-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ioT7bjYfU+RqEMX93qUMpYnZYr6YxEcx0mgotpO5OjoBqEx/jp97pGUiVvFlEtx+ J4uaWr0RKHykcfolTK9BXQ== 0000950109-94-000757.txt : 19940825 0000950109-94-000757.hdr.sgml : 19940825 ACCESSION NUMBER: 0000950109-94-000757 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 7 REFERENCES 429: 033-51219 FILED AS OF DATE: 19940502 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANC ONE CORP/OH/ CENTRAL INDEX KEY: 0000036090 STANDARD INDUSTRIAL CLASSIFICATION: 6021 IRS NUMBER: 310738296 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 033-53415 FILM NUMBER: 94525571 BUSINESS ADDRESS: STREET 1: 100 E BROAD ST CITY: COLUMBUS STATE: OH ZIP: 43271 BUSINESS PHONE: 6142485944 MAIL ADDRESS: STREET 1: 100 EAST BROAD STREET CITY: COLUMBUS STATE: OH ZIP: 43271-0251 FORMER COMPANY: FORMER CONFORMED NAME: FIRST BANC GROUP OF OHIO INC /OH/ DATE OF NAME CHANGE: 19800301 S-4 1 FORM S-4 Filed with the Securities and Exchange Commission on May 2, 1994 Registration No. 33- SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 F O R M S - 4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 BANC ONE CORPORATION - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Ohio - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation or organization) 6711 - -------------------------------------------------------------------------------- (Primary Standard Industrial Classification Code Number) 31-0738296 - -------------------------------------------------------------------------------- (I.R.S. Employer Identification No.) 100 East Broad Street, Columbus, Ohio 43271, (614) 248-5944 - -------------------------------------------------------------------------------- (Address, including Zip Code, and telephone number, including area code, of Registrant's principal executive offices) Roman J. Gerber, Esq., BANC ONE CORPORATION 100 East Broad Street, Columbus, Ohio 43271, (614) 248-5903 - -------------------------------------------------------------------------------- (Name, address, including Zip Code, and telephone number, including area code, of agent for service) With Copies to: Carter K. McDowell, Esq. Daniel O'Rourke, Esq. BANC ONE CORPORATION Vedder, Price, Kaufman & Kammholz 100 East Broad Street 222 North LaSalle, Suite 2600 Columbus, Ohio 43271-0152 Chicago, Illinois 60601-1003 614/248-6697 312/609-7669 Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date of this Registration Statement and all other conditions to the merger of Mid States Bancshares, Inc. with and into a wholly owned subsidiary of the Registrant pursuant to the Merger Agreement described in the enclosed Prospectus and Proxy Statement have been satisfied or waived. If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [_] Calculation of Registration Fee - -------------------------------------------------------------------------------- Proposed Proposed maximum maximum Title of each class Amount offering aggregate Amount of of securities to be price offering registration to be registered registered(1) per unit(2) price(2) fee(2) - -------------------------------------------------------------------------------- Common Stock 137,711 $22.68 $3,123,285 $1,077.00 - -------------------------------------------------------------------------------- (1) Based on an estimate of the maximum number of shares of common stock of the Registrant to be issued in connection with the merger of Mid States Bancshares, Inc. with and into a wholly owned subsidiary of the Registrant. (2) Estimated solely for purpose of computing the registration fee based upon the book value of the Common Stock, par value $5.00 per share, of Mid States Bancshares, Inc. as of March 31, 1994 in accordance with Rule 457(f)(2) of the General Rules and Regulations under the Securities Act of 1933. ------------------------------ The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. - -------------------------------------------------------------------------------- STATEMENT PURSUANT TO RULE 429 The Prospectus contained in this Registration Statement is a combined prospectus which also covers 771,111 Common Shares of Registrant, all of which were registered under Registration Statement No. 33-51219 on Form S-4. The 137,711 Common Shares of Registrant covered by this Registration Statement together with the 771,111 Common Shares of Registrant under Registration No. 33-51219 will equal the maximum number of shares of Common Stock of the Registrant (908,822 Common Shares) to be issued in connection with the merger of Mid States Bancshares, Inc. with and into a wholly owned subsidiary of Registrant. BANC ONE CORPORATION Cross Reference Sheet
Caption in Prospectus Item of Form S-4 and Proxy Statement - ------------------------------------- -------------------------------- A. Information about the Transaction --------------------------------- Item 1 - Forepart of Registration Outside Front Cover Page Statement and Outside Front Cover Reference Sheet Page of Prospectus Item 2 - Inside Front and Outside Available Information; Incorpora- Back Cover Pages of Prospectus tion by Reference; Table of Contents Item 3 - Risk Factors, Ratio of Information About the Transaction Earnings to Fixed Charges and Other Information Item 4 - Terms of the Transaction Merger; Comparative Rights of Shareholders Item 5 - Pro Forma Financial Infor- Incorporation by Reference mation Item 6 - Material Contacts with Background of Transaction the Company Being Acquired Item 7 - Additional Information * Required for Reoffering by Persons and Parties Deemed To Be Underwriters Item 8 - Interests of Named Interests of Named Experts and Experts and Counsel Counsel Item 9 - Disclosure of Commission * Position on Indemnification for Securities Act Liabilities B. Information about the Registrant -------------------------------- Item 10 - Information with Respect Information about BANC ONE to S-3 Registrants CORPORATION; Comparative Rights of Shareholders Item 11 - Incorporation of Certain Incorporation of Certain Informa- Information by Reference tion About BANC ONE by Reference Item 12 - Information with Respect * to S-2 or S-3 Registrants Item 13 - Incorporation of Certain * Information by Reference Item 14 - Information with Respect * to Registrants Other Than S-2 or S-3 Registrants
Caption in Prospectus Item of Form S-4 and Proxy Statement - ------------------------------------- -------------------------------- C. Information about the Company Being Acquired ----------------------------- Item 15 - Information with Respect Information About Mid States to S-3 Companies Bancshares, Inc.; Incorporation About Mid States Bancshares, Inc. by Reference Item 16 - Information with Respect * to S-2 or S-3 Companies Item 17 - Information with Respect * to Companies Other Than S-2 or S-3 Companies D. Voting and Management Information Item 18 - Information if Proxies, The Special Meeting of Shareholders; Consents or Authorizations Are To Voting and Management Information Be Solicited Item 19 - Information if Proxies, * Consents or Authorizations Are Not To Be Solicited or in an Exchange Offer
* Omitted because item is inapplicable or answer to item is negative. MID STATES BANCSHARES, INC. _______________, 1994 Dear Fellow Shareholder: You are cordially invited to attend a Special Meeting of Shareholders of Mid States Bancshares, Inc. ("MID STATES") to be held at 501 15th Street, Moline, Illinois on _______________, _____ __, 1994, at 10:00 a.m., local time. The purpose of the meeting is to consider and vote upon approval of an Agreement and Plan of Merger dated May 25, 1993, as amended February 22, 1994 and March 28, 1994 (the "Merger Agreement"), pursuant to which MID STATES will merge with and into a wholly owned subsidiary of BANC ONE CORPORATION. In the merger each outstanding share of MID STATES Common Stock will be converted into 2.917 shares of BANC ONE Common Stock, as described more fully in the accompanying Prospectus and Proxy Statement. Your Board of Directors believes that the terms of the Merger Agreement, as amended, are in the best interests of MID STATES shareholders, will provide significant value to all MID STATES shareholders, and will enable holders of MID STATES Common Stock to participate in the expanded opportunities for growth that the merger will make possible. Given the lengthy delay in submitting the Merger Agreement to the shareholders, a brief history of the proposed merger follows: BANC ONE and MID STATES announced the Merger Agreement on May 25, 1993. BANC ONE and MID STATES immediately began the process of obtaining necessary approvals. All regulatory approvals required prior to the merger were obtained. A special meeting of shareholders of MID STATES was originally scheduled for January 26, 1994 for the purpose of MID STATES shareholders approval of the Merger Agreement. The Board of Directors of MID STATES had unanimously recommended the merger to the shareholders and urged them to vote in favor of the proposed merger in the prospectus and proxy statement dated December 21, 1993 (the "December 21 Proxy") delivered to the shareholders of MID STATES in connection with that special meeting. However, the Merger Agreement contained a provision permitting MID STATES to terminate the Merger Agreement if during the January 11-24, 1994 evaluation period (during which the market price for BANC ONE's common stock was averaged), the average price of BANC ONE Common Stock (the "Evaluation Period Price") was below $37.82, which is a merger value equivalent of $102.96 per share of MID STATES Common Stock. This right to terminate is the so-called "walk-away" provision. In fact, the Evaluation Period Price was $33.43. The Board of Directors had stated in the December 21 Proxy that it did not intend to waive the "walk-away" provision. Also, Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), MID STATES' financial advisor, had, at the Board of Directors' request, specifically excluded from their fairness opinion dated December 21 1993 (the "December 21 opinion") the situation where the Evaluation Period Price was below $37.82. The December 21 opinion was a major supporting factor for the Board of Director's original recommendation in favor of the merger. - i - During the period immediately prior to January 26, DLJ on behalf of MID STATES requested that BANC ONE increase the exchange ratio so as to bring the value of BANC ONE shares to be received in the merger in respect to each share of MID STATES Common Stock to or above $102.96 at the closing. BANC ONE declined, but indicated a strong desire to consummate the merger and a willingness to negotiate terms other than the exchange ratio. On January 26, 1994, the Board of Director's chose to cancel the scheduled special meeting without voting on the merger so as to allow for further discussion with BANC ONE with a view to finding a basis for completion of the transaction. This was done because the Board of Directors was, and is, committed to the proposition that a merger with BANC ONE is in the best interest of MID STATES, its shareholders, employees, customers and depositors, as well as the Quad Cities community. For these reasons and the reasons set forth below and on page ___ of the accompanying Prospectus and Proxy Statement under "Merger Recommendations and Reasons for Transaction" (the "pertinent reasons") the Board of Directors chose not to exercise the walk-away provision at such time. MID STATES shareholders were informed of these events in a letter dated January 26, 1994. On February 22, 1994 BANC ONE and MID STATES entered into the First Amendment to the Merger Agreement. The First Amendment contains the following provisions: 1. MID STATES agreed that it would, conditionally, resolicit the MID STATES shareholders to approve the merger and in doing so would inform the shareholders that the MID STATES Board of Directors intends to proceed with the merger even if the BANC ONE share value equivalent is less than $102.96. The relevant conditions are: (a) that MID STATES' financial advisors opine that the exchange ratio is fair to the MID STATES shareholders from a financial point of view, disregarding the fact that the BANC ONE Evaluation Period Price was below $37.82 ($102.96 per MID STATES share of Common Stock merger value equivalent) as described above and might be below such amount at the closing [MID STATES intended to obtain a new fairness opinion from DLJ and to obtain a concurring "second opinion" from The Chicago Corporation ("TCC"), an investment banking firm, as to the fairness of the exchange ratio/merger consideration to the MID STATES shareholders]; (b) that these fairness opinions remain in effect at the closing of the merger transaction; and (c) that the shareholders of MID STATES approve the Merger Agreement with the knowledge that the Board of Directors intends to proceed with the merger on the terms and conditions described above. 2. MID STATES and BANC ONE agreed that MID STATES' right to terminate the Merger Agreement based upon the walk-away provision was amended so that MID STATES could unilaterally terminate the Merger Agreement if it could not obtain the necessary fairness opinions or any other cause made it probable that the merger could not be consummated prior to May 1, 1994, the "outside" date for completion of the Merger Agreement. 3. BANC ONE agreed to reimburse MID STATES for one-half of its out-of-pocket expenses (legal, financial advisory, accounting, etc.) incurred after January 25, 1994 in connection with the merger -- whether or not the transaction is consummated. - ii - During mid-February DLJ on behalf of MID STATES began discussions with BANC ONE concerning the need for BANC ONE to increase the exchange ratio/merger consideration so as to permit DLJ and TCC to issue their fairness opinions. During this time, the Board of Directors determined that, based on the pertinent reasons, if the merger with BANC ONE could not be accomplished at this time, the best course for MID STATES currently is to remain independent. Therefore, the MID STATES' Board instructed management and DLJ not to solicit or respond to inquiries from other possible interested parties for MID STATES, including the party from which MID STATES received an indication of interest for a possible merger with MID STATES in March, 1993. On March 11, 1994 BANC ONE offered to increase the exchange ratio from 2.7225 BANC ONE common shares (as adjusted to account for BANC ONE's 10% stock dividend of March 4, 1994) for each share of Common Stock of MID STATES to 2.917 shares. BANC ONE and MID STATES further agreed to extend the "outside" termination date under the Merger Agreement to July 1, 1994 so as to enable sufficient time to resolicit the shareholders of MID STATES. At a MID STATES Board of Director's Meeting on March 28, 1994 the Board of Directors agreed to ratify the Second Amendment to the Merger Agreement which encompassed these two terms and received the fairness opinions of its two financial advisors, DLJ and TCC. Based upon these reports and the new increased exchanged ratio, the Board of Directors once again, unanimously, recommends the merger to the shareholders and urges shareholder approval and the adoption of the Merger Agreement, as amended. The Board of Directors has set _____ __, 1994 as the date of the Special Meeting of Shareholders at which the Merger Agreement, as amended, will be considered and voted upon by the shareholders. Due to the lapse of time between the originally scheduled special meeting of shareholders and this newly scheduled Special Meeting, the Board of Directors has set a new record date of , 1994. All shareholders of record as of the close of business on such date shall be entitled to notice of and to vote at the Special Meeting of Shareholders. Additional information is contained in the accompanying Prospectus and Proxy Statement which I urge you to read carefully. Your Board of Directors unanimously recommends that you vote in favor of the approval of the Merger Agreement, as amended. Please indicate your voting instructions, sign and date the enclosed Proxy and mail it promptly in the return envelope provided. Whether or not you plan to attend the meeting, it is important that you return the enclosed Proxy so that your shares of MID STATES Common Stock are voted. Sincerely, Thomas H. Robinson President and Chief Executive Officer - iii - PROSPECTUS 908,822 Shares BANC ONE CORPORATION Common Stock --------------------------------- MID STATES BANCSHARES, INC. PROXY STATEMENT for Special Meeting of Shareholders ________________, 1994 --------------------------------- This Prospectus and Proxy Statement (the "Prospectus" or "Prospectus and Proxy Statement") relates to the proposed merger of Mid States Bancshares, Inc. ("MID STATES") with and into Banc One Illinois Corporation ("Banc One Illinois"), a wholly owned subsidiary of BANC ONE CORPORATION ("BANC ONE"). If the proposed merger (the "Merger") is consummated, each outstanding share of MID STATES Common Stock, par value $5.00 per share ("MID STATES Common Stock"), will be converted into 2.917 shares of BANC ONE Common Stock, no par value ("BANC ONE Common Stock"). See "MERGER--Exchange Ratio." The Merger is subject to the approval of not less than a majority of the holders of the outstanding shares of MID STATES Common Stock entitled to vote thereon and to the satisfaction of certain other conditions, including obtaining various regulatory approvals. This Prospectus and Proxy Statement does not cover any resales of BANC ONE Common Stock received by affiliates of MID STATES upon consummation of the Merger, and no person is authorized to make use of this Prospectus and Proxy Statement in connection with any such resale. BANC ONE Common Stock is traded on the New York Stock Exchange. The closing price of BANC ONE Common Stock on the New York Stock Exchange on April , 1994 was $______. The exchange rate mentioned above has been adjusted to reflect all stock splits and stock dividends. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------------------------- A Special Meeting of Shareholders of MID STATES will be held at 501 15th Street, Moline, Illinois, on ____________, 1994, to consider a proposal to approve the Merger Agreement (as hereinafter defined). --------------------------------- The date of this Prospectus and Proxy Statement is May ___, 1994. AVAILABLE INFORMATION BANC ONE is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). MID STATES files certain reports with the Commission pursuant to the Exchange Act. Reports, proxy and information statements and other information filed by BANC ONE and MID STATES can be inspected and copied, at prescribed rates, at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices located at Northwestern Atrium Center, 500 West Madison Street, Suite 1600, Chicago, Illinois 60661, and 75 Park Place, New York, New York 10007. Reports, proxy and information statements and other information concerning BANC ONE can be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. This Prospectus does not contain all information set forth in the Registration Statement and exhibits thereto which BANC ONE and MID STATES have filed with the Commission under the Securities Act of 1933, as amended (the "Securities Act") and Exchange Act, as the case may be, and to which reference is hereby made. INCORPORATION BY REFERENCE THIS PROSPECTUS AND PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE THEREIN, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY MID STATES SHAREHOLDER, TO WHOM THIS PROSPECTUS IS DELIVERED UPON ORAL OR WRITTEN REQUEST TO WILLIAM C. LEITER, CONTROLLER, BANC ONE CORPORATION, 100 EAST BROAD STREET, COLUMBUS, OHIO 43271-0251, TELEPHONE NUMBER 614/248-5905. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY _________________, 1994. BANC ONE's Annual Report on Form 10-K for the fiscal year ended December 31, 1993 and BANC ONE's Current Reports on Form 8-K, including the 8-K filed January 28, 1994 and the Form 8-K filed February 17, 1994, in each case filed with the Commission pursuant to Section 13 of the Exchange Act and the description of BANC ONE Common Stock which is contained in its registration statement filed under Section 12 of the Exchange Act, including any amendment or report filed for the purpose of updating such description, are incorporated into this Prospectus and Proxy Statement by reference. MID STATES' Annual Report on Form 10-KSB for the fiscal year ended December 31, 1993 filed with the Commission pursuant to Section 13 of the Exchange Actis incorporated into this Prospectus and Proxy Statement by reference. All documents filed by BANC ONE or MID STATES pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the Special Meeting of Shareholders of MID STATES shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the respective dates of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that such statement is modified or superseded by a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. No person is authorized to give any information or to make any representations other than those contained in this Prospectus and Proxy Statement and, if given or made, such information or representation must not be relied upon as having been authorized by BANC ONE or MID STATES. This Prospectus and Proxy Statement does not constitute an offering within any jurisdiction to any person to whom it is unlawful to make such offer within such jurisdiction. TABLE OF CONTENTS -----------------
Page ---- A. INFORMATION ABOUT THE TRANSACTION . . . . . . . . . . . . . . . . . 1 --------------------------------- INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Mid States Bancshares, Inc. . . . . . . . . . . . . . . . . . . . 1 BANC ONE CORPORATION . . . . . . . . . . . . . . . . . . . . . . 1 SUMMARY OF THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . 3 Terms of Agreement and Exchange Rate . . . . . . . . . . . . . . 3 Management After the Merger . . . . . . . . . . . . . . . . . . . 3 Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . 3 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Opinions of Investment Bankers . . . . . . . . . . . . . . . . . 4 Rights of Dissenting Shareholders . . . . . . . . . . . . . . . . 4 Differences in Shareholder Rights . . . . . . . . . . . . . . . . 4 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . 5 Conditions; Termination . . . . . . . . . . . . . . . . . . . . . 5 Selected Financial Data . . . . . . . . . . . . . . . . . . . . 5 Comparative Per Share Data . . . . . . . . . . . . . . . . . . . 8 THE SPECIAL MEETING OF SHAREHOLDERS . . . . . . . . . . . . . . . . 9 Purpose of the Special Meeting of Shareholders . . . . . . . . . 9 Record Dates and Voting Rights . . . . . . . . . . . . . . . . . 9 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 11 Operations After the Merger . . . . . . . . . . . . . . . . . . . 11 Background of Transaction . . . . . . . . . . . . . . . . . . . . 11 Merger Recommendation and Reasons for Transaction . . . . . . . . 17 Opinions of Investment Bankers . . . . . . . . . . . . . . . . . 18 Interests of Certain Persons in the Merger . . . . . . . . . . . 27 Effect on Employee Benefits . . . . . . . . . . . . . . . . . . . 28 Conditions to the Merger; Termination . . . . . . . . . . . . . 28 Federal Income Tax Consequences . . . . . . . . . . . . . . . . . 31 Conversion of Shares and Exchange of Certificates . . . . . . . . 32 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . 33 Resales by Affiliates . . . . . . . . . . . . . . . . . . . . . . 33 Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . 34 COMPARATIVE RIGHTS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . 34 Description of BANC ONE Stock . . . . . . . . . . . . . . . . . . 34 Special Voting Requirements for Certain Transactions . . . . . . 36 Comparison of BANC ONE Common Stock and MID STATES Common Stock . . . . . . . . . . . . . . . . . . . 38
Page ---- MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . 43 Transfer and Exchange Agents . . . . . . . . . . . . . . . . . . 43 Interests of Named Experts and Counsel . . . . . . . . . . . . . 43 Sources of Information . . . . . . . . . . . . . . . . . . . . . 44 Registration Statement . . . . . . . . . . . . . . . . . . . . . 44 Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 44 B. INFORMATION ABOUT BANC ONE CORPORATION . . . . . . . . . . . . . . . 45 -------------------------------------- General--Business . . . . . . . . . . . . . . . . . . . . . . . . . 45 Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . 45 Certain Regulatory Matters . . . . . . . . . . . . . . . . . . . . . 46 Market Prices of and Dividends Paid on BANC ONE Common Stock . . . . 49 Incorporation of Certain Information About BANC ONE CORPORATION by Reference . . . . . . . . . . . . . . . . . . . . 50 C. INFORMATION ABOUT MID STATES BANCSHARES, INC. . . . . . . . . . . . 51 --------------------------------------------- General -- Business . . . . . . . . . . . . . . . . . . . . . . . . 51 Market Prices of and Dividends Paid on MID STATES Common Stock . . . . . . . . . . . . . . . . . . . . 51 Incorporation of Certain Information About Mid States Bancshares, Inc. by Reference . . . . . . . . . . . . . . . . . . 52 D. VOTING AND MANAGEMENT INFORMATION . . . . . . . . . . . . . . . . . 53 --------------------------------- Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Rights of Dissenting Shareholders . . . . . . . . . . . . . . . . . 53 Management and Principal Shareholders of BANC ONE . . . . . . . . . 54 Management and Principal Shareholders of MID STATES . . . . . . . . 54 Future Proposals by MID STATES' Shareholders . . . . . . . . . . . . 54
EXHIBITS - -------- Exhibit A - Opinion of Donaldson, Lufkin & Jenrette Securities Corporation Exhibit B - Opinion of The Chicago Corporation Exhibit C - Section 262 of the Delaware General Corporation Law PROSPECTUS AND PROXY STATEMENT - ------------------------------ MID STATES BANCSHARES, INC. MOLINE, ILLINOIS _____________, 1994 SPECIAL MEETING OF SHAREHOLDERS ------------------------------- A. INFORMATION ABOUT THE TRANSACTION ------------------------------------- INTRODUCTION ------------ This Prospectus and Proxy Statement (the "Prospectus" or "Prospectus and Proxy Statement") is furnished in connection with the solicitation of proxies by the Board of Directors of Mid States Bancshares, Inc. ("MID STATES") a registered bank holding company headquartered in Moline, Illinois, to be voted at the Special Meeting of Shareholders of MID STATES to be held on _______________, 1994 for the purpose of considering and taking action upon a proposal to merge (the "Merger") MID STATES with and into Banc One Illinois Corporation ("Banc One Illinois"), a wholly owned subsidiary of BANC ONE CORPORATION ("BANC ONE"), a registered multi-bank holding company headquartered in Columbus, Ohio. This proposal is in accordance with the Agreement and Plan of Merger dated May 25, 1993 by and among MID STATES, Banc One Illinois and BANC ONE, as amended on February 22, 1994 and March 25, 1994 (the "Merger Agreement"). The principal office of BANC ONE is 100 East Broad Street, Columbus, Ohio 43271 and its telephone number is 614/248-5944. The principal office of MID STATES is 501 15th Street, Moline, Illinois 61265-2180 and its telephone number is 309/757-8400. This Prospectus and the form of proxy are being mailed to the shareholders of MID STATES for the first time on or about _______________, 1994. Mid States Bancshares, Inc. - --------------------------- MID STATES is a bank holding company incorporated under the laws of the state of Delaware in Moline, Illinois which owns all of the outstanding stock of the First National Bank of Moline, a national banking association with its main office located in Moline, Illinois ("First National", the "Bank" or the "Subsidiary"). The Bank operates three offices in Moline, Illinois. As of December 31, 1993, MID STATES had total assets of approximately $192 million and the Bank had deposits of approximately $163 million. See "INFORMATION ABOUT MID STATES BANCSHARES, INC." BANC ONE CORPORATION - -------------------- BANC ONE is a multi-bank holding company incorporated under the laws of the State of Ohio which as of December 31, 1993 owned all of the outstanding stock of one Arizona, two Kentucky, six Illinois, one Texas, four Michigan, eight Indiana, fourteen Wisconsin, one California, seven Colorado, eighteen Ohio, one Utah, two Oklahoma and sixteen West Virginia commercial banks. These -1- banks operate more than 1,300 offices in this thirteen-state area and, at December 31, 1993, BANC ONE, its affiliate banks and its non-bank subsidiaries had total assets of approximately $79.9 billion and total deposits of approximately $60.9 billion. Banc One Illinois, a direct subsidiary of BANC ONE, is the direct parent of BANC ONE's commercial banks situated in the State of Illinois. See "INFORMATION ABOUT BANC ONE CORPORATION", which includes information about pending acquisitions. -2- SUMMARY OF THE TRANSACTION -------------------------- Terms of Agreement and Exchange Rate - ------------------------------------ Upon the Merger becoming effective, each of the outstanding shares of MID STATES Common Stock, par value $5.00 per share ("MID STATES Common Stock"), will be converted into 2.917 shares of BANC ONE Common Stock, no par value ("BANC ONE Common Stock") (the "Exchange Ratio"). Upon consummation of the Merger, MID STATES will be merged with and into Banc One Illinois and the separate corporate existence of MID STATES will cease. Banc One Illinois, as the surviving corporation in the Merger and a wholly owned subsidiary of BANC ONE, will continue operations under the name Banc One Illinois Corporation. See "MERGER--Exchange Ratio." Management After the Merger - --------------------------- Banc One Illinois will operate with Banc One Illinois' current officers and employees, with its principal place of business in Springfield, Illinois. Banc One Illinois' current directors will serve as the directors of the surviving corporation following the Merger. It is anticipated that following the Merger, First National will operate under the name of Bank One, Quad Cities, National Association (the "Resulting Bank"). The Resulting Bank will conduct its banking operations at First National's present offices. The Resulting Bank, as a BANC ONE affiliate after the Merger, will operate under BANC ONE's operating philosophy whereby it will have autonomy to match its products and services to the needs of its local communities. BANC ONE bank affiliates have authority to make decisions locally in "people-related" matters such as lending, personnel, charitable contributions and other community and related matters, relying upon BANC ONE and its state holding companies for "paper and computer related" matters such as assistance in accounting, certain legal matters, investment portfolio management, regulatory compliance, data processing and other matters which are generally best performed by specialists on a centralized basis. Tax Consequences - ---------------- As a condition to the Merger, MID STATES and BANC ONE received an opinion dated April 20, 1994 from Vedder, Price, Kaufman & Kammholz substantially to the effect that, among other things, no gain or loss will be recognized by MID STATES' shareholders for federal income tax purposes as a result of the exchange of their MID STATES Common Stock for BANC ONE Common Stock in the Merger, except to the extent that cash is received in lieu of fractional shares of BANC ONE Common Stock or pursuant to the exercise of dissenters' rights. Certain tax consequences of the proposed transaction to shareholders of MID STATES are summarized under "MERGER--Federal Income Tax Consequences." Vote Required - ------------- Not less than a majority of the outstanding shares of MID STATES Common Stock entitled to vote thereon must vote in favor of the approval of the Merger Agreement in order for the transaction to be approved. The directors and -3- executive officers of MID STATES and their affiliates and associates are entitled to vote approximately 160,000 shares, or approximately 51% of the outstanding shares of MID STATES Common Stock. Although no agreements are in effect, it is currently anticipated that each such holder will vote his or her shares for approval of the Merger Agreement. It is not necessary for the shareholders of BANC ONE to approve the merger proposal. However, BANC ONE, as the sole shareholder of Banc One Illinois, has approved the Merger and the Merger Agreement. For information concerning voting by shareholders of MID STATES on the proposed Merger see "MERGER--General" and "VOTING AND MANAGEMENT INFORMATION--Voting." Opinions of Investment Bankers - ------------------------------ Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and The Chicago Corporation ('TCC") have each delivered a written opinion to the MID STATES' Board of Directors (the "MID STATES Board") to the effect that, as of the date of this Prospectus and Proxy Statement, the Exchange Ratio provided for in the Merger Agreement is fair to the holders of MID STATES Common Stock from a financial point of view. Copies of the opinions of DLJ and TCC, each dated as of the date of this Prospectus and Proxy Statement, are attached hereto as Exhibit A and Exhibit B, respectively. - --------- --------- These opinions should be read in their entirety for a description of the procedures followed, assumptions and qualifications made, matters considered and limitations as to the scope thereof. See "MERGER -- Opinions of Investment Bankers." Rights of Dissenting Shareholders - --------------------------------- Under Delaware law, certain rights are available to a shareholder of MID STATES who does not vote his or her shares in favor of the Merger and delivers to MID STATES, before the vote is taken, written notice of intent to demand payment for his or her MID STATES Common Stock if the Merger is consummated. See "VOTING AND MANAGEMENT INFORMATION--Rights of Dissenting Shareholders." Differences in Shareholder Rights - --------------------------------- There are differences between the rights of MID STATES shareholders and BANC ONE shareholders. Both Ohio law and BANC ONE's Amended Articles of Incorporation contain "control share acquisition" provisions which mandate certain procedures and shareholder consents to approve certain share acquisitions. In addition, under Ohio law, in evaluating an acquisition proposal, directors of an Ohio corporation such as BANC ONE are permitted, in determining whether any matter is in the best interest of the corporation, to take into consideration the interests of the corporation's employees, suppliers, creditors and customers, the economy and community and societal considerations in the interest of the corporation and its shareholders. The Delaware General Corporation Law (the "DGCL") does not contain any similar provisions, nor does MID STATES' Amended and Restated Certificate of Incorporation ("MID STATES' Certificate"). MID STATES' Certificate does, however, require approval of certain interested shareholder transactions by not less than 75% of MID STATES' outstanding shares entitled to vote, unless certain alternative conditions are met, one of which is approval of such transaction by two-thirds of MID STATES' directors. BANC ONE's Articles also -4- contain a so-called "fair price" provision which mandates certain procedures and approvals for a business combination. MID STATES' Certificate contains a price protection provision. See "COMPARATIVE RIGHTS OF SHAREHOLDERS--Special Voting Requirements for Certain Transactions." In addition, both Ohio law and the DGCL contain provisions prohibiting certain business combinations between corporations and "Interested Shareholders." The DGCL does not contain a so-called "fair price" provision. The effect of the supermajority and fair price provisions contained in BANC ONE's Articles may be to discourage certain potential business combinations which some shareholders may believe to be in their best interests and to make more difficult management changes which might occur if the potential business combination were successful. See "COMPARATIVE RIGHTS OF SHAREHOLDERS-- Comparisons of BANC ONE Common Stock and MID STATES Common Stock." The cumulative voting system is used in the election of MID STATES' Board of Directors. Cumulative voting is not used in the election of BANC ONE's Board of Directors. See "COMPARATIVE RIGHTS OF SHAREHOLDERS--Comparison of BANC ONE Common Stock and MID STATES' Common Stock." Regulatory Approvals - -------------------- In order for the proposed transaction to be consummated, approval of BANC ONE's acquisition of MID STATES must be obtained from the Board of Governors of the Federal Reserve System (the "Federal Reserve") and the Illinois Commissioner of Banks and Trust Companies (the "Illinois Commissioner"). Both of these regulatory approvals have been received. Conditions; Termination - ----------------------- Consummation of the Merger is also subject to satisfaction or waiver of various conditions, including compliance with respective covenants and confirmation of respective representations and warranties, the absence of any material adverse change in the financial condition or business of MID STATES or BANC ONE, the fulfillment of certain earnings tests and other matters. MID STATES, by action of its Board of Directors, may elect to terminate the Merger Agreement, whether before or after approval of the Merger by the shareholders of MID STATES, by giving three (3) days written notice of such election to BANC ONE. The Merger Agreement provides that either party may abandon the Merger if it is not consummated on or before July 1, 1994. See "MERGER- Conditions to the Merger" for a more complete discussion of the conditions to consummation of the Merger. Selected Financial Data - ----------------------- On March 30, 1993 BANC ONE acquired Valley National Corporation ("Valley"); on May 3, 1993 BANC ONE acquired Key Centurion Bancshares, Inc. ("Key") and First Community Bancorp, Inc. ("First Community"); on November 1, 1993 BANC ONE acquired Colorado Western Bancorp, Inc. ("Colorado Western"); on December 17, 1993 BANC ONE acquired First Financial Associates, Inc. ("First Financial"); on December 31, 1993 BANC ONE acquired Capital Banking Group ("CBG") and on March 17, 1994 BANC ONE acquired Parkdale Bank. On November 2, 1993 BANC ONE entered into an Agreement to acquire Liberty National Bancorp, Inc. ("Liberty"), Louisville, Kentucky. BANC ONE has also announced three other -5- acquisitions which are not material individually or in the aggregate, and, are therefore not included in the accompanying selected financial data. For further discussion on these acquisitions, see "INFORMATION ABOUT BANC ONE CORPORATION." All balance sheets and income statements presented for BANC ONE have been restated to include the poolings of interests with Valley, Key and First Community. MID STATES will be accounted for as a pooling of interests. The following table presents on a historical basis selected unaudited consolidated financial data for BANC ONE and MID STATES. The financial data is based on the consolidated financial statements of BANC ONE and MID STATES, respectively, incorporated herein by reference. -6- PRO FORMA COMBINED SELECTED DATA insert table1 -7-
SELECTED FINANCIAL DATA (2) $(thousands, except per share data) (UNAUDITED) Year ended December 31, ------------------------------------------------------------------------ 1993 1992 1991 1990 1989 ------------ ------------ ------------ ------------ ------------ Total interest income and other income: BANC ONE..................... $7,226,790 $7,358,393 $6,828,327 $6,151,959 $5,473,099 MID STATES .................. 14,880 16,285 17,676 18,380 17,395 Income from continuing operations: BANC ONE..................... $1,120,589 $876,588 $664,288 $536,066 $304,916 MID STATES .................. 2,094 2,017 1,967 1,875 1,723 Income from continuing operations per common share: BANC ONE..................... $2.93 $2.29 $1.82 $1.56 $0.97 (1) MID STATES .................. 6.72 6.47 6.31 6.02 5.53 Historical dividends declared per common share: BANC ONE..................... $1.07 $0.89 $0.76 $0.69 $0.63 MID STATES .................. 2.83 2.60 2.60 2.50 2.50 Total assets (end of period): BANC ONE..................... $79,918,561 $76,739,119 $73,840,498 $56,610,126 $48,111,384 MID STATES .................. 192,454 199,208 190,516 196,455 180,937 Long-term borrowings (end of period): BANC ONE..................... $1,701,662 $1,357,462 $943,726 $810,197 $624,232 MID STATES .................. Total stockholders' equity (end of period): BANC ONE..................... $7,033,638 $6,241,586 $5,559,370 $4,514,653 $3,633,542 MID STATES .................. 20,597 19,384 18,177 17,020 15,924 (1) The decrease in 1989's income from continuing operations per common share is due principally to a significant increase in Valley's provision for loan losses. (2) Gives effect to the 10% stock dividend on BANC ONE common stock paid on March 4, 1994 to BANC ONE common stockholders of record as of February 16, 1994.
Comparative Per Share Data - -------------------------- Based upon the Merger Exchange Rates and Consolidation Exchange Rates, the following tables set forth per common share income from continuing operations, dividends, book value, and market value of (i) BANC ONE, (ii) MID STATES; and (iii) pro forma equivalent of one share of MID STATES Common Stock based on BANC ONE Common Stock. insert table2 -8-
(iii) Per Share of MIDSTATES Common Stock assuming an exchange rate of one share of MIDSTATES Stock for 2.917 shares of (i) (ii) BANC ONE stock ------------------------- ------------------------- ------------------------- BANC BANC ONE MIDSTATES ONE ------------------------- ------------------------- ------------------------- Income from continuing operations per common share: December 31, 1989 $0.97 (5) $5.53 $2.83 December 31, 1990 1.56 6.02 4.55 December 31, 1991 1.82 6.31 5.31 December 31, 1992 2.29 6.47 6.68 December 31, 1993 2.93 6.72 8.55 Dividends per common share: December 31, 1989 0.63 2.50 1.84 December 31, 1990 0.69 2.50 2.01 December 31, 1991 0.76 2.60 2.22 December 31, 1992 0.89 2.60 2.60 December 31, 1993 1.07 2.83 3.12 Book value per common share as of December 31, 1993 17.82 66.11 51.98 Market value per common share as of May 25, 1993 (1) 38.55 (2) (3) 112.45 Market value per common share as of April __, 1994 (4) (2) (3) (1) The business day immediately preceding public announcement of the proposed merger. (2) Based on the closing price of BANC ONE common stock as reported on the New York Stock Exchange, adjusted for the five shares for four shares common stock split effective August 31, 1993 and the 10% stock dividend paid on March 4, 1994 to BANC ONE common stockholders of record as of February 16, 1994. (3) No active trading market exists for MID STATES common stock. (4) A recent business day preceding the date of this Prospectus. (5) The decrease in 1989's income from continuing operations per common share is due principally to a significant increase in Valley's provision for loan losses.
