Larry K. Harris
October 3, 1996
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 20549
Re: First Commercial Bancorp, Inc.
Proxy Statement for 1996 Annual Meeting of Shareholders
Ladies and Gentlemen:
Pursuant to Rule 14a-6 under the Securities Exchange Act of 1934, as
amended, we transmit herewith preliminary copies of the Notice of the 1996
Annual Meeting of Shareholders and Proxy Statement of First Commercial Bancorp,
Inc. (the Company). The Company anticipates that it will mail its definitive
proxy materials to shareholders on or about October 21, 1996, the record date
for the annual meeting.
The Company has previously deposited the $125.00 fee required for this
filing in its lock box account (CIK #0000315547).
Please call upon the undersigned (314/727-7676) should you have any
questions with respect to this filing or require additional information.
Very truly yours,
/s/ Larry K. Harris
Larry K. Harris
LKH/km
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
First Commercial Bancorp, Inc.
------------------------------
(Name of Registrant as Specified In Its Charter)
Not Applicable
--------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
--------------------------------------------
2) Form, Schedule or Registration Statement No.:
--------------------------------------------
3) Filing Party:
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4) Date Filed:
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<PAGE>
FIRST COMMERCIAL BANCORP, INC.
- --------------------------------------------------------------------------------
NOTICE OF THE 1996 ANNUAL MEETING OF
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDERS AND PROXY STATEMENT
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<PAGE>
FIRST COMMERCIAL BANCORP, INC.
865 Howe Avenue
Suite 310
Sacramento, California 95825
[DATE], 1996
To the Shareholders of First Commercial Bancorp, Inc.:
You are cordially invited to attend the First Commercial Bancorp, Inc.
1996 Annual Meeting of Shareholders, to be held on Thursday, December 5, 1996.
The meeting will begin promptly at 10:00 a.m. at the Red Lion Sacramento Inn,
1401 Arden Way, Sacramento, California.
The matters to be acted on at the meeting are described in detail in
the attached official Notice of the Annual Meeting of Shareholders and Proxy
Statement. Company officers will present reports and Shareholders will have an
opportunity to ask questions of general interest. A copy of the Company's Annual
Report to Shareholders for the fiscal year ended December 31, 1995, was mailed
previously to Shareholders on or about [DATE], or accompanies this Proxy
Statement for those Shareholders who became Shareholders of record after such
mailing date.
The vote of every Shareholder is important. Your prompt cooperation in
signing and returning your Proxy immediately will be greatly appreciated and may
save additional solicitation expenses. Please note that returning your completed
Proxy will not prevent you from voting in person at the meeting if you wish to
do so.
You may use the enclosed self-addressed stamped envelope to return your Proxy.
Sincerely,
Donald W. Williams
Chairman, President, and
Chief Executive Officer
<PAGE>
FIRST COMMERCIAL BANCORP, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 5, 1996
To the Shareholders of First Commercial Bancorp, Inc.
Notice is hereby given that the 1996 Annual Meeting of Shareholders
(the Annual Meeting) of First Commercial Bancorp, Inc., a Delaware corporation
(the Company), will be held on Thursday, December 5, 1996, commencing at 10:00
a.m. at the Red Lion Sacramento Inn, 1401 Arden Way, Sacramento, California.
Pursuant to the Amended and Restated By-laws of the Company, the Board
of Directors has fixed the close of business on October 21, 1996, as the record
date for determining the Shareholders of the Company entitled to receive notice
of and to vote at the Annual Meeting. The following items will be on the agenda:
1. To elect one person as a Class C Director, to serve a two-year
term expiring at the Annual Meeting of Shareholders to be held
in 1998 and to elect two persons as Class A Directors, each to
serve a three-year term expiring at the Annual Meeting of
Shareholders to be held in 1999; and
2. To consider and vote upon a proposal to amend the Company's
Certificate of Incorporation to: (i) effect a one-for-one
hundred twenty-five reverse stock split of all the issued and
outstanding shares of the Company's Common Stock; and (ii)
increase the par value of the Company's Common Stock from
$0.01 per share to $1.25 per share; and
3. To consider and vote upon a proposal to amend the Company's
Certificate of Incorporation to delete Article VIII,
respecting certain business combinations and other
extraordinary corporate activities; and
4. To consider and vote upon a proposal to amend the Company's
Certificate of Incorporation to eliminate the several classes
of the Company's Directors and provide that each member of the
Board of Directors be elected annually to serve a term of one
year ending at the next annual meeting of the Company's
shareholders; and
5. To consider and vote upon a proposal to amend the Company's
Certificate of Incorporation to provide that the beneficial
owners of 10 percent or more of the voting power of the then
outstanding shares of the Company's capital stock may call a
special meeting of the Company's Shareholders; and
6. To consider and vote upon a proposal to amend the Company's
Certificate of Incorporation to provide that the members of
the Board of Directors may be removed with or without cause by
the vote of a majority of the voting power of the then
outstanding shares of capital stock of the Company; and
7. To ratify the appointment of KPMG Peat Marwick LLP as
independent auditors for the Company; and
8. To transact such other business as may properly come before
the meeting.
These items are more fully described in the following Proxy Statement,
which is hereby made a part of this Notice. Only Shareholders of record at the
close of business on October 21, 1996, are entitled to notice and to vote at
this meeting.
So far as management is aware, no business is expected to come before
the Annual Meeting of Shareholders other than the matters described in Items 1
through 7 above.
By order of the Board of Directors
Donald W. Williams
Chairman, President, and
Chief Executive Officer
<PAGE>
PROXY STATEMENT
FOR
FIRST COMMERCIAL BANCORP, INC.
1996 ANNUAL MEETING OF SHAREHOLDERS
[DATE] , 1996
This Proxy Statement is furnished to shareholders (Shareholders) of
First Commercial Bancorp, Inc. (the Company) in connection with the solicitation
of proxies by the Company's Board of Directors for the 1996 Annual Meeting of
Shareholders that is scheduled to be held on December 5, 1996, and any
adjournments thereof (the Annual Meeting), for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. Only Shareholders of
record of the Company's Common Stock, $0.01 par value per share (Common Stock),
at the close of business on October 21, 1996 (the Record Date), are entitled to
notice of and to vote at this meeting. As of the close of business on September
30, 1996, there were 105,765,932 shares of Common Stock issued and outstanding
and entitled to vote.
Shareholders are not entitled to vote cumulatively for the election of
directors. Each Shareholder is entitled to a number of votes for the election of
directors equal to the number of shares held by such Shareholder multiplied by
the number of directors to be elected, but may cast no more votes for any one
nominee than is equal to the number of shares held by the Shareholder. On all
other matters, the Shareholders are entitled to one vote per share. Proxies for
shares marked abstain and broker non-votes will be considered represented at the
meeting but not voted; shares held in street name by brokers and others for
which Proxies are voted on some but not all matters will be considered
represented at the meeting but voted only as to those matters actually marked on
the Proxy if so indicated.
If you sign and return the enclosed Proxy, the shares represented
thereby will be voted FOR the nominees for director positions listed under the
headings Election of Class C Director and Election of Class A Directors and FOR
the proposals: (i) to amend the Company's Certificate of Incorporation (the
Charter) to (a) effect a one-for-one hundred twenty-five reverse stock split of
all the authorized shares of the Company's Common Stock and (b) increase the par
value of the Company's Common Stock from $0.01 to $1.25; (ii) to amend the
Charter to delete Article VIII (respecting certain business combinations) in its
entirety; (iii) to amend the Charter to eliminate the several classes of the
Company's Directors and provide that each member of the Board of Directors will
be elected annually to serve a term of one year ending at the next annual
meeting of the Company's shareholders, (iv) to amend the Charter to provide that
holders of 10 percent or more of the voting power of the Company's capital stock
may call a special meeting of the Shareholders; (v) to amend the Charter to
provide that the Shareholders may remove the Company's directors with or without
cause by majority vote; and (vi) to ratify the appointment of KPMG Peat Marwick
LLP as independent auditors of the Company, unless otherwise indicated on the
<PAGE>
Proxy. Although it is not anticipated that any nominee will not serve as a
director, or be unable to serve as a director, if elected, in either such event
the Proxies will be voted for such other person or persons as may be designated
by the Board of Directors.
Returning your completed Proxy will not prevent you from voting in
person at the meeting should you be present and wish to do so. Proxies may be
revoked by sending written notice of revocation to the Secretary of the Company,
or by signing and delivering a later dated Proxy, or, if you attend the Annual
Meeting in person, by voting at the Annual Meeting. Merely attending the Annual
Meeting will not constitute revocation of your Proxy.
You may revoke your Proxy at any time before it is voted.
Directors, officers, and other employees of the Company may solicit
proxies by personal interview, telephone, facsimile transmission, and telegram
in addition to the use of the mails. The Company will request persons, such as
brokers, nominees, and fiduciaries, holding stock in their name for others, or
holding stock for others who have the right to give voting instructions, to
forward proxy materials to their principals and request authority for the
execution of the Proxy. The Company will reimburse them for reasonable
out-of-pocket expenses in so doing. The total cost of soliciting proxies will be
borne by the Company.
The complete mailing address of Company's principal corporate offices
is 865 Howe Avenue, Suite 310, Sacramento, California 95825. This Proxy
Statement and the enclosed form of Proxy were first mailed to Shareholders on or
about [DATE], 1996.
I. ELECTION OF DIRECTORS
The Board of Directors consists of five persons. In accordance with the
Charter and the Amended and Restated By-laws of the Company (the By-laws), the
Board of Directors is divided into three classes (Class A, Class B, and Class C)
and the number of directors in each class is to be as nearly equal as possible.
Thus, Class A and Class B are each comprised of two directors and Class C is
comprised of one director. The term of office for a director position is three
years. Therefore, each year one class of directors is elected. However, the
Company did not hold an Annual Meeting of Shareholders in 1995, and Shareholders
did not elect a new Class C Director in 1995. As a consequence, the person
holding that office continued as a director past the normal term, until that
person resigned. Upon such resignation, the Board of Directors, under its powers
pursuant to the Charter and By-laws, appointed a successor Class C Director
(Fred L. Harris), to serve until Shareholders have an opportunity to elect a
Class C Director.
