<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 24, 2000
REGISTRATION NO. 333-
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--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
U.S. BANCORP
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 6711 41-0255900
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
U.S. BANK PLACE
601 SECOND AVENUE SOUTH
MINNEAPOLIS, MN 55402-4302
(612) 973-1111
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
LEE R. MITAU, ESQ.
EXECUTIVE VICE PRESIDENT--CORPORATE DEVELOPMENT AND GENERAL COUNSEL
U.S. BANK PLACE
601 SECOND AVENUE SOUTH
MINNEAPOLIS, MN 55402-4302
(612) 973-1111
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C> <C>
EDWARD D. HERLIHY, ESQ. JENNIE P. CARLSON, ESQ. MITCHELL S. EITEL, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ EXECUTIVE VICE PRESIDENT, SULLIVAN & CROMWELL
51 WEST 52ND STREET GENERAL COUNSEL AND SECRETARY 125 BROAD STREET
NEW YORK, NEW YORK 10019 FIRSTAR CORPORATION NEW YORK, NEW YORK 10004
(212) 403-1000 777 EAST WISCONSIN AVENUE (212) 558-4000
MILWAUKEE, WISCONSIN 53202
(414) 765-4321
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES
TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Securities Act"), check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED (1) PER SHARE (2) OFFERING PRICE REGISTRATION FEE (3)
<S> <C> <C> <C> <C>
Common stock, $1.25 par value............... 1,002,000,000 $16.84 $16,873,680,000 $4,454,652
</TABLE>
(1) Based upon an estimate of the maximum number of shares of common stock,
$0.01 par value (the "Firstar common stock"), of Firstar Corporation
("Firstar") that will each be exchanged for one share of common stock, $1.25
par value (the "U.S. Bancorp common stock"), of U.S. Bancorp pursuant to the
merger described herein.
(2) Calculated in accordance with Rule 457(f)(l) under the Securities Act based
on the aggregate market value on October 18, 2000 of the shares of Firstar
common stock expected to be cancelled in connection with the merger and
computed by dividing (i) the product of (A) the average of the high and low
prices of Firstar common stock as reported on the NYSE on October 18, 2000
($16.84) and (B) 1,002,000,000 representing the maximum number of shares of
Firstar common stock expected to be cancelled in connection with the merger,
by (ii) 1,002,000,000, representing the maximum number of shares of U.S.
Bancorp common stock to be issued to Firstar stockholders in connection with
the merger.
(3) The registration fee of $4,454,652 was calculated pursuant to Rule 457(f)
under the Securities Act, as follows: .000264 multiplied by the proposed
maximum aggregate offering price.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
[FIRSTAR LOGO] [U.S. BANCORP LOGO]
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
The boards of directors of Firstar Corporation and U.S. Bancorp have
approved an agreement to combine our companies. This proposed strategic business
combination will create one of the leading financial services firms in the
nation, with a powerful presence in consumer and corporate financial services,
wealth management, capital markets and payment systems.
Our combined company will span 24 midwestern and western states, from Ohio
to California, with 2,200 branch offices. We will bring together two highly
complementary institutions to create a strategically, operationally and
financially strong company. Based on June 30, 2000 financial data, the combined
company will have more than $160 billion in assets, $107 billion in deposits and
$145 billion of assets under management.
In the merger, Firstar will merge into U.S. Bancorp. Each share of Firstar
common stock that you hold prior to the merger will be converted into one share
of common stock of the combined company. Each share of U.S. Bancorp common stock
that you hold prior to the merger will be converted into 1.265 shares of common
stock of the combined company. We expect that Firstar stockholders will own
about 50.5%, and U.S. Bancorp stockholders about 49.5%, of the combined company.
We can't complete the merger unless we obtain the necessary regulatory
approvals and unless the stockholders of both our companies approve the merger.
Each of our companies will hold a special meeting of our stockholders to vote on
this merger proposal. YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to
attend your special meeting, please take the time to vote by completing and
mailing the enclosed proxy card to us. If you date and send your proxy card
without indicating how you want to vote, your proxy will be counted as a vote
FOR the merger. If you don't return your card or otherwise vote, or if you don't
instruct your broker how to vote any shares held for you in your broker's name,
your shares will, in effect, be voted against the merger.
The places, dates and times of the special meetings are as follows:
<TABLE>
<S> <C>
FOR FIRSTAR STOCKHOLDERS: FOR U.S. BANCORP STOCKHOLDERS:
[TO COME] [TO COME]
</TABLE>
This document gives you detailed information about the merger we are
proposing and includes our merger agreement as an appendix. You can also get
information about our companies from publicly available documents we have filed
with the Securities and Exchange Commission. We encourage you to read this
entire document carefully.
The common stocks of both Firstar and U.S. Bancorp are listed on the New
York Stock Exchange. Firstar is listed under the symbol "FSR," and U.S. Bancorp
is listed under the symbol "USB."
We enthusiastically support this combination of two of the premier
franchises in the financial services industry and join with the other members of
our boards of directors in recommending that you vote in favor of the merger.
<TABLE>
<S> <C>
[signature] [signature]
Jerry A. Grundhofer John F. Grundhofer
President and Chief Executive Officer Chairman, President and
Firstar Corporation Chief Executive Officer
U.S. Bancorp
</TABLE>
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THE SECURITIES TO BE ISSUED UNDER THIS DOCUMENT OR DETERMINED IF
THIS DOCUMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THE SECURITIES WE ARE OFFERING THROUGH THIS DOCUMENT ARE NOT
SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR NON-BANK
SUBSIDIARY OF EITHER OF OUR COMPANIES, AND THEY ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENTAL
AGENCY.
JOINT PROXY STATEMENT-PROSPECTUS DATED [ ], 2000 AND FIRST MAILED TO
STOCKHOLDERS ON OR ABOUT [ ], 2000
<PAGE>
REFERENCES TO ADDITIONAL INFORMATION
This document incorporates important business and financial information
about Firstar and U.S. Bancorp from documents that are not included in or
delivered with this document. This information is available to you without
charge upon your written or oral request. You can obtain documents related to
Firstar and U.S. Bancorp that are incorporated by reference in this document by
requesting them in writing or by telephone from the appropriate company:
<TABLE>
<S> <C>
FIRSTAR U.S. BANCORP
Investor Relations Investor Relations
Firstar Corporation U.S. Bancorp
777 East Wisconsin Avenue 601 Second Avenue South
Milwaukee, Wisconsin 53202 Minneapolis, Minnesota 55402-4302
Telephone: (414) 765-4325 Telephone: (612) 973-2263
</TABLE>
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY [ ], 2000 IN ORDER
TO RECEIVE THEM BEFORE THE SPECIAL MEETINGS.
See "Where You Can Find More Information" on page 77.
<PAGE>
[LOGO]
FIRSTAR CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [ ], 2000
TO THE STOCKHOLDERS
OF FIRSTAR CORPORATION:
We will hold a special meeting of stockholders of Firstar Corporation, a
Wisconsin corporation, on [ ], [ ], 2000, 9:00 a.m., local time, [in the Grand
Ballroom of the Pfister Hotel, 424 E. Wisconsin Avenue, Milwaukee, Wisconsin
53202], for the following purposes:
1. To consider and vote upon a proposal to approve an Agreement and Plan
of Merger, dated as of October 3, 2000, as amended as of October 23,
2000, by and between U.S. Bancorp, a Delaware corporation, and
Firstar, and the transactions contemplated thereby, including the
merger of Firstar with and into U.S. Bancorp upon the terms and
subject to the conditions set forth in the merger agreement, as more
fully described in the enclosed joint proxy statement-prospectus.
2. To transact any other business as may properly be brought before the
special meeting or any adjournments or postponements of the special
meeting.
We have fixed [ ], 2000 as the record date for determining those
stockholders entitled to vote at the special meeting and any adjournments or
postponements of the special meeting. Accordingly, only stockholders of record
at the close of business on that date are entitled to notice of, and to vote at,
the special meeting and any adjournments or postponements of the special
meeting. If you wish to attend the special meeting and your shares are held in
the name of a broker, trust, bank or other nominee, you must bring a proxy or
letter from the broker, trustee or nominee with you to confirm your beneficial
ownership of the shares.
By Order of the Board of Directors
[signature]
Jennie P. Carlson
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
[ ], 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH,
EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
THE BOARD OF DIRECTORS OF FIRSTAR UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR APPROVAL OF THE MERGER AGREEMENT.
<PAGE>
[LOGO]
U.S. BANCORP
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [ ], 2000
TO THE STOCKHOLDERS
OF U.S. BANCORP:
We will hold a special meeting of stockholders of U.S. Bancorp, a Delaware
corporation, on [ ], 2000, [at the Minneapolis Convention Center, 1301 Second
Avenue South, Minneapolis, Minnesota 55403] to consider and vote upon a proposal
to approve an Agreement and Plan of Merger, dated as of October 3, 2000, as
amended as of October 23, 2000, by and between Firstar Corporation, a Wisconsin
corporation, and U.S. Bancorp, and the transactions contemplated thereby,
including the merger of Firstar with and into U.S. Bancorp upon the terms and
subject to the conditions set forth in the merger agreement, as more fully
described in the enclosed joint proxy statement-prospectus.
We have fixed [ ], 2000 as the record date for determining those
stockholders entitled to vote at the special meeting and any adjournments or
postponements of the special meeting. Accordingly, only stockholders of record
at the close of business on that date are entitled to notice of, and to vote at,
the special meeting and any adjournments or postponements of the special
meeting. If you wish to attend the special meeting and your shares are held in
the name of a broker, trust, bank or other nominee, please bring a proxy or
letter from the broker, trustee or nominee with you to confirm your beneficial
ownership of the shares.
By Order of the Board of Directors
[signature]
James L. Chosy,
VICE PRESIDENT, ASSOCIATE GENERAL
COUNSEL AND SECRETARY
[ ], 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH,
EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
THE BOARD OF DIRECTORS OF U.S. BANCORP UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR APPROVAL OF THE MERGER AGREEMENT.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
SUMMARY..................................................... 1
The Merger................................................ 1
Our Reasons for the Merger................................ 1
Exchange of Shares........................................ 1
Our Recommendations to Stockholders....................... 2
Opinions of Financial Advisors............................ 2
Appraisal Rights.......................................... 2
Material Federal Income Tax Consequences.................. 2
Accounting Treatment...................................... 2
Management and Operations after the Merger................ 2
The Companies............................................. 2
The Special Meetings...................................... 3
Record Date; Vote Required................................ 3
Conditions to Completion of the Merger.................... 4
Regulatory Approvals...................................... 4
Termination of the Merger Agreement; Expenses............. 5
Waiver and Amendment...................................... 5
The Stock Option Agreements............................... 5
Interests of Directors and Officers in the Merger that
Differ from Your Interests.............................. 5
Treatment of Stock Options................................ 6
Material Differences in the Rights of Stockholders........ 6
Dividend Policy........................................... 6
Market Price Information.................................. 7
Unaudited Comparative Per Share Data...................... 8
Selected Financial Data................................... 10
FIRSTAR SPECIAL MEETING..................................... 14
Matters to be Considered.................................. 14
Proxies................................................... 14
Solicitation of Proxies................................... 14
Record Date and Voting Rights............................. 15
Recommendation of the Firstar Board....................... 16
Voting via Telephone or Internet.......................... 16
U.S. BANCORP SPECIAL MEETING................................ 17
Matters to be Considered.................................. 17
Proxies................................................... 17
Solicitation of Proxies................................... 17
Record Date and Voting Rights............................. 18
Recommendation of the U.S. Bancorp Board.................. 19
Voting via Telephone or Internet.......................... 19
THE MERGER.................................................. 20
Background of the Merger.................................. 20
Recommendation of the Firstar Board and Firstar's Reasons
for the Merger.......................................... 22
Recommendation of the U.S. Bancorp Board and U.S.
Bancorp's Reasons for the Merger........................ 24
Opinion of Firstar's Financial Advisor.................... 26
Opinion of U.S. Bancorp's Financial Advisor............... 31
The Merger Agreement...................................... 36
Board Composition of the Combined Company................. 36
Conversion of Stock; Treatment of Options................. 37
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Exchange of Certificates; Fractional Shares............... 37
Effective Time............................................ 39
Representations and Warranties............................ 39
Conduct of Business Pending the Merger.................... 40
Other Agreements.......................................... 42
Conditions to Completion of the Merger.................... 43
Regulatory Approvals Required for the Merger.............. 45
Material Federal Income Tax Consequences.................. 47
Accounting Treatment...................................... 48
Termination of the Merger Agreement....................... 49
Extension, Waiver and Amendment of the Merger Agreement... 49
Stock Exchange Listing.................................... 50
Dividends................................................. 50
Interests of Certain Persons in the Merger................ 50
The Stock Option Agreements............................... 54
Restrictions on Resales by Affiliates..................... 59
MANAGEMENT AND OPERATIONS AFTER THE MERGER.................. 60
Board of Directors........................................ 60
Management................................................ 60
Operations................................................ 60
PRICE RANGE OF COMMON STOCK AND DIVIDENDS................... 60
Firstar................................................... 60
U.S. Bancorp.............................................. 61
INFORMATION ABOUT FIRSTAR AND U.S. BANCORP.................. 61
Firstar................................................... 61
U.S. Bancorp.............................................. 62
CAPITAL STOCK OF THE COMBINED COMPANY....................... 63
Common Stock of the Combined Company...................... 63
Preferred Stock of the Combined Company................... 64
COMPARISON OF STOCKHOLDER RIGHTS............................ 65
Authorized Capital Stock.................................. 65
Size of Board of Directors................................ 65
Classes of Directors...................................... 65
Qualifications of Directors............................... 65
Filling Vacancies on the Board of Directors............... 66
Removal of Directors...................................... 66
Nomination of Directors for Election...................... 66
Anti-Takeover Provisions--Business Combinations........... 66
Anti-Takeover Provisions--Control Share Acquisitions...... 68
Stockholder Rights Plan................................... 69
Stockholder Action without a Meeting...................... 70
Calling Special Meetings of Stockholders.................. 70
Submission of Stockholder Proposals....................... 70
Notice of Stockholder Meetings............................ 71
Dividends................................................. 71
Dissenters' Appraisal Rights.............................. 71
Stockholder Class Voting Rights........................... 72
Consideration of Non-Stockholder Interests by Board of
Directors............................................... 72
Indemnification........................................... 72
Assessability............................................. 74
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Amendments to Articles of Incorporation................... 74
Amendment of By-Laws...................................... 75
VALIDITY OF COMMON STOCK.................................... 76
EXPERTS..................................................... 76
STOCKHOLDER PROPOSALS....................................... 76
OTHER MATTERS............................................... 76
INDEPENDENT PUBLIC ACCOUNTANTS.............................. 77
WHERE YOU CAN FIND MORE INFORMATION......................... 77
FORWARD-LOOKING STATEMENTS.................................. 79
</TABLE>
<TABLE>
<S> <C> <C>
Appendix A Agreement and Plan of Merger................................ A-1
Appendix A-1 Amendment No. 1 to Agreement and Plan of Merger............. A-1-1
Appendix B Firstar Stock Option Agreement.............................. B-1
Appendix C U.S. Bancorp Stock Option Agreement......................... C-1
Appendix D Opinion of Goldman, Sachs & Co. to the U.S. Bancorp Board of D-1
Directors.................................................
Appendix E Opinion of Credit Suisse First Boston Corporation to the E-1
Firstar Board of Directors................................
</TABLE>
iii
<PAGE>
SUMMARY
THIS BRIEF SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT. IT
DOES NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. WE URGE YOU TO
CAREFULLY READ THE ENTIRE DOCUMENT AND THE OTHER DOCUMENTS TO WHICH WE REFER YOU
TO FULLY UNDERSTAND THE MERGER. SEE "WHERE YOU CAN FIND MORE INFORMATION." EACH
ITEM IN THIS SUMMARY INCLUDES A PAGE REFERENCE DIRECTING YOU TO A MORE COMPLETE
DESCRIPTION OF THAT ITEM.
THE MERGER (PAGE 20)
WE HAVE ATTACHED THE MERGER AGREEMENT TO THIS DOCUMENT AS APPENDIX A AND AN
AMENDMENT TO THE MERGER AGREEMENT AS APPENDIX A-1, AND WE REFER TO THEM TOGETHER
IN THIS DOCUMENT AS THE MERGER AGREEMENT. PLEASE READ THE MERGER AGREEMENT. IT
IS THE LEGAL DOCUMENT THAT GOVERNS THE MERGER.
We propose a combination in which Firstar will merge into U.S. Bancorp, with
U.S. Bancorp as the surviving corporation. The combined company will be
incorporated in Delaware and its corporate headquarters will be in Minneapolis.
The combined company will be called "U.S. Bancorp." We expect to complete the
merger in the first quarter of 2001.
OUR REASONS FOR THE MERGER (PAGE 22)
We are proposing to merge our two companies because we believe that:
- the combined company will be positioned to grow and compete successfully
in a consolidating financial services industry and will be able to achieve
financial performance beyond what our two companies could achieve
separately;
- the combination will permit us to diversify and expand our geographic
presence and enhance substantially our ability to provide a diversified
range of financial products and services; and
- we should be able to combine our two operations successfully and manage
them in a disciplined manner after the merger.
We expect the merger to enhance Firstar's earnings per share immediately
upon completion. We also believe that we will be able to improve further our
financial performance through increased economies of scale in high-growth
businesses, significant annual expense savings and leveraging of our companies'
best practices over a larger asset, deposit and customer base.
EXCHANGE OF SHARES (PAGE 37)
U.S. BANCORP STOCKHOLDERS. Under the exchange ratio set forth in the merger
agreement, each of your shares of U.S. Bancorp common stock will be converted
into the right to receive 1.265 shares of common stock of the combined company.
The number of shares of combined company common stock you will be entitled to
receive will therefore be equal to the number of shares of U.S. Bancorp common
stock you own multiplied by 1.265, which we refer to in this document as the
exchange ratio.
You will have to surrender your U.S. Bancorp common stock certificates to
receive new certificates representing the number of shares of common stock of
the combined company you become entitled to receive in the merger. This will not
be necessary until you receive written instructions after we have completed the
merger.
FIRSTAR STOCKHOLDERS. Each of your shares of Firstar common stock will be
converted into one share of common stock of the combined company. You do not
need to surrender your shares or exchange them for new ones. If such an exchange
becomes required by law or regulation, you will receive instructions as to how
to surrender your Firstar stock certificates in exchange for certificates
representing shares of the combined company.
Because the exchange ratio is fixed and because the market price of the
common stock of the combined company will fluctuate, the value of the stock of
the combined company that Firstar and U.S. Bancorp stockholders will receive in
the merger may increase or decrease after the merger.
<PAGE>
OUR RECOMMENDATIONS TO STOCKHOLDERS (PAGE 22)
U.S. BANCORP STOCKHOLDERS. The U.S. Bancorp board of directors believes
that the merger is fair to you and in your best interests, and unanimously
recommends that you vote FOR the approval of the merger agreement.
FIRSTAR STOCKHOLDERS. The Firstar board of directors believes that the
merger is fair to you and in your best interests, and unanimously recommends
that you vote FOR the approval of the merger agreement.
OPINIONS OF FINANCIAL ADVISORS (PAGE 26)
U.S. BANCORP STOCKHOLDERS. Goldman, Sachs & Co. has delivered a written
opinion to the U.S. Bancorp board to the effect that, as of October 3, 2000, the
exchange ratio is fair to U.S. Bancorp stockholders (other than Firstar) from a
financial point of view. We have attached this opinion to this document as
Appendix D. You should read this opinion completely to understand the
assumptions made, matters considered and limitations of the review undertaken by
Goldman Sachs in providing its opinion.
FIRSTAR STOCKHOLDERS. Credit Suisse First Boston Corporation has delivered
a written opinion to the Firstar board to the effect that, as of October 3,
2000, the exchange ratio is fair to Firstar stockholders from a financial point
of view. We have attached this opinion to this document as Appendix E. You
should read it completely to understand the assumptions made, matters considered
and limitations of the review undertaken by Credit Suisse First Boston in
providing its opinion.
APPRAISAL RIGHTS (PAGE 71)
U.S. BANCORP STOCKHOLDERS. Under Delaware law, U.S. Bancorp stockholders
are not entitled to appraisal rights in this merger.
FIRSTAR STOCKHOLDERS. Under Wisconsin law, Firstar stockholders are not
entitled to appraisal rights in this merger.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES (PAGE 47)
We expect that, for U.S. federal income tax purposes, the exchange of your
shares of U.S. Bancorp common stock or Firstar common stock for shares of common
stock of the combined company in the merger generally will not cause you to
recognize any gain or loss. U.S. Bancorp stockholders will, however, have to
recognize income or gain in connection with any cash received instead of
fractional shares.
This tax treatment may not apply to every U.S. Bancorp stockholder and
Firstar stockholder. Determining the actual tax consequences of the merger to
you can be complicated. They will depend on your specific situation and on
variables not within our control. You should consult your own tax advisor for a
full understanding of the merger's tax consequences.
ACCOUNTING TREATMENT (PAGE 48)
We expect the merger to qualify as a "pooling of interests." This means
that, for accounting and financial reporting purposes, we will treat our
companies as if they had always been one combined entity.
MANAGEMENT AND OPERATIONS AFTER THE MERGER (PAGE 60)
The board of directors of the combined company will have 25 members, of whom
14 will be named by Firstar and 11 by U.S. Bancorp.
Following the merger, Jerry A. Grundhofer, Firstar's President and Chief
Executive Officer, will assume those positions for the combined company. John F.
Grundhofer, Chairman, President and Chief Executive Officer of U.S. Bancorp,
will be Chairman of the board of directors of the combined company.
THE COMPANIES (PAGE 61)
FIRSTAR CORPORATION
777 EAST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53202
(414) 765-4321
Firstar is a bank holding company organized under the laws of Wisconsin and
registered
2
<PAGE>
under the federal Bank Holding Company Act, and has also elected to become a
"financial holding company" under that Act. Firstar has nearly 1,200
full-service banking offices and more than 2,200 ATM locations in Ohio,
Wisconsin, Missouri, Kentucky, Illinois, Indiana, Iowa, Minnesota, Tennessee,
Arkansas, Kansas and Arizona. Firstar, founded in 1853, offers a comprehensive
line of consumer and commercial banking products and services, personal and
commercial trust, investment management, insurance, securities brokerage,
mortgage, credit card, cash management, international banking and other
financial services. Firstar is the parent company of Firstar Finance, a consumer
finance company, and Firstar Investment Research & Management Company, LLC, an
investment advisory firm.
At September 30, 2000, Firstar's consolidated total assets were
approximately $74 billion, its consolidated total deposits were approximately
$52 billion and its consolidated total stockholders' equity was approximately
$6.1 billion. Based on total assets at September 30, 2000, Firstar was the 14th
largest bank holding company in the United States.
U.S. BANCORP
U.S. BANK PLACE
601 SECOND AVENUE SOUTH
MINNEAPOLIS, MINNESOTA
(612) 973-1111
U.S. Bancorp is a bank holding company organized under the laws of Delaware
and registered under the federal Bank Holding Company Act, and has also elected
to become a financial holding company under that Act. U.S. Bancorp operates
approximately 1,000 banking offices in the Midwest and West. U.S. Bancorp
provides comprehensive banking, trust, investment and payment systems products
and services to consumers, businesses and institutions and operates a network of
5,000 ATMs. It also offers full-service brokerage services at approximately 100
offices through U.S. Bancorp Piper Jaffray. In addition, it is the largest
provider of Visa corporate and purchasing cards in the world and is one of the
largest providers of corporate trust services in the United States.
At September 30, 2000, U.S. Bancorp's consolidated total assets were
approximately $86 billion, its total deposits were approximately $51 billion,
and its consolidated total stockholders' equity was approximately $8 billion.
Based on total assets at September 30, 2000, U.S. Bancorp was the 10th largest
bank holding company in the United States.
THE SPECIAL MEETINGS (PAGES 14 AND 17)
FIRSTAR STOCKHOLDERS. The Firstar special meeting will be held on [ ]
at 9:00 a.m., local time, [in the Grand Ballroom of the Pfister Hotel, 424 E.
Wisconsin Avenue, Milwaukee, Wisconsin 53202.] At the Firstar special meeting,
you will be asked to approve the merger agreement that provides for the merger
of Firstar into U.S. Bancorp.
U.S. BANCORP STOCKHOLDERS. The U.S. Bancorp special meeting will be held on
[ ], at , local time, at [the Minneapolis Convention Center, 1301
Second Avenue South, Minneapolis, Minnesota 55403]. At the U.S. Bancorp special
meeting, you will be asked to approve the merger agreement that provides for the
merger of Firstar into U.S. Bancorp.
RECORD DATE; VOTE REQUIRED (PAGES 15 AND 18)
FIRSTAR STOCKHOLDERS. You can vote at the Firstar special meeting if you
owned Firstar common stock at the close of business on [ ]. On that date,
there were [ ] shares of Firstar common stock outstanding and entitled to
vote. You can cast one vote for each share of Firstar common stock that you
owned on that date. In order to approve the merger agreement the holders of a
majority of Firstar's outstanding shares must vote in favor of doing so.
Firstar directors and executive officers hold about [4.4]% of the
outstanding shares of Firstar common stock entitled to vote at the Firstar
special meeting, and U.S. Bancorp directors and executive officers hold [less
than 1]% of the outstanding shares of Firstar common stock entitled to vote at
the Firstar special meeting. We expect the Firstar directors and officers to
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vote their shares for approval of the merger agreement.
U.S. BANCORP STOCKHOLDERS. You can vote at the U.S. Bancorp special meeting
if you owned U.S. Bancorp common stock at the close of business on [ ]. On
that date, there were [ ] shares of U.S. Bancorp common stock outstanding
and entitled to vote. You can cast one vote for each share of U.S. Bancorp
common stock you owned on that date. In order to approve the merger agreement,
the holders of a majority of U.S. Bancorp's outstanding shares must vote in
favor of doing so.
U.S. Bancorp directors and executive officers hold about [4.2]% of the
outstanding shares of U.S. Bancorp common stock entitled to vote at the U.S.
Bancorp special meeting, and Firstar directors and executive officers hold [less
than 1]% of the outstanding shares of U.S. Bancorp common stock entitled to vote
at the U.S. Bancorp special meeting. We expect the U.S. Bancorp directors and
officers to vote their shares for approval of the merger agreement.
CONDITIONS TO COMPLETION OF THE MERGER (PAGE 43)
Our obligations to complete the merger depend on a number of conditions
being met. These include:
- the approval of the merger agreement by Firstar stockholders and U.S.
Bancorp stockholders;
- the approval by the New York Stock Exchange of an application to list the
shares of common stock of the combined company to be issued in the merger;
- the approval of the merger by the necessary federal and state regulatory
authorities;
- the absence of any order, injunction, decree, law or regulation that would
prohibit the merger or make it illegal;
- the receipt by each of us of legal opinions that, for U.S. federal income
tax purposes, Firstar, U.S. Bancorp and stockholders of both companies
that exchange all of their shares solely for shares of common stock of the
combined company will not recognize any gain or loss as a result of the
merger, except in connection with the payment of cash instead of
fractional shares to U.S. Bancorp stockholders. These opinions will be
subject to various limitations. We recommend that you read the more
detailed description of the merger's tax consequences beginning on
page 47; and
- the receipt by each of us of a letter from our independent accountants
that the merger will qualify for pooling-of-interests accounting
treatment.
Where the law permits, either of us could choose to waive a condition to our
obligation to complete the merger even when that condition has not been
satisfied. We cannot be certain when, or if, the conditions to the merger will
be satisfied or waived, or that the merger will be completed.
REGULATORY APPROVALS (PAGE 45)
We can't complete the merger unless it is approved by the Board of Governors
of the Federal Reserve System. Once the Federal Reserve Board approves the
merger, we will have to wait from 15 to 30 days before we can complete it.
During that time, the U.S. Department of Justice can challenge the merger.
The merger is also subject to the approval of, or notice to, state and other
regulatory authorities. We are in the process of filing all of the required
applications and notices with the Federal Reserve Board and these other
regulatory authorities. In addition, as a result of some of the non-banking
activities our companies presently conduct, the merger will be subject to review
by antitrust authorities under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, and we will be required to file premerger notification and report forms
concerning those activities with the Federal Trade Commission and the Antitrust
Division of the DOJ.
As of the date of this document, we haven't yet received the required
approvals. While we don't know of any reason why we wouldn't be able to obtain
the necessary approvals in a timely manner, we can't be certain when or if we
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will get them. We currently expect that we will need to sell some branches,
deposits and loans in the Minneapolis/St. Paul market to a third party to get
regulatory approvals, but we have taken this into account in planning for the
merger and we do not believe that it will have a material negative effect on the
combined company.
TERMINATION OF THE MERGER AGREEMENT; EXPENSES (PAGE 49)
We can mutually agree at any time to terminate the merger agreement without
completing the merger, even if our stockholders have approved it. Also, either
of us can decide, without the consent of the other, to terminate the merger
agreement if there is:
- a final denial of a required regulatory approval;
- an uncorrected breach of the merger agreement by the other party, so long
as the party seeking to terminate the merger agreement hasn't itself
breached the agreement; and
- a failure to complete the merger on or before July 3, 2001.
Whether or not the merger is completed, we will each pay our own fees and
expenses, except that we will evenly divide the costs and expenses that we have
incurred in printing and mailing this document. We will also evenly divide the
fees that we will have to pay to the SEC in connection with the merger.
WAIVER AND AMENDMENT (PAGE 49)
We may jointly amend the merger agreement, and each of us may waive our
right to require the other party to adhere to the terms and conditions of the
merger agreement. However, we may not do so after our stockholders approve the
merger if the amendment or waiver changes the consideration that will be
received by U.S. Bancorp stockholders or Firstar stockholders, unless they
approve the amendment or waiver.
THE STOCK OPTION AGREEMENTS (PAGE 54 AND APPENDICES B AND C)
Each of us, as an inducement to the other to enter into the merger
agreement, entered into a stock option agreement granting the other an option to
purchase shares of our common stock under the circumstances described in the
option agreements. We granted the options to each other in order to increase the
likelihood that we would complete the merger. The options could discourage other
companies from proposing a competing combination with either of us before we
complete the merger. The largest number of shares either company can purchase if
it exercises its option is 19.9% of the outstanding shares of common stock of
the other company. The purchase price under the option granted by Firstar is
$22.25 per share and the purchase price under the option granted by U.S. Bancorp
is $23.1875 per share, the closing prices of our shares at the end of the last
week before we signed the merger agreement. In some circumstances, the company
holding the option, or the company holding shares purchased under the option,
may require the company that granted the option to repurchase the option and/or
those shares at a price based on a formula described in the option. Either of us
could instead choose to give up our option to the granting company and receive a
cash payment of $420 million. The maximum value that either of us can realize
from the option granted to us is $630 million.
Neither of us can exercise our option unless particular events described in
the stock option agreements occur. These events generally are related to
agreements to engage in business combinations or acquisition transactions other
than the merger we are proposing in this document. We don't know of any event
that has occurred as of the date of this document that would allow either of us
to exercise our option.
INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER THAT DIFFER FROM YOUR
INTERESTS (PAGE 50)
Some of our directors and officers have interests in the merger that differ
from, or are in addition to, their interests as stockholders in our companies.
These interests exist because of
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employment or severance agreements that the officers have entered into with U.S.
Bancorp, and rights that U.S. Bancorp officers and directors have under U.S.
Bancorp's benefit plans. These employment and severance agreements provide the
officers with severance benefits if their employment with the combined company
is terminated, and the benefit plans provide for the accelerated vesting of, or
certain other special rights with respect to, the benefits under the benefit
plans. In connection with the merger, Firstar entered into a new employment
agreement with John F. Grundhofer, Chairman, President and Chief Executive
Officer of U.S. Bancorp, that will become effective upon completion of the
merger. In addition, John Grundhofer and Jerry A. Grundhofer, President and
Chief Executive Officer of Firstar, are brothers.
Additional interests in the merger of some of our directors and executive
officers are described under "Management and Operations After the Merger."
The members of our boards of directors knew about these additional interests
and considered them when they approved the merger agreement and the merger.
TREATMENT OF STOCK OPTIONS (PAGE 37)
In the merger, each option to buy Firstar common stock or U.S. Bancorp
common stock that is outstanding and not yet exercised immediately before the
merger is completed will become an option to buy common stock of the combined
company. In the case of options to buy U.S. Bancorp common stock, the number of
shares of common stock subject to each new stock option, as well as the exercise
price of that stock option, will be adjusted to reflect the exchange ratio. The
merger will cause some U.S. Bancorp unvested stock options to vest and
restrictions on some awards of U.S. Bancorp restricted stock to lapse. In the
case of options to buy Firstar common stock, the new options will be exercisable
for shares of common stock of the combined company and otherwise will continue
on the same terms and conditions in effect immediately prior to the completion
of the merger.
MATERIAL DIFFERENCES IN THE RIGHTS OF STOCKHOLDERS (PAGE 65)
The rights of Firstar stockholders are governed by Wisconsin law and by the
Firstar articles of incorporation and by-laws. The rights of U.S. Bancorp
stockholders are governed by Delaware law and by the U.S. Bancorp certificate of
incorporation and by-laws. Upon our completion of the merger, U.S. Bancorp
stockholders and Firstar stockholders will become stockholders of the combined
company, and their rights will be governed by Delaware law and the certificate
of incorporation and by-laws of the combined company. The combined company's
certificate of incorporation and by-laws will be substantially similar to U.S.
Bancorp's current certificate of incorporation and by-laws, except that the
number of authorized shares of common stock of the combined company will be
increased to 4 billion and the indemnification provisions of the U.S. Bancorp
by-laws will be amended to make them more similar to those in the Firstar
by-laws.
DIVIDEND POLICY (PAGE 50)
The merger agreement permits each of us to continue to pay regular quarterly
cash dividends to our stockholders. We will coordinate our declaration of
dividends, and the related record dates and payment dates, so that neither U.S.
Bancorp stockholders nor Firstar stockholders receive two dividends, or fail to
receive one dividend, for any single calendar quarter. Our current intention,
subject to determination by the board of directors of the combined company in
its discretion and to applicable law, is to set an initial regular annual
dividend rate on the combined company's common stock of $0.75.
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MARKET PRICE INFORMATION (PAGE 60)
Shares of Firstar common stock and U.S. Bancorp common stock are listed on
the NYSE. Firstar is listed under the symbol "FSR" and U.S. Bancorp is listed
under the symbol "USB." The market value of the aggregate consideration that
U.S. Bancorp stockholders will receive in the merger is approximately
$21 billion, based on Firstar's closing stock price on October 3, 2000, the date
preceding public announcement of the merger. The closing prices of Firstar
common stock and U.S. Bancorp common stock on October 3, 2000 and [ ], 2000,
and the implied value in the merger to U.S. Bancorp stockholders for each share
of U.S. Bancorp common stock on those dates, were as follows:
<TABLE>
<CAPTION>
U.S. BANCORP COMMON VALUE OF MERGER CONSIDERATION PER SHARE OF
FIRSTAR COMMON STOCK STOCK U.S. BANCORP COMMON STOCK
-------------------- ------------------- ------------------------------------------
<S> <C> <C> <C>
October 3, 2000......... $22.25 $23.19 $28.15
[ ], 2000......
</TABLE>
Of course, the market price of Firstar common stock and U.S. Bancorp common
stock will fluctuate prior to the merger, while the exchange ratio is fixed. You
should obtain current stock price quotations for Firstar common stock and U.S.
Bancorp common stock.
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UNAUDITED COMPARATIVE PER SHARE DATA
The following table shows historical information about our companies' income
per share, dividends per share and book value per share, and similar information
reflecting the merger, which we refer to as "pro forma" information. In
presenting the comparative pro forma information for the time periods shown we
assumed that we had been merged throughout those periods.
We also assumed that we will treat our companies as if they had always been
combined for accounting and financial reporting purposes--a method known as
pooling-of-interests accounting. The information listed as "equivalent pro
forma" was obtained by multiplying the pro forma amounts by the exchange ratio
of 1.265. We present this information to reflect the fact that U.S. Bancorp
stockholders will receive more than one share of common stock of the combined
company for each share of their U.S. Bancorp common stock exchanged in the
merger.
We expect that we will incur merger and integration charges as a result of
combining our companies. We also anticipate that the merger will provide the
combined company with financial benefits that include reduced operating
expenses. Also, we currently expect that the combined company will increase its
quarterly cash dividend to $0.1875 per share after completing the merger,
subject to a determination by the combined company's board of directors in its
discretion to do so. This intended increase isn't reflected in the pro forma
dividend information in the table. The pro forma information, while helpful in
illustrating the financial characteristics of the combined company under one set
of assumptions, does not reflect these anticipated financial expenses and
benefits and, accordingly, does not attempt to predict or suggest future
results. It also does not necessarily reflect what the historical results of the
combined company would have been had our companies been combined during the
periods presented.
The per share data give effect to all previous stock splits of Firstar
common stock and U.S. Bancorp common stock, including Firstar's three-for-one
split paid April 15, 1999 and U.S. Bancorp's three-for-one split effected
May 18, 1998.
The information in the following table is based on, and you should read it
together with, the historical financial information that we have presented in
our prior filings with the SEC. We are incorporating this material into this
document by reference. See "Where You Can Find More Information" on page 77 for
a description of where you can find our prior filings.
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UNAUDITED COMPARATIVE PER COMMON SHARE DATA OF
FIRSTAR AND U.S. BANCORP
<TABLE>
<CAPTION>
AS OF OR FOR
THE SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED --------------------------------------
JUNE 30, 2000 1999 1998 1997
-------------- -------- -------- --------
<S> <C> <C> <C> <C>
FIRSTAR
Basic earnings per common share:
Historical.................................... $ 0.64 $ 0.89 $0.83 $0.83
Pro forma..................................... 0.73 1.25 1.12 0.87
Diluted earnings per common share:
Historical.................................... $ 0.64 $ 0.87 $0.81 $0.82
Pro forma..................................... 0.72 1.23 1.10 0.85
Dividends declared on common stock:
Historical.................................... $0.325 $0.4625 $0.33 $0.27
Pro forma..................................... 0.325 0.4625 0.33 0.27
Book value per common share:
Historical.................................... $ 6.46 $ 6.47
Pro forma..................................... 7.15 6.66
U. S. BANCORP
Basic earnings per common share:
Historical.................................... $ 1.03 $ 2.07 $1.81 $1.13
Equivalent Pro forma.......................... 0.92 1.58 1.42 1.10
Diluted earnings per common share:
Historical.................................... $ 1.03 $ 2.06 $1.78 $1.11
Equivalent Pro forma.......................... 0.91 1.56 1.39 1.08
Dividends declared on common stock:
Historical.................................... $ 0.43 $ 0.78 $0.70 $0.62
Equivalent Pro forma.......................... 0.41 0.59 0.42 0.34
Book value per common share:
Historical.................................... $10.62 $ 10.14
Equivalent Pro forma.......................... 9.04 8.42
</TABLE>
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SELECTED FINANCIAL DATA
The following tables show summarized historical financial data for each of
us and also show similar pro forma information reflecting the merger. The pro
forma information reflects the pooling of interests method of accounting.