THE SPECIAL MEETING OF SHAREHOLDERS ----------------------------------- This Prospectus and Proxy Statement is being furnished to the shareholders of MID STATES in connection with the solicitation of proxies by the MID STATES Board for use at MID STATES' Special Meeting of Shareholders and at any adjournment or adjournments thereof (the "Special Meeting"). The Special Meeting of Shareholders of MID STATES will be held on _______________, 1994, at 10:00 a.m., local time at 501 15th Street, Moline, Illinois. Purpose of the Special Meeting of Shareholders - ---------------------------------------------- At the Special Meeting, the holders of MID STATES Common Stock will vote on the approval of the Merger Agreement. Record Dates and Voting Rights - ------------------------------ The MID STATES Board has fixed the close of business on , 1994, as the record date for determination of shareholders entitled to notice of and to vote at the Special Meeting. As of the record date, MID STATES had outstanding and entitled to vote ___________ shares of MID STATES Common Stock. Each share of MID STATES Common Stock is entitled to one vote. The Merger Agreement must be approved by a majority of MID STATES' shareholders. Votes, whether in person or by proxy, will be counted and tabulated by inspectors appointed by MID STATES. Abstentions and broker non-votes will not be counted as votes either "for" or "against" any matters coming before the Special Meeting, however, pursuant to Delaware law, such abstentions and broker non-votes will be counted toward determining a quorum. In accordance with Delaware law and MID STATES' Certificate and Bylaws, such abstentions have the effect of a "no" vote since state law requires the Merger Agreement to be authorized and approved by the affirmative vote of not less than a majority of the MID STATES Common Stock entitled to vote, rather than a majority of those shares actually voting. Proxies - ------- Proxies for use at the Special Meeting accompany this Proxy Statement. A shareholder may use a proxy whether or not he or she intends to attend the Special Meeting in person. The proxy may be revoked in writing by the person giving it at any time before it is exercised by notice to the Secretary of MID STATES, by submitting a later dated proxy or by attending and voting in person at the Special Meeting. All proxies validly submitted and not revoked will be voted in the manner specified therein. IF NO SPECIFICATION IS MADE, THE PROXIES WILL BE VOTED IN FAVOR OF APPROVAL OF THE MERGER AGREEMENT. The MID STATES Board is not aware of any other matters which may be presented for action at the Special Meeting, but if other matters do properly come before the meeting it is intended that the shares represented by the accompanying proxy will be voted by the persons named in the proxy in accordance with their best judgment. The shares represented by the accompanying proxy may not be voted to adjourn the Special Meeting of Shareholders for the purpose of soliciting additional votes to approve the Merger. -9- Solicitation of proxies will be made in person, by mail, or by telephone or telegraph by present and former directors, officers and employees of MID STATES and First National for which no additional compensation will be paid. MID STATES will bear the cost of solicitation of proxies from its shareholders and may reimburse brokers and others for their expenses in forwarding solicitation material to beneficial owners of its voting stock. MID STATES held its 1993 Annual Meeting of Shareholders on April 20, 1993. No date has been set for the 1994 Annual Meeting on the assumption that the Merger will be consummated. MERGER ------ The information in this Prospectus and Proxy Statement concerning the terms of the Merger is a summary only and is qualified in its entirety by reference to the Merger Agreement, as amended, which is attached as an exhibit to the Registration Statement filed by BANC ONE with the Commission in connection with the Merger and which is incorporated herein by reference. See "Incorporation by Reference" for the procedure for obtaining a copy of the Merger Agreement and the amendments thereto. General - ------- The Merger Agreement provides for the Merger of MID STATES with and into Banc One Illinois. As a result of the Merger, First National will become a subsidiary of BANC ONE and Banc One Illinois. Upon the effectiveness of the Merger (the "Effective Time") each of the outstanding shares of MID STATES Common Stock will be converted into 2.917 shares of BANC ONE Common Stock (subject to adjustments in certain circumstances), which shares of BANC ONE Common Stock will be issued as a result of the Merger. See "MERGER--Exchange Rate." The affirmative vote of a majority of the outstanding shares of MID STATES Common Stock entitled to vote at the Special Meeting is required in order to approve the Merger Agreement. See "VOTING AND MANAGEMENT INFORMATION-Voting." However, it is a condition to BANC ONE's obligation to consummate the Merger that not more than 10% of the maximum aggregate total number of shares of BANC ONE Common Stock which could be issued by BANC ONE in the Merger are to be settled in cash as a result of fractional share interests or are to be issued to MID STATES shareholders who have asserted rights of dissenting shareholders. See "VOTING AND MANAGEMENT INFORMATION-Rights of Dissenting Shareholders." Subject to such shareholder approval and the satisfaction of certain conditions and receipt of all requisite regulatory approvals (which have been obtained), in each case as provided for in the Merger Agreement, the Merger will become effective upon the issuance by the Secretary of State of the State of Illinois of a certificate of merger with respect thereto as provided in applicable provisions of the Illinois Business Corporation Act of 1983, as amended, and filing of a Certificate of Merger with the Secretary of State of the State of Delaware. -10- The Boards of Directors of BANC ONE, Banc One Illinois and MID STATES have approved the Merger Agreement. BANC ONE, as the sole shareholder of Banc One Illinois, has approved the Merger Agreement. Approval of the Merger Agreement by the shareholders of BANC ONE is not required for consummation of the Merger. Exchange Ratio - -------------- At the Effective Time, stock issued by reason of the Merger will be allocated to the shareholders of record of MID STATES as of the Effective Time with such shares of BANC ONE Common Stock to be equal to the number of shares of MID STATES Common Stock outstanding immediately prior to the Effective Time multiplied by 2.917. Operations After the Merger - --------------------------- Upon the consummation of the Merger, MID STATES will be merged into Banc One Illinois and the separate corporate existence of MID STATES will cease. Banc One Illinois, as the surviving corporation in the Merger and a wholly owned subsidiary of BANC ONE, will continue operations under the name "Banc One Illinois Corporation" and will operate with Banc One Illinois' current officers and employees, with its principal place of business at Springfield, Illinois. Banc One Illinois' current directors will serve as the directors of the surviving corporation following the Merger. Following the Merger, the Bank will change its name to Bank One, Quad Cities, N.A. and the present directors, officers and employees of the Bank will continue in those same capacities. The Bank will conduct its banking operations at its present offices. The Bank, as a BANC ONE affiliate after the Merger, will operate under BANC ONE's operating philosophy whereby it will have autonomy to match its products and services to the needs of its local communities. Similarly, BANC ONE bank affiliates have authority to make decisions locally in "people-related" matters such as lending, personnel, charitable contributions and other community and related matters, relying upon BANC ONE and its state holding companies for "paper and computer related" matters such as assistance in accounting, certain legal matters, investment portfolio management, regulatory compliance, data processing and other matters which are generally best performed by specialists on a centralized basis. Background of Transaction - ------------------------- On April 6, 1992, Mr. Thomas H. Robinson, President and CEO of MID STATES, and Mr. Richard Bishop, former President, CEO and director of MID STATES, met informally with representatives of BANC ONE. At the meeting, initiated by BANC ONE, BANC ONE expressed an interest in pursuing discussions regarding a possible affiliation with MID STATES. As a result of this initial meeting, Messrs. Bishop and Robinson and three principal shareholders of MID STATES (Messrs. John C. Pryor, James T. McLaughlin and Robert L. Seiffert) met with representatives of BANC ONE on June 16, 1992. In July, 1992, representatives of BANC ONE again approached MID STATES regarding a possible affiliation and indicated an interest in meeting with the entire Board of Directors. As a result, on July 20, 1992, representatives of BANC ONE made a presentation to the entire Board of Directors regarding BANC ONE and an affiliation between BANC ONE and MID STATES. -11- As from time to time MID STATES has received similar informal inquiries regarding possible affiliation, MID STATES' Board of Directors began discussing long-term strategic issues, including the possible sale of MID STATES, as well as MID STATES continuing to remain independent. In doing so, the Board consulted with and retained the law firm of Vedder, Price, Kaufman & Kammholz, a firm with extensive experience in representing financial institutions, as special counsel, to assist the Board in evaluating alternatives. Vedder, Price, Kaufman & Kammholz has represented MID STATES on a special counsel basis for a number of years. On September 21, 1992, the Board formed the Long-Range Strategic Planning Committee (the "Committee"), a special board committee consisting of Messrs. Richard M. Bishop, Daniel Churchill, James T. McLaughlin, Michael S. Plunkett, John C. Pryor, Thomas H. Robinson and Robert L. Seiffert, for the purpose of a focused study of the various alternatives available to MID STATES. The members of the committee consisted of management, outside directors, and representatives of MID STATES' four largest stockholder groups. Mr. Bishop resigned as a MID STATES director and Committee member in December, 1992 as part of his previously announced retirement plans. At the October 19, 1992 meeting of the Board of Directors, the Committee recommended to the Board that an investment banking firm be retained to assist in exploring various strategic alternatives. At that time, the Board of Directors recognized that it was in the best interests of MID STATES and its shareholders to retain an investment banking firm to assist in evaluating merger proposals and to hold discussions with certain regional bank holding companies that might be interested in affiliating with MID STATES. During late October, 1992, the Committee met with representatives of, and reviewed the services offered by, Donaldson, Lufkin & Jenrette Securities Corporation, a nationally recognized investment banking firm ("DLJ"). On November 6, 1992, MID STATES retained DLJ on the basis of, among other things, its perceived expertise in merger and acquisition transactions and its familiarity with the most likely potential merger partners for MID STATES and the Midwest regional banking industry. At the November 24, 1992 Committee meeting, the Committee, after reviewing a list of Midwestern regional bank holding companies, identified three prospective acquirors to be initially contacted by DLJ regarding a potential affiliation with MID STATES. In December, 1992, DLJ forwarded confidentiality agreements to these three regional bank holding companies, including BANC ONE, which had indicated an interest in pursuing further discussions with MID STATES. On December 28, 1992, BANC ONE and the two Midwestern-based bank holding companies executed confidentiality agreements. During February and March, 1993, MID STATES provided financial and other information to each of BANC ONE and the second Midwestern-based bank holding company ("MBHC") pursuant to the confidentiality agreements. At such time, the third Midwestern-based bank holding company indicated that it was not then currently interested in pursuing discussions due to other strategic initiatives. -12- In order to assist the Board of Directors in comparing the two interested parties and evaluating any merger proposal that might ensue, MID STATES requested that the parties prepare a written discussion of their respective business organizations and affiliation objectives, including, without limitation, a written response to the following areas of inquiry posed by the Board of Directors: (i) proposed purchase price or exchange ratio, including any price protection or other structural features on the purchase price; (ii) ongoing role of the existing Board of Directors; (iii) management style and philosophy, including those functions that would be decentralized or centralized subsequent to the acquisition; (iv) post-acquisition plans for existing employee compensation and benefits, including existing employment agreements; (v) principal services and capabilities offered that would inure to the benefit of MID STATES customers as a result of the acquisition; (vi) loan policy and application process and impact of transaction on the availability of credit to the communities served by MID STATES; (vii) expected timetable of an affiliation transaction; (viii) post-acquisition staffing patterns of recent acquisitions and intentions regarding the autonomy of MID STATES; and (ix) maintenance of MID STATES' strong community identification subsequent to the acquisition. On March 17, 1993, BANC ONE responded to the Board's inquiry. In addition to the proposed financial terms, the response indicated that BANC ONE's underlying philosophy with acquisition partners is the "Uncommon Partnership," which includes the basic tenets of autonomy, centralized support, market diversity and balance and emphasis on superior products and services. The response further indicated that BANC ONE offered a competitive benefits package to its employees and looked to promote from within. BANC ONE emphasized its decentralized and local autonomy approach to management, which extends to loan decisions, enhanced customer service through new products, consolidation of certain back room and other service and support functions and continued investment in new technology, and encouragement of its affiliates to be involved in their respective communities through the use of local contractors, service providers and businesses and emphasis on community reinvestment products and services. MBHC's March 19, 1993 response to the Board's inquiry indicated that, in addition to the proposed financial terms, MID STATES would continue to operate under its existing management with certain back room and other service functions being merged into MBHC's existing banking operations in the Quad Cities area. The response emphasized a continued commitment to the Moline community in the form of new products and services and expanded and enhanced community reinvestment activities. As with BANC ONE, MBHC indicated that credit decisions and employee management decisions were delegated activities. The response indicated that MBHC intended to retain the current management and employees and that as an affiliate of MBHC, MID STATES' employees would be entitled to participate in training programs, career advancement opportunities and benefits programs. On March 26, 1993, the Committee met with Vedder, Price, Kaufman & Kammholz and DLJ in Chicago to discuss the two written responses. At the meeting, DLJ reviewed the financial terms of the response by each from MBHC and BANC ONE in detail with the Committee. MBHC's initial indication of interest contemplated a fixed exchange ratio without the protection of a "walk-away" right. A -13- walk-away right permits the seller in a merger to terminate the transaction if the buyer's stock price falls below a stipulated benchmark. Based on average trading prices of MBHC's common stock during the relevant period, MBHC's initial indication of interest represented a total aggregate value of approximately $29-$32 million. BANC ONE's initial indication of interest, included a floating exchange ratio which contemplated an upper and lower "collar," but no "walk-away" right. The collar would have set a minimum and maximum number of shares to be issued in the merger, depending on BANC ONE's stock price. Each of the proposed transactions would have resulted in tax-deferred gain or loss to MID STATES' shareholders. In addition, each of the indications of interest contained various additional terms and was subject to various additional conditions. Subsequent to the discussions with DLJ, the Committee met separately with representatives of the two interested parties to ascertain the specifics of their respective indications of interest regarding an affiliation with MID STATES. At the conclusion of these meetings, the Committee met again to evaluate the initial indications of interest. In evaluating the indications of interest, Committee members expressed concern about the possible adverse impact on management and employees and possible diminished customer satisfaction that could result from an affiliation with MBHC given that MBHC would likely operate First National as a branch of its existing bank in the Quad Cities area at such time as interstate branch banking became lawful. The Committee also noted that BANC ONE was more likely than MBHC to be able to offer an acceptable purchase price without suffering unacceptable dilution in earnings per share. The BANC ONE response also offered significantly higher dividends than currently provided by MID STATES and the prospects for continued growth of MID STATES as a financial institution. MBHC's indication of interest also offered such prospects. BANC ONE's perceived intention to continue to operate MID STATES as an independent entity was also given consideration. As a result of its evaluations, and with the assistance of DLJ, the Committee determined that BANC ONE was the preferred bidder due to its perceived ability to offer superior financial terms and the perception that from an operations, management style and overall business philosophy viewpoint, BANC ONE was a more attractive merger partner than MBHC. DLJ was instructed to proceed with negotiations with BANC ONE. On April 2, 1993, the Committee met to discuss the status of the BANC ONE negotiations. After extensive discussions, the Committee instructed DLJ to continue negotiations. DLJ reported back to the Committee on April 6, 1993 with BANC ONE's final proposed exchange ratio of 2.917 and a "walk-away" right for MID STATES if the market price of BANC ONE's stock was below $41.60 on the Effective Date. After lengthy discussion, during which DLJ presented information regarding comparative transactions, the Committee determined that it was appropriate to present the financial terms and conditions of BANC ONE's indication of interest to the Board of Directors with a recommendation that the Board vote to approve the financial terms and conditions of BANC ONE's indication of interest subject to negotiation of certain outstanding issues. During the period immediately following the April 2, 1993 Committee meeting, DLJ again contacted MBHC and offered it the opportunity to increase the financial terms of its initial indication of interest. At such time, MBHC declined to do so. -14- A special meeting of the Board of Directors was held on April 17, 1993 to consider the BANC ONE merger proposal set forth in the first draft of the Merger Agreement dated April 13, 1993. At such meeting, DLJ made a presentation to the MID STATES Board of Directors concerning the expected effects of the proposed affiliation with BANC ONE. Vedder, Price, Kaufman & Kammholz then reviewed in detail with the Board its duties under Delaware law and the proposed Merger Agreement presented by BANC ONE. Vedder, Price, Kaufman & Kammholz concluded its presentation by indicating certain issues that required additional negotiation. After significant discussion, the MID STATES' Board of Directors authorized Mr. Robinson, with the assistance of DLJ and Vedder, Price, Kaufman & Kammholz, to attempt to negotiate a final definitive agreement with BANC ONE. On May 24, 1993, MID STATES' Board of Directors met with Vedder, Price, Kaufman & Kammholz and DLJ to consider the revised merger proposal and proposed form of Merger Agreement which had been negotiated between the parties and their representatives. At the meeting, DLJ made a detailed presentation regarding the proposed business combination and discussed a number of valuation considerations followed by a detailed presentation by Vedder, Price, Kaufman & Kammholz discussing the proposed Merger Agreement and the results of the negotiations with BANC ONE's representatives. After a presentation and recommendation by the Committee and receipt of an oral opinion from DLJ that BANC ONE's proposal was fair, from a financial point of view, to MID STATES' shareholders, the MID STATES' Board unanimously approved the form of Merger Agreement, Benefits Agreement and Separation Assistance Plan between MID STATES and BANC ONE and authorized its execution with such additional changes, modifications and amendments as were deemed necessary or appropriate by Mr. Robinson. Final modifications were made to the Merger Agreement as a result of negotiations between legal counsel for BANC ONE and Vedder, Price, Kaufman & Kammholz and it was executed by the respective parties on May 25, 1993. Prior to the opening of business on May 26, 1993, MID STATES and BANC ONE issued a joint press release announcing the execution of the Merger Agreement. BANC ONE and MID STATES began the process of obtaining necessary approvals. All regulatory approvals required prior to the merger were obtained. A special meeting of shareholders of MID STATES was originally scheduled for January 26, 1994 for the purpose of MID STATES shareholders approval of the Merger Agreement. The Board of Directors of MID STATES had unanimously recommended the merger to the shareholders and urged them to vote in favor of the proposed merger in the prospectus and proxy statement dated December 21, 1993 delivered to the shareholders of MID STATES in connection with that special meeting (the "December 21 Proxy"). However, the Merger Agreement contained a provision permitting MID STATES to terminate the Merger Agreement if during the January 11-24, 1994 evaluation period (during which the market price for BANC ONE's common stock was averaged), the average price of BANC ONE Common Stock (the "Evaluation Period Price") was below $37.82, which is a merger value equivalent of $102.96 per share of MID STATES Common Stock. This right to terminate is the so-called "walk-away" provision. In fact, the Evaluation Period Price was $33.43. The Board of Directors had stated in the December 21 Proxy that it did not intend -15- to waive the walk-away provision. Also, DLJ had, at the Board of Director's request, specifically excluded from their fairness opinion dated December 21, 1993 (the "December 21 opinion") the situation where the Evaluation Period Price was below $37.82. The December 21 opinion was a major supporting factor for the Board of Director's original recommendation in favor of the merger. During the period immediately prior to January 26, DLJ on behalf of MID STATES requested that BANC ONE increase the exchange ratio so as to bring the value of BANC ONE shares to be received in the merger in respect to each share of MID STATES Common Stock to or above $102.96 at the closing. BANC ONE declined, but indicated a strong desire to consummate the merger and a willingness to negotiate terms other than the exchange ratio. On January 26, 1994, the Board of Director's chose to cancel the scheduled special meeting without voting on the merger so as to allow for further discussion with BANC ONE with a view to finding a basis for completion of the transaction. This was done because the Board of Directors was, and is, committed to the proposition that a merger with BANC ONE is in the best interest of MID STATES, its shareholders, employees, customers and depositors, as well as the Quad Cities community. For these reasons and the reasons set forth below under "Merger Recommendations and Reasons for Transaction" (the "pertinent reasons") the Board of Directors chose not to exercise the walk-away provision at such time. MID STATES shareholders were informed of these events in a letter dated January 26, 1994. On February 22, 1994 BANC ONE and MID STATES entered into the First Amendment to the Merger Agreement. The First Amendment contained the following provisions: 1. MID STATES agreed that it would, conditionally, resolicit the MID STATES shareholders to approve the merger and in doing so would inform the shareholders that the MID STATES Board of Directors intends to proceed with the merger even if the BANC ONE share value equivalent is less than $102.96. The relevant conditions are: (a) that MID STATES financial advisors opine that the exchange ratio is fair to the MID STATES shareholders from a financial point of view, disregarding the fact that the BANC ONE Evaluation Period Price was below $37.82 ($102.96 per MID STATES share of Common Stock merger value equivalent) as described above and might be below such amount at the closing of the merger [MID STATES intended to obtain a new fairness opinion from DLJ and to obtain a concurring "second opinion" from The Chicago Corporation ("TCC"), an investment banking firm, as to the fairness of the exchange ratio to the MID STATES shareholders]; (b) that these fairness opinions remain in effect at the closing of the merger; and (c) that the shareholders of MID STATES approve the Merger Agreement with the knowledge that the Board of Directors intends to proceed with the merger on the terms and conditions described above. 2. MID STATES and BANC ONE agreed that MID STATES' right to terminate the Merger Agreement based upon the walk-away provision was amended so that MID STATES could unilaterally terminate the Merger Agreement if it could not obtain the necessary fairness opinions or any other cause made it probable that the merger could not be consummated prior to May 1, 1994, the "outside date" for completion of the Merger Agreement. -16- 3. BANC ONE agreed to reimburse MID STATES for one-half of its out-of-pocket expenses (legal, financial advisory, accounting, etc.) incurred after January 25, 1994 in connection with the merger -- whether or not the transaction is consummated. During mid-February DLJ on behalf of MID STATES began discussions with BANC ONE concerning the need for BANC ONE to increase the exchange ratio/merger consideration so as to permit DLJ and TCC to issue their fairness opinions. During this time, the Board of Directors determined that, if the merger with BANC ONE could not be accomplished at this time, the best course for MID STATES currently is to remain independent. Therefore, the MID STATES' Board instructed management and DLJ not to solicit or respond to inquiries from other possible interested parties for MID STATES, including MBHC, the party from which MID STATES received an indication of interest for a possible merger with MID STATES in March, 1993. On March 11, 1994 BANC ONE offered to increase the exchange ratio from 2.7225 BANC ONE common shares (as adjusted to account for BANC ONE's 10% stock dividend of March 4, 1994) to each share of Common Stock of MID STATES to 2.917 shares. BANC ONE and MID STATES further agreed to extend the termination date under the Merger Agreement to July 1, 1994 so as to enable sufficient time to resolicit the shareholders of MID STATES. At a MID STATES Board of Director's Meeting on March 28, 1994 the Board of Directors agreed to ratify the Second Amendment to the Merger Agreement which encompassed these two new terms and received the fairness opinions of its two financial advisors, DLJ and TCC. Based upon these reports and the increased exchanged ratio, the Board of Directors once again, unanimously, recommends the merger to the shareholders, and urges shareholder approval and the adoption of the Merger Agreement, as amended. Merger Recommendation and Reasons for Transaction - ------------------------------------------------- The terms of the Merger and the Merger Agreement, including the Exchange Ratio, were the result of arms length negotiations between MID STATES and BANC ONE and their respective representatives. In the course of reaching its decision to approve the Merger Agreement, the Board of Directors of MID STATES consulted with its legal and financial advisors as well as with management of MID STATES, and, without assigning any relative or specific weights, considered numerous factors, including but not limited to the following: (1) That a business combination with a larger bank holding company, such as BANC ONE, would provide both greater short-term and long-term value to MID STATES' shareholders than other alternatives available and would enhance MID STATES' competitiveness and its ability to serve its depositors, customers, and the communities in which it operates; (2) BANC ONE's record of fair treatment of employees of acquired institutions and outstanding record of community services and support; (3) BANC ONE's significant long-term experience in integrating the operations of banks and bank holding companies; -17- (4) The economic conditions and prospects for the market in which MID STATES operates, and competitive pressures in the financial services industry in general and the banking industry in particular; (5) That the Merger offered MID STATES' shareholders the prospect for substantially higher dividends, a higher current trading value for their shares, and better prospects for future growth than if MID STATES were to remain independent; (6) The bank regulatory environment in general; (7) The business, results of operations, asset quality and financial condition of BANC ONE, the future growth prospects of BANC ONE and MID STATES following the Merger, and the potential synergies and cost savings expected to be realized from the Merger; and (8) the presentations of MID STATES' financial advisors, DLJ and TCC, and the opinions rendered by DLJ and TCC to the effect that the Exchange Ratio was fair, from a financial point of view, to the holders of MID STATES Common Stock. See "Merger-Opinions of Investment Bankers." MID STATES' Board of Directors believes that the affiliation with BANC ONE will result in a competitively stronger combined entity with increased financial and human resources which will lead to enhanced financial performance and a larger and more geographically diverse banking operation. As of ______________, 1994, the directors and executive officers of MID STATES, together with their affiliates and associates, as a group, were entitled to vote approximately 160,000 shares of MID STATES Common Stock representing approximately 51% of the shares outstanding. These persons will be entitled to receive the same consideration for their shares as any other MID STATES shareholder upon approval of the Merger. MID STATES believes that all of the directors' and executive officers' shares will be voted in favor of the Merger. After the Merger, MID STATES' directors and executive officers will own less than 1% of the shares of BANC ONE Common Stock outstanding. MID STATES' BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE MERGER AGREEMENT BE APPROVED BY THE SHAREHOLDERS OF MID STATES. BANC ONE believes that the affiliation of MID STATES with BANC ONE and the acquisition of First National thereby will provide BANC ONE with a presence in the Moline, Illinois area and an expansion of BANC ONE's customer base and assets. Such expansion will provide BANC ONE with the opportunity to realize increased economies of scale while serving new customers with the expertise and assistance of the capable and experienced staff of First National. Opinions of Investment Bankers - ------------------------------ Opinion of Donaldson, Lufkin & Jenrette Securities Corporation The MID STATES Board retained DLJ, among other things, to advise it as to the fairness of the consideration to be received by the shareholders of MID STATES pursuant to the terms of the Merger Agreement. -18- DLJ is a nationally recognized investment banking firm regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions. The MID STATES Board selected DLJ on the basis of, among other things, its perceived expertise in merger and acquisition transactions and its familiarity with the most likely potential merger partners for MID STATES and the regional banking industry. DLJ has rendered a written opinion to the MID STATES Board to the effect that the Exchange Ratio is fair, from a financial point of view, to the holders of MID STATES Common Stock. DLJ's opinion is attached hereto as Exhibit A. MID STATES' shareholders are encouraged to read the DLJ opinion in its entirety. DLJ's opinion is directed to the Board of Directors of MID STATES only and is directed only to the Exchange Ratio and does not constitute a recommendation to any MID STATES shareholder as to how such shareholder should vote at the MID STATES Special Meeting of Shareholders. For purposes of its opinion and in connection with its review of the proposed transaction, DLJ, among other things: (a) reviewed the Merger Agreement, as amended, and the Prospectus and Proxy Statement; (b) reviewed certain publicly available financial statements both audited and unaudited, for MID STATES and BANC ONE; (c) reviewed certain financial statements and other financial and operating data concerning MID STATES and BANC ONE prepared by their respective managements; (d) reviewed certain financial projections of MID STATES and BANC ONE, both on a stand-alone and on a combined basis, prepared by their respective managements; (e) discussed certain aspects of the past and current business operations, results of regulatory examinations and actions, financial condition and future prospects of MID STATES and BANC ONE with certain members of the management of MID STATES and BANC ONE; (f) reviewed reported market prices and historical trading activity of MID STATES Common Stock and BANC ONE Common Stock; (g) reviewed certain aspects of the financial performance of MID STATES and BANC ONE Common Stock and compared such financial performance of MID STATE and BANC ONE, together with the stock market data relating to MID STATES and BANC ONE, with similar data available for certain other financial institutions and certain of their publicly traded securities; (h) reviewed the financial terms, to the extent publicly available, of certain recent business combinations involving other financial institutions; (i) participated in discussions and negotiations among representatives of MID STATES and BANC ONE and their financial and legal advisors; and (j) conducted such other studies, analyses and examinations as DLJ deemed appropriate. DLJ relied upon and assumed without independent verification the accuracy and completeness of all of the financial and other information provided to it by MID STATES, BANC ONE and their respective representatives and the publicly available information reviewed by DLJ. DLJ also relied upon the managements of both MID STATES and BANC ONE as to the reasonableness and achievability of the financial and operating forecasts provided to DLJ (and the assumptions and basis therefor). In that regard, DLJ assumed that such forecasts reflect the best available estimates and judgments of such respective managements and that such projections and forecasts will be realized in the amounts and in the time period currently estimated by the managements of both MID STATES and BANC ONE. 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 -19- MID STATES and BANC ONE at December 31, 1993 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 did not conduct a physical inspection of any of the properties or facilities of MID STATES or BANC ONE, nor did DLJ make any independent evaluation or appraisal of the assets, liabilities or prospects of MID STATES or BANC ONE, was not furnished with any such evaluation or appraisal and did not review any individual credit files. DLJ also assumed that the Merger is, and will be, in compliance with all laws and regulations that are applicable to MID STATES and BANC ONE. DLJ was informed by MID STATES and assumed for purposes of its opinion that the Merger will be recorded as a pooling of interests under generally accepted accounting principles. Prior to rendering its opinion dated _____________, 1994 to the MID STATES Board, DLJ rendered an oral opinion to the Board of March 28, 1994. See "MERGER/Background of Transaction" for discussion of the events preceding DLJ's rendering of its oral opinion. Set forth below is a brief summary of the analyses performed by DLJ in reaching its March 28, 1994 oral opinion. Stock Trading History. DLJ examined the history of trading prices and volume for MID STATES Common Stock (to the extent known by MID STATES management and conveyed to DLJ) and BANC ONE Common Stock and the relationship between the movements of such common stock prices to prices in the Standard & Poor's Regional Bank Index, the BANC ONE Peer Group (as defined below) and the MID STATES Peer Group (as defined below). Discounted Cash Flow Analysis. Using discounted cash flow analysis, DLJ estimated the future dividend streams that MID STATES could produce over the five years ending December 31, 1998, assuming a minimum required tangible equity level of 6% of tangible total assets, if MID STATES performed in accordance with management's forecast. DLJ also estimated the terminal value of MID STATES' common equity as of December 31, 1998, by applying a range of multiples to MID STATES' projected 1998 earnings. The dividend streams and terminal value were discounted to present values using discount rates ranging from 11% to 15%, which reflect different assumptions regarding the required rates of return of holders and prospective buyers of MID STATES Common Stock. The range of present values per share of MID STATES Common Stock resulting from this analysis was $78.75 to $98.20. Comparison with Selected Companies. DLJ compared selected financial ratios for MID STATES to the corresponding ratios of ANB Corporation; Independent Bank Corporation; Northwest Illinois Bancorp, Inc.; Princeton National Bancorp; and Premier Financial Services, Inc. (the "MID STATES Peer Group"), and for BANC ONE to the corresponding ratios of Boatmen's Bancshares, Inc.; Comerica Incorporated; First Bank System, Inc.; First of America Bank Corporation; Firstar Corporation; NBD Bancorp, Inc.; Norwest Corporation; Fifth Third Bancorp; Huntington Bancshares Incorporated; National City Corporation; Old Kent Financial Corporation; and Society Corporation (the "BANC ONE Peer Group"). Such ratios included the regulatory "leverage ratio," return on average total assets, return on average common equity, loan loss reserve to non-performing loans (defined as non-accrual loans, loans 90 days of more past due but still accruing interest and restructured loans) and non-performing assets (defined as non-performing loans plus other real estate -20- owned) to total loans plus other real estate owned, market price to latest twelve months' ("LTM") earnings per share ("EPS") and market price to book value per share. All ratios were based on financial data at or for the twelve months ended December 31, 1993. Market prices as of March 22, 1994 were used for all companies except MID STATES, for which the last sales price known to MID STATES management prior to announcement of the Merger Agreement was used. DLJ compared the mean values for each of such ratios for the MID STATES Peer Group with the corresponding ratio for MID STATES. This analysis showed that the MID STATES Peer Group had a mean leverage ratio of 8.9% as compared with 10.5% for MID STATES; a mean return on average assets of 1.18%, as compared with 1.08% for MID STATES; a mean return on average common equity of 12.0%, as compared with 10.5% for MID STATES; a mean ratio of loan loss reserve to non-performing loans of 192%, as compared with 194% for MID STATES; a mean ratio of non-performing assets to loans plus other real estate owned of 1.15%, as compared with 0.65% for MID STATES; a mean ratio of market price to LTM EPS of 10.9 times, as compared with 6.6 times for MID STATES; and a mean ratio of market price to book value per share of 1.24 times, as compared with 0.67 times for MID STATES. DLJ also compared the mean values for each of such ratios for the BANC ONE Peer Group with the corresponding ratio for BANC ONE. This analysis showed that the BANC ONE Peer Group had a mean leverage ratio of 7.66% as compared with 8.67% for BANC ONE; a mean return on average assets of 1.37%, as compared with 1.50% for BANC ONE; a mean return on average common equity of 16.8%, as compared with 17.1% for BANC ONE; a mean ratio of loan loss reserve to non-performing loans of 305%, as compared with 224% for BANC ONE; a mean ratio of non-performing assets to loans plus other real estate owned of 1.09%, as compared with 1.12% for BANC ONE; a mean ratio of market price to LTM EPS of 11.1 times, as compared with 11.4 times for BANC ONE; and a mean ratio of market price to book value per share of 1.78 times, as compared with 1.87 times for BANC ONE. Analysis of Selected Merger Transactions. DLJ reviewed selected mergers announced from January 1, 1992 through March 22, 1994 involving acquisitions of banks or bank holding companies headquartered in Illinois or states contiguous to Illinois with assets between $100 million and $300 million. Specifically, DLJ reviewed the mergers involving the following pairs of institutions: AMCORE Financial/First State Bancorp; Norwest Corporation/La Porte Bancorp; Old National Bancorp/Indiana State Bank of Terre Haute; Chemical Financial Corporation/Key State Bank; Citizens Banking Corporation/Royal Bank Group; Mercantile Bancorporation/Mount Vernon Bancorp; National City Bancshares/Lincolnland Bancorp; National City Bancshares/Sure Financial Corporation; F&M Bancorporation/First National Financial Corporation; Norwest Corporation/Financial Concepts Bancorp; Old National Bancorp/DCB Corporation; CNB Bancshares, Inc./South Central Illinois Bancorp; Firstbank of Illinois Corporation/First Highland Corporation; Society Corporation/First of America Bank - Monroe; and Old National Bancorp/Palmer Bancorp, Inc. DLJ calculated the multiples of the offer value over the LTM EPS and book value per share of the acquired company in each transaction. The analysis yielded a range of multiples of LTM EPS of 7.7 times to 38.6 times, with a mean of 16.9 times and a median of 15.4 times; and a range of multiples of book value of 1.00 times to 2.23 times, with a mean of 1.66 times and a median of 1.69 times. -21- DLJ compared these multiples with the corresponding multiples for the Merger, valuing the Exchange Ratio based on Banc One's closing price as of March 25, 1994. In calculating the multiples for the Merger, DLJ used the last sale price of MID STATES Common Stock known to MID STATES management prior to announcement of the Merger Agreement, EPS for the year ended December 31, 1993, and book value per share as of December 31, 1993. This analysis indicated that the value of the Exchange Ratio represented multiples of MID STATES' market price per share, EPS and book value per share of 2.21 times, 14.5 times and 1.47 times, respectively. No company or transaction used in the above analyses as a comparison is identical to MID STATES, BANC ONE 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. In connection with its written opinion dated as of _____________, 1994, 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. Although the summary set forth above does not purport to be a complete description of the analyses performed by DLJ, the material analyses performed by DLJ in rendering its opinion have been summarized above. However, the preparation of a fairness opinion is not necessarily susceptible to partial analysis or summary description. DLJ believes that its analyses and the summary set forth above must be considered as a whole and that selecting portions of its analyses, without considering all factors and analyses, would create an incomplete view of the process underlying the analyses by which DLJ reached its opinions. In addition, DLJ may have given various analyses more or less weight than other analyses, but no analysis was given materially more weight than any other analysis. Also, DLJ may have deemed various assumptions more or less probable that other assumptions, so that 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 MID STATES 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 MID STATES and BANC ONE. 