Election of Class C Director
----------------------------
The individual elected as a Class C Director at the Annual Meeting will
serve for a two-year term expiring at the Annual Meeting of Shareholders to be
held in 1998, thereby restoring the Class C directorship to its traditional
order for expiration and election. However, if the Shareholders approve the
proposal to amend Article SEVENTH of the Charter at the Annual Meeting (Item IV
below), all directors will serve one-year terms expiring at the 1997 Annual
Meeting of Shareholders. The Company's Board of Directors has nominated Fred L.
Harris to be elected as a Class C Director.
<PAGE>
The nominee for Class C Director receiving a plurality of the vote of
the holders of shares entitled to vote and represented in person or by Proxy at
the Annual Meeting will be elected as a director. Shares represented by a
properly executed Proxy in the accompanying form will be voted FOR the election
of Fred L. Harris to the Board of Directors as a Class C Director, unless
Shareholders specify otherwise in their Proxies. Should the nominee for Class C
Director become unable to serve as a director for any reason before the
election, the Proxy will be voted for the substitute nominee to be selected by
the Board of Directors of the Company. Cumulative voting does not apply in the
election of directors. The Board of Directors recommends a vote FOR the election
of Fred L. Harris as a director.
Election of Class A Directors
-----------------------------
At the Annual Meeting, two persons will be elected to serve as Class A
Directors for a three-year term expiring at the Annual Meeting of Shareholders
to be held in 1999. However, if the Shareholders approve the proposal to amend
Article SEVENTH of the Charter at the Annual Meeting (Item IV below), all
directors will serve one-year terms expiring at the 1997 Annual Meeting of
Shareholders. The Company's Board of Directors has nominated Donald W. Williams
and Michael P. Morris, the two persons currently serving as Class A Directors,
to be elected as Class A Directors.
The two nominees for Class A Director receiving a plurality of the vote
of the holders of shares entitled to vote and represented in person or by Proxy
at the Annual Meeting (i.e. the two receiving the most number of votes) will be
elected as directors. Shares represented by a properly executed Proxy in the
accompanying form will be voted FOR the election of Donald W. Williams and
Michael P. Morris to the Board of Directors as Class A Directors, unless
Shareholders specify otherwise in their Proxies. Should any nominee(s) for Class
A director become unable to serve as a director for any reason before the
election, the Proxy will be voted for the substitute nominee(s) to be selected
by the Board of Directors of the Company. Cumulative voting does not apply in
the election of directors. The Board of Directors recommends a vote FOR the
election of Donald W. Williams and Michael P. Morris as directors.
Continuing Directors
--------------------
The terms of the Class B Directors are scheduled to expire at the 1997
Annual Meeting of Shareholders at which time the Shareholders will elect two
Class B Directors. The Class B Directors currently are James F.
Dierberg and Allen H. Blake.
<PAGE>
Information About the Directors
-------------------------------
ALLENH. BLAKE: 53, Interim Chief Financial Officer of First Commercial
Bancorp, Inc. and First Commercial Bank and Executive Vice President,
Chief Financial Officer, and Secretary of First Banks, Inc.
Mr. Blake has been a Director of the Company since 1995, and was
appointed on November 28, 1995, to serve as the Interim Chief
Financial Officer of the Company and First Commercial Bank (the
Bank), a wholly-owned subsidiary of the Company, until a permanent
Chief Financial Officer can be employed. Mr. Blake also was a Senior
Vice President of First Banks, Inc. from February 1992 to April 1996
and was appointed an Executive Vice President of First Banks, Inc. in
April 1996. Mr. Blake joined First Banks, Inc. as Vice President and
Chief Financial Officer in 1984, and in 1988 he was appointed to the
office of Secretary and to the Board of Directors of First Banks, Inc.
In addition, Mr. Blake is Vice President, Chief Financial Officer,
Secretary, and director of First Banks America, Inc., Houston, Texas,
a director of First Bank, headquartered in O'Fallon, Illinois, and a
director and Secretary of First Bank, headquartered in Creve Coeur,
Missouri. First Banks America, Inc. and First Banks, Inc. each have a
class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the Exchange Act).
JAMES F. DIERBERG: 59, Chairman of the Board and Chief Executive Officer of
First Banks, Inc.
Mr. Dierberg has been a Director of the Company since 1995. He has
been the Chairman of the Board and Chief Executive Officer of First
Banks, Inc. and its predecessor companies since 1966. He has been a
director of First Banks, Inc. since 1979. Mr. Dierberg was President
of First Banks, Inc. from 1979 until February 1992, and he was re-
appointed President of First Banks, Inc. in April 1994. In September
1994 Mr. Dierberg was appointed Chairman of the Board, President,
and Chief Executive Officer of First Banks America, Inc.,
headquartered in Houston, Texas. Since 1957 Mr. Dierberg has served
in various capacities with other bank holding companies and banks
owned or controlled by him or members of his family. First Banks
America, Inc. and First Banks, Inc. each have a class of securities
registered pursuant to Section 12 of the Exchange Act.
<PAGE>
FRED L. HARRIS: 47, President, Fred L. Harris, a Professional Law Corporation
Mr. Harris served as a director of the Company from 1984 until
December 27, 1995, at which time he resigned as a director. On March
26, 1996, Mr. Harris was reappointed as a director and serves in such
capacity as of the date of this Proxy Statement. Mr. Harris is an
attorney and has practiced aw since 1977. Mr. Harris is President
of Fred L. Harris, a Professional Law Corporation. Mr. Harris was a
director and secretary of Southwest Food Products, Inc. from May 1990
until August 1990. On August 23, 1991, Southwest Food Products, Inc.
filed a voluntary petition for bankruptcy under Chapter XI of the
United States Bankruptcy Code. Mr. Harris was a director of El Pollo
Asada, Inc. from September 1989 to May 1990.
MICHAEL P. MORRIS: 49, Chief Financial Officer, Stille Company.
Mr. Morris has been a Director of the Company since 1995. He currently
is, and for the past four years has been, the Chief Financial Officer
of Stille Holding Company, a $200 million private company with two
retail subsidiaries and one real estate subsidiary. Prior to that time,
Mr. Morris was a partner for six years in the Sacramento office of KPMG
Peat Marwick LLP, a worldwide CPA firm. While with KPMG Peat Marwick
LLP, Mr. Morris specialized as a banking audit partner with extensive
experience auditing community banks in Northern California. Mr. Morris
joined KPMG Peat Marwick LLP in 1978.
DONALD W. WILLIAMS: 49, Chairman of the Board, President, and Chief
Executive Officer of the Company and Executive Vice President and
Chief Credit Officer of First Banks, Inc.
Mr. Williams has been Chairman of the Board, President, and Chief
Executive Officer of the Company since 1995. He has been Chief Credit
Officer of First Banks, Inc. since March, 1993, and served from 1993
to April 1996 as Senior Vice President. In April 1996, Mr. Williams
was appointed Executive Vice President of First Banks, Inc. Mr.
Williams is also Chairman of the Board and Chief Executive Officer of
the Bank. In addition, he is Chairman of the Board, President, and
Chief Executive Officer of First Bank & Trust, headquartered in
Irvine, California, and director of each of First Bank and First Bank
FSB, both of which are headquartered in St. Louis County, Missouri,
First Banks America, Inc., and BankTEXAS N.A., both of which are
headquartered in Houston, Texas. From 1989 until the time he assumed
his positions with First Banks, Inc., he was Senior Vice President
at Mercantile Bank of St. Louis, N.A., where he was responsible for
credit approval. First Banks America, Inc. and First Banks, Inc.
each have a class of securities registered pursuant to Section 12 of
the Exchange Act.
No director or executive officer of the Company has any family
relationship with any other director or executive officer of the Company, or
director or officer of the Bank.
<PAGE>
Messrs. Dierberg, Blake, and Williams were elected to the Board of
Directors of the Company in accordance with the terms of that certain Amended
and Restated Stock Purchase Agreement by and among the Company, the Bank, First
Banks, Inc., and Mr. Dierberg, dated August 7, 1995 (the Stock Purchase
Agreement). See Change of Control below. As of July 1996, Directors who are not
Executive Officers of the Company and/or the Bank and who do not beneficially
own 10 percent or more of the Company's Common Stock are paid $500 per meeting
of the Board of Directors that they attend. Directors who are executive officers
of the Company and/or the Bank or who beneficially own ten percent or more of
the Company's Common Stock are not compensated for serving as Directors. Prior
to July 1996, no Directors were compensated for serving as members of the Board
of Directors.
Committees
----------
The Company has a standing Audit Committee. Current members of the
Audit Committee are Messrs. Harris and Morris. There is no standing nominating
committee. The Board of Directors may nominate candidates for director
positions, and Shareholders may nominate candidates for director positions in
the manner set forth in the By-laws.
Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------
The full Board of Directors acted as the Company's Compensation
Committee during 1995. However, Messrs. Blake and Williams are compensated for
their services to the Company by First Banks, Inc. First Banks, Inc. is
reimbursed for its expenses in connection with such services pursuant to that
certain Management Services Agreement by and among the Company, the Bank, and
First Banks, Inc., dated December 21, 1995 (the Management Services Agreement).
Accordingly, Messrs. Blake and Williams may have participated in compensation
decisions with respect to other employees of the Company; however, as directors
of the Company they did not participate in decisions with respect to their
compensation as executive officers of the Company.
Board and Committee Meetings
----------------------------
All directors attended at least 75 percent of the aggregate of all
Board of Directors meetings and committee meetings (of which such directors were
members) during the fiscal year ended December 31, 1995, that were held during
the periods each served on the Board and/or committee. There were 19 Board of
Directors meetings held during the fiscal year ended December 31, 1995.
<PAGE>
Change of Control
-----------------
On July 25, 1995, the Boards of Directors of the Company and the Bank
unanimously approved entering into the Stock Purchase Agreement with James F.
Dierberg and First Banks, Inc. The Stock Purchase Agreement was executed by Mr.