We expect that we will incur merger and integration charges as a result of
combining our companies. We also anticipate that the merger will provide the
combined company with financial benefits that include reduced operating
expenses. Also, we currently expect that the combined company will increase its
quarterly cash dividend to $0.1875 per share after completing the merger,
subject to a determination by the combined company's board of directors in its
discretion to do so. This intended increase isn't reflected in the pro forma
dividend information in the table. The pro forma information, while helpful in
illustrating the financial characteristics of the combined company under one set
of assumptions, does not reflect these financial expenses or benefits and,
accordingly, does not attempt to predict or suggest future results. It also does
not necessarily reflect what the historical results of the new company would
have been had our companies been combined.
The information in the following tables is based on historical financial
information that we have presented in our prior filings with the SEC. You should
read all of the summary financial information we provide in the following tables
together with this historical financial information and with the more detailed
pro forma financial information we provide in this document, which you can find
beginning at page 81. This historical financial information is also incorporated
into this document by reference. See "Where You Can Find More Information" on
page 77 for a description of where you find this historical information.
Firstar's audited historical financial statements as of December 31, 1999
and 1998, and for the three fiscal years ended December 31, 1999, were audited
by PricewaterhouseCoopers LLP and U.S. Bancorp's audited historical financial
statements were audited by Ernst & Young LLP, both independent certified public
accountants. The financial statements for the six-month periods ended June 30,
2000 and 1999 have not been audited.
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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF FIRSTAR
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
------------------------- -------------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Interest income............... $ 2,660,825 $ 2,485,952 $ 5,021,712 $ 5,052,188 $ 4,513,660 $ 4,051,634 $ 3,921,523
Interest expense.............. 1,316,585 1,167,116 2,378,566 2,516,567 2,145,872 1,845,561 1,827,174
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income......... 1,344,240 1,318,836 2,643,146 2,535,621 2,367,788 2,206,073 2,094,349
Taxable equivalent
adjustment.................. 23,489 27,988 54,296 59,960 58,639 57,646 58,715
----------- ----------- ----------- ----------- ----------- ----------- -----------
Taxable equivalent net
interest income........... 1,367,729 1,346,824 2,697,442 2,595,581 2,426,427 2,263,719 2,153,064
Noninterest income............ 732,822 692,527 1,402,571 1,365,351 1,100,215 980,123 887,890
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net revenue................. 2,100,551 2,039,351 4,100,013 3,960,932 3,526,642 3,243,842 3,040,954
Noninterest expense........... 1,013,915 1,056,965 2,445,849 2,529,816 2,104,746 1,952,976 1,808,255
Provision for loan losses..... 96,743 88,227 187,301 164,790 204,127 176,100 112,069
Net income.................... 624,542 578,913 875,318 805,450 760,716 699,871 698,986
PER COMMON SHARE
Basic EPS..................... $ 0.64 $ 0.58 $ 0.89 $ 0.83 $ 0.83 $ 0.76 $ 0.75
Diluted EPS................... 0.64 0.57 0.87 0.81 0.82 0.75 0.74
Dividends declared............ 0.3250 0.20 0.4625 0.33 0.27 0.21 0.18
Period-end market price....... 21.06 28.00 21.13 31.00 19.13 10.21 6.61
AVERAGE BALANCES
Loans......................... $51,279,286 $48,775,187 $49,259,525 $46,673,396 $41,800,976 $37,191,126 $35,349,528
Loans held for sale........... 1,193,446 1,480,549 1,426,936 1,162,187 383,909 376,723 86,095
Investment securities......... 13,314,440 15,263,785 14,651,145 15,694,707 12,665,828 11,997,743 12,027,403
Short-term investments........ 412,919 697,559 547,424 640,722 646,944 405,141 550,689
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total interest-earning
assets.................... 66,200,091 66,217,080 65,885,030 64,171,012 55,497,657 49,970,733 48,013,715
Total assets.................. 73,273,162 73,770,541 73,222,590 71,096,191 60,722,443 54,565,374 52,242,526
Noninterest-bearing
deposits.................... 9,704,477 10,111,707 9,795,639 9,514,139 8,303,720 7,911,441 7,096,383
Interest-bearing deposits..... 42,579,614 42,510,077 42,025,563 42,097,767 37,682,107 34,623,470 33,293,091
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total deposits.............. 52,284,091 52,621,784 51,821,202 51,611,906 45,985,827 42,534,911 40,389,474
Short-term borrowings......... 8,814,169 7,279,623 7,819,562 7,369,227 6,477,480 5,025,361 5,207,545
Long-term debt................ 4,662,106 5,923,436 5,736,056 4,787,551 2,315,536 1,533,070 1,416,811
Shareholders' equity.......... 6,359,055 6,803,840 6,680,687 6,334,542 5,084,200 4,739,612 4,496,663
RATIOS
Return on average assets...... 1.71% 1.58% 1.20% 1.13% 1.25% 1.28% 1.34%
Return on average common
equity...................... 19.75 17.16 13.10 12.72 14.98 14.79 15.60
Net interest margin........... 4.14 4.09 4.09 4.04 4.37 4.53 4.48
Noninterest expense to net
revenue..................... 48.27 51.83 59.65 63.87 59.68 60.21 59.46
Dividend payout ratio......... 50.78 35.09 53.16 40.74 32.93 28.00 24.32
Average shareholders' equity
to average total assets..... 8.68 9.22 9.12 8.91 8.37 8.69 8.61
</TABLE>
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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF U.S. BANCORP
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
------------------------- -------------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Interest income............... $ 3,218,300 $ 2,736,900 $ 5,676,700 $ 5,407,400 $ 5,293,600 $ 5,114,400 $ 4,920,800
Interest expense.............. 1,510,600 1,141,600 2,416,000 2,346,800 2,245,500 2,143,800 2,098,100
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income......... 1,707,700 1,595,300 3,260,700 3,060,600 3,048,100 2,970,600 2,822,700
Taxable equivalent
adjustment.................. 34,400 21,400 42,000 51,300 57,900 64,100 63,900
----------- ----------- ----------- ----------- ----------- ----------- -----------
Taxable equivalent net
interest income........... 1,742,100 1,616,700 3,302,700 3,111,900 3,106,000 3,034,700 2,886,600
Noninterest income............ 1,597,100 1,282,200 2,758,700 2,256,600 1,615,200 1,783,100 1,313,300
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net revenue................. 3,339,200 2,898,900 6,061,400 5,368,500 4,721,200 4,817,800 4,199,900
Noninterest expense........... 1,792,600 1,471,600 3,126,900 2,844,300 2,812,300 2,538,100 2,475,900
Provision for loan losses..... 317,000 243,000 531,000 379,000 460,300 271,200 239,100
Net income.................... 772,100 741,100 1,506,500 1,327,400 838,500 1,218,700 897,100
=========== =========== =========== =========== =========== =========== ===========
PER COMMON SHARE
Basic EPS..................... $ 1.03 $ 1.03 $ 2.07 $ 1.81 $ 1.13 $ 1.60 $ 1.19
Diluted EPS................... 1.03 1.02 2.06 1.78 1.11 1.57 1.16
Dividends declared............ 0.43 0.39 0.78 0.70 0.62 0.55 0.48
Period-end market price....... 19.25 33.38 23.81 35.50 37.31 22.75 16.54
AVERAGE BALANCES
Loans......................... $64,853,000 $59,705,000 $60,578,000 $55,979,000 $53,513,000 $50,855,000 $47,703,000
Loans held for sale........... -- -- -- -- -- -- --
Investment securities......... 4,827,000 5,178,000 5,153,000 5,895,000 6,906,000 7,780,000 7,710,000
Short-term investments........ 3,664,000 2,479,000 2,661,000 1,994,000 1,256,000 1,566,000 1,143,000
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total interest-earning
assets.................... 73,344,000 67,362,000 68,392,000 63,868,000 61,675,000 60,201,000 56,556,000
Total assets.................. 82,927,000 75,593,000 76,947,000 71,791,000 68,771,000 67,402,000 63,084,000
Noninterest-bearing
deposits.................... 14,174,000 13,549,000 13,760,000 13,497,000 12,680,000 11,970,000 10,646,000
Interest-bearing deposits..... 35,877,000 34,252,000 34,339,000 33,830,000 34,656,000 35,282,000 34,080,000
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total deposits.............. 50,051,000 47,801,000 48,099,000 47,327,000 47,336,000 47,252,000 44,726,000
Short-term borrowings......... 3,554,000 4,181,000 3,887,000 3,733,000 5,314,000 7,187,000 6,969,000
Long-term debt................ 18,805,000 15,143,000 16,027,000 12,345,000 8,127,000 4,944,000 4,162,000
Shareholders' equity.......... 7,790,000 6,200,000 6,540,000 6,049,000 5,798,000 5,919,000 5,345,000
RATIOS
Return on average assets...... 1.87% 1.98% 1.96% 1.85% 1.22% 1.81% 1.42%
Return on average common
equity...................... 19.9 24.1 23.0 21.9 14.6 21.1 17.2
Net interest margin........... 4.78 4.84 4.83 4.87 5.04 5.04 5.10
Noninterest expense to net
revenue..................... 53.7 50.8 51.6 53.1 59.6 52.9 59.0
Dividend payout ratio......... 41.75 37.86 37.68 38.67 54.87 34.38 40.60
Average shareholders' equity
to average total assets..... 9.39 8.20 8.50 8.43 8.43 8.78 8.47
</TABLE>
12
<PAGE>
UNAUDITED SELECTED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
OF FIRSTAR AND U.S. BANCORP
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
--------------------------- ---------------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Interest income........... $ 5,879,125 $ 5,222,852 $ 10,698,412 $ 10,459,588 $ 9,807,260 $ 9,166,034 $ 8,842,323
Interest expense.......... 2,827,185 2,308,716 4,794,566 4,863,367 4,391,372 3,989,361 3,925,274
------------ ------------ ------------ ------------ ----------- ----------- -----------
Net interest income..... 3,051,940 2,914,136 5,903,846 5,596,221 5,415,888 5,176,673 4,917,049
Taxable equivalent
adjustment.............. 57,889 49,388 96,296 111,260 116,539 121,746 122,615
------------ ------------ ------------ ------------ ----------- ----------- -----------
Taxable equivalent net
interest income....... 3,109,829 2,963,524 6,000,142 5,707,481 5,532,427 5,298,419 5,039,664
Noninterest income........ 2,329,922 1,974,727 4,161,271 3,621,951 2,715,415 2,763,223 2,201,190
------------ ------------ ------------ ------------ ----------- ----------- -----------
Net revenue............. 5,439,751 4,938,251 10,161,413 9,329,432 8,247,842 8,061,642 7,240,854
Noninterest expense....... 2,806,515 2,528,565 5,572,749 5,374,116 4,917,046 4,491,076 4,284,155
Provision for loan
losses.................. 413,743 331,227 718,301 543,790 664,427 447,300 351,169
------------ ------------ ------------ ------------ ----------- ----------- -----------
Net income................ 1,396,642 1,320,013 2,381,818 2,132,850 1,599,216 1,918,571 1,596,086
------------ ------------ ------------ ------------ ----------- ----------- -----------
PER COMMON SHARE
Basic EPS................. $ 0.73 $ 0.69 $ 1.25 $ 1.12 $ 0.87 $ 1.02 $ 0.85
Diluted EPS............... 0.72 0.68 1.23 1.10 0.85 1.00 0.83
AVERAGE BALANCES
Loans..................... $116,132,286 $108,480,187 $109,837,525 $102,652,396 $95,313,976 $88,046,126 $83,052,528
Loans held for sale....... 1,193,446 1,480,549 1,426,936 1,162,187 383,909 376,723 86,095
Investment securities..... 18,141,440 20,441,785 19,804,145 21,589,707 19,571,828 19,777,743 19,737,403
Short-term investments.... 4,076,919 3,176,559 3,208,424 2,634,722 1,902,944 1,971,141 1,593,689
------------ ------------ ------------ ------------ ----------- ----------- -----------
Total interest-earning
assets................ 139,544,091 133,579,080 134,277,030 128,039,012 117,172,657 110,171,733 104,569,715
Total assets.............. 156,200,162 149,363,541 150,169,590 142,887,191 129,493,443 121,967,374 115,326,526
Noninterest-bearing
deposits................ 23,878,477 23,660,707 23,555,639 23,011,139 20,983,720 19,881,441 17,742,383
Interest-bearing
deposits................ 78,456,614 76,762,077 76,364,563 75,927,767 72,338,107 69,905,470 67,373,091
------------ ------------ ------------ ------------ ----------- ----------- -----------
Total deposits.......... 102,335,091 100,422,784 99,920,202 98,938,906 93,321,827 89,786,911 85,115,474
Short-term borrowings..... 12,368,169 11,460,623 11,706,562 11,102,227 11,791,480 12,212,361 12,176,545
Long-term debt............ 23,467,106 21,066,436 21,763,056 17,132,551 10,442,536 6,477,070 5,578,811
Shareholders' equity...... 14,149,055 13,003,840 13,220,687 12,383,542 10,882,200 10,658,612 9,841,663
RATIOS
Return on average
assets.................. 1.80% 1.78% 1.59% 1.49% 1.23% 1.57% 1.38%
Return on average common
equity.................. 19.85 20.41 18.02 17.22 14.70 18.00 16.22
Net interest margin....... 4.48 4.47 4.47 4.46 4.72 4.81 4.82
Noninterest expense to net
revenue................. 51.59 51.20 54.84 57.60 59.62 55.71 59.17
Average shareholders'
equity to average total
assets.................. 9.06 8.71 8.80 8.67 8.40 8.74 8.53
EXCLUDING MERGER RELATED
EXPENSES AND OTHER
NONRECURRING ITEMS
Net Income................ $ 1,598,500 $ 1,516,100 $ 3,052,500 $ 2,791,400 $ 2,080,700 $ 2,347,700 $ 1,817,300
Diluted EPS............... 0.83 0.79 1.58 1.45 1.11 1.24 0.95
Return on average
assets.................. 2.03% 1.97% 2.05% 1.95% 1.61% 1.89% 1.58%
Return on average common
equity.................. 22.64 21.20 23.26 22.54 19.35 22.15 18.96
Noninterest expense to net
revenue................. 49.10 50.21 49.60 51.24 51.94 54.07 57.48
</TABLE>
13
<PAGE>
FIRSTAR SPECIAL MEETING
This section contains information from Firstar for Firstar stockholders
about the special stockholder meeting Firstar has called to consider and approve
the merger agreement.
We are mailing this joint proxy statement-prospectus to you, as a Firstar
stockholder, on or about [ ], 2000. Together with this joint proxy
statement-prospectus, we are also sending to you a notice of the Firstar special
meeting and a form of proxy that our board of directors is soliciting for use at
the special meeting. The special meeting will be held on [ ], 2000, at
9:00 a.m., local time.
MATTERS TO BE CONSIDERED
The purpose of the special meeting is to vote on the approval of the merger
agreement, dated October 3, 2000, as amended as of October 23, 2000, between
U.S. Bancorp and Firstar, and the transactions contemplated in that agreement,
including the merger of Firstar into U.S. Bancorp. You may also be asked to vote
on a proposal to adjourn or postpone the special meeting. We could use any
adjournment or postponement of the special meeting for the purpose, among
others, of allowing more time to solicit votes to approve the merger agreement.
PROXIES
The accompanying form of proxy is for use at the special meeting if you
can't or don't wish to attend in person. You can revoke the proxy at any time
before the vote is taken at the special meeting by submitting to our corporate
secretary written notice of revocation or a properly executed proxy of a later
date, or by attending the special meeting and electing to vote in person.
Written notices of revocation and other communications with respect to the
revocation of Firstar proxies should be addressed to:
Firstar Corporation
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Corporate Secretary
All shares of Firstar common stock represented by valid proxies we receive
through this solicitation, and not revoked before they are exercised, will be
voted in the manner specified in this paragraph. If you make no specification on
your proxy card, your proxy will be voted FOR approval of the merger agreement.
Our board is presently unaware of any other matters that may be presented for
action at the special meeting. If other matters do properly come before the
special meeting, however, we intend that shares represented by proxies in the
form accompanying this joint proxy statement-prospectus will be voted by and at
the discretion of the persons named in the proxies. However, proxies that
indicate a vote against approval of the merger agreement will not be voted in
favor of any adjournment or postponement of the special meeting to solicit
additional proxies to approve the merger agreement.
SOLICITATION OF PROXIES
We will bear the entire cost of soliciting proxies from you, except that we
and U.S. Bancorp have agreed to each pay one-half of the costs and expenses of
printing and mailing this joint proxy statement-prospectus and all filing and
other fees relating to the merger paid to the SEC. In addition to soliciting
proxies by mail, we will request banks, brokers and other record holders to send
proxies and proxy material to the beneficial owners of Firstar common stock and
secure their voting instructions, if necessary. We will reimburse those record
holders for their reasonable expenses in taking those actions. We have also made
arrangements with [ ] to assist us in soliciting proxies from banks,
brokers and nominees, and have agreed to pay $[ ] plus expenses for their
services.
14
<PAGE>
If necessary, we may also use several of our regular employees, who will not be
specially compensated, to solicit proxies from our stockholders, either
personally or by telephone, telegram, fax, letter or special delivery letter.
RECORD DATE AND VOTING RIGHTS
In accordance with Wisconsin law, the Firstar by-laws and the rules of the
NYSE, we have fixed [ ], 2000 as the record date for determining the
Firstar stockholders entitled to notice of and to vote at the special meeting.
Accordingly, you are only entitled to notice of, and to vote at, the special
meeting if you were a record holder of shares of Firstar common stock at the
close of business on the record date. At that time, there were [ ] shares
of Firstar common stock held by approximately [ ] holders of record. To
have a quorum that permits us to conduct business at the special meeting, we
require the presence, whether in person or through return of a proxy card, of
holders of Firstar common stock representing a majority of the shares
outstanding and entitled to vote on the record date. You are entitled to one
vote for each outstanding share of Firstar common stock you held as of the close
of business on the record date.
Shares of Firstar common stock present in person at the special meeting but
not voting, and shares of Firstar common stock for which we have received
proxies indicating that their holders have abstained, will be counted as present
at the special meeting for purposes of determining whether there is a quorum for
transacting business at the special meeting. Brokers that hold shares of Firstar
common stock in nominee or "street" name for customers who are the beneficial
owners of those shares may not give a proxy to vote those shares on the merger
agreement without specific instructions from those customers. However, shares
represented by proxies returned by a broker holding these shares in "street"
name will be counted for purposes of determining whether a quorum exists, even
if those shares aren't voted by their beneficial owners in matters where the
broker cannot vote the shares in its discretion (so-called "broker non-votes").
Under Wisconsin law, approval of the merger agreement requires the
affirmative vote of the holders of a majority of the outstanding shares of
Firstar common stock entitled to vote at the special meeting.
BECAUSE APPROVAL OF THE MERGER AGREEMENT REQUIRES THE AFFIRMATIVE VOTE OF
THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF FIRSTAR COMMON STOCK
ENTITLED TO VOTE AT THE SPECIAL MEETING, ABSTENTIONS AND BROKER NON-VOTES WILL
HAVE THE SAME EFFECT AS VOTES AGAINST APPROVAL OF THE MERGER AGREEMENT.
ACCORDINGLY, THE FIRSTAR BOARD URGES YOU TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID
ENVELOPE.
As of the record date:
- our directors and executive officers beneficially owned approximately
[ ] shares of Firstar common stock, entitling them to exercise
approximately [ ]% of the voting power of the Firstar common stock
entitled to vote at the special meeting. We currently expect that each of
our directors and executive officers will vote the shares of Firstar
common stock he or she beneficially owns FOR approval of the merger
agreement;
- U.S. Bancorp's directors and executive officers beneficially owned less
than 1% of the outstanding shares of Firstar common stock entitled to vote
at the special meeting;
- the banking, trust and investment management subsidiaries of Firstar, as
fiduciaries, custodians or agents, held a total of [ ] shares of
Firstar common stock, representing approximately [ ]% of the shares
entitled to vote at the special meeting, and maintained sole or shared
voting power over [ ] of these shares; and
15
<PAGE>
- the banking, trust and investment management subsidiaries of U.S. Bancorp,
as fiduciaries, custodians or agents, held a total of approximately
[ ] shares of Firstar common stock, representing less than [ ]% of
the shares entitled to vote at the special meeting, and maintained sole or
shared voting power over approximately [ ] of these shares.
You can find additional information about beneficial ownership of Firstar
common stock by persons and entities, if any, owning more than 5% of the Firstar
common stock, and more detailed information about beneficial ownership of
Firstar common stock by our directors and executive officers, in the definitive
proxy statement we filed with the SEC and sent to our stockholders in connection
with our 2000 annual meeting of stockholders. See "Where You Can Find More
Information" for instructions on how you can obtain this document.
RECOMMENDATION OF THE FIRSTAR BOARD
The Firstar board has unanimously approved the merger agreement and the
transactions it contemplates, including the merger. The Firstar board believes
that the merger agreement and the transactions it contemplates are fair to, and
are in the best interests of, Firstar and Firstar stockholders, and unanimously
recommends that Firstar stockholders vote FOR approval of the merger agreement.
See "The Merger--Recommendation of the Firstar Board and Firstar's Reasons
for the Merger" for a more detailed discussion of the Firstar board's
recommendation.
VOTING VIA TELEPHONE OR INTERNET
Firstar offers three ways for you to vote your proxy.
OPTION 1--VOTE BY TELEPHONE:
Call toll free 1-800-214-9752 and follow the instructions on the enclosed
proxy card.
OPTION 2--VOTE ON THE INTERNET:
Access the proxy form at www.voteyourproxy.com. Follow the instructions for
Internet voting found there and on the enclosed proxy card.
OPTION 3--MAIL YOUR PROXY CARD:
If you do not wish to vote by touch tone phone or the Internet, please
complete, sign, date and return the enclosed proxy card as described under
"--Proxies."
In order to be effective, telephone or Internet proxy instructions must be
received before [time], [date], 2000, to allow for processing the results.
The telephone and Internet voting procedures used by Firstar's transfer
agent, Firstar Bank N.A., are designed to properly authenticate stockholders'
identities and to accurately record and count their proxies. If you vote via the
Internet, please be advised that there may be costs involved, including possibly
access charges from Internet access providers and telephone companies. You will
have to bear these costs.
If your shares are registered in the name of a brokerage, bank or other
nominee, you may not be able to use telephone and Internet voting procedures.
Please refer to the voting materials you receive, or contact your broker, bank
or other nominee, to determine your options.
16
<PAGE>
U.S. BANCORP SPECIAL MEETING
This section contains information from U.S. Bancorp for U.S. Bancorp
stockholders about the special stockholder meeting U.S. Bancorp has called to
consider and approve the merger agreement.
We are mailing this joint proxy statement-prospectus to you, as a U.S.
Bancorp stockholder, on or about [ ], 2000. Together with this joint proxy
statement-prospectus, we are also sending to you a notice of the U.S. Bancorp
special meeting and a form of proxy that our board is soliciting for use at the
special meeting. The special meeting will be held on [ ], 2000 at
9:00 a.m., local time.
MATTERS TO BE CONSIDERED
The purpose of the special meeting is to vote on the approval of the merger
agreement, dated October 3, 2000, as amended as of October 23, 2000, between
U.S. Bancorp and Firstar, and the transactions contemplated in that agreement.
These include the merger of Firstar into U.S. Bancorp. In addition, you may be
asked to vote upon a proposal to adjourn or postpone the special meeting. We
could use any adjournment or postponement for the purpose, among others, of
allowing more time to solicit votes to approve the merger agreement.
PROXIES
You should use the proxy form accompanying this document, or vote by
telephone or Internet submission, if you are unable or do not wish to attend the
special meeting in person. You can revoke your proxy at any time before the vote
is taken at the special meeting by submitting to our corporate secretary written
notice of revocation or a properly submitted proxy of a later date, or by
attending the special meeting and voting in person. Written notices of
revocation and other communications about revoking your proxy should be
addressed to:
U.S. Bancorp
U.S. Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Corporate Secretary
All shares of U.S. Bancorp common stock represented by valid proxies we
receive through this solicitation, and not revoked before they are exercised,
will be voted in the manner specified in this paragraph. If you make no
specification on your returned proxy card, your proxy will be voted FOR approval
of the merger agreement. Our board is presently unaware of any other matters
that may be presented for action at the special meeting. If other matters do
properly come before the special meeting, however, we intend that shares
represented by proxies in the form accompanying this joint proxy
statement-prospectus will be voted by and at the discretion of the persons named
in the proxies. However, proxies that indicate a vote against approval of the
merger agreement will not be voted in favor of any adjournment or postponement
of the special meeting for the purpose of soliciting additional proxies to
approve the merger agreement.
SOLICITATION OF PROXIES
We will bear the entire cost of soliciting proxies from you, except that we
and Firstar have agreed to each pay one-half of the costs and expenses of
printing and mailing this joint proxy statement-prospectus and all filing and
other fees relating to the merger paid to the SEC. In addition to soliciting
proxies by mail, we will request banks, brokers and other record holders to send
proxies and proxy material to the beneficial owners of the stock and secure
their voting instructions, if necessary. We will reimburse these record holders
for their reasonable expenses in taking those actions. We've also made
arrangements with [ ] to help us in soliciting proxies from banks, brokers
and nominees and have agreed to pay approximately $[ ] plus expenses for these
services. If necessary, we
17
<PAGE>
may also use several of our regular employees, who will not be specially
compensated, to solicit proxies from our stockholders, either personally or by
telephone, the Internet, telegram, fax, letter or special delivery letter.
RECORD DATE AND VOTING RIGHTS
In accordance with Delaware law, the U.S. Bancorp by-laws and the rules of
the NYSE, we have fixed [ ], 2000 as the record date for determining the
U.S. Bancorp stockholders entitled to notice of and to vote at the special
meeting. Accordingly, you are only entitled to notice of, and to vote at, the
special meeting if you were a record holder of U.S. Bancorp common stock at the
close of business on the record date. At that time, [ ] shares of U.S.
Bancorp common stock were outstanding, held by [ ] holders of record. To
have a quorum that permits us to conduct business at the special meeting, we
require the presence, whether in person or through the prior submission of a
proxy, of the holders of U.S. Bancorp common stock representing one-third of the
shares outstanding and entitled to vote on the record date. You are entitled to
one vote for each outstanding share of U.S. Bancorp common stock you held as of
the close of business on the record date.
Shares of U.S. Bancorp common stock present in person at the special meeting
but not voting, and shares of U.S. Bancorp common stock for which we have
received proxies indicating that their holders have abstained, will be counted
as present at the special meeting for purposes of determining whether we have a
quorum for transacting business. Shares held in street name that have been
designated by brokers on proxy cards as not voted will not be counted as votes
cast for or against any proposal. These broker non-votes will, however, be
counted for purposes of determining whether a quorum exists.
Under Delaware law, approval of the merger agreement requires the
affirmative vote of the holders of a majority of the outstanding shares of U.S.
Bancorp common stock entitled to vote at the special meeting.
BECAUSE APPROVAL OF THE MERGER AGREEMENT REQUIRES THE AFFIRMATIVE VOTE OF
THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF U.S. BANCORP COMMON STOCK
ENTITLED TO VOTE AT THE SPECIAL MEETING, ABSTENTIONS AND BROKER NON-VOTES WILL
HAVE THE SAME EFFECT AS VOTES AGAINST APPROVAL OF THE MERGER AGREEMENT.
ACCORDINGLY, THE U.S. BANCORP BOARD URGES YOU TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE
OR, ALTERNATIVELY, TO SUBMIT YOUR PROXY VIA THE TELEPHONE OR INTERNET PROCEDURES
DESCRIBED UNDER "--VOTING VIA TELEPHONE OR INTERNET."
As of the record date:
- directors and executive officers of U.S. Bancorp beneficially owned
approximately [ ] shares of U.S. Bancorp common stock, entitling them
to exercise approximately [ ]% of the voting power of the U.S. Bancorp
common stock entitled to vote at the special meeting. We currently expect
that each of our directors and executive officers will vote the shares of
U.S. Bancorp common stock he or she beneficially owns FOR approval of the
merger agreement;
- directors and executive officers of Firstar beneficially owned less than
1% of the outstanding shares of U.S. Bancorp common stock entitled to vote
at the special meeting;
- the banking, trust and investment management subsidiaries of U.S. Bancorp,
as fiduciaries, custodians or agents, held a total of approximately
[ ] shares of U.S. Bancorp common stock, representing approximately
[ ]% of the shares entitled to vote at the special meeting, and
maintained sole or shared voting power with respect to approximately
[ ] of these shares; and
- the banking, trust and investment management subsidiaries of Firstar, as
fiduciaries, custodians or agents, held a total of [ ] shares of U.S.
Bancorp common stock, representing less than [ ]% of the shares entitled
to vote at the special meeting, and maintained sole or shared voting power
over [ ] of these shares.
18
<PAGE>
You can find additional information about beneficial ownership of U.S.
Bancorp common stock by persons and entities, if any, owning more than 5% of the
U.S. Bancorp common stock, and more detailed information about beneficial
ownership of U.S. Bancorp common stock by our directors and executive officers,
in the definitive proxy statement we filed with the Securities and Exchange
Commission and sent to our stockholders in connection with our 2000 annual
meeting of stockholders. See "Where You Can Find More Information" for
instructions on how you can obtain this document.
POLICY ON CONFIDENTIAL VOTING
U.S. Bancorp has procedures to ensure that, regardless of whether
shareholders vote by mail, telephone, through the Internet or in person,
(i) all proxies, ballots and voting tabulations that identify shareholders are
kept permanently confidential, except as disclosure may be required by federal
or state law or expressly permitted by a shareholder, and (ii) voting
tabulations are performed by an independent third party.
RECOMMENDATION OF THE U.S. BANCORP BOARD
The U.S. Bancorp board has declared the merger agreement to be advisable and
has unanimously approved the merger agreement and the transactions it
contemplates, including the merger. The U.S. Bancorp board believes that the
merger agreement and the transactions it contemplates, including the merger, are
fair to, and are in the best interests of, U.S. Bancorp and U.S. Bancorp
stockholders and unanimously recommends that U.S. Bancorp stockholders vote FOR
approval of the merger agreement.
See "The Merger--Recommendation of the U.S. Bancorp Board and U.S. Bancorp's
Reasons for the Merger" for a more detailed discussion of the U.S. Bancorp
board's recommendation.
VOTING VIA TELEPHONE OR INTERNET
U.S. Bancorp offers three ways for you to vote your proxy.
OPTION 1--VOTE BY TELEPHONE:
Call toll free [1-877-777-8683] and follow the instructions on the enclosed
proxy card.
OPTION 2--VOTE ON THE INTERNET:
Access the proxy form at www.exproxyvote.com/usb. Follow the instructions
for Internet voting found there and on the enclosed proxy card.
OPTION 3--MAIL YOUR PROXY CARD:
If you do not wish to vote by touch tone phone or the Internet, please
complete, sign, date and return the enclosed proxy card as described under
"--Proxies."
In order to be effective, telephone or Internet proxy instructions must be
received before [time], [date], 2000, to allow for processing the results.
The telephone and Internet voting procedures used by U.S. Bancorp's transfer
agent, Equiserve, are designed to properly authenticate stockholders' identities
and to accurately record and count their proxies. If you vote via the Internet,
please be advised that there may be costs involved, including possibly access
charges from Internet access providers and telephone companies. You will have to
bear these costs.
If your shares are registered in the name of a brokerage, bank or other
nominee, you may not be able to use telephone and Internet voting procedures.
Please refer to the voting materials you receive, or contact your broker, bank
or other nominee, to determine your options.
19
<PAGE>
THE MERGER
THIS SUMMARY OF THE MATERIAL TERMS AND PROVISIONS OF THE MERGER AGREEMENT
AND THE STOCK OPTION AGREEMENTS WE'VE ENTERED INTO IN CONNECTION WITH THE MERGER
AGREEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MERGER AGREEMENT AND
THE STOCK OPTION AGREEMENTS. THE MERGER AGREEMENT EXECUTED ON OCTOBER 3, 2000 IS
ATTACHED TO THIS JOINT PROXY STATEMENT-PROSPECTUS AS APPENDIX A, AN AMENDMENT TO
THE MERGER AGREEMENT IS ATTACHED AS APPENDIX A-1, AND THE STOCK OPTION
AGREEMENTS ARE ATTACHED AS APPENDICES B AND C TO THIS DOCUMENT. WE INCORPORATE
EACH OF THOSE DOCUMENTS INTO THIS SUMMARY BY REFERENCE.
The Firstar board and the U.S. Bancorp board have each unanimously approved
the merger agreement, which provides for combining our companies through the
merger of Firstar into U.S. Bancorp at the completion of the merger, with U.S.
Bancorp as the surviving corporation.
Pursuant to the exchange ratio set forth in the merger agreement, each share
of U.S. Bancorp common stock issued and outstanding at the effective time of the
merger will be converted into the right to receive 1.265 shares of common stock
of the combined company. Each share of Firstar common stock issued and
outstanding at the effective time will become one share of common stock of the
combined company.
BACKGROUND OF THE MERGER
The Firstar board and its executive committee are periodically updated by
Firstar management and Firstar's outside advisors regarding conditions in the
market for financial services and the range of strategic options potentially
available from time to time to Firstar, including various business combination
scenarios and potential opportunities. In view of competitive developments and
the trend toward consolidation in the financial services industry, Firstar has
over time considered, among a range of other possible alternatives and as a part
of its regular reviews of strategic options, the potential strategic
implications of various business combinations, including a combination with U.S.
Bancorp. The U.S. Bancorp board frequently discusses, in consultation with its
management and outside advisors, the company's strategic options, including
potential business combinations. These discussions take into account the process
of consolidation, competitive considerations and other developments in the
financial services industry. Over time, a variety of possible business
combinations were discussed, including a combination with Firstar. From time to
time, Jerry A. Grundhofer, President and Chief Executive Officer of Firstar, and
John F. Grundhofer, Chairman, President and Chief Executive Officer of U.S.
Bancorp, have had informal discussions regarding their respective companies and
the general conditions prevailing in the market for financial services. On
occasion, as part of their informal discussions, Jerry and John Grundhofer spoke
in general terms about the possibility of an alliance or business combination
between their two companies, although these discussions did not lead to
substantive merger discussions.
In mid-September, 2000, Jerry and John Grundhofer spoke again regarding a
possible business combination. Each indicated interest in the potential benefits
of a combination between their companies and it was determined that it would
make sense to explore a possible combination in greater detail. Each then spoke
with legal counsel regarding these discussions and the process that should be
used if such discussions should lead to serious negotiations regarding a
possible business combination. After further consultation with legal counsel,
the U.S. Bancorp board determined that, in view of the familial relationship
between John and Jerry Grundhofer, a special process should be followed to
minimize the potential for the appearance of any conflict of interest. This
process included the formation of a special committee of outside directors of
the U.S. Bancorp board to oversee negotiations regarding any potential business
combination, including the exchange ratio and other terms of any merger
agreement and any employment agreement for John Grundhofer. The U.S. Bancorp
special committee, which consisted of four outside directors, determined that
John Grundhofer should not participate in these negotiations or in the due
diligence process. Based on similar considerations,
20
<PAGE>
Firstar determined to put in place a process in which Jerry Grundhofer would not
be involved in the negotiation of any employment contract into which John
Grundhofer might enter in connection with the execution of a merger agreement
(and that instead the negotiation of any such contract would be handled for
Firstar by a team consisting of the compensation committee of the Firstar board
and representatives of Arthur Andersen, consultants to Firstar). Additionally,
it was determined that Jerry Grundhofer would not participate in Firstar's due
diligence investigation of U.S. Bancorp except for a final review of the due
diligence reports containing the conclusions and recommendations of other
Firstar senior executives.
On September 28, the exchange ratio and certain governance and other terms
of a potential business combination were discussed and negotiated among senior
executives of Firstar and U.S. Bancorp (other than John Grundhofer) and
representatives of Credit Suisse First Boston, on behalf, and at the direction,
of Firstar, and representatives of Goldman Sachs, on behalf, and at the
direction, of U.S. Bancorp.
On September 29, the U.S. Bancorp special committee met with the executives
of U.S. Bancorp and the Goldman Sachs representatives who had participated in
discussions with Firstar and its representatives, as well as U.S. Bancorp's
special counsel, Sullivan & Cromwell. The special committee received a report on
the discussions and then discussed the parameters for further discussions and
negotiations of the terms of the proposed merger with Firstar as well as the
plan for proceeding with full due diligence. The special committee also reviewed
a term sheet regarding a proposed employment agreement for John Grundhofer
prepared by Firstar and, after discussion and modification, instructed counsel
to contact John Grundhofer to determine the general acceptability of the term
sheet.
Following conversations between representatives of U.S. Bancorp and Firstar
later on September 29, tentative agreement was reached on an exchange ratio of
1.265, subject to the satisfactory negotiation of the other terms of the merger
and definitive documentation. Also on September 29, 2000, counsel for Firstar
and U.S. Bancorp began negotiating the terms of a definitive merger agreement
and of mutual stock option agreements. On September 30 and October 1, 2000,
teams from each company met to conduct due diligence investigations and
management interviews. The U.S. Bancorp special committee met again late on
October 1, reviewed the status of ongoing negotiations and due diligence, was
informed by counsel that John Grundhofer had indicated to counsel his general
acceptance of the basic terms of the employment agreement that had been
negotiated to date, suggested certain changes in the employment agreement and
instructed the responsible U.S. Bancorp executives to continue the process.
Negotiations of the terms of definitive agreements continued through October 3,
2000.