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, from a financial point of view, of the Exchange Ratio. The analyses do not purport to be appraisals or to reflect the prices at which a company might actually be sold or the prices at which any securities may trade at the present time or at any time in the future. In addition, as described above, DLJ's opinion to the MID STATES Board was one of many factors taken into consideration by the MID STATES Board in making its determination to approve the Merger Agreement. Pursuant to the terms of a letter agreement dated November 6, 1992 (the "Engagement Letter"), for DLJ's services in connection with the Merger,including the rendering of its original fairness opinion, MID STATES -22- (i) has paid DLJ $175,000, and (ii) has agreed to pay DLJ an amount equal to 1.0% of the first $34 million aggregate amount of consideration received by MID STATES' shareholders (treating any options, warrants or other rights of conversion as outstanding), plus 5.0% of the aggregate amount received by MID STATES' shareholders in excess of $34 million and an additional 5.0% of the aggregate amount received in excess of $37 million, less the amount paid by MID STATES pursuant to clause (i) above. Mid States has also agreed to pay DLJ $150,000 for its second fairness opinion (Exhibit A hereto); such amount is not --------- offset against the fee described in clause (ii) above. Because the major portion of the aggregate consideration to be received by MID STATES' shareholders is to be paid in the form of securities, the Engagement Letter provides that the value of such securities, for purposes of calculating the fee payable to DLJ, will be determined by the last sale price for such securities on the last trading day thereof prior to consummation of the Merger. Such fee shall be payable in cash upon consummation of the Merger. MID STATES has also agreed to reimburse DLJ for all reasonable out-of-pocket expenses, including reasonable fees and disbursements of legal counsel, and has agreed to indemnify DLJ against certain liabilities. The DLJ fee is an obligation of MID STATES, which is payable upon the consummation of the Merger, and will have no impact on the consideration to be received by each MID STATES shareholder. DLJ may, in the ordinary course of its business, trade securities of MID STATES and BANC ONE for its own account or for the accounts of customers and thus may hold long or short positions in such securities at any time. Opinion of The Chicago Corporation The Chicago Corporation ("TCC") has delivered its written opinion to MID STATES Board of Directors that, based upon and subject to the various considerations set forth in the opinion dated _____________________, 1994, the Exchange Ratio being received by MID STATES shareholders in the merger is fair from a financial point of view to MID STATES' shareholders as of the date of its opinion. The Board of Directors has carefully and thoroughly reviewed the materials and presentations of TCC and has made inquiries of TCC personnel as to the methodology and the assumptions utilized in its analysis. No limitations were imposed by MID STATES' Board of Directors upon TCC with respect to the investigations made or procedures followed by it in rendering its opinion. The full text of TCC's opinion, which sets forth assumptions made, matters considered and limitations on the review undertaken, is attached hereto as Exhibit B. MID STATES shareholders are urged to read the opinion in its - --------- entirety. TCC's opinion is directed only to the Exchange Ratio to be received in the merger and does not constitute a recommendation to any MID STATES shareholder as to how such shareholder should vote at the Special Meeting. The summary of TCC's opinion set forth in this Prospectus and Proxy Statement is qualified in its entirety by reference to the full text of such opinion attached hereto as Exhibit B. - --------- -23- MID STATES retained TCC as a financial advisor on the basis of the firm's reputation, experience and familiarity with the banking industry and with merger and acquisition transactions. As part of its investment banking business, TCC is regularly engaged in the valuation of businesses in connection with mergers and acquisitions, negotiated underwritings, secondary distribution of listed and unlisted securities, private placements and valuations for corporate and other purposes. During the course of its engagement, and as a basis for arriving at its opinion, TCC reviewed and analyzed material bearing upon the financial and operating condition of MID STATES and BANC ONE and material prepared in connection with the merger, as follows: (i) the Merger Agreement, as amended; (ii) publicly available information concerning MID STATES and BANC ONE including among other things annual reports on form 10-KSB and 10-K, respectively, for each of the last five fiscal years ended; (iii) the nature and terms of recent sale and merger transactions involving financial institutions that TCC considered reasonably similar to MID STATES and BANC ONE in size, financial character, operating character, historical performance and geographic market; (iv) historical and current market data for MID STATES Common Stock and BANC ONE Common Stock and financial and other information provided to TCC by management of MID STATES and BANC ONE, and (v) the Registration Statement and this Prospectus and Proxy Statement. These analyses are discussed in more detail below. In addition, TCC conducted meetings with members of senior management of MID STATES and BANC ONE for the purpose of reviewing the future prospects of MID STATES and BANC ONE. TCC evaluated the pro forma ownership of BANC ONE Common Stock by MID STATES shareholders, relative to the pro forma contribution of MID STATES' assets, liabilities, equity and earnings of the proposed combined company. TCC also took into account its experience in other transactions, as well as its knowledge of the banking industry and its general experience in securities valuations. In rendering its opinion, TCC assumed without independent verification, the accuracy and completeness of the financial and other information and representations provided to it by MID STATES and BANC ONE. The following is a summary of all material terms considered and the analyses performed by TCC in rendering its opinion during the course of its engagement in connection with its ______________, 1994 opinion. Net Present Value Analysis. TCC prepared a net present value analysis which indicated theoretical values for MID STATES based on return on average assets ranging between 1.00% and 1.50% and asset growth rates ranging between 2.00% and 10.00%. The results of this analysis indicated a range of theoretical values for MID STATES between $68.05 per share (1.00% return on average assets; 2.00% asset growth rate) and $138.52 per share (1.50% return on average assets; 10.00% asset growth rate). At a return on average assets ratio of 1.10%, which approximated MID STATES historical performance, theoretical values ranged from $74.85 per share (2.00% asset growth rate) to $101.58 per share (10.00% asset growth rate). At an asset growth rate of 4.00%, which approximated MID STATES' historical performance, theoretical values ranged from $73.55 per share (1.00% return on average assets) to $110.32 per share (1.50% return on average assets). Contribution Analysis. TCC prepared a contribution analysis showing the percentages of assets, deposits, common equity, and 1992 and 1993 net income and estimated 1994 and 1995 net income contributed to the combined company on -24- a pro forma basis by MID STATES and BANC ONE, and compared these percentages to the pro forma ownership of BANC ONE. This analysis showed that MID STATES, as of December 31, 1993, would contribute 0.24% of pro forma consolidated total assets, 0.27% of deposits, 0.29% of common equity, 0.23% of 1992 and 0.18% of 1993 net income and 0.19% of estimated 1994 and 0.18% estimated 1995 net income. Based on the BANC ONE offer, shareholders of MID STATES would own approximately 0.24% of the pro forma common shares outstanding of BANC ONE. Comparable Transaction Analysis. TCC reviewed selected comparable merger and acquisition transactions. The following merger transactions were reviewed based on publicly available data (the acquiror is named first and underlined, followed by the seller): AMCORE Financial, Inc., First State Bancorp of Princeton; First Banks, ---------------------- ----------- Inc., First FSB of Proviso Township; Mercantile Bancorporation, Inc., Mount ---- ------------------------------- Vernon Bancorp; CNB Bancshares, Inc., South Central Illinois Bancorp; Old -------------------- --- Kent Financial Corporation, University Financial Corporation; Old National -------------------------- ------------ Bancorp, Palmer Bancorp, Inc.; BANC ONE Corporation, Jefferson Bancorp, ------- -------------------- Inc.; AMCORE Financial, Inc., Dixon Bancorp, Inc.; Mercantile ---------------------- ---------- Bancorporation, Inc., Old National Bancshares; Old National Bancorp, SBT -------------------- -------------------- Bancorp, Inc.; and AMCORE Financial, Inc., Central of Illinois, Inc. ---------------------- Transactions were selected on the basis of comparability of absolute transaction value and the perceived comparability of the markets served by the acquired institutions to those of MID STATES. For the comparable transactions, the multiple of price to trailing 12 months earnings ranged from 8.2 to 22.5 with an average of 13.0. At March 25, 1994, the BANC ONE proposed purchase price represented a multiple of price to trailing 12 months earnings of 14.5. For the comparable transactions, the multiple of purchase price to book value range from 0.95 to 1.95 with an average of 1.43. The BANC ONE offer to MID STATES represented a multiple of price to December 31, 1993 book value of 1.47. Financial Implications to MID STATES Shareholders. TCC prepared an analysis of the financial implications of the BANC ONE offer to a MID STATES shareholder. This analysis indicated that on a pro forma equivalent basis a shareholder of MID STATES would achieve an increase in earnings per share, a decrease in per share dividends and an increase in book value per share as a result of the consummation of the merger, assuming a dividend payout ratio significantly higher than MID STATES' historical payout ratio. Another analysis of the financial implications of the BANC ONE offer kept MID STATES' dividend payout ratio in line with historical dividend payouts. This analysis indicated that on a pro forma equivalent basis a shareholder of MID STATES would achieve an increase in earnings per share, an increase in dividends per share and a decrease in book value per share. Comparative Shareholder Returns. TCC presented an analysis of comparative theoretical shareholder returns for several scenarios, including MID STATES remaining independent, MID STATES being acquired in 1994 and MID STATES being acquired in 1997. This analysis, which was based on the net present value of projected dividend streams and projected 1997 common stock valuations (using current price-to-trailing twelve month earnings multiples), indicated total shareholders returns of 11.4% for MID STATES remaining independent, 31.7% for -25- the merger in 1997 and 38.2% based on the acceptance of an offer in 1994. TCC also prepared an analysis of the possible pricing of a merger transaction with certain other Midwest-based bank holding companies using estimated 1994 net income for MID STATES and stock prices for selected companies and assuming no earnings-per-share dilution for the buyer. The holding companies reviewed included: AMCORE Financial, Inc.; BANC ONE; Commerce Bancshares, Inc.; First Bank System, Inc.; First Midwest Bancorp; First of America Bank Corp.; Firstbank of Illinois Co.; Firstar Corporation; Hawkeye Bancorporation; Magna Group, Inc.; Mercantile Bancorporation, Inc.; Northwest Illinois Bancorp; and Norwest Corporation. Given the assumptions, the analysis indicated that these companies could pay a high of $107.28 per share, a low of $66.12 per share and an average price of $81.72 per share for all of the shares of MID STATES. A second analysis was conducted under the aforementioned methodology with the 1994 net income of MID STATES to include a tax-effected 15% reduction in operating expenses. Under that assumption the previously listed companies could pay a high of $131.87 per share, a low of $81.27 per share and an average price of $100.45 per share for all the shares of MID STATES. Comparable Company Analysis. TCC compared the market price, market-to-book value and price-to-earnings multiples of BANC ONE Common Stock with the individual market multiples and averages of the following selected comparable companies which it deemed to be reasonably similar to BANC ONE in size, financial character, operating character, historical performance and geographic market: BANC ONE; BankAmerica Corporation; Boatmen's Bancshares, Inc.; Citicorp; Comerica Incorporated; First Bank System, Inc.; First Chicago Corporation; First Interstate Bancorp; First of America Bank Corp.; First Union Corporation; Fleet Financial Group; KeyCorp; Mellon Bank Corporation; NBD Bancorp, Inc.; National City Corporation; NationsBank Corporation; Norwest Corporation; and PNC Bank Corp. This analysis indicated that BANC ONE Common Stock sold at a price of 1.87 times the December 31, 1993 book value and the comparables sold at an average price of 1.56 times book value. BANC ONE's Common Stock sold at a multiple of price to trailing 12 months earnings of 11.2, while the comparable group average price-to-earnings multiple was 10.0. The summary of TCC's analysis set forth above is a fair summary thereof but does not purport to be a complete description of the presentations by TCC to the MID STATES Board of Directors. TCC believes that its analysis and the summary set forth above must be considered as a whole and that selecting portions of analysis, without considering all factors and analyses, could create an incomplete view of the process by which a fairness opinion is rendered. In connection with its analyses, TCC assumed that there would be no material adverse change in general economic, business, market financial and regulatory conditions, all of which are beyond the control of BANC ONE and MID STATES. The analyses performed by TCC are not necessarily indicative of actual values of future results, which may be significantly more or less favorable than suggested by such analyses. Fees and Indemnification. The fees due to TCC under the Agreement between TCC and MID STATES (the "TCC Agreement") were payable by MID STATES as follows: $25,000 at the date of execution of TCC Agreement and $25,000 upon delivery of a verbal opinion conclusions and $50,000 at the time a written opinion is -26- delivered for the use with this Prospectus and Proxy Statement. The TCC fee will have no impact on the consideration to be received by each MID STATES' shareholder. In addition to such fees, MID STATES has agreed to reimburse TCC for all reasonable out-of-pocket expenses and will pay to TCC a fee of $1,500 per day for preparation and court appearances with regard to the fairness opinion. MID STATES has also agreed to indemnify TCC, its officers, directors, agents, employees and certain controlling persons from and against any losses, claims, damages and liabilities in connection with or arising out of the transactions or services referred to in TCC Agreement. This indemnification is subject to certain conditions and procedures set forth in an indemnification agreement between MID STATES and TCC. Interest of Certain Persons in the Merger After consummation of the Merger, MID STATES will be merged into Banc One Illinois and the separate corporate existence of MID STATES will cease. It is anticipated that Mr. Thomas H. Robinson, President, CEO and a director of MID STATES and First National, will join the Board of Directors of Banc One Illinois. Following the Merger, First National will operate under the name Bank One, Quad Cities, N.A. and the present directors, officers and employees of First National will continue in the same capacities and one or more officers of Banc One Illinois may be added to the Board. MID STATES and First National entered into an employment agreement with Mr. Robinson on June 15, 1992 for the purpose of memorializing the continuation of the then effective employment terms and practices and to provide Mr. Robinson with a three-year employment guarantee in the event of a change in control of MID STATES. The employment agreement was amended and restated as of May 17, 1993 to clarify the terms of the agreement and certain procedural matters thereunder and for the joint obligation of both MID STATES and First National for the compensation and benefits thereunder. Specifically, the agreement provides that Mr. Robinson's employment will be continued for a period of three years following a change in control on the terms at least as favorable as those in effect immediately prior to the change in control. If Banc One Illinois or First National terminates Mr. Robinson's employment during such three-year period, or if Mr. Robinson should resign during such period for "good reason" (defined to mean a significant change in Mr. Robinson's authority or duties, a reduction in the compensation or benefits required under the agreement, or a reasonable determination by him that he is unable to exercise such authorities or responsibilities as a result of the change in control), then Banc One Illinois and First National will be obligated to continue to pay Mr. Robinson his current base salary and the value of the incentive and retirement compensation to which he would have been entitled during the remainder of the three-year term and to continue to provide all medical, life and other insurance protections for such period. In the event that the payment of such salary and benefits results in the imposition upon Mr. Robinson of the excise tax applicable to certain excess parachute payments under the Code, the agreement provides that Mr. Robinson will be entitled to a supplemental payment equal to such excise tax, and all taxes imposed on such supplemental payment. The Merger will constitute a change in control for purposes of the agreement and Banc One Illinois has -27- agreed to assume the obligations of MID STATES under the agreement following the Merger. Mr. Robinson's annual base salary as of October 1, 1993 is $125,000. Although it is the intent of MID STATES and BANC ONE to continue to provide employment opportunities for employees of MID STATES and First National following the Merger, the Board of Directors of MID STATES, with BANC ONE's consent, has adopted a Separation Assistance Plan to provide separation pay to employees of MID STATES or First National in the event that a reduction in the work force of MID STATES or First National occurs within one year after the Merger. Under the Separation Assistance Plan, Banc One Illinois and First National will first attempt to provide employment alternatives for within the BANC ONE system for employees affected by the discontinuation of job positions or functions. If such alternatives are not possible, then the employee whose job position or function was discontinued shall be entitled to separation pay equal to one week's pay for each full year of service with MID STATES or First National, subject to a maximum of 26 weeks. Any employee who is a vice president shall be entitled to 26 weeks of separation pay, regardless of the employee's years of service. Mr. Robinson is not eligible to receive a benefit under the Separation Assistance Plan. Effect on Employee Benefits Pursuant to the Merger Agreement, BANC ONE covenants to comply with its agreements with respect to certain employee benefits sat forth in a letter agreement dated May 24, 1993 between BANC ONE and MID STATES (the "Benefits Agreement"). The Benefits Agreement provides that, upon the Merger or on such subsequent date as BANC ONE shall determine, BANC ONE will cause coverage under the various employee benefit plans and programs maintained by BANC ONE to be extended to the employees of MID STATES and First National. As a result, such employees will participate in, among other plans, the BANC ONE Retirement Plan, Supplemental Employees Retirement Plan, Profit Sharing and 401(k) Plan, Employee Stock Purchase Plan, and medical and life insurance programs. The service of such employees with MID STATES and First National will be recognized under the BANC ONE plans for purposes of determining eligibility for participation and vesting of benefits under the BANC ONE plans; service for purposes of measuring benefits earned under the BANC ONE plans will be measured from the date of the Merger. The employee benefit plans maintained by MID STATES and First National will be terminated or merged into the BANC ONE plans when the BANC ONE plans are extended to the MID STATES and First National employees, subject to the inclusion under the BANC ONE plans of certain benefits accrued during the calendar year in which the transition to the BANC ONE plans occur. Conditions to the Merger; Termination - ------------------------------------- Consummation of the Merger is subject to satisfaction of a number of conditions, including: (1) the receipt of all necessary approvals of the acquisition by governmental agencies and authorities, including the Federal Reserve and the Illinois Commissioner, and each of such approvals shall remain in full force and effect at the Effective Time; -28- (2) there being no change in the consolidated financial condition, aggregate net assets, shareholders' equity, business or operating results of MID STATES and First National, taken as a whole, or BANC ONE and its subsidiaries, taken as a whole, from March 31, 1993 to the Effective Time, that has had a material adverse effect; (3) compliance by MID STATES, BANC ONE and Banc One Illinois with their respective covenants and confirmation of their respective representations and warranties as set forth in the Merger Agreement, including the agreement of MID STATES that, except with the approval of BANC ONE or as otherwise permitted by the Merger Agreement, it will not (a) from March 31, 1993 to the Effective Time, pay any cash dividends; (b) effect any changes in connection with its equity capitalization; or (c) conduct its banking operations other than in the ordinary course of business; (4) approval of the Merger Agreement and the Merger by the requisite vote of shareholders of MID STATES Common Stock (see "MERGER--General" and "VOTING AND MANAGEMENT INFORMATION--Voting"); (5) receipt by MID STATES and BANC ONE of the legal opinion of MID STATES' counsel regarding the federal income tax consequences referred to under the caption "MERGER--Federal Income Tax Consequences"; (6) receipt by BANC ONE of an opinion from MID STATES' counsel and receipt by MID STATES of an opinion from counsel for BANC ONE and Banc One Illinois, which opinions are to be in the general form of those annexed to the Merger Agreement; (7) satisfaction by BANC ONE and MID STATES of the respective earnings tests set forth in the Merger Agreement or as otherwise agreed between the parties; (8) fractional share interests in BANC ONE Common Stock to be paid to former holders of MID STATES Common Stock in cash in the exchange (see "MERGER-Fractional Shares") and shares of BANC ONE Common Stock to which holders of MID STATES Common Stock would have been entitled as of the consummation of the Merger, but who have taken steps to perfect their rights as dissenting shareholders pursuant to applicable law, shall not exceed 10% of the maximum aggregate number of shares of BANC ONE Common Stock which could be issued as a result of the Merger; (9) the shares of BANC ONE Common Stock to be issued in exchange for MID STATES Common Stock shall have been listed on the NYSE; (10) receipt by BANC ONE of the written opinion of Coopers & Lybrand, independent certified public accountants, that the transaction contemplated by the Merger Agreement may be properly accounted for as a pooling-of-interests; -29- (11) the holders of all credit agreements on which MID STATES or any SUBSIDIARY is the maker, issuer or guarantor and which contain provisions which make the acquisition of MID STATES by or merger into another entity a condition of default or acceleration, shall have provided BANC ONE with a written waiver of all such provisions; (12) the total number of shares of MID STATES Common Stock issued and outstanding shall not be more than 311,560 shares; and (13) receipt by MID STATES of opinions from each of DLJ and TCC to the effect that, in the opinion of such firm, the consideration to be received as a result of the Merger is fair from a financial point of view to the holders of MID STATES Common Stock and such opinions shall not have been withdrawn prior to the Effective Time. The provisions of the Merger Agreement, including the foregoing conditions, may be waived at any time by the party which is entitled to the benefits thereof. However, after the shareholders of MID STATES have approved the Merger Agreement, MID STATES may only amend the Merger Agreement if, in the opinion of MID STATES' Board of Directors, such amendment will not have a material adverse effect on the benefits intended under the Merger Agreement for the shareholders of MID STATES. The Merger Agreement may be terminated at any time prior to the Effective Time of the Merger, whether before or after approval by the shareholders of MID STATES, by written notice from BANC ONE to MID STATES, or from MID STATES to BANC ONE, as the case may be, upon the occurrence of any of the following: (i) if any material condition to either party's obligations under the Merger Agreement is not satisfied or waived at the time or times contemplated thereby (each party's right to terminate under this clause (i) shall relate only to conditions to that party's obligations); (ii) in the event of a material breach by a party of any representation, warranty, condition or agreement contained in the Merger Agreement that is not cured within 30 days of the giving of notice to such party by the other party; or (iii) if the Merger shall not have been consummated on or before July 1, 1994. The Merger Agreement also may be terminated, and the Merger thereby abandoned, by the mutual consent of the Boards of Directors of MID STATES and BANC ONE at any time prior to the effective date of the Merger. MID STATES, by action of its Board of Directors, may elect to terminate the Merger Agreement, whether before or after approval of the Merger by the shareholders of MID STATES, by giving three (3) days written notice of such election to BANC ONE. If the Merger is not consummated other than by reason of a willful breach of any party to the Merger Agreement, MID STATES, BANC ONE and Banc One Illinois will each pay all of its own expenses incurred incident to such transaction, except for printing expenses which will be paid by BANC ONE. BANC ONE has also agreed to reimburse MID STATES for one-half of all legal and accounting fees and the expenses and fees of DLJ and TCC incurred in connection with the Merger after January 25, 1994. -30- Federal Income Tax Consequences - ------------------------------- The following is a summary of certain material U.S. federal income tax consequences of the Merger, including certain consequences to holders of MID STATES Common Stock who are citizens or residents of the United States and who hold their shares as capital assets. It does not discuss all tax consequences that may be relevant to MID STATES shareholders subject to special federal income tax treatment (such as insurance companies, dealers in securities, certain retirement plans, financial institutions, tax exempt organizations or foreign persons) or to MID STATES shareholders who acquired their shares of MID STATES Common Stock pursuant to the exercise of employee stock options or otherwise as compensation. The summary does not address the state, local or foreign tax consequences of the Merger, if any. As a condition to the closing, MID STATES and BANC ONE received the opinion of Vedder, Price, Kaufman & Kammholz, dated April 20, 1994 that, for federal income tax purposes: (1) The Merger will constitute a reorganization within the meaning of Section 368(a)(1)(A) and Section 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended; (2) No gain or loss will be recognized by Banc One Illinois or MID STATES by reason of the Merger; (3) No gain or loss will be recognized by the shareholders of MID STATES on the exchange of their shares of MID STATES Common Stock for shares of BANC ONE Common Stock, except as described below with respect to cash received pursuant to the exercise of statutory dissenters' rights or in lieu of fractional share interests; (4) The tax basis of the BANC ONE Common Stock (including fractional share interests) received by holders of MID STATES Common Stock will be the same as the tax basis of the MID STATES Common Stock surrendered in exchange therefor; and (5) The holding period of the BANC ONE Common Stock received by a holder of MID STATES Common Stock will include the period for which the MID STATES Common Stock exchanged therefor was held, provided the exchanged MID STATES Common Stock was held as a capital asset by such holder on the date of the exchange. A MID STATES shareholder who receives cash in lieu of a fractional share interest in BANC ONE Common Stock will be treated as having received the cash in redemption of the fractional share interest. The receipt of cash in lieu of a fractional share interest should generally result in capital gain or loss to the holder in an amount equal to the difference between the amount of cash received and the portion of the holder's tax basis in the MID STATES Common Stock allocable to the fractional share interest. Such capital gain or loss will be long-term capital gain or loss if the holder's holding period for the BANC ONE Common Stock received, determined as set forth above, is longer than one year. -31- A dissenting shareholder who receives cash in exchange for shares of MID STATES Common Stock will generally recognize capital gain or loss equal to the difference between the amount of cash received and the holder's tax basis in the shares exchanged. Such capital gain or loss will be long-term capital gain or loss if the holder has held the shares for more than one year as of the Effective Time of the Merger. No rulings from the Internal Revenue Service have been or will be sought by BANC ONE or MID STATES with respect to the federal income tax consequences of the Merger. The opinion of counsel to be obtained by BANC ONE and MID STATES will not be binding upon the Internal Revenue Service, nor will it preclude the Service from taking positions contrary to it. No rulings or opinions with respect to state or local tax consequences have been or will be sought by BANC ONE or MID STATES. THE INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS BASED ON THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (AND AUTHORITIES THEREUNDER) AS IN EFFECT ON THE DATE OF THIS PROSPECTUS AND PROXY STATEMENT, WITHOUT CONSIDERATION OF THE PARTICULAR FACTS OR CIRCUMSTANCES OF ANY SHAREHOLDER. SHAREHOLDERS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS WITH RESPECT TO THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER IN THEIR PARTICULAR SITUATIONS, AS WELL AS THE CONSEQUENCES UNDER ANY APPLICABLE STATE, LOCAL OR FOREIGN TAX LAWS. Conversion of Shares and Exchange of Certificates - ------------------------------------------------- Upon consummation of the Merger, the outstanding shares of MID STATES Common Stock will be converted into shares of BANC ONE Common Stock at the Exchange Ratio calculated as described under the caption "MERGER--Exchange Ratio." Except in the event that either MID STATES or BANC ONE shall declare a stock dividend or distribution upon or subdivide, split up, reclassify or combine its respective Common Stock or declare a dividend, or make a distribution, on its respective Common Stock in any security convertible into such Common Stock prior to the time the Merger becomes effective, no further adjustments will be made in the Exchange Ratio. However, in the event of such a transaction, appropriate adjustment will be made in the Exchange Ratio. The Exchange Ratio has been adjusted to reflect the effect of all stock splits and dividends. As soon as practicable after the Merger becomes effective, instructions and forms will be furnished to the shareholders of MID STATES for use in exchanging their MID STATES share certificates for certificates of BANC ONE Common Stock. If any certificate for shares of BANC ONE Common Stock is to be issued in a name other than that in which the certificate for shares of MID STATES Common Stock surrendered for exchange is registered, the certificate so surrendered must be properly endorsed or otherwise be in proper form for transfer and the person requesting such exchange must pay to BANC ONE or its transfer agent any applicable transfer or other taxes required by reason of the issuance of the certificate. Until so surrendered, certificates formerly representing shares of MID STATES Common Stock will be deemed for all purposes to evidence ownership of the number of shares of BANC ONE Common Stock into which such shares have been converted. Dividends and other distributions, if any, that become payable on -32- BANC ONE Common Stock pending exchange of certificates representing shares of MID STATES Common Stock will be retained by BANC ONE until surrender of such certificates, at which time such dividends and distributions will be paid, without interest. In addition, after the Effective Time the holders of certificates formerly representing shares of MID STATES Common Stock shall cease to have rights with respect to such shares (except such rights, if any, as holders of certificates representing MID STATES Common Stock may have as dissenting shareholders), and, except as aforesaid, their sole rights shall be to exchange such certificates for shares of BANC ONE Common Stock in accordance with the Merger Agreement. Fractional Shares - ----------------- No fractional shares of BANC ONE Common Stock will be exchanged for shares of MID STATES Common Stock. In lieu thereof, each shareholder of MID STATES having a fractional interest resulting from the exchange of MID STATES Common Stock for BANC ONE Common Stock will be paid by BANC ONE an amount in cash equal to the value of such fractional interest based upon the closing price of BANC ONE Common Stock on the NYSE on the fifth day immediately preceding the day on which the merger is consummated during which shares of BANC ONE Common Stock are traded on the NYSE as reported in The Wall Street Journal for NYSE ----------------------- Composite Transactions. Resales by Affiliates - --------------------- The shares of BANC ONE Common Stock issuable to MID STATES shareholders upon consummation of the Merger have been registered under the Securities Act, but such registration does not cover resales by affiliates of MID STATES ("Affiliates"). BANC ONE Common Stock received and beneficially owned by those MID STATES shareholders who are deemed to be Affiliates may be resold without registration as provided for by Rule 145 under the Securities Act, or as otherwise permitted. The term Affiliate is defined to include any person who, directly or indirectly, controls, or is controlled by, or is under common control with MID STATES at the time the Merger Agreement is submitted for approval by a vote of the shareholders of MID STATES Common Stock. Each Affiliate who desires to resell the BANC ONE Common Stock received in the Merger must sell such BANC ONE Common Stock either (i) pursuant to an effective registration statement under the Securities Act, (ii) in accordance with the applicable provisions of Rule 145 under the Securities Act or (iii) in a transaction which, in the opinion of counsel for such Affiliate or as described in a "no-action" or interpretive letter from the Staff of the Commission, in each case reasonably satisfactory in form and substance to BANC ONE, states that such resale is exempt from the registration requirements of the Securities Act. Rule 145(d) requires that persons deemed to be Affiliates resell their BANC ONE Common Stock pursuant to certain of the requirements of Rule 144 under the Securities Act if such BANC ONE Common Stock is sold within the first two years after the receipt thereof. After two years, if such person is not an affiliate of BANC ONE and BANC ONE is current in the filing of its periodic securities law reports, a former Affiliate of MID STATES may freely resell the BANC ONE Common Stock received in the Merger without limitation. After three years from the issuance of the BANC ONE Common Stock, if such person is not an affiliate of BANC ONE at the time of sale or for at least -33- three months prior to such sale, such person may freely resell such BANC ONE Common Stock, without limitation, regardless of the status of BANC ONE's periodic securities law reports. MID STATES has agreed to provide BANC ONE with a list of those persons who may be deemed to be Affiliates at the time of the Special Meeting. MID STATES will use its best efforts to cause each such person to deliver to BANC ONE prior to the Effective Time a written agreement to the effect that no sale will be made of any shares of BANC ONE Common Stock received in the Merger by an Affiliate of MID STATES except (i) in accordance with the Securities Act and (ii) if, as it expects to do, BANC ONE utilizes pooling-of-interests accounting in accounting for the Merger, until such time as BANC ONE shall first publish the financial results of at least 30 days of post-merger combined operations of MID STATES and BANC ONE, provided that BANC ONE shall publish such results not later than four months from the Effective Time. The certificates of BANC ONE Common Stock issued to Affiliates of MID STATES in the Merger may contain an appropriate restrictive legend, and appropriate stop transfer orders may be given to the transfer agent for such certificates. Accounting Treatment - -------------------- BANC ONE expects to account for the acquisition of MID STATES as a pooling-of-interests. COMPARATIVE RIGHTS OF SHAREHOLDERS ---------------------------------- Description of BANC ONE Stock - ----------------------------- General. The authorized capital stock of BANC ONE consists of 600,000,000 - ------- shares of BANC ONE Common Stock and 35,000,000 shares of Preferred Stock, without par value ("Preferred Stock"), divided into 10,000,000 shares of Class A Preferred Stock, 1,000,000 shares of Class B Convertible Preferred Stock ("Class B Preferred Stock") and 24,000,000 shares of Class C Preferred Stock of which the $3.50 Cumulative Convertible Preferred Stock constitutes a series ("Series C Preferred Stock"). As of December 31, 1993, there were issued and outstanding 5,000,000 shares of Series C Preferred Stock and 380,687,187 shares of BANC ONE Common Stock. The following summary of the terms of BANC ONE's capital stock does not purport to be complete and is qualified in its entirety by reference to the applicable provisions of the Ohio General Corporation Law and BANC ONE's Articles. Common Stock. Holders of BANC ONE Common Stock are entitled to receive - ------------ dividends out of funds legally available therefor as and if declared by the Board of Directors, provided that, so long as any shares of Preferred Stock are outstanding, no dividends (other than dividends payable in BANC ONE Common Stock) or other distributions (including redemptions and purchases) may be made with respect to the BANC ONE Common Stock unless full cumulative dividends on the shares of Preferred Stock have been paid. -34- Holders of shares of BANC ONE Common Stock are entitled to one vote for each share for the election of directors and on all other matters. Holders of BANC ONE Common Stock vote together as a class with holders of Class B Preferred Stock. Generally, holders of Series C Preferred Stock have no voting rights. The issued and outstanding shares of BANC ONE Common Stock are fully paid and nonassessable. The holders of BANC ONE Common Stock are not entitled to preemptive rights or conversion or redemption rights. The BANC ONE Common Stock does not have cumulative voting rights in the election of directors. In the event of the voluntary or involuntary dissolution, liquidation or winding up of BANC ONE, holders of BANC ONE Common Stock will be entitled to receive, pro rata, after satisfaction in full of the prior rights of creditors (including holders of BANC ONE's indebtedness) and holders of Preferred Stock, all the remaining assets of BANC ONE available for distribution. Preferred Stock. The Board of Directors has the authority to issue each class - --------------- of Preferred Stock in one or more series and to fix the designations, number of shares, dividends, redemption rights, sinking fund requirements, liquidation prices, conversion rights and other rights, qualifications, limitations or restrictions thereon (except voting rights) as the Board of Directors may from time to time be permitted by law to fix or change. Currently, there are outstanding shares of Series C Preferred Stock. Holders of Series C Preferred Stock are entitled to receive out of funds legally available therefor cumulative cash dividends at the annual rate of $3.50 per share payable quarterly on the last day of March, June, September and December in each year. In the event that full cumulative dividends on outstanding shares of Series C Preferred Stock have not been paid, no dividends may be declared or paid on, and no amounts may be set aside or applied to the redemption or purchase of, any shares of BANC ONE Common Stock or any other shares of capital stock of BANC ONE ranking junior to shares of Series C Preferred Stock. Upon the voluntary or involuntary dissolution, liquidation or winding up of BANC ONE, holders of Series C Preferred Stock are entitled to receive a preferential distribution of $50 per share plus accrued and unpaid dividends, if any. Generally holders of shares of Series C Preferred Stock have no voting rights. The approval of a majority of the outstanding shares of Series C Preferred Stock voting together as a class is required in order to amend BANC ONE's Articles to affect adversely the rights of the holders of the Series C Preferred Stock or to take any action that would result in the creation of or an increase in the number of authorized shares senior or superior with respect to dividends or upon liquidation to the Series C Preferred Stock. Holders of Series C Preferred Stock also have the right to elect two additional directors during any period in which dividends on Series C Preferred Stock are cumulatively in arrears in the amount of six or more full quarterly dividends. -35- At the option of the holder of any shares of Series C Preferred Stock, such shares may be converted into shares of BANC ONE Common Stock at the conversion rate then in effect. The present conversion rate is 1.75360 shares of BANC ONE Common Stock for each share of Series C Preferred Stock and is subject to adjustment for stock dividends, subdivisions, splits (the conversion rate has been adjusted to reflect the 5 shares for 4 shares common stock split declared by Banc One's Board of Directors on July 20, 1993 and payable August 31, 1993 to shareholders of record on August 3, 1993) and combinations and any distribution of rights or warrants to purchase BANC ONE Common Stock at a price per share less than the BANC ONE Common Stock's then-current market value. The issued shares of Series C Preferred Stock may be redeemed, in whole or in part, by BANC ONE at its election at any time after April 15, 1995, at a redemption price of $52.10 per share during the period from April 15, 1995, to but not including March 31, 1996, and thereafter at the redemption prices during the 12-month periods beginning on March 31 of the years shown below, plus accrued and unpaid dividends, if any.
Year Redemption Price ---- ---------------- 1996 . . . . . . . . . . . . . . . . $51.75 1997 . . . . . . . . . . . . . . . . $51.40 1998 . . . . . . . . . . . . . . . . $51.05 1999 . . . . . . . . . . . . . . . . $50.70 2000 . . . . . . . . . . . . . . . . $50.35 2001 and thereafter . . . . . . . . . $50.00
Special Voting Requirements for Certain Transactions - ---------------------------------------------------- Article Eleventh of BANC ONE's Articles incorporates, to a large extent, the provisions of the Ohio control share acquisition statute (Section 1701.831 of the Ohio Revised Code). Article Eleventh sets forth procedures for obtaining shareholder consent of "control share acquisitions" subject to the right of the Board of Directors to screen out proposals that do not meet certain standards set forth in Article Eleventh. Article Eleventh defines a "control share acquisition" as any acquisition, directly or indirectly, of shares of BANC ONE which, when added to all other shares of BANC ONE owned or controlled by the acquiror, would entitle the acquiror, alone or with others, to exercise or direct the exercise of voting power in BANC ONE in the election of directors within any of the following ranges of voting power: (a) one-fifth or more but less than one-third; (b) one-third or more but less than a majority; and (c) a majority or more. A bank, broker, nominee, trustee, or other person who acquires shares in the ordinary course of business for the benefit of others in good faith and not for the purpose of circumventing Article Eleventh shall, however, be deemed to have voting power only of shares in respect of which such person would be able to exercise or direct the exercise of votes without further instruction from others at a meeting of shareholders called under Article Eleventh. A control share acquisition which meets certain criteria set forth in Article Eleventh as determined by the Board of Directors must be presented to a meeting of the shareholders of BANC ONE and approved by the affirmative vote of both (a) a majority of the voting -36- power represented at the meeting and (b) a majority of that portion of such voting power excluding any "interested shares"; that is, those shares held by the acquiring person, executive officers of BANC ONE and employees of BANC ONE who are also directors. Article Eleventh may be amended by a vote of 85% of the votes entitled to be cast by all holders of voting stock. BANC ONE's Articles also include a "fair price" provision which is designed to provide reasonable assurances to shareholders that in the event any shareholder or group of shareholders acquires 20% or more of BANC ONE's voting stock (the "Acquiror") and then seeks to acquire all or part of the remaining voting stock through a merger or other transaction which would force a change or termination of the other shareholders' ownership interests (a "Business Combination"), such other shareholders must receive consideration at least equivalent to that paid by the Acquiror in acquiring its 20% stock interest, unless the Business Combination is approved either (i) by a majority of directors who are unrelated to the Acquiror or (ii) by the affirmative vote of 75% of all the votes entitled to be cast by all holders of voting stock and 67% of the votes entitled to be cast by all holders of voting stock held by shareholders other than the Acquiror ("Special Shareholder Vote"). This provision operates by requiring that after an Acquiror emerges, any Business Combination which has the effect of requiring shareholders to surrender their shares must satisfy one of the following conditions: (a) Fair Consideration to Shareholders. The terms of the Business ---------------------------------- Combination must provide for payment of consideration which is at least equivalent to the highest price paid to other shareholders by the Acquiror in acquiring its 20% stock position and must be approved by shareholders as otherwise required by applicable law; or (b) Unrelated Director Approval. The Business Combination must be --------------------------- approved as fair to shareholders by a majority of the directors who are not affiliated with the Acquiror and who were directors before the Acquiror acquired its 20% stock position or who were nominated or elected to succeed such directors by the other unaffiliated directors ("Unrelated Directors") and must be approved by shareholders as otherwise required by applicable law; or (c) Special Shareholder Vote. The Business Combination must be approved ------------------------ by a Special Shareholder Vote. The Article containing this provision may be amended only by a vote of 85% of the votes entitled to be cast by all holders of voting stock, unless the amendment is approved unanimously by the Unrelated Directors, in which case only majority shareholder approval would be required. Chapter 1704 of the Ohio Revised Code (the "Ohio Statute") is similar to the "fair price" provision contained in BANC ONE's Articles. The Ohio Statute prohibits an "Issuing Public Corporation" from engaging in a "Chapter 1704 Transaction" with an "Interested Shareholder" for a period of three years following the date on which the person becomes an "Interested Shareholder" unless, prior to such date, the directors of the "Issuing Public Corporation" -37- approve either the "Chapter 1704 Transaction" or the acquisition of shares pursuant to which such person became an "Interested Shareholder." An "Issuing Public Corporation" is an Ohio corporation with 50 or more shareholders which has its principal place of business, principal executive offices or substantial assets within the State of Ohio. BANC ONE is currently an Issuing Public Corporation. An "Interested Shareholder" is any person who is the beneficial owner of a sufficient number of shares to allow such person, directly or indirectly, alone or with others, including affiliates and associates, to exercise or direct the exercise of 10% of the voting power of the Issuing Public Corporation. A "Chapter 1704 Transaction" includes any merger, consolidation, combination or majority share acquisition between or involving an Issuing Public Corporation and an Interested Shareholder or an affiliate or associate of an Interested Shareholder. A Chapter 1704 Transaction also includes certain transfers of property, dividends and issuance or transfers of shares, from or by an Issuing Public Corporation or a subsidiary of an Issuing Public Corporation to, with or for the benefit of an Interested Shareholder or an affiliate or associate of an Interested Shareholder unless such transaction is in the ordinary course of business of the Issuing Public Corporation on terms no more favorable to the Interested Shareholder than those acceptable to third parties as demonstrated by contemporaneous transactions. Finally, Chapter 1704 Transactions include certain transactions which (i) increase the proportionate share ownership of an Interested Shareholder, (ii) result in the adoption of a plan or proposal for the dissolution, winding up of the affairs or liquidation of the Issuing Public Corporation if such plan is proposed by or on behalf of the Interested Shareholder, or (iii) pledge or extend the credit or financial resources of the Issuing Public Corporation to or for the benefit of the Interested Shareholder. After the initial three-year moratorium has expired, an Issuing Public Corporation may engage in a Chapter 1704 Transaction if (i) the acquisition of shares pursuant to which the person became an Interested Shareholder received the prior approval of the board of directors of the Issuing Public Corporation, (ii) the Chapter 1704 Transaction is approved by the affirmative vote of the holders of shares representing at least a majority of the voting power of the Issuing Public Corporation and by the holders of at least a majority of voting shares which are not beneficially owned by an Interested Shareholder or an affiliate or associate of an Interested Shareholder, or (iii) the Chapter 1704 Transaction meets certain statutory tests designed to ensure that it be economically fair to all shareholders. Comparison of BANC ONE Common Stock and MID STATES Common Stock - --------------------------------------------------------------- The rights of shareholders of BANC ONE are governed by BANC ONE's Articles and Code of Regulations and the applicable provisions of the Ohio law, while the rights of the shareholders of MID STATES are governed by MID STATES' Certificate and By-laws and the applicable provisions of the DGCL. If the holders of MID STATES Common Stock approve the Merger Agreement and the Merger is subsequently consummated, holders of MID STATES Common Stock will become holders of BANC ONE Common Stock. The following comparison of the rights of holders of MID STATES Common Stock and BANC ONE Common Stock is based on current terms of the governing documents of the respective companies, and on the current provisions of applicable state law. -38- The rights of holders of MID STATES Common Stock and holders of BANC ONE Common Stock are similar in several respects: each shareholder is entitled to one vote for each share held on all matters submitted to a vote of shareholders (although holders of MID STATES Common Stock are entitled to exercise cumulative voting in the election of directors), each shareholder is entitled to receive pro rata any assets distributed to shareholders upon liquidation, dissolution or winding up of the affairs of the company (after all creditors have been satisfied and requisite preferential amounts are paid to the holders of outstanding preferred stock). Although it is impracticable to note all the differences between Ohio law and the DGCL generally and all of the differences between the applicable governing documents of BANC ONE and MID STATES, the following is intended to be a summary of certain significant differences between the rights of holders of BANC ONE Common Stock and the rights of holders of MID STATES Common Stock. Election and Removal of Directors. MID STATES' directors are elected by cumulative voting. This means that in an election of directors, holders of MID STATES Common Stock may give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of shares owned by the shareholder, or distribute the number of votes among any number of candidates. MID STATES' entire Board of Directors or any lesser number may be removed, with or without cause, by a vote of the holders of the majority of the shares then entitled to vote at an election of directors, except that no director may be removed if the votes cast against his removal would be sufficient to elect such director if voted cumulatively at an election of directors at which the same total number of votes were cast and the entire board were then being elected. Cumulative voting makes it more likely that sizable minority shareholders could elect minority directors even if opposed by the other shareholders. Cumulative voting is not allowed in the election of directors of BANC ONE. All of the directors of MID STATES and BANC ONE are elected by the shareholders each year and may be removed with or without cause by the shareholders Dividends. Under Ohio law, dividends may be paid out of surplus, including both earned surplus and capital surplus, in cash, property or shares of the corporation, provided that such dividend payments are not in violation of the rights of any other class of securities and are not made when the corporation is insolvent or there is reasonable ground to believe that by such payment it will be rendered insolvent. A Delaware corporation may pay dividends out of any surplus and, if it has no surplus, out of any net profits for the fiscal year in which the dividend was declared or for the preceding fiscal year; provided that such payment may not be made from such net profit if capital shall have been reduced by depreciation, losses or otherwise below the amount of capital represented by all classes of shares having a preference upon the distribution of assets. The payment of dividends by bank holding companies also is subject to certain regulatory constraints. Dividends paid by both BANC ONE and MID STATES are subject to federal income tax to the extent of the distributing corporation's current and accumulated earnings and profits. However, it is suggested that in connection with voting on the Merger, shareholders contact their tax advisors to determine the tax consequences of the Merger to them. -39- Supermajority and Fair Price Provisions. MID STATES' Certificate contains provisions similar to the provisions of BANC ONE's Articles relating to control share acquisitions and fair price provisions for business combinations. BANC ONE's Articles contain provisions requiring a supermajority vote for certain business combinations. See "COMPARATIVE RIGHTS OF SHAREHOLDERS--Special Voting Requirements for Certain Transactions." Although Delaware law generally requires the affirmative vote of the holders of a majority of the shares of each class entitled to vote to approve a merger, consolidation, share exchange or sale, lease, exchange or other disposition of all or substantially all of MID STATES' assets, MID STATES' Certificate requires the approval of certain interested shareholder transactions by not less than 75% of MID STATES' outstanding shares entitled to vote, unless certain alternative requirements are satisfied. In addition, in the event of a merger, consolidation or sale of MID STATES or any subsidiary thereof, with or to a corporation, person or entity, which owns, directly or indirectly, ten percent or more of the outstanding shares of MID STATES ("Ten Percent Owner"), each holder of MID STATES Common Stock who properly opposes such transaction is entitled to receive a price for his, her or its shares equal to the highest price paid by such Ten Percent Owner for shares of MID STATES purchased in the two-year period prior to the consummation of such transaction. In addition to being subject to the laws of Delaware and Ohio, respectively, both MID STATES and BANC ONE, as bank holding companies, are subject to various provisions of federal law with respect to mergers, consolidations and certain other corporate transactions. Evaluation of Tender Offers and Business Combinations. In evaluating an acquisition proposal, Ohio law includes a provision which permits directors, in determining whether any matter is in the best interests of the corporation, to take into consideration the interests of the corporation's employees, suppliers, creditors and customers, the economy of the state and the nation, community and societal considerations and the long-term and short-term interests of the corporation and its shareholders, including the possibility that such interests may be best served by the continued independence of the corporation. No similar provision is included in the DGCL or MID STATES' Certificate. Amendment of Governing Documents. BANC ONE's Articles may be amended by the affirmative vote of the holders of a majority of the voting power of BANC ONE, except that amendments to the "control share acquisition" and "fair price" provisions require a supermajority vote. See "COMPARATIVE RIGHTS OF SHAREHOLDERS--Special Voting Requirements for Certain Transactions." The Code of Regulations of BANC ONE may only be amended by the affirmative vote of a majority of the voting power represented by the outstanding voting stock of BANC ONE present in person or by proxy at an annual or special meeting called for such purpose. MID STATES' Certificate may be amended by the affirmative vote of the holders of a majority of the outstanding shares of MID STATES' voting stock, except that amendments to the provision providing for supermajority voting and any amendment which provides for any change to Sections Fifth, Sixth and Ninth of MID STATES' Articles require the affirmative vote of three-fourths of the -40- outstanding shares of MID STATES' voting stock. The DGCL provides that shareholders of a corporation may amend its by-laws and that a corporation may, in its certificate of incorporation, also confer such power upon its Board of Directors. MID STATES' Certificate explicitly confers upon the MID STATES' Board the power to amend MID STATES' by-laws. Accordingly, both the MID STATES' Board and its shareholders may amend MID STATES' by-laws by a majority vote, except that amendments by MID STATES' shareholders to provisions in MID STATES' by-laws