Dierberg, First Banks, Inc., the Company and the Bank on August 7, 1995. The
Company's Shareholders approved the terms of the Stock Purchase Agreement on
December 27, 1995. Pursuant to the Stock Purchase Agreement, First Banks, Inc.
has contributed $6.5 million of capital to the Company in exchange for 65
million of shares of the Common Stock. First Banks, Inc. also purchased two
convertible debentures (the Convertible Debentures) from the Company in the
aggregate principal amount of $6.5 million. The Convertible Debentures bear an
interest rate of 12 percent per annum and are secured by all of the Bank's
Common Stock. Both Convertible Debentures mature during the year 2000. Pursuant
to the terms of the Convertible Debentures, First Banks, Inc. may convert the
principal and interest due under the debentures into Common Stock at the rate of
$0.10 per share. As a result of the foregoing, at September 30, 1996 First
Banks, Inc. owned or has the ability to obtain shares of the Company's Common
Stock equal to 76.98 percent of all of the Company's outstanding Common Stock.
Moreover, pursuant to the terms of the Stock Purchase Agreement, First Banks,
Inc. nominated and the Board of Directors appointed three new directors to the
Board of Directors, thereby giving First Banks, Inc.
control of the management of the Company.
Compensation Committee Report
-----------------------------
The Board of Directors serves in the role of a compensation committee.
Three of the current directors, including Mr. Williams, who is Chairman of the
Board, Chief Executive Officer, and President of the Company, and Mr. Blake, who
is Interim Chief Financial Officer of the Company, are executive officers of
First Banks, Inc., which is compensated for their services to the Company on an
hourly basis under the provisions of the Management Services Agreement. None of
the current directors has ever been compensated by the Company or the Bank as an
executive officer.
The purpose of a compensation committee is to consider the levels and
components of executive compensation relative to those generally available in
its marketplace in the context of the overall long-term objectives of the
Company, and its stockholders. By maintaining appropriate balance in these
factors, the Board of Directors believes that it will be most effective in
attracting and retaining well-qualified executives who will be capable of
contributing to the success of the Company.
The paramount objective of the Company is building the long-term value
of the shareholders' investment within the framework of operating the Bank in a
safe and sound manner. This is accomplished by achieving substantial
improvements and consistency in earnings and strengthening the Bank's franchise.
<PAGE>
Consequently, the compensation of executives should be structured to attract
individuals capable in contributing to the achievement of these objectives and
to align the welfare of those individuals with that of the shareholders.
The Board of Directors periodically reviews the various components of
the Company's executive compensation programs as outlined below:
Base Salary. In determining the appropriate base salaries of its
executive officers, the Board of Directors evaluates the performance of the
Company, considering general business and industry conditions, among other
factors, and the contributions of specific executives toward that performance.
Particular measures to which the Board of Directors assigns significance are net
income, earnings per share, expense control, net interest margin, regulatory
reports, and the performance of the Company's stock. The Board of Directors also
evaluates each officer's areas of responsibility and the Company's performance
in those areas. Finally, the Company considers the level of compensation paid
comparable executives by other financial institutions of comparable size in its
marketplaces.
Bonus. The Board of Directors may elect to award bonuses to selected
executive officers based largely upon the same criteria as the evaluations of
base salaries, emphasizing the need to maintain competitive compensation
packages and the desire to recognize outstanding performance by the officers.
Stock Option Program. The Board of Directors recognizes that one way to
align the interests of the Company's executive officers with those of its
shareholders is the encouragement of ownership of the Company stock through
stock options granted under its Employee Stock Option Plan. Under this plan,
executive officers are eligible to receive stock options from time to time,
giving them the right to purchase shares of Common Stock of the Company at a
specified price in the future.
Compensation of Chief Executive Officer. As noted elsewhere in this
Proxy Statement, Mr. Williams, the Chief Executive Officer, does not receive any
compensation from either the Company or the Bank. First Banks, Inc. receives
fees from the Company pursuant to the Management Services Agreement for services
provided to the Company by Mr. Williams (See Compensation Committee Interlocks
and Insider Participation).
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The table below sets forth, as of September 30, 1996, the number and
percentage of outstanding shares of Common Stock beneficially owned by: (i) each
Director of the Company; (ii) all directors and officers of the Company as a
group; and (iii) each person known by the Company to own beneficially more than
five percent of its Common Stock. The Company believes that each individual or
entity named has sole investment and voting power with respect to shares of
Common Stock indicated as beneficially owned, except as otherwise noted.
Name and Address Shares Beneficially Owned
-------------------------
Number(1) Percentage(1)
--------- -------------
First Banks, Inc.
135 North Meramec Avenue
Clayton, Missouri 63105 136,313,334(2) 76.98%
James F. Dierberg
135 North Meramec Avenue
Clayton, Missouri 63105 136,313,334(3) 76.98%
Allen H. Blake -0- 0.00%
Fred L. Harris 16,936(4) (5)
Michael P. Morris -0- 0.00%
Donald W. Williams -0- 0.00%
All Directors and Officers as a
Group (Six Persons) 136,330,270 76.99%
- ----------------------
(1) Calculated pursuant to Rule 13d-3(d) of the Exchange Act. Under Rule
13d-3(d), shares not outstanding which are subject to options,
warrants, rights, or conversion privileges exercisable within 60 days
are deemed outstanding for the purpose of calculating the number and
percentage owned by such person, but not deemed outstanding for the
purpose of calculating the percentage owned by each other person
listed. Each beneficial owner's percentage ownership is based upon
105,765,932 shares of Common Stock issued and outstanding as of
September 30, 1996.
(2) Includes 71,313,334 shares which First Banks, Inc. has the right to
obtain upon conversion of the entire principal amounts of the
Convertible Debentures plus accrued interest through September 30, 1996
into Common Stock.
(3) The voting stock of First Banks, Inc.is owned by various trusts which
were created by and administered by and for the benefit of Mr.Dierberg.
Accordingly, Mr. Dierberg controls the management and policies of First
Banks, Inc. and the election of its directors and is deemed to have
beneficial ownership of all of the Company's shares attributable to
First Banks, Inc.
(4) Includes options for 10,000 shares of Common Stock granted on September
26, 1989 exercisable at $11.12 per share.
(5) Less than one percent.
<PAGE>
Summary Compensation Table
--------------------------
The following table sets forth certain information regarding the
compensation paid to Donald W. Williams (the Company's Chief Executive Officer)
and the Company's other most highly compensated executive officers of the
Company whose compensation (including annual salary and bonus) exceeded
$100,000, for the fiscal year ended December 31, 1995 (the Named Executive
Officers):
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Compensation Awards Payouts
- --------------------------- ------------------------------- ------- ------------- --------- ---------- ----------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- --------------------------- -------- ------------ --------- ------- ------------- --------- ---------- ----------------
Restricted
Name and Principal StockAward(s) Options LTIP All Other
Position Year Salary(1) Bonus Other (Shares) Payouts Compensation
(2)
- --------------------------- -------- ------------ --------- ------- ------------- --------- ---------- ----------------
James E. Culleton,
Secretary of the Company 1995 $156,405 $ -0- $ -0- $ -0- -0- $ -0- $ 1,407
and President of First 1994 162,937 -0- -0- -0- -0- -0- 5,437
Commercial Bank 1993 154,284 -0- -0- -0- -0- -0- 5,505
- --------------------------- -------- ------------ --------- ------- ------------- --------- ---------- ----------------
Donald W. Williams
Chairman of the Board, 1995 N/A(3) N/A N/A N/A N/A N/A N/A
President, and Chief 1994 N/A N/A N/A N/A N/A N/A N/A
Executive Officer 1993 N/A N/A N/A N/A N/A N/A N/A
- --------------------------- -------- ------------ --------- ------- ------------- --------- ---------- ----------------
Dennis F. Ceklovsky
Chief Credit Officer and 1995 128,051 -0- -0- -0- -0- -0- -0-
Executive Vice President 1994 X -0- -0- -0- -0- -0- -0-
First Commercial Bank(4) 1993 N/A N/A N/A N/A N/A N/A N/A
- --------------------------- -------- ------------ --------- ------- ------------- --------- ---------- ----------------
Anne H. Long
Executive Vice President 1995 $130,251 -0- -0- -0- -0- -0- $ 62,749(6)
and Chief Financial 1994 103,251 -0- -0- -0- -0- -0- 5,089
Officer(5) 1993 93,800 -0- -0- -0- -0- -0- 4,995
- --------------------------- -------- ------------ --------- ------- ------------- --------- ---------- ----------------
<FN>
(1) Includes deferred compensation.
(2) Threshold of $50,000 or 10 percent of total salary or compensation not
met.
(3) Mr. Williams began serving as President and Chief Executive Officer of
the Company effective December 27, 1995. Mr. Williams assumed the
position of Chairman of the Board of the Company effective March 18,
1996. Mr. Williams is compensated for such services by First Banks,
Inc. First Banks, Inc. is reimbursed for such services, pursuant to
the terms of the Management Services Agreement. See Related Party
Transactions.
(4) Mr. Ceklovsky served as an officer of the Bank from September 1994
until October 1995.
(5) Ms. Long resigned her positions with the Company effective December 6,
1995.
(6) Includes $249 in respect of continued health insurance coverage
through December 31, 1995, and a $63,500 payment to Ms. Long in
consideration for certain amendments to her employment agreement with
the Company.
</FN>
</TABLE>
<PAGE>
Related Party Transactions
--------------------------
The Company and the Bank entered into that certain Standby Stock
Purchase Agreement, dated June 30, 1995, with First Banks, Inc. and James F.
Dierberg, later amended and restated as the Stock Purchase Agreement, as well as
the related Additional Investment Agreement and Standby Agreement by and among
the Company, the Bank, First Banks, Inc., and Mr. Dierberg, dated October 31,
1995, and December 28, 1995, respectively. The voting stock of First Banks, Inc.
is owned by various trusts which were created by and are administered by and for
the benefit of Mr. Dierberg and members of his immediate family. Accordingly,
Mr. Dierberg controls the management and policies of First Banks, Inc. and the
election of its directors. First Banks, Inc. owns a majority of the outstanding
shares of the Company's Common Stock , and thus controls the election of
directors of the Company. In accordance with the terms of the Stock Purchase
Agreement, Messrs. Dierberg, Blake, and Williams were appointed as directors of
the Company. Messrs. Blake and Williams also render services as executive
officers to the Company and the Bank as well as to First Banks, Inc. and its
affiliates. As described previously, Messrs. Blake and Williams are compensated
independently for their services to First Banks, Inc. and its affiliates, and
First Banks, Inc. is reimbursed for their services to the Company and the Bank
pursuant to the Management Services Agreement. The Management Services Agreement
is described further below.