On October 3, 2000, the executive committee of the Firstar board met. Jerry
Grundhofer explained the background of the proposed transaction and the process,
put in place with the assistance of counsel, under which the negotiations had
taken place. He also reviewed with the executive committee the terms of the
proposed transaction with U.S. Bancorp, as well as a business and financial
analysis of each of Firstar and U.S. Bancorp and of a combined company if a
merger were to be completed. Representatives of Credit Suisse First Boston then
presented a comprehensive analysis of the proposed merger and informed the
executive committee that Credit Suisse First Boston was prepared to render to
the Firstar board its opinion that the exchange ratio in the proposed merger was
fair, from a financial point of view, to Firstar stockholders. Members of
Firstar senior management then summarized for the executive committee the
results of Firstar's due diligence investigation of U.S. Bancorp, and
representatives of Wachtell, Lipton, Rosen & Katz summarized the terms of the
proposed definitive merger agreement and stock option agreements. Following
discussion among and questions by the members of the executive committee, the
executive committee voted unanimously to recommend that the full Firstar board
approve the proposed merger. Later on October 3, 2000, the full Firstar board
met. Jerry Grundhofer and representatives of Credit Suisse First Boston,
Wachtell, Lipton, Rosen & Katz and senior management of Firstar made
presentations covering the subject matter that
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<PAGE>
had been presented earlier to the executive committee. In addition, Credit
Suisse First Boston rendered its oral opinion, subsequently confirmed in
writing, to the Firstar board that, based upon and subject to the matters
discussed in its written opinion, the exchange ratio in the merger was fair,
from a financial point of view, to Firstar stockholders, and representatives of
Wachtell, Lipton, Rosen & Katz discussed the legal principles applicable to the
consideration by the Firstar board of the proposed merger and any decision it
might make with respect to the proposed merger, as well as certain technical
drafting points on the definitive documents remaining to be resolved with U.S.
Bancorp. The Firstar compensation committee and a representative of Arthur
Andersen then discussed with the Firstar board the proposed terms of an
employment agreement with John Grundhofer that had been negotiated in
contemplation of entering into the merger agreement. Following discussions among
and questions by the members of the Firstar board, the Firstar board voted
unanimously to adopt the proposed merger agreement and approved the transactions
and other agreements contemplated thereby, including the proposed stock option
agreements and the employment agreement with John Grundhofer.
On the evening of October 3, the full U.S. Bancorp board met. Presentations
were made by the senior executives of U.S. Bancorp who had participated in the
negotiations and managed the due diligence process. The presentations included a
report on the history of the discussions between the companies, a report on the
economic, governance and other issues of the proposed business combination,
analyses of the financial condition and prospects and businesses of U.S.
Bancorp, Firstar and a combined company and the results of due diligence.
Representatives of Goldman Sachs presented an analysis of the proposed
transaction and rendered an oral opinion to the U.S. Bancorp board to the effect
that, as of October 3, 2000, the exchange ratio in the merger was fair, from a
financial point of view, to U.S. Bancorp stockholders (other than Firstar).
Representatives of Sullivan & Cromwell discussed the legal principles applicable
to the consideration by the U.S. Bancorp board of the proposed merger, described
certain regulatory and timing issues and described the terms of the proposed
definitive merger agreement, stock option agreements and the employment
agreement, as well as certain technical drafting points on the definitive
documents remaining to be resolved with Firstar. Based on, among other things,
the various factors discussed below under "--Recommendation of the U.S. Bancorp
Board and U.S. Bancorp's Reasons for the Merger," after discussions among and
questions by the members of the U.S. Bancorp board, and upon recommendation of
the special committee, the U.S. Bancorp board voted unanimously to adopt the
proposed merger agreement and approved the transactions and other agreements
contemplated thereby, including the proposed stock option agreements.
After the U.S. Bancorp board meeting adjourned, the final drafting points of
the definitive documents were resolved, and during the evening of October 3,
2000, the parties entered into the merger agreement, the stock option agreements
and the employment agreement. On October 23, 2000, the parties entered into an
amendment to the merger agreement concerning the specific provisions of the
certificate of incorporation and by-laws of the surviving corporation.
RECOMMENDATION OF THE FIRSTAR BOARD AND FIRSTAR'S REASONS FOR THE MERGER
THE FIRSTAR BOARD BELIEVES THAT THE MERGER IS FAIR TO, AND IN THE BEST
INTERESTS OF, FIRSTAR AND FIRSTAR STOCKHOLDERS. ACCORDINGLY, THE FIRSTAR BOARD
HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT
THE FIRSTAR STOCKHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
We believe that the merger presents a unique opportunity to combine two of
the nation's leading financial institutions to create a premier banking and
financial services company with the capability to offer a full range of
financial products and services through a powerful western and midwestern
distribution network.
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<PAGE>
In reaching our decision to approve the merger agreement and the stock
option agreements, we consulted with our management, as well as with Firstar's
financial and legal advisors, and considered a variety of factors, including the
following:
- our knowledge of Firstar's business, operations, financial condition,
earnings, asset quality and prospects;
- the business, operations, financial condition, earnings, asset quality and
prospects of U.S. Bancorp. In making this determination, we took into
account the results of Firstar's due diligence review of U.S. Bancorp;
- the consistency of the merger with our business strategy, including
maintaining strong earnings growth and being a low-cost provider of
financial services;
- the unique strategic opportunity presented by a merger of Firstar and U.S.
Bancorp to establish one of the top ten bank holding companies in the
United States, ranked by total assets, creating critical mass in core
business lines;
- our expectation that the combined company would benefit from significantly
greater scale than either Firstar or U.S. Bancorp separately in its
consumer banking, commercial banking, asset management, payment systems
and in other high-growth specialty businesses, from a more diversified
revenue stream and from leveraging Firstar's business model through the
U.S. Bancorp franchise, including its faster-growing retail markets;
- while there can be no assurances as to future results, our expectation of
the financial impact of combining our companies, including the pro forma
capital and financial ratios of the combined company, the expectation that
the merger would enhance Firstar's earnings per share immediately upon
completion, that approximately $266 million in annual pre-tax expense
savings could be fully realized by fiscal year 2004 and that the combined
company would incur a pre-tax restructuring charge of approximately
$800 million, and that, when, as and if declared by the board of directors
of the combined company, the annual cash dividend per share of common
stock of the combined company would be increased to $.75 after completion
of the merger;
- the complementary nature of the businesses and geographical footprint of
Firstar and U.S. Bancorp;
- our belief and that of Firstar senior management that Firstar and U.S.
Bancorp share a common vision about the importance of delivering financial
performance and stockholder value and that management and employees of
Firstar and U.S. Bancorp possess complementary skills and expertise;
- the structure of the merger and the terms of the merger agreement and the
stock option agreements, including the fact that the merger is intended to
qualify as a reorganization under Section 368(a) of the U.S. Internal
Revenue Code and for pooling-of-interests accounting treatment;
- the proposed arrangements with members of management of Firstar and U.S.
Bancorp, including the fact that Jerry Grundhofer would become the
President and Chief Executive Officer of the combined company; that John
Grundhofer would become Chairman of the board of the combined company;
that John Grundhofer would enter into an employment agreement with Firstar
in connection with the merger; and that the board of the combined company
would be comprised of 14 directors designated by Firstar and 11 directors
designated by U.S. Bancorp. See "--Interests of Certain Persons in the
Merger" and "Management and Operations After the Merger";
- the familial relationship between John Grundhofer and Jerry Grundhofer and
the process put in place by the parties to mitigate any potential or
perceived conflict of interest;
23
<PAGE>
- the opinion of Credit Suisse First Boston that, as of October 3, 2000 and
based upon and subject to the matters discussed in its written opinion,
the 1.265 exchange ratio set forth in the merger agreement was fair from a
financial point of view to Firstar stockholders. See "--Opinion of
Firstar's Financial Advisor";
- the anticipated effect of the merger on compensation, benefits and
incentives provided to employees under various employment-related
agreements, plans and programs. See "--Interests of Certain Persons in the
Merger"; and
- the likelihood that the merger will be approved by the appropriate
regulatory authorities. See "--Regulatory Approvals Required for the
Merger." In this connection, we considered the amount of divestitures of
assets and deposit liabilities that is likely to be required by regulatory
authorities in connection with the merger.
This discussion of the information and factors considered by the Firstar
board is not intended to be exhaustive but includes all material factors the
board considered. In reaching the determination to approve and recommend the
merger, the Firstar board did not assign any relative or specific weights to the
foregoing factors, and individual directors may have given differing weights to
different factors. The Firstar board is unanimous in its recommendation that
Firstar stockholders vote for approval of the merger agreement.
RECOMMENDATION OF THE U.S. BANCORP BOARD AND U.S. BANCORP'S REASONS FOR THE
MERGER
AFTER CAREFUL CONSIDERATION, THE U.S. BANCORP BOARD DETERMINED THAT THE
MERGER AGREEMENT IS ADVISABLE AND IN THE BEST INTERESTS OF U.S. BANCORP AND ITS
STOCKHOLDERS. ACCORDINGLY, THE U.S. BANCORP BOARD HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE U.S. BANCORP STOCKHOLDERS
VOTE FOR ADOPTION OF THE MERGER AGREEMENT.
In reaching our decision to approve the merger agreement and related
transactions, we consulted with our executive management, as well as with our
company's financial and other advisors, and considered a variety of factors,
including the following:
- our knowledge of our company's business, operations, financial condition,
earnings, asset quality and prospects;
- our knowledge of Firstar's business, operations, financial condition,
earnings, asset quality and prospects, which is based in substantial part
on our company's due diligence review of Firstar;
- the position of the combined company as one of the largest banking
organizations in the United States in terms of assets, earnings and market
capitalization and its leading position in its major business lines;
- the opportunities for cost savings and revenue enhancements arising from
the merger. In particular, we took into account the expectations that,
although there can be no assurance as to the achievement or timing of cost
savings and other financial results, approximately $266 million in annual
pre-tax cost savings could be realized by 2004 and the combined company
could generate capital substantially in excess of what was deemed
appropriate;
- the intention, subject to determination by the board of directors of the
combined company in its discretion, to increase the combined company's
annual cash dividend to $0.75 after completion of the merger;
- the integration plans for the merger, the ability to effectuate those
integration plans and the records of Firstar and U.S. Bancorp in
consummating large-scale mergers;
- Firstar's record of credibility with financial analysts;
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<PAGE>
- the opinion of our financial advisor, Goldman Sachs, that, as of October
3, 2000, the exchange ratio set forth in the merger agreement was fair
from a financial point of view to U.S. Bancorp stockholders (other than
Firstar). See "--Opinion of U.S. Bancorp's Financial Advisor";
- the consolidation process in the financial services industry;
- the commitment of both companies to stockholder value;
- the complementary nature of the business lines and geographic markets of
Firstar and U.S. Bancorp;
- the management skills of Firstar and U.S. Bancorp;
- the increasing demands and opportunities of technological advances and the
increasing importance of scale in responding to those opportunities and
demands;
- analyses of other potential merger partners;
- the terms and conditions of the merger agreement and the stock option
agreements, including their reciprocal nature;
- the effect of the U.S. Bancorp stock option agreement on potential bidders
for U.S. Bancorp;
- the leading franchise of the combined company in the midwest and northwest
and the potential for growth in other markets where the combined company
would have a presence;
- various proposed statutory, regulatory and accounting changes, including
the proposed elimination of pooling-of-interests accounting and the
ability to account for the merger as a pooling of interests;
- the anticipated effect of the merger on compensation, benefits and
incentives provided to employees under various employment-related
agreements, plans and programs. See "--Interests of Certain Persons in the
Merger";
- the likelihood that the merger will be approved by the appropriate
regulatory authorities. See
"--Regulatory Approvals Required for the Merger." In this connection, we
considered the amount of divestitures of branches, assets and deposit
liabilities that was likely to be required by regulatory authorities in
connection with merger;
- the expectation that the merger will qualify as a reorganization under
Section 368(a) of the U.S. tax code;
- the expectation that the combined company would incur a pre-tax
restructuring charge of $800 million;
- the board and management structure of the combined company, including the
facts that Jerry Grundhofer would become the President and Chief Executive
Officer of the combined company; that John Grundhofer would become
Chairman of the Board of the combined company; that John Grundhofer would
enter into an employment agreement with Firstar in connection with the
merger; that the board of directors of the combined company would be
comprised of 14 directors designated by Firstar and 11 directors
designated by U.S. Bancorp; and that the senior executives of the combined
company would be comprised of a number of senior executives from each of
the two companies;
- the familial relationship between John Grundhofer and Jerry Grundhofer and
the process put in place by the parties to mitigate any potential or
perceived conflict of interest; and
- the fact that the combined company would have its headquarters in
Minneapolis and would retain the "U.S. Bancorp" name.
25
<PAGE>
The foregoing discussion of the information and factors considered by the U.S.
Bancorp board is not intended to be exhaustive but includes all material factors
considered by the board. In its evaluation of the merger and related
transactions, the U.S. Bancorp board did not find it practicable to and did not
quantify or otherwise assign relative weights to the factors considered in
reaching its determination.
OPINION OF FIRSTAR'S FINANCIAL ADVISOR
Credit Suisse First Boston acted as financial advisor to Firstar in
connection with the merger. Firstar selected Credit Suisse First Boston based on
its experience, expertise and familiarity with Firstar and its business. Credit
Suisse First Boston is an internationally recognized investment banking firm and
is regularly engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, leveraged buyouts, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes.
In connection with Credit Suisse First Boston's engagement, Firstar asked
Credit Suisse First Boston to evaluate the fairness of the exchange ratio to
Firstar stockholders from a financial point of view. At the October 3, 2000
meeting of the Firstar board, Credit Suisse First Boston rendered an oral
opinion that, as of that date, and based upon and subject to various matters
stated in its opinion, the exchange ratio was fair to Firstar stockholders from
a financial point of view. Credit Suisse First Boston confirmed its oral opinion
of October 3, 2000 by delivery of a written opinion dated the same date. The
written opinion is referred to in this joint proxy statement-prospectus as the
Credit Suisse First Boston opinion.
Attached as Appendix E to this joint proxy statement-prospectus is the full
text of the Credit Suisse First Boston opinion, which describes the procedures
followed, assumptions made, matters considered and limitations on the review
undertaken in connection with that opinion. Firstar stockholders should read the
entire Credit Suisse First Boston opinion.
The Credit Suisse First Boston opinion speaks only as of October 3, 2000.
Credit Suisse First Boston has rendered its opinion without considering any fact
or circumstance occurring after October 3, 2000. Subsequent developments may
affect Credit Suisse First Boston's fairness opinion, and Credit Suisse First
Boston does not have any obligation to update, revise or reaffirm its fairness
opinion. The Credit Suisse First Boston opinion is directed to the Firstar
board. It relates only to the fairness of the exchange ratio to Firstar
stockholders from a financial point of view, and does not address any other
aspect of the merger or any related transaction, and does not constitute a
recommendation to Firstar stockholders as to how to vote at the Firstar special
meeting. This summary of the Credit Suisse First Boston opinion is qualified in
its entirety by reference to the full text of that opinion.
In arriving at its opinion, Credit Suisse First Boston:
- reviewed certain publicly available business and financial information
relating to Firstar and U.S. Bancorp as well as the merger agreement and
certain related documents;
- reviewed certain other information relating to Firstar and U.S. Bancorp,
including management's financial information and forecasts of cost savings
to be achieved in the merger provided by Firstar and U.S. Bancorp;
- met with Firstar and U.S. Bancorp management to discuss the businesses and
prospects of the companies;
- considered certain financial and stock market data of Firstar and U.S.
Bancorp and compared that data to similar data about other publicly held
companies in similar businesses;
- considered the financial terms of certain other recent business
combinations and transactions that have recently been effected; and
26
<PAGE>
- considered other information, financial studies, analyses and
investigations and financial, economic and market criteria that Credit
Suisse First Boston deemed relevant.
In connection with its review, Credit Suisse First Boston did not assume any
responsibility for independent verification of any of the foregoing information.
Credit Suisse First Boston relied on this information being complete and
accurate in all material respects and assumed that the definitive merger
agreement conformed, in all respects material to Credit Suisse First Boston's
analysis, to the draft reviewed by it. As to financial forecasts, Credit Suisse
First Boston assumed that these forecasts were reasonably prepared on bases
reflecting the best currently available estimates and judgments of Firstar and
U.S. Bancorp management as to the future financial performance of Firstar and
U.S. Bancorp and as to the cost savings and other potential synergies
anticipated to result from the merger. Firstar informed Credit Suisse First
Boston, and Credit Suisse First Boston assumed, that the merger will be treated
as a tax-free reorganization for federal income tax purposes and accounted for
as a pooling of interests in accordance with GAAP. In addition, Firstar did not
ask Credit Suisse First Boston to make, and Credit Suisse First Boston did not
make, an independent evaluation or appraisal of the assets or liabilities,
contingent or otherwise, of Firstar or U.S. Bancorp, nor was Credit Suisse First
Boston furnished with any evaluations or appraisals of this kind. Firstar placed
no limits on the analysis performed or opinion expressed by Credit Suisse First
Boston.
Credit Suisse First Boston's opinion was necessarily based upon financial,
economic, market and other conditions as they existed and could be evaluated on
the date of the opinion. Credit Suisse First Boston did not express any opinion
as to the actual value of the stock of the combined company when Firstar and
U.S. Bancorp stockholders receive it in the merger or the prices at which the
stock of the combined company will trade subsequent to the merger. Credit Suisse
First Boston was not requested to, and did not, determine or recommend the
specific amount of consideration payable in the merger, which was determined by
arms' length negotiations between Firstar and U.S. Bancorp.
In preparing its opinion, Credit Suisse First Boston performed a variety of
financial and comparative analyses, the material aspects of which are described
below. The summary of Credit Suisse First Boston's analyses described below
should not be taken as a complete description of the analyses underlying the
Credit Suisse First Boston opinion. The preparation of a fairness opinion is a
complex analytic process involving various determinations as to the most
appropriate and relevant methods of financial analyses and the application of
those methods to the particular circumstances. Therefore, such an opinion is not
readily susceptible to summary description. In arriving at its opinion, Credit
Suisse First Boston made qualitative judgements as to the significance and
relevance of each analysis and factor considered by it. Accordingly, Credit
Suisse First Boston believes that its analyses must be considered as a whole and
that selecting portions of its analyses and factors, without considering all
analyses and factors, could create a misleading or incomplete view of the
processes underlying its analyses and the Credit Suisse First Boston opinion.
In its analyses, Credit Suisse First Boston made numerous assumptions with
respect to Firstar, U.S. Bancorp, industry performance, and regulatory, general
business, economic, market and financial conditions and other matters, many of
which are beyond the control of Firstar and U.S. Bancorp. No company,
transaction or business used in these analyses as a comparison is identical to
Firstar, U.S. Bancorp, the combined company or the merger.
Moreover, an evaluation of the results of these analyses is not entirely
mathematical; rather, these analyses involve complex considerations and
judgements concerning financial and operating characteristics and other factors
that could affect the transaction, public trading or other values of the
companies, business segments or transactions being analyzed. The estimates
contained in these analyses and the ranges resulting from any particular
analysis are not necessarily indicative of actual values or predictive of future
results or values, which may be significantly more or less favorable than those
suggested by these analyses. In addition, analyses related to the value of
businesses or securities do not
27
<PAGE>
purport to be appraisals or to reflect the prices at which those businesses or
securities actually may be sold. Accordingly, these analyses and estimates are
inherently subject to substantial uncertainty.
The Credit Suisse First Boston opinion and the financial analyses Credit
Suisse First Boston presented to the Firstar board were among many factors
considered by the board in its evaluation of the merger and should not be viewed
as determinative of the views of the Firstar board or management with respect to
the exchange ratio or the merger.
The following is a summary of the material financial analyses performed by
Credit Suisse First Boston in connection with its opinion delivered to the
Firstar board as of October 3, 2000. Certain of these summaries include
information presented in tabular format. In order to fully understand the
financial analyses used by Credit Suisse First Boston, these tables must be read
together with the accompanying narratives. The tables alone do not constitute a
complete description of the applicable financial analysis. Considering the data
in the tables without considering the full narrative description of the
financial analyses could create a misleading or incomplete view of the financial
analyses Credit Suisse First Boston performed. Unless otherwise noted, all
multiples and ratios in the following analyses were calculated using stock
market data as of September 29, 2000 and reported financial data as of or for
the three month period ended June 30, 2000, annualized where appropriate. All
estimates of future earnings were based on management projections and/or
consensus earnings per share ("EPS") estimates published by First Call. First
Call is an industry service provider of global earnings information based on an
average of earnings estimates published by various investment banking firms.
COMPARABLE COMPANIES ANALYSIS. Credit Suisse First Boston compared selected
stock market and operating data for U.S. Bancorp to corresponding data for peer
companies that Credit Suisse First Boston selected and deemed to be relevant for
this purpose based on their financial, operational and other characteristics.
The U.S. Bancorp peer group consisted of:
- Bank One Corporation
- First Union Corporation
- KeyCorp
- National City Corporation
- The PNC Financial Services Group, Inc.
- SunTrust Banks, Inc.
- Wells Fargo & Company
As reflected in the table below, the comparable company analysis indicated
that U.S. Bancorp trades at a discount to the average of its peer group as
reflected by price to earnings and price to book multiples. In addition, the
table indicates that U.S. Bancorp's operating statistics are superior to the
average statistics for its peers.
<TABLE>
<CAPTION>
PEER
U.S. BANCORP PEER RANGE AVERAGE
------------ ------------------- --------
<S> <C> <C> <C>
Price to:
Estimated 2000 EPS....................................... 10.5x 9.6x - 18.1x 13.2x
Estimated 2001 EPS....................................... 9.4 8.7 - 15.8 11.8
Book Value............................................... 2.11 1.70 - 3.10 2.39
Tangible Book Value...................................... 3.66 2.16 - 5.03 3.27
Net Interest Margin........................................ 4.72% 3.41% - 5.55% 3.90%
Efficiency Ratio........................................... 49.3 55.7 - 64.4 59.2
Return on Assets (ROA)..................................... 1.86 0.95 - 1.89 1.39
Return on Equity (ROE)..................................... 20.2 13.8 - 22.4 18.8
</TABLE>
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<PAGE>
COMPARABLE TRANSACTIONS. Credit Suisse First Boston compared the terms of the
Firstar and U.S. Bancorp merger to similar "merger of equals" transactions. The
market premium, ownership split and board composition were all within the
parameters of the comparable transactions.
<TABLE>
<CAPTION>
BOARD
MARKET PREMIUM OWNERSHIP COMPOSITION
-------------- --------- -----------
<S> <C> <C> <C>
Firstar/U.S. Bancorp.................................... 31.8%(1) 50/50 56/44
Fleet Financial Group Inc./BankBoston Corporation....... 12.9 60/40 55/45
Star Banc Corporation/Firstar........................... 27.1 50/50 56/44
Norwest/Wells Fargo & Company........................... 9.3 47/53 50/50
NationsBank/BankAmerica................................. 0.0 55/45 55/45
Banc One Corporation/First Chicago NBD.................. 6.4 58/42 50/50
Travelers/Citicorp...................................... 7.9 50/50 50/50
</TABLE>
------------------------
(1) Based on Firstar's and U.S. Bancorp's average closing price for the ten
trading days ended September 29, 2000.
In addition, Credit Suisse First Boston reviewed relevant multiples and
premiums for bank acquisitions. Credit Suisse First Boston used two sets of
comparable acquisitions: (1) "large" transactions and (2) "1999-2000"
transactions. The "large" comparable transaction set includes the following:
- U.S. Bancorp/First Bank System, Inc.
- NationsBank Corporation/Barnett Banks, Inc.
- First Union Corporation/CoreStates Financial Corp.
- Star Banc Corporation/Firstar
- SunTrust Banks, Inc./Crestar Financial Corporation
- Fleet Financial Group, Inc./BankBoston Corporation
- Firstar/Mercantile Bancorporation Inc.
The "1999-2000" comparable transaction set includes eight selected
transactions announced in 1999 and 2000 with transaction values in excess of
$1 billion.
The following table compares the implied transaction multiples and premium
for U.S. Bancorp to those of comparable transactions. All multiples were based
on public information at the time of announcement of the particular transaction.
The analysis indicates that the multiples and premium in the Firstar and U.S.
Bancorp merger compare favorably to, or are in line with, those of comparable
transactions.
<TABLE>
<CAPTION>
COMPARABLE
TRANSACTIONS
TRANSACTION --------------------
MULTIPLES LARGE 1999-2000
----------- -------- ---------
<S> <C> <C> <C>
Price to:
Current Year EPS.......................................... 13.0x 21.4x 16.5x
Forward Year EPS.......................................... 11.7 19.8 15.1
Book Value................................................ 2.63 3.99 2.67
Tangible Book Value....................................... 4.55 4.88 3.19
Premium to Market........................................... 32%(1) 29% 29%
</TABLE>
------------------------
(1) Based on Firstar and U.S. Bancorp's last 10-day average trading prices as of
September 29, 2000.
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<PAGE>
DISCOUNTED CASH FLOW ANALYSIS. Credit Suisse First Boston estimated the present
value of the after-tax free cash flows that U.S. Bancorp could produce on a
stand-alone basis through calendar year 2004. Two separate scenarios were used
in the analysis. Under the "street" scenario, consensus EPS estimates from First
Call were used for 2000 and 2001, which were then projected at the consensus
First Call long-term growth rate to arrive at EPS for subsequent years. Under
the "management" scenario, the 2001 First Call EPS estimate was reduced by $0.07
per share and then projected at the First Call long-term growth rate to arrive
at EPS for subsequent years.
The analysis assumed a 6.5% targeted tangible common ratio. The range of
estimated terminal values was calculated by applying multiples ranging from
11.0x to 13.0x to the projected calendar year 2004 net income of U.S. Bancorp.
The resulting cash flows to equity holders were then discounted to present
values using a discount rate of 13%. This analysis indicated an implied equity
reference range of approximately $26.39 to $29.92 per share of U.S. Bancorp
common stock using First Call EPS estimates and $25.80 to $29.21 using
management EPS estimates. In addition, Credit Suisse First Boston considered the
value of future after-tax cash flows that U.S. Bancorp could provide to equity
holders on a change-of-control basis, taking into account the impact of cost
savings, estimated deposit divestitures, and the cost of financing restructuring
charges. The resulting change of control valuations were $27.30 to $30.80 per
share of U.S. Bancorp common stock using First Call EPS estimates and $26.70 to
$30.08 using management EPS estimates. These reference ranges compare favorably
to an implied price per share of U.S. Bancorp common stock of $28.30 based on
the closing price of Firstar common stock on September 29, 2000.
CONTRIBUTION ANALYSIS. Credit Suisse First Boston analyzed the relative
contribution of Firstar and U.S. Bancorp to the combined company's market
capitalization, estimated earnings (with and without cost savings) and selected
balance sheet accounts. The analysis reflects a relatively balanced contribution
between Firstar and U.S. Bancorp across all relevant metrics.
<TABLE>
<CAPTION>
RELATIVE CONTRIBUTION
-----------------------
FIRSTAR U.S. BANCORP
-------- ------------
<S> <C> <C>
Ownership Based on 1.265 Exchange Ratio..................... 50.5% 49.5%
Stand-Alone Market Capitalization........................... 55.9 44.1
Actual 1999 Net Income...................................... 44.8 55.2
Estimated 2000 Net Income................................... 47.3 52.7
Estimated 2001 Net Income................................... 48.3 51.7
Total Loans................................................. 44.1 55.9
Total Assets................................................ 46.4 53.6
Total Deposits.............................................. 50.6 49.4
Common Equity............................................... 43.4 56.6
</TABLE>
MERGER CONSEQUENCES ANALYSIS. Credit Suisse First Boston analyzed the pro forma
effect of the merger on the estimated EPS of Firstar for 2001, 2002, and 2003
based on analysts' consensus estimates as reported by First Call. For U.S.
Bancorp EPS estimates, two scenarios were used. The first scenario used First
Call EPS estimates while the second scenario used the management EPS estimates
previously mentioned.
In performing this analysis, Credit Suisse First Boston considered the
impact of cost savings, estimated deposit divestitures and cost of financing
restructuring charges on pro forma EPS in 2001, 2002 and 2003. Using the First
Call EPS estimates for U.S. Bancorp, Credit Suisse First Boston estimated that
the merger should add 5.3% to Firstar's estimated EPS in 2001, 5.4% in 2002 and
3.7% in 2003. Using management's estimates, Credit Suisse First Boston estimated
that the merger should add 3.7% to Firstar's estimated EPS in 2001, 3.9% in 2002
and 2.2% in 2003.
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<PAGE>
ENGAGEMENT OF CREDIT SUISSE FIRST BOSTON. Under the terms of Credit Suisse
First Boston's engagement, Firstar has agreed to pay Credit Suisse First Boston
a total fee equal to $23 million. Seven million dollars of the fee was payable
upon execution of the merger agreement and the balance is contingent and payable
upon completion of the merger. Firstar has also agreed to indemnify Credit
Suisse First Boston and related persons and entities against various
liabilities, including liabilities under the federal securities laws, arising
out of Credit Suisse First Boston's engagement and to reimburse Credit Suisse
First Boston for its reasonable out-of-pocket expenses, including the reasonable
fees and expenses of its legal counsel, incurred by Credit Suisse First Boston
in connection with its engagement.
In the past, Credit Suisse First Boston and its affiliates have provided
financial advice and services to Firstar in connection with matters unrelated to
this merger for which Credit Suisse First Boston and its affiliates have
required compensation.
In the ordinary course of its business, Credit Suisse First Boston and its
affiliates may actively trade the debt and equity securities of both Firstar and
U.S. Bancorp for Credit Suisse First Boston's and its affiliates' own accounts
and for the accounts of customers and, accordingly, may at any time hold a long
or short position in these securities.
OPINION OF U.S. BANCORP'S FINANCIAL ADVISOR
On October 3, 2000, Goldman Sachs delivered its opinion, subsequently
confirmed in writing, to the U.S. Bancorp board to the effect that, as of that
date and based upon and subject to the considerations set forth in its opinion,
the exchange ratio was fair, from a financial point of view, to U.S. Bancorp
stockholders (other than Firstar).
The full text of the opinion, which sets forth the assumptions made,
procedures followed, matters considered and limits on the review undertaken, is
attached as Appendix D to this joint proxy statement-prospectus. The opinion was
provided to the U.S. Bancorp board for its information and assistance, is
directed only to the fairness of the exchange ratio from a financial point of
view to U.S. Bancorp stockholders and does not constitute a recommendation to
any U.S. Bancorp stockholder as to how such stockholder should vote at the U.S.
Bancorp special meeting. The description of the opinion set forth herein is
qualified in its entirety by reference to Appendix D. U.S. Bancorp stockholders
are urged to read the opinion in its entirety.
In connection with its opinion, Goldman Sachs, among other things:
- reviewed the merger agreement;
- reviewed Annual Reports to Stockholders and Annual Reports on Form 10-K of
Firstar and U.S. Bancorp for the five years ended December 31, 1999;
- reviewed certain interim reports to stockholders and Quarterly Reports on
Form 10-Q of Firstar and U.S. Bancorp;
- reviewed certain other communications from Firstar and U.S. Bancorp to
their respective stockholders;
- reviewed certain internal financial analyses and forecasts for Firstar and
U.S. Bancorp prepared by their respective managements, including certain
cost savings and operating synergies projected by the management of
Firstar to result from the transaction contemplated by the merger
agreement;
- reviewed the impact of certain divestitures projected by the managements
of Firstar and U.S. Bancorp;
- held discussions with members of the senior management of Firstar and U.S.
Bancorp regarding their assessment of the strategic rationale for, and the
potential benefits of, the transaction
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<PAGE>
contemplated by the merger agreement and the past and current business
operations, financial condition and future prospects of their respective
companies;
- reviewed the reported price and trading activity for the common stock of
each of Firstar and U.S. Bancorp;
- compared certain financial and stock market information for Firstar and
U.S. Bancorp with similar information for certain other companies the
securities of which are publicly traded; and
- reviewed the financial terms of certain recent business combinations in
the commercial banking industry specifically and in other industries
generally and performed such studies and analyses as they considered
appropriate.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information discussed with or reviewed by Goldman Sachs and
have assumed such accuracy and completeness for purposes of rendering their
opinion. Firstar had not prepared a forecast of expected future performance
beyond fiscal 2001; accordingly, with the consent of the U.S. Bancorp board,
Goldman Sachs' review with respect to earnings after fiscal 2001 for Firstar,
including the earnings growth estimates of research analysts for such periods,
was limited to discussions with senior management of Firstar and U.S. Bancorp.
Goldman Sachs has assumed that the forecasts prepared by the management of each
of Firstar and U.S. Bancorp, including the cost savings and operating synergies
proposed by Firstar and U.S. Bancorp management, have been reasonably prepared
and reflect the best currently available judgments and estimates of the
managements of Firstar and U.S. Bancorp, and that the synergies will be realized
in the amounts and at the times contemplated thereby. Goldman Sachs is not an
expert in the evaluation of loan and lease portfolios for purposes of assessing
the adequacy of the allowances for losses with respect thereto and assumed, with
the consent of the U.S. Bancorp board, that such allowances for Firstar are in
the aggregate adequate to cover all such losses. In addition, Goldman Sachs did
not review individual credit files nor did Goldman Sachs make an independent
evaluation or appraisal of the assets and liabilities (including any hedge or
derivative positions) of Firstar and U.S. Bancorp or any of their subsidiaries
and have not been furnished with any such evaluation or appraisal. Goldman Sachs
also assumed, with the consent of the U.S. Bancorp board, that the merger will
be accounted for as a pooling of interests under GAAP. Goldman Sachs assumed
that all material governmental, regulatory or other consents and approvals
necessary for the consummation of the transaction contemplated by the merger
agreement will be obtained without any adverse effect on Firstar or U.S. Bancorp
or on the expected benefits of the merger. Goldman Sachs was not requested to
solicit, and did not solicit, interest from other parties with respect to an
acquisition of or a business combination with U.S. Bancorp.
The following is a brief summary of the material financial analyses
presented to the U.S. Bancorp board on October 3, 2000 by Goldman Sachs in
connection with rendering its opinion to the U.S. Bancorp board dated as of
October 3, 2000.
SELECTED COMPANIES ANALYSIS. As part of its October 3, 2000 presentation,
Goldman Sachs reviewed and compared certain financial and stock market
information as well as certain asset, equity
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<PAGE>
and profitability ratios of Firstar and U.S. Bancorp with the following publicly
traded commercial banking organizations:
<TABLE>
<S> <C>
Citigroup Inc. Washington Mutual, Inc.
Bank of America Corporation State Street Corporation
Wells Fargo & Company Northern Trust Corporation
Bank One Corporation The PNC Financial Services Group, Inc.
The Bank of New York Company, Inc. SunTrust Banks, Inc.
Fleet Boston Financial Corporation National City Corporation
First Union Corporation BB&T Financial Corporation
Fifth Third Bancorp Wachovia Corporation
Mellon Financial Corporation JP Morgan Chase (pro forma for the announced
merger of JP Morgan and
Chase Manhattan Corporation)
</TABLE>
The financial data used were as of the latest twelve months ended June 30,
2000 and the market data and earnings estimate were as of September 29, 2000.
Projected earnings per share were based on preceding analysts' estimates from
the Institutional Brokerage Estimate System, or IBES, a data service that
compiles earnings estimates of securities research analysts.
The following table compares information derived by Goldman Sachs with
respect to U.S. Bancorp and Firstar with the medians and averages indicated for
the selected companies:
<TABLE>
<CAPTION>
SELECTED
COMPANIES
-------------------
MEDIAN AVERAGE FIRSTAR U.S. BANCORP
-------- -------- -------- ------------
<S> <C> <C> <C> <C>
Price to projected earnings multiple, based on estimates
of 2000 earnings per share............................. 14.7x 18.3x 14.7x 10.4x
Price to projected earnings multiple, based on estimates
of 2001 earnings per share............................. 12.8x 16.2x 12.8x 9.3x
Projected five-year growth rate of earnings per share.... 12.0% 12.2% 15.0% 11.0%
Price to projected earnings multiple, based on estimates
of 2001 earnings per share to projected five-year
growth rate of earnings per share...................... 1.1x 1.3x 0.9x 0.8x
Tangible common equity as a percentage of tangible
assets................................................. 5.9% 5.8% 6.5% 5.7%
Multiple of price to tangible book value per share....... 3.8x 4.9x 4.6x 3.6x
Return on average assets................................. 1.4% 1.4% 1.8% 1.9%
Return on average common equity.......................... 21.1% 19.3% 21.2% 20.3%
Efficiency ratio (non-interest expense, excluding
amortization of goodwill, divided by the sum of net
interest income and non-interest income)............... 54.8% 53.9% 42.3% 48.8%
Fee income ratio......................................... 44.3% 49.5% 35.1% 47.4%
</TABLE>
EXCHANGE RATIO HISTORY. Goldman Sachs calculated the ratio of the closing
market price per share of U.S. Bancorp common stock to the closing price per
share of Firstar common stock on selected
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<PAGE>
dates and the implied premium to market price (based on the exchange ratio). The
selected dates and the corresponding ratio of stock prices and implied premiums
were:
<TABLE>
<CAPTION>
RATIO OF U.S. BANCORP IMPLIED PREMIUM
COMMON STOCK PRICE TO MARKET
TO FIRSTAR COMMON (BASED ON 1.265
TIME PERIOD STOCK PRICE EXCHANGE RATIO)
----------------------------------------------------------- --------------------- ---------------
<S> <C> <C>
September 29, 2000......................................... 1.017 24.4%
September 28, 2000......................................... 0.970 30.4
September 27, 2000......................................... 0.944 34.0
September 13, 2000......................................... 0.906 39.6
2000 Year to date average.................................. 0.931 35.9
August 1, 2000 to September 29, 2000 average............... 0.906 39.7
</TABLE>
SELECTED TRANSACTION ANALYSIS. Goldman Sachs reviewed publicly available
information for pending and completed merger or acquisition transactions in the
banking industry. The selected transactions reviewed by Goldman Sachs included:
- Chase Manhattan Corporation/JP Morgan & Co., Inc.
- Firstar/Mercantile Bancorporation Inc.
- Fleet Financial Group Inc./BancBoston Corporation
- Wells Fargo & Co./Norwest Corporation
- Bank One Corporation/First Chicago NBD
- NationsBank Corporation/Barnett Banks, Inc.
- Wells Fargo & Co./First Interstate Bancorp
- Chemical Banking Corporation/Chase Manhattan Corporation
- Travelers Group Inc./Citicorp
- First Union Corporation/Corestates Financial Corp.