with respect to the number of directors and the filling of director vacancies require the affirmative vote of not less than three-fourths of the outstanding shares of MID STATES' voting stock. Appraisal Rights. Under the DGCL, appraisal or dissenters' rights are available only in connection with statutory mergers or consolidations. Even in such cases, unless the certificate of incorporation otherwise provides, the DGCL does not recognize dissenters' rights for any class or series of stock which is either listed on a national securities exchange or held of record by more than 2,000 shareholders except that appraisal rights are available for holders of stock who, by the terms of the merger or consolidation, are required to accept anything except (i) stock of the corporation surviving or resulting from the merger of consolidation, (ii) shares which at the effective time of the merger or consolidation are either listed on a national securities exchange or held of record by more than 2,000 shareholders, (iii) cash in lieu of fractional shares of stock described in the foregoing clauses (i) and (ii), or (iv) any combination of stock and cash in lieu of fractional shares described in the foregoing clauses (i), (ii) or (iii). MID STATES has less than 2,000 shareholders and although a local brokerage firm attempts to make a market in MID STATES Common Stock, MID STATES Common Stock is not listed on any national securities exchange. Therefore, holders of MID STATES Common Stock will be entitled under the DGCL to appraisal rights in connection with the Merger. See "VOTING AND MANAGEMENT INFORMATION--Rights of Dissenting Shareholders." Under Ohio law, dissenting shareholders are entitled to appraisal rights in connection with the lease, sale, exchange, transfer or other disposition of all or substantially all of the assets of a corporation and in connection with certain amendments to its articles of incorporation. In addition, shareholders of an Ohio corporation being merged into a new corporation are also entitled to appraisal rights. Shareholders of an acquiring corporation are entitled to appraisal rights in a merger, combination or majority share acquisition in which such shareholders are entitled to voting rights. Repurchases. Under the DGCL, a corporation may repurchase or redeem its shares only if such purchase does not impair capital. However, a corporation may redeem preferred stock out of capital if such shares will be retired upon redemption and the stated capital of the corporation is thereupon reduced in accordance with the DGCL. Under Ohio law, a corporation may purchase or redeem its own shares if authorized to do so by its articles of incorporation or under certain other circumstances but may not do so only if immediately thereafter its assets would be less than its liabilities plus its stated capital, if any, or if the corporation is insolvent or would be rendered insolvent by such a purchase or redemption. Article Sixth of BANC ONE's Articles permits BANC ONE to repurchase or redeem shares to the extent permitted by law. -41- Indemnification. The DGCL provides that a director, employee, officer or agent of a corporation may be indemnified against liability (other than in an action by or in the right of a corporation) and other costs incurred by such person in connection with such proceedings, provided such person acted in good faith and in a manner such person reasonably believed to be in and not opposed to, the best interests of the corporation and, with respect to any criminal proceedings, had no reason to believe the conduct was unlawful. For actions or suits brought by or in the name of the corporation, the DGCL provides that a director, employee, officer or agent of a corporation may be indemnified against expenses by such person in connection with such proceeding if such person acted in good faith and in a manner such person reasonably believed to be in and not opposed to, the best interests of the corporation except that if such person is adjudged to be liable to the corporation, such person can be indemnified if and only to the extent that a court shall determine that despite the adjudication of liability, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the court shall deem proper. The DGCL permits a corporation to advance expenses incurred by an officer or director in defending any action prior to the disposition of such action upon a receipt of an undertaking by or on behalf of such officer or director to repay such amount if it is ultimately determined that such officer or director is not entitled to be indemnified by the corporation. MID STATES' By-laws provide that MID STATES must indemnify all persons whom it is permitted to indemnify under the DGCL. The DGCL allows a corporation to provide, in its certificate of incorporation, a provision which limits or eliminates the personal liability of a director to the corporation and its shareholders for monetary damages for such person's breach of fiduciary duty, provided that such provision may not so limit a director's liability (i) for a breach of his duty of loyalty to the corporation; (ii) for acts or omissions not in good faith or involving intentional misconduct or a knowing violation of law; (iii) for unlawful payments of dividends, certain stock repurchases or redemptions; or (iv) for any transaction from which the director derived an improper personal benefit. These provisions have the effect of protecting a corporation's directors against personal liability from breaches of their duty of care, including liability for gross negligence under Delaware law. MID STATES' By-laws contain a provision eliminating such liability to the extent permitted under the DGCL. Under Ohio law, Ohio corporations are authorized to indemnify directors, officers, employees and agents within prescribed limits and must indemnify them under certain circumstances. Ohio law does not provide statutory authorization for a corporation to indemnify directors and officers for settlements, fines or judgments in the context of derivative suits. However, it provides that directors (but not officers) are entitled to mandatory advancement of expenses, including attorneys' fees, incurred in defending any action, including derivative actions, brought against the director, provided the director agrees to cooperate with the corporation concerning the matter and to repay the amount advanced if it is proved by clear and convincing evidence that his or her act or failure to act was done with deliberate intent to cause injury to the corporation or with reckless disregard for the corporation's best interests. Ohio law does not authorize payment of expenses or judgments to an officer or other agent after a finding of negligence or -42- misconduct in a derivative suit absent a court order. Indemnification is required, however, to the extent such person succeeds on the merits. In all other cases, if a director or officer acted in good faith and in a manner he or she reasonably believed to be in (or not opposed to) the best interests of the company, indemnification is discretionary except as otherwise provided by a company's articles, code of regulations or by contract except with respect to the advancement of expenses of directors. The statutory right to indemnity is not exclusive in Ohio. Ohio law provides express authority for Ohio corporations to procure not only insurance policies, but also to furnish protection similar to insurance, including trust funds, letters of credit and self-insurance, or to provide similar protection such as indemnity against loss of insurance. Unlike Delaware law, Ohio law has codified the traditional business judgment rule. Ohio law provides that the business judgment presumption of good faith may only be overcome by clear and convincing evidence, rather than the preponderance of the evidence standard applicable in most states. Further, Ohio law provides specific statutory authority for directors to consider, in addition to the interests of the corporation's shareholders, other factors such as the interest of the corporation's employees, suppliers, creditors and customers; the economy of the state and nation; community and societal considerations; the long-term and short-term interests of the corporation and its shareholders; and the possibility that these interests may be best served by the continued independence of the corporation. MISCELLANEOUS INFORMATION ------------------------- Transfer and Exchange Agents - ---------------------------- Bank One, Indianapolis, N.A., Indianapolis, Indiana, serves as Transfer Agent and as Registrar for BANC ONE Common Stock. Bank One, Indianapolis, N.A. will act as Exchange Agent in connection with the Merger. First National acts as Transfer Agent and as Registrar for MID STATES Common Stock. Interests of Named Experts and Counsel - -------------------------------------- The consolidated financial statements of BANC ONE incorporated by reference in this Prospectus and Proxy Statement have been audited by Coopers & Lybrand, independent public accountants, to the extent and for the years included in their reports, which reports are included or are incorporated herein, and have been so included or incorporated in reliance upon their reports given on the authority of that firm as experts in accounting and auditing. The consolidated financial statements of MID STATES incorporated by reference in this Prospectus and Proxy Statement have been audited by McGladrey & Pullen, independent certified public accountants, to the extent and for the years included in the reports which parts are included or incorporated by reference herein and have been included and incorporated in reliance upon their reports given, and upon the authority of said firm as experts in accounting and auditing. Certain legal matters will be passed upon for MID STATES by counsel for MID STATES, Vedder, Price, Kaufman & Kammholz, Chicago, Illinois. An opinion on certain of the federal income tax consequences of the proposed transaction -43- will also be issued by Vedder, Price, Kaufman & Kammholz. Vedder, Price, Kaufman & Kammholz has from time to time performed legal services for Banc One Illinois in connection with matters unrelated to the Merger. An opinion on the validity of the BANC ONE Common Stock offered hereby has been passed upon by Roman J. Gerber, Executive Vice President and General Counsel of BANC ONE. Sources of Information - ---------------------- The information concerning BANC ONE and MID STATES has been supplied by the management of the respective companies. Registration Statement - ---------------------- This Prospectus and Proxy Statement does not include all of the information set forth or incorporated by reference in the Registration Statement on Form S-4 and the exhibits thereto filed by BANC ONE with the Commission under the Securities Act. The Registration Statement may be inspected at the principal office of the Commission in Washington, D.C., and copies may be obtained upon payment of prescribed fees. See "AVAILABLE INFORMATION" for addresses of the Commission's offices. Reference is hereby made to the Registration Statement and exhibits thereto for further information pertaining to BANC ONE and MID STATES. Other Matters - ------------- The Board of Directors of MID STATES does not know of any other matters which may come before the Special Meeting. -44- B. INFORMATION ABOUT BANC ONE CORPORATION ------------------------------------------ General -- Business. - ------------------- BANC ONE is a multi-bank holding company with bank subsidiaries in Arizona, California, Colorado, Ohio, Illinois, Indiana, Kentucky, Michigan, Oklahoma, Texas, Utah, West Virginia and Wisconsin. At December 31, 1993, BANC ONE had consolidated total assets of $79.9 billion, consolidated total deposits of approximately $60.9 billion and consolidated total shareholders' equity of approximately $7.0 billion. At December 31, 1993, BANC ONE ranked eighth among the nation's publicly owned bank holding companies in terms of period-end assets and at December 31, 1993, BANC ONE ranked sixth among the nation's publicly owned bank holding companies in terms of period-end common equity. For the year ended December 31, 1993, BANC ONE's return on average assets was 1.53%. As of December 31, 1993, BANC ONE owned indirectly all of the outstanding stock of 82 commercial banks (the "affiliate banks"). Except for Bank One, Texas, N.A., BANC ONE had no single affiliate bank comprising in excess of 20% of its consolidated assets at December 31, 1993. BANC ONE also owns subsidiaries which offer services in the areas of mortgage banking, credit card processing, consumer finance, equipment leasing, fiduciary and trust services, venture capital, credit life insurance, brokerage and data processing. Since its formation in 1968, BANC ONE has acquired over 125 banking institutions and the number of banking offices of its affiliate banks has increased from 24 to over 1,300. BANC ONE anticipates that it will continue to expand by acquisition in the future. BANC ONE is frequently in discussions regarding possible acquisitions. See "Recent Developments" for information with respect to pending and potential acquisitions. BANC ONE is a legal entity separate and distinct from its affiliate banks and its nonbanking subsidiaries. Accordingly, the right of BANC ONE, and thus the right of BANC ONE's creditors and shareholders, to participate in any distribution of the assets or earnings of any affiliate bank or other subsidiary is necessarily subject to the prior claims of creditors of the affiliate bank or subsidiary, except to the extent that claims of BANC ONE in its capacity as a creditor may be recognized. The principal source of BANC ONE's revenues is dividends and fees from its affiliates. See "Certain Regulatory Matters" for a discussion of regulatory restrictions on the ability of the affiliate banks to pay dividends to BANC ONE. Recent Developments. - ------------------- In recent years, BANC ONE has pursued an active acquisition program. The following is a list of announced significant acquisitions that have not been consummated as of the date of this Prospectus and Proxy Statement. Liberty National Bancorp, Inc., a multi-bank holding company headquartered in Louisville, Kentucky with assets of approximately $4.9 billion as of December 31, 1993, which BANC ONE will acquire for approximately 24 million shares of BANC ONE Common Stock. -45- BANC ONE has also announced three other acquisitions which are not material in the aggregate. In addition, BANC ONE has recently terminated its pending acquisitions of FirsTier Financial, Inc., a multi-bank holding company headquartered in Omaha, Nebraska with assets of approximately $3.1 billion as of December 31, 1993, and Nebraska Capital Corporation, a single bank holding company headquartered in Lincoln, Nebraska with assets of approximately $95 million as of December 31, 1993. BANC ONE continues to explore opportunities to acquire banks and nonbank companies permitted by the Bank Holding Company Act of 1956. Discussions are continually being carried on relating to the acquisition of bank-related companies and other banks. It is not presently known whether, or on what terms, such discussions will result in further acquisitions. BANC ONE's acquisition strategy is flexible in that it does not require BANC ONE to effect specific acquisitions so as to enter certain markets or to attain specified growth levels. Rather than being market driven or size motivated, BANC ONE's acquisition strategy reflects BANC ONE's willingness to consider potential acquisitions wherever and whenever such opportunities arise based on the then-existing market conditions and other circumstances. Banks to be acquired must be of sufficient size to support and justify having management of a caliber capable of making lending and other management decisions at the local level under BANC ONE's operating philosophy. BANC ONE also is willing from time to time to acquire a smaller bank when it can be acquired through a reorganization into an existing affiliate. BANC ONE's interest in the acquisition of non-bank companies has been limited to bank-related services with which BANC ONE already has familiarity. BANC ONE's acquisitions may be made by the exchange of stock, through cash purchases, and with other consideration. Other than as described above, BANC ONE does not currently have any definite understandings or agreements for any acquisitions material to BANC ONE. However, BANC ONE anticipates that it will continue to expand by acquisition in the future. Certain Regulatory Matters - -------------------------- General BANC ONE is subject to the supervision of, and to regular inspection by, the Federal Reserve. BANC ONE's principal banking subsidiaries are organized as national banking associations, which are subject to regulation by the Comptroller of the Currency (the "Comptroller"). In addition, various state authorities regulate BANC ONE's state banking subsidiaries. Furthermore, the various banking subsidiaries are subject to regulation by the Federal Deposit Insurance Corporation (the "FDIC") and other federal bank regulatory bodies. In addition to banking laws, regulations and regulatory agencies, BANC ONE and its subsidiaries and affiliates are subject to various other laws, regulations and regulatory agencies, all of which directly or indirectly affect BANC ONE's operations, management and ability to make distributions. The following discussion summarizes certain aspects of those laws and regulations that affect BANC ONE. -46- Proposals to change the laws and regulations governing the banking industry are frequently raised in Congress, in the state legislatures and before the various bank regulatory agencies. The likelihood and timing of any changes and the impact such changes might have on BANC ONE and its subsidiaries are difficult to determine. According to Federal Reserve policy, bank holding companies are expected to act as a source of financial strength to each subsidiary bank and to commit resources to support each such subsidiary. This support may be required at times when a bank holding company may not be able to provide such support. Furthermore, in the event of a loss suffered or anticipated by the FDIC -- either as a result of default of a banking or thrift subsidiary of BANC ONE or related to FDIC assistance provided to a subsidiary in danger of default -- the other banking subsidiaries of BANC ONE may be assessed for the FDIC's loss, subject to certain exceptions. BANC ONE's banks are affected by various state and federal laws and by the fiscal and monetary policies of the federal government and its agencies, including the Federal Reserve. An important purpose of these policies is to curb inflation and control recessions through control of the supply of money and credit. The Federal Reserve uses its powers to regulate reserve requirements of its member banks, the discount rate on its member bank borrowings, interest rates on time and savings deposits of its member banks, and to conduct open market operations in United States government securities so as to exercise control over the supply of money and credit. These policies have a direct effect on the amount of bank loans and deposits and on the interest rates charged on loans and paid on deposits, with the result that federal policies have a material effect on bank earnings. Policies which are directed toward increasing the supply of money and credit and reducing interest rates may have an adverse effect on bank earnings. Future policies of the Federal Reserve and other authorities cannot be predicted, nor can their effect on future bank earnings be predicted. Similarly, future changes in state and federal laws and wage, price and other economic restraints of the federal government cannot be predicted nor can their effect on future bank earnings be predicted. Capital Requirements The Federal Reserve, the FDIC and the Comptroller have issued substantially similar minimum risk-based and leverage capital guidelines for United States banking organizations. In addition, those regulatory agencies may from time to time require that a banking organization maintain capital above the minimum levels, whether because of its financial condition or actual or anticipated growth. The Federal Reserve risk-based guidelines applicable to BANC ONE define a two-tier capital framework. Tier 1 capital consists of common and qualifying preferred shareholders' equity, minority interests less goodwill and certain other intangible assets, and one-half of investments in unconsolidated subsidiaries. Tier 2 capital consists of mandatory convertible debt, subordinated and other qualifying term debt, preferred stock not qualifying as Tier 1 capital and the allowance for credit losses, subject to certain limitations less one-half of -47- investments in unconsolidated subsidiaries. The sum of Tier 1 and Tier 2 capital represents qualifying total capital, at least 50% of which must consist of Tier 1 capital. Risk-based capital ratios are calculated by dividing Tier 1 and total capital by the sum of four categories of risk-weighted assets, such risk weights based primarily on relative credit risk. The regulatory minimum qualifying total risk-based capital ratio is 8%, of which at least 4% must consist of Tier 1 capital. BANC ONE's Tier 1 and total risk-based capital ratios under these guidelines at December 31, 1993 were 10.51% and 14.19%, respectively. The leverage ratio is determined by dividing Tier 1 capital by adjusted total assets. Although the stated minimum ratio is 3%, most banking organizations are required to maintain ratios of at least 100 to 200 basis points above 3%. BANC ONE's estimated leverage ratio at December 31, 1993 was 8.66%. Although BANC ONE has not been informed of any specific leverage ratio requirement applicable to it, management believes that BANC ONE meets its leverage ratio requirement. Dividend Restrictions Various federal and state statutory provisions limit the amount of dividends BANC ONE's affiliate banks can pay to BANC ONE without regulatory approval. The approval of the appropriate bank regulator is required for any dividend by a national bank or state member bank if the total of all dividends declared by the bank in any calendar year would exceed the total of its net profits, as defined by regulatory agencies, for such year combined with its retained net profits for the preceding two years. In addition, a national bank or a state member bank may not pay a dividend in an amount greater than its net profits then on hand. Under these provisions and various state law restrictions, BANC ONE's affiliate banks could have declared, as of December 31, 1993, without obtaining prior regulatory approval, aggregate dividends of approximately $1.2 billion. In addition, federal bank regulatory authorities have authority to prohibit the affiliate banks from engaging in an unsafe or unsound practice in conducting their business. The payment of dividends, depending upon the financial condition of the bank in question, could be deemed to constitute such an unsafe or unsound practice. The ability of BANC ONE's affiliate banks to pay dividends in the future is presently, and could be further, influenced by bank regulatory policies and capital guidelines. FDICIA The Federal Deposit Insurance Corporation Improvement Act of 1991 (the "FDICIA"), which became law on December 19, 1991, revises several banking statutes, including the Federal Deposit Insurance Act, affecting bank regulation, deposit insurance and provisions for funding of the Bank Insurance Fund (the "BIF") administered by the FDIC. Under FDICIA the bank regulators' authority to intervene is linked to the deterioration of a bank's capital level. In addition, FDICIA places limits on real estate lending and brokered deposit activities, expands audit and reporting requirements, and imposes limitations and requirements on various banking functions. BANC ONE believes that the deposit insurance and brokered deposit limitations under FDICIA will not have any material impact on the liquidity or funding of BANC ONE or its affiliate banks. -48- Deposit Insurance Assessments The deposits of each of BANC ONE's banks are insured up to regulatory limits by the FDIC. Accordingly, BANC ONE's banks are subject to deposit insurance assessments to maintain the Bank Insurance Fund (the "BIF") of the FDIC. On September 14, 1992, the FDIC adopted regulations to implement a transitional risk-related insurance assessment system, starting January 1, 1993. Under this system, the FDIC will place each insured bank in one of nine risk categories based on its level of capital and other relevant information (such as supervisory evaluations). Each insured bank's insurance assessment rate will then be determined by the risk category in which it has been classified by the FDIC. Under this transitional system, the average insurance assessment rate will be .254% per $100 of deposits. However, there will be an eight basis point spread between the highest and lowest assessment rates, so that banks classified as strongest by the FDIC will be subject to a rate of $0.23 per $100 of deposits and banks classified as weakest by the FDIC will be subject to a rate of $0.31 per $100 of deposits. The FDIC has indicated that it expects that the majority of banks will be subject to an assessment rate of $0.23 per $100 of deposits (the same rate as under the current flat-rate assessment system). However, the FDIC has also indicated that it expects to recommend that the permanent risk-related premium system, to be implemented in 1994, incorporate a wider differential between the highest and lowest assessment rates. Market Prices of and Dividends Paid on BANC ONE Common Stock - ------------------------------------------------------------ BANC ONE Common Stock is, and the shares offered hereby will be, listed on the New York Stock Exchange. The following table sets forth, for the periods indicated, the high and low reported closing sale prices per share of BANC ONE Common Stock on the New York Stock Exchange Composite Tape and cash dividends per share of BANC ONE Common Stock. The dividend and stock price information for 1990 has not been adjusted to reflect the 10% dividend on BANC ONE Common Stock effective February 14, 1992 or for the five shares for four shares common stock split payable to shareholders of record on August 3, 1993 and to be distributed on August 31, 1993. Price Range of Common Stock ---------------------------
High Low Dividends ---- --- --------- 1992 - ---- First Quarter . . . . . $36.36 $30.75 $.21 Second Quarter . . . . 34.55 30.73 .21 Third Quarter . . . . . 34.27 30.64 .24 Fourth Quarter . . . . 38.91 31.82 .24 1993 - ---- First Quarter . . . . . $42.27 $36.36 $.25 Second Quarter. . . . . 44.73 36.73 .25 Third Quarter . . . . . 42.19 34.55 .28 Fourth Quarter 39.77 32.27 .28
-49-
1994 - ---- First Quarter . . . . $35.47 $31.88 .31 Second Quarter . . . . .31 (through , 1994)
BANC ONE intends to continue its present policy of paying quarterly cash dividends to its shareholders so that dividends as a percentage of income will average between 35 and 40 percent of net income. The timing and amount of future dividends will depend upon earnings, cash requirements, the financial condition of BANC ONE and its subsidiaries, applicable government regulations and other factors deemed relevant by the Board of Directors. Certain debt instruments to which BANC ONE is a party limit its ability to pay dividends on BANC ONE Common Stock. Under the most restrictive of these limitations, BANC ONE would have been permitted to pay cash dividends on BANC ONE Common Stock in excess of its $$1.0 billion of retained earnings as of December 31, 1993. As described under "Certain Regulatory Matters," various state and federal laws limit the ability of affiliate banks to pay dividends to BANC ONE. Incorporation of Certain Information About BANC ONE By Reference - --------------------------- BANC ONE's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, and BANC ONE's Current Reports on Form 8-K, including the Form 8-K filed January 28, 1994 and the Form 8-K filed February 17, 1994, in each case filed with the Commission pursuant to Section 13 of the Exchange Act and the description of BANC ONE Common Stock which is contained in its registration statement filed under Section 12 of the Exchange Act, including any amendment or report filed for the purpose of updating such description, are incorporated into this Prospectus and Proxy Statement by reference. -50- C. INFORMATION ABOUT Mid States Bancshares, Inc. ------------------------------------------------- General - ------- MID STATES is a bank holding company incorporated under the laws of the state of Delaware with its principal office in Moline, Illinois. MID STATES owns all of the outstanding stock of the First National Bank Moline, Moline, Illinois ("First National"), which operates two offices in Moline, Illinois. As of December 31, 1993, MID STATES had total assets of approximately $192 million and First National had deposits of approximately $163 million. Market Prices of and Dividends Paid on MID STATES Common Stock - -------------------------------------------------------------- As of December 31, 1993, there were approximately 300 holders of record of MID STATES Common Stock. No trading market exists for MID STATES Common Stock as trades occur infrequently and typically for very few shares. The last known trade occurred on April 16, 1993 and was for 188 shares at a price of $45.00 per share. See "Information About the Transaction - Comparative per Share Data." The following table sets forth, for the periods indicated, the cash dividends paid per share of MID STATES Common Stock:
Dividend Per Share ------------------ 1991 - ---- First Quarter . . . . . $.60 Second Quarter . . . . .60 Third Quarter . . . . . .60 Fourth Quarter . . . . .80 1992 - ---- First Quarter . . . . . $.60 Second Quarter . . . . .60 Third Quarter . . . . . .60 Fourth Quarter . . . . .80 1993 - ---- First Quarter . . . . . $.60 Second Quarter. . . . . .69 Third Quarter . . . . . .77 Fourth Quarter . . . . .77 1994 First Quarter . . . . . .84 Second Quarter. . . . . . (through , 1994)
-51- The Merger Agreement provides that beginning with the second calendar quarter of 1993 and for each succeeding calendar quarter prior to the consummation of the Merger, MID STATES may declare and pay cash dividends on shares of MID STATES Common Stock in an amount, per calendar quarter, which, in the aggregate, will not exceed the greater of $0.65 per share or a comparable BANC ONE Common Stock dividend on shares of MID STATES Common Stock. However, MID STATES will not declare or pay any dividends or make any distributions in any amount on the MID STATES Common Stock in the quarter in which the Effective Time occurs and in which the shareholders of MID STATES Common Stock are entitled to receive regular quarterly dividends on the shares of BANC ONE Common Stock into which the shares of MID STATES Common Stock have been converted. Incorporation of Certain Information About MID STATES By Reference - ------------------------------------------------------------------ MID STATES' Annual Report on Form 10-KSB for the fiscal year ended December 31, 1993, as filed by MID STATES with the Commission is incorporated into this Prospectus and Proxy Statement by reference. -52- D. VOTING AND MANAGEMENT INFORMATION ------------------------------------- BANC ONE will pay the costs of preparing and printing this Prospectus and Proxy Statement and MID STATES will bear the cost of soliciting proxies from its shareholders for the Special Meeting. Solicitation of proxies will be made in person, by mail, or by telephone or telegraph by present and former directors, officers and employees of MID STATES and First National for which no additional compensation will be paid. Copies of the form of proxy and Notice and this Prospectus will be mailed to shareholders on or about April , 1994. Voting - ------ The proxy accompanying this Prospectus Proxy Statement is solicited by the Board of Directors of MID STATES and, if properly executed and returned, will be voted in accordance with the instructions given therein. IF NO INSTRUCTIONS ARE GIVEN, THE PROXY WILL BE VOTED IN FAVOR OF THE PROPOSAL TO APPROVE THE MERGER AGREEMENT. Any proxy may be revoked at any time before it is voted by furnishing MID STATES with either written notice of revocation or a subsequently dated proxy or appearing at the Special Meeting and electing to vote in person. The MID STATES Board has fixed the close of business on , 1994, as the record date for the determination of shareholders entitled to notice of and to vote at the Special Meeting. As of the record date, __________________ shares of MID STATES Common Stock were outstanding, each of which entitled its holder to one vote at the Special Meeting. The affirmative vote of a majority of the outstanding shares of MID STATES Common Stock entitled to vote thereon is required for approval of the Merger Agreement. The Directors of MID STATES have unanimously approved the Merger Agreement and each director has indicated an intention to vote all of his shares in favor of the Merger Agreement. Rights of Dissenting Shareholders - --------------------------------- Under Delaware law, appraisal or dissenters' rights are available in connection with statutory mergers or consolidations. The DGCL provides that shareholders shall receive a notice at least 20 days prior to a meeting held for purposes of voting on a merger that appraisal rights are available and shall also receive a copy of Section 262 of the DGCL. A shareholder wishing to exercise his or her appraisal rights shall deliver to the corporation, in advance of the merger vote, a written demand for appraisal. A proxy or vote against the merger shall not constitute a demand under the DGCL. Within 10 days after a merger is effective, the surviving or resulting corporation shall notify all shareholders who have demanded an appraisal and did not vote for or consent to the merger that the merger has become effective. Within 120 days of the effective date of the merger, the surviving or resulting corporation or a shareholder who has demanded an appraisal may file a petition in a Court of Chancery demanding a determination of the value of the stock of all such shareholders. Within 60 days of the effective date of a merger, any shareholder may withdraw his or her previous demand for an appraisal and accept the terms of the merger. Section 262 of the DGCL is attached to this Prospectus and Proxy Statement as Exhibit C. --------- -53- Management and Principal Shareholders of BANC ONE - ------------------------------------------------- Information concerning the directors and executive officers of BANC ONE, compensation of directors and executive officers of BANC ONE and any related transactions in which they have an interest, together with information related to principal shareholders of BANC ONE, is set forth in BANC ONE's Proxy Statement, dated March , 1994, incorporated herein by reference to BANC ONE's Annual Report on Form 10-K for the year ended December 31, 1993. See "Incorporation by Reference." Management and Principal Shareholders of MID STATES - --------------------------------------------------- Information concerning the directors and executive officers of MID STATES, compensation of directors and executive officers of MID STATES and any related transactions in which they have an interest, together with information related to principal shareholders of MID STATES, is set forth in MID STATES' Annual Report on Form 10-K for the year ended December 31, 1993. See "Incorporation of Certain Information About MID STATES by Reference." Future Proposals by MID STATES's Shareholders - --------------------------------------------- If the Merger is not consummated, it is currently anticipated that the 1994 Annual Meeting of Shareholders of MID STATES will be held on __________, 1994. -54- Exhibit A --------- May _____, 1994 Board of Directors Mid States Bancshares, Inc. 501 15th Street Moline, Illinois 61265-2184 Gentlemen: On December 21, 1993, we delivered to you our written opinion as to the fairness, from a financial point of view, to the holders of the outstanding common stock, par value $5.00 per share (the "Mid States Common Stock"), of Mid States Bancshares, Inc. ("Mid States") of the consideration to be received by such holders pursuant to the Agreement and Plan of Merger dated as of May 25, 1993 by and among Mid States, Banc One Corporation ("Banc One") and Banc One Illinois Corporation, a wholly-owned subsidiary of Banc One (the "Merger Agreement"). The Merger Agreement provides for the merger of Mid States with and into Banc One Illinois Corporation (the "Merger") and provided for the conversion of each share of Mid States Common Stock into the right to receive, subject to certain limitations and procedures set forth in the Merger Agreement, 2.7225 shares of Banc One common stock, no par value ("Banc One Common Stock"), after giving effect to Banc One's five-share-for-four-share stock split on August 31, 1993 and ten percent stock dividend paid on March 4, 1994. Our letter of December 31, 1993 expressed our opinion that, on the basis of the factors and subject to the conditions described in that letter, if the market value of the Banc One Common Stock to be received in respect of each share of Mid States Common Stock were $102.96 or higher, the consideration to be received by the holders of Mid States common stock pursuant to the Merger Agreement would be fair, from a financial point of view, to the holders of Mid States Common Stock. In that letter, we expressed no opinion as to the fairness of such consideration in the event that the market value of the Banc One Common Stock to be received in respect of each share of Mid States Common Stock were less than $102.96. You have now requested our opinion as to the fairness, from a financial point of view, to the holders of Mid States Common Stock of the "Exchange Rate" set forth in the Second Agreement Amending Agreement and Plan of Merger, dated as of March 25, 1994 (the "Second Amendment"). The Second Amendment provides that, at the time the Merger becomes effective (the "Effective Time") and subject to certain limitations and procedures set forth in the Merger Agreement and the amendments thereto, each of the not more than 311,560 shares of Mid States Common Stock that shall be issued and outstanding immediately prior to the Effective Time (excluding any shares held by Mid States as treasury shares) shall be converted into 2.917 shares of Banc One Common Stock (the "Exchange Rate"). The Merger is subject to, among other things, approvals of the Board of Governors of the Federal Reserve System and the Illinois Commissioner of Banks and Trust Companies (which approvals have been granted), approval by the holders of a majority of the shares of Mid States Board of Directors Mid States Bancshares, Inc. Page 2 May _____, 1994 Common Stock, and receipt of opinions to the effect that the Merger will qualify for treatment as a tax-free reorganization and a pooling-of-interests. Donaldson, Lufkin & Jenrette Securities Corporation, as part of its investment banking business, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, including bank holding company acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements, and valuations for corporate and other purposes. We were retained by Mid States to act as its exclusive financial advisor with respect to any sale, merger, consolidation, or other business combination, in one or a series of transactions, involving all or a substantial amount of the business, securities or assets of Mid States. We have received and will receive compensation from Mid States in connection with our services, a significant portion of which is contingent upon the consummation of the Merger. At your direction, we solicited a limited number of institutions, including Banc One, to determine their interest in a possible business combination with Mid States. Also at your direction, we ceased soliciting such interest of third parties at the time you determined to negotiate on an exclusive basis with Banc One, which negotiations led to execution of the Merger Agreement. In the ordinary course of our business we may actively trade the debt and equity securities of companies, including Mid States and Banc One, for our own account and for the accounts of customers and may hold a long or short position in such securities at any time. 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, the First Agreement Amending Agreement and Plan of Merger dated as of February 22, 1994, the Second Amendment, the prospectus and proxy statement dated as of December 21, 1993 and the prospectus and proxy statement dated as of April ___, 1994 sent to the holders of Mid States Common Stock in connection with the proposed transaction; 2. Reviewed certain publicly available financial statements, both audited and unaudited, for Mid States and Banc One; 3. Reviewed certain financial statements and other financial and operating data concerning Mid States and Banc One prepared by their respective managements; 4. Reviewed certain financial projections of Mid States and Banc One, both on a stand-alone and on a combined basis, prepared by their respective managements; 5. Discussed certain aspects of the past and current business operations, results of regulatory examinations, financial condition and future prospects of Mid States and Banc One with certain members of the management of Mid States and Banc One; 6. Reviewed reported market prices and historical trading activity of Mid States Common Stock and Banc One Common Stock; Board of Directors Mid States Bancshares, Inc. Page 3 May _____, 1994 7. Reviewed certain aspects of the financial performance of Mid States and Banc One and compared such financial performance of Mid States and Banc One together with the stock market data relating to Mid States and Banc One with similar data available for certain other financial institutions and certain of their publicly traded securities; 8. Reviewed the financial terms, to the extent publicly available, of certain recent business combinations involving other financial institutions; 9. Participated in discussions and negotiations among representatives of Mid States and Banc One and their financial and legal advisors; 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 Mid States, Banc One and their respective representatives and of the publicly available information that was reviewed by us. We have also relied upon the managements of both Mid States and Banc One 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 that such forecasts, including without limitation projected costs savings and operating synergies resulting from the Merger, reflect the best currently available estimates and judgments of such respective managements and that such projections and forecasts will be realized in the amounts and in the time periods currently estimated by the managements of both Mid States and Banc One. 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 Mid States and Banc One at December 31, 1993 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 Mid States or Banc One, nor did we make any independent evaluation or appraisal of the assets, liabilities or prospects of Mid States or Banc One, were not furnished with any such evaluation or appraisal, and did not review any individual credit files. We have also assumed that the Merger is, and will be, in compliance with all laws and regulations that are applicable to Mid States and Banc One. We were informed by Mid States and have assumed for purposes of our opinion that the Merger will be recorded as a pooling of interests under generally accepted accounting principles. 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. In rendering our opinion, we have assumed that in the course of obtaining the necessary regulatory and governmental approvals for the proposed Merger, no restriction will be imposed on Banc One or the surviving corporation in the Merger that would have a material adverse effect on the contemplated benefits of the Merger. We have also assumed that there would not occur any change in the applicable law or regulation that would cause a material adverse change in the prospects or operations of Banc One or the surviving corporation after the Merger. Board of Directors Mid States Bancshares, Inc. Page 4 May _____, 1994 We are not expressing any opinion herein as to the prices at which shares of Banc One Common Stock may trade if and when they are issued or at any future time, nor does our opinion constitute a recommendation to any holder of Mid States Common Stock as to how such holder should vote with respect to the Merger Agreement at any meeting of holders of Mid States Common Stock. This letter is for the information of the Board of Directors of Mid States and is not to be quoted or referred to, in whole or in part, in any registration statement, prospectus, or proxy statement, or any other written document used in connection with the offer or sale of securities, nor shall this letter be used for any other purpose without our prior written consent; provided, however, that we hereby consent to the inclusion and reference to this opinion in any registration statement or proxy statement used in connection with the Merger so long as the opinion is quoted in full or attached as an exhibit to such registration statement or proxy statement. 