The Company and the Bank entered into a Cost Sharing Agreement, dated
December 21, 1995 (the Cost Sharing Agreement), with First Bank & Trust, a
wholly-owned subsidiary of First Banks, Inc. The Cost Sharing Agreement is
designed to allow the Company and the Bank to share the benefits, services, and
costs of certain personnel employed by First Bank & Trust, including services in
the areas of lending, human resources, and branch administration. Similarly,
pursuant to the Management Services Agreement, First Banks, Inc. or certain
subsidiaries of First Banks, Inc. may provide the Bank with services in the
areas of lending, human resources, corporate audit, general accounting,
asset/liability management, investments, planning and budgets, branch
administration, purchasing, and accounts payable. Both of the Cost Sharing
Agreement and the Management Services Agreement contain provisions requiring
services rendered to the Bank to be provided on terms and conditions, including
audit standards, that are substantially the same, or at least as favorable to
the Bank, as then prevailing at the time for comparable transactions with, or
involving, other nonaffiliated companies. In the absence of comparable
transactions, the agreements require the services to be rendered on terms and
under conditions, including audit standards, that in good faith would be offered
to, or would apply to, nonaffiliated companies. For December 1995 the Bank paid
$16,466 in fees, costs, and expenses pursuant to the Management Services
Agreement. No fees were paid as of December 31, 1995, under the Cost Sharing
Agreement.
The Bank entered into a Service Agreement, dated December 8, 1995 (the
Service Agreement), with FirstServ, Inc., a wholly-owned subsidiary of First
Banks, Inc., pursuant to which FirstServ, Inc. provides data processing and item
<PAGE>
processing to the Bank. FirstServ, Inc. provides such services through a
facilities management agreement with First Services, L.P., a limited partnership
indirectly owned by Mr. Dierberg and his children. The Bank anticipates paying
approximately $28,000 per month for basic services pursuant to the Service
Agreement, which fees are less than the expenses previously incurred by the Bank
in its internal data processing operations. The Bank paid to FirstServ, Inc. a
one-time conversion training fee of $30,000.
Indebtedness of Directors and Executive Management
--------------------------------------------------
Some of the directors and executive officers of the Company and members
of their immediate families and the companies with which they have been
associated have been customers of, and have had banking transactions with, the
Bank in the ordinary course of the Bank's business since January 1, 1995, and
the Bank expects to have such banking transactions in the future. All loans and
commitments to lend included in such transactions were made in the ordinary
course of business, on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
other persons and, in the opinion of the Bank, did not involve more than the
normal risk of collectability or present other unfavorable features.
At December 31, 1995, the Bank had no outstanding loans to persons who
were then serving as directors or executive officers.
Employment Arrangements and Agreements
--------------------------------------
Donald W. Williams is serving as the Chairman of the Board and Chief
Executive Officer of the Bank, as well as Chairman of the Board, President, and
Chief Executive Officer of the Company. Mr. Williams also is an Executive Vice
President and the Chief Credit Officer of First Banks, Inc. and serves in other
positions for affiliates of First Banks, Inc. Mr. Williams is compensated by
First Banks, Inc. independently of his services to the Company. First Banks,
Inc. is reimbursed for Mr. Williams' services to the Company and the Bank
through the Management Services Agreement. Under the Management Services
Agreement, Mr. Williams' services are billed to the Bank on an hourly basis at
rates ranging from $40 to $65 per hour, depending on the type of service
rendered.
On November 28, 1995, the Board of Directors of the Company and the
Bank appointed Allen H. Blake to serve as Interim Chief Financial Officer of the
Company and the Bank. Mr. Blake also is serving as Executive Vice President and
Chief Financial Officer of First Banks, Inc., as well as serving in other
positions for affiliates of First Banks, Inc. Mr. Blake is compensated by First
Banks, Inc. independently of his services to the Company. First Banks, Inc. is
reimbursed for Mr. Blake's services to the Company and the Bank through the
Management Services Agreement. Under the Management Services Agreement, Mr.
Blake's services are billed to the Bank on an hourly basis at rates ranging from
$40 to $65 per hour, depending on the type of service rendered.
<PAGE>
Mr. Culleton entered into an employment agreement with the Company and
the Bank on November 19, 1991, which was amended and restated effective January
1, 1996, and pursuant to which Mr. Culleton serves as President and Chief
Operating Officer of the Bank. The amended employment agreement has a three-year
term commencing January 1, 1996. Until January 1, 1995, Mr. Culleton's prior
employment agreement provided for an annual base salary of $131,316 with annual
consumer price index adjustments of not less than six percent nor more than 10
percent and an annual net income performance bonus equal to one percent of
after-tax net income above a five percent return on the tangible equity capital
of the Bank. During 1995 Mr. Culleton's base salary under the agreement was
$156,405. Effective January 1, 1996, Mr. Culleton's base salary was set at
$90,000, subject to periodic review by the Board of Directors. Mr. Culleton may
also receive any bonus granted to him in the discretion of the Board of
Directors. Effective January 1, 1996, Mr. Culleton ceased to serve as Executive
Vice President of the Company and ceased serving as Interim President of the
Company effective December 27, 1995. Mr. Culleton continues to serve as the
Company's Secretary. Mr. Culleton is entitled to participate in all of the
benefit plans which are generally available to members of the Company's and the
Bank's senior management. In the event that Mr. Culleton's employment with the
Bank is terminated for any reason other than cause or by Mr. Culleton himself,
he will be entitled to receive a severance payment of $235,000 less any amount
of annual salary paid to him from January 1, 1996, through the date of
termination. At the time of execution of the amended agreement, Mr. Culleton was
paid for accrued but unused vacation time at his then-current salary rate.
<PAGE>
Aggregate Options Exercised in Last
Fiscal Year and Fiscal Year-End Option Values
---------------------------------------------
The following table sets forth the aggregate number of options
exercised by each of the Named Executive Officers during the fiscal year ended
December 31, 1995, the number of exercisable and unexercisable options held by
each Named Executive Officer as of December 31, 1995, and the value of all
unexercised in-the-money options held by each Named Executive Officer at
December 31, 1995.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal at Fiscal Year-End
Year-End
------------------------ ----------------------
<S> <C> <C> <C> <C>
Shares Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized Unexercisable Unexercisable
- --------------------------------- -------------------- ------------- ------------------------ ----------------------
James E. Culleton None N/A 33,000/12,000(1) -0-/-0-(2)
- --------------------------------- -------------------- ------------- ------------------------ ----------------------
Donald W. Williams None N/A -0-/-0- -0-/-0-
- --------------------------------- -------------------- ------------- ------------------------ ----------------------
Dennis F. Ceklovsky None N/A -0-/-0- -0-/-0-
- --------------------------------- -------------------- ------------- ------------------------ ----------------------
Anne H. Long None N/A 8,350/2,650(3) -0-/-0-(2)
- --------------------------------- -------------------- ------------- ------------------------ ----------------------
- ------------------
<FN>
(1) Includes options for 15,000 shares granted on September 26, 1989
exercisable at $11.12 per share; and options for 30,000 shares granted
on March 25, 1992 exercisable at $7.38 per share.
(2) As of December 31, 1995, the exercise price of the options granted
exceeded the closing price of $0.22 per share of Common Stock.
(3) Includes options for 2,000 shares granted on March 26, 1991 exercisable
at $8.44 per share; options for 5,000 shares granted on February 25,
1992 exercisable at $7.63 per share; and options for 4,000 shares
granted July 28, 1992 exercisable at $5.00 per share. All of Ms. Long's
options expired on March 7, 1996.
</FN>
</TABLE>
II. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S
CHARTER EFFECTING A REVERSE STOCK SPLIT AND
AN INCREASE IN PAR VALUE OF THE COMMON STOCK
General
-------
The Board of Directors of the Company has adopted a resolution
approving and submitting to the Shareholders for approval, a proposed amendment
to the Charter that would: (i) effect a one-for-one hundred twenty-five reverse
stock split (the Reverse Stock Split) of the presently issued and outstanding
shares of the Company's Common Stock; and (ii) increase the par value of the
Company's Common Stock from $0.01 to $1.25 per share. The principal effect of
the Reverse Stock Split will be to reduce the number of issued and outstanding
shares of Common Stock from 105,765,932 to approximately 846,127. The Reverse
Stock Split will not change the number of authorized shares of Common Stock.
The complete text of the proposed amendment to the Charter for the
Reverse Stock Split (the Reverse Split Amendment) is set forth in Exhibit A to
this Proxy Statement; however, such text is subject to change as may be required
by the Secretary of State of Delaware. If the Reverse Stock Split is approved by
the requisite vote of the Company's Shareholders, upon filing of the Reverse
Split Amendment with the Secretary of State of Delaware, the Reverse Stock Split
will be effective, and each certificate representing shares of Common Stock
outstanding or held in treasury immediately prior to the Reverse Stock Split
(the Old Shares) will be deemed automatically, without any action on the part of
the Shareholders, to represent one-one hundred twenty-fifth (1/125) of the
number of shares of Common Stock shown on the face of the Certificate after the
Reverse Stock Split (the New Shares); provided, however, that no fractional New
Shares will be issued as a result of the Reverse Stock Split, and any fractional
interest shall not entitle the owner to any rights as a holder of Common Stock.
In lieu of fractional shares, each Shareholder whose Old Shares are not evenly
divisible by 125 will have the right to receive a cash payment (without
interest) in an amount determined by multiplying such fraction by the average of
the high and low bid prices of the Common Stock as reported on The Nasdaq
SmallCap Market (the SmallCap Market) on the day the Reverse Split Amendment is
filed or, if no sales of the Company's Common Stock occur on such day as
reported on the SmallCap Market, the first day immediately prior to such date on
which a sale of the Common Stock occurs as reported on the SmallCap Market,
appropriately adjusted for the Reverse Stock Split.