- NationsBank Corporation/BankAmerica Corporation
The following table compares information with respect to the merger and the
medians and means for the selected transactions:
<TABLE>
<CAPTION>
SELECTED
TRANSACTIONS
-------------------
THE MERGER MEAN MEDIAN
---------- -------- --------
<S> <C> <C> <C>
Multiple of price to book value per share................... 2.7x 3.5x 3.4x
Multiple of price to tangible book value per share.......... 4.5x 4.2x 4.0x
Multiple of price to last twelve months earnings per
share..................................................... 13.4x 20.7x 20.8x
Premium to core deposits.................................... nm 30.5% 32.0%
Premium to market price, based on the target market price
six days prior to the announcement of the transaction..... 24.4% 17.8% 15.8%
</TABLE>
CONTRIBUTION ANALYSIS. Goldman Sachs analyzed and compared the respective
contributions of each of Firstar and U.S. Bancorp to the balance sheet and
income statement of the combined company. Based upon its analysis, Goldman Sachs
derived a range of implied exchange ratios of 1.0168x to 1.6650x with a median
of 1.3398x and a mean of 1.3678x.
PRO FORMA ANALYSES. Goldman Sachs analyzed the pro forma impact of the
merger on earnings per share from the point of view of the holders of both U.S.
Bancorp and Firstar common stock. Based upon earnings and synergies estimates
from the managements of each of U.S. Bancorp and Firstar, this analysis
indicated that the merger would be earnings accretive to holders of Firstar
common stock by 3.6% in 2001, 3.8% in 2002 and 2.1% in 2003. Based upon adjusted
estimates, this analysis indicated that the merger would be earnings dilutive to
holders of U.S. Bancorp common stock by 2.2% in 2001,
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<PAGE>
and accretive by 2.0% in 2002 and 4.4% in 2003. Based upon First Call estimates,
this analysis indicated that the merger would be earnings dilutive to holders of
U.S. Bancorp common stock by 5.0% in 2001 and 1.0% in 2002 and accretive by 1.4%
in 2003. In conducting its analysis, Goldman Sachs used U.S. Bancorp
management's adjusted earning estimates which were less than the then current
First Call and IBES estimates.
DISCOUNTED CASH FLOW ANALYSIS. Goldman Sachs performed a discounted cash
flow analysis to determine a range of present values per share of the U.S.
Bancorp common stock. The range was determined using a dividend discount model,
with all cash flows discounted back to June 30, 2000. In performing this
analysis, Goldman Sachs used projected 2001 earnings per share of $2.42 and
$2.35, representing First Call estimates of earnings per share and U.S. Bancorp
management's adjusted projected earnings per share, respectively, and grew
earnings per share at rates of 9% and 11%. Using discount rates ranging from 8%
to 14%, and terminal price to earnings value multiples ranging from 8.0x to
14.0x, this analysis resulted in a range of net present values from $18.58 to
$43.32 per share of U.S. Bancorp common stock.
OTHER ANALYSES. Goldman Sachs also performed a price to forward earnings
comparison of U.S. Bancorp and Firstar, a comparison of price to the last twelve
months earnings per share for certain historical bank merger transactions and
the S&P regional bank composite, compared projected cost savings for the
selected transactions with those relating to the merger, a pro forma stock price
analysis and a pro forma dividend analysis.
The preceding discussion is a summary of the material financial analyses
that Goldman Sachs performed and presented to the U.S. Bancorp board on
October 3, 2000, but it does not purport to be a complete description of the
analyses performed by Goldman Sachs or of its presentation to the U.S. Bancorp
board. The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. Goldman
Sachs believes that its analyses must be considered as a whole and that
selecting portions of its analyses, without considering the analyses taken as a
whole, would create an incomplete view of the process underlying the analyses
set forth in the U.S. Bancorp opinion. In addition, Goldman Sachs considered the
results of all such analyses and did not assign relative weights to any of the
analyses, so the ranges of valuations resulting from any particular analysis
described above should not be taken to be Goldman Sachs' view of the actual
value of U.S. Bancorp or a combination of Firstar and U.S. Bancorp.
In performing its analyses, Goldman Sachs made numerous assumptions with
respect to industry performance, general business, economic and regulatory
conditions and other matters, many of which are beyond the control of Firstar or
U.S. Bancorp. The analyses performed by Goldman Sachs are not necessarily
indicative of actual values, trading values or actual future results which might
be achieved, all of which may be significantly more or less favorable than
suggested by such analyses. Such analyses were prepared solely as part of
Goldman Sachs' analysis of the fairness of the exchange ratio to U.S. Bancorp
stockholders from a financial point of view and were provided to the U.S.
Bancorp board. No company or transaction used as a comparison in the analyses is
identical to Firstar or U.S. Bancorp or to the merger. The analyses do not
purport to be appraisals or to reflect the prices at which a company might be
sold. Because such estimates are inherently subject to uncertainty, being based
upon numerous factors or events beyond the control of Firstar or U.S. Bancorp,
none of Firstar, U.S. Bancorp, Goldman Sachs or any other person assumes
responsibility if future results or actual values are materially different from
these forecasts or assumptions. In addition, as described above, the opinion was
one of many factors taken into consideration by the U.S. Bancorp board in making
its determination to approve the merger. Consequently, the analyses described
above should not be viewed as determinative of the U.S. Bancorp board's or U.S.
Bancorp management's opinion with respect to the value of U.S. Bancorp or a
combination of Firstar and U.S. Bancorp, or of whether the U.S. Bancorp board or
U.S. Bancorp management would have been willing to agree to a different exchange
ratio. U.S. Bancorp placed no limits on the scope of the analysis performed, or
opinion expressed, by Goldman Sachs.
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<PAGE>
U.S. Bancorp agreed to pay Goldman Sachs a fee of $3,000,000 in cash, which
was payable upon announcement of the merger, a further fee of $4,000,000, which
is payable upon the mailing of this joint proxy statement-prospectus to U.S.
Bancorp stockholders, and an additional fee of $20,000,000 in cash upon
consummation of the merger. In addition, U.S. Bancorp has agreed to reimburse
Goldman Sachs for its reasonable out-of-pocket expenses incurred in connection
with the services provided by it and to indemnify and hold harmless Goldman
Sachs and certain related parties from and against certain liabilities and
expenses, including certain liabilities under the federal securities laws,
incurred in connection with its engagement.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. U.S. Bancorp selected
Goldman Sachs as its financial advisor because Goldman Sachs is a nationally
recognized investment banking firm that has substantial experience in investment
banking in general, including transactions similar to the proposed merger, and
because of its familiarity with, and prior work for, U.S. Bancorp.
Goldman Sachs provides a full range of financial advisory and securities
services and has advised the U.S. Bancorp board that, in the course of its
normal trading activities, it may from time to time effect transactions and hold
securities, including derivative securities, of Firstar or U.S. Bancorp for its
own account and the accounts of customers. Goldman Sachs is familiar with U.S.
Bancorp, having acted as its financial advisor in connection with, and having
participated in certain of the negotiations leading to, the merger agreement.
Goldman Sachs has also provided certain investment banking services to U.S.
Bancorp from time to time, including having acted as co-advisor to First Bank
System, Inc. (the predecessor to U.S. Bancorp) in connection with its merger
with U.S. Bancorp in March 1997; lead manager of a public offering of
$45,000,000 of its floating rate bank notes due 2000 in July 1997; lead manager
of a public offering of $49,000,000 of its floating rate CD notes due 2000 in
August 1998; lead manager of a public offering of $49,000,000 of its floating
rate CD notes due 2001 in September 1998; lead manager of a public offering of
$49,000,000 of floating rate CD notes due 1999 in September 1998. Goldman Sachs
has provided certain investment banking services to Firstar from time to time.
THE MERGER AGREEMENT
This section describes the principal provisions of the merger agreement and
the stock option agreements. Capitalized terms we use here without an express
definition have the meanings given to those terms in those agreements.
Subject to the terms and conditions of the merger agreement, and in
accordance with Wisconsin and Delaware law, at the effective time of the merger,
Firstar will merge into U.S. Bancorp. U.S. Bancorp will be the surviving
corporation and will continue its corporate existence under the laws of
Delaware. When the merger is completed, the separate corporate existence of
Firstar will terminate. The U.S. Bancorp certificate of incorporation will be
the certificate of incorporation of the combined company, and the U.S. Bancorp
by-laws will be the by-laws of the combined company, except that the combined
company's certificate of incorporation will authorize it to issue up to
4 billion shares of common stock, and the by-laws of the combined company will
be amended to provide indemnification provisions more similar to those in the
Firstar by-laws. See "Comparison of Stockholder Rights."
BOARD COMPOSITION OF THE COMBINED COMPANY
When the merger is completed, the board of directors of the combined company
will be comprised of 25 individuals, 11 of whom will be named by U.S. Bancorp
and 14 by Firstar.
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<PAGE>
CONVERSION OF STOCK; TREATMENT OF OPTIONS
U.S. BANCORP COMMON STOCK. At the effective time, each share of U.S. Bancorp
common stock outstanding will be converted into the right to receive 1.265
shares of common stock of the combined company. The exchange ratio is subject to
customary adjustments to preserve the relative value of the consideration U.S.
Bancorp stockholders are to receive in the event of stock splits, reverse stock
splits or the like before the merger is completed as described under
"--Antidilution Adjustments."
FIRSTAR COMMON STOCK. As of the effective time, shares of Firstar common stock
outstanding will be converted into an equal number of shares of common stock of
the combined company. Some shares of Firstar common stock will not be converted
into stock of the combined company. These include shares held by Firstar or U.S.
Bancorp or any of our wholly-owned subsidiaries (except for shares held in trust
accounts, managed accounts and the like, or otherwise held in a fiduciary
capacity that are beneficially owned by third parties (trust account shares) or
shares held by Firstar or U.S. Bancorp or any of our subsidiaries in respect of
a debt previously contracted (DPC shares)). Each outstanding share of U.S.
Bancorp common stock owned by Firstar, U.S. Bancorp or any of our wholly-owned
subsidiaries (other than trust account shares or DPC shares) will be canceled at
the effective time and will cease to exist. No Firstar common stock or other
consideration will be delivered in exchange for these shares. All shares of
Firstar common stock that are owned by U.S. Bancorp or any of its wholly-owned
subsidiaries (other than trust account shares and DPC shares) will become
authorized but unissued shares of common stock of the combined company.
U.S. BANCORP STOCK OPTIONS. Each option to acquire U.S. Bancorp common stock
outstanding and unexercised immediately prior to the effective time will be
converted automatically at the effective time into an option to purchase common
stock of the combined company, with the following adjustments:
- the number of shares of common stock of the combined company subject to
the new option will be equal to the product of the number of shares of
U.S. Bancorp common stock subject to the original option and the exchange
ratio; and
- the exercise price per share of common stock of the combined company
subject to the new option will be equal to the exercise price under the
original option divided by the exchange ratio.
The duration and other terms of each new option will be substantially the
same as the original U.S. Bancorp option. In any event, options that are
incentive stock options under the U.S. tax code will be adjusted in the manner
prescribed by the U.S. tax code.
FIRSTAR STOCK OPTIONS. Each option to acquire Firstar common stock outstanding
and unexercised immediately prior to the effective time will be converted into
an option to acquire common stock of the combined company on the same terms and
conditions in effect immediately prior to the effective time.
ANTIDILUTION ADJUSTMENTS. If, before the effective time, the outstanding shares
of U.S. Bancorp common stock or Firstar common stock are increased, decreased,
changed into or exchanged for a different number or kind of shares or securities
as a result of a reorganization, recapitalization, reclassification, stock
dividend, stock split reverse stock split or other similar change in
capitalization, an appropriate and proportionate adjustment will be made to the
exchange ratio.
EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
EXCHANGE PROCEDURES. After the effective time, we will deposit with an exchange
agent, which will be Firstar Bank, N.A. or another bank or trust company
reasonably acceptable to each of us, certificates
37
<PAGE>
representing the shares of common stock of the combined company and cash in lieu
of any fractional shares to be issued under the merger agreement in exchange for
outstanding shares of U.S. Bancorp common stock. We refer to the fund into which
we deposit the certificates and cash, together with any dividends or
distributions on the fund, as the "exchange fund."
Shortly after the date of the effective time, the exchange agent will mail a
transmittal letter to U.S. Bancorp stockholders. The transmittal letter will
contain instructions about the surrender of U.S. Bancorp common stock
certificates for combined company common stock certificates and any cash in lieu
of fractional shares.
U.S. BANCORP COMMON STOCK CERTIFICATES SHOULD NOT BE RETURNED WITH THE
ENCLOSED PROXY CARD. THEY SHOULD NOT BE FORWARDED TO THE EXCHANGE AGENT UNLESS
AND UNTIL YOU RECEIVE A TRANSMITTAL LETTER FOLLOWING THE EFFECTIVE TIME.
If U.S. Bancorp common stock certificates are presented for transfer after
the effective time, they will be canceled and exchanged for certificates
representing the applicable number of shares of combined company common stock.
Any U.S. Bancorp stockholder that requests that combined company common stock
certificates be issued in a name other than that in which the certificate being
surrendered is registered will have to pay to the exchange agent in advance any
transfer taxes that may be owed.
After the effective time, there will be no transfers on the stock transfer
books of Firstar of shares of Firstar common stock issued and outstanding
immediately prior to the effective time.
NO FRACTIONAL SHARES WILL BE ISSUED. The exchange agent will not issue
fractional shares of common stock of the combined company to you in the merger
(other than fractional shares that would be issued under dividend reinvestment
plans, 401(k) plans and similar employee and stock plans maintained by U.S.
Bancorp prior to the merger). There will be no dividends or voting rights with
respect to any fractional shares. For each fractional share that would otherwise
be issued, the exchange agent will pay cash in an amount equal to the fraction
of a whole share that would otherwise have been issued, multiplied by the
closing sale prices of U.S. Bancorp common stock on the NYSE for the ten trading
days immediately preceding the date of the effective time. No interest will be
paid or accrued on the cash in lieu of fractional shares.
LOST, STOLEN OR DESTROYED U.S. BANCORP COMMON STOCK CERTIFICATES. If you've
lost a certificate representing U.S. Bancorp common stock, or it has been stolen
or destroyed, the exchange agent will issue the consideration properly payable
under the merger agreement on receipt of appropriate evidence of the loss, theft
or destruction and appropriate evidence that you own the certificate. The
exchange agent will also require you to post bond in an amount the combined
company determines is necessary to protect against any claim that may be made
against the combined company about ownership of the lost certificate.
NO ACTION BY FIRSTAR STOCKHOLDERS REQUIRED. Firstar stockholders will not be
required to exchange certificates representing their shares of Firstar common
stock or otherwise take any action as a result of the completion of the merger.
YOU DO NOT NEED TO SUBMIT SHARE CERTIFICATES FOR FIRSTAR COMMON STOCK TO
FIRSTAR, U.S. BANCORP, THE EXCHANGE AGENT OR TO ANY OTHER PERSON IN CONNECTION
WITH THE MERGER.
For a description of the common stock of the combined company and a
description of the differences between the rights of U.S. Bancorp stockholders
and Firstar stockholders, see "Capital Stock of the Combined Company" and
"Comparison of Stockholder Rights."
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EFFECTIVE TIME
The effective time of the merger will be the time set forth in the legal
documents that we will file with the Wisconsin Department of Financial
Institutions and with the Secretary of State of the State of Delaware,
respectively, on the closing date of the merger. We will close the merger on a
date on which each of us agrees, but in any case no later than five business
days after the satisfaction or waiver (where waiver is legally permissible) of
the last remaining condition to the merger unless extended by our mutual
agreement. See "--Conditions to Completion of the Merger."
We anticipate that we will complete the merger during the fiscal quarter
ending March 31, 2001. However, completion could be delayed if there is a delay
in obtaining the necessary regulatory approvals. There can be no assurances as
to if or when these approvals will be obtained or that the merger will be
consummated. If we don't complete the merger by July 3, 2001, either of us may
terminate the merger agreement unless the failure to complete the merger by this
date is due to the failure of the party seeking to terminate the merger
agreement to perform or observe its obligations under the merger agreement. See
"--Conditions to Completion of the Merger" and "--Regulatory Approvals Required
for the Merger."
REPRESENTATIONS AND WARRANTIES
The merger agreement contains representations and warranties of Firstar, on
the one hand, and U.S. Bancorp, on the other hand, as to, among other things:
- the corporate organization and existence of each party and its
subsidiaries;
- the capitalization of each party and its subsidiaries;
- the corporate power and authority of each party;
- the compliance of the merger agreement with:
- the certificate of incorporation and by-laws of each party,
- applicable law, and
- material agreements, instruments or obligations;
- governmental approvals;
- regulatory investigations and orders;
- each party's financial statements and filings with the SEC;
- each party's brokers' fees;
- the absence of material changes in each party's business since June 30,
2000;
- the absence of material legal proceedings and injunctions;
- the filing and accuracy of each party's tax returns;
- each party's employee benefit plans and related matters;
- the availability and accuracy of each party's reports and filings with the
SEC;
- each party's compliance with applicable law;
- the validity of, and the absence of material defaults under, various
contracts;
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- the absence of undisclosed liabilities;
- insurance;
- the inapplicability to the merger of state anti-takeover laws,
anti-takeover provisions in our charters and our stockholder rights plans;
and
- the tax and accounting treatment of the merger.
CONDUCT OF BUSINESS PENDING THE MERGER
Under the merger agreement, prior to the effective time, each of us has
agreed to, and to cause our subsidiaries to:
- conduct its business in the ordinary course;
- use reasonable best efforts to maintain and preserve intact its business
organization, employees and advantageous business relationships and to
retain the services of its key officers and key employees; and
- take no action that would adversely affect or delay the ability of either
of us to obtain the necessary approvals of any regulatory agency or other
governmental entity or to perform our covenants and agreements under the
merger agreement or the stock option agreements, or to consummate the
transactions they contemplate.
In addition, except as expressly contemplated by the merger agreement or as
disclosed prior to signing the merger agreement, or as contemplated by the stock
option agreements, each of us has agreed that, without the consent of the other
party, we and our subsidiaries will not, among other things:
- other than in the ordinary course of business, incur any indebtedness for
borrowed money other than short-term indebtedness incurred to refinance
short-term indebtedness and indebtedness between us and one of our
wholly-owned subsidiaries; assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other
individual, corporation or other entity; or make any loan or advance;
- adjust, split, combine or reclassify any of our capital stock;
- make, declare or pay any dividend or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any shares
of its capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, except for:
- in the case of U.S. Bancorp, regular quarterly cash dividends on U.S.
Bancorp common stock at a rate not in excess of $0.215 per share of U.S.
Bancorp common stock,
- in the case of Firstar, regular quarterly cash dividends at a rate not in
excess of $0.1625 per share of Firstar common stock, and
- dividends paid by any of the subsidiaries of each of Firstar and U.S.
Bancorp to Firstar or U.S. Bancorp or any of their subsidiaries,
respectively;
- with limited exceptions, grant any stock appreciation rights or grant any
right to acquire any shares of its capital stock;
- issue any additional shares of capital stock except as a result of:
- the exercise of stock options (or related reload options) outstanding as
of the date of the merger agreement, or
- under the stock option agreements;
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- sell, transfer, mortgage, encumber or otherwise dispose of any material
part of its business or any of its properties or assets to any individual,
corporation or other entity other than a subsidiary, or cancel, release or
assign any indebtedness to any such person or any claims held by any such
person, except in the ordinary course of business or under contracts or
agreements in force at the date of the merger agreement;
- except for transactions in the ordinary course of business or under
contracts or agreements in force at the date of or permitted by the merger
agreement, make any material investment, either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of
any property or assets, in any other individual, corporation or other
entity other than a subsidiary of that corporation or entity;
- except for transactions in the ordinary course of business, terminate, or
waive any material provision of, any of its material contracts or
agreements, or make any change in any instrument or agreement governing
the terms of any of its securities, or material lease or contract, other
than normal renewals of contracts and leases without material adverse
changes of terms;
- other than in the ordinary course of business or as required by agreements
in force at the date of the merger agreement, increase in any manner the
compensation or fringe benefits of any of its employees or directors or
pay any pension or retirement not required by any existing plan or
agreement to any of its employees or directors or become a party to, amend
or commit itself to any pension, retirement, profit-sharing, consulting,
change of control, severance or welfare benefit plan or agreement or
employment agreement with or for the benefit of any employee or directors
or accelerate the vesting of, or the lapsing of restrictions with respect
to, any stock options or other stock-based compensation;
- solicit or encourage from any third party or enter into any negotiations,
discussions or agreement in respect of, or authorize any individual,
corporation or other entity to solicit or encourage from any third party
or enter into any negotiations, discussions or agreement in respect of, or
provide or cause to be provided any confidential information in connection
with, any inquiries or proposals relating to the disposition of all or
substantially all of its business or assets, or the acquisition of its
voting securities, or the merger or consolidation of it or any of its
subsidiaries with any corporation or other entity other than as provided
by the merger agreement (and each party has discontinued any such
negotiations or discussions initiated prior to the date of the merger
agreement, and will promptly notify the other of all of the relevant
details relating to all inquiries and proposals that it may receive
relating to any of these matters). Either party may, however, and may
permit its employees, agents and representatives to, furnish confidential
information and participate in otherwise prohibited negotiations or
discussions to the extent that doing so is necessary to comply with its
and its directors' fiduciary duties, so long as it enters into a
confidentiality agreement (with terms at least as favorable to it as the
confidentiality agreement between Firstar and U.S. Bancorp) before
providing any non-public information to the third party in question;
- settle any material claim, action or proceeding involving money damages,
except in the ordinary course of business, or involving any restriction on
the conduct of its business;
- knowingly take any action that would prevent or impede the merger from
qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the U.S. tax code;
- amend its certificate of incorporation or its by-laws;
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- other than in consultation with the other party, materially restructure or
change its investment securities portfolio or its gap position, through
purchases, sales or otherwise, or the manner in which the portfolio is
classified or reported;
- take any action that is intended or expected to result in any of the
conditions to the merger not being satisfied or in a violation of any
provision of the merger agreement, except, in every case, as may be
required by applicable law;
- implement or adopt any change in its accounting principles, practices or
methods, other than as may be required by GAAP or regulatory guidelines;
- file or amend any tax return except in the ordinary course of business
consistent with past practice, settle or compromise any material tax
liability, make, change or revoke any material tax election, or change any
method of tax accounting except as required by applicable law; or
- agree to take, make any commitment to take, or adopt any resolutions of
its board of directors in support of, any of the actions listed above.
OTHER AGREEMENTS
In addition to the agreements about the conduct of our businesses we've
described above, we have also agreed in the merger agreement to take several
other actions:
- we agreed to cooperate with each other and to use our reasonable best
efforts to promptly prepare and file all necessary documentation to obtain
as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and governmental entities necessary or
advisable to consummate the merger;
- we agreed, upon request, to provide each other all information concerning
ourselves and our subsidiaries, directors, officers and stockholders and
other matters as may be necessary or advisable in connection with this
document, or any other filing necessary in connection with the merger;
- we agreed to give each other access to all of our properties, books,
contracts, commitments and records, to provide information about our
businesses, properties and personnel and to keep that information
confidential;
- we agreed to use our reasonable best efforts to take all actions
necessary, proper or advisable to comply promptly with all legal
requirements that may be imposed on either of us or our subsidiaries
relating to the merger and to consummate the merger;
- in order to assure compliance with securities laws and requirements for
pooling-of-interests accounting treatment, we agreed to use our reasonable
best efforts to cause each of our respective directors, executive officers
and other affiliates to deliver to each other a written agreement
restricting the ability of such person to sell, pledge, transfer or
otherwise dispose of any U.S. Bancorp common stock or Firstar common stock
held by such person;
- U.S. Bancorp agreed to cause the shares of common stock of the combined
company to be issued in the merger to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the effective time; and
- we agreed that, upon completion of the merger, the combined company will
indemnify and hold harmless all past and present officers, directors and
employees of Firstar, U.S. Bancorp and their subsidiaries to the fullest
extent permitted by law. We also agreed that the combined company will
maintain for a period of six years after completion of the merger the
directors' and officers' liability insurance policies currently maintained
by U.S. Bancorp, or policies with a
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substantially comparable insurer, of at least the same coverage and
amounts containing forms and conditions that are no less advantageous to
the insured, with respect to claims arising from facts or events that
occurred on or before completion of the merger.
Also, we have agreed on the following points concerning employee benefit
plans:
- we agreed that the employee benefit plans in place at the effective time
covering employees of Firstar and U.S. Bancorp will remain in effect for
these employees until the combined company adopts the new benefit plans
covering employees of the combined company;
- we will cooperate in reviewing, evaluating and analyzing the Firstar
employee benefit plans and the U.S. Bancorp employee benefit plans in
order to develop appropriate new benefit plans;
- after the merger is completed, the combined company will recognize
employees' prior service with Firstar or U.S. Bancorp or their
subsidiaries for the purposes of benefit plans of the combined company in
which those employees are eligible to participate following the effective
time, for purposes of eligibility, vesting and levels of benefits, but not
for purposes of benefit accruals under any defined benefit pension plan;
- after the merger is completed, the combined company will waive any
pre-existing conditions or limitations and eligibility waiting periods
under any group health plans of the combined company for Firstar and U.S.
Bancorp employees and their eligible dependents;
- after the merger is completed, the combined company will give each Firstar
and U.S. Bancorp employee credit for the plan year in which the merger is
completed toward applicable deductibles and annual out-of-pocket limits
for expenses incurred prior to completion of the merger; and
- the combined company will honor and cause to be paid in accordance with
their terms all benefits vested as of the completion of the merger under
the Firstar and U.S. Bancorp benefit plans, including change-of-control
benefits related to the merger. In connection with the approval of the
merger by the U.S. Bancorp board, the board determined that the
transactions contemplated by the merger agreement will be no more than a
"partial change in control" within the meaning of the U.S. Bancorp Cash
Balance Plan and the Senior Management, Middle Management and Broad-Based
Change in Control Severance Pay Plans and Programs as well as for the
purposes of certain employment arrangements and benefits plans applicable
to executives and non-employee directors. See "--Interests of Certain
Persons in the Merger."
CONDITIONS TO COMPLETION OF THE MERGER
Firstar's and U.S. Bancorp's obligations to complete the merger are subject
to the satisfaction or waiver, where permissible, of the following conditions at
or prior to the effective time:
- the merger agreement and the transactions it contemplates will have been
duly approved by Firstar stockholders and U.S. Bancorp stockholders;
- the shares of common stock of the combined company that are to be issued
upon completion of the merger will have been authorized for listing on the
NYSE, subject to official notice of issuance;
- all regulatory approvals required to consummate the merger will have been
obtained and will remain in full force and effect, and any statutory
waiting periods required by law will have expired;
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- the registration statement of which this document forms a part will have
become effective, no stop order suspending the effectiveness of the
registration statement will have been issued by the SEC, and no
proceedings for that purpose will have been initiated or threatened by the
SEC;
- no order, injunction or decree issued by any court or agency with
jurisdiction, or other legal restraint or prohibition preventing
completion of the merger will be in effect;
- no statute, rule, regulation, order, injunction or decree will have been
enacted, entered, promulgated or enforced by any governmental entity that
materially restricts or makes illegal completion of the merger;
- Firstar will have received the opinion of Wachtell, Lipton, Rosen & Katz,
and U.S. Bancorp will have received the opinion of Sullivan & Cromwell, in
form and substance reasonably satisfactory to Firstar and U.S. Bancorp,
respectively, dated as of the closing date of the merger, substantially to
the effect that, on the basis of facts, representations and assumptions
set forth in each of these opinions that are consistent with the state of
facts existing at the effective time:
- the merger will constitute a reorganization under Section 368(a) of the
U.S. tax code,
- Firstar and U.S. Bancorp will each be a party to the reorganization under
368(b) of the U.S. tax code,
- no gain or loss will be recognized by Firstar or U.S. Bancorp as a result
of the merger, and
- no gain or loss will be recognized by Firstar common stock or U.S.
Bancorp stockholders who exchange all of their Firstar or U.S. Bancorp
common stock solely for common stock of the combined company in the
merger (except with respect to cash received by U.S. Bancorp stockholders
instead of fractional share interests in common stock of the combined
company);
- each of us will have received a letter from our independent accountants to
the effect that the merger will qualify for pooling-of-interests
accounting treatment;
- the representations and warranties of the other party to the merger
agreement will be true and correct in all material respects as of the date
of the merger agreement and (except to the extent that the representations
and warranties speak as of an earlier date) as of the date the merger is
to be completed as though made on that date, except that, for purposes of
this condition, these representations and warranties (except for each
party's representations and warranties as to its capitalization, which
must be true and correct in all material respects) will be deemed to be
true and correct unless the failure of these representations and
warranties to be so true and correct, individually or in the aggregate,
and without giving effect to any qualification as to materiality set forth
in the representations and warranties, would have a material adverse
effect on the other party; and
- the other party to the merger agreement will have performed in all
material respects all obligations required to be performed by it under the
merger agreement at or prior to the closing date.
The merger agreement defines "material adverse effect" as a material adverse
effect on:
- the business, operations, results of operations or financial condition of
U.S. Bancorp, Firstar or the combined company (as the case may be) and its
subsidiaries, taken as a whole, except to the extent the effect is
attributable to the execution and announcement of the merger agreement; or
- the ability of U.S. Bancorp, Firstar or the combined company (as the case
may be) to complete in a timely manner the transactions contemplated by
the merger agreement.
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REGULATORY APPROVALS REQUIRED FOR THE MERGER
We have agreed to use our reasonable best efforts to obtain all regulatory
approvals required to consummate the merger. We refer to these approvals, along
with the expiration of any statutory waiting periods related to these approvals,
as the "requisite regulatory approvals." These include approval from the Federal
Reserve Board and various state regulatory authorities. We intend to complete
the filing of applications and notifications to obtain the requisite regulatory
approvals promptly after the date of this joint proxy statement-prospectus. The
merger cannot proceed in the absence of the requisite regulatory approvals. We
cannot assure you that the requisite regulatory approvals will be obtained, and,
if obtained, we cannot assure you as to the date of any of these approvals or
the absence of any litigation challenging them. Likewise, we cannot assure you
that the DOJ or a state attorney general will not attempt to challenge the
merger on antitrust grounds, or, if such a challenge is made, as to the result
of that challenge.
We are not aware of any other material governmental approvals or actions
that are required prior to the parties' consummation of the merger other than
those described below. We presently contemplate that if any additional
governmental approvals or actions are required, these approvals or actions will
be sought. However, we cannot assure you that any of these additional approvals
or actions will be obtained.
FEDERAL RESERVE BOARD. The merger is subject to approval by the Federal Reserve
Board under the Bank Holding Company Act. Firstar will promptly make the
required filings with the Federal Reserve Board for approval of the merger.
Assuming Federal Reserve Board approval, the merger may not be consummated for
30 days, during which time the DOJ may challenge the merger on antitrust
grounds. With the approval of the Federal Reserve Board and the DOJ, this
waiting period may be reduced to no less than 15 days.
The Federal Reserve Board is prohibited from approving any transaction under
the applicable statutes that would result in a monopoly, or that would be in
furtherance of any combination or conspiracy to monopolize, or to attempt to
monopolize, the business of banking in any part of the United States, or that
may have the effect in any section of the United States of substantially
lessening competition, or tending to create a monopoly, or resulting in a
restraint of trade, unless the Federal Reserve Board finds that the
anti-competitive effects of the transaction are clearly outweighed in the public
interest by the probable effect of the transaction in meeting the convenience
and needs of the communities to be served.
In addition, in reviewing a transaction under the Bank Holding Company Act,
the Federal Reserve Board will consider the financial and managerial resources
of our companies and their subsidiary banks and the convenience and needs of the
communities to be served. As part of its consideration of these factors, we
expect that the Federal Reserve Board will consider the regulatory status of
Firstar and U.S. Bancorp and the overall capital and safety and soundness
standards established by the Federal Deposit Insurance Corporation Improvement
Act of 1991, as amended, and the regulations issued under that statute.
Under the Community Reinvestment Act of 1977, as amended, the Federal
Reserve Board will take into account our records of performance in meeting the
credit needs of our entire communities, including low- and moderate-income
neighborhoods, served by our companies. Each of our banking subsidiaries has
received either an outstanding or a satisfactory rating from its federal
regulator with respect to this criterion.
The Federal Reserve Board will furnish notice and a copy of the application
for approval of the merger to the Office of the Comptroller of the Currency, the
Federal Deposit Insurance Corporation and the appropriate state regulatory
authorities. These agencies have 30 days to submit their views and
recommendations to the Federal Reserve Board. The Federal Reserve Board is
required to hold a
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public hearing in the event it receives a written recommendation of disapproval
of the application from any of these agencies within this 30-day period.
Furthermore, the Bank Holding Company Act and Federal Reserve Board regulations
require published notice of, and the opportunity for public comment on, the
application submitted by Firstar for approval of the merger, and authorize the
Federal Reserve Board to hold a public hearing or meeting if the Federal Reserve
Board determines that a hearing or meeting would be appropriate. Any hearing or
meeting or comments provided by third parties could prolong the period during
which the application is under review by the Federal Reserve Board.
If the DOJ were to commence an antitrust action, that action would stay the
effectiveness of Federal Reserve Board approval of the merger unless a court
specifically orders otherwise. In reviewing the merger, the DOJ could analyze
the merger's effect on competition differently than the Federal Reserve Board,
and thus it is possible that the DOJ could reach a different conclusion than the
Federal Reserve Board regarding the merger's competitive effects. In particular,
the DOJ may focus on the impact of the merger on competition for loans and other
financial services to small and middle market businesses. Failure of the DOJ to
object to the merger may not prevent the filing of antitrust actions by private
persons or state attorneys general.
Our rights to exercise our options under the stock option agreements are
also subject to the prior approval of the Federal Reserve Board, to the extent
that the exercise of these options would result in one of us owning more than 5%
of the outstanding shares of common stock of the other. We have filed or intend
to file the required applications with the Federal Reserve Board for approval of
the exercise of each of our options under the relevant stock option agreement.
In considering whether to approve either company's right to exercise its option,
including its right to purchase more than 5% of the outstanding shares of the
other company's common stock, the Federal Reserve Board would generally apply
the same statutory criteria it would apply to its consideration of approval of
the merger.
We anticipate that we will need to make divestitures in the
Minneapolis/St. Paul area in order to avoid a determination by the Federal
Reserve Board or the DOJ that the merger would have a significantly adverse
competitive affect in that market. Although there can be no assurances, we do
not believe that the divestitures will have a material negative effect on the
combined company. Under Federal Reserve Board policy, the merger cannot be
completed until there is an executed definitive agreement for the divestitures.
OTHER REGULATORY AUTHORITIES. Applications or notifications are being filed
with various state and/or foreign regulatory authorities and self-regulatory
organizations in connection with acquisitions or changes in control of
subsidiaries of Firstar and/or U.S. Bancorp, including banks, broker-dealers and
insurance subsidiaries, that may be deemed to result from the consummation of
the merger. In addition, the merger may be reviewed by the attorneys general in
the various states in which Firstar and U.S. Bancorp own banking subsidiaries.
These authorities may be empowered under the applicable state laws and
regulations to investigate or disapprove the merger under the circumstances and
based upon the review provided for in applicable state laws and regulations.
ANTITRUST. Because the merger involves activities that are not subject to
review by the Federal Reserve Board under Sections 3 and 4 of the Bank Holding
Company Act, it will be partially subject to the HSR Act, and the parties will
be required to file premerger notification and report forms with respect to such
activities with the FTC and the Antitrust Division of the DOJ. A transaction or
portion of a transaction that is notifiable under the HSR Act may not be
consummated until the expiration of a 30 calendar-day waiting period, or the
early termination of that waiting period, following the filing of premerger
notification and report forms by the parties with the FTC and DOJ. If either the
FTC or the DOJ were to request additional information or documentary material
with respect to the merger from the parties prior to the expiration of the
waiting period, the waiting period would expire at 11:59 p.m., New York City
time, on the 20th calendar day after the date of substantial compliance with
that request. At any time before or after the merger and the exchange of shares,
the FTC or the DOJ
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could take whatever action under the antitrust laws it deems necessary or
desirable in the public interest, including seeking to enjoin the merger or the
exchange of shares, or seeking a divestiture of shares or assets.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material anticipated U.S. federal income
tax consequences of the merger to stockholders who hold Firstar common stock or
U.S. Bancorp common stock as a capital asset. The summary is based on the U.S.
tax code, regulations of the U.S. Treasury Department under the U.S. tax code,
administrative rulings and court decisions, in each case as in effect as of the
date of this joint proxy statement-prospectus, all of which are subject to
change at any time, possibly with retroactive effect. This summary is not a
complete description of all of the tax consequences of the merger. In
particular, this summary may not address U.S. federal income tax considerations
applicable to you if you are a member of a class of stockholders subject to
special treatment under U.S. federal income tax law, including, for example:
- non-residents of the United States for U.S. federal income tax purposes
- financial institutions
- dealers in securities
- traders in securities that elect to apply a mark-to-market method of
accounting
- insurance companies
- tax-exempt entities
- holders that acquired their shares of Firstar common stock or U.S. Bancorp
common stock through exercise of an employee stock option or right, or
otherwise as compensation
- holders that hold Firstar common stock or U.S. Bancorp common stock as
part of a hedge, straddle, constructive sale or conversion transaction
In addition, we do not provide any information in this joint proxy
statement-prospectus about the tax consequences of the merger under applicable
foreign, state or local laws.
WE URGE YOU TO CONSULT WITH YOUR TAX ADVISORS ABOUT THE PARTICULAR TAX
CONSEQUENCES OF THE MERGER TO YOU, INCLUDING THE EFFECTS OF U.S. FEDERAL, STATE
OR LOCAL, OR FOREIGN AND OTHER TAX LAWS.
In connection with the filing of the registration statement with the SEC,
Wachtell, Lipton, Rosen & Katz, counsel to Firstar, and Sullivan & Cromwell,
counsel to U.S. Bancorp, have delivered to Firstar and U.S. Bancorp,
respectively, their opinions, dated the date of this joint proxy statement-
prospectus, addressing the U.S. federal income tax consequences of the merger
described below. Those opinions have been rendered on the basis of facts,
representations and assumptions set forth or referred to in the opinions. In
rendering these opinions, Wachtell, Lipton, Rosen & Katz and Sullivan & Cromwell
required and relied upon representations contained in certificates of officers
of Firstar and U.S. Bancorp. The opinions are to the effect that, for U.S.
federal income tax purposes:
- the merger will constitute a reorganization within the meaning of
Section 368(a) of the U.S. tax code;
- Firstar and U.S. Bancorp will each be a party to the reorganization within
the meaning of Section 368(b) of the U.S. tax code;
- neither Firstar nor U.S. Bancorp will recognize any gain or loss as a
result of the merger other than mark-to-market gains and losses recognized
upon the close of U.S. Bancorp's taxable year; and
- no gain or loss will be recognized by Firstar stockholders or U.S. Bancorp
stockholders that exchange all of their Firstar common stock or U.S.