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 that the Exchange Rate is fair, from a financial point of view, to the holders of Mid States Common Stock. Very truly yours, DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION by ----------------------------- David D. Olson Managing Director THE CHICAGO CORPORATION Exhibit B --------- ____________, 1994 Board of Directors Mid States Bancshares, Inc. 501 15th Street Moline, Illinois 61265 Members of the Board: Mid States Bancshares, Inc. ("Mid States") has entered into an Agreement and Plan of Merger (the "Agreement") dated May 25, 1993, as amended February 22, 1994 and March 25, 1994, between Banc One Corporation ("Banc One") and Mid States. As is set forth in the Agreement, each outstanding share of common stock of Mid States will be exchanged for 2.917 common shares of Banc One (the "Exchange Rate"). In connection therewith, you have requested our opinion as to the fairness of the Exchange Rate, from a financial point of view, to the shareholders of Mid States. During the course of our engagement, we have, among other things; 1) Reviewed and analyzed material bearing upon the financial and operating condition of Banc One and Mid States and material prepared in connection with the proposed transaction; 2) Reviewed the Agreement; certain publicly available information concerning Banc One and Mid States, including financial statements and Consolidated Balance Sheets and Statements of Income for each of the five most recent fiscal years; 3) Reviewed the operating characteristics of certain other financial institutions deemed relevant to the contemplated transaction; 4) Reviewed the nature and terms of recent sale and merger transactions involving banks, thrifts, bank and thrift holding companies and other financial institutions that we consider relevant; 5) Reviewed historical and current market data for Banc One and Mid States common stock; Board of Directors Mid States Bancshares, Inc. Page -2- 6) Reviewed financial and other information provided to us by the managements' of Banc One and Mid States; 7) Conducted meetings with members of the senior management of Banc One and Mid States for the purpose of reviewing the future prospects of Banc One and Mid States; 8) Reviewed certain information including forecasts pertaining to prospective cost savings and revenue enhancements relative to the proposed transactions; 9) Evaluated the pro forma ownership of Banc One common stock by Mid States shareholders, relative to the pro forma contribution of Mid States' assets, liabilities, equity and earnings to the pro forma company. We also took into account our experience in other transactions, as well as our knowledge of the banking industry and our general experience in securities valuations. The Chicago Corporation ("TCC") is an investment banking and securities firm with membership on all principal U.S. securities exchanges. As part of our investment banking services, we are regularly engaged in the independent valuation of securities in connection with negotiated underwritings, private placements, merger and acquisition transactions and recapitalizations. In rendering this opinion, we have assumed, without independent verification, the accuracy and completeness of the financial and other information and representations provided to us by Banc One and Mid States. Based on the foregoing and our experience as investment bankers, we are of the opinion that, as of the date hereof, the Exchange Rate is fair from a financial point of view, to the shareholders of Mid States. Sincerely, /s/ The Chicago Corporation THE CHICAGO CORPORATION CONSENT OF THE CHICAGO CORPORATION We hereby consent to the summarization of our fairness opinion letter and references to our firm under the caption "SUMMARY OF THE TRANSACTION -- Opinions of Investment Bankers" and to the inclusion of such letter as Exhibit B to the Proxy Statement -Prospectus which is part of this Registration Statement on Form S-4 of BANC ONE CORPORATION. By giving such consent, we do not thereby admit that we are experts with respect to any part of such Registration Statement within the meaning of the term "expert" as used in the Securities and Exchange Commission promulgated thereunder. THE CHICAGO CORPORATION The Chicago Corporation Chicago, Illinois April 20, 1994 Opinion of Financial Advisor to Mid States The Chicago Corporation has delivered its written opinion to Mid States Board of Directors that, based upon and subject to the various considerations set forth in the opinion dated _________________, 1994, the Exchange Ratio is fair from a financial point of view to Mid States' shareholders as of the date of its opinion. The Board of Directors has carefully and thoroughly reviewed the materials and presentations of The Chicago Corporation and has made inquiries of The Chicago Corporation personnel as to the methodology and the assumptions utilized in its analysis. No limitations were imposed by Mid States' Board of Directors upon The Chicago Corporation with respect to the investigations made or procedures followed by it in rendering its opinion. The full text of the opinion of The Chicago Corporation, which sets forth assumptions made, matters considered and limitations on the review undertaken, is attached hereto as Exhibit B. Mid States shareholders are urged to read the opinion in its entirety. The Chicago Corporation's opinion is directed only to the Exchange Ratio to be received in the Merger and does not constitute a recommendation to any Mid States shareholder as to how such shareholder should vote at the Annual Meeting. The summary of the opinion of The Chicago Corporation set forth in this Prospectus/Proxy Statement is qualified in its entirety by reference to the full text of such opinion attached hereto as Exhibit B. Mid States retained The Chicago Corporation as its financial advisor on the basis of the firm's reputation, experience and familiarity with the banking industry and with merger and acquisition transactions. As part of its investment banking business, The Chicago Corporation is regularly engaged in the valuation of businesses in connection with mergers and acquisitions, negotiated underwritings, secondary distribution of listed and unlisted securities, private placements and valuations for corporate and other purposes. During the course of its engagement, and as a basis for arriving at its opinion, The Chicago Corporation reviewed and analyzed material bearing upon the financial and operating condition of Mid States and Banc One and material prepared in connection with the Merger, as follows: (i) the Merger Agreement; (ii) publicly available information concerning Mid States and Banc One including among other things annual reports on form 10-KSB for Mid States and on form 10-K for Banc One for each of the last five fiscal years ended; (iii) the nature and terms of recent sale and merger transactions involving financial institutions that The Chicago Corporation considered reasonably similar to Mid States and Banc One in size, financial character, operating character, historical performance and geographic market; (iv) historical and current market data for Mid States Common Stock and Banc One Common Stock and financial and other information provided to The Chicago Corporation by management of Mid States and Banc One, and (v) the Registration Statement and this Prospectus/Proxy Statement. These analyses are discussed in more detail below. In addition, The Chicago Corporation conducted meetings with members of senior management of Mid States and Banc One for the purpose of reviewing the future prospects of Mid States and Banc One. The Chicago Corporation evaluated the pro forma ownership of Banc One Common Stock by Mid States shareholders, relative to the pro forma contribution of Mid States' assets, liabilities, equity and earnings of Page -2- the proposed combined company. The Chicago Corporation also took into account its experience in other transactions, as well as its knowledge of the banking industry and its general experience in securities valuations. In rendering its opinion, The Chicago Corporation assumed without independent verification, the accuracy and completeness of the financial and other information and representations provided to it by Mid States and Banc One. The following is a summary of all material terms considered and the analyses performed by The Chicago Corporation in rendering its opinion during the course of its engagement in connection with its ________________, 1994 opinion. Net Present Value Analysis. The Chicago Corporation prepared a net present value analysis which indicated theoretical values for Mid States based on return on average assets ranging between 1.00% and 1.50% and asset growth rates ranging between 2.00% and 10.00%. The results of this analysis indicated a range of theoretical values for Mid States between $68.05 per share (1.00% return on average assets; 2.00% asset growth rate) and $138.52 per share (1.50% return on average assets; 10.00% asset growth rate). At a return on average assets ratio of 1.10%, which approximated Mid States historical performance, theoretical values ranged from $74.85 per share (2.00% asset growth rate) to $101.58 per share (10.00% asset growth rate). At an asset growth rate of 4.00%, which approximated Mid States' historical performance, theoretical values ranged from $73.55 per share (1.00% return on average assets) to $110.32 per share (1.50% return on average assets). Contribution Analysis. The Chicago Corporation prepared a contribution analysis showing the percentages of assets, deposits, common equity, and 1992 and 1993 net income and estimated 1994 and 1995 net income contributed to the combined company on a pro forma basis by Mid States and Banc One, and compared these percentages to the pro forma ownership of Banc One. This analysis showed that Mid States, as of December 31, 1993, would contribute 0.24% of pro forma consolidated total assets, 0.27% of deposits, 0.29% of common equity, 0.23% of 1992 and 0.18% of 1993 net income and 0.19% of estimated 1994 and 0.18% estimated 1995 net income. Based on the Banc One offer, shareholders of Mid States would own approximately 0.24% of the pro forma common shares outstanding of Banc One. Comparable Transaction Analysis. The Chicago Corporation reviewed selected comparable merger and acquisition transactions. The following merger transactions were reviewed based on publicly available data (the acquiror is named first and underlined, followed by the seller): AMCORE Financial, Inc., ----------------------- First State Bancorp of Princeton; First Banks, Inc., First FSB of Proviso ------------------ Township; Mercantile Bancorporation, Inc., Mount Vernon Bancorp; CNB -------------------------------- --- Bancshares, Inc., South Central Illinois Bancorp; Old Kent Financial - ----------------- ------------------ Corporation, University Financial Corporation; Old National Bancorp, Palmer - ------------ --------------------- Bancorp, Inc.; Banc One Corporation, Jefferson Bancorp, Inc.; AMCORE --------------------- ------ Financial, Inc., Dixon Bancorp, Inc.; Mercantile Bancorporation, Inc., Old - ---------------- -------------------------------- National Bancshares; Old National Bancorp, SBT Bancorp, Inc.; and AMCORE --------------------- ------ Financial, Inc., Central of Illinois, Inc. Transactions were selected on the - ---------------- basis of comparability of absolute transaction value and the perceived comparability of the markets served by the acquired institutions to those of Mid States. For the comparable transactions, the multiple of price to trailing 12 months earnings ranged from 8.2 to 22.5 with an average of 13.0. At March 25, 1994, the Banc One proposed purchase price represented a multiple of price to trailing 12 months earnings of 14.5. Page -3- For the comparable transactions, the multiple of purchase price to book value range from 0.95 to 1.95 with an average of 1.43. The Banc One offer to Mid States represented a multiple of price to December 31, 1993 book value of 1.47. Financial Implications to Mid States Shareholders. The Chicago Corporation prepared an analysis of the financial implications of the Banc One offer to a Mid States Shareholder. This analysis indicated that on a pro forma equivalent basis a shareholder of Mid States would achieve an increase in earnings per share, a decrease in per share dividends and an increase in book value per share as a result of the consummation of the Merger, assuming a dividend payout ratio significantly higher than Mid States' historical payout ratio. Another analysis of the financial implications of the Banc One offer kept Mid States' dividend payout ratio in line with historical dividend payouts. This analysis indicated that on a pro forma equivalent basis a shareholder of Mid States would achieve an increase in earnings per share, an increase in dividends per share and a decrease in book value per share. Comparative Shareholder Returns. The Chicago Corporation presented an analysis of comparative theoretical shareholder returns for several scenarios, including Mid States remaining independent, Mid States being acquired in 1994 and Mid States being acquired in 1997. This analysis, which was based on the net present value of projected dividend streams and projected 1997 common stock valuations (using current price-to-trailing twelve month earnings multiples), indicated total shareholders returns of 11.4% for Mid States remaining independent, 31.7% for a merger in 1997 and 38.2% based on the acceptance of an offer in 1994. The Chicago Corporation also prepared an analysis of the possible pricing of a merger transaction with certain other Midwest-based bank holding companies using estimated 1994 net income for Mid States and stock prices for selected companies and assuming no earnings-per- share dilution for the buyer. The holding companies reviewed included: AMCORE Financial, Inc.; Banc One Corporation, Inc.; Commerce Bancshares, Inc.; First Bank System, Inc.; First Midwest Bancorp; First of America Bank Corp.; Firstbank of Illinois Co.; Firstar Corporation; Hawkeye Bancorporation; Magna Group, Inc.; Mercantile Bancorporation, Inc.; Northwest Illinois Bancorp; and Norwest Corporation. Given the assumptions, the analysis indicated that these companies could pay a high of $107.28 per share, a low of $66.12 per share and an average price of $81.72 per share for all of the shares of Mid States. A second analysis was conducted under the aforementioned methodology with the 1994 net income of Mid States to include a tax-effected 15% reduction in operating expenses. Under that assumption the previously listed companies could pay a high of $131.87 per share, a low of $81.27 per share and an average price of $100.45 per share for all the shares of Mid States. Page -4- Comparable Company Analysis. The Chicago Corporation compared the market price, market-to-book value and price-to-earnings multiples of Banc One Common Stock with the individual market multiples and averages of the following selected comparable companies which it deemed to be reasonably similar to Banc One in size, financial character, operating character, historical performance and geographic market: Banc One Corporation; BankAmerica Corporation; Boatmen's Bancshares, Inc.; Citicorp; Comerica Incorporated; First Bank System, Inc.; First Chicago Corporation; First Interstate Bancorp; First of America Bank Corp.; First Union Corporation; Fleet Financial Group; KeyCorp; Mellon Bank Corporation; NBD Bancorp, Inc.; National City Corporation; NationsBank Corporation; Norwest Corporation; and PNC Bank Corp. This analysis indicated that Banc One Common Stock sold at a price of 1.87 times the December 31, 1993 book value and the comparables sold at an average price of 1.56 times book value. Banc One's Common Stock sold at a multiple of price to trailing 12 months earnings of 11.2, while the comparable group average price- to-earnings multiple was 10.0. The summary of The Chicago Corporation analysis set forth above is a fair summary thereof but does not purport to be a complete description of the presentations by The Chicago Corporation to the Mid States Board of Directors. The Chicago Corporation believes that its analysis and the summary set forth above must be considered as a whole and that selecting portions of analysis, without considering all factors and analyses, could create an incomplete view of the process by which a fairness opinion is rendered. In connection with its analyses, The Chicago Corporation assumed that there would be no material adverse change in general economic, business, market financial and regulatory conditions, all of which are beyond the control of Banc One and Mid States. The analyses performed by The Chicago Corporation are not necessarily indicative of actual values of future results, which may be significantly more or less favorable than suggested by such analyses. Fees and Indemnification. The fees due to The Chicago Corporation under the Agreement between The Chicago Corporation and Mid States (the "Chicago Corporation Agreement") were payable by Mid States as follows: $25,000 at the date of execution of The Chicago Corporation Agreement and $25,000 upon delivery of verbal conclusions and $50,000 at the time a written opinion is delivered for the proxy statement. In addition to such fees, Mid States has agreed to reimburse The Chicago Corporation for all reasonable out-of-pocket expenses and will pay to The Chicago Corporation a fee of $1,500 per day for preparation and court appearances with regard to the fairness opinion. Mid States has also agreed to indemnify The Chicago Corporation, its officers, directors, agents, employees and certain controlling persons from and against any losses, claims, damages and liabilities in connection with or arising out of the transactions or services referred to in The Chicago Corporation Agreement. This indemnification is subject to certain conditions and procedures set forth in an indemnification agreement between Mid States and The Chicago Corporation. Exhibit C DELAWARE GENERAL CORPORATION LAW Section 262. Appraisal rights. (a) Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to Section 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of his shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word "stockholder" means a holder of record of stock in a stock corporation and also a member of record of a nonstock corporation; the words "stock" and "share" mean and include what is ordinarily meant by those words and also membership or membership interest of a member of a nonstock corporation. (b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to Section 251, 252, 254, 257, 258 or 263 of this title: (1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock which, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or (ii) held of record by more than 2,000 stockholders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of Section 261 of this title. (2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to Sections 251, 252, 254, 257, 258 and 263 of this title to accept for such stock anything except: a. Shares of stock of the corporation surviving or resulting from such merger or consolidation; b. Shares of stock of any other corporation which at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association or Securities Dealers, Inc. or held of record by more than 2,000 stockholders; c. Cash in lieu of fractional shares of the corporations described in the foregoing subparagraphs a. and b. of this paragraph; or d. Any combination of the shares of stock and cash in lieu of fractional shares described in the foregoing subparagraphs a., b. and c. of this paragraph. (3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under Section 253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation. (c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as is practicable. (d) Appraisal rights shall be perfected as follows: (1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) hereof that appraisal rights are available for any or all of the share of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal off his shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of his shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of his shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or (2) If the merger or consolidation was approved pursuant to Section 228 or 253 of this title, the surviving or resulting corporation, either before the effective date of the merger or consolidation or within 10 days thereafter, shall notify each of the stockholders entitled to appraisal rights of the effective date of the merger or consolidation and that appraisal rights are available for any or all of the shares of the constituent corporation, and shall include in such notice a copy of this section. The notice shall be sent by certified or registered mail, return receipt requested, addressed to the stockholder at his address as it appears on the records of the corporation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of the notice, demand in writing from the surviving or resulting corporation the appraisal of his shares. Such demand will be sufficient if it reasonably informs the corporation of the identify of the stockholder and that the stockholder intends thereby to demand the appraisal of his shares. (e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) hereof and who is otherwise entitled to appraisal rights, may file a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder shall have the right to withdraw his demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who ahs complied with the requirements of subsections (a) and (d) hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after his written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) hereof, whichever is later. (f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a fully verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list of the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation. (g) At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings, and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder. (h) After determining the stockholders entitled to an appraisal, the Court shall appraise the shares, determining their fair value exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with a fair rate of interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. In determining the fair rate of interest, the Court may consider all relevant factors, including the rate of interest which the surviving or resulting corporation would have had to pay to borrow money during the pendency of the proceeding. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, permit discovery or other pretrial proceedings and may proceed to trial upon the appraisal prior to the final determination of the stockholder entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted his certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that he is not entitled to appraisal rights under this section. (i) The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Interest may be simple or compound, as the Court may direct. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court's decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state. (j) The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney's fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal. (k) From and after the effective date of the merger or consolidation, no stockholder who has demanded his appraisal right as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation; provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of his demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just. (l) The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation. (8 Del. C. 1953, Section 262; 56 Del. Laws, c. 50; 56 Del. Laws, c. 186, Section 24; 57 Del. Laws, c. 148, Sections 27-29; 59 Del. Laws, c. 106, Section 12; 60 Del. Laws, c. 371, Sections 3-12; 63 Del. Laws, c. 25, Section 14; 63 Del. Laws, c. 152, Sections 1,2; 64 Del. Laws, c. 112, Sections 46-54; 66 Del. Laws, c. 136, Sections 30-32; 66 Del. Laws, c. 352, Section 9; 67 Del. Laws, c 376, Sections 19, 20.) PART II INFORMATION NOT REQUIRED IN PROSPECTUS -------------------------------------- Item 20. Indemnification of Officers and Directors. ----------------------------------------- Section 1701.13(E) of the Ohio General Corporation Law sets forth provisions which define the extent to which a corporation may indemnify directors, officers, and employees. Those provisions have been adopted by the Registrant in Article V of Registrant's Code of Rights. Article V provides for the indemnification or the purchase of insurance for the benefit of the directors, officers, employees and agents of the Registrant in the event such persons are subject to legal action as a result of actions in their capacities as directors, officers, employees or agents of the Registrant. Registrant has entered into indemnification agreements with its directors and executive officers that provide for indemnification unless the indemnitee's conduct is finally adjudged by a court to be knowingly fraudulent, deliberately dishonest or willful misconduct. Registrant indemnifies other officers, employees or agents provided such persons acted in good faith and in a manner which they reasonably believed to be in or not opposed to the best interest of the Registrant or, with respect to criminal actions, had no reason to believe was unlawful. Item 21. Exhibits and Financial Statement Schedules. ------------------------------------------ The following exhibits are filed herewith except those indicated which have been filed previously as shown below and which are incorporated herein by reference. 2.1 Merger Agreement dated May 25, 1993, as amended on February 22, 1994 and March 25, 1994 by and among Mid States Bancshares, Inc., Banc One Illinois Corporation and joined in by BANC ONE CORPORATION. 2.3 Form of Proxy to be used by Mid States Bancshares, Inc. 3.1 Amended Articles of Incorporation of the Registrant (incorporated by reference from Exhibit 3-1 of the Annual Report of the Registrant on Form 10-K for the year ended December 31, 1991.) 3.2 Code of Regulations of the Registrant (incorporated by reference from Exhibit 3-2 of the Annual Report of the Registrant on Form 10-K for the year ended December 31, 1991). 4.1 Form of Common Stock Certificate of the Registrant (incorporated by reference from Exhibit 4.1 to the Annual Report of the Registrant on Form 10-K for the year ended December 31, 1989). 5 Opinion of Roman J. Gerber, Executive Vice President and Counsel for BANC ONE CORPORATION, regarding the legality of securities being offered, including consent. 8 Opinion of Vedder, Price, Kaufman & Kammholz regarding certain federal income tax consequences of the Merger, including consent. II-1 24 Consent of Coopers & Lybrand. 24.1 Consent of McGladrey & Pullen. 24.2 Consent of Donaldson, Lufkin & Jenrette Securities Corporation is included in its opinion which is Exhibit A to the Prospectus and Proxy --------- Statement. 24.3 Consent of The Chicago Corporation is included in its opinion which is Exhibit B to the Prospectus and Proxy Statement. --------- 25 Power of attorney is included elsewhere in Part II of this Registration Statement. Item 22. Undertakings. ------------ (a) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) The undersigned Registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this Registration Statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form. (c) The Registrant hereby undertakes that every prospectus (i) that is filed pursuant to paragraph (a) above, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the Registration Statement and will not be used until such amendment has become effective, and that for the purpose of determining liabilities under the Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (d) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid II-2 by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (e) The undersigned Registrant hereby undertakes to respond to requests for information that is incorporated by reference into the Prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (f) The undersigned Registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. (g) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement: (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-3 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Columbus, State of Ohio, on May 2, 1994. BANC ONE CORPORATION By: /s/ ROMAN J. GERBER --------------------------- Roman J. Gerber Executive Vice President WITNESS our hands and common seal on the dates set forth below. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated: Signature Title Date --------- ----- ---- /s/ JOHN B. MCCOY Chairman of the Board May 2, 1994 - ------------------------------ (Principal Executive Officer John B. McCoy & Director) /s/ DONALD L. MCWHORTER President and Director May 2, 1994 - ------------------------------ Donald L. McWhorter /s/ FREDERICK L. CULLEN Senior Vice President May 2, 1994 - ------------------------------ (Principal Financial Officer) Frederick L. Cullen /s/ WILLIAM C. LEITER Controller (Principal May 2, 1994 - ------------------------------ Accounting Officer) William C. Leiter /s/ CHARLES E. EXLEY Director May 2, 1994 - ------------------------------ Charles E. Exley /s/ E. GORDON GEE Director May 2, 1994 - ------------------------------ E. Gordon Gee II-4 /s/ JOHN R. HALL Director May 2, 1994 - ------------------------------ John R. Hall /s/ LABAN P. JACKSON, JR. Director May 2, 1994 - ------------------------------ Laban P. Jackson, Jr. /s/ JOHN G. MCCOY Director May 2, 1994 - ------------------------------ John G. McCoy /s/ RENE C. MCPHERSON Director May 2, 1994 - ------------------------------ Rene C. McPherson /s/ THEKLA R. SHACKELFORD Director May 2, 1994 - ------------------------------ Thekla R. Shackelford /s/ ALEX SHUMATE Director May 2, 1994 - ------------------------------ Alex Shumate /s/ FREDERICK P. STRATTON, JR. Director May 2, 1994 - ------------------------------ Frederick P. Stratton, Jr. Director - ------------------------------ Romeo J. Ventres /s/ ROBERT D. WALTER Director May 2, 1994 - ------------------------------ Robert D. Walter II-5 EX-2.1 2 MERGER AGREEMENT EXHIBIT 2.1 AGREEMENT and PLAN OF MERGER between MID STATES BANCSHARES, INC. and BANC ONE ILLINOIS CORPORATION and joined in by BANC ONE CORPORATION TABLE OF CONTENTS TO MERGER AGREEMENT
Page ---- RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1. Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 2. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 3. Business . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 4. Effective Time of Merger; Articles of Incorporation . . . . 3 Section 5. Effect of Merger . . . . . . . . . . . . . . . . . . . . . . 4 Section 6. Liabilities upon Merger; Service of Process . . . . . . . . 4 Section 7. Conversion of Shares . . . . . . . . . . . . . . . . . . . . 5 Section 8. Board of Directors; Employees; and Name Change; . . . . . . 8 Section 9. Stock Options and Employee Benefits . . . . . . . . . . . . 9 Section 10. Undertakings of the Parties . . . . . . . . . . . . . . . . 9 Section 11. Dissenting Shareholders . . . . . . . . . . . . . . . . . . 15 Section 12. Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 13. Representations and Warranties of BANC ONE . . . . . . . . . 17 Section 14. Representations and Warranties of BANC ONE ILLINOIS . . . . 28 Section 15. Representations and Warranties of MID STATES . . . . . . . . 29 Section 16. Action by MID STATES Pending Effecting Time . . . . . . . . 41 Section 17. Action by BANC ONE Pending Effective Time . . . . . . . . . 45 Section 18. Conditions to Obligations of BANC ONE and BANC ONE ILLILNOIS . . . . . . . . . . . . . . . . . . . . 46 Section 19. Conditions to Obligations of MID STATES . . . . . . . . . . 48 Section 20. Conditions to Obligations of All Parties . . . . . . . . . . 51 Section 21. Indemnification . . . . . . . . . . . . . . . . . . . . . . 52 Section 22. Non-Survival of Representations and Warranties . . . . . . . 55 Section 23. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 55 Section 24. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 55 Section 25. Satisfaction of Conditions; Termination . . . . . . . . . . 56 Section 26. Waivers; Amendments . . . . . . . . . . . . . . . . . . . . 59 Section 27. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 60 Section 28. Captions; Counterparts . . . . . . . . . . . . . . . . . . . 60 Section 29. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 60 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 EXHIBIT A - MID STATES Subsidiaries List EXHIBIT B - Form of Plan of Merger EXHIBIT C - Form of Undertaking by Affiliates EXHIBIT D - Opinion of Counsel for MID STATES EXHIBIT D - Opinion of Counsel for BANC ONE and BANC ONE ILLINOIS
AGREEMENT and PLAN OF MERGER ---------------------------- AGREEMENT and PLAN OF MERGER dated May 25, 1993 (hereinafter called the "Merger Agreement"), between Mid States Bancshares, Inc. (hereinafter called "MID STATES") and BANC ONE ILLINOIS CORPORATION (hereinafter called "BANC ONE ILLINOIS") and joined in by BANC ONE CORPORATION (hereinafter called "BANC ONE"). WITNESSETH: MID STATES is a corporation duly organized under the laws of the State of Delaware. Its principal office is located at 506 15th Street, Moline, Rock Island County, Illinois. As of March 31, 1993, MID STATES had authorized capital stock consisting of 750,000 shares of common stock with par value of $5.00 per share ("MID STATES Common"), 311,560 of which shares were issued and outstanding and 3,040 of which were shares of treasury stock owned by MID STATES. Except as set forth in Exhibit A hereto, MID STATES owns, beneficially and of record, all of the issued and outstanding capital stock of the bank listed in Exhibit A hereto (the "Bank") and of the corporations listed in Exhibit A hereto (the "Companies"). The Bank and the Companies are hereinafter referred to collectively as the "Subsidiaries" and each, sometimes, as a "Subsidiary." BANC ONE ILLINOIS is a corporation duly organized under the laws of the State of Illinois. Its principal office is located at One East Old State Capitol Plaza, Springfield, Sangamon County, Illinois. As of March 31, 1993, BANC ONE ILLINOIS had capital stock of $100 divided into 100 shares of common stock with par value of $1.00 per share ("BANC ONE ILLINOIS Common") all of which were issued and outstanding. As of March 31, 1993, BANC ONE ILLINOIS had surplus of $130,063,525 and undivided profits, including capital reserves, of $170,656,325 and total consolidated assets of $3,025,537,402. BANC ONE ILLINOIS is a wholly owned subsidiary of BANC ONE. -1- BANC ONE is a corporation duly organized under the laws of the State of Ohio. Its principal office is located at 100 East Broad Street, Columbus, Franklin County, Ohio. As of March 31, 1993 BANC ONE had capital stock of $1,551,467,000, divided into 600,000,000 shares of common stock, without par value ("BANC ONE Common"), 258,798,094 of which shares of BANC ONE Common were issued and outstanding and none of which were shares of treasury stock owned by BANC ONE, and 35,000,000 shares of preferred stock without par value, of which 287,536 were issued and outstanding as Class B Convertible, no par value shares, and 5,000,000 shares were issued and outstanding as Series C $3.50 Cumulative Convertible Preferred Stock. As of March 31, 1993, BANC ONE had surplus of $2,776,022,000 undivided profits, including capital reserves, of $1,676,013,000, and total consolidated assets of $69,705,594,000. The respective Boards of Directors of MID STATES, BANC ONE ILLINOIS and BANC ONE have each approved this Merger Agreement and the consummation of the transactions hereby and have approved the execution and delivery of this Merger Agreement. This Merger Agreement provides for the merger of MID STATES with and into BANC ONE ILLINOIS upon the terms and conditions of this Merger Agreement (the "Merger"). BANC ONE ILLINOIS will be the surviving corporation of the Merger. From and after the Effective Time, as defined in Section 4 of this Merger Agreement, and as and when required by this Merger Agreement, BANC ONE will issue shares of BANC ONE Common in exchange for all of the issued and outstanding shares of MID STATES Common (excluding any shares held by MID STATES as treasury shares). It is understood by each of the parties hereto that BANC ONE seeks, as a result of the Merger, to acquire MID STATES, the Bank and the Companies and all of their respective operating assets and liabilities. Subject to the terms and conditions of this Merger Agreement, all parties will exert their reasonable best efforts to obtain such regulatory approvals and to effect such other actions as are necessary or appropriate to consummate the Merger. Except as may be required upon application of Section 7(e) of this Merger Agreement, BANC ONE will issue not more than 616,888 shares of BANC ONE Common in connection with the transactions contemplated by this Merger Agreement. In consideration of the premises, MID STATES, BANC ONE and BANC ONE ILLINOIS hereby make this Merger Agreement and prescribe the terms and conditions of the Merger and the mode of carrying the Merger into effect as follows: -2- 1. Merger. Subject to the terms and conditions hereinafter set forth, MID ------ STATES shall be merged with and into BANC ONE ILLINOIS pursuant to and in accordance with applicable provisions of the Illinois Business Corporation Act of 1983, as amended (the "Illinois BCA") and the General Corporation Law of the State of Delaware (the "Delaware GCL"). 2. Name. The name of the surviving corporation (hereinafter called the ---- "Surviving Corporation" whenever reference is made to it as of the Effective Time or thereafter) shall be "BANC ONE ILLINOIS CORPORATION." 3. Business. The business of BANC ONE ILLINOIS as the Surviving Corporation -------- shall be that of a bank holding company. The Surviving Corporation shall exist by virtue of, and be governed by the laws of the State of Illinois and shall have its principal office at One East Old State Capitol Plaza, Springfield, Illinois. 4. Effective Time of Merger; Articles of Incorporation. The Merger shall --------------------------------------------------- become effective upon the later to occur of (a) issuance by the Secretary of State of the State of Illinois of a certificate of merger with respect thereto as provided in applicable provisions of the Illinois BCA and (b) the filing of a certificate of merger with the Secretary of State of the State of Delaware (the "Effective Time"). Attached to this Merger Agreement as Exhibit B is a Plan of Merger (the "Plan of Merger") containing certain of the terms of this Merger Agreement, which shall be set forth in substantially the form of such Exhibit B (as the "plan of merger" with respect to the Merger referred to in Section 11.25 and the other applicable provisions of the Illinois BCA) in the Articles of Merger filed by MID STATES and BANC ONE ILLINOIS with the Secretary of State of the State of Illinois in order to make the Merger effective. The Articles of Incorporation of BANC ONE ILLINOIS in effect as of the Effective Time shall be the Articles of Incorporation of the Surviving Corporation, and the By-Laws of BANC ONE ILLINOIS in effect as of the Effective Time shall be the By-Laws of the Surviving Corporation. -3- 5. Effect of Merger. At the Effective Time, the separate corporate existence ---------------- of MID STATES and BANC ONE ILLINOIS, respectively, shall, as provided in applicable provisions of the Illinois BCA and the Delaware GCL, be merged into and continued in BANC ONE ILLINOIS as the Surviving Corporation, which shall be deemed to be the same corporation as MID STATES and BANC ONE ILLINOIS. All rights, franchises and interests of MID STATES and BANC ONE ILLINOIS, respectively, in and to every type of property, real, personal and mixed, and choses in action, shall be transferred to and vested in BANC ONE ILLINOIS as the Surviving Corporation by virtue of the Merger without any deed or other transfer in the same manner and to the same extent as such rights, franchises and interests were held or enjoyed by MID STATES and BANC ONE ILLINOIS, respectively, at the Effective Time, as provided in applicable provisions of the Illinois BCA and Delaware GCL. 6. Liabilities upon Merger; Service of Process. The Surviving Corporation ------------------------------------------- shall be responsible for all of the liabilities of every kind and description of MID STATES and BANC ONE ILLINOIS existing as of the Effective Time, including, but not limited to, employment agreements and severance agreements, except as may be specifically provided otherwise in this Merger Agreement. The filing with the Delaware Secretary of State of an appropriate certificate of merger or other appropriate document as required by the Delaware GCL shall operate as a consent by the Surviving Corporation that it may be sued and served with process in the State of Delaware in any suit, action or proceeding for the enforcement of any obligation or liability of MID STATES or BANC ONE ILLINOIS including any amount payable to any dissenting shareholder; as the consent by the Surviving Corporation to service upon and by the Secretary of State of the State of Delaware as agent of the Surviving Corporation to accept service of process in any such suit, action or proceeding for the enforcement of any such obligation or liability; and as an appointment by the Surviving Corporation of Willard Bunn III, whose address is One East Old State Capitol Plaza, Springfield, Illinois 62701 as agent of the Surviving Corporation for service of process in any action, suit or proceeding to enforce any such obligation or liability of MID STATES or BANC ONE ILLINOIS, to whom the -4- Secretary of State of the State of Delaware may mail a copy of any such process served upon the Secretary of State of the State of Delaware. 7. Conversion of Shares. -------------------- (a) At the Effective Time: (i) Each of the not more than 311,560 shares of MID STATES Common that shall be issued and outstanding immediately prior to the Effective Time (excluding any shares held by MID STATES as treasury shares) shall thereupon and without further action be converted into 1.98 shares of BANC ONE Common, subject, however, to (A) the anti-dilution provisions of Sections 7(e) of this Merger Agreement and (B) provisions set forth in Section 7(c) herein relative to fractional shares (the "Exchange Rate"). (ii) The 100 shares of BANC ONE ILLINOIS Common issued and outstanding immediately prior to the Effective Time shall continue to be issued and outstanding shares of common stock without par value of the Surviving Corporation. (iii) All of the shares of MID STATES Common held by MID STATES as treasury shares immediately prior to the Effective Time shall be cancelled and shall not represent capital stock of the Surviving Corporation and shall not be exchanged for shares of BANC ONE Common. (b) At the Effective Time, stock issued by reason of the Merger shall be allocated to the shareholders of record of MID STATES as of the Effective Time with such shares of BANC ONE Common to be equal to the number of shares of MID STATES Common outstanding immediately prior to the Effective Time multiplied by the Exchange Rate as calculated pursuant to Section 7(a). Such allocation of BANC ONE Common for each share of MID STATES Common held of record at the Effective Time made on the basis of the Exchange Rate is subject to limitations -5- relative to fractional shares as set forth in Section 7(c) herein and to adjustments pursuant to the anti-dilution provisions of Section 7(e). (c) No certificate for fractional shares of BANC ONE Common will be issued by BANC ONE in connection with the exchange contemplated by the Merger, but in lieu thereof, any holder of MID STATES Common shall, upon surrender of the certificate or certificates representing such MID STATES Common, be paid cash, without interest, by BANC ONE for such fractional shares on the basis of the BANC ONE Average Price (as hereinafter defined). The BANC ONE Average Price shall mean the average of the closing prices of BANC ONE Common on the New York Stock Exchange ("NYSE") during the Valuation Period (as hereinafter defined) in The Wall Street Journal for NYSE Composite Transactions. The term ----------------------- "Valuation Period" shall mean the ten consecutive NYSE trading days ending on the sixth NYSE trading day immediately prior to the proposed Effective Time, as designated by BANC ONE pursuant to Section 10(c) of this Merger Agreement. (d) At the Effective Time, holders of certificates formerly representing shares of MID STATES will tender such certificates to BANC ONE and subject to the provisions set forth above relating to fractional shares, BANC ONE, or BANK ONE, INDIANAPOLIS, N.A., as Exchange Agent for BANC ONE, will distribute to the holders of certificates formerly representing shares of MID STATES Common in exchange for and upon surrender for cancellation by such holders of a certificate or certificates formerly representing shares of MID STATES Common the certificate(s) for shares of BANC ONE Common in accordance with the Exchange Rate. Each certificate formerly representing MID STATES Common (other than certificates representing shares of MID STATES Common subject to the rights of dissenting shareholders) shall be deemed for all purposes to evidence the ownership of the number of shares of BANC ONE Common and cash for fractional shares into which such shares have been converted, except, however, and notwithstanding the foregoing, that, until such surrender of the certificate or certificates formerly representing shares of MID STATES Common, the -6- holder thereof shall not be entitled to receive any dividend or other payment or distribution payable to holders of BANC ONE Common. Upon such surrender (or in lieu of surrender other provisions reasonably satisfactory to BANC ONE as are made as set forth in the next following paragraph), there shall be paid to the person entitled thereto the aggregate amount of dividends or other payments or distributions (in each case without interest) which became payable after the Effective Time on the whole shares of BANC ONE Common represented by the certificates issued upon such surrender and exchange or in accordance with such other provisions, as the case may be. After the Effective Time, the holders of certificates formerly representing shares of MID STATES Common shall cease to have rights with respect to such shares (except such rights, if any, as they may have as dissenting shareholders), and except as aforesaid, their sole rights shall be to exchange said certificates for shares of BANC ONE Common and cash for fractional shares in accordance with this Merger Agreement. Certificates representing shares of MID STATES Common surrendered for cancellation by each shareholder entitled to exchange shares of MID STATES Common for shares of BANC ONE Common by reason of the Merger shall be appropriately endorsed or accompanied by such appropriate instruments of transfer as BANC ONE may reasonably require; provided, however, that if there be delivered to BANC ONE by any person who is unable to produce any such certificate formerly representing shares of MID STATES Common for transfer (i) evidence to the reasonable satisfaction of BANC ONE that any such certificate has been lost, wrongfully taken or destroyed, (ii) such security or indemnity as reasonably may be requested by BANC ONE to save it harmless, and (iii) evidence to the reasonable satisfaction of BANC ONE that such person is the owner of the shares theretofore represented by each certificate claimed by him or her to be lost, wrongfully taken or destroyed and that he or she is the person who would be entitled to present each such certificate and to receive shares of BANC ONE Common pursuant to this Merger Agreement, then BANC ONE, in the absence of actual notice to it that any shares theretofore -7- represented by any such certificate have been acquired by a bona fide purchaser, shall deliver to such person the certificate(s) representing shares of BANC ONE Common which such person would have been entitled to receive upon surrender of each such lost, wrongfully taken or destroyed certificate of MID STATES Common. (e) If prior to the Effective Time BANC ONE or MID STATES shall (i) declare a stock dividend upon or subdivide, split up, reclassify or combine its shares of common stock; or (ii) declare a dividend or make a distribution on its common stock in any security convertible into its common stock, appropriate adjustment or adjustments will be made in the Exchange Rate. 8. Board of Directors; Employees; and Name Changes. The directors of BANC ONE ----------------------------------------------- ILLINOIS immediately prior to the Effective Time, together with MID STATES director Thomas H. Robinson, shall serve as the directors of the Surviving Corporation immediately following the Effective Time and until the next annual meeting of shareholders at which their respective successors are elected and qualified. The officers and employees of the Surviving Corporation immediately following the Effective Time shall be the officers and employees of BANC ONE ILLINOIS immediately before the Effective Time with each such person to hold the same office in the Surviving Corporation as held by such person in BANC ONE ILLINOIS. The directors, officers and employees of the Subsidiaries immediately following the Effective Time shall be the directors, officers and employees of the respective Subsidiaries immediately before the Effective Time. MID STATES will cooperate with BANC ONE in the procurement of requisite corporate and regulatory approvals and will use its reasonable best efforts to take such other steps as are appropriate and necessary to effect changes in the name of each of the Subsidiaries to include the words "BANK ONE" or "BANC ONE" so that such name changes will become effective at the Effective Time. -8- 9. Stock Options and Employee Benefits. ----------------------------------- (a) As of the date of the Merger Agreement, there are no outstanding and unexercised stock options for shares of MID STATES Common. (b) All employee benefit programs of MID STATES and the Subsidiaries will be terminated, grandfathered or merged in BANC ONE benefit plans and programs will be made available and applicable to the employees of MID STATES and the Subsidiaries following the Effective Time and shall be as described in and governed by a Benefits Letter Agreement dated May 24, 1993, pertaining to benefits between MID STATES and BANC ONE (the "Benefits Agreement") or in the Second Benefits Letter Agreement dated May 24, 1993 pertaining to employee issues between MID STATES and BANC ONE (the "Second Benefits Agreement"). 10. Undertakings of the Parties. MID STATES, BANC ONE ILLINOIS and BANC ONE --------------------------- further agree as follows: (a) This Merger Agreement and the Plan of Merger shall be submitted to the shareholders of MID STATES for approval at a meeting to be called and held in accordance with applicable law and the Certificate of Incorporation and By-Laws of MID STATES. Such shareholders' meeting will be scheduled to be held approximately 30 days following the mailing by MID STATES of its proxy statement to its shareholders promptly following the effective date of the registration statement to be filed by BANC ONE with the Securities and Exchange Commission (the "SEC") as provided in Section 10(d). MID STATES and BANC ONE will cooperate with each other in order to facilitate the preparation, filing and clearance of the registration statement and the proxy statement under Federal and State securities laws to be used with respect to such shareholders' meeting and the exchange of shares as contemplated by this Merger Agreement. (b) BANC ONE will promptly prepare and file an application (believed in good faith by BANC ONE to be substantially complete in form and substance) to the Board of Governors of the Federal Reserve System -9- (the "Board") under appropriate provisions of Section 3 of the Bank Holding Company Act of 1956, as amended, and an application to the Illinois Commissioner of Banks and Trust Companies (the "Illinois Commissioner") under appropriate provisions of the Illinois Bank Holding Company Act of 1957, as amended, for prior approval of the proposed acquisition of MID STATES and/or the Subsidiaries by BANC ONE and/or BANC ONE ILLINOIS. MID STATES will furnish BANC ONE such information, appropriate representations and documents as may be reasonably requested by BANC ONE in connection therewith. BANC ONE will use its reasonable best efforts to cause such applications to be approved by the Board and the Illinois Commissioner, respectively, and to obtain such other regulatory consents and approvals as may be necessary to facilitate the Merger and will provide MID STATES and its counsel with an opportunity to review drafts of all such applications and to comment on the portions of such applications that contain information about MID STATES. BANC ONE will provide MID STATES and its counsel with copies of the public portions of all such applications as filed, together with correspondence to or from the Board and Illinois Commissioner related thereto. (c) After receipt of the Board's prior approval of BANC ONE's and BANC ONE ILLINOIS' acquisition of MID STATES, after approval of the acquisition by the Illinois Commissioner, and after the approval of the shareholders of MID STATES, as provided in Section 10(a), BANC ONE shall designate the date as of which BANC ONE desires the Merger to become effective and the Effective Time shall occur at the time and on the date so designated, subject to Section 24 of this Merger Agreement. In no event will the date designated by BANC ONE as the Effective Time be sooner than the day following the day on which all approvals of the Board and the Illinois Commissioner have been received and any required waiting periods with respect thereto have expired, nor will the date designated by BANC ONE as the Effective Time be later than 31 days following the date at which all approvals of the Board and the Illinois Commissioner have been received and any required waiting periods with respect thereto have expired. -10- (d) BANC ONE will prepare and file with the SEC and use its reasonable best efforts to cause to become effective, a registration statement, including the related prospectus and proxy statement referred to in Section 10(a), above ("Proxy Statement"), and any required amendments thereto or supplements to any prospectus contained therein, relating to the exchange of BANC ONE Common contemplated by this Merger Agreement. Such registration statement will not cover resales by any persons who may be considered "underwriters" under Rule 145(c) of the Securities Act of 1933, as amended (the "1933 Act"). BANC ONE shall use its reasonable best efforts to have the shares of BANC ONE Common qualified or exempted from qualification under all applicable state securities laws as soon as possible. In the event that a stop order has been issued, or threatened, by the SEC, that suspends or would suspend the effectiveness of the registration statement, BANC ONE shall use its reasonable best efforts to promptly remove, or cause not to be issued, any such stop order. (e) BANC ONE and/or BANC ONE ILLINOIS will assume and pay all expenses incident to the obtaining of the requisite regulatory consents and approvals. Without limiting the generality of the foregoing, the expenses to be assumed and paid by BANC ONE shall include (i) all legal and other expenses and taxes incurred by BANC ONE incident to the consummation of the Merger contemplated by this Merger Agreement, (ii) all legal and other expenses incurred by BANC ONE incident to the preparation and filing of the applications to the Board, the Illinois Commissioner, and other requests for regulatory consents and approvals with the appropriate bank regulatory agencies as set forth in or contemplated by this Merger Agreement, and (iii) all legal and other expenses, if any, incurred in connection with the registration of BANC ONE Common under the Federal and State securities laws. The expenses to be assumed and paid by BANC ONE and/or BANC ONE ILLINOIS shall not include any legal or other expenses incurred by MID STATES in the negotiation of the Merger, the examination or review of documents for its own benefit, in connection with its own corporate proceedings or to any investment banker or advisor for services -11- rendered on its behalf. BANC ONE will pay the expenses of reproducing the Proxy Statement. MID STATES shall be responsible for its legal and accounting fees associated with the Proxy Statement, including the expenses and fees to Donaldson, Lufkin and Jenrette Securities Corporation ("DLJ") with respect to any opinion expressed with respect to the fairness of the Merger from a financial point of view and/or the Exchange Rate to the holders of MID STATES Common (the "DLJ Fairness Opinion"). Any fees and expenses assumed and paid by BANC ONE and/or BANC ONE ILLINOIS pursuant to this Section 10(e), whether directly or indirectly incurred, shall not reduce or otherwise effect the Exchange Rate. (f) All information furnished by one party to another party in connection with this Merger Agreement (whether before or after the date of this Merger Agreement) and the transactions contemplated hereby which is regarded by such furnishing party as confidential (and is so designated not later than the time of delivery or the date of this Merger Agreement) will be kept confidential by such other party and will be used only in connection with this Merger Agreement and the transactions contemplated hereby, except to the extent that such information (i) is already known to such other party when received, (ii) thereafter becomes lawfully obtainable from other sources, otherwise than in violation of this paragraph or similar duties or provisions regarding confidentiality, or (iii) is, in the reasonable opinion of legal counsel for BANC ONE, required to be disclosed in any document filed with the SEC, the Board, the Illinois Commissioner or any other governmental agency or authority. The provisions of this Merger Agreement supersede and shall serve to terminate any Confidentiality Agreement between the parties. (g) BANC ONE will provide MID STATES and its counsel with copies of all filings made by BANC ONE with the SEC under the Securities Exchange Act of 1934, as amended, (the "1934 Act") and the 1933 Act and the respective rules and regulations of said Commission thereunder at the time such filings are made at any time prior to the Effective Time. -12- (h) BANC ONE and BANC ONE ILLINOIS will furnish to MID STATES all information concerning BANC ONE and BANC ONE ILLINOIS reasonably required by MID STATES in connection with the preparation of proxy solicitation materials for use in soliciting proxies in connection with the meeting of MID STATES' shareholders called for the purpose of voting on the Merger and will promptly advise MID STATES if BANC ONE determines that any of such information is or becomes false or misleading in any material respect. MID STATES will furnish to BANC ONE all information concerning MID STATES and the Subsidiaries reasonably required by BANC ONE in connection with BANC ONE's preparation of the registration statement (including the related prospectus) and any required amendments or supplements thereto, or in connection with other filings by BANC ONE relating to the registration of its shares and will promptly advise BANC ONE if MID STATES determines that any such information is or becomes false or misleading in any material respect. (i) No press release or other public disclosure of matters related to this Merger Agreement or any of the transactions contemplated hereby shall be made by MID STATES or BANC ONE unless the other party shall have provided its prior consent to the form and substance thereof; provided, however, that nothing herein shall be deemed to prohibit any party hereto from making any disclosure which its counsel deems necessary or advisable in order to fulfill such party's disclosure obligations imposed by law. (j) Prior to the Effective Time, BANC ONE will vote all the shares of BANC ONE ILLINOIS to approve and adopt the proposal to merge BANC ONE ILLINOIS and MID STATES at a meeting of the shareholders of BANC ONE ILLINOIS held for such purpose or by means of a unanimous written consent of BANC ONE ILLINOIS shareholders adopted in lieu of a meeting to approve the Merger and approve this Merger Agreement. (k) For not less than the two-year period immediately following the Effective Time, BANC ONE shall make available adequate current public information about itself as that terminology is used in and as required by Rule 144(c) of the SEC under the 1933 Act. -13- (l) Each of BANC ONE, BANC ONE ILLINOIS and MID STATES will use its reasonable best efforts to cause the Merger to qualify for pooling-of-interests accounting treatment. (m) MID STATES will use its reasonable best efforts to cause each person who, in the joint opinion of counsel for BANC ONE and MID STATES is at the Effective Time or was, at the time of MID STATES' shareholders' meeting referred to in Section 10(a) hereof, an "affiliate" of MID STATES (as that term is used in Rules 144 and 145 promulgated by the SEC under the 1933 Act), to execute and deliver to BANC ONE the written undertakings in the form attached hereto as Exhibit C. --------- (n) BANC ONE will initiate a pre-acquisition investigation and review of the books, records and facilities of MID STATES and its Subsidiaries and will complete such pre-acquisition investigation not later than 60 days following the date of this Merger Agreement. BANC ONE shall advise MID STATES at the conclusion of such pre-acquisition investigation of all matters then known to BANC ONE which BANC ONE shall in good faith determine to be either (i) inconsistent in any material and adverse respect with any of the representations and warranties of MID STATES contained in this Merger Agreement or (ii), in the reasonable judgment of the Board of Directors of BANC ONE, to be either (x) of such significance as to materially and adversely affect the financial condition or the results of operations of MID STATES and the Subsidiaries on a consolidated basis or (y) to deviate materially and adversely from MID STATES' audited financial statements for the year ended December 31, 1992. BANC ONE shall have the right to terminate this Merger Agreement as set forth in Section 24(c) and supplemented by the MID STATES Disclosure Letter (as hereinafter defined). (o) MID STATES will initiate a pre-acquisition investigation and review of the books, records and facilities of BANC ONE and its subsidiaries and will complete such pre-acquisition investigation not later than 10 business days following the date of this Merger Agreement. MID -14- STATES shall advise BANC ONE at the conclusion of such pre- acquisition investigation of all matters then known to MID STATES which MID STATES shall in good faith determine to be either (i) inconsistent in any material and adverse respect with any of the representations and warranties of BANC ONE contained in this Merger Agreement or (ii) in the reasonable judgment of the Board of Directors of MID STATES, to be either (x) of such significance as to materially and adversely affect the financial condition or the results of operations of BANC ONE and its subsidiaries on a consolidated basis or (y) to deviate materially and adversely from BANC ONE's audited financial statements for the year ended December 31, 1992. MID STATES shall have the right to terminate this Merger Agreement as set forth in Section 24(d) and supplemented by the BANC ONE Disclosure Letter (as hereinafter defined). (p) In addition to BANC ONE's pre-acquisition investigation of MID STATES and its Subsidiaries and MID STATES' pre-acquisition investigation of BANC ONE and its subsidiaries, BANC ONE and MID STATES shall each provide the other with adequate opportunity to conduct such further reviews and examinations of the business, properties and conditions (financial and otherwise) of the other as BANC ONE and MID STATES, respectively, shall deem prudent, provided that such investigations shall not interfere unreasonably with the normal operations of the party being reviewed. (q) BANC ONE will use its reasonable best efforts to cause the shares of BANC ONE Common to be issued to the shareholders of MID STATES pursuant to this Merger Agreement to be listed on the NYSE as of the Effective Time. 11. Dissenting Shareholders. Shareholders of MID STATES Common who do not vote ----------------------- their shares in favor of the Merger and otherwise perfect applicable dissenters' rights will be entitled to dissenters or appraisal rights pursuant to applicable provisions of the Delaware GCL. -15- 12. Tax Opinion. BANC ONE and MID STATES shall use their respective reasonable ----------- best efforts to obtain from Vedder, Price, Kaufman & Kammholz and cause to be included in the registration statement a written opinion addressed to, among others, MID STATES, its shareholders and BANC ONE, that, based upon the Internal Revenue Code of 1986, as amended (the "Code"), the regulations thereunder, and rulings issued by the Internal Revenue Service in transactions similar to those contemplated by this Merger Agreement, for Federal income tax purposes: (a) The merger of MID STATES into BANC ONE ILLINOIS, pursuant to this Agreement, will constitute a reorganization within the meaning of Section 368(a)(1)(A) and Section 368(a)(2)(D) of the Code. MID STATES, BANC ONE ILLINOIS and BANC ONE will each be considered "a party to a reorganization" within the meaning of Section 368(b) of the Code for purposes of this reorganization. (b) No gain or loss will be recognized by MID STATES upon the transfer of the assets and liabilities to BANC ONE ILLINOIS in exchange for the shareholders of MID STATES receiving BANC ONE Common; (c) No gain or loss will be recognized by BANC ONE ILLINOIS upon the receipt of the assets and liabilities of MID STATES in exchange for the shareholders of MID STATES receiving BANC ONE Common; (d) The tax basis of the assets of MID STATES in the hands of BANC ONE ILLINOIS will be the same as the tax basis of such assets in the hands of MID STATES immediately prior to the transfer; (e) The holding period of the assets of MID STATES transferred to BANC ONE ILLINOIS will include the period during which such assets were held by MID STATES prior to the transfer; (f) No gain or loss will be recognized by the shareholders of MID STATES upon the receipt of BANC ONE Common in exchange for their shares of MID STATES (disregarding for this purpose of any cash received upon exercise of dissenters' rights or in lieu of the receipt of fractional shares); -16- (g) The tax basis of the BANC ONE Common (including any fractional share interests to which they may be entitled) received by the shareholders of MID STATES will be the same as the tax basis of the MID STATES shares exchanged therefor; and (h) The holding period of the BANC ONE Common received by the shareholders of MID STATES will include the holding period of the MID STATES shares exchanged therefor, provided that at the time of the exchange the MID STATES shares were held as capital assets. 