After the Reverse Stock Split becomes effective, Shareholders will be
asked to surrender certificates representing Old Shares in accordance with the
procedures set forth in a letter of transmittal to be sent by the Company. Upon
such surrender, a certificate representing the New Shares will be issued and
forwarded to the Shareholder; however, each certificate representing Old Shares
will continue to be valid and represent New Shares equal to one-one hundred
twenty-fifth (1/125) of the number of Old Shares (subject to the provisions
above describing the treatment of fractional shares). The voting and other
rights that presently characterize the Common Stock will not be altered by the
Reverse Stock Split.
Purposes of the Proposed Reverse Stock Split
--------------------------------------------
The Board of Directors, after considering the effects of the relatively
low current trading price per share of the Common Stock, believes that the
Reverse Stock Split is advisable and in the best interests of the Company and
its Shareholders. The Board of Directors expects the Reverse Stock Split to help
the Company to continue to meet the minimum maintenance criteria established by
The National Association of Securities Dealers, Inc. (the NASD) and applicable
to all companies with securities traded on the SmallCap Market. For all of 1996
through the date of this Proxy Statement, the minimum bid price for the Common
Stock has been less than $1.00, the threshold requirement for continued listing
<PAGE>
of the Company's Common Stock on the SmallCap Market. The Company has maintained
its listing on the SmallCap Market by meeting alternative criteria permitted by
the NASD. However, the Company has been informed that the alternative criteria
will likely be discontinued by the NASD, and at that time the Company will
either meet the $1.00 minimum bid price requirement, or no longer be eligible to
be included for listing on the SmallCap Market. Such delisting probably would
have an adverse effect upon the Company and its Shareholders.
Additionally, a low per share market price often adversely affects the
marketability of a stock. Certain institutional investors have internal policies
preventing the purchase of low-priced stocks, and many brokerage houses do not
permit low-priced stocks to be used as collateral for margin accounts or to be
purchased on margin. Further, certain brokerage houses have adopted
time-consuming practices and procedures which act to discourage individual
brokers from dealing in low-priced stocks because such practices make the
handling of low-priced stocks unattractive. A low stock price also has the
effect of increasing the amount and percentage of transaction costs paid by
individual investors. Because brokers' commissions on low-priced stocks
generally represent a higher percentage of the stock price than commissions on
higher priced stocks, a low stock price can result in individual shareholders
paying higher transaction costs (commissions, markups, or markdowns) which are a
higher percentage of their total value than would be the case with a higher
share price. The Board of Directors believes that the expected increase in share
price resulting from the Reverse Stock Split may reduce the effect of these
negative attributes traditionally associated with a low per share price, thereby
enhancing the acceptability of the Common Stock with the financial community and
investing public and resulting in a broader market for the Common Stock than
currently exists.
There can be no assurance that the Reverse Stock Split will increase
the current market price per share in a proportionate amount to the Reverse
Stock Split, or that any increase in market price of the Common Stock after the
Reverse Stock Split can be maintained. The Reverse Stock Split could result in a
market price for Common Stock which is proportionately less than the decrease in
the number of shares outstanding, resulting in a lower market capitalization for
the Company, and a lower market value for shares held by an individual
shareholder. Additionally, there can be no assurance that any of the effects
described above will be achieved. Moreover, liquidity for the Company's
Shareholders could be adversely affected by the reduced number of shares of
Common Stock outstanding after the Effective Date.
In addition, there can be no assurance that the Company will continue
to meet the requirements for continued listing on the SmallCap Market. If the
Company should cease to be listed on the SmallCap Market, the ability of the
Company's Shareholders to sell their shares, and the potential for the Company
to utilize its stock to raise funds or enter into other transactions, could be
significantly restricted.
<PAGE>
Effect of the Reverse Stock Split
---------------------------------
The Reverse Stock Split will be effected by means of filing the Reverse
Split Amendment with the Secretary of State of Delaware. Assuming approval of
the Reverse Stock Split by the requisite vote of the Shareholders at the Annual
Meeting, the Reverse Split Amendment will be filed with the Secretary of State
of Delaware as promptly as practicable, and the Reverse Stock Split will become
effective on the date and at the time of such filing (the Effective Date).
Without any further action on the part of the Company or the Shareholders, after
the Reverse Stock Split, the certificates representing Old Shares will be deemed
to represent one-one hundred twenty-fifth of the number of New Shares (plus an
amount in cash to be determined by multiplying any fraction which results when
the number of Old Shares is not evenly divisible by 125 by the average of the
high and low bid prices of the Company's Common Stock on the Effective Date as
reported on the SmallCap Market, or, if no sales of the Company's Common Stock
occur on such day as reported on the SmallCap Market, the first day immediately
prior to the Effective Date on which a sale of the Company's Common Stock occurs
as reported on the SmallCap Market, appropriately adjusted for the Reverse Stock
Split).
Delaware law does not provide Shareholders with dissenters' rights in
connection with the Reverse Stock Split.
The Company has authorized capital stock of 250,000,000 shares of
Common Stock and 5,000,000 shares of blank check preferred stock. The authorized
capital stock will not be changed by reason of the Reverse Stock Split. As of
September 30, 1996, the number of issued and outstanding Old Shares was
105,765,932 and no shares of preferred stock were issued and outstanding.
Based upon its Shareholders of record as of the Record Date, as well as
certain information the Company has received regarding beneficial owners,
approximately 50 beneficial holders will cease to be Shareholders of the Company
upon the Reverse Stock Split because of the ownership of record of less than 125
shares. The Company does not expect the aggregate repurchase price for
fractional shares resulting from the Reverse Stock Split to be material and it
has sufficient funds to make such payments.
As of September 30, 1996, under the Company's employee stock option
plan (the Employee Option Plan) and director's stock option plan (the Directors'
Plan), there were outstanding options to purchase 69,000 and 40,000 shares of
Common Stock, respectively, at exercise prices from $4.25 to $11.12 per share.
Options to purchase 565,987 and 210,000 shares of Common Stock remain available
for grant pursuant to the Employee Option Plan and Directors' Plan,
respectively. The Employee Option Plan and the Directors' Plan provide that in
the event of a change in capitalization, such as the Reverse Stock Split, the
number of shares covered by each option and the purchase price under options
outstanding under each plan shall be adjusted so as to maintain the optionees'
proportionate interest as before the Reverse Stock Split. Additionally, the
Employee Option Plan and the Directors' Plan provide that the total shares
subject to options to be issued under the respective plans shall be
appropriately adjusted. If the Reverse Stock Split is approved, the number of
shares of Common Stock issuable upon the exercise of outstanding options and the
number of shares available for grant under the Employee Option Plan will be
adjusted to approximately 552 and 4,528, respectively, and the exercise prices
of outstanding options will be adjusted to prices ranging from $531.25 to
$1,390.00 as appropriate. The number of shares of Common Stock issuable upon the
exercise of outstanding options under the Directors' Plan will be adjusted to 80
and the exercise prices of such outstanding options will be adjusted to
$1,390.00.
Under the terms of the Convertible Debentures, the principal and any
unpaid interest thereon is convertible any time prior to or at maturity into
Common Stock at $0.10 per share. The Convertible Debentures provide that in the
event of a change in capitalization, such as the Reverse Stock Split, the rate
at which the outstanding indebtedness under the Convertible Debentures (whether
at maturity or prior thereto) is converted to Common Stock shall be adjusted so
as to maintain the debenture holders proportionate interest as before the
Reverse Stock Split. As a result, assuming approval of the Reverse Stock Split,
the price at which indebtedness under the Convertible Debentures is converted to
Common Stock shall be $12.50.
<PAGE>
The following table illustrates the principal effects of the proposed
Reverse Stock Split and decrease in outstanding Common Stock, assuming no
additional shares of Common Stock are issued prior to the Effective Date as a
result of the exercise of any options or the conversion of any convertible
instrument into Common Stock:
Prior to Proposed After Proposed
Shares of Stock Reversed Stock Split Reverse Stock Split
--------------- -------------------- -------------------
Authorized Common Stock 250,000,000 250,000,000
Outstanding Common Stock 105,765,932 846,127(1)
Authorized Preferred Stock 5,000,000 5,000,000
Outstanding Preferred Stock 0 0
Shares Subject to Outstanding
Options under the Employee
Option Plan 69,000 560
Options Available for Grant
Under the Employee Option Plan 565,987 4,528
Shares Subject to Outstanding
Options Under Directors' Plan 10,000 80
Shares Issuable Upon Conversion
of Convertible Debentures as
of September 30, 1996 71,313,334 570,506
- ------------------------------------
(1) Subject to adjustments due to the settlement of fractional shares. The
Company does not expect such adjustments to be material.
The Common Stock currently is registered under Section 12(g) of the
Exchange Act and, as a result, the Company is subject to the periodic reporting
and other requirements of the Exchange Act. The Board of Directors believes that
the Reverse Stock Split will not affect the registration of the Common Stock
under the Exchange Act. Immediately after the Effective Date, trades of the New
Shares are expected to be reported on the SmallCap Market under the Company's
symbol, FCOB.
Exchange of Stock Certificates
------------------------------
As soon as practicable after the Effective Date, the Company will send
a letter of transmittal to each holder of record of Old Shares of Common Stock
outstanding on the Effective Date. The letter of transmittal will contain
instructions for the surrender of the certificate(s) representing such Old
Shares to First National Bank of Boston, the Company's exchange agent (the
Exchange Agent). Upon proper completion and execution of the letter of
transmittal and return thereof to the Exchange Agent, together with the
certificate(s) representing Old Shares, a Shareholder will be entitled to
<PAGE>
receive a certificate or certificates representing the number of New Shares of
Common Stock into which the Shareholder's Old Shares have been reclassified and
changed as a result of the Reverse Stock Split, and payment by check for
fractional shares, if any.
Shareholders should not submit any certificates until requested to do
so. No new certificate will be issued to a Shareholder until the Shareholder has
surrendered his, her, or its outstanding certificate(s), together with the
properly completed and executed letter of transmittal to the Exchange Agent.
Federal Income Tax Consequences of the Reverse Stock Split
----------------------------------------------------------
The Company has not sought and will not seek an opinion of counsel or a
ruling from the Internal Revenue Service regarding the federal income tax
consequences of the Reverse Stock Split. The Company believes that the Reverse
Stock Split will have the following federal income tax effects.