Bancorp common stock solely for common stock of the combined company in
the merger (except with respect to cash received by U.S.
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Bancorp stockholders instead of fractional share interests in common stock
of the combined company).
We will not be obligated to complete the merger unless Firstar receives a
further opinion of Wachtell, Lipton, Rosen & Katz and U.S. Bancorp receives a
further opinion of Sullivan & Cromwell, in form and substance reasonably
satisfactory to Firstar and U.S. Bancorp, respectively, dated as of the closing
date of the merger, on the basis of facts, representations and assumptions set
forth in each of those opinions that are consistent with the state of facts
existing at the effective time of the merger, substantially to the foregoing
effect.
None of the tax opinions delivered or to be delivered to the parties in
connection with the merger as described in this joint proxy statement-prospectus
are binding on the Internal Revenue Service or the courts, and we do not intend
to request a ruling from the IRS with respect to the merger.
Holders of U.S. Bancorp common stock receiving cash in lieu of a fractional
share of common stock of the combined company will be treated as first having
received the fractional share in the merger and then having the fractional share
redeemed by the combined company. These holders should generally recognize
capital gain or loss equal to the difference between the tax basis of the
fractional share and the amount of cash received. Any such capital gain or loss
will be long-term capital gain or loss if the U.S. Bancorp common stock
exchanged has been held for more than one year at the effective time of the
merger.
INFORMATION REPORTING AND BACKUP WITHHOLDING. Payments related to U.S. Bancorp
common stock may be subject to information reporting to the IRS and to a 31%
backup withholding tax. Backup withholding will not apply, however, to a payment
to you, or another payee, if you or the payee completes and signs the substitute
Form W-9 that we will include as part of the transmittal letter, or otherwise
proves to Firstar and the exchange agent that you or the payee is exempt from
backup withholding.
ACCOUNTING TREATMENT
We anticipate that we will account for the merger as a pooling-of-interests
transaction under GAAP. Under this method of accounting, U.S. Bancorp
stockholders and Firstar stockholders will be deemed to have combined their
existing voting common stock interests in the merger. Accordingly, the book
value of the assets, liabilities and stockholders' equity of each of Firstar and
U.S. Bancorp, as reported on our consolidated balance sheets, will be carried
over to the consolidated balance sheet of the combined company. No goodwill will
be created. The combined company will be able to include in its consolidated
income the consolidated income of both our companies for the entire fiscal year
in which the merger occurs, and prior years' income statements will be restated
to include the combined results of operations of Firstar and U.S. Bancorp for
all prior periods reported.
It is a condition to each of our obligations to consummate the merger that
we each receive an opinion from our independent accountants to the effect that
the merger will be accounted for as a pooling of interests. See "--Conditions to
Completion of the Merger."
We have prepared the unaudited pro forma financial information contained in
this joint proxy statement-prospectus using the pooling-of-interests accounting
method to account for the merger. See "Summary--Unaudited Comparative Per Share
Data" and "Selected Financial Data--Unaudited Selected Pro Forma Condensed
Combined Financial Data of Firstar and U.S. Bancorp."
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TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated at any time before the effective time
of the merger, whether before or after approval by Firstar stockholders and U.S.
Bancorp stockholders:
- by our mutual consent, if each of our boards of directors so determines by
a vote of a majority of the members of the entire board of directors;
- by either of our boards of directors if:
- any governmental entity that must grant a requisite regulatory approval
has denied approval of the merger and this denial has become final and
non-appealable, or
- any governmental entity with jurisdiction has issued a final
non-appealable order enjoining or otherwise prohibiting the consummation
of the transactions contemplated by the merger agreement; or
- by either of our boards of directors if the merger is not completed on or
before July 3, 2001 unless the delay is caused by the failure of the party
seeking to terminate the merger agreement to perform its obligations in
the merger agreement; or
- by either of our boards of directors (if the terminating party is not in
breach of the merger agreement) if there has been a material breach of the
merger agreement on the part of the other party that, individually or in
the aggregate, would constitute, if occurring or continuing on the closing
date, the failure of the conditions described in either of the last two
paragraphs under "--Conditions to Completion of the Merger," and that is
not cured within 45 days following written notice to the party committing
the breach or that, by its nature, cannot be cured prior to the closing
date.
Whether or not we complete the merger, all fees and expenses we incur in
connection with the merger will be paid by the party incurring the expenses.
However, the costs and expenses of printing and mailing this document, and all
filing and other fees paid to the SEC in connection with the merger, will be
borne equally by each of us.
EXTENSION, WAIVER AND AMENDMENT OF THE MERGER AGREEMENT
EXTENSION AND WAIVER. At any time before the effective time, either of us, by
action taken or authorized by our board of directors, may, to the extent legally
allowed:
- extend the time for the other to perform any of its obligations;
- waive any inaccuracies in the representations and warranties of the other
contained in the merger agreement or in any document delivered under the
merger agreement; and
- waive compliance by the other with any of the agreements or conditions
contained in the merger agreement.
However, after Firstar stockholders or U.S. Bancorp stockholders approve the
merger agreement, there may not be, without further approval of those
stockholders, any extension or waiver of the merger agreement that reduces the
amount or changes the form of the consideration to be delivered to Firstar
stockholders or U.S. Bancorp stockholders, other than as contemplated by the
merger agreement.
AMENDMENT. Subject to compliance with applicable law, we may amend the merger
agreement by action taken or authorized by both of our boards of directors at
any time before or after Firstar
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stockholders or U.S. Bancorp stockholders approve the merger agreement, except
that after the Firstar stockholders or U.S. Bancorp stockholders have given
their approval, there may not be, without further approval of these
stockholders, any amendment of the merger agreement that changes the amount or
the form of the consideration to be delivered to Firstar stockholders or U.S.
Bancorp stockholders, other than as contemplated by the merger agreement.
STOCK EXCHANGE LISTING
U.S. Bancorp has agreed to cause the shares of U.S. Bancorp common stock to
be issued in the merger to be approved for listing on the NYSE. Firstar's and
U.S. Bancorp's obligation to consummate the merger is conditioned on the shares
of common stock of the combined company being authorized for listing on the
NYSE, subject to official notice of issuance. When the merger is completed,
Firstar common stock currently listed on the NYSE will be delisted and
deregistered under the Securities Exchange Act of 1934, as amended.
DIVIDENDS
We will coordinate the declaration and payment of regular quarterly cash
dividends on Firstar common stock and U.S. Bancorp common stock with the intent
that you will not receive two dividends for a single quarter, or fail to receive
one dividend, that you would otherwise receive in the absence of the merger. In
connection with the merger, Firstar and U.S. Bancorp have indicated their
current intention to set an initial regular annual dividend rate on the combined
company's common stock of $0.75. All dividends on common stock of the combined
company are subject to determination by the board of directors of the combined
company in its discretion and are also subject to certain legal limitations
under federal banking law and state law. See "Comparison of Stockholders'
Rights--Dividends."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Some members of U.S. Bancorp's and Firstar's management, and the members of
the U.S. Bancorp and Firstar boards, have interests in the merger that are in
addition to the interest as U.S. Bancorp stockholders or Firstar stockholders
they share with you. The U.S. Bancorp and Firstar boards were aware of these
different interests and considered them, among other matters, in approving the
merger agreement and the transactions it contemplates.
NEW EMPLOYMENT AGREEMENT WITH JOHN GRUNDHOFER. In connection with entering
into the merger agreement, Firstar entered into an employment agreement with
John Grundhofer. The term of the agreement starts at the completion of the
merger and ends on December 31, 2002. During the term of the employment
agreement, John Grundhofer will serve as the Chairman of the board of directors
of the combined company and as the Co-Chairman of the Executive Committee of
such board. Until the first annual stockholder's meeting following John
Grundhofer's 65th birthday, he shall serve as a member of the combined company's
board.
During the term of the employment agreement, John Grundhofer will be
entitled to receive a base salary and an annual bonus equal to the base salary
and annual bonus paid to Firstar's chief executive officer, but in no event will
John Grundhofer's base salary be less than his current base salary. On
completion of the merger, he will also be granted 100,000 shares of restricted
combined company common stock and a stock option to acquire 2.4 million shares
of combined company common stock at an exercise price equal to the fair market
value of such common stock on the date of grant and with a term of ten years.
The restricted stock and stock option will vest in four equal installments on
each of the first four anniversaries of the completion of the merger, subject to
earlier vesting upon a change of control of the combined company and certain
terminations of the executive's employment, including his
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retirement. Commencing upon the expiration of the term of the agreement, John
Grundhofer will be paid an annual retirement benefit of $2.92 million, less any
benefits payable under the combined company's and U.S. Bancorp's tax-qualified
and non-qualified retirement plans. John Grundhofer will also be entitled to
participate in the employee benefit plans and programs of the combined company
and to receive the long-term disability, life insurance and certain other
payments provided pursuant to the agreement between him and U.S. Bancorp. The
employment agreement also contains non-competition, non-solicitation and
confidentiality provisions that apply to John Grundhofer while employed and
during specified periods thereafter.
The employment agreement provides that, on a termination of John
Grundhofer's employment by the combined company other than for cause or
disability, or by him for good reason, he will be entitled to a payment
consisting of:
- a PRO RATA annual bonus through the date of termination, based on the
highest annual bonus earned in the three years prior to the termination
date, plus
- the product of (a) the number of months from the date of termination until
December 31, 2002, divided by 12 and (b) the sum of his base salary and
annual bonus (based on the highest annual bonus earned in the three years
prior to the termination date).
Also, his restricted stock and stock options will vest immediately, and the
combined company will continue to provide him and his spouse with medical and
dental benefits for the remainder of their lives. If any amounts payable to John
Grundhofer under the employment agreement or otherwise would be subject to the
excise tax under section 4999 of the U.S. tax code, an additional payment will
be made so that after the payment of all income and excise taxes, John
Grundhofer will be in the same after-tax position as if no excise tax under
section 4999 had been imposed. However, if these additional payments (excluding
additional amounts payable due to the excise tax) do not exceed 110% of the
greatest amount that could be paid to John Grundhofer without requiring payment
of the excise tax, no additional payments will be made on account of the excise
tax, and, instead, the payments otherwise due to him will be reduced as
necessary to prevent the application of the excise tax. On completion of the
merger, John Grundhofer's new employment agreement will supersede his prior
employment agreement with U.S. Bancorp, except as provided in the new agreement.
See "--EXISTING EMPLOYMENT AND SEVERANCE ARRANGEMENTS WITH U.S. BANCORP
EXECUTIVES."
EXISTING EMPLOYMENT AND SEVERANCE ARRANGEMENTS WITH U.S. BANCORP EXECUTIVES.
John Grundhofer's employment agreement to serve as Chairman, President and
Chief Executive Officer of U.S. Bancorp provides for, among other things, the
payment of severance amounts and benefits upon certain terminations of
employment in connection with certain changes in control of U.S. Bancorp,
including a "partial change in control." Upon the completion of the merger, any
prior employment, severance or change in control agreements between U.S. Bancorp
and John Grundhofer will be superseded (except as expressly provided by the new
employment agreement) by the new employment agreement, entered into between
John Grundhofer and Firstar in connection with the merger which is described
above under "--New Employment Agreement with John Grundhofer."
U.S. Bancorp also had entered into change in control severance agreements
with 14 executive officers. The transactions provided for in the merger
agreement would have triggered a "full change in control" under the change in
control severance agreements because the definition includes, among other
events, a change in the majority of U.S. Bancorp's board. The existing
agreements with U.S. Bancorp executives described herein and the plans described
below allow the board to provide in its discretion that an event which would
otherwise constitute a "full change in control" will be deemed a "partial change
in control." In connection with the approval of the merger by the U.S. Bancorp
board, the board determined that the transactions contemplated by the merger
agreement will be no more
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than a partial change in control within the meaning of these existing U.S.
Bancorp employment and change in control severance agreements.
The change in control severance agreements provide for severance benefits
following a partial change in control, if a covered executive's employment is
involuntarily terminated other than for "cause" (as defined in the agreements)
or if a covered executive voluntarily terminates his employment for "good
reason" (as defined in the agreements). Those severance benefits include:
- a payment equal to three times the sum of the executive's annual salary
plus average actual incentive pay for the three fiscal years preceding the
year in which the merger is announced;
- continuation of life, individual disability, medical and dental insurance
coverage for 36 months following the date of termination, subject to
certain conditions specified in the agreements;
- payment of the full amount of any long-term cash incentive award for any
plan periods then in progress;
- payment of pro rata amount of any annual cash incentive award;
- credit for five additional years of service under the U.S. Bancorp
Non-Qualified Supplemental Executive Retirement Plan;
- three additional years of accruals under U.S. Bancorp's qualified or
non-qualified defined benefit plans; and
- individual outplacement counseling services.
Each of these change in control severance agreements also provides that, in
the event of a change in control of U.S. Bancorp, if an excise tax is payable
under section 4999 of the U.S. tax code because the payments and benefits
payable to a covered executive are deemed to constitute parachute payments
within the meaning of section 280G of the U.S. tax code, U.S. Bancorp will
provide the covered executive with an additional payment so that after the
payment of all income and excise taxes, the executive will be in the same
after-tax position he or she would have been in if no excise tax under
section 4999 had been imposed.
U.S. BANCORP EXECUTIVE BENEFIT PLANS.
Under U.S. Bancorp's voluntary deferred compensation plan for management and
highly compensated employees, participating executives may receive a
distribution of their entire account, minus a penalty equal to 5% of the value
of the account, prior to the original deferral date if a "qualifying
termination" occurs and there is a partial change in control.
Retirement benefits provided under the U.S. Bancorp Nonqualified
Supplemental Executive Retirement Plan will be paid upon the request of a
participant, minus a penalty equal to 5% of the total benefit, if a qualifying
termination occurs and there is a partial change in control. In addition,
eligibility to be a plan participant upon a qualifying termination prior to or
following a partial change in control will be determined without regard to the
satisfaction of certain service requirements.
For purposes of the U.S. Bancorp Cash Balance Pension Plan, if a qualifying
termination occurs and there is a partial change in control, the participant
will be considered to be 100% vested in his or her entire accrued benefit under
the plan.
Generally, for the purposes of these plans, a "qualifying termination" is a
termination prior to (specifically, following announcement of a transaction at
the request of any party to the transaction or any person associated with the
event or events which results in a change in control) or following a
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partial change in control that results in a participant becoming entitled to
receive change in control severance payments pursuant to the terms of any
employment agreement, change in control severance agreement, or the U.S. Bancorp
Senior Management Change in Control Severance Pay Plan.
In connection with the approval of the merger by the U.S. Bancorp board, the
board determined that the transactions contemplated by the merger agreement will
be no more than a partial change in control within the meaning of each of these
U.S. Bancorp executive benefit plans.
U.S. BANCORP STOCK-BASED RIGHTS. The merger agreement provides that, upon
completion of the merger, each outstanding and unexercised stock option to
purchase shares of U.S. Bancorp common stock granted under the U.S. Bancorp
equity incentive plans will cease to represent the right to acquire shares of
U.S. Bancorp common stock and will be converted into and become a right with
respect to combined company common stock. Pursuant to the terms of certain of
the award agreements under the U.S. Bancorp stock plans, as a result of the
transactions contemplated by the merger agreement, the unvested stock options
held by certain executive officers of U.S. Bancorp will become fully vested and
exercisable and the restrictions on awards of restricted stock held by certain
executive officers of U.S. Bancorp will lapse. The number of unvested stock
options to acquire shares of U.S. Bancorp common stock held by the executive
officers of U.S. Bancorp that will become fully vested and exercisable as a
result of the transactions contemplated by the merger agreement is 4,507,332 in
the aggregate, and an additional 200,000 stock options in the aggregate would
become fully vested and exercisable if the employment of the holder were
terminated under certain specified circumstances following the merger. The
number of shares of U.S. Bancorp common stock underlying awards of restricted
stock held by the executive officers of U.S. Bancorp that will become free of
restrictions as a result of the transactions contemplated by the merger
agreement is 173,315 in the aggregate, and an additional 362,102 in the
aggregate restricted stock awards would become free of restrictions if the
employment of the holders were terminated under certain specified circumstances
following the merger.
RELATIONSHIP OF JOHN F. AND JERRY A. GRUNDHOFER. Jerry A. Grundhofer, President
and Chief Executive Officer of Firstar, and John F. Grundhofer, Chairman,
President and Chief Executive Officer of U.S. Bancorp, are brothers.
INDEMNIFICATION AND INSURANCE. The merger agreement provides that, after the
merger, the combined company will indemnify any person who is a current or
former director, officer or employee of Firstar, U.S. Bancorp or their
subsidiaries at the completion of the merger. This indemnity covers any claim or
proceeding, whether actual or threatened, to which such a person has been made,
or has been threatened to be made, a party and that relates to the person's
service as a director, officer or employee of Firstar, U.S. Bancorp or their
subsidiaries or to the merger agreement, the stock option agreements or any of
the transactions contemplated by those agreements. We have agreed that, if this
type of indemnity is required by the merger agreement, the combined company will
indemnify a covered person to the fullest extent permitted by law against any
liability or expense the person incurs related to a covered claim or proceeding.
The merger agreement also provides that the combined company will use its
reasonable best efforts to cause the persons serving as officers and directors
of Firstar, U.S. Bancorp or their subsidiaries immediately before completion of
the merger to be covered for at least six years after completion of the merger
by U.S. Bancorp's directors' and officers' liability insurance policy (or any
equivalent substitute for that policy). The policy will cover acts or omissions
committed by these officers and directors prior to completion of the merger.
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THE STOCK OPTION AGREEMENTS
Immediately after the execution of the merger agreement, Firstar and U.S.
Bancorp entered into a stock option agreement, dated October 3, 2000, under
which Firstar granted U.S. Bancorp an option to purchase Firstar common stock
from Firstar under the conditions we describe below. At the same time, U.S.
Bancorp and Firstar entered into a stock option agreement, dated October 3,
2000, under which U.S. Bancorp granted to Firstar an option to purchase U.S.
Bancorp common stock from U.S. Bancorp under the conditions we describe below.
Firstar and U.S. Bancorp each granted these options to induce the other to enter
into the merger agreement.
The terms and conditions of the Firstar stock option agreement and the U.S.
Bancorp stock option agreement are identical in all material respects. For
purposes of this section, except as otherwise noted:
- the Firstar stock option agreement or the U.S. Bancorp stock option
agreement, as the case may be, is sometimes referred to as the "issuer
option agreement";
- the company obligated to issue stock under an issuer option agreement is
sometimes referred to as the "issuer";
- the company holding the option is sometimes referred to as the "optionee";
- the Firstar option or the U.S. Bancorp option, as the case may be, is
sometimes referred to as the "issuer option"; and
- common stock of the company granting the option, as the case may be, is
referred to as "issuer common stock".
The stock option agreements are intended to increase the likelihood that the
merger will be consummated in accordance with the terms of the merger agreement
and to compensate the optionee if the merger is not consummated. Consequently,
aspects of the stock option agreements may discourage persons that might be
interested in acquiring all of or a significant interest in Firstar or U.S.
Bancorp from considering or proposing an acquisition, even if these persons were
prepared to offer to pay consideration that had a higher current market price
than the shares of combined company common stock to be received under the merger
agreement. An agreement to acquire Firstar or U.S. Bancorp, or the accumulation
of 20% or more of the common stock of either company, by a third party could
cause the Firstar option or the U.S. Bancorp option, as the case may be, to
become exercisable. The existence of the issuer options could significantly
increase the cost to a potential acquiror of acquiring either of our companies.
This increased cost might discourage a potential acquiror from considering or
proposing an acquisition or might result in a potential acquiror proposing to
pay a lower per share price to acquire the Issuer than it might otherwise have
proposed to pay. Moreover, following consultation with our respective
independent accountants, we believe that the exercise or repurchase of either of
the issuer options is likely to prohibit another acquiror from accounting for
any acquisition of the issuer using the pooling-of-interests accounting method
for a period of two years.
The Firstar stock option agreement provides for the purchase by U.S. Bancorp
of up to 195,895,138 shares (the "Firstar option shares" or the "issuer option
shares," as the case may be) of Firstar common stock at an exercise price of
$22.25 per share (the closing price on the NYSE composite tape on Friday,
September 29, 2000). The U.S. Bancorp option agreement provides for the purchase
by Firstar of up to 147,939,263 shares (the "U.S. Bancorp option shares" or the
"issuer option shares," as the case may be) of U.S. Bancorp common stock at an
exercise price of $23.1875 per share (the closing price on the NYSE composite
tape on Friday, September 29, 2000), payable in cash. The issuer common stock,
if issued under the issuer option agreement, will in no event exceed 19.9% of
the issuer common stock issued and outstanding without giving effect to the
issuance of any issuer common stock subject to the issuer option.
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The number of shares of issuer common stock subject to the applicable issuer
option will be increased or decreased, as appropriate, to the extent that
additional shares of issuer common stock are either:
- issued or otherwise become outstanding, other than under an exercise of an
issuer option; or
- redeemed, repurchased, retired or otherwise cease to be outstanding after
October 3, 2000 such that, thereafter, the number of issuer option shares
will continue to equal 19.9% of the issuer common stock then issued and
outstanding before considering the issuance of any issuer common stock
subject to the issuer option.
Also, in the event of any change in, or distributions in respect of, the
number of shares of issuer common stock by reason of a stock dividend, split-up,
merger, recapitalization, combination, subdivision, conversion, exchange of
shares, distribution on or in respect of such issuer common stock or similar
transaction, the type and number of issuer option shares purchasable upon
exercise of the applicable issuer option, and the applicable option price, will
be adjusted in such a manner as will fully preserve the economic benefits of the
option.
Each issuer option agreement provides that the optionee or any other holder
or holders of the issuer option (as used in this section, collectively, the
"holder") may exercise the issuer option, in whole or in part, subject to
regulatory approval, if both an "initial triggering event" and a "subsequent
triggering event" has occurred prior to the occurrence of an "exercise
termination event," so long as the holder has sent to the issuer written notice
of the exercise within 90 days following the subsequent triggering event
(subject to extension as provided in each issuer option agreement). Any exercise
of the issuer option will be deemed to occur on the date this notice is sent.
The terms "initial triggering event" and "subsequent triggering event"
generally relate to attempts by one or more third parties to acquire a
significant interest in the Issuer. For the purposes of each issuer option
agreement, the term "initial triggering event" means the occurrence of any of
the following events or transactions after October 3, 2000:
- the issuer or any subsidiary of the issuer, without the optionee's prior
written consent, enters into an agreement to engage in, or the issuer's
board of directors recommends that stockholders of the Issuer approve or
accept, an acquisition transaction with any person or group, other than as
contemplated by the merger agreement;
- the issuer or any subsidiary of the issuer, without the optionee's prior
written consent, authorizes, recommends, proposes or publicly announces
its intention to authorize, recommend or propose to engage in an
acquisition transaction, or the issuer's board of directors publicly
withdraws or, or publicly announces its intention to withdraw or modify,
in any manner adverse to the optionee, its recommendation that its
stockholders approve the merger agreement in anticipation of engaging in
an acquisition transaction;
- any person, other than the optionee, any subsidiary of the optionee or any
issuer subsidiary acting in a fiduciary capacity in the ordinary course of
business acquires beneficial ownership, or the right to acquire beneficial
ownership, of 10% or more of the outstanding shares of issuer common
stock;
- any person other than the optionee or any subsidiary of the optionee makes
a BONA FIDE proposal to the issuer or its stockholders by public
announcement or written communication that becomes the subject of public
disclosure to engage in an acquisition transaction;
- the issuer breaches any covenant or obligation in the merger agreement
after any person, other than the optionee or any subsidiaries of the
optionee, has proposed an acquisition transaction, and this breach both
would entitle the optionee to terminate the merger agreement and is not
remedied prior to the date of the optionee's notice to the issuer of the
exercise of the option; or
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- any person other than the optionee or any subsidiary of the optionee,
other than in connection with a transaction to which the optionee has
given its prior written consent, files an application or notice with the
Federal Reserve Board, or other federal or state bank regulatory
authority, which application or notice has been accepted for processing,
for approval to engage in an acquisition transaction.
For purposes of each issuer option agreement, the term "acquisition
transaction" means:
- a merger or consolidation, or any similar transaction with the issuer or
any of its subsidiaries (as defined in Rule 1-02 of SEC Regulation S-X);
- a purchase, lease or other acquisition or assumption of all or a
substantial portion of the assets or deposits of the issuer or any of its
subsidiaries;
- a purchase or other acquisition of securities representing 10% or more of
voting power of the issuer; or
- any substantially similar transaction, except that in no event will any
merger, consolidation, purchase or similar transaction involving only the
issuer and one or more of its subsidiaries, or involving only any two or
more of its subsidiaries, and not entered into in violation of the merger
agreement, be an acquisition transaction.
The term "subsequent triggering event" means the occurrence of either of the
following events or transactions after October 3, 2000:
- the acquisition by any person of beneficial ownership of 20% or more of
the then outstanding shares of issuer common stock; or
- the occurrence of the initial triggering event described above in the
first bullet point under the definition of initial triggering event,
except that the percentage referred to in the third bullet point of the
definition of "acquisition transaction" will be 20%.
Each issuer option will expire upon the occurrence of an "exercise
termination event," which includes:
- the effective time of the merger;
- termination of the merger agreement in accordance with the provisions of
the merger agreement if prior to the occurrence of an initial triggering
event, except as a result of an uncured and volitional material breach by
the Issuer of the merger agreement; or
- the date that is 12 months after the termination of the merger agreement
if the termination occurs after an initial triggering event or is a
termination by the optionee as a result of an uncured material breach by
the issuer of the merger agreement, unless the breach by the issuer is
non-volitional.
If an initial triggering event continues or occurs beyond the termination of
the merger agreement and prior to the passage of this 12-month period, the
issuer option will terminate 12 months from the expiration of the last initial
triggering event to expire, but in no event more than 18 months after the
termination of the merger agreement.
As of the date of this joint proxy statement-prospectus, to our knowledge,
no initial triggering event or subsequent triggering event has occurred.
Under some circumstances the issuer of an option may be required to
repurchase the option, and any shares for which the option was exercised, for a
price specified in the stock option agreement. Immediately prior to the
occurrence of a repurchase event,
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- following a request of a holder, delivered prior to an exercise
termination event, the issuer, or any successor to the issuer, will
repurchase the issuer option from the holder at a price (the "issuer
option repurchase price") equal to the amount by which the market/offer
price exceeds the exercise price, multiplied by the number of shares for
which the issuer option may then be exercised; and
- at the request of the owner of issuer option shares from time to time (the
"owner"), delivered within 90 days of the occurrence of a repurchase event
(or a later period as provided in Section 10 of each of the option
agreements), the issuer will repurchase the number of the issuer option
shares from the owner as the owner will designate at a price (the "issuer
option share repurchase price") equal to the market/offer price multiplied
by the number of option shares so designated.
The term "market/offer price" means the highest of:
- the price per share of issuer common stock at which a tender offer or
exchange offer for the issuer common stock has been made;
- the price per share of issuer common stock to be paid by any third party
under an agreement with issuer;
- the highest closing price for shares of issuer common stock within the
six-month period immediately preceding the date the holder gives notice of
the required repurchase of the issuer option or the owner gives notice of
the required repurchase of issuer option shares, as the case may be; or
- in the event of a sale of all or a substantial portion of the issuer's
assets, the sum of the price paid in the sale for these assets and the
current market value of the remaining assets of the issuer as determined
by a nationally recognized investment banking firm selected by the holder
or the owner, as the case may be, and reasonably acceptable to the issuer,
divided by the number of shares of issuer common stock outstanding at the
time of the sale.
A "repurchase event" is deemed to have occurred:
- upon the consummation of an acquisition transaction; or
- upon the acquisition by any person of the beneficial ownership of 50% or
more of the then outstanding issuer common stock, as long as a subsequent
triggering event has occurred prior to an exercise termination event.
In some situations, the option will convert into an option to purchase the
shares of a successor to the issuer. In the event that, prior to an exercise
termination event, the issuer enters into any agreement:
- to consolidate with or merge into any person, other than the optionee or
one of its subsidiaries, such that issuer is not the continuing or
surviving corporation of the consolidation or merger;
- to permit any person, other than the optionee or one of its subsidiaries,
to merge into the issuer with the issuer as the continuing or surviving
corporation, but, in connection with the consolidation or merger, the
then-outstanding shares of the issuer common stock are changed into or
exchanged for stock or other securities of any other person or cash or any
other property, or the then-outstanding shares of issuer common stock
after the merger will represent less than 50% of the outstanding voting
shares and voting share equivalents of the merged corporation; or
- to sell or otherwise transfer all or substantially all of its assets to
any person, other than the optionee or any of its subsidiaries,
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then the agreement governing these transactions must provide that, upon
consummation of the transaction and upon terms and conditions set forth in the
issuer option agreement, the option will be converted into, or exchanged for, an
option having substantially the same terms as the option (the "substitute
option") to purchase securities, at the election of the holder, of either the
acquiring person or any person that controls the acquiring person.
At the request of the holder of the substitute option, the issuer of the
substitute option will repurchase it in accordance with terms and conditions
that are set forth in the issuer option agreement.
CASH SURRENDER VALUE. The optionee may, at any time during which the issuer
would be required to repurchase the issuer option or any issuer option shares as
described above, surrender the issuer option (together with any issuer option
shares issued to and then owned by the holder) to the issuer in exchange for a
cash payment equal to the surrender price, except that the optionee may not
exercise this right if the issuer has previously repurchased the issuer option
(or any portion of the issuer option) or any issuer option shares as described
above. The "surrender price" is:
- $420,000,000, plus
- if applicable, the aggregate purchase price previously paid by the
optionee with respect to any issuer option shares, minus
- if applicable, the excess of:
- the net cash, if any, received by the optionee in an arm's-length sale of
issuer option shares (or any other securities into which these issuer
option shares were converted or exchanged) to any party not affiliated
with the optionee, over
- the purchase price paid by the optionee with respect to those issuer
option shares.
LIMITATION ON PROFIT. Notwithstanding any other provision of the stock option
agreement, the optionee's total profit under the agreement may not exceed
$630 million. If the optionee's total profit would otherwise exceed
$630 million, it will:
- reduce the number of shares subject to the option;
- deliver to the issuer shares of issuer common stock for cancellation;
- pay cash to the issuer;
- reduce the amount of the option repurchase price; or
- any combination of the above;
so that the profit it actually realizes does not exceed $630 million.
Some rights and obligations of the optionee and the issuer under the stock
option agreement are subject to receipt of required regulatory approvals. The
approval of the Federal Reserve Board is required for the acquisition by the
optionee of more than 5% of the outstanding shares of issuer common stock.
Accordingly, the optionee has included or will include in its applications with
the Federal Reserve Board a request for approval of the right of the optionee to
exercise its rights under the issuer option agreement, including its right to
purchase more than 5% of the outstanding shares of issuer common stock.
Acquisitions of 5% or less may be subject to the provisions of the HSR Act,
which, if it applied, would require the optionee to wait for a specified period
before completing the acquisition.
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RESTRICTIONS ON RESALES BY AFFILIATES
SECURITIES ACT RESTRICTIONS. The shares of common stock of the combined company
that Firstar stockholders and U.S. Bancorp stockholders will own following the
merger have been registered under the Securities Act of 1933, as amended. They
may be traded freely and without restriction by you if you are not deemed to be
an affiliate of Firstar or the combined company under the Securities Act. An
"affiliate" of Firstar or the combined company, as defined by the rules
promulgated under the Securities Act, is a person that directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, Firstar or the combined company, respectively. Persons that
are affiliates of Firstar at the time the merger is submitted for vote of the
Firstar stockholders or of the combined company following completion of the
merger may not sell their shares of common stock of the combined company
acquired in the merger except pursuant to an effective registration statement
under the Securities Act or an applicable exemption from the registration
requirements of the Securities Act, including Rules 144 and 145 issued by the
SEC under the Securities Act. Affiliates include directors, executive officers
and beneficial owners of 10% or more of any class of capital stock.
This joint proxy statement-prospectus does not cover any resale of common
stock of the combined company received in the merger by any person that may be
deemed to be an affiliate of U.S. Bancorp or Firstar.
SEC ACCOUNTING RESTRICTIONS. SEC guidelines regarding qualifying for the
pooling-of-interests method of accounting also limit sales of shares of the
acquiring and acquired company by affiliates of either company in a business
combination. SEC guidelines indicate further that pooling-of-interests
accounting will generally not be challenged on the basis of sales by those
affiliates if they do not dispose of any of the shares of the company they own
or shares of a company they receive in connection with a merger during the
period beginning 30 days before the merger and ending when financial results
covering at least 30 days of post-merger operations of the combined company have
been published.
COVENANTS RELATING TO RESALE RESTRICTIONS. Each of us has agreed in the merger
agreement to use our reasonable best efforts to cause each person who is an
affiliate of our company (for purposes of Rule 145, in the case of Firstar, and
for qualifying the merger for pooling-of-interests accounting treatment) to
deliver to the other a written agreement intended to ensure compliance with the
Securities Act and preserve the ability to treat the merger as a
pooling-of-interests.
We have agreed in the merger agreement that the combined company will use
its best efforts to publish, not later than 90 days after the end of the first
month after the completion of the merger in which there are at least 30 days of
post-merger combined operations, combined sales and net income figures as
contemplated by and in accordance with the terms of the SEC's Accounting Series
Release No. 135.
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MANAGEMENT AND OPERATIONS AFTER THE MERGER
BOARD OF DIRECTORS
Firstar and U.S. Bancorp have agreed that, following the merger, 14
directors of the combined company will be designated by Firstar, and that the
remaining 11 directors will be designated by U.S. Bancorp, with committee
membership reflecting the same proportional membership as closely as possible.
The executive committee of the combined company's board of directors will be
co-chaired by John Grundhofer and Jerry Grundhofer. The governance and
compensation committees of the combined company will be chaired by directors
designated by Firstar, and the outreach and audit committees will be chaired by
directors designated by U.S. Bancorp.
MANAGEMENT
John Grundhofer will serve as Chairman of the Board, and Jerry Grundhofer
will serve as President and Chief Executive Officer, of the combined company
after completion of the merger. We expect the other executive officers of the
combined company and their areas of responsibility to include David Moffett
(finance), Andrew Duff (wealth management, trust and investments), Richard Davis
(consumer), Daniel Frate (payment systems), Joseph Hasten (large corporate),
Daniel Quinn (middle market), William Chenevich (information
technology/operations), J. Robert Hoffmann (credit), Steve Smith (human
resources) and Lee Mitau (legal).
OPERATIONS
Following completion of the merger, the combined company will be
headquartered in Minneapolis, Minnesota.
While there can be no assurances, Firstar and U.S. Bancorp presently expect
to achieve approximately $266 million in annual pre-tax expense savings by the
end of 2003 as a result of the merger. Firstar and U.S. Bancorp expect that
these expense savings will be derived principally from elimination of
redundancies in administration and corporate support functions. Firstar and U.S.
Bancorp also expect that the combined company will incur one-time merger-related
and restructuring charges of approximately $800 million (pre-tax).
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
FIRSTAR
Firstar common stock is listed on the NYSE and traded under the symbol
"FSR." The following table sets forth, for the periods indicated, the high and
low reported closing sale prices per share of Firstar common stock on the NYSE
composite transactions reporting system and cash dividends declared per share of
Firstar common stock.
<TABLE>
<CAPTION>
PRICE RANGE OF DIVIDENDS
COMMON STOCK DECLARED
------------------------- ---------
HIGH LOW
-------- --------
<S> <C> <C> <C>
1998
First Quarter......................................... 20.42 17.71 .077
Second Quarter........................................ 21.46 19.73 .077
Third Quarter......................................... 24.50 18.30 .077
Fourth Quarter........................................ 31.00 19.06 .100
1999
First Quarter......................................... 31.86 27.42 .100
Second Quarter........................................ 34.56 26.25
Third Quarter......................................... 24.25 19.86 .100
Fourth Quarter........................................ 31.00 19.06 .100
2000
First Quarter......................................... 24.63 17.00 .163
Second Quarter........................................ 27.75 21.06 .163
Third Quarter......................................... 25.00 19.75 .163
Fourth Quarter (through [ ], 2000)...............
</TABLE>
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U.S. BANCORP
U.S. Bancorp common stock is listed on the NYSE and traded under the symbol
"USB." The following table sets forth the high and low closing sales prices for
U.S. Bancorp common stock for the periods indicated, as listed in the NYSE
composite transaction reporting system, and the quarterly cash dividends
declared per share for the periods indicated.
<TABLE>
<CAPTION>
PRICE RANGE OF DIVIDENDS
COMMON STOCK DECLARED
------------------------- ---------
HIGH LOW
-------- --------
<S> <C> <C> <C>
1998
First Quarter......................................... 41.58 34.33 .175
Second Quarter........................................ 45.63 38.19 .175
Third Quarter......................................... 47.06 34.13 .175
Fourth Quarter........................................ 42.37 31.00 .175
1999
First Quarter......................................... 37.75 30.50 .195
Second Quarter........................................ 37.75 31.50 .195
Third Quarter......................................... 34.50 28.63 .195
Fourth Quarter........................................ 37.63 21.88 .195
2000
First Quarter......................................... 23.06 17.13 .215
Second Quarter........................................ 27.25 19.25 .215
Third Quarter......................................... 23.25 18.38 .215
Fourth Quarter (through [ ], 2000)...............
</TABLE>
In connection with the merger, Firstar and U.S. Bancorp have indicated their
current intention to set an initial regular annual dividend rate on the combined
company's common stock of $0.75. The timing and amount of future dividends paid
by Firstar, U.S. Bancorp and the combined company are subject to determination
by the applicable board of directors in its discretion and will depend upon
earnings, cash requirements and the financial condition of the respective
companies and their subsidiaries, applicable government regulations and other
factors deemed relevant by the applicable company's board of directors. Various
U.S. state and federal laws limit the ability of affiliate banks to pay
dividends to Firstar and U.S. Bancorp and the same laws will apply to the
combined company following the merger. The merger agreement restricts the cash
dividends that may be paid on Firstar and U.S. Bancorp common stock pending
consummation of the merger. See "The Merger--Conduct of Business Pending the
Merger" and "--Other Agreements."