13. Representations and Warranties of BANC ONE. BANC ONE represents and ------------------------------------------ warrants to MID STATES that, except as set forth in BANC ONE's disclosure letter to MID STATES dated May 24, 1993 and delivered to MID STATES not later than the time of the execution of this Merger Agreement (the "BANC ONE Disclosure Letter"), and except as otherwise indicated below: (a) BANC ONE is a corporation duly organized and validly existing in good standing under the laws of the State of Ohio, is a registered bank holding company under the Bank Holding Company Act of 1956, as amended, and is qualified to do business and is in good standing in the State of Ohio, together with all other jurisdictions where it is both required to so qualify and where the failure to so qualify would have a material adverse effect on the business, operations, financial condition or results of operations of such party and its subsidiaries, taken as a whole, or on the ability of such party to consummate the transactions contemplated hereby, and BANC ONE has full power and authority (including all licenses, franchises, permits and other governmental authorizations which are legally required) to engage in the businesses and activities now conducted by it and its subsidiaries. BANC ONE is not subject to any formal or informal agreement or understanding with, nor is it subject to any order of, any bank regulatory authority restricting or prohibiting or attempting to restrict or prohibit any activities or conduct of BANC ONE. As of March 31, 1993, the authorized capital stock of BANC ONE consisted of (i) 600,000,000 shares of BANC ONE Common Stock without par value, of which a total of 258,798,094 shares were issued and -17- outstanding and none of which were shares held by BANC ONE as treasury stock and (ii) 35,000,000 shares of preferred stock without par value, of which 287,536 shares were issued and outstanding as Class B Convertible, no par value shares, and 5,000,000 shares were issued and outstanding as Series C $3.50 Cumulative Convertible Preferred Stock. All of the issued and outstanding shares of BANC ONE's capital stock are duly authorized, validly issued, fully paid, nonassessable and subject to no pre-emptive rights. Subject only to obtaining the required regulatory approvals, BANC ONE is, and at all times after the date of this Merger Agreement to and including the Effective Time will be, authorized to effect the Merger under applicable law. (b) BANC ONE has furnished to MID STATES copies of the following financial statements relating to BANC ONE and its consolidated subsidiaries: (i) the audited Consolidated Balance Sheets of BANC ONE as of December 31, 1992 and 1991 and the Consolidated Statements of Income, Shareholders' Equity and Cash Flows for the years then ended, together with the notes thereto, as audited by Coopers & Lybrand, independent auditors together with the notes thereto; and (ii) the unaudited Consolidated Balance Sheet of BANC ONE as at March 31, 1993 and the unaudited Consolidated Statements of Income and Shareholders' Equity for the period then ended, together with the notes thereto. Each of the aforementioned financial statements present fairly, in accordance with generally accepted accounting principles (applied on a consistent basis except as disclosed in the footnotes thereto), the consolidated financial position and results of operations of BANC ONE as of the dates and for the periods therein set forth. Such financial statements do not, as of the dates thereof, include any material asset or omit any material liability, absolute or contingent, or other fact, the inclusion or omission of which renders such financial statements, in light of the circumstances under which they were made, misleading in any material respect. Since March 31, 1993, there has not been any change in the financial condition, results of operations or business of BANC ONE and its subsidiaries that has had a material adverse effect on the -18- financial condition or results of operations of such party and its subsidiaries, taken as a whole, or on the ability of such party to consummate the transaction contemplated hereby (a "Material Adverse Effect"). Since March 31, 1993, BANC ONE has issued approximately 13,378,000 additional shares of BANC ONE Common. (c) The Boards of Directors of BANC ONE and BANC ONE ILLINOIS have duly authorized the execution and delivery of this Merger Agreement and approved the Merger as contemplated by said Merger Agreement. No authorization of this Merger Agreement or of the transactions hereby contemplated is required by the shareholders of BANC ONE. BANC ONE and BANC ONE ILLINOIS have all requisite power and authority to enter into this Merger Agreement and, after its vote of the shares of BANC ONE ILLINOIS in favor of the Merger as contemplated by Section 10(j), BANC ONE and BANC ONE ILLINOIS will have the authority to consummate the transactions contemplated hereby. This Merger Agreement constitutes the valid and legally binding and enforceable obligation of each of BANC ONE and BANC ONE ILLINOIS and this Merger Agreement and the consummation of the Merger have been duly authorized and approved on behalf of BANC ONE and BANC ONE ILLINOIS by all requisite corporate action. Provided the required approvals are obtained from the Board and the Illinois Commissioner, neither the execution and delivery of this Merger Agreement nor the consummation of the Merger will conflict with, result in the breach of, constitute a default under or accelerate the performance provided by the terms of any law, or any rule or regulation of any governmental agency or authority or any judgment, order or decree of any court, bank regulatory agency or other governmental agency to which BANC ONE or BANC ONE ILLINOIS is subject, any contract, agreement or instrument to which BANC ONE or BANC ONE ILLINOIS is a party or by which BANC ONE or BANC ONE ILLINOIS is bound or committed, or the Articles of Incorporation or Regulations of BANC ONE or the Articles of Incorporation or By-Laws of BANC ONE ILLINOIS, or constitute an event which with the lapse of time or action by a third party, could, to the best of BANC ONE's knowledge, result in the default under any of the foregoing or result in the creation of any lien, charge or encumbrance upon any of the -19- assets or properties of BANC ONE or BANC ONE ILLINOIS or upon any of the stock of BANC ONE or BANC ONE ILLINOIS or adversely affect the ability of BANC ONE to consummate the transactions contemplated hereby, except, in the case of contracts, agreements or instruments, such defaults, conflicts or breaches which either (i) will be cured or waived prior to the Effective Time or (ii) if not so cured or waived would not, in the aggregate, have a Material Adverse Effect. (d) The reserve for possible loan and lease losses shown on the March 31, 1993 Consolidated Balance Sheet of BANC ONE and its subsidiaries is adequate in all material respects under the requirements of generally accepted accounting principles to provide for possible losses, net of recoveries relating to loans previously charged off, on loans outstanding (including, without limitation, accrued interest receivable) as of March 31, 1993. (e) Except as disclosed in the financial statements referred to in Section 13(b), there is no litigation, action, suit, investigation or proceeding pending or, to the best of the knowledge after due inquiry of BANC ONE and its executive officers, overtly threatened, against or affecting BANC ONE or any of its subsidiaries or involving any of their respective properties or assets, at law or in equity, before any federal, state, municipal, local or other governmental authority, which is reasonably likely to be resolved adversely to the interest of BANC ONE or its subsidiaries and, if so resolved, would have a Material Adverse Effect or materially impair its ability, or that of BANC ONE ILLINOIS, to perform under this Merger Agreement, and to the best of the knowledge and belief after due inquiry of BANC ONE and its executive officers, no one has reasonable or valid grounds on which it reasonably can be expected that anyone will assert or initiate any such litigation, action, suit, investigation or proceeding against BANC ONE or any of its subsidiaries based upon the wrongful action or inaction of BANC ONE or any of its subsidiaries or any of their respective officers, directors or employees. -20- (f) At the Effective Time and on such subsequent dates when the former shareholders of MID STATES surrender their MID STATES share certificates for cancellation, the shares of BANC ONE Common to be exchanged with former shareholders of MID STATES will have been duly authorized and validly issued by BANC ONE and will be fully paid and nonassessable and subject to no pre-emptive rights. (g) BANC ONE and each of its subsidiaries have good and marketable title to all their respective assets and properties, whether real or personal, tangible or intangible, including without limitation the capital stock of its subsidiaries and all other assets and properties reflected in BANC ONE's Consolidated Balance Sheet as of March 31, 1993 or acquired subsequent thereto (except to the extent that such assets and properties have been disposed of for fair value in the ordinary course of business since March 31, 1993). Such assets and properties are subject to no liens, mortgages, security interests, encumbrances, pledges or charges of any kind, except (i) as noted in said Consolidated Balance Sheet or the notes thereto; (ii) statutory liens for taxes not yet delinquent; (iii) landlord's liens; and (iv) minor defects and irregularities in title and encumbrances which do not materially impair the use thereof for the purposes for which they are held; and such liens, mortgages, security interests, encumbrances and charges do not, in the aggregate, have a Material Adverse Effect. BANC ONE and its subsidiaries as lessees have the unqualified right under valid and subsisting leases to occupy, use, possess and control all property leased by BANC ONE and its subsidiaries. (h) To the best of the knowledge after due inquiry of BANC ONE and its executive officers, BANC ONE and its subsidiaries have complied with all laws, regulations and orders applicable to them and to the conduct of their businesses, including without limitation, all statutes, rules and regulations pertaining to the conduct of banking activities except for violations which together with any penalty which results therefrom has not had and will not have a Material Adverse Effect. Neither BANC ONE nor any of its subsidiaries is in -21- default under, and no event has occurred which, to the best of BANC ONE's knowledge, after due inquiry, is likely to result in the default under the terms of any judgment, decree, order, writ, rule or regulation of any governmental authority or court, whether federal, state or local and whether at law or in equity, in each case where the default has had or is likely to have a Material Adverse Effect. (i) BANC ONE and BANC ONE ILLINOIS have not incurred and will not incur directly or indirectly any liability for brokerage, finders', agents' or investment bankers' fees or commissions in connection with this Merger Agreement or the transactions contemplated hereby, except for fees associated with the provision of the DLJ Fairness Opinion, for which BANC ONE and/or BANC ONE ILLINOIS may be obligated by operation of law as a result of the Merger. (j) Each pension, stock bonus or purchase, profit-sharing, retirement, health and welfare plan maintained by or covering employees of BANC ONE or any subsidiary of BANC ONE other than a multiemployer plan (for purposes of this paragraph hereinafter referred to collectively as the "Plans") which purports to be a qualified plan under Section 401(a) of the Code is so qualified. All of the Plans which constitute employee pension benefit or employee welfare benefit plans subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), have been maintained in compliance in all material respects with the applicable requirements of ERISA. All material notices, reports and other filings required under applicable law to be given or made to or with any governmental agency with respect to the Plans have been timely filed or delivered. BANC ONE has no knowledge of any circumstances which would adversely affect the qualification of the Plans or their compliance with the applicable requirements of ERISA, would result or have resulted in liability under Title IV of ERISA or of any "reportable event" (as such term is defined in Section 4043(b) of ERISA) or any "prohibited transaction" (as such term is defined in Section 406 of ERISA and Section 4975(c) of the Code) which has occurred since the date on which said sections became applicable to the Plans and which could reasonably be -22- expected to result in any material liability of BANC ONE or any subsidiary to the Pension Benefit Guaranty Corporation (the "PBGC"), the Department of Treasury, the Department of Labor or any multiemployer plan. Those Plans which are defined benefit plans within the meaning of ERISA meet the minimum funding standards set forth in the Code and ERISA and the assets of such Plans equal or exceed the present value of accrued benefits on a termination basis under such Plans as of the most recent plan valuation date. There are no pending or threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations which have been asserted or instituted against the Plans, any fiduciaries thereof with respect to their duties to the Plans or the assets of any of the trusts under any of the Plans which could reasonably be expected to result in any material liability of BANC ONE or any subsidiary to the PBGC, Department of Treasury, Department of Labor or any multiemployer plan. (k) BANC ONE and/or its subsidiaries have duly filed all federal, state, county and local income, franchise, bank, excise, real and personal property and other tax returns and reports (including, but not limited to, those relating to social security, withholding, unemployment insurance, and occupation, sales and use taxes and those filed on a consolidated, combined or unitary basis) required to have been filed by BANC ONE or its subsidiaries up to the date hereof. All of the foregoing returns are true and correct in all material respects, and BANC ONE and its subsidiaries have paid or, prior to the Effective Time, will pay all taxes, interest, additions to tax, and penalties shown on such returns or reports as being due or (except to the extent the same are contested in good faith and, if material, summarized in the BANC ONE Disclosure Letter) claimed to be due to any federal, state, county, local or other taxing authority, and there is, and at the Effective Time will be, no basis for any additional claim or assessment which might materially and adversely affect BANC ONE and its subsidiaries, except for those being contested in good faith and summarized in the BANC ONE Disclosure Letter. BANC ONE and its subsidiaries have paid or made adequate -23- provision in their financial statements or on their books and records for all taxes payable in respect of all periods ending on or before the date hereof. BANC ONE and its subsidiaries have, or at the Effective Time will have, no liability for any taxes, interest, additions to tax, or penalties of any nature whatsoever, except for those taxes which may have arisen up to the Effective Time in the ordinary course of business and are properly accrued on the books of BANC ONE and its subsidiaries as of the Effective Time or are being contested in good faith and have, if material, been summarized in the BANC ONE Disclosure Letter. (l) BANC ONE and its subsidiaries have in effect insurance coverage with reputable insurers, which in respect of amounts, premiums, types and risks insured, constitutes reasonably adequate coverage against all risks customarily insured against by bank holding companies and their subsidiaries comparable in size and operations to BANC ONE and its subsidiaries. (m) Neither the Proxy Statement nor the related registration statement nor any amendment or supplement thereto that is filed with the SEC in connection with the transactions contemplated hereby (except for any information which has been or shall be supplied by MID STATES for inclusion in the Proxy Statement and registration statement and is so included as so supplied) shall contain (in the case of information relating to the Proxy Statement, at the time it is mailed and in the case of information relating to the registration statement at the time it becomes effective and at the time of MID STATES' shareholders' meeting) any untrue statement of a material fact or shall omit to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. The registration statement and any amendments or supplements thereto that are filed with the SEC in connection with the transactions contemplated hereby will comply as to form in all material respects with the provisions of the 1933 Act and the rules and regulations promulgated thereunder. -24- (n) No employee of BANC ONE or any of its subsidiaries is represented, for purposes of collective bargaining, by a labor organization of any type. BANC ONE is unaware of any efforts during the past five years to unionize or organize any employees of BANC ONE or any of its subsidiaries, and no claim related to such employees under the Fair Labor Standards Act, National Labor Relations Act, Civil Rights Act of 1964, Walsh-Healy Act, Davis Bacon Act, Civil Rights Act of 1866, Age Discrimination in Employment Act, Equal Pay Act of 1963, Executive Order No. 11246, Federal Unemployment Tax Act, Vietnam Era Veterans Readjustment Act, Occupational Safety and Health Act, or any state or local employment related law, order, ordinance or regulation, no unfair labor practice, discrimination or wage-and-hour claim is pending or, to the best of BANC ONE's knowledge, threatened against BANC ONE or any of its subsidiaries which claim has had or is reasonably likely to have a Material Adverse Effect. (o) To the actual knowledge of BANC ONE and its executive officers: (i) with respect to any contaminant, pollutant, hazardous substance, hazardous waste, hazardous pollutant, toxic pollutant, toxic waste or toxic substance ("Contaminant"), there are no material actions, proceedings or investigations pending or threatened before any federal or state environmental regulatory body, or before any federal or state court, alleging non-compliance with or liability in connection with, by BANC ONE or any of its subsidiaries, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. (S)(S) 9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act, 42 U.S.C. (S)(S) 6901 et seq. ("RCRA"), the Clean Water Act, 33 U.S.C. (S)(S) 1251 et seq. ("CWA"), or the Clean Air Act, 42 U.S.C. (S)(S) 7401 et seq. ("CAA"), as each is amended from time to time, or any other federal, state, local or municipal statute, ordinance or regulation, or order, ruling or other decision of any court, administrative agency or other governmental authority relating to health or safety or environmental protection (such statutes, ordinances, regulations, orders, rulings and decisions, together, "Environmental Laws"); (ii) there is no reasonable basis for the institution of any material action, proceeding or investigation -25- against BANC ONE or any of its subsidiaries under any Environmental Law; (iii) neither BANC ONE nor any of its subsidiaries is responsible in any material respect under any Environmental Law for any release by any person at or in the vicinity of real property of any Contaminant, caused by the spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing of any such hazardous substance into the environment (collectively "Release"); (iv) neither BANC ONE nor any of its subsidiaries is responsible for any material costs of any response action required by virtue of any Release of any Contaminant into the environment including, without limitation, costs arising from investigation, removal or remediation of Contaminants, security fencing, alternative water supplies, temporary evacuation and housing and other emergency assistance undertaken by any environmental regulatory body or any other person; (v) BANC ONE and each of its subsidiaries are, in all material respects, in compliance with all applicable Environmental Laws; and (vi) no real property owned or used by BANC ONE or any of its subsidiaries contains any Contaminant including, without limitation, any asbestos, PCBs or petroleum products or byproducts in any form, the presence, location or condition of which (a) could require remediation or other corrective action pursuant to any Environmental Law in any material respect, or (b) otherwise would pose any significant health or safety risk unless remedial measures were taken. (p) BANC ONE and/or its subsidiaries (i) have surveyed the facilities where BANC ONE and its subsidiaries conduct their businesses including, without limitation, automatic teller machines (collectively, the "BANC ONE Facilities") for compliance with the Americans with Disabilities Act and the regulations issued thereunder (collectively, "ADA"); (ii) have developed action plans to remove architectural barriers including communication barriers that are structural in nature from existing BANC ONE Facilities (collectively, the "BANC ONE Barriers") when such removal is "readily achievable," as that term is defined in ADA; (iii) will finalize action plans for automatic teller machines ("ATMs") upon clarification by the -26- Architectural and Transportation Barriers Compliance Board ("ATBCB"); (iv) have developed or will develop schedules for BANC ONE Barrier removal from BANC ONE Facilities in such action plans so that BANC ONE Barrier removal will be complete on January 26, 1992 or as soon as practicable thereafter; and (v) have removed all BANC ONE Barriers in BANC ONE Facilities or will cause all BANC ONE Barriers to be removed in accordance with such action plans. All "alterations" (as such term is defined in ADA) to BANC ONE Facilities undertaken after January 26, 1992 comply with ADA and the ATBCB Accessibility Guidelines for Buildings and Facilities ("ADAAG"). Effective January 26, 1992, all plans and designs for new construction to be utilized by BANC ONE and its subsidiaries comply with ADA and ADAAG. To the best of BANC ONE's knowledge, after due inquiry, no material investigations, proceedings, or complaints, formal or informal, are pending or threatened against BANC ONE and/or its subsidiaries in connection with BANC ONE Facilities under ADA, ADAAG, or any other state or federal law concerning accessibility for individuals with disabilities. (q) The statements made in the BANC ONE Disclosure Letter and any attachments thereto shall be deemed to constitute representations and warranties of BANC ONE under this Merger Agreement to the same extent as if herein set forth in full. Anything disclosed in the BANC ONE Disclosure Letter or the attachments thereto shall be considered to have been disclosed for purposes of all representations, warranties and covenants under this Merger Agreement. (r) BANC ONE has filed all reports, statements, forms and documents with the SEC that it was required to file since December 31, 1988 (the "SEC Filings"), all of which have complied in all material respects with all applicable requirements of the 1933 Act and the 1934 Act. As of their respective dates, each such SEC Filing did 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, in light of the circumstances under which they were made, not misleading. -27- 14. Representations and Warranties of BANC ONE ILLINOIS. BANC ONE ILLINOIS --------------------------------------------------- represents and warrants to MID STATES that, except as set forth in the BANC ONE Disclosure Letter, and except as otherwise indicated below: (a) BANC ONE ILLINOIS is a corporation duly organized and validly existing under the laws of the State of Illinois, is a registered bank holding company under the Bank Holding Company Act of 1956, as amended, and is qualified to do business and is in good standing in the State of Illinois together with all other jurisdictions where it is both required to so qualify and the failure to so qualify would have a Material Adverse Effect, and BANC ONE ILLINOIS has full power and authority (including all licenses, franchises, permits and other governmental authorizations which are legally required) to engage in the business and activities now conducted by it and its subsidiaries. The authorized capital stock of BANC ONE ILLINOIS is, and at the Effective Time will be, 100 shares of common stock, $1.00 par value, of which 100 shares are issued and outstanding, all of which are owned by BANC ONE free and clear of all liens, security interests or other encumbrances. (b) The Board of Directors of BANC ONE ILLINOIS has authorized execution of this Merger Agreement and approved the acquisition of MID STATES as contemplated by said Merger Agreement. BANC ONE ILLINOIS has all requisite power and authority to enter into this Merger Agreement and, after approval of the Merger by BANC ONE, the sole shareholder of BANC ONE ILLINOIS, BANC ONE ILLINOIS will have the authority to consummate the transactions contemplated hereby. Subject to shareholder approval, this Merger Agreement constitutes the valid and legally binding obligation of BANC ONE ILLINOIS and this Merger Agreement and the consummation hereof have been duly authorized and approved on behalf of BANC ONE ILLINOIS by all requisite corporate action. Subject to shareholder approval and provided the required approvals are obtained from the Board and the Illinois Commissioner, neither the execution and delivery of this Merger Agreement nor the consummation of the Merger will conflict with, result in the breach of, constitute a default under or accelerate the performance provided -28- by the terms of any law, or any rule or regulation of any governmental agency or authority or any judgment, order or decree of any court, bank regulatory agency or other governmental agency to which BANC ONE ILLINOIS may be subject, any contract, agreement or instrument to which BANC ONE ILLINOIS is a party or by which BANC ONE ILLINOIS is bound or committed, or the Articles of Incorporation or By-laws of BANC ONE ILLINOIS, or constitute an event which with the lapse of time or action by a third party, could to the best of BANC ONE ILLINOIS' knowledge, result in the default under any of the foregoing or result in the creation of any lien, charge or encumbrance upon any of the assets or properties of BANC ONE ILLINOIS or adversely affect the ability of BANC ONE ILLINOIS to consummate the transactions contemplated hereby. 15. Representations and Warranties of MID STATES. MID STATES represents and -------------------------------------------- warrants to BANC ONE that, except as set forth in MID STATES' disclosure letter to BANC ONE dated May 25, 1993 and delivered to BANC ONE not later than the time of the execution of this Merger Agreement (the "MID STATES Disclosure Letter"), and except as otherwise indicated below: (a) MID STATES is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware, is a registered bank holding company under the Bank Holding Company Act of 1956, as amended, and is qualified to do business and is in good standing in all jurisdictions where it is both required to so qualify and where the failure to so qualify would have a Material Adverse Effect, and MID STATES has full power and authority (including all licenses, franchises, permits and other governmental authorizations which are legally required) to engage in the businesses and activities now conducted by it and the Subsidiaries. MID STATES is not subject to any formal or informal agreement or understanding with, nor is it subject to any order of, any bank regulatory authority restricting or prohibiting or attempting to restrict or prohibit any activities or conduct of MID STATES. As of March 31, 1993, the authorized capital stock of MID STATES consisted of 750,000 shares of MID STATES Common, 311,560 of which shares were issued and -29- outstanding and 3,040 of which were treasury shares owned by MID STATES. All of the issued and outstanding shares of MID STATES Common are duly authorized, validly issued, fully paid and nonassessable and none are issued in violation of the pre-emptive rights of any shareholder. There are no outstanding options, warrants or commitments of any kind related to MID STATES' capital stock. (b) MID STATES has furnished to BANC ONE copies of the following financial statements relating to MID STATES and the Subsidiaries on a consolidated basis: (i) the audited Consolidated Balance Sheet of MID STATES as of December 31, 1992 and 1991, and the Consolidated Statements of Income, Stockholders' Equity and Cash Flows for the years then ended, together with the notes thereto, as audited by McGladrey & Pullen, Certified Public Accountants; and (ii) the unaudited Consolidated Balance Sheet of MID STATES as at March 31, 1993 and the unaudited Consolidated Statements of Income and Cash Flows for the period then ended, together with the notes thereto. Each of the aforementioned financial statements presents fairly, in accordance with generally accepted accounting principles (applied on a consistent basis except as disclosed in the footnotes thereto), the consolidated financial position and results of operations of MID STATES as of the dates and for the periods therein set forth. Such financial statements do not, as of the dates thereof, include any material asset or omit any material liability, absolute or contingent, or other fact, the inclusion or omission of which renders such financial statements, in light of the circumstances under which they were made, misleading in any material respect. Since March 31, 1993, there has not been any change in the financial condition, results of operations or business of MID STATES and the Subsidiaries that has had a Material Adverse Effect. (c) The Board of Directors of MID STATES has duly authorized the execution and delivery of this Merger Agreement and approved the Merger as contemplated by the Merger Agreement and will recommended it to the MID STATES shareholders for adoption. Subject to the -30- approval by the shareholders of MID STATES and the contemplated regulatory approvals, this Merger Agreement constitutes the valid, legally binding and enforceable obligation of MID STATES and MID STATES has all requisite power and authority to enter into this Merger Agreement and MID STATES has the authority to consummate the transactions contemplated hereby so that, provided all required corporate and regulatory approvals are obtained, neither the execution and delivery of this Merger Agreement nor the consummation of the Merger will conflict with, result in the breach of, constitute a default under or accelerate the performance provided by the terms of any law, or any rule or regulation of any governmental agency or authority or any judgment, order or decree of any court, bank regulatory agency or other governmental agency to which MID STATES is subject, any contract, agreement or instrument to which MID STATES is a party or by which MID STATES is bound or committed, or the Certificate of Incorporation or By-Laws of MID STATES, or constitute an event which with the lapse of time or action by a third party, could, to the best of MID STATES' knowledge, result in the default under any of the foregoing or result in the creation of any lien, charge or encumbrance upon any of the assets or properties of MID STATES or upon any of MID STATES' capital stock; except, in the case of contracts, agreements or instruments, such defaults, conflicts or breaches which either (i) will be cured or waived prior to the Effective Time or (ii) if not so cured or waived would not, in the aggregate, have a Material Adverse Effect. (d) The reserve for possible loan and lease losses shown on the March 31, 1993 Consolidated Balance Sheet of MID STATES and its Subsidiaries is adequate in all material respects under the requirements of generally accepted accounting principles to provide for possible losses, net of recoveries relating to loans previously charged off, on loans outstanding (including, without limitation, accrued interest receivable) as of March 31, 1993. -31- (e) Except as disclosed in the financial statements referred to in Section 15(b), there is no litigation, action, suit, investigation or proceeding pending or, to the best of the knowledge after due inquiry of MID STATES and its executive officers, overtly threatened, against or affecting MID STATES or any of its Subsidiaries or involving any of their respective properties or assets, at law or in equity, before any federal, state, municipal, local or other governmental authority which is reasonably likely to be resolved adversely to the interest of MID STATES or its Subsidiaries and, if so resolved, would have a Material Adverse Effect, and to the best of the knowledge and belief after due inquiry of MID STATES and its executive officers, no one has reasonable or valid grounds on which it reasonably can be expected that anyone will assert or initiate any such litigation, action, suit, investigation or proceeding against MID STATES or any of the Subsidiaries based upon the wrongful action or inaction of MID STATES or any of the Subsidiaries or any of their respective officers, directors or employees. (f) MID STATES and its Subsidiaries have good and marketable title to all their respective assets and properties, whether real or personal, tangible or intangible, including without limitation the capital stock of its Subsidiaries and all other assets and properties reflected in MID STATES' Consolidated Balance Sheet as of March 31, 1993 or acquired subsequent thereto (except to the extent that such assets and properties have been disposed of for fair value in the ordinary course of business since March 31, 1993). Such assets and properties are subject to no liens, mortgages, security interests, encumbrances, pledges or charges of any kind, except (i) as reflected in said Balance Sheet or the notes thereto; (ii) statutory liens for taxes not yet delinquent; (iii) landlord's liens; and (iv) minor defects and irregularities in title and encumbrances which do not materially impair the use thereof for the purposes for which they are held; and such liens, mortgages, security interests, encumbrances and charges do not, in the aggregate, have a Material Adverse Effect. MID STATES and its Subsidiaries as lessee have the right under valid and subsisting leases to occupy, use, possess and control all -32- property leased by MID STATES and its Subsidiaries. At the Effective Time all limitations affecting such properties will not, in the aggregate, have a Material Adverse Effect. (g) To the best of the knowledge after due inquiry of MID STATES and its executive officers, MID STATES and its Subsidiaries have complied with all laws, regulations and orders applicable to them and to the conduct of their businesses, including without limitation, all statutes, rules and regulations pertaining to the conduct of banking activities except for violations which together with any penalty which results therefrom has not had and will not have a Material Adverse Effect. Neither MID STATES nor any of its Subsidiaries is in default under, and no event has occurred which, to the best of MID STATES' knowledge, after due inquiry, is likely to result in the default under the terms of any judgment, decree, order, writ, rule or regulation of any governmental authority or court, whether federal, state or local and whether at law or in equity, in each case where the default has had or is likely to have a Material Adverse Effect. (h) MID STATES has not, since March 31, 1993 to the date hereof, (i) sold or issued any corporate debt securities or sold, issued, reissued or increased its shares of its capital stock; (ii) granted any option for the purchase of capital stock; (iii) declared or set aside or paid any dividend or other distribution in respect of its capital stock, except as permitted pursuant to Section 16(a) hereof or as incurred in carrying out the transactions contemplated by this Merger Agreement, or directly or indirectly, purchased, redeemed or otherwise acquired any shares of such stock; (iv) incurred any obligation or liability (absolute or contingent) except obligations or liabilities incurred in the ordinary course of business, or mortgaged, pledged or subjected to lien or encumbrance (other than landlord's liens and statutory liens for taxes not yet delinquent and banking transactions conducted in the ordinary course of business) on any of its material assets or properties; (v) discharged or satisfied any material lien or encumbrance or paid any material obligation or liability (absolute or contingent), other than current liabilities -33- included in MID STATES' financial statements as of March 31, 1993, current liabilities incurred since the date thereof in the ordinary course of business and liabilities incurred in carrying out the transactions contemplated by this Merger Agreement; (vi) sold, exchanged or otherwise disposed of any material capital assets; (vii) made any extraordinary officers' salary increase or wage increase, entered into any employment contract with any officer or salaried employee or instituted any employee welfare, bonus, stock option, profit-sharing, retirement or similar plan or arrangement; (viii) suffered any damage, destruction or loss, whether or not covered by insurance, that has had a Material Adverse Effect or waived any rights of value which, in the aggregate, have had a Material Adverse Effect; (ix) entered or agreed to enter into any agreement or arrangement granting any preferential right to purchase any of its material assets, properties or rights or requiring the consent of any party to the transfer and assignment of any such material assets, properties or rights; or (x) entered into any other material transaction (other than in the ordinary course of business) except as expressly contemplated by this Merger Agreement. (i) Except as set forth in the MID STATES Document List (the "MID STATES Document List") attached to the MID STATES Disclosure Letter, neither MID STATES nor any of its Subsidiaries is a party to or bound by any written or oral (i) employment or consulting contract which is not terminable by MID STATES or its Subsidiaries on 60 days or less notice, (ii) employee bonus, deferred compensation, pension, stock bonus or purchase, profit-sharing, retirement or stock option plan, (iii) other employee benefit or welfare plan, or (iv) other executory material agreements as defined by the instructions to Exhibit 10 under Item 601 of SEC Regulation S-K. All such pension, stock bonus or purchase, profit-sharing, retirement, health and welfare plans (other than any multiemployer plans) set forth in the MID STATES Document List are in this section hereinafter referred to collectively as the "Plans." Those Plans intended to be qualified plans under Section 401(a) of the Code meet any applicable requirements for favorable tax treatment under the Code. All of the -34- Plans which constitute employee pension benefit plans or employee welfare plans subject to ERISA have been maintained in compliance in all material respects with the applicable requirements of ERISA. All material notices, reports and other filings required under applicable law to be given or made to or with any governmental agency with respect to the Plans have been timely filed or delivered. MID STATES has no knowledge of any circumstances which would adversely affect the qualification of the Plans or their compliance with the applicable requirements of ERISA, would result or have resulted in liability under Title IV of ERISA or of any unreported "reportable event" (as such term is defined in Section 4043(b) of ERISA) or any "prohibited transaction" (as such term is defined in Section 406 of ERISA and Section 4975(c) of the Code) which has occurred since the date on which said sections became applicable to the Plans and which could reasonably be expected to result in any material liability of MID STATES or any Subsidiary to the PBGC, the Department of Treasury, the Department of Labor or any multiemployer plan. Those Plans which are defined benefit plans within the meaning of ERISA meet the minimum funding standards set forth in the Code and ERISA and the assets of such Plans equal or exceed the present value of accrued benefits on a termination basis under such Plans as of the most recent plan valuation date. There are no pending or threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations which have been asserted or instituted against the Plans, any fiduciaries thereof with respect to their duties to the Plans or the assets of any of the trusts under any of the Plans which could reasonably be expected to result in any material liability of MID STATES or any of its Subsidiaries to the PBGC, the Department of Treasury, the Department of Labor or any multiemployer plan. (j) MID STATES and/or its Subsidiaries have duly filed all federal, state, county and local income, franchise, bank, excise, real and personal property and other tax returns and reports (including, but not limited to, those relating to social security, withholding, unemployment insurance, and occupation, sales, and use taxes and -35- those filed on a consolidated, combined or unitary basis) required to have been filed by MID STATES or its Subsidiaries up to the date hereof. MID STATES has made available to BANC ONE a copy of its Federal income tax return for the year 1991 and will make available to BANC ONE a copy of its Federal income tax return for the year 1992 when it is filed. All of the foregoing returns are true and correct in all material respects, and MID STATES and its Subsidiaries have paid or, prior to the Effective Time, will pay all taxes, interest, additions to tax, and penalties shown on such returns or reports as being due or (except to the extent the same are contested in good faith and, if material, summarized in the MID STATES Disclosure Letter) claimed to be due to any federal, state, county, local or other taxing authority, and there is, and at the Effective Time will be, no basis for any additional claim or assessment which might materially and adversely affect MID STATES and its Subsidiaries, except for those being contested in good faith and summarized in the MID STATES Disclosure Letter. MID STATES and its Subsidiaries have paid or made adequate provision in their financial statements or on their books and records for all taxes payable in respect of all periods ending on or before the date hereof. MID STATES and its Subsidiaries have, or at the Effective Time will have, no liability for any taxes, interest, additions to tax, or penalties of any nature whatsoever, except for those taxes which may have arisen up to the Effective Time in the ordinary course of business and are properly accrued on the books of MID STATES and the Subsidiaries as of the Effective Time or are being contested in good faith and have, if material, been summarized in the MID STATES Disclosure Letter. (k) MID STATES and the Subsidiaries have in effect insurance coverage with reputable insurers which in respect of amounts, premiums, types and risks insured, constitutes reasonably adequate coverage against all risks customarily insured against by bank holding companies and their subsidiaries comparable in size and operations to MID STATES and the Subsidiaries. -36- (l) MID STATES has not incurred and will not incur any liability for brokerage, finders', agents', or investment bankers' fees or commissions in connection with this Merger Agreement or the transactions contemplated hereby except for fees to DLJ to be determined in accordance with the terms of that certain engagement letter dated November 6, 1992 annexed as an exhibit to the MID STATES Disclosure Letter. (m) MID STATES has annexed to the MID STATES Disclosure Letter a loan schedule identifying certain loan agreements, notes and borrowing arrangements (the "MID STATES Loan Schedule") between its Subsidiaries and borrowers of its Subsidiaries, as of the date hereof. Except as specifically noted on the MID STATES Loan Schedule, no Subsidiary is, as of the date hereof, a party to any written or, to MID STATES' actual knowledge, oral (i) loan agreement, note or borrowing arrangement, other than credit card loans and other loans the unpaid balance of which does not exceed $100,000 per loan, under the terms of which the obligor is over 60 days delinquent in payment of principal or interest or, to the best of MID STATES' knowledge, in default of any other provision as of the dates shown thereon; (ii) loan agreement, note or borrowing arrangement which has been classified as "substandard," "doubtful," "loss," "other loans especially mentioned" or any comparable classifications by MID STATES, a Subsidiary or banking regulator; (iii) loan agreement, note, or borrowing arrangement, including any loan guaranty, with any director, executive officer or ten percent shareholder of MID STATES, or to the actual knowledge of MID STATES and its executive officers, after due inquiry, any person, corporation or enterprise controlling, controlled