A Shareholder will not recognize gain or loss on the exchange of
the Shareholder's Old Shares for New Shares.
2. A Shareholder receiving cash in lieu of a fractional share will be
treated as if the fractional share were distributed to the Shareholder and then
redeemed by the Company for cash. The Shareholder will recognize gain or loss
based on the difference between his, her, or its tax basis in the fractional
share and the cash payment received therefor.
3. In the aggregate, the Shareholder's basis in the New Shares will
equal the Shareholder's basis in the Old Shares exchanged therefor (less the
basis the Shareholder had in any fractional share interest for which the
Shareholder received cash in lieu thereof).
4. A Shareholder's holding period for the New Shares will include the
holding period of the Old Shares exchanged therefor if the Old Shares were a
capital asset in the hands of the Shareholder immediately before the exchange.
5. The Reverse Stock Split will constitute a reorganization within the
meaning of Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as
amended, and the Company will not recognize any gain or loss as a result of the
Reverse Stock Split.
Authority of Board of Directors to Alter The Proposal
-----------------------------------------------------
The Board of Directors may make such changes to the Reverse Split
Amendment that it deems necessary or prudent to file the Reverse Split Amendment
with the Secretary of State of Delaware and give effect to the Reverse Stock
Split.
<PAGE>
Recommendation and Vote
-----------------------
The affirmative vote of holders of a majority of the outstanding shares
of Common Stock of the Company is required to approve the Reverse Stock Split
and Reverse Split Amendment. Shares represented by a properly executed Proxy in
the accompanying form will be voted FOR the proposal to effect the Reverse Stock
Split and approve the Reverse Split Amendment, unless Shareholders specify
otherwise in their Proxies. First Banks, Inc. has indicated to the Board of
Directors that it intends to vote its shares of the Company's Common Stock for
the proposal to approve the Reverse Stock Split. Accordingly, the Board of
Directors anticipates that the proposal to adopt the Reverse Split Amendment and
effect the Reverse Stock Split will be approved by the Shareholders. The Board
of Directors is of the opinion that the Reverse Stock Split and Reverse Split
Amendment are advisable and recommends a vote FOR the approval of the Reverse
Stock Split and Reverse Split Amendment.
III. PROPOSAL TO DELETE ARTICLE EIGHTH
OF THE COMPANY'S CHARTER
General
-------
The Board of Directors has approved and recommended that the
Shareholders approve an amendment to the Charter that would delete Article
EIGHTH of the Company's Charter in its entirety. The principal effect of this
amendment, if adopted, would be to eliminate the requirement that any business
combination of the Company with another entity (as such is defined in the
Charter, including mergers, consolidations, recapitalizations, issuance of
shares, and the sale of all or substantially all of the Company's assets) must
be approved, except in certain specific circumstances, by holders of at least 75
percent of the outstanding shares of capital stock of the Company entitled to
vote and by the holders of a majority of the capital stock of the Company held
by persons other than beneficial owners of 10 percent or more of the Company's
outstanding capital stock. The complete text of Article EIGHTH as currently in
effect and the complete text of the amendment deleting Article EIGHTH are set
forth in Exhibit A.
Reasons for the Deletion of Article EIGHTH
------------------------------------------
Article EIGHTH initially was included in the Company's Charter as a
mechanism to increase the power of the Company's Board of Directors to deal
effectively with hostile takeover attempts. This provision of the Charter may
have the effect of delaying, deferring, or preventing a change in control of the
Company by requiring super majority Shareholder approval to effect any
transaction which causes a change in control of the Company. After
consideration, the Company's Board of Directors has determined to eliminate this
impediment to takeover attempts, believing that other provisions respecting
shareholder interests provide all appropriate protection for Shareholders.
<PAGE>
Effect of Deleting Article EIGHTH
---------------------------------
Assuming the proposal to delete Article EIGHTH from the Charter is
approved, the approval of any merger, consolidation, recapitalization, issuance
of shares, or other change in control of the Company would require the approval
of only a majority of the Company's Shareholders. Because First Banks, Inc.
controls more than a majority of the Company's outstanding capital stock, it
would have the power to approve any such transaction, including a combination or
consolidation with itself or other banks or bank holding companies controlled by
First Banks, Inc., without the approval of any other Shareholders.
Recommendation and Vote
-----------------------
In order to amend or delete Article EIGHTH, such change must be
approved by either: (i) the vote of 75 percent of the Company's outstanding
Common Stock and the majority of the shares of outstanding capital stock other
than beneficial owners of 10 percent or more of the Company's outstanding Common
Stock; or (ii) three-fourths of the Company's Continuing Directors (as such term
is defined in the Charter) and a majority of the holders of the Company's
outstanding Common Stock. Shares represented by a properly executed Proxy in the
accompanying form will be voted FOR the proposal to delete Article EIGHTH from
the Charter, unless Shareholders specify otherwise in their Proxies. The
Continuing Directors have approved the amendment to delete Article EIGHTH of the
Company's Charter, and as a consequence, the approval of the amendment to delete
Article EIGHTH requires only the approval of a majority of the holders of the
Company's outstanding Common Stock. First Banks, Inc. has indicated to the Board
of Directors that it intends to vote its shares of the Company's Common Stock
FOR the approval of the amendment to delete Article EIGHTH. Accordingly, the
Board of Directors anticipates that the amendment to delete Article EIGHTH of
the Charter will be approved. The Board of Directors is of the opinion that the
deletion of Article EIGHTH from the Company's Charter is advisable and
recommends a vote for the approval of such amendment.
<PAGE>
IV. PROPOSAL TO AMEND THE COMPANY'S CHARTER TO ELIMINATE
THE SEVERAL CLASSES OF DIRECTORS AND PROVIDE THAT
EACH DIRECTOR SHALL BE ELECTED ANNUALLY
TO SERVE A ONE-YEAR TERM
General
-------
The Board of Directors has approved and recommended that the
Shareholders approve an amendment to the Charter that would amend Article
SEVENTH to eliminate the several classes of the Board of Directors and provide
that all members of the Company's Board of Directors be elected annually to
serve a one-year term expiring at the next annual meeting of Shareholders after
the election of such persons to the Board. The complete text of the amendment
approved by the Board of Directors to effect this change is set forth in Exhibit
A.
Reasons for the Amendment to Article SEVENTH
--------------------------------------------
Article SEVENTH Sections A and B initially were included in the
Company's Charter to inhibit a majority Shareholder from immediately replacing a
majority of the Board of Directors and to increase the power of the Company's
Board of Directors to deal effectively with hostile takeover attempts. This
provision of the Charter may have the effect of delaying, deferring, or
preventing a change in control of the Company by preventing or delaying a
potential acquiror from obtaining control of management of the Company. After
consideration, the Company's Board of Directors has determined to eliminate the
staggered board, believing that other provisions respecting shareholder
interests provide all appropriate protection for Shareholders, and in
recognition that First Banks, Inc., through its ownership of a majority of the
outstanding shares of the Company's Common Stock has obtained control of the
Company.
Effect of Amending Article SEVENTH
----------------------------------
Assuming the proposal to amend Article SEVENTH Sections A and B is
approved, such amendment will become effective upon filing of a Certificate of
Amendment effecting such amendment with the Delaware Secretary of State (which,
by necessity, will occur after the Annual Meeting). As a consequence, at the
Annual Meeting the Shareholders will elect directors only for those classes
whose terms expired at or prior to the Annual Meeting. See Election of Class C
Director and Election of Class A Directors above. If the proposed amendment to
Article SEVENTH becomes effective the several classes of the Board of Directors
will be eliminated and the terms of all members of the Board of Directors will
expire at the 1997 Annual Meeting of Shareholders. At the 1997 Annual Meeting of
shareholders (and each annual meeting thereafter) Shareholders will elect a new
Board of Directors in its entirety with each director serving a term of one year
ending at the next annual meeting of Shareholders. Because First Banks, Inc.
owns a majority of the shares of the Company's outstanding Common Stock, if the
proposed amendment to Article SEVENTH Sections A and B is adopted, First Banks,
<PAGE>
Inc. will be able to elect the entire Board of Directors at the 1997 Annual
Meeting of Shareholders and each annual meeting thereafter for as long as First
Banks, Inc. continues to own a majority of the shares of the Company's
outstanding Common Stock.
Recommendation and Vote
-----------------------
Approval of the amendment to Article SEVENTH Sections A and B of the
Company's Charter, requires the affirmative vote of a majority of the shares of
the Company's outstanding Common Stock. Properly executed Proxies will be voted
FOR such amendment, unless Shareholders specify otherwise in their Proxies.
First Banks, Inc. has indicated to the Board of Directors that it intends to
vote its shares of the Company's Common Stock FOR the approval of the proposed
amendment to Article SEVENTH Sections A and B of the Charter. Accordingly, the
Board of Directors anticipates that the proposed amendment to Article SEVENTH
Sections A and B of the Charter will be approved by the Company's Shareholders.
The Board of Directors is of the opinion that the proposed amendment to Article
SEVENTH Sections A and B from the Company's Charter is advisable and recommends
a vote for the approval of such amendment.
V. PROPOSAL TO AMEND THE CHARTER TO PROVIDE THAT THE
HOLDERS OF 10 PERCENT OR MORE OF THE VOTING POWER
OF THE COMPANY'S OUTSTANDING COMMON STOCK MAY
CALL SPECIAL MEETINGS OF THE SHAREHOLDERS
General
-------
The Board of Directors has approved and recommended that the
Shareholders approve an amendment to Article SIXTH Section C of the Company's
Charter to provide that, in addition to the Board of Directors, holders of 10
percent or more of the voting power of the then outstanding shares of the
Company's capital stock entitled to vote generally in the election of directors
may call special meetings of the Shareholders. Currently, Shareholders are not
permitted to call special meetings of Shareholders. The principal effect of this
amendment is to permit a person or persons outside of the Board of Directors and
the management group to call special meetings of the Shareholders and make
proposals for the Shareholders to consider. If the amendment is adopted and
becomes effective, any holder or holders of 10 percent or more of the Company's
Common Stock will be permitted to call a special meeting of the Shareholders.