INFORMATION ABOUT FIRSTAR AND U.S. BANCORP
FIRSTAR
Firstar is a regional, multi-state bank holding company organized under the
laws of Wisconsin and registered under the Bank Holding Company Act. Firstar is
also a financial holding company under the Bank Holding Company Act. The current
Firstar was created by the merger of Firstar Corporation and Mercantile
Bancorporation on September 20, 1999, and owns subsidiaries engaged in banking
and in a variety of related businesses. Firstar has nearly 1,200 full-service
banking offices and more than 2,200 ATM locations in Ohio, Wisconsin, Missouri,
Kentucky, Illinois, Indiana, Iowa, Minnesota, Tennessee, Arkansas, Kansas,
Arizona and Florida. Firstar, founded in 1853, offers a comprehensive line of
consumer and commercial banking products and services, personal and commercial
trust, investment management, insurance, securities brokerage, mortgage, credit
card, cash management, international banking and other financial services.
Firstar is the parent company of Firstar Finance, a consumer finance company,
and Firstar Investment Research & Management Company, LLC, an investment
advisory firm.
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At September 30, 2000, Firstar's consolidated total assets were
approximately $74 billion, its consolidated total deposits were approximately
$52 billion and its consolidated total stockholders' equity was approximately
$6.1 billion. Based on total assets at September 30, 2000, Firstar was the [ ]
largest bank holding company in the United States.
Firstar is a legal entity separate and distinct from its banking and
non-banking subsidiaries. Accordingly, the right of Firstar, and thus the right
of Firstar's creditors, to participate in any distribution of the assets or
earnings of any subsidiary, other than in its capacity as a creditor of the
subsidiary, is subject to the prior payment of claims of creditors of the
subsidiary. The principal sources of our company's revenues are dividends and
fees from our subsidiaries.
Firstar's executive offices are located at 777 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202, and our telephone number is (414) 765-4321.
Firstar's Annual Report on Form 10-K for the year ended December 31, 1999
incorporates by reference or sets forth information about executive
compensation, various benefit plans (including stock option plans), voting
securities and their principal holders, various relationships and related
transactions and other related matters pertaining to Firstar. We incorporate
this Annual Report on Form 10-K in this joint proxy statement-prospectus by
reference. If you would like copies of these documents, you may contact us at
the address or telephone number indicated under "Where You Can Find More
Information."
U.S. BANCORP
U.S. Bancorp is a bank holding company registered under the Bank Holding
Company Act and incorporated in Delaware. U.S. Bancorp is also a financial
holding company under the Bank Holding Company Act. U.S. Bancorp operates
approximately 1,000 banking offices in the Midwest and West. U.S. Bancorp
provides comprehensive banking, trust, investment and payment systems products
and services to consumers, businesses and institutions. It operates a network of
5,000 ATMs and provides 24-hour, seven-days-a-week telephone customer service.
It also offers full-service brokerage services at approximately 100 offices
through U.S. Bancorp Piper Jaffray. In addition, it is the largest provider of
Visa corporate and purchasing cards in the world, and is one of the largest
providers of corporate trust services in the nation.
At September 30, 2000, U.S. Bancorp's consolidated total assets were
approximately $86 billion, its total deposits were approximately $51 billion,
and its consolidated total stockholders' equity was approximately $8 billion.
Based on total assets at September 30, 2000, U.S. Bancorp was the 10th largest
bank holding company in the United States.
U.S. Bancorp is a legal entity separate and distinct from its banking and
non-banking subsidiaries. Accordingly, the right of U.S. Bancorp, and thus the
right of U.S. Bancorp's creditors, to participate in any distribution of the
assets or earnings of any subsidiary, other than in its capacity as a creditor
of the subsidiary, is subject to the prior payment of claims of creditors of the
subsidiary. The principal sources of our company's revenues are dividends and
fees from our subsidiaries.
U.S. Bancorp's executive offices are located at U.S. Bank Place, 601 Second
Avenue South, Minneapolis, Minnesota 55402, and our telephone number is
(612) 973-1111.
U.S. Bancorp's Annual Report on Form 10-K for the year ended December 31,
1999 incorporates by reference or sets forth information relating to executive
compensation, various benefit plans (including stock option plans), voting
securities and their principal holders, various relationships and related
transactions and other related matters pertaining to U.S. Bancorp. We
incorporate this Annual Report on Form 10-K in this joint proxy
statement-prospectus by reference. If you would like copies of these documents,
you may contact U.S. Bancorp at our address or telephone number indicated under
"Where You Can Find More Information."
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CAPITAL STOCK OF THE COMBINED COMPANY
As a result of the merger, Firstar stockholders and U.S. Bancorp
stockholders will become stockholders of the combined company. Your rights as
stockholders of the combined company will be governed by Delaware law and the
certificate of incorporation and by-laws of the combined company, which will
generally be the same as those of U.S. Bancorp with the changes contemplated by
the merger agreement and described in this joint proxy statement-prospectus.
This description of the capital stock of the combined company, including the
common stock to be issued in the merger, reflects the anticipated state of
affairs at the effective time of the merger. The following summarizes the
material terms of the capital stock of the combined company but does not purport
to be complete, and is qualified in its entirety by reference to the applicable
provisions of federal law governing bank holding companies, Delaware law and the
certificate of incorporation and by-laws of the combined company.
COMMON STOCK OF THE COMBINED COMPANY
Following the merger, the combined company will be authorized to issue up to
4 billion shares of common stock, par value $1.25 per share. All of the issued
and outstanding shares of combined company common stock will be validly issued,
fully paid and nonassessable.
VOTING AND OTHER RIGHTS. The holders of common stock of the combined company
will be entitled to one vote per share, and, in general, a majority of votes
cast with respect to a matter will be sufficient to authorize action upon
routine matters. Directors are to be elected by a majority of the votes cast,
and stockholders of the combined company will not have the right to cumulate
their votes in the election of directors. For that reason, holders of a majority
of the shares of common stock of the combined company entitled to vote in any
election of directors may elect all of the directors standing for election. In
general, however:
- amendments to the certificate of incorporation of the combined company
will be approved if the votes cast within a voting group favoring the
action exceed the votes cast within the voting group opposing the action;
and
- a merger or dissolution of the combined company, or the sale of all or
substantially all of its assets, must be approved by the affirmative vote
of the holders of a majority of the voting power of the outstanding voting
shares and the affirmative vote of the holders of a majority of the
outstanding shares of each class entitled to vote on the matter as a
class.
NO PREEMPTIVE OR CONVERSION RIGHTS. Common stock of the combined company will
not entitle its holders to any preemptive rights, redemption privileges, sinking
fund privileges or conversion rights.
ASSETS UPON DISSOLUTION. In the event of liquidation, holders of common stock
of the combined company would be entitled to receive proportionately any assets
legally available for distribution to stockholders of the combined company with
respect to shares held by them, subject to any prior rights of any preferred
stock of the combined company then outstanding.
DISTRIBUTIONS. Holders of common stock of the combined company will be entitled
to receive the dividends or distributions that the board of directors of the
combined company may declare out of funds legally available for these payments.
The payment of distributions by the combined company will be subject to the
restrictions of Delaware law applicable to the declaration of distributions by a
corporation. Under Delaware law, a corporation may not pay a dividend out of net
profits if the capital of the corporation is less than the stated amount of
capital represented by the issued and outstanding stock of all classes having a
preference upon the distribution of the corporation's assets. In addition, the
payment of distributions to stockholders is subject to any prior rights of
outstanding preferred stock. See "--Preferred Stock of the Combined Company."
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As a bank holding company, the ability of the combined company to pay
distributions will be affected by the ability of its banking subsidiaries to pay
dividends. The ability of these banking subsidiaries, as well as of the combined
company, to pay dividends in the future currently is, and could be further,
influenced by bank regulatory requirements and capital guidelines.
RESTRICTIONS ON OWNERSHIP. The Bank Holding Company Act would generally
prohibit any company that is not engaged in banking activities and activities
that are permissible for a bank holding company or a financial holding company
from acquiring control of the combined company (or of Firstar or U.S. Bancorp).
Control is generally defined as ownership of 25% or more of the voting stock or
other exercise of a controlling influence. In addition, any existing bank
holding company would require the prior approval of the Federal Reserve Board
before acquiring 5% or more of the voting stock of the combined company (or of
Firstar or U.S. Bancorp). In addition, the Change in Bank Control Act of 1978,
as amended, prohibits a person or group of persons from acquiring "control" of a
bank holding company unless the Federal Reserve Board has been notified and has
not objected to the transaction. Under a rebuttable presumption established by
the Federal Reserve Board, the acquisition of 10% or more of a class of voting
stock of a bank holding company with a class of securities registered under
Section 12 of the Exchange Act, such as Firstar or U.S. Bancorp (or as the
combined company will have), would, under the circumstances set forth in the
presumption, constitute acquisition of control of the bank holding company.
PREFERRED STOCK OF THE COMBINED COMPANY
The combined company will be authorized to issue up to 50 million shares of
preferred stock, par value $1.00 per share. The board of directors of the
combined company will be authorized to issue preferred stock in one or more
series, to fix the number of shares in each such series, and to determine the
designations and preferences, limitation and relative rights, of each series.
The board of directors of the combined company will determine the number of
shares constituting each series and the designation of any of these series,
dividend rates, terms of redemption, liquidation preferences, sinking fund
requirements, conversion rights, voting rights, and whether the preferred stock
can be issued as a share dividend with respect to another class or series of
shares, all without any vote or other action on the part of stockholders.
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COMPARISON OF STOCKHOLDER RIGHTS
The rights of Firstar stockholders are governed by the Wisconsin Business
Corporation Law, or WBCL, the Firstar articles of incorporation and the Firstar
by-laws. The rights of U.S. Bancorp stockholders are governed by the Delaware
General Corporation Law, or DGCL, and by the U.S. Bancorp certificate of
incorporation and the U.S. Bancorp by-laws. After the merger, the rights of
combined company stockholders will be governed by the DGCL and the certificate
of incorporation and by-laws of the combined company, which will be those of
U.S. Bancorp, with the changes contemplated by the merger agreement and
described in this joint proxy statement-prospectus. The following summarizes the
material differences between the WBCL, the Firstar articles of incorporation and
the Firstar by-laws, on the one hand, and the DGCL, the U.S. Bancorp certificate
of incorporation and the U.S. Bancorp by-laws, on the other hand. Where
applicable, it also describes changes to the U.S. Bancorp certificate of
incorporation that we intend to make in connection with the merger. This summary
does not purport to be a complete discussion of, and is qualified in its
entirety by reference to, the Firstar articles of incorporation, the Firstar
by-laws, the U.S. Bancorp certificate of incorporation, the U.S. Bancorp
by-laws, the certificate of incorporation and by-laws of the combined company,
the WBCL and the DGCL.
AUTHORIZED CAPITAL STOCK
U.S. BANCORP. The U.S. Bancorp certificate of incorporation authorizes it to
issue up to 1.5 billion shares of common stock and 50 million shares of
preferred stock. The certificate of incorporation of the combined company will
authorize it to issue 4 billion shares of common stock and 50 million shares of
preferred stock.
FIRSTAR. The Firstar articles of incorporation authorize it to issue up to
2 billion shares of common stock and 10 million shares of preferred stock.
SIZE OF BOARD OF DIRECTORS
U.S. BANCORP. The U.S. Bancorp certificate of incorporation provides for the
U.S. Bancorp board to consist of not less than 12 nor more than 30 directors.
The exact number is fixed by resolution of the U.S. Bancorp board.
FIRSTAR. The Firstar articles of incorporation provide for the Firstar board to
consist of not less than nine nor more than 35 directors. The exact number is
fixed by resolution of the Firstar board.
CLASSES OF DIRECTORS
U.S. BANCORP. The U.S. Bancorp certificate of incorporation provides that the
U.S. Bancorp board is divided into three classes of directors as nearly equal in
number as possible, with each class being elected to a staggered three-year
term.
FIRSTAR. The Firstar articles of incorporation contain a substantially
identical provision.
QUALIFICATIONS OF DIRECTORS
U.S. BANCORP. The U.S. Bancorp certificate of incorporation and by-laws contain
no age limits for directors.
FIRSTAR. The Firstar by-laws provide that, with limited exceptions, a person is
not eligible to be elected or re-elected to the Firstar board if that person is
over 70 years of age.
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FILLING VACANCIES ON THE BOARD OF DIRECTORS
U.S. BANCORP. Under the U.S. Bancorp certificate of incorporation and by-laws,
any vacancy occurring in the U.S. Bancorp board may be filled by a majority of
the remaining directors.
FIRSTAR. Under the Firstar articles of incorporation, any vacancy occurring in
the Firstar board may be filled by a majority of the remaining directors. If
there are no directors then in office, the stockholders will be entitled to fill
vacancies on the board of directors.
REMOVAL OF DIRECTORS
U.S. BANCORP. Under DGCL Section 141, directors of a corporation with a
classified board of directors, such as U.S. Bancorp, may be removed only for
cause unless the certificate of incorporation provides otherwise. Under the U.S.
Bancorp certificate of incorporation, directors may be removed only for cause.
FIRSTAR. WBCL Section 808 allows for the removal of directors with or without
cause unless the articles of incorporation or by-laws provide otherwise. The
Firstar articles of incorporation provide that a director may be removed only
for cause, defining "cause" as a nonappealable conviction of a felony or a
nonappealable judgment by a court of liability for willful misconduct in the
performance of his or her duties in a matter that has a material adverse effect
on the corporation.
NOMINATION OF DIRECTORS FOR ELECTION
U.S. BANCORP. Under the U.S. Bancorp by-laws, nominations for the U.S. Bancorp
board may be made by any stockholder that complies with specified notice
procedures. These procedures require the nomination to be received by U.S.
Bancorp no later than:
- in the case of annual meetings, 120 days prior to the date of U.S.
Bancorp's proxy statement for the previous year's annual meeting (unless
there was no annual meeting during the previous year or the date of the
current year's annual meeting has changed by more than 30 days from the
date contemplated at the time of the previous year's proxy statement, in
which case the notice must be received a reasonable time before proxies
are solicited for the current year's meeting); or
- in the case of a special meeting for the election of directors, the close
of business on the seventh business day after the notice of the meeting is
first given to stockholders.
FIRSTAR. Under the Firstar articles of incorporation, nominations for the
Firstar board may be made by any stockholder who complies with specified notice
procedures. These procedures require the nomination to be received by Firstar no
later than the earlier of:
- 45 days in advance of the first anniversary of the date proxy statements
were mailed for the prior year's annual meeting; and
- the later of 70 days prior to the date of the annual meeting for which the
nomination is being made and 10 business days after the first public
announcement of the date of the annual meeting.
ANTI-TAKEOVER PROVISIONS--BUSINESS COMBINATIONS
Both the DGCL and WBCL contain business combination statutes that protect
domestic corporations from hostile takeovers, and from actions following such a
takeover, by prohibiting some transactions once an acquiror has gained a
significant holding in the corporation.
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DELAWARE LAW. Under DGCL Section 203, during the three-year period after a
person becomes an interested stockholder, a corporation may not engage in a
business combination with the interested stockholder unless:
- prior to the transaction in which the interested stockholder becomes such,
the board of directors approved that transaction or the business
combination;
- the interested stockholder owns at least 85% of the voting stock of the
corporation as a result of the transaction in which the stockholder became
interested; or
- the business combination is approved by the board of directors and a
two-thirds stockholder majority (excluding shares owned by the interested
stockholder).
A "business combination" includes mergers, sales of corporate assets or
stock, certain reclassifications and recapitalizations and similar transactions.
An "interested stockholder" is one that beneficially owns or controls 15% or
more of the outstanding voting shares of the corporation, or is an affiliate or
associate of the corporation and had such ownership within the last three years.
Section 203 allows a corporation to "opt-out" of its protections by adopting
an appropriate amendment to its certificate of incorporation or by-laws. U.S.
Bancorp has not adopted such an amendment, and therefore is protected by
Section 203.
WISCONSIN LAW.
BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS. Under WBCL
Section 1141, during the three-year period after a person becomes an interested
stockholder, a corporation generally may not engage in a business combination
with the interested stockholder unless the corporation's board of directors
approved the business combination or the acquisition of the stock prior to the
acquisition date. Following this three-year period, the WBCL also prohibits a
business combination with an interested stockholder unless:
- the board of directors approved the business combination or the
acquisition of the stock prior to the acquisition date;
- the business combination is approved by a majority of the outstanding
voting stock not owned by the interested stockholder;
- the consideration to be received by stockholders meets the "fair price"
and form requirements of the statute; or
- the business combination is of a type specifically excluded from the
coverage of the statute.
The definition of "business combination" under WBCL Section 1141 is
generally similar to that contained in DGCL Section 203. The definition of
"interested stockholder" is generally similar to the definition of "interested
stockholder" in DGCL Section 203, except that the interest a holder must have to
be considered "interested" under WBCL Section 1141 is 10%, as opposed to 15%
under DGCL Section 203.
In addition, stockholders of Wisconsin corporations have appraisal rights in
business combinations that they may not have in transactions not involving an
interested stockholder.
BUSINESS COMBINATIONS WITH SIGNIFICANT STOCKHOLDERS. WBCL Sections 1130 to
1134 govern mergers or share exchanges between public Wisconsin corporations and
their significant stockholders, and sales of all or substantially all of the
assets public Wisconsin corporations to significant stockholders. These
transactions must be approved by 80% of all stockholders and two-thirds of
stockholders other than the significant stockholder unless the stockholders
receive a statutorily-determined fair price. This is intended to insure that
stockholders in a second step merger, share exchange or asset sale receive at
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least what stockholders received in the first step. The definition of
"significant stockholder" under WBCL Section 1130 is generally similar to the
definition of "interested stockholder" contained in WBCL Section 1141.
In addition to the protections provided by the DGCL and the WBCL, the
Firstar articles of incorporation and U.S. Bancorp certificate of incorporation
also contain provisions regulating business combinations with persons who own a
specified portion of each company's stock.
U.S. BANCORP. The U.S. Bancorp certificate of incorporation provides that an
80% stockholder majority must approve any "business transaction" with a "related
person" unless:
- the business transaction is approved by a majority of U.S. Bancorp's
continuing directors; or
- all the following criteria are satisfied:
- certain fair price criteria are met;
- after the related person acquires at least 10% of the voting power of
U.S. Bancorp and before the business transaction is completed, the
related person does not acquire any more voting securities of U.S.
Bancorp except as part of the transaction in which the related person
crossed the 10% threshold or as a result of a PRO RATA stock dividend or
stock split; and
- before the business transaction is completed, the related person does not
(1) receive any loans, advances or other financial assistance from U.S.
Bancorp, (2) cause any material change in U.S. Bancorp's business or
equity capital structure, or (3) without the approval of U.S. Bancorp's
continuing directors, cause U.S. Bancorp to fail to pay quarterly cash
dividends or to reduce those dividends.
The definition of "business combination" under the U.S. Bancorp certificate
of incorporation is generally similar to that contained in DGCL Section 203. A
"related person" is defined as any person or group that beneficially owns 10% or
more of the voting power of U.S. Bancorp. A "continuing director" is one who was
on the U.S. Bancorp board on April 24, 1986 or whose election was approved by a
majority of the then-continuing directors (unless the director in question is a
related person and the business transaction to be voted upon is one in which the
director has a personal interest other than as a stockholder).
FIRSTAR. The Firstar articles of incorporation prohibit Firstar from engaging
in a business combination with an interested stockholder unless the transaction:
- is approved by at least 80% of the voting power of all the shares of
capital stock of Firstar;
- is approved by a majority of Firstar's continuing directors; or
- satisfies certain fair price criteria.
The definition of "business combination" in the Firstar articles of
incorporation is generally similar to that contained in Section 203. The Firstar
articles of incorporation define "interested stockholder" as a person or group
that is, or was within the past two years, the beneficial owner of 5% or more of
the voting power of Firstar. A "continuing director" is one who is not, and is
not an affiliate of or associated with, an interested stockholder and either
(1) was a member of the Firstar board before the interested stockholder became
such or (2) was elected with the approval of a majority of the then-continuing
directors.
ANTI-TAKEOVER PROVISIONS--CONTROL SHARE ACQUISITIONS
U.S. BANCORP. The DGCL has no control share acquisition statute.
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FIRSTAR. WBCL Section 1150 provides that, in some circumstances, the voting
power of shares of a public Wisconsin corporation held by any person in excess
of 20% of the total voting power of the corporation is limited to 10% of the
voting power those excess shares would otherwise have. Full voting power may be
restored if a majority of the voting power of shares represented at a meeting,
including those held by the party seeking restoration, are voted in favor of the
restoration.
WBCL Section 1134 requires stockholder approval for some transactions in the
context of a tender offer (or similar action) for more than 5% of any class of a
Wisconsin corporation's stock. Stockholder approval is required for the
acquisition of more than 5% of the corporation's stock at a price above market
value from any person who holds more than 3% of the voting shares and has held
the shares for less than two years, unless the corporation makes an equal offer
to acquire all shares. Stockholder approval is also required for the sale or
option of assets that amount to at least 10% of the market value of the
corporation, but this requirement does not apply if the corporation has at least
three directors who are not officers or employees of the corporation, or a
majority of the disinterested directors chooses to opt out of this provision.
STOCKHOLDER RIGHTS PLAN
U.S. BANCORP. U.S. Bancorp does not currently have a stockholder rights plan.
We expect that U.S. Bancorp will adopt a stockholder rights plan, generally
similar in terms to the Firstar plan described below, to be effective no later
than the effective time of the merger.
FIRSTAR. Firstar has a stockholder rights plan that could discourage unwanted
or hostile takeover attempts that are not approved by the Firstar board. The
rights plan allows holders of Firstar common stock to purchase shares in either
Firstar or an acquiror at a discount to market value in response to specified
takeover events that are not approved in advance by the Firstar board.
THE RIGHTS. On November 20, 1998, the Firstar board declared a dividend of
one preferred share purchase right for each Firstar common share outstanding.
The rights currently trade with, and are inseparable from, the common stock.
EXERCISE PRICE. Each right allows its holder to purchase from Firstar one
one-hundredth of a Firstar Series A Preferred Share for $58.33. This portion of
a preferred share will give the stockholder approximately the same dividend,
voting, and liquidation rights as would one share of common stock.
EXERCISABILITY. The rights will not be exercisable until:
- 10 days after a public announcement that a person or group has obtained
beneficial ownership of 15% or more of Firstar's outstanding common stock;
or
- 10 business days after a person or group begins a tender or exchange offer
that, if completed, would result in that person or group becoming the
beneficial owner of 15% or more of Firstar's outstanding common stock.
The date when the rights become exercisable is referred to in the rights
plan as the "distribution date." After that date, the rights will be evidenced
by rights certificates that Firstar will mail to all eligible holders of common
stock. A person or member of a group that has obtained beneficial ownership of
15% or more of Firstar's outstanding common stock may not exercise any rights
even after the distribution date.
CONSEQUENCES OF A PERSON OR GROUP BECOMING AN ACQUIRING PERSON: A person or
group that acquires beneficial ownership of 15% or more of Firstar's outstanding
common stock is called an "acquiring person."
- FLIP IN. If a person or group becomes an acquiring person, all holders of
rights other than the acquiring person may purchase shares of Firstar
common stock at half their market value.
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- FLIP OVER. If, after a person or group becomes an acquiring person,
Firstar merges or consolidates with another entity, or if 50% or more of
Firstar's consolidated assets or earning power are sold, all holders of
rights other than the acquiring person may purchase shares of the
acquiring company at half their market value.
THE AMENDMENT TO THE RIGHTS PLAN. Immediately before entering into the
merger agreement, Firstar amended the rights plan to provide that the rights
will not become exercisable as a result of the merger agreement, the stock
option agreement or the transactions described in those agreements. The rights
plan amendment also provides that U.S. Bancorp will not become an acquiring
person as a result of the merger agreement, the stock option agreement or the
transactions described in those agreements, and that the Firstar rights plan
will terminate upon completion of the merger.
STOCKHOLDER ACTION WITHOUT A MEETING
U.S. BANCORP. The U.S. Bancorp certificate of incorporation provides that
stockholders may not act by written consent in lieu of a meeting.
FIRSTAR. Under WBCL Section 704, any action that may be taken by stockholders
at a meeting may be taken without a meeting only if a consent is signed by all
of the stockholders entitled to vote with respect to the subject matter unless
the articles of incorporation provide otherwise. The Firstar articles of
incorporation do not otherwise provide.
CALLING SPECIAL MEETINGS OF STOCKHOLDERS
U.S. BANCORP. Under the U.S. Bancorp by-laws, a special meeting of the
stockholders may be called only by the U.S. Bancorp board or its chief executive
officer.
FIRSTAR. Under WBCL Section 702, a special meeting of stockholders may be
called by the holders of 10% of the votes entitled to be cast at the meeting.
Under the Firstar by-laws, as permitted by the WBCL, the chairman of the board
of directors, the president or a majority of the Firstar board may also call a
special meeting. The Firstar by-laws set forth in detail the procedures required
to call a special meeting of stockholders and the business that may be conducted
at a special meeting.
SUBMISSION OF STOCKHOLDER PROPOSALS
U.S. BANCORP. The U.S. Bancorp by-laws provide that, in order for a stockholder
to bring business before an annual meeting, the stockholder must give timely
notice of the proposal to U.S. Bancorp. To be timely, the notice must be
received not later than the 120th day prior to the date that the proxy statement
for the previous year's annual meeting was released to stockholders (unless
there was no annual meeting during the previous year or the date of the current
year's annual meeting has changed by more than 30 days from the date
contemplated at the time of the previous year's proxy statement, in which case
the notice must be received a reasonable time before proxies are solicited for
the current year's meeting).
FIRSTAR. The Firstar by-laws provide that, in order for a stockholder to bring
business before an annual meeting, the stockholder must give timely notice of
the proposal to Firstar. To be timely, a notice must be received no later than
the earlier of:
- 45 days in advance of the first anniversary of the date proxy statements
were mailed for the prior year's annual meeting; and
- the later of 70 days prior to the date of the annual meeting for which the
nomination is being made and 10 business days after the first public
announcement of the date of the annual meeting.
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NOTICE OF STOCKHOLDER MEETINGS
U.S. BANCORP. Under DGCL Section 222, U.S. Bancorp must deliver a notice of an
annual or special meeting not less than 10 nor more than 60 days before the date
of the meeting.
FIRSTAR. Under WBCL Section 705, a Wisconsin corporation must notify its
stockholders of annual or special meetings not less than 10 nor more than
60 days before an annual or special meeting unless the corporation's articles of
incorporation or by-laws provide otherwise. The Firstar by-laws generally follow
the WBCL on this point, except that for special meetings called by the Chairman
of the board or the president upon the demand of stockholders, Firstar must send
the notice within 30 days after holders of shares representing at least 10% of
the votes entitled to be cast at the special meeting deliver the demand to
Firstar.
DIVIDENDS
U.S. BANCORP. Under DGCL Section 170, a Delaware corporation may pay dividends
only out of its surplus or its net profits for the current or preceding fiscal
year. In addition, a dividend may not be paid out of net profits if the capital
of the corporation is less than the stated amount of capital represented by the
issued and outstanding stock of all classes having a preference upon the
distribution of the corporation's assets.
FIRSTAR. Under WBCL Section 640, the board of directors of a Wisconsin
corporation may authorize, and the corporation may pay, dividends or make other
distributions to its stockholders (including the repurchase of its shares)
unless either of following is true:
- after the distribution the corporation would not be able to pay its debts
as they become due in the usual course of business; or
- the corporation's total assets after the distribution would be less than
the sum of its total liabilities plus, unless the certificate of
incorporation provides otherwise, the amount that would be needed, if the
corporation were to be dissolved at the time of the distribution, to
satisfy the preferential rights upon dissolution of stockholders whose
preferential rights are superior to those receiving the distribution.
DISSENTERS' APPRAISAL RIGHTS
U.S. BANCORP. Under DGCL Section 262, a stockholder of a Delaware corporation
that is a party to a merger or consolidation has the right to dissent from the
merger or consolidation and to demand payment of the fair value of the
stockholder's shares, unless:
- the stock with respect to which the dissent is made is:
- listed on a national securities exchange,
- designated as a national market system security on an interdealer
quotation system,
- held of record by more than 2,000 holders, or
- is stock in the surviving corporation in a merger that was legally
completed without stockholder approval under Delaware law; and
- stockholders receive anything in the merger or consolidation other than:
- shares of stock in the surviving corporation,
- shares of stock of another corporation that is listed on a national
securities exchange, designated as a national market system security or
held by more than 2,000 holders, or
- cash in lieu of fractional shares.
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FIRSTAR. Under WBCL Section 1302, stockholders of a corporation are generally
entitled to receive payment of the fair value of their stock if they dissent
from specified transactions, including a proposed merger, share exchange or a
sale of substantially all of the assets of the corporation. However, dissenters'
rights generally are not available to holders of shares, such as shares of
Firstar common stock, that are registered on a national securities exchange or
quoted on NASDAQ unless the corporation's articles of incorporation provide
otherwise or the transaction is a business combination as described under
"--Anti-Takeover Provisions--Business Combinations." A merger that does not
alter the contract rights of the shares and does not change or convert the
shares is not a business combination for this purpose.
STOCKHOLDER CLASS VOTING RIGHTS
U.S. BANCORP. Under DGCL Section 242, holders of a particular class of shares
are entitled to vote as a separate class if the rights of that class are
affected in various respects by amendments to the certificate of incorporation.
If the amendment affects only a part of a class, that part is entitled to vote
as a class.
FIRSTAR. Under WBCL Sections 1004 and 1103, holders of a particular class of
shares are entitled to vote as a separate class if the rights of that class are
affected in various respects by mergers, consolidations or amendments to the
articles of incorporation. Under WBCL Section 1003, the presence or absence of
dissenters' rights for a voting group affects the right of that group to vote on
amendments to a corporation's articles of incorporation. If a voting group would
have dissenters' rights as a result of the amendment, then a majority of the
votes entitled to be cast by that voting group is required for adoption of the
amendment.
CONSIDERATION OF NON-STOCKHOLDER INTERESTS BY BOARD OF DIRECTORS
U.S. BANCORP. The DGCL does not expressly authorize the board of directors of a
Delaware corporation, in taking action, to consider the interests other than
those of stockholders, although judicial decisions interpreting Delaware law
have stated that in certain cases, directors may appropriately consider the
effect of a transaction on non-stockholder constituencies.
FIRSTAR. Under WBCL Section 827, in discharging his or her duties to the
corporation and in determining what he or she believes to be in the best
interests of the corporation, a director or officer may, in addition to
considering the effects of any action on stockholders, consider the effects of
the action on employees, suppliers, customers, the communities in which the
corporation operates and any other factors that the director or officer
considers pertinent. The Firstar articles of incorporation expressly incorporate
the constituency provisions of the WBCL and permit a director to consider the
long-term as well as short-term interests of Firstar and its stockholders,
including the possibility that these interests may be best served by Firstar's
continued independence.
INDEMNIFICATION
U.S. BANCORP. Under DGCL Section 145 and the U.S. Bancorp by-laws, U.S. Bancorp
will indemnify any person made, or threatened to be made, a party to any action,
suit, or proceeding, whether criminal, civil, administrative, or investigative,
by reason of the fact that such person:
- is or was a director, advisory director, or officer of U.S. Bancorp; or
- is or was a director, advisory director or officer of U.S. Bancorp and
served any other corporation or enterprise as a director, advisory
director, officer, partner, trustee, employee or agent at the request of
U.S. Bancorp;
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against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
the action, suit or proceeding, provided that the person:
- acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation; and
- with respect to any criminal action or proceeding, had no reasonable cause
to believe that his or her conduct was unlawful.
Pursuant to the merger agreement, the by-laws of the combined company after
the merger will additionally provide that the party seeking indemnification (the
"claimant") must submit a written request for indemnification. If the claimant
so requests, the determination of whether he or she is entitled to
indemnification will be made by an independent counsel, who will be an
independent attorney or law firm experienced in matters of corporate law. The
independent counsel will be chosen by the board of directors unless there was a
change in control of the corporation within the preceding two years, in which
case the independent counsel will be chosen by the claimant. If the claimant
does not request that the determination be made by an independent counsel, it
will be made by:
- the board of directors by majority vote of the disinterested directors or
a committee of disinterested directors designated by a majority vote of
the disinterested directors;
- if there are no disinterested directors or if the disinterested directors
so choose (or if a quorum of disinterested directors cannot be obtained),
by an independent counsel; or
- if the disinterested directors so choose, by the stockholders of the
combined company.
If the combined company fails to satisfy a claimant's request for
indemnification within 30 days, the claimant may bring suit against the company
to recover the unpaid amount of the claim.
Additionally, we have agreed that the by-laws of the combined company will
provide that the right to indemnification under the by-laws is a contract right
that includes the right to be paid the expenses incurred in defending any
proceeding for which indemnification is provided in advance of its final
disposition (subject, to the extent required by Delaware law, to delivery to the
combined company of an undertaking to repay all advances if it is ultimately
determined that a director, advisory director or officer is not entitled to be
indemnified). We have also agreed in the merger agreement that the by-laws of
the combined company will provide that the right to indemnification and the
advance payment of expenses will not be exclusive of any other right that any
person may have to indemnification under law, from the combined company or
otherwise, and that no repeal or modification of the indemnification by-law will
diminish or adversely affect the rights of any director, officer, employee or
agent of the combined company relating to anything arising prior to the repeal
or modification.
FIRSTAR. Under WBCL Section 851, a Wisconsin corporation must indemnify its
directors and officers against liability incurred by the director or officer in
a proceeding to which the indemnified person was a party because he or she is a
director or officer, unless liability was incurred because a director or officer
breached or failed to perform a duty that he or she owes to the corporation and
the breach or failure constitutes:
- a willful failure to deal fairly with the corporation or its stockholders
in connection with a matter in which the director or officer has a
material conflict of interest;
- a violation of criminal law, unless the director or officer had reasonable
cause to believe that his or her conduct was lawful or no reasonable cause
to believe that his or her conduct was unlawful;
- a transaction from which the director or officer derived an improper
personal benefit; or
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- willful misconduct.
The Firstar by-laws provide that if a quorum of disinterested directors, by
majority vote, determines that the director or officer seeking indemnification
is not entitled to it, or if a quorum of disinterested directors cannot be
obtained within 30 days of Firstar being notified that the director or officer
is seeking indemnification, the Firstar board will immediately authorize an
"authority" (an independent attorney selected jointly by the disinterested
directors and the party seeking indemnification, a panel of jointly-selected
arbitrators or a court) to determine whether indemnification is due. If the
Firstar board fails to appoint an authority within the 30-day period, it will be
conclusively presumed that the disinterested directors determined that the
director or officer seeking indemnification is entitled to it. In the
determination proceeding before the authority, there is a rebuttable presumption
that the director or officer is entitled to indemnification. Firstar will pay
all costs associated with the determination process.
The Firstar by-laws also obligate Firstar to indemnify a director or officer
of any of its controlled banking subsidiaries (subsidiaries that are at least
80% owned by Firstar and chartered as bank or trust companies) against
liabilities and expenses incurred in a legal proceeding to the same extent
described in the preceding paragraph, so long as the proceeding is based on acts
or omissions alleged to have occurred after the controlled banking subsidiary
became a subsidiary of Firstar. Finally, the Firstar by-laws authorize the
board, in its discretion, to indemnify directors and officers of affiliated
entities and employees and agents of Firstar.
ASSESSABILITY
U.S. BANCORP. Under DGCL Section 102, stockholders of a Delaware corporation
will not, unless the corporation's certificate of incorporation provides
otherwise, be personally liable for the payment of the corporation's debts
except insofar as their liability arises from their own actions. The U.S.
Bancorp certificate of incorporation does not expand the personal liability of
its stockholders.
FIRSTAR. WBCL Section 622 provides that stockholders of Wisconsin corporations
are personally liable up to an amount equal to the par value of shares owned by
them (and to the consideration for which shares without par value were issued)
for debts owing to employees of the corporation for services performed for the
corporation, but not exceeding six months' service in any one case.
AMENDMENTS TO ARTICLES OF INCORPORATION
U.S. BANCORP. The U.S. Bancorp certificate of incorporation provides that those
portions of the certificate of incorporation relating to the number and
classification of directors, filling of vacancies on the board of directors,
stockholder action by written consent, business transactions with related
persons and limitations on the liability of directors may not be amended without
the approval of an 80% stockholder majority. Under DGCL Section 242, all other
amendments to the U.S. Bancorp certificate of incorporation requires only
majority stockholder approval.
FIRSTAR. Under WBCL Section 1003, the board of directors may propose amendments
to a corporation's articles of incorporation and can establish conditions for
the amendment. The WBCL provides that amendments to articles of incorporation,
except in some limited circumstances, must be approved by the stockholders in
addition to approval by the board of directors. The vote of stockholders needed
to approve an amendment depends in part on the rights of the voting groups
entitled to vote separately on the amendment. If a voting group would have
dissenters' rights as a result of the amendment, then a majority of the votes
entitled to be cast by that voting group is required for adoption of the
amendment. Otherwise, the WBCL provides that, if a quorum exists, the amendment
will be adopted if the votes cast within the voting group favoring the action
exceed the votes cast opposing the action, unless the articles of incorporation
or the WBCL require a greater number of affirmative votes. The Firstar articles
of incorporation require 80% majority stockholder
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approval of amendments to the provisions of the Firstar articles of
incorporation relating to stockholder proposals, the board of directors,
business combinations, special meetings of stockholders and amendments to the
provision of the articles of incorporation that calls for the supermajority
votes described above.
AMENDMENT OF BY-LAWS
U.S. BANCORP. DGCL Section 109 provides that a Delaware corporation's by-laws
may be amended by the stockholders and, if the certificate of incorporation so
provides, by the board of directors. The U.S. Bancorp certificate of
incorporation authorizes the board to amend the U.S. Bancorp by-laws.
FIRSTAR. WBCL Section 1020 provides that a corporation's stockholders or board
of directors may adopt, amend or repeal the corporation's by-laws. However, the
corporation's articles of incorporation may reserve that power exclusively to
the stockholders. In addition, in adopting, amending or repealing a particular
by-law, the stockholders may prohibit the board of directors from amending,
repealing or readopting that by-law. The Firstar articles of incorporation
require 80% stockholder approval of amendments relating to the by-laws that
govern stockholder proposals and special meetings.
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VALIDITY OF COMMON STOCK
The validity of the U.S. Bancorp common stock to be issued in the merger
will be passed upon by Sullivan & Cromwell, New York, New York.