by or under common control with any of the foregoing; or, (iv) to the best of MID STATES' knowledge, loan agreement, note or borrowing arrangement in violation of any law, regulation or rule of any governmental authority and which violation could, to the best of MID STATES' knowledge after due inquiry, have a Material Adverse Effect. -37- (n) None of the information provided by MID STATES to BANC ONE for inclusion in the Proxy Statement or related registration statement or any amendment or supplement thereto (to the extent so included as so provided) shall contain (in the case of information relating to the Proxy Statement, at the time it is mailed and in the case of information relating to the registration statement, at the time it becomes effective) any untrue statement of a material fact or shall omit to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. The Proxy Statement that is filed with the SEC in connection with the meeting of the shareholders of MID STATES will comply as to form in all material respects with the provisions of the 1934 Act and the rules and regulations promulgated thereunder. (o) MID STATES has annexed a contracts schedule (the "MID STATES Contracts Schedule") to the MID STATES Disclosure Letter setting forth certain material contracts, including credit agreements, on which MID STATES or any of its Subsidiaries is the obligor, maker, issuer or guarantor as of the date hereof. Except as specifically disclosed on the MID STATES Contracts Schedule, neither MID STATES nor any Subsidiary is, as of the date hereof, a party to any material contract and/or any material credit agreement as obligor, maker, issuer or guarantor and which contract or agreement contains covenants which make the acquisition of MID STATES or any Subsidiary by or merger with another entity a condition of default or acceleration. (p) Attached hereto as Exhibit A is MID STATES' Subsidiaries List which --------- sets forth the complete legal name of each Subsidiary, a designation of the laws under which each Subsidiary is incorporated, the activities conducted by each Subsidiary and the regulatory approvals, if any, requested and/or obtained by MID STATES and each such Subsidiary in connection with the acquisition of each such Subsidiary and/or regulatory approvals received by MID STATES and its Subsidiaries necessary to engage in such activities. Except as set forth in Exhibit A, MID STATES has no subsidiaries. Each of the --------- -38- Subsidiaries is a corporation or similar entity duly organized and validly existing in good standing under the laws of the United States or the state of its incorporation and has full power and authority (including all licenses, franchises, permits and other governmental authorizations which are legally required) to engage in the businesses and activities now conducted by it and is duly qualified to do business and is in good standing in all jurisdictions where the failure to so qualify (together with all such failures) would have a Material Adverse Effect. Except as may be set forth in Exhibit A, MID --------- STATES and/or one or more of its Subsidiaries owns beneficially and of record all the outstanding shares of capital stock of each Subsidiary, which stock is fully paid and non-assessable, except as provided by law. Neither MID STATES nor any of its Subsidiaries is a party to any partnership or joint venture except as may be set forth and described in Exhibit A. --------- (q) No employee of MID STATES or any of its Subsidiaries is represented, for purposes of collective bargaining, by a labor organization of any type. MID STATES is unaware of any efforts during the past five years to unionize or organize any employees of MID STATES or any of its Subsidiaries, and no claim related to such employees under the Fair Labor Standards Act, National Labor Relations Act, Civil Rights Act of 1964, Walsh-Healy Act, Davis Bacon Act, Civil Rights Act of 1866, Age Discrimination in Employment Act, Equal Pay Act of 1963, Executive Order No. 11246, Federal Unemployment Tax Act, Vietnam Era Veterans Readjustment Act, Occupational Safety and Health Act, or any state or local employment related law, order, ordinance or regulation, no unfair labor practice, discrimination or wage-and-hour claim is pending or, to the best of MID STATES' knowledge, threatened against MID STATES or its Subsidiaries, which claim has had or is reasonably likely to have a Material Adverse Effect. (r) To the actual knowledge of MID STATES and its executive officers: (i) with respect to any Contaminant, there are no material actions, proceedings or investigations pending or threatened before any federal -39- or state environmental regulatory body, or before any federal or state court, alleging non-compliance with or liability in connection with, by MID STATES or any Subsidiary, CERCLA or any other Environmental Laws; (ii) there is no reasonable basis for the institution of any material action, proceeding or investigation against MID STATES or any Subsidiary under any Environmental Law; (iii) neither MID STATES nor any Subsidiary is responsible in any material respect under any Environmental Law for any Release; (iv) neither MID STATES nor any Subsidiary is responsible for any material costs of any response action required by virtue of any Release of any Contaminant into the environment including, without limitation, costs arising from investigation, removal or remediation of Contaminants, security fencing, alternative water supplies, temporary evacuation and housing and other emergency assistance undertaken by any environmental regulatory body or any other person; (v) MID STATES and each Subsidiary is, in all material respects, in compliance with all applicable Environmental Laws; and (vi) no real property owned or used by MID STATES or any Subsidiary contains any Contaminant including, without limitation, any asbestos, PCBs or petroleum products or byproducts in any form, the presence, location or condition of which (a) could require remediation or other corrective action pursuant to any Environmental Law in any material respect, or (b) otherwise would pose any significant health or safety risk unless remedial measures were taken. (s) MID STATES and/or the Subsidiaries (i) have surveyed the facilities where MID STATES and the Bank conduct their businesses including, without limitation, ATMs (collectively, the "MID STATES Facilities") for compliance with ADA; (ii) have developed action plans to remove architectural barriers including communication barriers that are structural in nature from existing MID STATES Facilities (collectively, the "MID STATES Barriers") when such removal is "readily achievable," as that term is defined in ADA; (iii) will finalize action plans for ATMs upon clarification by the ATBCB; (iv) have developed or will develop schedules for MID STATES Barrier removal from MID STATES Facilities in such action plans so that MID STATES Barrier removal will be complete on January 26, 1992 or as -40- soon as practicable thereafter; and (v) have removed all MID STATES Barriers in MID STATES Facilities or will cause all MID STATES Barriers to be removed in accordance with such action plans. All "alterations" (as such term is defined in ADA) to MID STATES Facilities undertaken after January 26, 1992 comply with ADA and the ADAAG. Effective January 26, 1992, all plans and designs for new construction to be utilized by MID STATES and the Subsidiaries comply with ADA and ADAAG. To the best of MID STATES' knowledge, after due inquiry, no material investigations, proceedings, or complaints, formal or informal, are pending or threatened against MID STATES and/or the Subsidiaries in connection with MID STATES Facilities under ADA, ADAAG, or any other state or federal law concerning accessibility for individuals with disabilities. (t) The statements made and the information included in the MID STATES Disclosure Letter and any attachments thereto shall be deemed to constitute representations and warranties of MID STATES under this Merger Agreement to the same extent as if herein set forth in full. Anything disclosed in the MID STATES Disclosure Letter or the attachments thereto shall be considered to have been disclosed for purposes of all representations, warranties and covenants under this Merger Agreement. (u) There are no credit agreements on which MID STATES or any of the Subsidiaries is the maker, issuer or guarantor and which contain provisions which make the acquisition of MID STATES by or merger into another entity a condition of default or acceleration. 16. Action by MID STATES Pending Effective Time. MID STATES agrees that from ------------------------------------------- the date of this Merger Agreement until the earlier of the Effective Time or the time that this Merger Agreement is terminated, except with the prior written permission of BANC ONE, which, in any case covered by Section 16(d) hereof, shall not be unreasonably withheld: (a) Beginning with the first calendar quarter of 1993 and for each succeeding calendar quarter thereafter prior to that calendar quarter in which the Effective Time shall occur, MID STATES -41- (i) will not declare or pay any dividends or make any distributions on shares of MID STATES Common, except cash dividends which shall be equal to either: (a) $0.65 per share per quarter or (b) that amount per share per quarter calculated by multiplying the amount paid by BANC ONE on each share of BANC ONE Common for such quarter times the Exchange Rate; (ii) except as hereinbelow provided, will not declare or pay any dividends or make any distributions in any amount on its MID STATES Common in the quarter in which the Effective Time shall occur and in which the shareholders of MID STATES Common are entitled to receive regular quarterly dividends on the shares of BANC ONE Common into which the shares of MID STATES Common have been converted. It is the intent of this part (ii) to provide that the holders of MID STATES Common will receive either the payment of cash dividends on their shares of MID STATES Common or the payment of cash dividends as the holders of shares of BANC ONE Common received in exchange for the shares of MID STATES Common for the calendar quarter during which the Effective Time shall occur, but will not receive and will not become entitled to receive for the same calendar quarter both the payment of a cash dividend as shareholders of MID STATES and the payment of a cash dividend as the holders of the shares of BANC ONE Common received in exchange for the shares of MID STATES Common. In the event that MID STATES does not declare and pay cash dividends on its MID STATES Common in a particular calendar quarter because of MID STATES' reasonable expectation that the Effective Time would occur in said calendar quarter wherein the holders of MID STATES Common would have become entitled to receive cash dividends for such calendar quarter on the shares of BANC ONE Common to have been exchanged for the shares of MID STATES Common, and the Effective Time does not in fact occur effective in said calendar quarter, then, as a result thereof, MID STATES shall be entitled to declare and pay a cash dividend (within the -42- limitations of this Section 16) on said shares of MID STATES Common for said calendar quarter as soon as reasonably practicable. The declaration of any dividends within the limitations of this paragraph shall remain within the discretion of the Board of Directors of MID STATES. (b) MID STATES will not issue, sell, grant any option for, or acquire for value any shares of its capital stock or otherwise effect any change in connection with its equity capitalization. (c) Except as otherwise set forth in or contemplated by this Merger Agreement, MID STATES will carry on its businesses in substantially the same manner as heretofore, use its reasonable best efforts to keep in full force and effect insurance comparable in amount and scope of coverage to that now maintained by it and use its reasonable best efforts to maintain and preserve its business organization intact. (d) Neither MID STATES nor any Subsidiary will (i) enter into any new line of business or incur or agree to incur any obligation or liability except liabilities and obligations (including corporate debt issuances) incurred in the ordinary course of business, except as may be directed by any regulatory agency; (ii) except as may be directed by any regulatory agency, change its or the Subsidiaries' lending, investment, liability management and other material banking policies in any material respect; (iii) except in the ordinary course of business and consistent with prior practice, grant any general or uniform increase in the rates of pay of employees; (iv) establish any new employee benefit plan or amend any existing plan (except as required by law or permitted in the Benefits Letter) so as to increase by any significant amount the benefits payable thereunder; (v) incur or commit to any capital expenditures other than in the ordinary course of business (which will in no event include the establishment of new branches or any other facilities or any capital -43- expenditures in excess of $50,000 for any individual project for any purpose) except any alterations MID STATES, after consultation with BANC ONE, decides are required by the Americans with Disabilities Act or referenced in the MID STATES Disclosure Letter; or (vi) merge into, consolidate with or permit any other corporation to be merged or consolidated with it or any of its Subsidiaries or acquire outside of the ordinary course of business part of or all the assets or stock of any other corporation or person. (e) MID STATES will not change its or its Subsidiaries' methods of accounting in effect at December 31. 1992, except as required by changes in generally accepted accounting principles as concurred in by McGladrey & Pullen, or change any of its methods of reporting income and deductions for Federal income tax purposes from those employed in the preparation of MID STATES' Federal income tax returns for the taxable years ending December 31, 1992 and 1991, except as required by changes in law or regulation. (f) MID STATES will afford BANC ONE, its officers and other authorized representatives, such access to all books, records, bank examination reports (as permitted by law), tax returns, leases, contracts and documents of MID STATES and its Subsidiaries and will furnish to BANC ONE such information with respect to the assets and business of MID STATES and its Subsidiaries as BANC ONE may from time to time reasonably request in connection with this Merger Agreement and the transactions contemplated hereby. (g) MID STATES will promptly advise BANC ONE in writing of all material corporate actions taken by the directors and shareholders of MID STATES, furnish BANC ONE with copies of all monthly and other interim financial statements of MID STATES as they become available, and keep BANC ONE fully informed concerning all trends and developments which in the opinion of MID STATES may have a Material Adverse Effect on MID STATES. -44- (h) MID STATES, its Subsidiaries and their respective officers, directors and employees will not contract for or acquire, at the expense of MID STATES or any of its Subsidiaries, a policy or policies providing for insurance coverage for directors, officers and/or employees of MID STATES and/or its Subsidiaries for any period subsequent to the Effective Time for events occurring before or after the Effective Time; provided, however, that MID STATES may renew, extend or replace existing policies in the ordinary course consistent with past practices for periods of not greater than one year. 17. Action by BANC ONE Pending Effective Time. BANC ONE agrees that from the ----------------------------------------- date of this Merger Agreement until the Effective Time, except with prior written permission of MID STATES: (a) BANC ONE will not adopt or implement any amendment to its Articles of Incorporation or any plan of reorganization which would affect in any manner the terms and provisions of the shares of BANC ONE Common or the rights of the holders of such shares or reclassify the BANC ONE Common. (b) Except as otherwise set forth in or contemplated by this Merger Agreement, BANC ONE will carry on its businesses in substantially the same manner as heretofore, use its reasonable best efforts to keep in full force and effect insurance comparable in amount and scope of coverage to that now maintained by it and use its reasonable best efforts to maintain and preserve its business organization intact. (c) BANC ONE will not change its or its subsidiaries' methods of accounting in effect at December 31, 1992, except as required by changes in generally accepted accounting principles as concurred with by Coopers & Lybrand, its independent auditors, or change any of its methods of reporting income and deductions for Federal income tax purposes from those employed in the preparation of the Federal income tax returns of BANC ONE for the taxable years ending December 31, 1992 and 1991, except as required by changes in law or regulation. -45- (d) BANC ONE will afford MID STATES, its officers and other authorized representatives, such access to all books, records, bank examination reports (as permitted by law), tax returns, leases, contracts and documents of BANC ONE and its subsidiaries and will furnish to MID STATES such information with respect to the assets, earnings and business of BANC ONE and its subsidiaries as MID STATES may from time to time reasonably request in connection with this Agreement and the transactions contemplated hereby. 18. Conditions to Obligations of BANC ONE and BANC ONE ILLINOIS. The ----------------------------------------------------------- obligations of BANC ONE and BANC ONE ILLINOIS to effect the Merger are subject, unless waived by BANC ONE, to the satisfaction of the following conditions on or prior to the Effective Time: (a) There shall not have been any change in the consolidated financial condition, aggregate net assets, shareholders' equity, business or operating results of MID STATES and its Subsidiaries, taken as a whole, from March 31, 1993 to the Effective Time that has had a Material Adverse Effect. (b) MID STATES shall not have paid cash dividends from March 31, 1993 to the Effective Time except as permitted under this Merger Agreement. (c) All representations by MID STATES contained in this Merger Agreement shall be true in all material respects at, or as of, the Effective Time as though such representations were made at and as of said date, except for changes contemplated by the Merger Agreement, and except also for representations as of a specified time other than the Effective Time, which shall be true in all material respects at such specified time; provided, however, that the representation of MID STATES contained in Section 15(d) shall be true in all material respects as applied to the Balance Sheet of MID STATES included in the most recently available quarterly or annual report to MID STATES shareholders and/or MID STATES' report to the SEC on Form 10-Q or Form 10-K as of the close of the most recent calendar quarter prior to the Effective Date (as hereinafter defined) and the reserve for -46- possible loan and lease losses included therein, as though each reference to "March 31, 1993" in such section were a reference to the last day of the most recent calendar quarter prior to the day of the Effective Time (the "Effective Date"). (d) BANC ONE shall have received the opinion of legal counsel for MID STATES, dated as of the Effective Time, substantially to the effect set forth in Exhibit D hereto, together with a copy of the Certificate --------- of Incorporation, as amended, of MID STATES certified by the Secretary of State of the State of Delaware and a copy of the charter documents, as amended, of each Subsidiary and, for MID STATES and each Subsidiary, Certificates of Good Standing dated as a date not more than 20 days prior to the Effective Time from the OCC, the Illinois or Delaware Secretary of State or other appropriate governmental or regulatory entities, as applicable. (e) MID STATES shall have performed in all material respects all agreements and conditions required by this Merger Agreement to be performed and satisfied by it at or prior to the Effective Time. (f) As of the close of the most recent calendar quarter (or if the Effective Time shall occur within 20 days following the close of a calendar quarter, then as of the next preceding calendar quarter) cumulative earnings reported by MID STATES since March 31, 1993 shall be greater than or equal to the amount calculated by multiplying (a) $565,000 by (b) the number of full calendar quarters which have passed since March 31, 1993 and for which earnings have been reported as of such date, times (c) 0.9. As used in this Section "reported" means reported on MID STATES' financial statements prepared in accordance with generally accepted accounting principles applied on a basis consistent with MID STATES' financial statements for the years ended December 31, 1992 and 1991, as included in MID STATES' reports to the SEC on Form 10-K or MID STATES' annual reports to shareholders subject to any subsequent adjustments required to be reported to the SEC whether or not such adjustments have, as yet, been reported with the following adjustments, if any, net of related tax savings and -47- costs which were reflected in net income for the relevant period(s) added back into or deducted from net income for the applicable period: (i) investment banking expenses, outside legal and accounting fees, or other costs associated with the Merger, (ii) gains or losses on sales of assets outside of the ordinary course of business, (iii) any other expenses upon which BANC ONE and MID STATES shall mutually agree, and (iv) any other reserves or adjustments requested by BANC ONE or referenced in the MID STATES Disclosure Letter. (g) The total number of shares of MID STATES Common issued and outstanding shall not be more than 311,560 shares. (h) The aggregate of (i) the fractional share interests of BANC ONE Common to be paid in cash pursuant to Section 7(c), and (ii) the shares of BANC ONE Common to which holders of MID STATES Common would have been entitled as of the Effective Time but who, as of the Effective Time, have taken steps to perfect their rights as dissenting shareholders pursuant to the provisions of applicable law, shall not be more than 10% of the maximum aggregate number of shares of BANC ONE Common which could be issued as a result of the Merger. (i) MID STATES shall have furnished BANC ONE a certificate, signed on its behalf by the Chairman or President and the Secretary or an Assistant Secretary of MID STATES and dated as of the Effective Time, certifying as to the form of and adoption of resolutions of the Board and shareholders of MID STATES approving the Merger Agreement and the Merger, respectively, and to the effect that the conditions described in Paragraphs (a), (b), (c), (e), (f) and (g) of this Section 18 have been fully satisfied. 19. Conditions to Obligations of MID STATES. The obligations of MID STATES to --------------------------------------- effect the Merger are subject, unless waived by MID STATES, to the satisfaction on or prior to the Effective Time of the following conditions: -48- (a) There shall not have been any change in the consolidated financial condition, aggregate net assets, shareholders' equity, business, or operating results of BANC ONE and its subsidiaries, taken as a whole, from March 31, 1993 to the Effective Time that has had a Material Adverse Effect. (b) All representations by BANC ONE and BANC ONE ILLINOIS contained in this Merger Agreement shall be true in all material respects at, or as of, the Effective Time as though such representations were made at and as of said date, except for changes contemplated by this Merger Agreement, and except also for representations as of a specified time other than the Effective Time, which shall be true in all material respects at such specified time; provided, however, that the representation of BANC ONE contained in Section 13(d) shall be true in all material respects as applied to the Consolidated Balance Sheet of BANC ONE included in the most recently available quarterly or annual report to BANC ONE's shareholders and/or BANC ONE's report to the SEC on Form 10-Q or Form 10-K as of the close of the most recent calendar quarter prior to the Effective Date and the reserve for possible loan and lease losses included therein, as though each reference to "March 31, 1993" in such section were a reference to the last day of the most recent calendar quarter prior to the Effective Date. (c) MID STATES shall have received the opinion of counsel for BANC ONE and BANC ONE ILLINOIS (i) on and dated the date on which the registration statement described in Section 10(d) of this Merger Agreement shall have become effective as described in Section 19(b) of this Merger Agreement substantially to the effect of the three last paragraphs of Exhibit E hereto and (ii) on and dated as of the Effective Time --------- substantially to the effect set forth in Exhibit E hereto, together --------- with a copy of the Articles of Incorporation of BANC ONE certified by the Secretary of State of the State of Ohio and a copy of the Articles of Incorporation of BANC ONE ILLINOIS certified by the Secretary of State of the State of Illinois and copies of such other charter documents and Certificates of Good -49- Standing of BANC ONE and BANC ONE ILLINOIS dated as of a date not more than 20 days prior to the day of the Effective Time from the Ohio and Illinois Secretaries of State, respectively, as MID STATES shall reasonably require. (d) BANC ONE and BANC ONE ILLINOIS shall have performed all agreements and conditions required by this Merger Agreement to be performed and satisfied by it at or prior to the Effective Time. (e) As of the close of the most recent calendar quarter (or if the Effective Time shall occur within 20 days following the close of a calendar quarter, then as of the close of the next preceding calendar quarter) cumulative per share earnings reported by BANC ONE since March 31, 1993 shall be greater than or equal to the amount calculated by multiplying (a) $0.96 by (b) the number of full calendar quarters which have passed since March 31, 1993 and for which earnings have been reported as of such date, times (c) 0.9. As used in this Section, "reported" means reported on BANC ONE's consolidated financial statements prepared in accordance with generally accepted accounting principles applied on a basis consistent with BANC ONE's consolidated financial statements for the years ended December 31, 1992 and 1991, as included in BANC ONE's reports to the SEC on Forms 10-K or BANC ONE's annual reports to shareholders subject to any subsequent adjustments required to be reported to the SEC whether or not such adjustments have, as yet, been reported. (f) MID STATES shall have received an opinion from DLJ dated as of a date not later than the date of the Proxy Statement, to the effect that, in the opinion of such firm, the financial consideration to be received as a result of the Merger is fair from a financial point of view to the holders of MID STATES Common and such opinion shall not have been withdrawn prior to the Effective Time. -50- (g) BANC ONE shall have furnished MID STATES a certificate, signed by the Chairman or President or an Executive Vice President and by the Secretary or Assistant Secretary of BANC ONE and dated as of the Effective Time certifying as to the form of and adoption of the resolutions of the Boards of BANC ONE and of BANC ONE ILLINOIS approving the Merger Agreement and the Merger, and to the effect that the conditions described in Paragraphs (a), (b), (d), (e) and (h) of this Section 19 have been fully satisfied. (h) The shares of BANC ONE Common to be issued to the holders of MID STATES Common shall be listed on the NYSE. 20. Conditions to Obligations of All Parties. In addition to the provisions of ---------------------------------------- Sections 18 and 19 hereof, the obligations of BANC ONE and MID STATES to effect the Merger shall be subject to the satisfaction of the following conditions on or prior to the Effective Time: (a) The parties hereto shall have received all necessary approvals of governmental agencies and authorities of the transactions contemplated by this Merger Agreement and each of such approvals shall remain in full force and effect at the Effective Time. BANC ONE shall notify MID STATES promptly upon receipt of all necessary governmental approvals. At the Effective Time, (i) no party hereto shall be subject to any order, decree or injunction of a court or governmental agency of competent jurisdiction which enjoins or prohibits the consummation of the Merger; and (ii) no statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced by any governmental authority which prohibits or makes illegal consummation of the Merger. (b) The registration statement required to be filed by BANC ONE pursuant to Section 10(d) of this Merger Agreement shall have become effective by an order of the SEC, the shares of BANC ONE Common to be exchanged in the Merger shall have been qualified or exempted under all applicable state securities laws, and there shall have been no stop order issued or threatened by the SEC that suspends or would -51- suspend the effectiveness of the registration statement, and no proceeding by the SEC shall have been commenced, pending or overtly threatened for such purpose and the BANC ONE Common to be issued in the Merger will be authorized for trading on the NYSE. (c) This Merger Agreement and the Merger shall have been duly approved and adopted by the requisite affirmative vote of the shareholders of MID STATES and BANC ONE ILLINOIS. (d) Vedder, Price, Kaufman & Kammholz shall have issued its written opinion, dated as of the day of the Effective Time, satisfactory to MID STATES and BANC ONE, respectively, substantially to the effect set forth in clauses (a) through (h) of Section 12 of this Merger Agreement and there shall exist as of, at or immediately prior to the Effective Time no facts or circumstances which would render such opinion inapplicable in any respect to the transactions to be consummated hereunder. (e) Coopers & Lybrand shall have issued its written opinion, dated as of a date not later than the Effective Time, satisfactory, in good faith, to BANC ONE, advising that the transaction herein contemplated may be properly accounted for as a pooling-of-interests; provided, however, that this condition shall be deemed to have been waived by BANC ONE if the inability to obtain such opinion arises out of, or results directly or indirectly from, any action taken by BANC ONE, BANC ONE ILLINOIS or any of their respective subsidiaries contrary to that contemplated by this Merger Agreement. 21. Indemnification. --------------- (a) In the event of any threatened or actual claim, action, suit, proceeding or investigation, whether formal or informal and whether civil, administrative or criminal, including, without limitation, any such claim, action, suit, proceeding or investigation in which any person who is now, or has been at any time prior to the date hereof, or who becomes prior to the Effective Time, a director, officer, -52- employee, fiduciary or agent of MID STATES or any of its Subsidiaries (the "Indemnified Parties") is, or is threatened to be, made a party or a witness, based in whole or in part on, or arising in whole or in part out of, or pertaining to, this Merger Agreement or any of the transactions contemplated hereby (a "Merger Related Event"), whether in any case asserted or arising before or after the Effective Time, the parties hereto agree to cooperate and use their reasonable best efforts to defend against and respond to such claim, action, suit, proceedings or investigation. It is understood and agreed that, provided that, with regard to any Merger Related Event, and conditioned upon the Merger becoming effective, BANC ONE shall indemnify and hold harmless, as and to the fullest extent permitted by applicable law, each Indemnified Party against any and all losses, claims, damages, liabilities, costs, expenses (including attorneys' fees and expenses), judgments and fines, and amounts paid in settlement, in connection with any such threatened or actual claim, action, suit, proceedings or investigation; provided, however, that BANC ONE shall not be liable for any settlement effected without its prior written consent (which consent shall not be unreasonably withheld). In the event of any such threatened or actual claim, action, suit, proceedings or investigation (whether asserted or arising before or after the Effective Time), (i) BANC ONE shall pay expenses (including attorney's fees and expenses) in advance of the final disposition of any claim, suit, proceedings or investigation to each Indemnified Party to the fullest extent permitted by applicable law, and (ii) BANC ONE shall use its reasonable best efforts to assist in the vigorous defense of any such matter; provided, however, that BANC ONE's obligations as herein set forth shall not apply to any losses, claims, damages, liabilities, costs, expenses, judgments, fines and amounts paid in settlement by any Indemnified Party involving the fraud, bad faith and/or reckless disregard of such Indemnified Party related to any threatened or actual claim, action, suit, proceedings or investigation brought by BANC ONE against any Indemnified Party. Any Indemnified Party wishing to claim indemnification under this Section 21(a) shall, upon learning of or having reason to anticipate any such claim, action, suit, proceedings or investigation, immediately notify BANC ONE thereof. -53- (b) BANC ONE shall insure that all rights to indemnification and all limitations of liability existing in favor of the Indemnified Parties as provided in MID STATES's Certificate of Incorporation and By-laws or similar governing documents of any of its Subsidiaries, as in effect as of May 1, 1993, or as provided for or allowed under applicable law as in effect as of the date hereof or as amended at a time prior to the Effective Time, with respect to claims or liabilities arising from facts or events existing or occurring prior to the Effective Time, shall survive the Merger and shall continue in full force and effect, without any amendment thereto, for a period of three (3) years from the Effective Time; provided, however, that all rights to indemnification in respect of any claim asserted or made within such period shall continue until the final disposition of such claim. (c) From and after the Effective Time, persons who, immediately prior to the Effective Time, served as the directors, officers and employees of MID STATES and its Subsidiaries, who, following the Effective Time, continue as directors, officers and/or employees of the Surviving Corporation or one of the Subsidiaries, shall have indemnification rights having prospective application only, except, however, for the indemnification rights set forth in paragraphs (a) and (b) of this Section 21. These prospective indemnification rights shall consist of (i) such rights to which directors, officers and employees are entitled under the provisions of the Certificate of Incorporation, Bylaws or similar governing documents of the Surviving Corporation and its subsidiaries, as applicable, as in effect from time to time after the Effective Time, as applicable, and provisions of applicable law as in effect from time to time after the Effective Time and (ii) those indemnification rights set forth in agreements, if any, between BANC ONE and the directors and executive officers of the Surviving Corporation and its subsidiaries. Such agreements, if any, which shall be executed as soon as practicable following the Effective Time, shall provide certain indemnification rights that are comparable to those provided to directors, officers and employees of BANC ONE and its subsidiaries generally, but which rights may be -54- greater or lesser than the indemnification rights available in clause (i) above. (d) The obligations of BANC ONE provided under paragraphs (a) and (b) this Section 21 are intended to be the joint and several obligations of BANC ONE and the Surviving Corporation and to benefit, and be enforceable against BANC ONE and the Surviving Corporation directly by, the Indemnified Parties, and shall be binding on all respective successors and permitted assigns of BANC ONE and the Surviving Corporation. (e) In the event BANC ONE or the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any person, then, and in each such case, proper provision shall be made so that the successors and assigns of BANC ONE or the Surviving Corporation, as the case may be, assume the obligations set forth in this Section 21. 22. Non-Survival of Representations and Warranties. The respective ---------------------------------------------- representations and warranties of MID STATES, BANC ONE and BANC ONE ILLINOIS contained in this Merger Agreement shall not survive the Effective Time. 23. Governing Law. This Merger Agreement shall be construed and interpreted ------------- according to the applicable laws of the State of Illinois, except as the laws of the State of Delaware are expressly applicable to the Merger. 24. Assignment. This Merger Agreement and all of the provisions hereof shall ---------- be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this Merger Agreement nor any of the rights, interest, or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties. -55- 25. Satisfaction of Conditions; Termination. --------------------------------------- (a) BANC ONE and BANC ONE ILLINOIS agree to use their reasonable best efforts to obtain satisfaction of the conditions of this Merger Agreement insofar as they relate to BANC ONE and BANC ONE ILLINOIS, and MID STATES agrees to use its reasonable best efforts to obtain the satisfaction of the conditions of this Merger Agreement insofar as they relate to MID STATES, in each case as soon as possible. (b) This Merger Agreement may be terminated at any time prior to the Effective Time, whether before or after approval of the Merger by the shareholders of BANC ONE ILLINOIS or by MID STATES' shareholders, upon the occurrence of any of the following by written notice from BANC ONE to MID STATES (authorized by the Board of Directors of BANC ONE), or by written notice from MID STATES to BANC ONE (authorized by the Board of Directors of MID STATES), as the case may be: (i) If any material condition to the obligations of BANC ONE and/or BANC ONE ILLINOIS set forth in Section 18 or 20 is not substantially satisfied at the time or times contemplated thereby and such condition is not waived by BANC ONE or if any material condition to the obligations of MID STATES as set forth in Section 19 or 20 is not substantially satisfied at the time or times contemplated thereby and such condition is not waived by MID STATES, each party's right to terminate under this Section 25 (b)(i) shall relate only to conditions to that party's obligations; (ii) In the event of a material breach by the other of any representation, warranty, condition or agreement contained in this Merger Agreement that is not cured within 30 days of the time that written notice of such breach is received by such other party from the party giving notice; or (iii) If the Merger shall not have been consummated on or before May 1, 1994. -56- (c) In the event that BANC ONE's pre-acquisition investigation and review of MID STATES as described in Section 10(n) of this Merger Agreement discloses matters which BANC ONE in good faith believes to be either (i) inconsistent in any material respect with any of the representations and warranties of MID STATES contained in this Agreement or (ii), in the reasonable judgment of the Board of Directors of BANC ONE, to be either (x) of such significance as to materially and adversely affect the financial condition or the results of operations of MID STATES and its Subsidiaries on a consolidated basis or (y) to deviate materially and adversely from MID STATES' audited financial statements for the year ended December 31, 1992, BANC ONE shall have the right to terminate this Merger Agreement as set forth in this Section 25(c) as supplemented by the MID STATES Disclosure Letter by giving written notice of termination to MID STATES within seven days of the conclusion of such pre-acquisition investigation. (d) In the event that MID STATES' pre-acquisition investigation and review of BANC ONE as described in Section 10(o) of this Merger Agreement discloses matters which MID STATES in good faith believes to be either (i) inconsistent in any material respect with any of the representations and warranties of BANC ONE contained in this Agreement, or (ii) in the reasonable judgment of the Board of Directors of MID STATES, to be either (x) of such significance as to materially and adversely affect the financial condition or the results of operations of BANC ONE and its subsidiaries on a consolidated basis or (y) to deviate materially and adversely from BANC ONE's audited financial statements for the year ended December 31, 1992, MID STATES may elect to terminate this Merger Agreement by giving written notice of termination to BANC ONE within seven days of the conclusion of such pre-acquisition investigation. (e) In the event the BANC ONE Average Price (as defined in Section 7 of this Merger Agreement) is less than $52.00 per share, MID STATES, by action of its Board of Directors, may elect to terminate this Merger Agreement, whether before or after approval of the Merger by the -57- shareholders of MID STATES or by BANC ONE ILLINOIS shareholders, by giving written notice of such election to BANC ONE within two NYSE trading days after the Valuation Period (as defined in Section 7 of this Merger Agreement). If prior to the Valuation Period, BANC ONE shall effect a stock dividend or make distributions upon or subdivide, split up, reclassify or combine its shares of the BANC ONE Common, appropriate adjustment or adjustments will be made in the BANC ONE Average Price. A termination resulting from MID STATES' election under this Section 25(e) shall be deemed to have been a termination by mutual consent of the parties. (f) This Merger Agreement may be terminated and abandoned (whether before or after approval of the Merger by the shareholders of BANC ONE ILLINOIS or by MID STATES' shareholders) by mutual written consent of MID STATES, BANC ONE ILLINOIS and BANC ONE authorized by their respective Boards of Directors. (g) In the event of termination of this Merger Agreement (i) caused otherwise than by a willful breach of this Merger Agreement by any of the parties hereto or (ii) pursuant to Section 25(c) or (d), this Merger Agreement shall cease and terminate, the acquisition of MID STATES as provided herein shall not be consummated, and none of BANC ONE, BANC ONE ILLINOIS nor MID STATES shall have any liability to any other party under this Merger Agreement of any nature whatever, except for BANC ONE's obligations related to the printing of the proxy solicitation materials, including any liability for damages, provided, however, that the duties of the parties with respect to confidential information as set forth in Section 10(f) shall survive any such termination. If the Merger is not consummated as the result of termination of this Merger Agreement caused otherwise than by willful breach of a party hereto, BANC ONE, BANC ONE ILLINOIS and MID STATES each shall pay its own fees and expenses incident to the negotiation, preparation and execution of this Merger Agreement, the respective shareholders' meetings and actions of the parties and all -58- other acts incidental to, contemplated by or in pursuance of the transactions contemplated by this Merger Agreement, including fees and expenses of their respective counsel, accountants and other experts and advisors. (h) If termination of this Merger Agreement shall be judicially determined to have been caused by willful breach of this Merger Agreement, then, in addition to other remedies at law or equity for breach of this Merger Agreement, the party so found to have willfully breached this Merger Agreement shall indemnify the other parties for their respective costs, fees and expenses of their counsel, accountants and other experts and advisors as well as fees and expenses incident to negotiation, preparation and execution of this Merger Agreement and related documentation and their shareholders' meetings and consents. 26. Waivers; Amendments. Any of the provisions of this Merger Agreement may be ------------------- waived at any time by the party which is, or the shareholders of which are, entitled to the benefit thereof, provided, however, such waiver, if material to MID STATES or its shareholders, may be made only following due authorization by the Board of Directors of MID STATES. This Merger Agreement may be amended or modified in whole or in part by an agreement in writing executed in the same manner (but not necessarily by the same persons) as this Merger Agreement and which makes reference to this Merger Agreement, provided, however, such amendment or modification may be made only following due authorization by the respective Boards of Directors of MID STATES, BANC ONE ILLINOIS and BANC ONE; provided, further, however, that after a favorable vote by the shareholders of MID STATES any such action shall be taken by MID STATES only if, in the opinion of its Board of Directors, such amendment or modification will not have any material adverse effect on the benefits intended under this Merger Agreement for the shareholders of MID STATES and will not require resolicitation of any proxies from such shareholders. -59- 27. Entire Agreement. Subject to the exceptions noted in the next following ---------------- sentence, this Agreement supersedes any other agreement, whether written or oral, that may have been made or entered into by MID STATES, BANC ONE ILLINOIS and BANC ONE or by any officer or officers of such parties relating to the acquisition of the business or the capital stock of MID STATES and/or its Subsidiaries by BANC ONE or BANC ONE ILLINOIS. Except for the BANC ONE Disclosure Letter and any attachment thereto, the MID STATES Disclosure Letter and any attachments thereto, the Benefits Agreement and the Second Benefits Agreement, this Merger Agreement constitutes the entire agreement by the parties, and there are no agreements or commitments except as set forth herein and therein. 28. Captions; Counterparts. The captions in this Merger Agreement are for ---------------------- convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Merger Agreement. This Merger Agreement may be executed in several counterparts, each of which shall constitute one and the same instrument. 29. Notices. All notices and other communications hereunder may be made by ------- mail, hand-delivery or by courier service. If notices and other communications are made by nationally recognized overnight courier service for overnight delivery, such notice shall be deemed to have been given one business day after being forwarded to such a nationally recognized overnight courier service for overnight delivery and otherwise when received. All notices and other communications hereunder given to any party shall be communicated to the remaining party to this Merger Agreement by mail or by hand-delivery in the same manner as herein provided. (a) If to BANC ONE, to: BANC ONE CORPORATION Attention of: Chief Executive Officer 100 East Broad Street Columbus, Ohio 43271 -60- With a copy to: BANC ONE CORPORATION Attention of: Roman J. Gerber General Counsel 100 East Broad Street Columbus, Ohio 43271 (b) If to MID STATES, to: MID STATES BANCSHARES, INC. Attention of: Thomas H. Robinson Chief Executive Officer and President 506 15th Street Moline, Illinois 61265-2184 With a copy to: Vedder, Price, Kaufman & Kammholz Attention of: Daniel O'Rourke 222 N. LaSalle Street, 26th Floor Chicago, Illinois 60601-1003 (c) If to BANC ONE ILLINOIS, to: BANC ONE ILLINOIS CORPORATION Attention of: Willard Bunn III Chairman One East Old State Capitol Plaza Springfield, Illinois 62701 With a copy to: BANC ONE ILLINOIS CORPORATION Attention of: Samuel J. Witsman General Counsel One East Old State Capitol Plaza Springfield, Illinois 62701 -61- IN WITNESS WHEREOF, this Merger Agreement has been executed the day and year first above written. BANC ONE CORPORATION ATTEST: CHARLES F. ANDREWS By: ROMAN J. GERBER - -------------------------- -------------------------- Charles F. Andrews Roman J. Gerber Assistant Secretary Executive Vice President MID STATES BANCSHARES, INC. ATTEST: G. H. CLAUSEN By: T. H. ROBINSON - -------------------------- -------------------------- G. H. CLAUSEN President and Chief Executive Vice President and Secretary Officer BANC ONE ILLINOIS CORPORATION ATTEST: THOMAS H. CARTWRIGHT By: WILLARD BUNN III - -------------------------- -------------------------- Willard Bunn III Chairman EXHIBITS TO AGREEMENT AND PLAN OF MERGER ---------------------------------------- Exhibit A - MID STATES Subsidiaries List Exhibit B - Form of Plan of Merger Exhibit C - Form of Undertaking by Affiliates Exhibit D - Opinion of Counsel for MID STATES Exhibit E - Opinion of Counsel for BANC ONE and BANC ONE ILLINOIS EXHIBIT A ---------
MID STATES SUBSIDIARIES LIST ---------------------------- Other Activities for Incorporated Activities Which Regulatory Name Under Conducted Approval Obtained - ---- ------------ ---------- ----------------- The First National Bank Federal law commercial None of Moline bank