The complete text of the amendment approved by the Board of Directors to effect
this change to the Charter is set forth in Exhibit A hereto.
<PAGE>
Reasons for the Amendment to Article SIXTH
------------------------------------------
As a condition to granting regulatory authorization to engage in the
offer and sale of securities pursuant to an offering of Common Stock to the
Company's existing Shareholders during 1996, the California Division of
Corporations required that the Company agree to submit to its Shareholders for
consideration and approval this proposed amendment to the Charter. As a
consequence, the Board of Directors has approved and recommended for
Shareholders' approval the proposed amendment to Article SIXTH Section C.
Recommendation and Vote
-----------------------
Approval of the amendment to Article SIXTH Section C of the Company's
Charter, requires the affirmative vote of a majority of the shares of the
Company's outstanding Common Stock. Properly executed Proxies will be voted FOR
such amendment, unless Shareholders specify otherwise in their Proxies. First
Banks, Inc. has indicated to the Board of Directors that it intends to vote its
shares of the Company's Common Stock FOR the approval of the proposed amendment
to Article SIXTH Section C of the Charter. Accordingly, the Board of Directors
anticipates that the proposed amendment to Article SIXTH Section C of the
Charter will be approved by the Company's Shareholders. The Board of Directors
is of the opinion that the proposed amendment to Article SIXTH Section C from
the Company's Charter is advisable and recommends a vote for the approval of
such amendment.
VI. PROPOSAL TO AMEND THE CHARTER TO PROVIDE THAT
THE COMPANY'S DIRECTORS MAY BE REMOVED
WITH OR WITHOUT CAUSE
General
-------
The Board of Directors has approved and recommended that the
Shareholders approve an amendment to Article SEVENTH Section C of the Company's
Charter to provide that members of the Board of Directors may be removed with or
without cause. The principal effect of this amendment is to make it easier for a
holder or holders of Common Stock to remove one or more existing members of the
Company's Board of Directors. The complete text of the amendment approved by the
Board of Directors to effect this change to the Charter is set forth in Exhibit
A hereto.
Reasons for the Amendment to Article SEVENTH
--------------------------------------------
As a condition to granting regulatory authorization to engage in the
offer and sale of securities pursuant to an offering during 1996 of Common Stock
to the Company's Shareholders, the California Department of Corporations
required that the Company agree to submit to its Shareholders for consideration
and approval the proposed amendment to the Charter. As a consequence, the Board
of Directors has approved and recommended for Shareholder approval the proposed
amendment to Article SEVENTH Section C.
<PAGE>
Recommendation and Vote
-----------------------
Approval of the amendment to Article SEVENTH Section C of the Company's
Charter, requires the affirmative vote of a majority of the shares of the
Company's outstanding Common Stock. Properly executed Proxies will be voted FOR
such amendment, unless Shareholders specify otherwise in their Proxies. First
Banks, Inc. has indicated to the Board of Directors that it intends to vote its
shares of the Company's Common Stock FOR the approval of proposed amendment to
Article SEVENTH Section C of the Charter. Accordingly, the Board of Directors
anticipates that the amendment to amend Article SEVENTH Section C of the Charter
will be approved by the Company's Shareholders. The Board of Directors is of the
opinion that the proposed amendment to Article SEVENTH Section C of the
Company's Charter is advisable and recommends a vote for the approval of such
amendment.
VII. RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP as
independent auditors to audit the financial statements of the Company for the
fiscal year ending December 31, 1996, subject to ratification by the
Shareholders. A representative of KPMG Peat Marwick LLP is expected to be
present at the meeting to answer questions and make a statement if he desires to
do so.
Vote Required
-------------
The affirmative vote of a majority of the shares of Common Stock
present or represented by proxy at the Annual Meeting on this proposal is
required for approval. If the Shareholders do not approve this proposal, the
selection of independent auditors will be reconsidered by the Board of
Directors. First Banks, Inc. has indicated to the Board of Directors that it
intends to vote its shares of the Company's Common Stock FOR the ratification of
KPMG Peat Marwick LLP as the Company's auditors. Accordingly, the Board of
Directors anticipates that such proposal will be approved by the Company's
Shareholders. The Board of Directors recommends a vote FOR this proposal and
properly executed Proxies will be so voted, unless Shareholders specify
otherwise in their Proxies.
VIII. OTHER MATTERS
Management does not intend to bring any other matters before the Annual
Meeting and, at the date of this Proxy Statement, management is not informed of
any other matters that others may bring before the meeting. However, if any
other matters properly come before the meeting, it is the intention of the proxy
holders to vote such shares for which they hold proxies in accordance with their
judgment on such matters.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
--------------------------------------------------------------------
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers, and persons who own more than 10 percent of the Company's
Common Stock, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company during the year, all Section 16(a) filings applicable
to its officers, directors, and greater than 10 percent beneficial owners
relating to changes in ownership of Common Stock in 1995 were met.
<PAGE>
Stock Appreciation Rights
-------------------------
Pursuant to the Stock Purchase Agreement, Shareholders of record as of
October 6, 1995 were granted stock appreciation rights, pursuant to which
holders of such rights would be entitled to certain payments if, as of June 30,
1996, December 31, 1997, and October 31, 1998, the Company met certain
thresholds under formulas, referred to as Measurement Formulas, in the Stock
Purchase Agreement. At June 30, 1996, those Measurement Formulas provided for no
payment to holders of Stock Appreciation Rights, as the appropriate thresholds
had not been met.
Miscellaneous
-------------
Proposals of Shareholders intended to be presented at the 1997 Annual
Meeting of Shareholders must be received by the Company no later than August 7,
1997, to be eligible for inclusion in the proxy materials for that meeting.
Performance Graph
-----------------
The Company has prepared the following table comparing the yearly
percentage change in shareholder return on the Company's Common Stock to the
cumulative total return of regional banks with assets of less than $500 million
as published by S&L Securities (the Banking Index) and the S&P 500. SNL
Securities publishes the cumulative total return of companies in the banking
industry. The table assumes a $100.00 investment in Company Common Stock, the
Banking Index, and the S&P 500 on December 31, 1990, and that all dividends paid
have been reinvested.
<TABLE>
<CAPTION>
FIRST COMMERCIAL BANCORP, INC.
Stock Price Performance
(Graphic Description)
Period Ending
-------------
<S> <C> <C> <C> <C> <C> <C>
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
Peer Group 100.00 138.00 194.18 226.91 230.34 297.62
First Commercial-CA 100.00 91.74 73.41 65.68 13.52 3.40
S&P 500 100.00 130.47 140.41 154.56 156.60 215.45
</TABLE>
- -------------------------
<PAGE>
EXHIBIT A TO PROXY STATEMENT
First Commercial Bancorp, Inc.
1996 Annual Meeting of Shareholders
This Exhibit A to the Proxy Statement for First Commercial Bancorp,
Inc. 1996 Annual Meeting of Shareholders sets forth certain proposed amendments
to the Certificate of Incorporation of First Commercial Bancorp, Inc. (the
Charter). Additionally, this Exhibit A sets forth the complete text of Article
EIGHTH as currently contained in the Charter, which the Board of Directors has
recommended be deleted. Shareholders should refer to the Proxy Statement for a
more complete discussion of the reasons for and the effect of the proposed
amendments to the Charter and the deletion of Article EIGHTH.
Reverse Split Amendment
-----------------------
BE IT RESOLVED that Article FOURTH Section A of the Corporation's
Certificate of Incorporation be amended by deleting the same in its entirety and
substituting therefor the following:
FOURTH:
A. The total number of shares of all classes of stock that the
Corporation shall have authority to issue is two hundred fifty-five million
(255,000,000), consisting of:
(1) five million (5,000,000) shares of Preferred Stock, par
value one cent ($0.01) per share (the Preferred Stock); and
(2) two hundred fifty million (250,000,000) shares of Common
Stock, par value $1.25 per share (the Common Stock).
<PAGE>
Exhibit A to Proxy Statement
Each share of Common Stock issued and outstanding is hereby
reclassified and changed into one-one hundred twenty-fifth (1/125) of a
fully paid and nonassessable share of Common Stock of the Corporation,
par value $1.25 per share, and each stock certificate for one or more
shares of Common Stock as of the close of business on the date this
amendment becomes effective (the Effective Date) shall represent the
whole number of shares of Common Stock obtained by dividing by one
hundred twenty-five (125) the number of shares of Common Stock
represented by such certificate immediately prior to the Effective Date
and a right to receive cash for the fractional shares of Common Stock,
if any, which such shareholder would otherwise be entitled to receive
in an amount equal to the fractional share which such shareholder would
otherwise be entitled to receive multiplied by the average closing bid
and ask quotes for one share of the Common Stock on the Effective Date
as reported on The Nasdaq SmallCap Market or, if no sales of the Common
Stock occur on the Effective Date as reported on The Nasdaq SmallCap
Market, the first day immediately preceding the Effective Date on which
a sale of the Common Stock occurs as reported on The Nasdaq SmallCap
Market.