EXPERTS
The consolidated financial statements of Firstar and its subsidiaries as of
December 31, 1999 and 1998 and for each of the years in the three-year period
ended December 31, 1999 incorporated in this joint proxy statement-prospectus by
reference to Firstar's Annual Report on Form 10-K for the year ended
December 31, 1999 have been incorporated in this document by reference in
reliance on the report with respect to those financial statements of
PricewaterhouseCoopers LLP, independent public accountants, given upon the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of U.S. Bancorp appearing in U.S.
Bancorp's Annual Report on Form 10-K for the year ended December 31, 1999, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
STOCKHOLDER PROPOSALS
Firstar stockholders may submit proposals to be considered for stockholder
action at the 2001 annual meeting of Firstar stockholders (which we expect will
only be held if the merger has not been completed or the merger agreement is
terminated) if they do so in accordance with the applicable regulations of the
SEC and the Firstar articles of incorporation and by-laws. Any proposals to be
included in the proxy statement sent by Firstar to Firstar stockholders in
connection with such a 2001 annual meeting must be received by the Secretary of
Firstar no later than November 1, 2000 in order to be considered for inclusion
in such proxy statement. Any proposal from a Firstar stockholder to be presented
to the 2001 annual meeting of Firstar stockholders that is submitted outside the
processes of Rule 14a-8 under the Exchange Act and that therefore will not be
included in proxy material to be sent to Firstar stockholders by Firstar must be
received by the Secretary of Firstar no later than the earlier of (1)
January 17, 2001 and (2) the later of 70 days prior to the date of the 2001
annual meeting of Firstar stockholders and 10 business days after the first
public announcement of the date of the 2000 annual meeting, in order to be
considered timely under the Firstar articles of incorporation and by-laws.
In order for stockholder proposals for the 2001 annual meeting of U.S.
Bancorp stockholders to be eligible for inclusion in the U.S. Bancorp proxy
statement for such meeting, they must be received by U.S. Bancorp at its
principal office in Minneapolis, Minnesota on or before November 16, 2000. If a
stockholder desires to bring business before the annual meeting that is not the
subject of a proposal timely submitted for inclusion in the U.S. Bancorp proxy
statement, written notice of such business, as prescribed in the U.S. Bancorp
by-laws, must be received by U.S. Bancorp at its principal office on or before
November 16, 2000. If U.S. Bancorp does not receive timely notice, such business
will be excluded from consideration at the meeting.
OTHER MATTERS
As of the date of this joint proxy statement-prospectus, the U.S. Bancorp
board and the Firstar board know of no matters that will be presented for
consideration at either of their special meetings other than as described in
this joint proxy statement-prospectus. If any other matters properly come before
either of the Firstar or U.S. Bancorp special meetings, or any adjournments or
postponements of these meetings, and be voted upon, the enclosed proxies will be
deemed to confer discretionary authority on the individuals that they name as
proxies to vote the shares represented by these proxies
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as to any of these matters. The individuals named as proxies intend to vote or
not to vote in accordance with the recommendation of the respective managements
of U.S. Bancorp and Firstar.
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of PricewaterhouseCoopers LLP will be present at the Firstar
special meeting and representatives of Ernst & Young LLP will be present at the
U.S. Bancorp special meeting. In each case, these representatives will have the
opportunity to make a statement if they desire to do so and are expected to be
available to respond to appropriate questions.
WHERE YOU CAN FIND MORE INFORMATION
U.S. Bancorp has filed a registration statement with the SEC under the
Securities Act that registers the distribution to Firstar and U.S. Bancorp
stockholders of the shares of common stock of the combined company to be issued
in connection with the merger. The registration statement, including the
attached exhibits and schedules, contains additional relevant information about
Firstar, U.S. Bancorp and the combined company and the common stock of these
companies. The rules and regulations of the SEC allow us to omit some
information included in the registration statement from this document.
In addition, Firstar (File No. 1-2981) and U.S. Bancorp (File No. 1-6880)
file reports, proxy statements and other information with the SEC under the
Exchange Act. You may read and copy this information at the following locations
of the SEC:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like Firstar and
U.S. Bancorp, that file electronically with the SEC. The address of that site is
HTTP://WWW.SEC.GOV. Firstar's address on the world wide web is
HTTP://WWW.FIRSTAR.COM, and U.S. Bancorp's address is HTTP://WWW.USBANK.COM. The
information on our web sites is not a part of this document.
You can also inspect reports, proxy statements and other information about
Firstar and U.S. Bancorp at the offices of the NYSE, 20 Broad Street, New York,
New York 10005.
The SEC allows Firstar and U.S. Bancorp to "incorporate by reference"
information into this document. This means that the companies can disclose
important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is considered
to be a part of this document, except for any information that is superseded by
information that is included directly in this document.
77
<PAGE>
This document incorporates by reference the documents listed below that
Firstar and U.S. Bancorp have previously filed with the SEC. They contain
important information about our companies and their financial condition.
<TABLE>
<CAPTION>
U.S. BANCORP FILINGS PERIOD OR DATE FILED
-------------------- ---------------------------------------------
<S> <C>
Annual Report on Form 10-K................... Year ended December 31, 1999
Quarterly Reports on Form 10-Q............... Quarters ended June 30, 2000 and March 31,
2000
Current Reports on Form 8-K.................. October 12, 2000, October 4, 2000,
August 22, 2000 and July 20, 2000
The description of U.S. Bancorp common stock
set forth in the registration statement on
Form 8-A12B filed pursuant to Section 12 of
the Securities and Exchange Act, including
any amendment or report filed with the SEC
for the purpose of updating this
description................................ March 24, 1998 (as amended by a
Form 8-A12B/A filed on March 26, 1998)
</TABLE>
<TABLE>
<CAPTION>
FIRSTAR FILINGS PERIOD OR DATE FILED
--------------- ---------------------------------------------
<S> <C>
Annual Report on Form 10-K................... Year ended December 31, 1999
Quarterly Reports on Form 10-Q............... Quarters ended June 30, 2000, March 31, 2000
(as amended by a Form 10-Q/A filed on
June 1, 2000)
Current Reports on Form 8-K.................. October 12, 2000
The description of Firstar Corporation common
stock set forth in the registration
statement on Form 8-A12B filed pursuant to
Section 12 of the Securities and Exchange
Act, including any amendment or report
filed with the SEC for the purpose of
updating this description.................. December 1, 1998
The description of the rights agreement,
contained in Form 8-K filed pursuant to
Section 12 of the Securities Exchange Act,
including any amendment or report filed
with the SEC for the purpose of updating
this description........................... January 1, 1989
</TABLE>
Firstar and U.S. Bancorp incorporate by reference additional documents that
either company may file with the SEC between the date of this document and the
dates of their respective special meetings. These documents include periodic
reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K, as well as proxy statements.
Firstar has supplied all information contained or incorporated by reference
in this document relating to Firstar, as well as all pro forma financial
information, and U.S. Bancorp has supplied all such information relating to U.S.
Bancorp.
You can obtain any of the documents incorporated by reference in this
document through Firstar or U.S. Bancorp, as the case may be, or from the SEC
through the SEC's internet world wide web site at the address described above.
Documents incorporated by reference are available from the companies
78
<PAGE>
without charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference as an exhibit in this document. You can
obtain documents incorporated by reference in this document by requesting them
in writing or by telephone from the appropriate company at the following
addresses:
<TABLE>
<S> <C>
FIRSTAR U.S. BANCORP
Investor Relations Investor Relations
Firstar Corporation U.S. Bank Place
777 East Wisconsin Avenue 601 Second Avenue South
Milwaukee, Wisconsin 53202 Minneapolis, Minnesota 55402-4302
Telephone: (414) 765-5235 Telephone: (612) 973-2263
</TABLE>
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY [ ] TO
RECEIVE THEM BEFORE THE SPECIAL MEETINGS. If you request any incorporated
documents from us, we will mail them to you by first class mail, or another
equally prompt means, within one business day after we receive your request.
We have not authorized anyone to give any information or make any
representation about the merger or our companies that is different from, or in
addition to, that contained in this document or in any of the materials that
we've incorporated into this document. Therefore, if anyone does give you
information of this sort, you should not rely on it. If you are in a
jurisdiction where offers to exchange or sell, or solicitations of offers to
exchange or purchase, the securities offered by this document or the
solicitation of proxies is unlawful, or if you are a person to whom it is
unlawful to direct these types of activities, then the offer presented in this
document does not extend to you. The information contained in this document
speaks only as of the date of this document unless the information specifically
indicates that another date applies.
FORWARD-LOOKING STATEMENTS
This document, including information included or incorporated by reference
in this document, contains forward-looking statements with respect to the
financial condition, results of operations and business of Firstar and U.S.
Bancorp and, assuming the consummation of the merger, a combined Firstar and
U.S. Bancorp, including statements relating to:
- synergies (including cost savings), and accretion to reported earnings
expected to be realized from the merger;
- business opportunities and strategies potentially available to the
combined company;
- restructuring charges expected to be incurred in connection with the
merger;
- management, operations and policies of the combined company after the
merger; and
- statements preceded by, followed by or that include the words "believes,"
"expects," "anticipates," "intends," "estimates," "should" or similar
expressions.
These forward-looking statements involve some risks and uncertainties.
Factors that may cause actual results to differ materially from those
contemplated by these forward-looking statements include, among other things,
the following possibilities:
- expected cost savings from the merger cannot be fully realized or realized
within the expected time;
- revenues following the merger are lower than expected;
- competitive pressure among depository institutions increases
significantly;
79
<PAGE>
- costs or difficulties related to the integration of the businesses of
Firstar and U.S. Bancorp are greater than expected;
- changes in the interest rate environment reduce interest margins;
- general economic conditions, either nationally or in the states in which
the combined company will be doing business, are less favorable than
expected;
- legislation or regulatory requirements or changes adversely affect the
business in which the combined company will be engaged; and
- changes may occur in the securities market.
All dividends on common stock of the combined company are subject to
determination by the board in its discretion.
See "Where You Can Find More Information."
80
<PAGE>
FIRSTAR CORPORATION AND U.S. BANCORP
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information
and explanatory notes are presented to show the impact of the merger on our
companies' historical financial positions and results of operations under the
pooling-of-interests method of accounting. Under this method of accounting, the
recorded assets, liabilities, shareholders' equity, income and expenses of both
companies are combined and reflected at their historical amounts. The unaudited
pro forma condensed combined financial information combined the historical
financial information of Firstar and U.S. Bancorp as of June 30, 2000, for the
six-month period ended June 30, 2000 and for the twelve-month periods ended
December 31, 1999, 1998 and 1997. The unaudited pro forma condensed combined
balance sheet as of June 30, 2000 assumes the merger was consummated on that
date. The unaudited pro forma condensed combined statements of income give
effect to the merger as if the merger had been consummated at the beginning of
the earliest period presented.
The merger provides for the exchange of 1.265 shares of common stock of the
combined company for each outstanding share of U.S. Bancorp common stock and for
the exchange of 1 share of common stock of the combined company for each
outstanding share of Firstar common stock. The unaudited pro forma condensed
combined financial information is based on and derived from, and should be read
in conjunction with, our historical consolidated financial statements and the
related notes, which are incorporated in this document by reference. See "Where
You Can Find More Information."
The unaudited pro forma condensed combined balance sheet as of June 30, 2000
reflects the effect of an estimated non-recurring pre-tax merger charge of
$800 million. See Note 3 to the unaudited pro forma condensed combined financial
information on page 85 for further information. The combined company expects to
achieve substantial merger benefits, including reduced operating expenses. Also,
we currently contemplate that the combined company will increase its quarterly
cash dividend to $0.1875 per share after completing the merger, subject to a
determination by the combined company's board of directors in its discretion to
do so. The pro forma earnings do not reflect any of these anticipated financial
expenses and benefits and are not indicative of the results of future
operations. No assurances can be given with respect to the ultimate level of
financial benefits to be realized. See "Management and Operations After the
Merger."
The unaudited pro forma condensed combined financial information is
presented for illustrative purposes only and is not necessarily indicative of
the operating results or financial position that would have occurred if the
merger had been consummated during the periods or as of the dates for which the
pro forma data are presented, nor is it necessarily indicative of future
operating results or financial position of the combined company.
81
<PAGE>
FIRSTAR CORPORATION AND U.S. BANCORP
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AT JUNE 30, 2000
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FIRSTAR PRO FORMA
CORPORATION U.S. BANCORP ADJUSTMENTS PRO FORMA
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Cash and due from banks................... $ 3,502,277 $ 3,775,000 $ -- 7,277,277
Money market investments.................. 260,923 1,037,000 1,297,923
Trading securities........................ -- 765,000 765,000
Investment securities:
Available-for-sale...................... 12,756,055 4,526,000 17,282,055
Held-to-maturity........................ 245,317 -- 245,317
----------- ----------- ----------- ------------
Total securities.......................... 13,001,372 4,526,000 -- 17,527,372
Loans:
Commercial loans........................ 18,824,205 33,103,000 51,927,205
Real estate loans....................... 18,151,027 17,105,000 35,256,027
Retail loans............................ 15,171,619 17,176,000 32,347,619
----------- ----------- ----------- ------------
Total loans........................... 52,146,851 67,384,000 -- 119,530,851
Allowance for loan losses........... 717,631 1,039,000 1,756,631
----------- ----------- ----------- ------------
Net loans............................. 51,429,220 66,345,000 -- 117,774,220
Loans held for sale..................... 1,501,860 -- 1,501,860
Premises and equipment.................. 1,008,170 855,000 (48,000) 1,815,170
Intangible assets....................... 1,693,488 3,188,000 4,881,488
Other assets............................ 2,032,491 5,683,000 7,715,491
----------- ----------- ----------- ------------
Total assets.......................... $74,429,801 $86,174,000 $ (48,000) $160,555,801
=========== =========== =========== ============
LIABILITIES:
Deposits:
Noninterest-bearing deposits............ $ 9,842,403 $16,223,000 $ -- $ 26,065,403
Interest-bearing deposits............... 42,880,129 36,322,000 79,202,129
----------- ----------- ----------- ------------
Total deposits........................ 52,722,532 52,545,000 -- 105,267,532
Short-term borrowings..................... 9,666,931 2,034,000 11,700,931
Long-term debt............................ 4,481,685 20,712,000 25,193,685
Other liabilities......................... 1,352,172 2,952,000 530,000 4,834,172
----------- ----------- ----------- ------------
Total liabilities..................... 68,223,320 78,243,000 530,000 146,996,320
----------- ----------- ----------- ------------
SHAREHOLDERS' EQUITY:
Common stock.............................. 9,844 948,000 1,471,548 2,429,392
Surplus................................... 1,879,301 1,457,000 (2,222,495) 1,113,806
Retained earnings......................... 4,971,621 5,839,000 (578,000) 10,232,621
Treasury stock, at cost................... (531,854) (242,000) 750,947 (22,907)
Accumulated other comprehensive income.... (122,431) (71,000) (193,431)
----------- ----------- ----------- ------------
Total shareholders' equity............ 6,206,481 7,931,000 (578,000) 13,559,481
----------- ----------- ----------- ------------
Total liabilities and shareholders'
equity.............................. $74,429,801 $86,174,000 $ (48,000) $160,555,801
=========== =========== =========== ============
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma condensed
combined financial information.
82
<PAGE>
FIRSTAR CORPORATION AND U.S. BANCORP
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 2000
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FIRSTAR PRO FORMA
CORPORATION U. S. BANCORP ADJUSTMENTS PRO FORMA
----------- ------------- ----------- ----------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans........................ $2,153,339 $2,944,400 $ -- $5,097,739
Interest and fees on loans held for sale.......... 46,032 -- 46,032
Interest on investment securities................. 448,258 146,600 594,858
Interest on money market investments.............. 13,196 127,300 140,496
---------- ---------- ------- ----------
Total Interest Income........................... 2,660,825 3,218,300 -- 5,879,125
INTEREST EXPENSE
Interest on deposits.............................. 914,023 775,100 1,689,123
Interest on short-term borrowings................. 251,796 118,100 369,896
Interest on long-term debt........................ 150,766 617,400 768,166
---------- ---------- ------- ----------
Total Interest expense.......................... 1,316,585 1,510,600 -- 2,827,185
---------- ---------- ------- ----------
Net interest income........................... 1,344,240 1,707,700 -- 3,051,940
Provision for loan losses......................... 96,743 317,000 413,743
---------- ---------- ------- ----------
Net interest income after provision for loan
losses...................................... 1,247,497 1,390,700 -- 2,638,197
NONINTEREST INCOME:
Trust income...................................... 227,211 234,100 461,311
Mortgage banking income........................... 78,148 -- 78,148
Service charges on deposits....................... 103,070 226,500 329,570
Credit card and ATM income........................ 87,417 336,600 424,017
Investment products fees and commissions.......... 11,567 198,000 209,567
Investment banking revenue........................ -- 166,800 166,800
Trading account profits and commissions........... -- 141,800 141,800
All other income.................................. 225,395 293,300 518,695
---------- ---------- ------- ----------
732,808 1,597,100 -- 2,329,908
Investment securities gains/(losses)--net......... 14 -- 14
---------- ---------- ------- ----------
Total noninterest income........................ 732,822 1,597,100 -- 2,329,922
NONINTEREST EXPENSE:
Salaries.......................................... 373,624 846,200 1,219,824
Pension and other employee benefits............... 53,127 145,400 198,527
Equipment expense................................. 70,822 81,600 152,422
Occupancy expense--net............................ 80,614 112,300 192,914
Goodwill and other intangible assets.............. 60,199 115,000 175,199
All other expense................................. 256,729 464,000 720,729
---------- ---------- ------- ----------
895,115 1,764,500 -- 2,659,615
Merger and restructuring expenses................. 118,800 28,100 146,900
---------- ---------- ------- ----------
Total noninterest expense....................... 1,013,915 1,792,600 -- 2,806,515
INCOME BEFORE TAX................................. 966,404 1,195,200 -- 2,161,604
Income tax........................................ 341,862 423,100 764,962
---------- ---------- ------- ----------
NET INCOME........................................ $ 624,542 $ 772,100 $ -- $1,396,642
========== ========== ======= ==========
PER SHARE:
Basic earnings per common share................... $ 0.64 $ 1.03 $ 0.73
Diluted earnings per common share................. $ 0.64 $ 1.03 $ 0.72
Average common shares--basic (thousands).......... 971,758 747,176 1,916,936
Average common shares--diluted (thousands)........ 981,983 749,882 1,930,584
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma condensed
combined financial information.
83
<PAGE>
FIRSTAR CORPORATION AND U.S. BANCORP
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FIRSTAR PRO FORMA
CORPORATION U.S. BANCORP ADJUSTMENTS PRO FORMA
----------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans......................... $3,968,923 $5,208,600 $9,177,523
Interest and fees on loans held for sale........... 102,685 -- 102,685
Interest on investment securities.................. 921,807 307,900 1,229,707
Interest on trading securities..................... 6,377 -- 6,377
Interest on money market investments............... 21,920 160,200 182,120
---------- ---------- ------- ----------
Total interest income............................ 5,021,712 5,676,700 -- 10,698,412
INTEREST EXPENSE:
Interest on deposits............................... 1,678,839 1,291,200 2,970,039
Interest on short-term borrowings.................. 368,252 214,100 582,352
Interest on long-term debt......................... 331,475 910,700 1,242,175
---------- ---------- ------- ----------
Total interest expense........................... 2,378,566 2,416,000 -- 4,794,566
---------- ---------- ------- ----------
Net interest income............................ 2,643,146 3,260,700 -- 5,903,846
Provision for loan losses.......................... 187,301 531,000 718,301
---------- ---------- ------- ----------
Net interest income after provision for loan
losses....................................... 2,455,845 2,729,700 -- 5,185,545
NONINTEREST INCOME:
Trust income....................................... 427,346 459,700 887,046
Mortgage banking income............................ 151,736 -- 151,736
Service charges on deposits........................ 181,348 434,600 615,948
Credit card and ATM income......................... 151,274 603,100 754,374
Investment products fees and commissions........... 41,153 347,700 388,853
Investment banking revenue......................... -- 245,400 245,400
Trading account profits and commissions............ -- 215,900 215,900
All other income................................... 434,952 453,600 888,552
---------- ---------- ------- ----------
1,387,809 2,760,000 -- 4,147,809
Investment securities gains/(losses)--net.......... 14,762 (1,300) 13,462
---------- ---------- ------- ----------
Total noninterest income......................... 1,402,571 2,758,700 -- 4,161,271
NONINTEREST EXPENSE:
Salaries........................................... 862,092 1,460,900 2,322,992
Pension and other employee benefits................ 137,550 248,400 385,950
Equipment expense.................................. 147,821 160,100 307,921
Occupancy expense--net............................. 167,788 204,600 372,388
Goodwill and other intangible assets............... 120,831 165,600 286,431
All other expense.................................. 539,304 824,900 1,364,204
---------- ---------- ------- ----------
1,975,386 3,064,500 -- 5,039,886
Merger and restructuring expenses.................. 470,463 62,400 532,863
---------- ---------- ------- ----------
Total noninterest expense........................ 2,445,849 3,126,900 -- 5,572,749
INCOME BEFORE TAX.................................. 1,412,567 2,361,500 -- 3,774,067
Income tax......................................... 537,249 855,000 1,392,249
---------- ---------- ------- ----------
NET INCOME......................................... $ 875,318 $1,506,500 $ -- $2,381,818
========== ========== ======= ==========
PER SHARE:
Basic earnings per common share.................... $ 0.89 $ 2.07 $ 1.25
Diluted earnings per common share.................. 0.87 2.06 1.23
Average common shares--basic (thousands)........... 987,488 727,531 1,907,815
Average common shares--diluted (thousands)......... 1,002,754 732,991 1,929,988
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma condensed
combined financial information.
84
<PAGE>
FIRSTAR CORPORATION AND U.S. BANCORP
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FIRSTAR PRO FORMA
CORPORATION U.S. BANCORP ADJUSTMENTS PRO FORMA
----------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans......................... $3,928,140 $4,921,800 $8,849,940
Interest and fees on loans held for sale........... 84,844 -- 84,844
Interest on investment securities.................. 1,002,273 366,400 1,368,673
Interest on trading securities..................... 8,894 -- 8,894
Interest on money market investments............... 28,037 119,200 147,237
---------- ---------- ------- ----------
Total interest income............................ 5,052,188 5,407,400 -- 10,459,588
INTEREST EXPENSE:
Interest on deposits............................... 1,843,674 1,391,000 3,234,674
Interest on short-term borrowings.................. 381,985 212,700 594,685
Interest on long-term debt......................... 290,908 743,100 1,034,008
---------- ---------- ------- ----------
Total interest expense........................... 2,516,567 2,346,800 -- 4,863,367
---------- ---------- ------- ----------
Net interest income............................ 2,535,621 3,060,600 -- 5,596,221
Provision for loan losses.......................... 164,790 379,000 543,790
---------- ---------- ------- ----------
Net interest income after provision for loan
losses....................................... 2,370,831 2,681,600 -- 5,052,431
NONINTEREST INCOME:
Trust income....................................... 375,258 413,000 788,258
Mortgage banking income............................ 202,590 -- 202,590
Service charges on deposits........................ 177,762 406,000 583,762
Credit card and ATM income......................... 130,535 574,800 705,335
Investment products fees and commissions........... 44,862 229,700 274,562
Investment banking revenue......................... -- 100,400 100,400
Trading account profits and commissions............ -- 118,100 118,100
All other income................................... 417,814 402,000 819,814
---------- ---------- ------- ----------
1,348,821 2,244,000 -- 3,592,821
Investment securities gains/(losses)--net.......... 16,530 12,600 29,130
---------- ---------- ------- ----------
Total noninterest income......................... 1,365,351 2,256,600 -- 3,621,951
NONINTEREST EXPENSE:
Salaries........................................... 953,309 1,210,900 2,164,209
Pension and other employee benefits................ 172,990 222,300 395,290
Equipment expense.................................. 160,737 153,400 314,137
Occupancy expense--net............................. 169,467 187,400 356,867
Goodwill and other intangible assets............... 114,983 143,700 258,683
All other expense.................................. 581,038 710,100 1,291,138
---------- ---------- ------- ----------
2,152,524 2,627,800 -- 4,780,324
Merger and restructuring expenses.................. 377,292 216,500 593,792
---------- ---------- ------- ----------
Total noninterest expense........................ 2,529,816 2,844,300 -- 5,374,116
INCOME BEFORE TAX.................................. 1,206,366 2,093,900 -- 3,300,266
Income tax......................................... 400,916 766,500 1,167,416
---------- ---------- ------- ----------
NET INCOME......................................... $ 805,450 $1,327,400 $ -- $2,132,850
========== ========== ======= ==========
PER SHARE:
Basic earnings per common share.................... $ 0.83 $ 1.81 $ 1.12
Diluted earnings per common share.................. 0.81 1.78 1.10
Average common shares--basic (thousands)........... 970,420 733,898 1,898,801
Average common shares--diluted (thousands)......... 989,085 744,178 1,930,470
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma condensed
combined financial information.
85
<PAGE>
FIRSTAR CORPORATION AND U.S. BANCORP
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FIRSTAR PRO FORMA
CORPORATION U.S. BANCORP ADJUSTMENTS PRO FORMA
----------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans......................... $3,645,628 $4,784,500 $8,430,128
Interest and fees on loans held for sale........... 27,633 -- 27,633
Interest on investment securities.................. 801,196 439,600 1,240,796
Interest on trading securities..................... 7,208 -- 7,208
Interest on money market investments............... 31,995 69,500 101,495
---------- ---------- ------- ----------
Total interest income............................ 4,513,660 5,293,600 -- 9,807,260
INTEREST EXPENSE:
Interest on deposits............................... 1,647,355 1,436,800 3,084,155
Interest on short-term borrowings.................. 342,655 300,600 643,255
Interest on long-term debt......................... 155,862 508,100 663,962
---------- ---------- ------- ----------
Total interest expense........................... 2,145,872 2,245,500 -- 4,391,372
---------- ---------- ------- ----------
Net interest income............................ 2,367,788 3,048,100 -- 5,415,888
Provision for loan losses.......................... 204,127 460,300 664,427
---------- ---------- ------- ----------
Net interest income after provision for loan
losses....................................... 2,163,661 2,587,800 -- 4,751,461
NONINTEREST INCOME:
Trust income....................................... 338,123 348,000 686,123
Mortgage banking income............................ 93,399 -- 93,399
Service charges on deposits........................ 163,283 396,200 559,483
Credit card income................................. 128,900 418,800 547,700
Investment products fees and commissions........... 36,381 65,700 102,081
Investment banking revenue......................... -- -- --
Trading account profits and commissions............ -- 30,900 30,900
All other income................................... 336,396 352,000 688,396
---------- ---------- ------- ----------
1,096,482 1,611,600 -- 2,708,082
Investment securities gains/(losses)--net.......... 3,733 3,600 7,333
---------- ---------- ------- ----------
Total noninterest income......................... 1,100,215 1,615,200 -- 2,715,415
NONINTEREST EXPENSE:
Salaries........................................... 860,020 969,300 1,829,320
Pension and other employee benefits................ 176,175 217,400 393,575
Equipment expense.................................. 146,910 165,400 312,310
Occupancy expense--net............................. 153,045 182,000 335,045
Goodwill and other intangible assets............... 75,462 113,300 188,762
All other expense.................................. 571,741 653,300 1,225,041
---------- ---------- ------- ----------
1,983,353 2,300,700 -- 4,284,053
Merger and restructuring expenses.................. 121,393 511,600 632,993
---------- ---------- ------- ----------
Total noninterest expense........................ 2,104,746 2,812,300 -- 4,917,046
INCOME BEFORE TAX.................................. 1,159,130 1,390,700 -- 2,549,830
Income tax......................................... 398,414 552,200 950,614
---------- ---------- ------- ----------
NET INCOME......................................... $ 760,716 $ 838,500 $ -- $1,599,216
========== ========== ======= ==========
PER SHARE:
Basic earnings per common share.................... $ 0.83 $ 1.13 $ 0.87
Diluted earnings per common share.................. 0.82 1.11 0.85
Average common shares--basic (thousands)........... 913,042 733,551 1,840,984
Average common shares--diluted (thousands)......... 932,407 742,914 1,872,193
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma condensed
combined financial information.
86
<PAGE>
FIRSTAR CORPORATION AND U.S. BANCORP
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
NOTE 1--BASIS OF PRESENTATION
On October 4, 2000, Firstar Corporation announced that it had signed a
definitive agreement to acquire U.S. Bancorp through an exchange of shares.
The unaudited pro forma condensed combined financial information has been
prepared assuming that the merger will be accounted for under the
pooling-of-interests method and is based on the historical consolidated
financial statements of the two companies. A review of each company's respective
accounting policies has not been completed. As a result of this review, it might
be necessary to restate certain amounts in the financial statements of the
combined company to conform to those accounting policies that will be followed
by the combined company. Any such restatements are not expected to be material.
NOTE 2--SHAREHOLDERS' EQUITY
Under the terms of the merger agreement, Firstar shareholders will receive 1
share, and U.S. Bancorp shareholders 1.265 shares, of common stock of the
combined company for each share of Firstar or U.S. Bancorp common stock,
respectively, owned as of the consummation of the merger. U.S. Bancorp had
747,056,939 shares of common stock outstanding at June 30, 2000, which will be
exchanged for approximately 945,027,028 shares of the combined company's common
stock. The combined company will have approximately 1,905,452,203 shares
outstanding after the merger. The common stock in the unaudited pro forma
condensed combined balance sheet has been adjusted to reflect the par value
amount of shares of the combined company. Pro forma treasury stock represents
the canceling of shares held by Firstar or U.S. Bancorp or any wholly-owned
subsidiaries (except for shares held in trust accounts, managed accounts and the
like, or otherwise held in a fiduciary capacity that are beneficially owned by
third parties (trust account shares) or shares held by Firstar or U.S. Bancorp
or any of our subsidiaries in respect of a debt previously contracted (DPC
shares)). Pro forma retained earnings reflects an adjustment for estimated
merger related charges as described in Note 3 below.
NOTE 3--MERGER RELATED CHARGES
In connection with the merger, Firstar and U.S. Bancorp expect the combined
company to incur pre-tax merger related charges of approximately $800 million.
These are expected to include approximately $208 million in employee related
payments, $226 million in direct conversion costs, $118 million in charges
related to consolidation of systems and operations, $48 million in occupancy and
equipment charges (elimination of duplicate facilities and write-off of
equipment) and $200 million in other merger related costs (including legal and
investment banking fees).
The merger related charges and related tax effect have been reflected in the
unaudited pro forma condensed combined balance sheet as of June 30, 2000, and
have not been reflected in the unaudited pro forma condensed combined income
statements as they are not expected to have a continuing impact on the
operations of the combined company.
87
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
by and between
FIRSTAR CORPORATION
and
U.S. BANCORP
DATED AS OF OCTOBER 3, 2000
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TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
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ARTICLE I
THE MERGER
1.1 The Merger.................................................. 1
1.2 Effective Time.............................................. 2
1.3 Effects of the Merger....................................... 2
1.4 Conversion of Stock......................................... 2
1.5 Options..................................................... 3
1.6 Firstar Options............................................. 3
1.7 Certificate of Incorporation................................ 3
1.8 By-Laws..................................................... 4
1.9 Tax and Accounting Consequences............................. 4
1.10 Board of Directors.......................................... 4
1.11 Headquarters of Surviving Corporation....................... 4
ARTICLE II
EXCHANGE OF SHARES
2.1 Exchange of Old Certificates for New Certificates........... 4
2.2 Exchange Procedures......................................... 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FIRSTAR
3.1 Corporate Organization...................................... 6
3.2 Capitalization.............................................. 6
3.3 Authority; No Violation..................................... 7
3.4 Consents and Approvals...................................... 7
3.5 Regulatory Compliance....................................... 8
3.6 Financial Statements........................................ 8
3.7 Broker's Fees............................................... 9
3.8 Absence of Certain Changes or Events........................ 9
3.9 Legal Proceedings........................................... 9
3.10 Taxes and Tax Returns....................................... 9
3.11 Employee Benefit Plans...................................... 10
3.12 SEC Reports................................................. 11
3.13 Compliance with Applicable Law.............................. 12
3.14 Certain Contracts........................................... 12
3.15 Undisclosed Liabilities..................................... 12
3.16 Insurance................................................... 12
3.17 Charter Provisions; State Takeover Laws; Firstar Rights
Agreement................................................... 12
3.18 Reorganization; Pooling of Interests........................ 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF U.S. BANCORP
4.1 Corporate Organization...................................... 13
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4.2 Capitalization.............................................. 13
4.3 Authority; No Violation..................................... 14
4.4 Consents and Approvals...................................... 15
4.5 Regulatory Compliance....................................... 15
4.6 Financial Statements........................................ 16
4.7 Broker's Fees............................................... 16
4.8 Absence of Certain Changes or Events........................ 16
4.9 Legal Proceedings........................................... 16
4.10 Taxes and Tax Returns....................................... 17
4.11 Employee Benefit Plans...................................... 17
4.12 SEC Reports................................................. 19
4.13 Compliance with Applicable Law.............................. 19
4.14 Certain Contracts........................................... 19
4.15 Undisclosed Liabilities..................................... 19
4.16 Insurance................................................... 20
4.17 Charter Provisions; State Takeover Laws..................... 20
4.18 Reorganization; Pooling of Interests........................ 20
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time........... 20
5.2 Forbearances................................................ 20
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters.......................................... 23
6.2 Access to Information....................................... 23
6.3 Shareholders' Approvals..................................... 24
6.4 Legal Conditions to Merger.................................. 24
6.5 Affiliates; Publication of Combined Financial Results....... 24
6.6 Stock Exchange Listing...................................... 25
6.7 Employee Benefit Plans...................................... 25
6.8 Indemnification; Directors' and Officers' Insurance......... 25
6.9 Additional Agreements....................................... 26
6.10 Advice of Changes........................................... 26
6.11 Dividends................................................... 26
6.12 Exemption from Liability under Section 16(b). Firstar
Insiders.................................................... 27
6.13 Exemption from Liability under Section 16(b). U.S. Bancorp
Insiders.................................................... 27
6.14 List of Option Holders...................................... 27
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the
Merger...................................................... 28
7.2 Conditions to Obligations of U.S. Bancorp................... 29
7.3 Conditions to Obligations of Firstar........................ 29
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ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination................................................. 29
8.2 Effect of Termination....................................... 30
8.3 Amendment................................................... 30
8.4 Extension; Waiver........................................... 30
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing..................................................... 31
9.2 Nonsurvival of Representations, Warranties and Agreements... 31
9.3 Expenses.................................................... 31
9.4 Notices..................................................... 31
9.5 Interpretation.............................................. 32
9.6 Counterparts................................................ 32
9.7 Entire Agreement............................................ 32
9.8 Governing Law............................................... 32
9.9 Publicity................................................... 32
9.10 Assignment; Third Party Beneficiaries....................... 32
</TABLE>
Exhibit A--U.S. Bancorp Option Agreement
Exhibit B--Firstar Option Agreement
Exhibit 6.5(a)(1)--Form of Affiliate Letter Addressed to U.S. Bancorp
Exhibit 6.5(a)(2)--Form of Affiliate Letter Addressed to Firstar
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INDEX OF DEFINED TERMS
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Agreement................................................... Recitals 1
BHC Act..................................................... 3.1(a) 7
Closing..................................................... 9.1 36
Closing Date................................................ 9.1 36
Code........................................................ 1.5(b) 4
Confidentiality Agreement................................... 6.2(b) 28
Delaware Certificate........................................ 1.2 2
Delaware Secretary.......................................... 1.2 2
DGCL........................................................ 1.1(a) 1
DPC Shares.................................................. 1.4(b) 3
DRIP Suspension Date........................................ 4.2 16
Effective Time.............................................. 1.2 2
Employees................................................... 6.7(a) 29
ERISA....................................................... 3.11(a) 12
Exchange Act................................................ 3.6 10
Exchange Agent.............................................. 2.1 5
Exchange Ratio.............................................. 1.4(a) 2
Federal Reserve Board....................................... 3.4 9
Firstar..................................................... Recitals 1
Firstar 10-K................................................ 3.6 10
Firstar Articles............................................ 1.7 4
Firstar Benefit Plans....................................... 3.11(a) 12
Firstar Capital Stock....................................... 3.2 7
Firstar Common Stock........................................ 1.4(a) 2
Firstar Contract............................................ 3.14(a) 14
Firstar Disclosure Schedule................................. 3 7
Firstar ERISA Affiliate..................................... 3.11(a) 12
Firstar Insiders............................................ 6.12 32
Firstar Option.............................................. 1.6 4
Firstar Option Agreement.................................... Recitals 1
Firstar Preferred Stock..................................... 3.2 7
Firstar Regulatory Agreement................................ 3.5(b) 10
Firstar Reports............................................. 3.12(b) 13
Firstar Rights.............................................. 3.2 8
Firstar Rights Agreement.................................... 1.4(b) 3
Firstar Section 16 Information.............................. 6.12 32
Firstar Shareholder Rights.................................. 1.4(b) 3
Firstar Stock Plans......................................... 3.2 8
GAAP........................................................ 1.9 4
Governmental Entity......................................... 3.4 9
HSR Act..................................................... 3.4 9
Indemnified Parties......................................... 6.8(a) 30
IRS......................................................... 3.10(a) 11
Joint Proxy Statement....................................... 3.4 9
Material Adverse Effect..................................... 3.1(a) 7
Merger...................................................... Recitals 1
Merger Consideration........................................ 1.1(b) 2
</TABLE>
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New Benefit Plans........................................... 6.7(a) 29
New Certificates............................................ 1.4(c) 3
Non-Subsidiary Affiliate.................................... 3.3(b) 8
NYSE........................................................ 2.2(f) 6
Old Certificates............................................ 1.4(c) 3
Option Agreements........................................... Recitals 1
Regulatory Agencies......................................... 3.5 9
Requisite Regulatory Approvals.............................. 7.1(c) 33
S-4......................................................... 3.4 9
SEC......................................................... 3.1 7
Securities Act.............................................. 3.12(b) 13
SRO......................................................... 3.4 9
State Approvals............................................. 3.4 9
State Regulator............................................. 3.5 9
Subsidiary.................................................. 3.1(a) 7
Surviving Corporation....................................... Recitals 1
Surviving Corporation Common Stock.......................... 1.4(a) 2
Tax......................................................... 3.10(b) 12
Taxes....................................................... 3.10(b) 12
Term Preferred Stock........................................ 1.4(a) 2
Trust Account Shares........................................ 1.4(b) 3
U.S. Bancorp................................................ Recitals 1
U.S. Bancorp 10-K........................................... 4.6 18
U.S. Bancorp Certificate.................................... 4.1(a) 15
U.S. Bancorp Benefit Plans.................................. 4.11(a) 21
U.S. Bancorp Capital Stock.................................. 4.2 16
U.S. Bancorp Common Stock................................... 1.4(a) 2
U.S. Bancorp Contract....................................... 4.14(a) 23
U.S. Bancorp Disclosure Schedule............................ 4 15
U.S. Bancorp DRIP........................................... 4.2 16
U.S. Bancorp ERISA Affiliate................................ 4.11(a) 21
U.S. Bancorp Insiders....................................... 6.13 32
U.S. Bancorp Option......................................... 1.5(a) 3
U.S. Bancorp Option Agreement............................... Recitals 1
U.S. Bancorp Preferred Stock................................ 4.2 16
U.S. Bancorp Regulatory Agreement........................... 4.5(b) 18
U.S. Bancorp Reports........................................ 4.12(a) 22
U.S. Bancorp Rights......................................... 4.2 16
U.S. Bancorp Section 16 Information......................... 6.13 32
U.S. Bancorp Stock Plans.................................... 4.2 16
WBCL........................................................ 1.1(a) 1
Wisconsin Articles.......................................... 1.2 2
Wisconsin Department........................................ 1.2 2
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 3, 2000 (this
"Agreement"), by and between FIRSTAR CORPORATION, a Wisconsin corporation
("Firstar"), and U.S. BANCORP, a Delaware corporation ("U.S. Bancorp").