EXHIBIT B FORM OF PLAN OF MERGER ---------------------- This Plan of Merger dated as of _________, 199_ sets forth certain of the terms relating to the merger (the "Merger") of Banc One Illinois Corporation, an Illinois corporation ("BANC ONE ILLINOIS") and MID STATES BANCSHARES, INC., a Delaware corporation ("MID STATES"); 1. Merger and the Surviving Corporation. ------------------------------------ (a) Subject to the terms and conditions of the Agreement and Plan of Merger dated as of _________, 1993 (the "Merger Agreement") among MID STATES, BANC ONE ILLINOIS and BANC ONE CORPORATION, an Ohio corporation ("BANC ONE") and the sole shareholder of BANC ONE ILLINOIS, MID STATES shall be merged with and into BANC ONE ILLINOIS (which shall be the surviving corporation in the Merger) in accordance with the Illinois Business Corporation Act of 1983, as amended (the "Illinois BCA"). The Merger shall become effective upon the issuance by the Secretary of State of the State of Illinois of articles of merger with respect thereto. For purposes hereof, the term "Effective Time" shall mean the time when such articles of merger is issued by the Secretary of State of the State of Illinois, and the term "Surviving Corporation" shall mean BANC ONE ILLINOIS as the corporation surviving the Merger. (b) At the Effective Time, by virtue of the Merger, the Surviving Corporation shall have all the rights, privileges, immunities and powers, and shall be subject to all the duties and liabilities, of a corporation organized under the Illinois BCA, and the Surviving Corporation shall thereupon and thereafter possess all the rights, privileges, immunities, and franchises, of a public as well as of a private nature, of each of BANC ONE ILLINOIS and MID STATES; and all property, real, personal, and mixed, and all debts due on whatever account, and all other choses in action, and all and every other interest, of or belonging to or due to each of BANC ONE ILLINOIS and MID STATES, shall be taken and deemed to be transferred to and vested in the Surviving Corporation without further act or deed; and the title to any real estate, or any interest therein, vested in either BANC ONE ILLINOIS or MID STATES shall not revert or be in any way impaired by reason of the Merger, and the Surviving Corporation shall be responsible and liable for all the liabilities and obligations of each of BANC ONE ILLINOIS and MID STATES, all with the full effect provided for in the Illinois BCA. (c) The Surviving Corporation shall be governed by the laws of the State of Illinois. The Articles of Incorporation of BANC ONE ILLINOIS in effect immediately prior to the Effective Time shall be the Articles of Incorporation of the Surviving Corporation at and after the Effective Time. (d) The By-laws of BANC ONE ILLINOIS in effect immediately prior to the Effective Time shall be the By-laws of the Surviving Corporation at and after the Effective Time, until altered, amended or repealed as provided therein and in the Articles of Incorporation of the Surviving Corporation. (e) The directors of BANC ONE ILLINOIS in office immediately prior to the Effective Time shall be the directors of the Surviving Corporation at and after the Effective Time, until the next annual meeting of shareholders at which their respective successors are elected and qualified in accordance with the By-laws of the Surviving Corporation. (f) The officers of BANC ONE ILLINOIS in office immediately prior to the Effective Time shall be the officers of the Surviving Corporation at and after the Effective Time, holding the offices in the Surviving Corporation which they held in BANC ONE ILLINOIS immediately prior thereto, until their successors are elected or appointed in accordance with the By-laws of the Surviving Corporation and shall have duly qualified. 2. Conversion of Stock. ------------------- (a) At the Effective Time: (i) Each of the not more than 314,600 shares of MID STATES Common that shall be issued and outstanding immediately prior to the Effective Time (excluding any shares held by MID STATES as treasury shares) shall thereupon and without further action be converted into 1.98 shares of BANC ONE Common, subject, however, to (A) the anti-dilution provisions of Section 2(d) of this Merger Agreement and (B) provisions hereinafter contained relative to fractional shares (the "Exchange Rate"). (ii) The 100 shares of BANC ONE ILLINOIS Common issued and outstanding immediately prior to the Effective Time shall continue to be issued and outstanding shares of common stock without par value of the Surviving Corporation. (iii) All of the shares of MID STATES Common held by MID STATES as treasury shares immediately prior to the Effective Time shall be cancelled and shall not represent capital stock of the Surviving Corporation and shall not be exchanged for shares of BANC ONE Common. (b) MID STATES' shareholders of record at the Effective Time, for the shares of MID STATES Common then held by them, respectively, shall be allocated and be entitled to receive (upon surrender of certificates formerly representing shares of MID STATES Common for cancellation) certificates for shares of BANC ONE Common as shall be equal to the number of shares of MID STATES Common outstanding immediately prior to the Effective Time multiplied by the Exchange Rate. (c) No certificate for fractional shares of BANC ONE Common will be issued by BANC ONE in connection with the exchange contemplated by the Merger, but in lieu thereof, any holder of MID STATES Common shall, upon surrender of the certificate or certificates representing such MID STATES Common, be paid cash, without interest, by BANC ONE for such fractional shares on the basis of the BANC ONE Average Price (as hereinafter defined). The BANC ONE Average Price shall mean the average of the closing prices of BANC ONE Common on the New York Stock Exchange ("NYSE") during the Valuation Period (as hereinafter defined) in The Wall Street Journal for NYSE Composite Transactions. The term ----------------------- "Valuation Period" shall mean the ten consecutive NYSE trading days ending on the sixth NYSE trading day immediately prior to the proposed Effective Time, as designated by BANC ONE. (d) If prior to the Effective Time, (i) MID STATES shall declare a stock dividend or distribution upon or subdivide, split up, reclassify or combine MID STATES Common or declare a dividend or make a distribution on MID STATES Common in any security convertible into MID STATES Common, or (ii) BANC ONE shall declare a stock dividend or distribution upon or subdivide, split up, reclassify or combine BANC ONE Common or declare a dividend or make a distribution on BANC ONE Common in any security convertible into BANC ONE Common, appropriate adjustment or adjustments will be made in the Exchange Rate. 3. Dissenting Shares. MID STATES' shareholders who do not vote their shares ----------------- of MID STATES Common in favor of the Merger and otherwise perfect applicable dissenters' rights and shareholders of MID STATES Preferred who perfect applicable dissenters' rights will be entitled to dissenters or appraisal rights pursuant to applicable provisions of the Delaware General Corporation Laws. 4. Surrender of Certificates. ------------------------- (a) Prior to the Effective Time, BANC ONE shall appoint BANK ONE, INDIANAPOLIS, N.A. to act as exchange agent in respect of the Merger (said bank, in its capacity as such exchange agent, being hereinafter called the "Exchange Agent"). (b) Promptly following the Effective Time, BANC ONE shall provide to Exchange Agent shares of BANC ONE Common and funds necessary to pay for the shares of MID STATES Common pursuant to Section 2. (c) As soon as practicable after the Effective Time, and subject to the provisions of Section 2 relating to fractional shares, BANC ONE, or BANK ONE, INDIANAPOLIS, N.A., as Exchange Agent for BANC ONE, will distribute to the former holders of MID STATES Common, in exchange for and upon surrender for cancellation by such holders of a certificate or certificates formerly representing shares of MID STATES Common, the certificate(s) for shares of BANC ONE Common in accordance with the Common Exchange Rate. Each certificate formerly representing MID STATES Common (other than certificates representing shares of MID STATES Common subject to the rights of dissenting shareholders) shall be deemed for all purposes to evidence the ownership of the number of shares of BANC ONE Common and cash for fractional shares into which such shares have been converted, except, however, and notwithstanding the foregoing, that, until such surrender of the certificate or certificates formerly representing shares of MID STATES Common, the holder thereof shall not be entitled to receive any dividend or other payment or distribution payable to holders of BANC ONE Common. Upon such surrender (or in lieu of surrender other provisions reasonably satisfactory to BANC ONE as are made as set forth in the next following paragraph), there shall be paid to the person entitled thereto the aggregate amount of dividends or other payments or distributions (in each case without interest) which became payable after the Effective Time on the whole shares of BANC ONE Common represented by the certificates issued upon such surrender and exchange or in accordance with such other provisions, as the case may be. After the Effective Time, the holders of certificates formerly representing shares of MID STATES Common shall cease to have rights with respect to such shares (except such rights, if any, as they may have as dissenting shareholders), and except as aforesaid, their sole rights shall be to exchange said certificates for shares of BANC ONE Common and cash for fractional shares in accordance with this Merger Agreement. Certificates representing shares of MID STATES Common surrendered for cancellation by each shareholder entitled to exchange shares of MID STATES Common for shares of BANC ONE Common by reason of the Merger shall be appropriately endorsed or accompanied by such appropriate instruments of transfer as BANC ONE may reasonably require; provided, however, that if there be delivered to BANC ONE by any person who is unable to produce any such certificate formerly representing shares of MID STATES Common for transfer (i) evidence to the reasonable satisfaction of BANC ONE that any such certificate has been lost, wrongfully taken or destroyed, (ii) such security or indemnity as reasonably may be requested by BANC ONE to save it harmless, and (iii) evidence to the reasonable satisfaction of BANC ONE that such person is the owner of the shares theretofore represented by each certificate claimed by him or her to be lost, wrongfully taken or destroyed and that he or she is the person who would be entitled to present each such certificate and to receive shares of BANC ONE Common pursuant to this Merger Agreement, then BANC ONE, in the absence of actual notice to it that any shares theretofore represented by any such certificate have been acquired by a bona fide purchaser, shall deliver to such person the certificate(s) representing shares of BANC ONE Common which such person would have been entitled to receive upon surrender of each such lost, wrongfully taken or destroyed certificate of MID STATES Common. EXHIBIT C --------- (FORM OF UNDERTAKING BY AFFILIATES) UNDERTAKING OF AFFILIATE ------------------------ __________________, 199_ In consideration and anticipation of the receipt by the undersigned of Common Stock of BANC ONE CORPORATION ("BANC ONE") upon consummation of a proposed merger (the "Merger") of MID STATES BANCSHARES, INC. ("MID STATES") and BANC ONE ILLINOIS CORPORATION, a subsidiary of BANC ONE, pursuant to the terms of a certain Agreement and Plan of Merger dated __________________, 1993, (the "Merger Agreement"), and in view of the fact that the undersigned has, pursuant to the Merger Agreement, been identified as a possible "affiliate" of MID STATES within the meaning of Rules 144 and 145 ("Rule 144" and "Rule 145," respectively), as amended, of the General Rules and Regulations under the Securities Act of 1933, as amended (the "1933 Act"), the undersigned (the "Affiliate") represents and undertakes as follows: The Affiliate shall not offer, sell or otherwise dispose of or transfer any of the shares of the Common Stock of BANC ONE to be received by him upon consummation of the Merger (the "Shares"), except the Affiliate may offer, sell or transfer the Shares (1) in a manner and to the extent permitted by the applicable provisions of Rule 145, (2) pursuant to an effective registration statement relating to the Shares under the 1933 Act, or (3) in a transaction which, in the opinion of counsel for the Affiliate or as described in a "no-action" or interpretive letter from the staff of the Securities and Exchange Commission, in each case reasonably satisfactory in form and substance to BANC ONE, is exempt from the registration requirements of the 1933 Act. BANC ONE's transfer agents may be given appropriate instructions prohibiting transfer of the Shares unless these provisions are complied with and the certificate(s) for the Shares may bear a restrictive legend in substantially the following form: The shares represented by this certificate have been issued to the registered holder as a result of a transaction to which Rule 145 under the Securities Act of 1933, as amended (the "1933 Act") applies. The shares represented by this certificate may not be sold, transferred or assigned, and the issuer shall not be required to give effect to any attempted sale, transfer or assignment, except pursuant to (i) a registration statement then in effect under the 1933 Act, (ii) a transaction permitted by Rule 145 as to which the issuer has received evidence of compliance with the provisions of said Rule 145 reasonably satisfactory to it or (iii) a transaction which, in the opinion of counsel for the Affiliate or as described in a 'no action' or interpretive letter from the staff of the Securities and Exchange Commission, in each case reasonably satisfactory in form and substance to the issuer, is exempt from the registration requirements of the 1933 Act. The restrictions of this paragraph shall become null and void and this paragraph shall have no effect on and after ______________. The undersigned undertakes to take such action as shall be necessary to cause the Shares to be received by the undersigned to be registered in a manner that will allow for the placement of a restrictive legend on the certificate(s) representing such Shares. The undersigned further undertakes that, if it is necessary in order to preserve pooling-of-interests accounting treatment, none of the Shares to be received by the undersigned, directly or indirectly, will be sold or otherwise disposed of during a period of time beginning with the effective date of the Merger and ending with a date upon which financial results of at least 30 days of post-merger combined operations have been first published by BANC ONE in accordance with SEC Accounting Series Release No. 130 as amended by Release No. 135, provided that BANC ONE hereby agrees that such financial results will be published not later than four months from the Merger. I hereby acknowledge that pursuant to the provisions of Rules 144 and 145 certain other persons or entities related to me are, or may be, subject to the foregoing restrictions on the resale of BANC ONE Common Stock received by them pursuant to the Merger, which persons include (i) any of my relatives or my spouse, or any relative of my spouse, who has the same home as me; (ii) any trust or estate in which I or any of the persons specified in the preceding clause collectively own ten percent (10%) or more of the total beneficial interest, or of which I or any of such persons serve as trustee, executor, or in any similar capacity; and (iii) any corporation or other organization (other than BANC ONE) in which I or any of the persons specified above are the beneficial owners, collectively, of ten percent (10%) or more of the equity interest therein. I hereby further acknowledge that I have advised any and all of such persons that they are, or may be, subject to the provisions of said Rules 144 and 145, and I hereby represent that I will use my best efforts to ensure that such persons comply with the provisions of this letter and Rules 144 and 145, as applicable, upon the resale of any Common Stock of BANC ONE. IN WITNESS WHEREOF, the Affiliate has made this undertaking as of the day and year first above written. ----------------------------------- (OPINION OF COUNSEL FOR MID STATES) EXHIBIT D _____________, 199_ BANC ONE CORPORATION 100 East Broad Street Columbus, Ohio 43271 Gentlemen: We are special counsel to MID STATE BANCSHARES, INC., a Delaware corporation and a registered bank holding company ("MID STATES"), and have acted as counsel for MID STATES in connection with the merger (the "Merger") of MID STATES with and into BANC ONE ILLINOIS CORPORATION ("BANC ONE ILLINOIS"), an Illinois corporation and a wholly-owned subsidiary of BANC ONE CORPORATION ("BANC ONE"), pursuant to which each of the issued and outstanding shares of MID STATES's Common Stock will be converted into shares of BANC ONE Common Stock. The Merger is to be consummated pursuant to the terms of an Agreement and Plan of Merger dated _______________, 1993 ("Merger Agreement"), between BANC ONE ILLINOIS and MID STATES and joined in by BANC ONE. This opinion is furnished to you pursuant to Section 18(d) of the Merger Agreement. Except as otherwise indicated herein, capitalized terms used in this Opinion Letter are defined in the Merger Agreement or the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law (1991), respectively. In the event of any inconsistency between the definition of any such term in the Merger Agreement and the Accord, the definition set forth in the Accord shall govern. This Opinion Letter is governed by, and is to be interpreted in accordance with, the Accord. As a consequence, it is subject to a number of qualifications, exceptions, definitions, limitations on coverage, and other limitations, all as more particularly described in the Accord, and this Opinion Letter should be read in conjunction therewith. The law covered by the opinions expressed herein is limited solely to the laws of the States of Illinois and Delaware and the Federal Law of the United States generally. Based upon and subject to the foregoing, we are of the opinion that: 1. The Merger Agreement is enforceable against MID STATES. BANC ONE CORPORATION ______________, 199_ Page 2 2. Except as set forth in the MID STATES Disclosure Letter, the execution and delivery by MID STATES of, and the performance by MID STATES of its agreements in, the Merger Agreement do not (a) violate the Constituent Documents of MID STATES; (b) violate applicable provisions of statutory law or regulation; (c) breach or otherwise violate any existing obligation of MID STATES under any Court Orders of which we have knowledge; or (d) breach, or result in a default under, any obligation of MID STATES under an Other Agreement of which we have actual knowledge. The General Qualifications apply to each of the opinions set forth above. We are rendering this opinion solely for the benefit of BANC ONE and BANC ONE ILLINOIS in connection with the transactions described in the Merger Agreement. It may not be relied upon by any other person or for any other person, or quoted or filed with any regulatory agency without our prior approval. Very truly yours, - ------------------------ - ------------------------ EXHIBIT E --------- (OPINION OF COUNSEL FOR BANC ONE CORPORATION AND BANC ONE ILLINOIS CORPORATION) _______________, 199_ Mid States Bancshares, Inc. 506 15th Street Molene, Illinois 61265-2184 Attention: Chairman Gentlemen: I am counsel for BANC ONE CORPORATION, an Ohio corporation and a registered bank holding company ("BANC ONE") and BANC ONE ILLINOIS CORPORATION ("BANC ONE ILLINOIS"), an Illinois corporation, a registered bank holding company and wholly owned subsidiary of BANC ONE, and have acted as counsel for BANC ONE and BANC ONE ILLINOIS in connection with the merger (the "Merger") of MID STATES BANCSHARES, INC. ("MID STATES") and BANC ONE ILLINOIS pursuant to which each of the issued and outstanding shares of MID STATES Common will be converted into shares of BANC ONE Common. Such Merger is to be consummated pursuant to the terms of an Agreement and Plan of Merger dated _____________, 1993 ("Merger Agreement") between MID STATES, BANC ONE ILLINOIS and joined in by BANC ONE. This opinion is furnished to you pursuant to Section 19(c) of the Merger Agreement. Except as otherwise indicated herein, capitalized terms used in this Opinion Letter are defined in the Merger Agreement or the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law (1991), respectively. In the event of any inconsistency between the definition of any such term in the Merger Agreement and the Accord, the definition set forth in the Accord shall govern. This Opinion Letter is governed by, and is to be interpreted in accordance with, the Accord. As a consequence, it is subject to a number of qualifications, exceptions, definitions, limitations on coverage, and other limitations, all as more particularly described in the Accord, and this Opinion Letter should be read in conjunction therewith. The law covered by the opinions expressed herein is limited solely to the laws of the State of Ohio, except as it relates to the status of BANC ONE ILLINOIS under Illinoislaw, and the Federal Law of the United States generally. MID STATES BANCSHARES, INC. __________, 199_ Based upon and subject to the foregoing, I am of the opinion that: 1. The Merger Agreement is enforceable against BANC ONE. 2. The Merger Agreement is enforceable against BANC ONE ILLINOIS. 3. Except as set forth in the BANC ONE Disclosure Letter, the execution and delivery by BANC ONE and BANC ONE ILLINOIS of, and the performance by BANC ONE and BANC ONE ILLINOIS of their agreements in, the Merger Agreement do not (a) violate the Constituent Documents of BANC ONE and BANC ONE ILLINOIS; (b) violate applicable provisions of statutory law or regulation; (c) breach or otherwise violate any existing obligation of BANC ONE and BANC ONE ILLINOIS under any Court Orders of which I am aware; or (d) breach, or result in a default under, any obligation of BANC ONE or BANC ONE ILLINOIS under an Other Agreement of which I am aware. I hereby confirm to you, pursuant to the requirements of Section 13(e) of the Merger Agreement, that there are no actions or proceedings against BANC ONE or any of its subsidiaries, pending or overtly threatened in writing, before any court, governmental agency or arbitrator which (i) seek to affect the enforceability of the Merger Agreement or (ii) come within the objective standard established in the Merger Agreement for disclosure, except as set forth in the BANC ONE Disclosure Letter. I have participated in the preparation of the Registration Statement on Form S-4 or other appropriate registration statement form (No._____________) of BANC ONE ("Registration Statement"), and in rendering this opinion have limited my review of the facts concerning the Registration Statement to discussions with and inquiry of Directors, officers and employees of BANC ONE, and Coopers & Lybrand, the independent accountants who examined certain of the financial statements of BANC ONE included in the Registration Statement, and based thereon and subject to the General Qualifications, I am of the opinion that such Registration Statement, and the Prospectus included in the Registration Statement (except as to financial statements, other financial data and any information concerning MID STATES included therein, as to which I express no opinion) at the time the Registration Statement became effective under the Securities Act of 1933 (the "1933 Act") complied as to form in all material respects with the 1933 Act and the rules and regulations of the Securities and Exchange Commission thereunder. I confirm that the Registration Statement has become effective under the 1933 Act, and to the best of my Actual Knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the 1933 Act. MID STATES BANCSHARES, INC. _________, 1993 Page 3 I have not checked the accuracy or completeness of, or otherwise verified, any statement of fact contained in the Registration Statement and Prospectus. Based on the participations, discussions and inquiries described above, however, I have no reason to believe that the Registration Statement (except as to financial statements, other financial data and any information concerning MID STATES included therein, as to which no view is expressed) at the time it became effective and as of the date of this letter contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that the Prospectus (except as to financial statements, other financial data and any information concerning MID STATES included therein, as to which no view is expressed) at such times contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or that since the effective date of the Registration Statement, any event has occurred which should have been set forth in an amendment or supplement to the Registration Statement or the Prospectus which has not been set forth in such an amendment or supplement. The General Qualifications apply to all of the opinions set forth above. I am rendering this opinion solely for the benefit of MID STATES in connection with the transactions described in the Merger Agreement. It may not be relied upon by any other person or for any other person. Very truly yours, - ------------------------- - ------------------------- FIRST AGREEMENT AMENDING AGREEMENT and PLAN OF MERGER This First Agreement Amending the Agreement and Plan of Merger between Mid States Bancshares, Inc. (hereinafter called "MID STATES") and Banc One Illinois Corporation (hereinafter called "BANC ONE ILLINOIS") and joined in by BANC ONE CORPORATION (hereinafter called "BANC ONE") is dated as of February 22, 1994. W I T N E S S E T H WHEREAS, the parties hereto have entered into an Agreement and Plan of Merger dated as of May 25, 1993 (hereinafter, the "Merger Agreement") providing for the merger of MID STATES into BANC ONE ILLINOIS and the exchange of shares of BANC ONE Common Stock for the shares of MID STATES Common Stock; WHEREAS, the MID STATES shareholders meeting has been postponed because the Board of Directors of MID STATES determined not to exercise the "walk-away" right provided in Section 7(c) of the Merger Agreement and chose to proceed in good faith in an attempt to consummate the Merger by undertaking a resolicitation of the MID STATES' shareholders regarding the Merger, during which resolicitation the Board of Directors of MID STATES will inform the shareholders that the Board intends to waive the "walk-away" right and proceed with the Merger provided MID STATES is able to obtain fairness opinions described below and the MID STATES' shareholders approve the Merger on that basis; WHEREAS, MID STATES and BANC ONE have agreed to amend the Registration Statement on Form S-4 registering the BANC ONE Common Stock to be issued to the shareholders of MID STATES; and -1- WHEREAS, the parties have agreed to modify the Merger Agreement to amend matters related to the registration period, the Valuation Period, the MID STATES shareholder meeting, the Closing date and the payment of certain expenses incurred between January 25, 1994 and the effective date of the Merger of MID STATES and BANC ONE ILLINOIS or the termination of the Merger Agreement, as the case may be. STATEMENT OF AMENDMENT NOW THEREFORE, the parties hereby agree that the Merger Agreement shall be and is hereby amended to read as follows: A. The last sentence of Section 7(c) of the Merger Agreement is amended to read in its entirety as follows: The term "Valuation Period" shall mean January 11, 1994 through January 24, 1994. B. Section 10(a) of the Merger Agreement is amended to read in its entirety as follows: (a) This Merger Agreement and the Plan of Merger shall be submitted to the shareholders of MID STATES for approval at a meeting to be called and held in accordance with applicable law and the Certificate of Incorporation and By-Laws of MID STATES. Such shareholders' meeting will be scheduled to be held approximately 30 days following the later of the mailing by MID STATES of (i) a proxy statement to its shareholders promptly following the effective date of the registration statement (the "Registration Statement") to be filed by BANC ONE with the Securities and -2- Exchange Commission (the "SEC") as provided in Section 10(d) or (ii) a second Proxy Statement following the effective date of any post-effective amendment to the Registration Statement filed after January 25, 1994 (the "Second Proxy Statement"). MID STATES and BANC ONE will cooperate with each other in order to facilitate the preparation, filing and clearance of the registration statement and the proxy statement under Federal and State securities laws to be used with respect to such shareholders' meeting and the exchange of shares as contemplated by this Merger Agreement. C. Section 10(c) of the Merger Agreement is amended to read in its entirety as follows: (c) After receipt of the Board's prior approval of BANC ONE's and BANC ONE ILLINOIS' acquisition of MID STATES, after approval of the acquisition by the Illinois Commissioner, and after the approval of the shareholders of MID STATES, as provided in Section 10(a), BANC ONE shall designate the date as of which BANC ONE desires the Merger to become effective and the Effective Time shall occur at the time and on the date so designated, subject to Section 25 of this Merger Agreement. The date designated by BANC ONE as the Effective Date shall be a date as soon as practicable after receipt of the approvals noted above in this Section 10(c); provided, however, that in no event will the date designated by BANC ONE as the Effective Time be sooner than the day of the MID STATES shareholders meeting, nor will the date designated by BANC ONE as the Effective Time be later than 31 days following the MID STATES shareholders meeting. D. Section 10(e) of the Merger Agreement is amended to read in its entirety as follows: (e) BANC ONE and/or BANC ONE ILLINOIS will assume and pay all expenses incident to the obtaining of the requisite regulatory consents and approvals. Without limiting the generality of the foregoing, the expenses to be assumed and paid by BANC ONE shall include (i) all -3- legal and other expenses and taxes incurred by BANC ONE incident to the consummation of the Merger contemplated by this Merger Agreement, (ii) all legal and other expenses incurred by BANC ONE incident to the preparation and filing of the applications to the Board, the Illinois Commissioner, and other requests for regulatory consents and approvals with the appropriate bank regulatory agencies as set forth in or contemplated by this Merger Agreement, and (iii) all legal and other expenses, if any, incurred in connection with the registration of BANC ONE Common under the Federal and State securities laws. Except as noted below, the expenses to be assumed and paid by BANC ONE and/or BANC ONE ILLINOIS shall not include any legal or other expenses incurred by MID STATES in the negotiation of the Merger, the examination or review of documents for its own benefit, in connection with its own corporate proceedings or to any investment banker or advisor for services rendered on its behalf. BANC ONE will pay the expenses of reproducing any proxy statement mailed to MID STATES' shareholders, including any printing costs associated with the mailing of the Second Proxy Statement. Prior to January 25, 1994, MID STATES shall be responsible for its legal and accounting fees incurred with any proxy statement mailed to its shareholders, including the expenses and fees to Donaldson, Lufkin and Jenrette Securities Corporation ("DLJ") with respect to any opinion expressed with respect to the fairness of the Merger from a financial point of view and/or the Exchange Rate to the holders of MID STATES Common (the "DLJ Fairness Opinion"). From January 25, 1994 through the earlier of the closing or termination of this Merger Agreement, whether or not the Merger is consummated, BANC ONE and MID STATES shall each be responsible for one-half of the legal and accounting fees incurred by MID STATES in connection with the transactions contemplated by this Agreement, the closing and Second Proxy Statement, the expenses and fees to DLJ with respect to any DLJ Fairness Opinion issued after January 25, 1994 and the expenses and fees to The Chicago Corporation ("TCC") with respect to any opinion expressed with respect to the fairness of the Merger from a financial point of view and/or the Exchange Rate to the holders of -4- MID STATES Common (the "TCC Fairness Opinion"). Any fees and expenses assumed and paid by BANC ONE and/or BANC ONE ILLINOIS pursuant to this Section 10(e), whether directly or indirectly incurred, shall not reduce or otherwise effect the Exchange Rate. E. Subsection (x) of Section 15(h) of the Merger Agreement is amended to read in its entirety as follows: (x) entered into any other material transaction (other than in the ordinary course of business) except as expressly contemplated by this Merger Agreement and including a contract with TCC regarding the issuance of the TCC Fairness Opinion. F. Section 15(l) of the Merger Agreement is amended to read in its entirety as follows: MID STATES has not incurred and will not incur any liability for brokerage, finders', agents', or investment bankers' fees or commissions in connection with this Merger Agreement or the transactions contemplated hereby except for fees to DLJ to be determined in accordance with the terms of that certain engagement letter dated November 6, 1992 annexed as an exhibit to the MID STATES Disclosure Letter and any fees to DLJ and TCC after January 25, 1994 for the issuance of a second DLJ Fairness Opinion and a TCC Fairness Opinion. G. Section 19(f) of the Merger Agreement is amended to read in its entirety as follows: MID STATES shall have received opinions from DLJ and TCC dated as of a date not later than the date of the Second Proxy Statement, to the effect that, in the opinion of such firms, the financial consideration to be received as a result of the Merger is fair from a financial point of view to the holders of MID STATES Common and such opinions shall not have been withdrawn prior to the Effective Time. -5- H. Section 20(b) of the Merger Agreement is amended to read in its entirety as follows: The registration statement, including any post-effective amendment required to be filed by BANC ONE pursuant to Section 10(d) of this Merger Agreement, shall have become effective by an order of the SEC, the shares of BANC ONE Common to be exchanged in the Merger shall have been qualified or exempted under all applicable state securities laws, and there shall have been no stop order issued or threatened by the SEC that suspends or would suspend the effectiveness of the registration statement, and no proceeding by the SEC shall have been commenced, pending or overtly threatened for such purpose and the BANC ONE Common to be issued in the Merger will be authorized for trading on the NYSE. I. The first paragraph of Section 25(e) of the Merger Agreement is amended to read in its entirety as follows: MID STATES, by action of its Board of Directors, may elect to terminate this Merger Agreement, whether before or after approval of the Merger by the shareholders of MID STATES, by giving three (3) days written notice of such election to BANC ONE at any time after the date of this Amendment. Such election shall be based on the MID STATES' Board of Directors conclusion that the termination of the Merger is in the best interests of MID STATES because of (a) an inability to obtain fairness opinions or any other cause that precludes the timely holding of the MID STATES' shareholders' meeting necessary to approve the Merger or (b) the reasonable probability that any other condition to MID STATES' obligation to consummate the Merger cannot be timely satisfied. J. The last sentence of Section 25(g) of the Merger Agreement is amended to read in its entirety as follows: If the Merger is not consummated as the result of termination of this Merger Agreement caused otherwise than by willful breach of a party hereto, BANC ONE, BANC ONE ILLINOIS and MID STATES each shall -6- pay its own fees and expenses incident to the negotiation, preparation and execution of this Merger Agreement, the respective shareholders' meetings and actions of the parties and all other acts incidental to, contemplated by or in pursuance of the transactions contemplated by this Merger Agreement, including fees and expenses of their respective counsel, accountants and other experts and advisors, except as noted in Section 10(e). Except as amended by this Agreement, the Merger Agreement and the exhibits thereto remain in full force and effect without alteration or change. IN WITNESS WHEREOF, the parties hereto have set their hands on the date and in the year first above written. BANC ONE CORPORATION ATTEST: By: /s/ Roman J. Gerber /s/ Charles F. Andrews -------------------------- - -------------------------- Roman J. Gerber Charles F. Andrews Executive Vice President Assistant Secretary MID STATES BANCSHARES, INC. ATTEST: By: /s/ Thomas H. Robinson /s/ G. H. Clausen -------------------------- - -------------------------- Thomas H. Robinson Secretary President and Chief Executive Officer ATTEST: BANC ONE ILLINOIS CORPORATION By: /s/ Willard Bunn III /s/ Thomas Cartwright -------------------------- - -------------------------- Willard Bunn III Secretary Chairman -7- SECOND AGREEMENT AMENDING AGREEMENT and PLAN OF MERGER This Second Agreement Amending the Agreement and Plan of Merger between Mid States Bancshares, Inc. (hereinafter called "MID STATES") and Banc One Illinois Corporation (hereinafter called "BANC ONE ILLINOIS") and joined in by BANC ONE CORPORATION (hereinafter called "BANC ONE") is dated as of March 25, 1994. W I T N E S S E T H WHEREAS, the parties hereto have entered into an Agreement and Plan of Merger dated as of May 25, 1993 as amended by a First Agreement Amending Agreement and Plan of Merger dated as of February 22, 1994 (hereinafter, the "Merger Agreement") providing for the merger of MID STATES into BANC ONE ILLINOIS and the exchange of shares of BANC ONE Common Stock for the shares of MID STATES Common Stock; WHEREAS, the parties have agreed to modify the Merger Agreement to amend matters related to the total number of shares of BANC ONE CORPORATION Common Stock to be exchanged for all of the shares of MID STATES Common Stock, the number of shares of BANC ONE CORPORATION Common Stock into which each shares of MID STATES Common Stock will be exchanged, and extend the date after which MID STATES or BANC ONE may terminate the Merger Agreement if the transaction has not then been consummated. STATEMENT OF AMENDMENT NOW THEREFORE, the parties hereby agree that the Merger Agreement shall be and is hereby amended to read as follows: A. The last sentence of the fourth paragraph following WITNESSETH is amended to read in its entirety as follows: Except as may be required upon application of Section 7(e) of this Merger Agreement, BANC ONE will issue not more than 908,822 shares of BANC ONE Common in connection with the transactions contemplated by this Merger Agreement. -1- B. Section 7(a)(i) of the Merger Agreement is amended to read in its entirety as follows: (i) Each of the not more than 311,560 shares of MID STATES Common that shall be issued and outstanding immediately prior to the Effective Time (excluding any shares held by MID STATES as treasury shares) shall thereupon and without further action be converted into 2.917 shares of BANC ONE Common, subject, however, to (A) the anti-dilution provisions of Sections 7(e) of this Merger Agreement and (B) provisions set forth in Section 7(c) herein relative to fractional shares (the "Exchange Rate"). C. Section 7(e) of the Merger Agreement is amended to read in its entirety as follows: (e) Except for the 5 for 4 share stock split paid on BANC ONE Common on August 31, 1993 and the 10% stock dividend paid on BANC ONE Common Stock on March 4, 1994, both of which distributions have been taken into account herein, if prior to the Effective Time BANC ONE or MID STATES shall (i) declare a stock dividend upon or subdivide, split up, reclassify or combine its shares of common stock; or (ii) declare a dividend or make a distribution on its common stock in any security convertible into its common stock, appropriate adjustment or adjustments will be made in the Exchange Rate. D. Section 25(b)(iii) of the Merger Agreement is amended to read in its entirety as follows: (iii) If the Merger shall not have been consummated on or before July 1, 1994. E. Section 2(a)(i) of Exhibit B to the Merger Agreement is amended to read in its entirety as follows: (i) Each of the not more than 311,560 shares of MID STATES Common that shall be issued and outstanding immediately prior to the Effective Time (excluding any shares held by MID STATES as treasury shares) -2- shall thereupon and without further action be converted into 2.917 shares of BANC ONE Common, subject, however, to (A) the anti-dilution provisions of Section 2(d) of this Merger Agreement and (B) provisions hereinafter contained relative to fractional shares (the "Exchange Rate"). F. The last sentence of Section 2(c) of Exhibit B to the Merger Agreement is amended to read in its entirety as follows: The term "Valuation Period" shall mean January 11, 1994 through January 24, 1994. G. Section 2(d) of Exhibit B to the Merger Agreement is amended to read in its entirety as follows: (d) If prior to the Effective Time, (i) MID STATES shall declare a stock dividend or distribution upon or subdivide, split up, reclassify or combine MID STATES Common or declare a dividend or make a distribution on MID STATES Common in any security convertible into MID STATES Common, or (ii) except for the 5 for 4 share stock split paid on BANC ONE Common on August 31, 1993 and the 10% stock dividend paid on BANC ONE Common Stock on March 4, 1994, both of which distributions have been taken into account herein, BANC ONE shall declare a stock dividend or distribution upon or subdivide, split up, reclassify or combine BANC ONE Common or declare a dividend or make a distribution on BANC ONE Common in any security convertible into BANC ONE Common, appropriate adjustment or adjustments will be made in the Exchange Rate. Except as amended by this Agreement, the Merger Agreement and the exhibits thereto remain in full force and effect without alteration or change. -3- IN WITNESS WHEREOF, the parties hereto have set their hands on the date and in the year first above written. BANC ONE CORPORATION ATTEST: By: /s/ Roman J. Gerber /s/ Charles F. Andrews -------------------------- - -------------------------- Roman J. Gerber Charles F. Andrews Executive Vice President Assistant Secretary MID STATES BANCSHARES, INC. ATTEST: By: /s/ Thomas H. Robinson /s/ Gregory J. Kistler -------------------------- - -------------------------- Thomas H. Robinson Assistant President and Chief Executive Secretary Officer BANC ONE ILLINOIS CORPORATION ATTEST: By: /s/ Willard Bunn III /s/ Thomas Cartwright -------------------------- - -------------------------- Willard Bunn III Secretary Chairman -4- EX-2.3 3 FORM OF PROXY EXHIBIT 2.3 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS P R O X Y FOR SPECIAL MEETING OF SHAREHOLDERS OF MID STATES BANCSHARES, INC. * * * * * * * * * * KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned shareholder of Mid States Bancshares, Inc. ("MID STATES") do hereby nominate, constitute and appoint Thomas H. Robinson, Daniel Churchill or James T. McLaughlin, or any one of them (with full power to act alone) my proxy and true and lawful attorney(s) in fact with full power of substitution, for me and in my name, place and stead to vote all Common Stock of MID STATES standing in my name, on its books at the close of business on ________________ at the special meeting of its shareholders to be held at 501 15th Street, Moline, Illinois on _______________ at 10:00 a.m., local time, or at any adjournment thereof, with all the powers the undersigned would possess if personally present, as follows: 1. Proposal to approve and adopt an Agreement and Plan of Merger dated May 25, 1993, as amended on February 22, 1994 and March 25, 1994, by and between MID STATES and Banc One Illinois Corporation ("Banc One Illinois") and joined in by BANC ONE CORPORATION ("BANC ONE") and providing for the merger of MID STATES with and into Banc One Illinois, as subsidiary of BANC ONE, pursuant to which each share of MID STATES Common Stock (other than shares of MID STATES Common Stock owned by a MID STATES shareholder who properly demands and preserves dissenters' rights) will be converted into shares of BANC ONE Common Stock at a rate of 2.917 shares of BANC ONE Common Stock for each share of MID STATES Common Stock. FOR ___ AGAINST ___ ABSTAIN ___ 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof. The Board of Directors knows of no other business to be brought before the meeting. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1 AND ACCORDING TO THE BEST JUDGMENT OF THE PROXIES WITH REGARD TO PROPOSAL 2. THIS PROXY MAY BE REVOKED BY A SUBSEQUENTLY DATED PROXY OR WRITTEN NOTICE TO THE BOARD OF DIRECTORS OR PERSONAL BALLOT AT THE MEETING. Please sign exactly as name appears on MID STATES records. When shares are held by joint tenants, both must sign. When signing as attorney-in-fact, executor, administrator, trustee, committee, personal representative or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. Dated: Dated: ----------------------------- ----------------------------- - ------------------------------------ ------------------------------------ Signature Signature if held jointly - ------------------------------------ ------------------------------------ (Please print name) (Please print name) PLEASE MARK, SIGN, DATE AND RETURN THE PROXY USING THE ENCLOSED ENVELOPE EX-5 4 ROMAN J. GERBER OPINION EXHIBIT 5 (BANK ONE LOGO APPEARS HERE) May 2, 1994 BANC ONE CORPORATION 100 East Broad Street Columbus, Ohio 43215 Re: BANC ONE CORPORATION Registration Statement on Form S-4 (Mid States Bancshares, Inc.) ------------------------------------------------------------------- Gentlemen: I have acted as counsel to BANC ONE CORPORATION ("BANC ONE") in connection with the Registration Statement on Form S-4 to be filed by BANC ONE with the Securities and Exchange Commission under the Securities Act of 1933, as amended. Pursuant to Rule 429, this Registration Statement, together with Registration Statement No. 33-51219, relates to the issuance of up to 908,822 shares of common stock, no par value, of BANC ONE (the "Shares") to the shareholders of Mid States Bancshares, Inc. ("MID STATES") in connection with the merger (the "Merger") of MID STATES with and into Banc One Illinois Corporation ("Bank One Illinois"), a wholly owned subsidiary of BANC ONE, pursuant to the terms of a Merger Agreement dated May 25, 1993, as amended on February 22, 1994 and March 25, 1994, by and among MID STATES, BANC ONE and Banc One Illinois (the "Merger Agreement"). In this connection, I have examined such corporate records and other documents and certificates of public officials as I have deemed necessary in order to render the opinion set forth below. Based upon the foregoing, it is my opinion that upon the satisfaction of certain conditions provided for in the Merger Agreement, the Shares, when issued and delivered pursuant to the provisions of the Merger Agreement and upon consummation of the Merger, will be validly issued, fully paid and non-assessable. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, /s/ ROMAN J. GERBER Roman J. Gerber General Counsel EX-8 5 OPINION OF VEDER, PRICE, KAUFMAN & KAMMHOLZ EXHIBIT 8 VEDDER, PRICE, KAUFMAN & KAMMHOLZ 222 North LaSalle Street Chicago, Illinois 60601-1003 312/609-7500 Vedder, Price, Kaufman, Kammholz & Day 805 Third Avenue New York, New York 10022-2203 212/407-7700 Vedder, Price, Kaufman & Kammholz 4615 East State Street Rockford, Illinois 61108 815/962-9100 Vedder, Price, Kaufman, Kammholz & Day 919 18th Street, N.W., Suite 1001 Washington, D.C. 20006-5593 202/828-5020 April 29, 1994 Board of Directors Board of Directors Mid States Bancshares, Inc. BANC ONE CORPORATION 501 15th Street 100 East Broad Street Moline, Illinois 61265 Columbus, Ohio 43271 Gentlemen: In connection with the solicitation of proxies for a special meeting of shareholders of Mid States Bancshares, Inc., a Delaware corporation ("Mid States"), at which there will be presented a proposed merger ("Merger") of Mid States into Banc One Illinois Corporation, an Illinois corporation ("BOIC") and wholly-owned subsidiary of BANC ONE CORPORATION, an Ohio Corporation ("Banc One"), you have requested our opinion with respect to certain federal income tax consequences of the Merger. The Merger contemplates the acquisition by BOIC of all the assets and liabilities of Mid States in exchange for common stock, with no par value, of Banc One ("Banc One Common") pursuant to an Agreement and Plan of Merger, dated as of May 25, 1993, as amended February 22, 1994 and March 28, 1994, entered into by Mid States, BOIC and Banc One (the "Merger Agreement"). The opinions expressed in this letter are based on the Internal Revenue Code of 1986, as amended (the "Code"), the Income Tax Regulations promulgated by the Treasury Department thereunder and judicial authority reported as of the date hereof. We have also considered the position of the Internal Revenue Service (the "Service") reflected in published and private rulings. Although we are not aware of any pending changes to these authorities that would alter our opinions, there can be no assurance that future legislative or administrative changes, court decisions or Service interpretations will not significantly modify the statements or opinions expressed herein. We express no opinion herein as to any issue of federal law other than those specifically considered herein. We also do not express any opinion as to any issue of state or local law. Board of Directors April 29, 1994 Page 2 For the purposes indicated above, and based upon our review, the conditions set forth below, and the anticipated receipt by us prior to closing of such representations as we may request of Mid States, certain shareholders of Mid States, and Banc One, in such form as we may request, it is our opinion that: (1) The merger of Mid States into BOIC, pursuant to the Merger Agreement, will constitute a reorganization within the meaning of section 368(a)(1)(A) and section 368(a)(2)(D) of the Code. Mid States, BOIC and Banc One will each be considered "a party to a reorganization" within the meaning of section 368(b) of the Code for purposes of this reorganization; (2) No gain or loss will be recognized by Mid States upon the transfer of its assets and liabilities to BOIC pursuant to the Merger; (3) No gain or loss will be recognized by BOIC upon the receipt of the assets and liabilities of Mid States pursuant to the Merger; (4) The tax basis of the assets of Mid States in the hands of BOIC will be the same as the tax basis of such assets in the hands of Mid States immediately prior to the transfer; (5) The holding period of the assets of Mid States transferred to BOIC will include the period during which such assets were held by Mid States prior to the transfer; (6) No gain or loss will be recognized by the shareholders of Mid States upon the receipt of Banc One Common in exchange for their shares of Mid States (disregarding for this purpose any cash received upon exercise of dissenters' rights or in lieu of the receipt of fractional shares); (7) The tax basis of the Banc One Common (including for this purpose any fractional share interests which shareholders of Mid States will be deemed to receive and then sell in exchange for cash) received by the shareholders of Mid States will be the same as the tax basis of the Mid States shares exchanged therefor; and (8) The holding period of the Banc One Common received by the shareholders of Mid States will include the holding period of the Mid States shares exchanged Board of Directors April 29, 1994 Page 3 therefor, provided that at the time of the exchange the Mid States shares were held as capital assets. In rendering this opinion, we have examined the Merger Agreement and such other documents as we have deemed necessary or appropriate. We have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as copies, the authenticity of the originals of such copies, and that the Merger will be consummated pursuant to Illinois and Delaware law in the manner set forth in the Merger Agreement. We have also assumed that any written representations and covenants of Mid States, certain shareholders of Mid States, and Banc One as we may request in connection with rendering our opinion will be provided to us by such parties prior to the closing and that such representations and covenants will be accurate and complete in all respects as of the time they are provided to us and as of the closing. Any changes in these facts, or in the accuracy of these assumptions, representations or covenants, may necessitate reconsideration of our opinion and possibly result in different conclusions. Our opinion is limited to those federal income tax issues specifically considered herein and is addressed to and is only for the benefit of Mid States and Banc One. The opinion is furnished to you pursuant to section 12 of the Merger Agreement and may not be used or relied upon for any other purpose and may not be circulated or otherwise referred to for any other purpose without our express written consent. Although the discussion herein is based upon our best interpretation of existing sources of law and expresses what we believe a court would properly conclude if presented with these issues, no assurance can be given that such interpretations would be followed if they were to become the subject of judicial or administrative proceedings. We hereby consent to the filing of this opinion as an Exhibit to the Registration Statement and to the use of our name in the Prospectus and Proxy Statement constituting part of the Registration Statement. In giving such consent, we do not thereby concede that we are within the category of persons whose consent is required under section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. Very truly yours, /s/ VEDDER, PRICE, KAUFMAN & KAMMHOLZ VEDDER, PRICE, KAUFMAN & KAMMHOLZ EX-24 6 CONSENT OF COOPERS & LYBRAND EXHIBIT 24 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Registration Statement of BANC ONE CORPORATION on Form S-4 of our report which includes an explanatory paragraph regarding the change in method of accounting for income taxes and post-retirement benefits other than pensions in 1993, dated February 21, 1994 on our audits of the consolidated financial statements of BANC ONE CORPORATION as of December 31, 1993 and 1992, and for the years ended December 31, 1993, 1992, and 1991, included in BANC ONE CORPORATION'S Annual Report on Form 10-K for the year ended December 31, 1993. We also consent to the reference to our Firm under the caption "Miscellaneous Information" in said Registration Statement. /s/ Coopers & Lybrand COOPERS & LYBRAND Columbus, Ohio April 20, 1994 EX-24.1 7 CONSENT OF MCGLADREY & PULLEN EXHIBIT 24.1 CONSENT OF INDEPENDENT AUDITORS The Board of Directors Mid States Bancshares, Inc. We consent to the use of our report incorporated herein by reference to our firm under the heading "Interests of Named Experts and Counsel" in the prospectus. /s/ MCGLADREY & PULLEN Moline, Illinois April 19, 1984 -----END PRIVACY-ENHANCED MESSAGE-----