Current Version of Article EIGHTH
---------------------------------
EIGHTH: The affirmative vote of (a) the holders of not less than 75
percent of the outstanding shares of capital stock of the Corporation entitled
to vote and (b) the holders of not less than a majority of the outstanding
shares of capital stock of the Corporation entitled to vote excluding for
purposes of determining the affirmative vote required by this clause (b) all
such shares of which a Related Person (as hereinafter defined) shall be a
Beneficial Owner (as hereinafter defined), shall be required for the approval or
authorization of any Business Combination (as hereinafter defined) involving a
Related Person; provided, however, that the foregoing voting requirements set
forth in clauses (a) and (b) above shall not be applicable, and the provisions
of Delaware law relating to the percentage of shareholder approval, if any,
shall apply to any such Business Combination if:
A. The Continuing Directors of the Corporation (as hereinafter
defined) by a three-fourths vote thereof have expressly approved the
Business Combination either in advance of or subsequent to the
acquisition of outstanding shares of stock of the Corporation that
caused the Related Person to become a Related Person; or
B. If each of the following conditions is satisfied:
(1) (a) The aggregate amount of the cash and the fair market
value of the property, securities or other consideration to be received
per share of any class or series of capital stock of the Corporation in
the Business Combination by holders of such capital stock of the
Corporation, other than the Related Person involved in the Business
Combination, is not less than the Highest Per Share Price or the
Highest Equivalent Price (as these terms are hereinafter defined), paid
or to be paid by the Related Person in acquiring any of such class or
series of the capital stock of the Corporation outside of such Business
Combination; and (b) the Related Person shall not have received the
benefit, directly or indirectly (except proportionately as a
stockholder), of any loans, advances, guarantees, pledges or other
financial assistance provided by the Corporation whether in
anticipation of or in connection with such Business Combination or
otherwise; and
<PAGE>
(2) A proxy statement complying with the requirements of the
Securities Exchange Act of 1934, as amended, shall have been mailed to
all stockholders of the Corporation for the purpose of soliciting
stockholder approval of the Business Combination. The proxy statement
shall contain at the front thereof, in a prominent place, the position
of the Continuing Directors as to the advisability (or inadvisability)
of the Business Combination and, if deemed advisable by a majority of
the Continuing Directors, the opinion of an investment banking firm
selected by the Continuing Directors as to the fairness of the terms of
the Business Combination, from the point of view of the holders of the
outstanding shares of capital stock of the Corporation other than any
Related Person.
For purposes of this Article EIGHTH:
(1) The term Business Combination means (a) any merger (other
than a merger effected under 253 of the General Corporation Law),
consolidation or share exchange of the Corporation or any of its
subsidiaries into or with any member of any Related person, in each
case irrespective of which corporation or company is the surviving
entity; (b) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition to or with any member of any Related Person (in a
single transaction or a series of related transactions) of all or a
Substantial Part (as hereinafter defined) of the assets of the
Corporation (including without limitation any securities of a
subsidiary) or a Substantial Part of the assets of any of its
subsidiaries; (c) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition to or with the Corporation or to or with any of
its subsidiaries (in a single transaction or series of related
transactions) of all or a Substantial Part of the assets of any member
of any Related Person; (d) the issuance or transfer of any securities
of the Corporation or any of its subsidiaries by the Corporation or any
of its subsidiaries to any member of any Related Person (other than an
issuance or transfer of securities which is effected on a pro rata
basis to all stockholders of the Corporation and other than in
connection with the exercise or conversion of securities exercisable
for or convertible into securities of the Corporation or any of its
subsidiaries which have been distributed on a pro rata basis to all
stockholders of the Corporation); (e) the acquisition by the
Corporation or any of its subsidiaries of any securities of any member
of any Related Person; and (f) any agreement, contract or other
arrangement providing for any of the transactions described in this
definition of Business Combination.
(2) The term Related Person shall mean any individual,
corporation, partnership or other person or entity, including any
member of a group (as defined in Section 13(d)(3)) of the Securities
Exchange Act of 1934, as amended, as in effect at the date of the
adoption of this Article by the stockholders of the Corporation; such
Act and such Rules and Regulations promulgated thereunder, collectively
as so in effect, being hereinafter referred to as the Exchange Act),
and any Affiliate or Associate (as defined in Rule 12b-2 of the
Exchange Act) of any such individual, corporation, partnership or other
person or entity which, as of the record date for the determination of
stockholders entitled to notice of and to vote on any Business
<PAGE>
Combination, or immediately prior to the consummation of such
transaction, together with their Affiliates and Associates, are
Beneficial Owners (as defined in Rule 13d-3 of the Exchange Act) in the
aggregate of 10 percent or more of the outstanding shares of any class
or series of capital stock of the Corporation.
(3) The term Substantial Part shall mean more than 10 percent
of the fair market value, as determined by three-fourths of the
Continuing Directors, of the total consolidated assets of the
Corporation and its subsidiaries taken as a whole, as of the end of its
most recent fiscal year ending prior to the time the determination is
being made.
(4) For the purposes of subparagraph B(1) of Paragraph One of
this Article EIGHTH, the term other consideration to be received shall
include, without limitation, common stock or other capital stock of the
Corporation retained by shareholders of the Corporation other than
Related Persons or parties to such Business Combination in the event of
a Business Combination in which the Corporation is the surviving
Corporation.
(5) The term Continuing Director shall mean a director who
either (a) was a member of the Board of Directors of the Corporation
immediately prior to the time that the Related Person involved in a
Business Combination became a Related Person, or (b) has been
designated (before his or her initial election as director) as a
Continuing Director by a majority of the then Continuing Directors.
(6) A Related Person shall be deemed to have acquired a share
of the capital stock of the Corporation at the time when such Related
Person became a Beneficial Owner thereof. With respect to the shares
owned by Affiliates, Associates or other persons whose ownership is
aggregated with that of a Related Person under the foregoing definition
of Related Person, if the price paid by such Related Person for such
shares is not determinable by the Continuing Directors, such price
shall be deemed to be the higher of (a) the price paid upon the
acquisition thereof by the Affiliate, Associate or other person or (b)
the market price of the shares in question at the time when the Related
Person became a Beneficial Owner thereof.
(7) The terms Highest Per Share Price and Highest Equivalent
Price as used in this Article EIGHTH shall mean the following: If there
is only one class of capital stock of the Corporation issued and
outstanding, the Highest Per Share Price shall mean the highest price
that can be determined to have been paid at any time, or to have been
agreed to be paid, by the Related Person for any share or shares of
that class of capital stock. If there is more than one class of capital
stock of the Corporation issued and outstanding, the Highest Equivalent
Price shall mean with respect to each class and series of capital stock
of the Corporation, the amount determined by three-fourths of the
Continuing Directors, on whatever basis they believe is appropriate, to
be the highest per share price equivalent for each such class or series
of the highest price that can be determined to have been paid at any
time, or to have been agreed to be paid, by the Related Person for any
share or shares of any class or series of capital stock of the
Corporation. In determining the Highest Per Share Price and Highest
Equivalent Price, all acquisitions by the Related Person shall be taken
into account regardless of whether the shares were acquired before or
after the Related Person became a Related Person. The Highest Per Share
Price and the Highest Equivalent Price shall also include any brokerage
commissions, transfer taxes and soliciting dealers' fees paid by the
Related Person with respect to the shares of capital stock of the
Corporation acquired by the Related Person.
<PAGE>
The Board of Directors of the Corporation shall have the power
and duty to determine for the purposes of this Article EIGHTH on the
basis of information then known to it, (a) whether any person is an
Affiliate or Associate of another person, (b) whether any proposed
sale, lease, exchange or other disposition of part of the properties or
assets of the Corporation involves a Substantial Part of the properties
or assets of the Corporation, and (c) the value of the Highest Per
Share Price and Highest Equivalent Price. Any such reasonable
determination by the Board shall be conclusive and binding for all
purposes of this Article EIGHTH.
Any amendment, change or repeal of this Article EIGHTH, or any
other amendment of this Certificate of Incorporation which will have
the effect of modifying or permitting circumvention of this Article
EIGHTH, shall require the favorable vote, at a meeting of the
stockholders of the Corporation, of (a) the holders of at least 75
percent of the then outstanding shares of capital stock of the
Corporation entitled to vote and (b) a majority of the outstanding
shares of capital stock of the Corporation entitled to vote of which a
Related Person is not a Beneficial Owner; provided, however, that this
Paragraph Three shall not apply to, and such 75 percent and majority
vote shall not be required for, any such amendment, change or repeal
recommended to stockholders by the affirmative vote of not less than
three-fourths of the Continuing Directors, or if there is no Related
Person, by a majority vote of the Board of Directors, and such
amendment, change, or repeal so recommended shall require only the
vote, if any, required under the applicable provision of the General
Corporation Law.
Amendment to the Charter Deleting Article EIGHTH
BE IT RESOLVED that Article EIGHTH of the Corporation's
Certificate of Incorporation be amended by deleting the text of Article EIGHTH
in its entirety, and substituting therefore the word RESERVED.
Amendment to Article SEVENTH Sections A and B of the Charter
BE IT RESOLVED that Section A and Section B of Article SEVENTH be
amended by deleting the same in their entirety and substituting therefor the
following:
<PAGE>
Exhibit A to Proxy Statement
A. The number of directors shall, subject to the rights of the
holders of any series of Preferred Stock then outstanding, be fixed from time to
time exclusively by the Board of Directors pursuant to a resolution adopted by a
majority of a quorum acting at any meeting (or a majority of the whole board
acting by written consent, not taking into account any vacant directorships).
All directors shall serve terms of one year, expiring at the next annual meeting
of the shareholders, with each director to hold office until his or her
successor shall have been duly elected and qualified. For those directors who,
at the time this provision of the Certificate of Incorporation becomes
effective, are serving a term that expires more than one year after the annual
meeting of directors most recently held prior to the effectiveness of this
provision, the terms of such directors shall automatically and without further
action by the shareholders be converted to terms that expire at the next annual
meeting of shareholders following effectiveness of this provision.
B. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, newly created directorships resulting from any
increase in the authorized number of directors or any vacancies in the Board of
Directors resulting from the death, resignation, retirement, disqualification,
removal from office, or other cause may be filled by the majority vote of the
directors then in office, though less than a quorum.
Amendment to Article SIXTH Section C of the Charter(1)
BE IT RESOLVED that paragraph C of Article SIXTH of the Corporation's
Certificate of Incorporation be amended by adding the following words to the end
of the second sentence thereof: "or by the holders of 10 percent or more of the
voting power of all of the then outstanding shares of capital stock entitled to
vote generally in the election of directors, in such manner and in accordance
with such conditions as may be set forth in the By-laws of the Corporation."
Amendment to Article SEVENTH Section C of the Charter(1)
BE IT RESOLVED that paragraph C of Article SEVENTH of the Corporation's
Certificate of Incorporation be amended by deleting the words "but only for
cause and only," and substituting therefore the words "with or without cause."
- --------
1 Paragraph C is referred to as Section C in the Proxy Statement.
<PAGE>
GRAPHICS APPENDIX LIST
PAGE WHERE GRAPHIC APPEARS DESCRIPTION OF GRAPHIC
- -------------------------- ----------------------
28 STOCK PRICE PERFORMANCE