W I T N E S S E T H:
WHEREAS, the boards of directors of each of Firstar and U.S. Bancorp have
determined that it is in the best interests of their respective companies and
their shareholders to consummate the strategic business combination transaction
provided for herein in which Firstar will, subject to the terms and conditions
set forth herein, merge with and into U.S. Bancorp (the "Merger"), so that U.S.
Bancorp is the surviving corporation (hereinafter sometimes referred to in such
capacity as the "Surviving Corporation") in the Merger; and
WHEREAS, as a condition to, and immediately after, the execution of this
Agreement, and as a condition to the execution of the Firstar Option Agreement,
U.S. Bancorp and Firstar are entering into a stock option agreement with U.S.
Bancorp as issuer, and Firstar as grantee, of the stock option contemplated
thereby (the "U.S. Bancorp Option Agreement") in the form attached hereto as
Exhibit A; and
WHEREAS, as a condition to, and immediately after, the execution of this
Agreement, and as a condition to the execution of the U.S. Bancorp Option
Agreement, U.S. Bancorp and Firstar are entering into a stock option agreement
with Firstar as issuer, and U.S. Bancorp as grantee, of the stock option
contemplated thereby (the "Firstar Option Agreement"; and together with the U.S.
Bancorp Option Agreement, the "Option Agreements") in the form attached hereto
as Exhibit B; and
WHEREAS, it is the intention of the parties that the Merger be accounted for
as a "pooling of interests" under generally accepted accounting principles and
constitute a reorganization under Section 368(a) of the Code; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. (a) Subject to the terms and conditions of this Agreement,
in accordance with the Business Corporation Law of the State of Wisconsin (the
"WBCL") and the General Corporation Law of the State of Delaware (the "DGCL"),
at the Effective Time, Firstar shall merge with and into U.S. Bancorp. U.S.
Bancorp shall be the Surviving Corporation in the Merger, and shall continue its
corporate existence under the laws of the State of Delaware. Upon consummation
of the Merger, the separate corporate existence of Firstar shall terminate.
(b) Firstar and U.S. Bancorp may, upon mutual agreement, at any time change
the method of effecting the combination of U.S. Bancorp and Firstar (including
without limitation the provisions of this Article I) if and to the extent they
deem such change to be desirable, including without limitation, to provide for a
merger of either party with a wholly-owned Subsidiary of the other; PROVIDED,
HOWEVER, that no such change shall (i) alter or change the amount of
consideration to be provided to holders of either Firstar Common Stock or U.S.
Bancorp Common Stock as provided for in this Agreement (the "Merger
Consideration"), (ii) adversely affect the tax treatment of shareholders as a
result of receiving
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the Merger Consideration or (iii) materially impede or delay consummation of the
transactions contemplated by this Agreement.
1.2 EFFECTIVE TIME. The Merger shall become effective as set forth in
articles of merger (the "Wisconsin Articles") that shall be filed with the
Wisconsin Department of Financial Institutions (the "Wisconsin Department"), and
in the certificate of merger (the "Delaware Certificate") that shall be filed
with the Secretary of State of the State of Delaware (the "Delaware Secretary"),
in each case on the Closing Date. The term "Effective Time" shall be the date
and time when the Merger becomes effective, as set forth in the Wisconsin
Articles and the Delaware Certificate.
1.3 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
shall have the effects set forth in the WBCL and the DGCL.
1.4 CONVERSION OF STOCK. At the Effective Time, by virtue of the Merger
and without any action on the part of U.S. Bancorp, Firstar or the holder of any
of the following securities:
(a) Subject to Sections 2.2(d) and 2.2(f), (i) each share of the common
stock, par value $1.25 per share, of U.S. Bancorp (the "U.S. Bancorp Common
Stock") issued and outstanding immediately prior to the Effective Time shall be
converted into 1.265 shares (the "Exchange Ratio") of the common stock, par
value $1.25 per share, of the Surviving Corporation (the "Surviving Corporation
Common Stock"); and (ii) each share of Term Participating Preferred Stock, par
value $1.00 per share, of U.S. Bancorp (the "Term Preferred Stock"), issued and
outstanding immediately prior to the Effective Time, shall remain outstanding,
but the "Reference Package" referred to in the terms thereof shall be adjusted
to comprise 12.65 shares of Surviving Corporation Common Stock or such other
number of shares of Surviving Corporation Common Stock as may be required from
time to time pursuant to Section 4 of the Certificate of Designation and Terms
of the Term Preferred Stock as in effect as of the date hereof.
(b) Except as otherwise provided in Section 1.4(e), at and after the
Effective Time, each share of Firstar common stock, par value $0.01 per share
(together with the Firstar Shareholder Rights attached thereto, the "Firstar
Common Stock") issued and outstanding immediately prior to the Effective Time,
except for shares of Firstar Common Stock owned, directly or indirectly, by U.S.
Bancorp or Firstar or any of their respective wholly-owned Subsidiaries (other
than (i) shares of Firstar Common Stock held, directly or indirectly, in trust
accounts, managed accounts and the like, or otherwise held in a fiduciary
capacity, that are beneficially owned by third parties (any such shares, whether
held directly or indirectly by U.S. Bancorp or Firstar, as the case may be,
being referred to herein as "Trust Account Shares") and (ii) any shares of
Firstar Common Stock held by U.S. Bancorp or Firstar or any of their respective
Subsidiaries in respect of a debt previously contracted (any such shares of
Firstar Common Stock, and shares of U.S. Bancorp Common Stock that are similarly
held, whether held directly or indirectly, by U.S. Bancorp or Firstar, being
referred to herein as "DPC Shares"), shall be converted into one share of the
Surviving Corporation Common Stock. As used herein, "Firstar Shareholder Rights"
shall mean the preferred share purchase rights issued to the holders of Firstar
Common Stock pursuant to the Rights Agreement, dated as of November 20, 1998 (as
such may be amended, supplemented, restated or replaced from time to time),
between Firstar and Firstar Bank, N.A. (the "Firstar Rights Agreement").
(c) Holders of certificates formerly representing Firstar Common Stock shall
not be required to exchange such certificates for certificates representing
Surviving Corporation Common Stock, PROVIDED, HOWEVER, that if an exchange of
such certificates is required by law or applicable rule or regulation, the
parties will cause the Surviving Corporation to arrange for such exchange on a
one-share-for-one-share basis. Holders of certificates representing U.S. Bancorp
Common Stock referred to in Article II ("Old Certificates") shall exchange such
Old Certificates for certificates representing shares of Surviving Corporation
Common Stock ("New Certificates") in the manner described in Section 2.2.
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(d) If, prior to the Effective Time, the outstanding shares of Firstar
Common Stock or U.S. Bancorp Common Stock shall have been increased, decreased,
changed into or exchanged for a different number or kind of shares or securities
as a result of a reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, or other similar change in
capitalization, an appropriate and proportionate adjustment shall be made to the
Exchange Ratio.
(e) At the Effective Time, all shares of Firstar Common Stock that are
owned, directly or indirectly, by U.S. Bancorp or Firstar or any of their
respective wholly-owned Subsidiaries (other than Trust Account Shares and DPC
Shares) shall be canceled and shall cease to exist and no consideration shall be
delivered in exchange therefor. All shares of U.S. Bancorp Common Stock that are
owned by Firstar or any of its wholly-owned Subsidiaries (other than Trust
Account Shares and DPC Shares) shall as of the Effective Time become authorized
but unissued shares of Surviving Corporation Common Stock.
1.5 OPTIONS. (a) At the Effective Time, without any action on the part of
any holder of any such option, each option to purchase shares of U.S. Bancorp
Common Stock (each, a "U.S. Bancorp Option") that is outstanding and unexercised
immediately prior thereto shall cease to represent a right to acquire shares of
U.S. Bancorp Common Stock and shall be converted automatically into an option to
purchase shares of Surviving Corporation Common Stock in an amount and at an
exercise price determined as provided below (and otherwise subject to the terms
of the U.S. Bancorp Stock Plans (as defined in Section 4.2) and the agreements
evidencing grants thereunder):
(i) The number of shares of Surviving Corporation Common Stock to be
subject to the new option shall be equal to the product of (A) the number of
shares of U.S. Bancorp Common Stock purchasable upon exercise of the
original U.S. Bancorp Option and (B) the Exchange Ratio, the product being
rounded, if necessary, up or down, to the nearest whole share; and
(ii) The exercise price per share of Surviving Corporation Common Stock
under the new option shall be equal to the exercise price per share of U.S.
Bancorp Common Stock under the original U.S. Bancorp Option divided by the
Exchange Ratio, PROVIDED that such exercise price shall be rounded to the
nearest whole cent.
(b) The adjustment provided in Section 1.5(a) with respect to any options
that are "incentive stock options" (as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code")) shall be and is intended to be
effected in a manner that is consistent with Section 424(a) of the Code. The
duration and other terms of the new option shall be the same as the original
option.
1.6 FIRSTAR OPTIONS. At the Effective Time, by virtue of the Merger and
without any action on the part of any holder of any such option, each option to
purchase shares of Firstar Common Stock (each, a "Firstar Option") that is
outstanding and unexercised immediately prior thereto shall be assumed by the
Surviving Corporation and shall cease to represent the right to acquire shares
of Firstar Common Stock and shall be converted into an option to purchase shares
of Surviving Corporation Common Stock, on the same terms and conditions as are
in effect immediately prior to the Effective Time, except that all references to
Firstar shall be deemed to be references to the Surviving Corporation.
1.7 CERTIFICATE OF INCORPORATION. Subject to the terms and conditions of
this Agreement, at the Effective Time, the Certificate of Incorporation of the
Surviving Corporation shall be in the form to be mutually agreed upon by the
parties hereto as promptly as practicable following the date hereof and in any
event prior to the mailing of the Joint Proxy Statement, PROVIDED that such
Certificate of Incorporation shall be substantially identical (providing for
changes required to conform to requirements of the DGCL and to accommodate the
Term Preferred Stock) to the Articles of Incorporation of Firstar (the "Firstar
Articles"), with such changes as the parties may mutually agree upon, PROVIDED
FURTHER that the Certificate of Incorporation of the Surviving Corporation shall
provide
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that the name of the Surviving Corporation is "U.S. Bancorp" and the number of
authorized shares of common stock and preferred stock shall be 4,000,000,000,
par value $1.25 per share, and 50,000,000, par value $1.00 per share,
respectively.
1.8 BY-LAWS. Subject to the terms and conditions of this Agreement, at the
Effective Time, the By-Laws of the Surviving Corporation shall be in the form to
be mutually agreed upon by the parties hereto as promptly as practicable
following the date hereof and in any event prior to the mailing of the Joint
Proxy Statement, PROVIDED that such By-Laws shall be substantially identical
(providing for changes required to conform to requirements of the DGCL) to the
By-Laws of Firstar, with such changes as the parties may mutually agree upon.
1.9 TAX AND ACCOUNTING CONSEQUENCES. It is intended that the Merger shall
constitute a "reorganization" within the meaning of Section 368(a) of the Code,
that this Agreement shall constitute a "plan of reorganization" for the purposes
of Sections 354 and 361 of the Code and that the Merger shall be accounted for
as a "pooling of interests" under generally accepted accounting principles
("GAAP").
1.10 BOARD OF DIRECTORS. At the Effective Time, the directors of the
Surviving Corporation shall be comprised of 25 individuals, 11 named by U.S.
Bancorp and 14 named by Firstar. The directors of the Surviving Corporation at
the Effective Time shall each hold office in accordance with the Certificate of
Incorporation of the Surviving Corporation until their respective successors are
duly elected or appointed and qualified.
1.11 HEADQUARTERS OF SURVIVING CORPORATION. From and after the Effective
Time, the location of the headquarters and principal executive offices of the
Surviving Corporation shall be Minneapolis, Minnesota.
ARTICLE II
EXCHANGE OF SHARES
2.1 EXCHANGE OF OLD CERTIFICATES FOR NEW CERTIFICATES. (a) From the
Effective Time until the end of the 18-month period following the Effective
Time, the Surviving Corporation shall make available to an exchange agent (which
may be a Subsidiary bank of the Surviving Corporation) appointed prior to the
Effective Time by U.S. Bancorp and Firstar jointly on behalf of the Surviving
Corporation (the "Exchange Agent") New Certificates and cash in amounts
sufficient to allow the Exchange Agent to make all deliveries of New
Certificates and payments that may be required in exchange for Old Certificates
pursuant to this Article II. At the end of such 18-month period, any such New
Certificates and cash remaining in the possession of the Exchange Agent
(together with any dividends or earnings in respect thereof) shall be returned
to the Surviving Corporation. Any former holders of Old Certificates who have
not theretofore exchanged their Old Certificates for New Certificates and cash
pursuant to this Article II shall thereafter be entitled to look exclusively to
the Surviving Corporation for the shares of Surviving Corporation Common Stock
(or any unpaid dividends and distributions thereon) and any cash to which they
become entitled upon exchange of their Old Certificates pursuant to this
Article II, without any interest thereon. Notwithstanding the foregoing, none of
U.S. Bancorp, Firstar, the Surviving Corporation, the Exchange Agent or any
other person shall be liable to any holder of shares of U.S. Bancorp Common
Stock for any amount delivered in good faith to a public official pursuant to
applicable abandoned property, escheat or similar laws.
2.2 EXCHANGE PROCEDURES. (a) Promptly after the Effective Time, the
Surviving Corporation shall cause the Exchange Agent to mail or deliver to each
person who was, immediately prior to the Effective Time, a holder of record of
U.S. Bancorp Common Stock, a form (mutually agreed upon by U.S. Bancorp and
Firstar) of letter of transmittal containing instructions for use in effecting
the surrender of Old Certificates in exchange for New Certificates and any
payments pursuant to this
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Article II. Upon surrender to the Exchange Agent of an Old Certificate for
cancellation together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, the holder of such Old
Certificate shall be entitled to receive in exchange therefor a New Certificate
representing the shares of Surviving Corporation Common Stock, and a check in
the amount, if any, to which such holder is entitled pursuant to this
Article II, and the Old Certificate so surrendered shall forthwith be canceled.
No interest will be paid or will accrue on any amount payable upon surrender of
Old Certificates.
(b) If any New Certificate is to be issued in a name other than that in
which the Old Certificate or Old Certificates surrendered in exchange therefor
is or are registered, it shall be a condition of the issuance thereof that the
Old Certificate or Old Certificates so surrendered shall be properly endorsed
(or accompanied by an appropriate instrument of transfer) and otherwise in
proper form for transfer, and that the person requesting such exchange shall pay
to the Exchange Agent in advance any transfer or other Taxes required by reason
of the issuance of a New Certificate in any name other than that of the
registered holder of the Old Certificate or Old Certificates surrendered, or
required for any other reason, or shall establish to the satisfaction of the
Exchange Agent that such Tax has been paid or is not payable.
(c) After the Effective Time, there shall be no transfers on the stock
transfer books of Firstar of the shares of Firstar Common Stock that were issued
and outstanding immediately prior to the Effective Time.
(d) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Surviving Corporation
Common Stock shall be issued upon the surrender for exchange of Old
Certificates, no dividend or distribution with respect to Surviving Corporation
Common Stock shall be payable on or with respect to any fractional share, and
such fractional share interests shall not entitle the owner thereof to vote or
to any other rights of a shareholder of Surviving Corporation.
(e) In the event any Old Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Old Certificate to be lost, stolen or destroyed and, if reasonably required
by Surviving Corporation, the posting by such person of a bond in such amount as
Surviving Corporation may determine is reasonably necessary as indemnity against
any claim that may be made against it with respect to such Old Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed Old
Certificate the shares of Surviving Corporation Common Stock and any cash in
lieu of fractional shares deliverable in respect thereof pursuant to this
Agreement.
(f) Upon giving effect to the conversion described in Section 1.4(a), the
resulting number of shares of Surviving Corporation Common Stock of each
registered holder of U.S. Bancorp Common Stock shall be rounded down to the
nearest whole number and each such registered holder shall be entitled to
receive from the Surviving Corporation in lieu of any fractional share of
Surviving Corporation Common Stock prior to such rounding down an amount
(without interest) equal to the product obtained by multiplying (i) the fraction
of a share of Surviving Corporation Common Stock to which such holder would
otherwise be entitled and (ii) the average of the closing price per share of
U.S. Bancorp Common Stock for the ten trading days most recently preceding the
Closing Date as reported on the New York Stock Exchange, Inc. (the "NYSE")
Composite Transactions reporting system. Notwithstanding the foregoing,
fractional shares of Surviving Corporation Common Stock that would be issued
into a dividend reinvestment plan, 401(k) plan or other similar stock plan
maintained by U.S. Bancorp prior to the Effective Time shall be issued within
such plan as a fractional share of Surviving Corporation Common Stock at the
Effective Time, to the extent such plan provides for fractional shares.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FIRSTAR
Except as disclosed in the Firstar disclosure schedule delivered to U.S.
Bancorp concurrently herewith (the "Firstar Disclosure Schedule") Firstar hereby
represents and warrants to U.S. Bancorp as follows:
3.1 CORPORATE ORGANIZATION. (a) Firstar is a corporation duly organized,
validly existing and in good standing under the laws of the State of Wisconsin.
Firstar has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not, either individually or in the aggregate, have a Material Adverse
Effect on Firstar. As used in this Agreement, the term "Material Adverse Effect"
means, with respect to U.S. Bancorp, Firstar or the Surviving Corporation, as
the case may be, a material adverse effect on (i) the business, operations,
results of operations or financial condition of such party and its Subsidiaries
taken as a whole, except to the extent such effect is attributable to the
execution of this Agreement and the announcement thereof or (ii) the ability of
such party to timely consummate the transactions contemplated hereby. As used in
this Agreement, the word "Subsidiary" means "Significant Subsidiary" as defined
in Rule 1-02 of Regulation S-X of the Securities and Exchange Commission (the
"SEC") with respect to either party hereto or any entity of which at least a
majority of the securities or ownership interests having by their terms ordinary
voting power to elect a majority of the board of directors or similar governing
body are owned or controlled directly or indirectly by such party. Firstar is
duly registered as a bank holding company and has become a financial holding
company under the Bank Holding Company Act of 1956, as amended (the "BHC Act"),
and meets the requirements of Section 4(l) of the BHC Act.
(b) Each Firstar Subsidiary (i) is duly organized and validly existing under
the laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would have a Material Adverse Effect on Firstar and (iii) has all
requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
3.2 CAPITALIZATION. The authorized capital stock of Firstar consists of
(i) 2,000,000,000 shares of Firstar Common Stock, of which, as of October 3,
2000, 984,397,677 shares were issued and outstanding and 27,803,224 shares were
held in treasury, (ii) 10,000,000 shares of preferred stock, par value $1.00 per
share (the "Firstar Preferred Stock" and, together with the Firstar Common
Stock, the "Firstar Capital Stock"), of which, as of October 3, 2000, no shares
were issued and outstanding. All of the issued and outstanding shares of Firstar
Common Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, except
(i) pursuant to the terms of the Firstar Option Agreement, (ii) options and
stock issued pursuant to employee and director stock plans of Firstar in effect
as of the date hereof (the "Firstar Stock Plans") and (iii) the Firstar Rights
Agreement, Firstar does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of Firstar Capital
Stock or any other equity securities of Firstar or any securities representing
the right to purchase or otherwise receive any shares of Firstar Capital Stock
(collectively, including the items contemplated by clauses (i) through (iii) of
this sentence, the "Firstar Rights"). As of October 3, 2000, no shares of
Firstar Capital Stock were reserved for issuance. Since October 3, 2000, Firstar
has not issued any shares of its capital stock or any securities convertible
into or exercisable for any shares of
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its capital stock, other than as expressly permitted by Section 5.2 and pursuant
to the Firstar Option Agreement.
3.3 AUTHORITY; NO VIOLATION. (a) Firstar has full corporate power and
authority to execute and deliver this Agreement and each of the Option
Agreements and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Option Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly approved by the board of directors of Firstar. The board of
directors of Firstar has directed that this Agreement and the transactions
contemplated hereby be submitted to Firstar's shareholders for approval at a
meeting of such shareholders and, except for the approval of this Agreement and
the transactions contemplated hereby by the affirmative vote of the holders of a
majority of the outstanding shares of Firstar Common Stock entitled to vote
thereon, no corporate proceedings on the part of Firstar are necessary to
approve this Agreement and the Option Agreements and to consummate the
transactions contemplated hereby and thereby. This Agreement has been duly and
validly executed and delivered by Firstar and (assuming due authorization,
execution and delivery by U.S. Bancorp) constitutes the valid and binding
obligation of Firstar, enforceable against Firstar in accordance with its terms
(except as may be limited by bankruptcy, insolvency, moratorium, reorganization
or similar laws affecting the rights of creditors generally and the availability
of equitable remedies).
(b) Neither the execution and delivery of this Agreement by Firstar nor the
consummation by Firstar of the transactions contemplated hereby, nor compliance
by Firstar with any of the terms or provisions hereof, will (i) violate any
provision of the Firstar Articles or By-Laws or (ii) assuming that the consents
and approvals referred to in Section 3.4 are duly obtained, (A) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Firstar, any of its Subsidiaries or its Non-Subsidiary
Affiliates (as defined below) or any of their respective properties or assets or
(B) violate, conflict with, result in a breach of any provision of or the loss
of any benefit under, constitute a default (or an event that, with notice or
lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate the
performance required by, or result in the creation of any lien upon any of the
respective properties or assets of Firstar, any of its Subsidiaries or
Non-Subsidiary Affiliates under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which Firstar, any of its Subsidiaries or its
Non-Subsidiary Affiliates is a party, or by which they or any of their
respective properties or assets may be bound or affected, except in the case of
clause (B) above for such violations, conflicts, breaches or defaults that,
either individually or in the aggregate, will not have a Material Adverse Effect
on Firstar. The term "Non-Subsidiary Affiliate" means, with respect to U.S.
Bancorp, Firstar or the Surviving Corporation, as the case may be, a material
investment of such party or a Subsidiary thereof in a corporation, joint
venture, partnership, limited liability company and other entity thereof other
than a Subsidiary.
3.4 CONSENTS AND APPROVALS. Except for (a) the filing of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act and approval of such
applications and notices, (b) the pre-merger notification requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (c) the filing of any required applications or notices with any state or
foreign agencies and approval of such applications and notices, including in
connection with U.S. Bancorp's Canadian branch (the "State Approvals"), (d) the
filing with the SEC of a joint proxy statement in definitive form relating to
the meetings of U.S. Bancorp's and Firstar's shareholders to be held in
connection with this Agreement and the transactions contemplated hereby (the
"Joint Proxy Statement"), and of the registration statement on Form S-4 (the
"S-4") in which the Joint Proxy Statement will be included as a prospectus and
any filings under the Securities Act (as defined in Section 3.12(b)) required in
connection with the issuance of shares of Firstar Common Stock pursuant to the
Firstar Option Agreement, (e) the filing of
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the Wisconsin Articles with the Wisconsin Department pursuant to the WBCL,
(f) the filing of the Delaware Certificate with the Delaware Secretary pursuant
to the DGCL, (g) any consents, authorizations, approvals, filings or exemptions
in connection with compliance with the applicable provisions of federal and
state securities laws relating to the regulation of broker-dealers, insurance
companies and agents, investment advisers or transfer agents, and federal
commodities laws relating to the regulation of futures commission merchants and
the rules and regulations thereunder and of any applicable industry
self-regulatory organization ("SRO"), and the rules of the NYSE, or that are
required under consumer finance, mortgage banking and other similar laws and
(h) such filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the issuance
of the shares of Surviving Corporation Common Stock pursuant to this Agreement
or the resale of shares of Firstar Common Stock as contemplated by the Firstar
Option Agreement, no consents or approvals of or filings or registrations with
any court, administrative agency or commission or other governmental authority
or instrumentality (each a "Governmental Entity") are necessary in connection
with (i) the execution and delivery by Firstar of this Agreement and (ii) the
consummation by Firstar of the transactions contemplated hereby, except to the
extent that the absence of any such consent, authorization, approval, filing or
exemption would not, individually or in the aggregate, have a Material Adverse
Effect on Firstar or the Surviving Corporation.
3.5 REGULATORY COMPLIANCE. (a) Except for normal examinations conducted by
a Regulatory Agency (as defined below) in the ordinary course of the business of
Firstar and its Subsidiaries, no Regulatory Agency has initiated any proceeding
or, to the best knowledge of Firstar, investigation into the business or
operations of Firstar or any of its Subsidiaries since January 1, 1998, except
where such proceedings or investigation will not, either individually or in the
aggregate, have a Material Adverse Effect on Firstar. There is no unresolved
violation, criticism, or exception by any Regulatory Agency with respect to any
report or statement relating to any examinations of Firstar or any of its
Subsidiaries that, in the reasonable judgment of Firstar, will, either
individually or in the aggregate, have a Material Adverse Effect on Firstar. The
term "Regulatory Agencies" means (i) the Federal Reserve Board, (ii) the Federal
Deposit Insurance Corporation, (iii) any state regulatory authority (each a
"State Regulator"), (iv) the Office of the Comptroller of the Currency, (v) the
SEC and (vi) any SRO.
(b) Neither Firstar nor any of its Subsidiaries is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a party
to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or has been since January 1, 1997, a recipient of any
supervisory letter from, or since January 1, 1997, has adopted any board
resolutions at the request of any Regulatory Agency or other Governmental Entity
that currently restricts in any material respect the conduct of its business or
that in any material manner relates to its capital adequacy, its credit
policies, its management or its business (each, whether or not set forth in the
Firstar Disclosure Schedule, a "Firstar Regulatory Agreement"), nor has Firstar
or any of its Subsidiaries been advised since January 1, 1997, by any Regulatory
Agency or other Governmental Entity that it is considering issuing or requesting
any such Firstar Regulatory Agreement.
3.6 FINANCIAL STATEMENTS. Copies of the consolidated balance sheets of
Firstar and its Subsidiaries as of December 31, for the fiscal years 1998 and
1999, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for the fiscal years 1997 through 1999,
inclusive, as reported in Firstar's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999 (the "Firstar 10-K") filed with the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), in each case
accompanied by the audit report of PricewaterhouseCoopers LLP, independent
accountants with respect to Firstar, have previously been made available to U.S.
Bancorp. The December 31, 1999 consolidated balance sheet of Firstar (including
the related notes, where applicable) fairly presents in all material respects
the consolidated financial position of Firstar and its Subsidiaries as of the
date thereof, and the other financial
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statements referred to in this Section 3.6 (including the related notes, where
applicable) fairly present in all material respects the results of the
consolidated operations and changes in shareholders' equity and consolidated
financial position of Firstar and its Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth; each of such statements
(including the related notes, where applicable) complies in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto; and each of such statements
(including the related notes, where applicable) has been prepared in all
material respects in accordance with GAAP consistently applied during the
periods involved, except, in each case, as indicated in such statements or in
the notes thereto. The books and records of Firstar and its Subsidiaries have
been, and are being, maintained in all material respects in accordance with GAAP
and any other applicable legal and accounting requirements and reflect only
actual transactions.
3.7 BROKER'S FEES. Except for Credit Suisse First Boston Corporation, none
of Firstar nor any Firstar Subsidiary nor any of their respective officers or
directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with the Merger or
related transactions contemplated by this Agreement or the Option Agreements.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as publicly disclosed
in Firstar Reports filed prior to the date hereof, since June 30, 2000, no event
or events have occurred that have had, either individually or in the aggregate,
a Material Adverse Effect on Firstar.
(b) Except as publicly disclosed in Firstar Reports filed prior to the date
hereof, since June 30, 2000, Firstar and its Subsidiaries have carried on their
respective businesses in all material respects in the ordinary course.
3.9 LEGAL PROCEEDINGS. (a) Neither Firstar nor any of its Subsidiaries is
a party to any, and there are no pending or, to the best of Firstar's knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against
Firstar or any of its Subsidiaries or challenging the validity or propriety of
the transactions contemplated by this Agreement or the Firstar Option Agreement
as to which, in any such case, there is a reasonable probability of an adverse
determination and that, if adversely determined, will, either individually or in
the aggregate, have a Material Adverse Effect on Firstar.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply generally to financial holding
companies, bank holding companies or banks) imposed upon Firstar, any of its
Subsidiaries or the assets of Firstar or any of its Subsidiaries that has had,
or will have, either individually or in the aggregate, a Material Adverse Effect
on Firstar or the Surviving Corporation.
3.10 TAXES AND TAX RETURNS. (a) Each of Firstar and its Subsidiaries has
duly filed all federal, state, foreign and local information returns and tax
returns required to be filed by it on or prior to the date hereof (all such
returns being accurate and complete in all material respects) and has duly paid
or made provisions for the payment of all Taxes and other governmental charges
that have been incurred or are due or claimed to be due from it by federal,
state, foreign or local taxing authorities on or prior to the date of this
Agreement (including, without limitation, if and to the extent applicable, those
due in respect of its properties, income, business, capital stock, deposits,
franchises, licenses, sales and payrolls) other than (i) Taxes or other charges
that are not yet delinquent or are being contested in good faith and have not
been finally determined, or (ii) information returns, tax returns, Taxes or
other governmental charges as to which the failure to file, pay or make
provision for will not, either individually or in the aggregate, have a Material
Adverse Effect on Firstar. The federal and material state income tax returns of
Firstar and its Subsidiaries have been examined by the Internal Revenue Service
(the "IRS") or the relevant state taxing authorities, as the case may be, for
all years to and including 1993 and any liability with respect thereto has been
satisfied and any liability with respect to deficiencies asserted as a result of
such examination has been reserved against in accordance with
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GAAP. There are no material disputes pending, or claims asserted for, Taxes or
assessments upon Firstar or any of its Subsidiaries for which Firstar has not
established reserves in accordance with GAAP. In addition, (A) proper and
accurate amounts have been withheld by Firstar and its Subsidiaries from their
employees for all prior periods in compliance in all material respects with the
tax withholding provisions of applicable federal, state and local laws, except
where failure to do so will not, either individually or in the aggregate, have a
Material Adverse Effect on Firstar, (B) federal, state, and local returns that
are accurate and complete in all material respects have been filed by Firstar
and its Subsidiaries for all periods for which returns were due with respect to
income tax withholding, Social Security and unemployment taxes, except where
failure to do so will not, either individually or in the aggregate, have a
Material Adverse Effect on Firstar, (C) the amounts shown on such federal, state
or local returns to be due and payable have been paid in full or provision
therefor has been included by Firstar in its consolidated financial statements
in accordance with GAAP, except where failure to do so will not, either
individually or in the aggregate, have a Material Adverse Effect on Firstar and
(D) there are no Tax liens upon any property or assets of Firstar or its
Subsidiaries except liens for current Taxes not yet due or liens that will not,
either individually or in the aggregate, have a Material Adverse Effect on
Firstar. Neither Firstar nor any of its Subsidiaries has been required to
include in income any adjustment pursuant to Section 481 of the Code by reason
of a voluntary change in accounting method initiated by Firstar or any of its
Subsidiaries, and the IRS has not initiated or proposed in writing any such
adjustment or change in accounting method, in either case that has had or will
have, either individually or in the aggregate, a Material Adverse Effect on
Firstar. Except as set forth in the financial statements described in
Section 3.6 (including the related notes, where applicable), neither Firstar nor
any of its Subsidiaries has entered into a transaction that is being accounted
for as an installment obligation under Section 453 of the Code, that will have,
either individually or in the aggregate, a Material Adverse Effect on Firstar.
(b) As used in this Agreement, the term "Tax" or "Taxes" means all federal,
state, local, and foreign income, excise, gross receipts, gross income, AD
VALOREM, profits, gains, property, capital, sales, transfer, use, payroll,
employment, severance, withholding, duties, intangibles, franchise, backup
withholding, and other taxes, charges, levies or like assessments together with
all penalties and additions to tax and interest thereon.
(c) No deduction has been disallowed under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by Firstar or any Subsidiary
of Firstar under any contract, plan, program, arrangement or understanding,
except for such disallowed deductions that will not, either individually or in
the aggregate, have a Material Adverse Effect on Firstar.
3.11 EMPLOYEE BENEFIT PLANS. (a) The Firstar Disclosure Schedule sets
forth a true and complete list of each material employee or director benefit,
employment or compensation plan, arrangement or agreement that is maintained, or
contributed to, as of the date of this Agreement (the "Firstar Benefit Plans")
by Firstar, any of its Subsidiaries or by any trade or business, whether or not
incorporated (a "Firstar ERISA Affiliate"), all of which together with Firstar
would be deemed a "single employer" within the meaning of Section 4001 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(b) True and complete copies of each of the Firstar Benefit Plans have
previously been made available to U.S. Bancorp. The copies of the Firstar
Benefit Plans filed as exhibits to the Firstar 10-K are true and complete copies
thereof.
(c) (i) Each of the Firstar Benefit Plans has been operated and administered
in all material respects in compliance with applicable laws, including, but not
limited to, ERISA and the Code, (ii) each of the Firstar Benefit Plans intended
to be "qualified" within the meaning of Section 401(a) of the Code is so
qualified, and, to the knowledge of Firstar, there are no existing circumstances
or any events that have occurred that will adversely affect the qualified status
of any such Firstar Benefit Plan,
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(iii) with respect to each Firstar Benefit Plan that is subject to Title IV of
ERISA, the present value of accrued benefits under such Firstar Benefit Plan,
based upon the actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by such Firstar Benefit Plan's actuary with
respect to such Firstar Benefit Plan, did not, as of its latest valuation date,
exceed the then-current value of the assets of such Firstar Benefit Plan
allocable to such accrued benefits, (iv) no Firstar Benefit Plan provides
benefits, including, without limitation, death or medical benefits (whether or
not insured), with respect to current or former employees or directors of
Firstar or its Subsidiaries beyond their retirement or other termination of
service, other than (A) coverage mandated by applicable law, (B) death benefits
or retirement benefits under any "employee pension plan" (as such term is
defined in Section 3(2) of ERISA), (C) deferred compensation benefits accrued as
liabilities on the books of Firstar or its Subsidiaries or (D) benefits the full
cost of which is borne by the current or former employee or director (or his or
her beneficiary), (v) no material liability under Title IV of ERISA has been
incurred by Firstar, its Subsidiaries or any Firstar ERISA Affiliate that has
not been satisfied in full, and no condition exists that presents a material
risk to Firstar, its Subsidiaries or any Firstar ERISA Affiliate of incurring a
material liability thereunder, (vi) no Firstar Benefit Plan is a "multiemployer
pension plan" (as such term is defined in Section 3(37) of ERISA), (vii) all
contributions or other amounts payable by Firstar or its Subsidiaries as of the
Effective Time with respect to each Firstar Benefit Plan in respect of current
or prior plan years have been paid or accrued in accordance with GAAP and
Section 412 of the Code, (viii) none of Firstar, its Subsidiaries or any other
person, including any fiduciary, has engaged in a transaction in connection with
which Firstar, its Subsidiaries or any Firstar Benefit Plan will be subject to
either a material civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a material tax imposed pursuant to Section 4975 or 4976 of the Code,
and (ix) to the best knowledge of Firstar there are no pending, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the Firstar Benefit Plans or any trusts related thereto that
could reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect on Firstar.
(d) Neither the execution and delivery of this Agreement nor the shareholder
approval or consummation of the transactions contemplated hereby will (either
alone or in conjunction with any other event) (i) result (either alone or upon
the occurrence of any additional acts or events) in any payment (including,
without limitation, severance, unemployment compensation, "excess parachute
payment" (within the meaning of Section 280G of the Code), forgiveness of
indebtedness or otherwise) becoming due to any director or any employee of
Firstar or any of its affiliates from Firstar or any of its affiliates under any
Firstar Benefit Plan or otherwise, (ii) increase or affect the calculation of
the amount of any benefits otherwise payable under any Firstar Benefit Plan,
(iii) result in any acceleration of the time of payment or vesting of any such
benefits, (iv) require the funding of any trust or other funding vehicle or
(v) limit or prohibit the ability to amend, merge, terminate, or receive a
reversion of assets from, any Firstar Benefit Plan or related trust.
3.12 SEC REPORTS. An accurate and complete copy of each (a) final
registration statement, prospectus, report, schedule and definitive proxy
statement filed since January 1, 1997 by Firstar with the SEC pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act
(the "Firstar Reports") and prior to the date hereof and (b) communication
mailed by Firstar to its shareholders since January 1, 1997 and prior to the
date hereof, has previously been made available to U.S. Bancorp, and no such
Firstar Report or communication, as of the date thereof, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances in which they were made, not misleading, except that
information as of a later date (but before the date hereof) shall be deemed to
modify information as of an earlier date. Since January 1, 1997, as of their
respective dates, all Firstar Reports filed under the Securities Act and the
Exchange Act complied in all material respects with the published rules and
regulations of the SEC with respect thereto.
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3.13 COMPLIANCE WITH APPLICABLE LAW. Firstar and each of its Subsidiaries
hold all material licenses, franchises, permits and authorizations necessary for
the lawful conduct of their respective businesses under and pursuant to each,
and have complied in all material respects with and are not in default in any
material respect under any, applicable law, statute, order, rule, regulation,
policy and/or guideline of any Governmental Entity relating to Firstar or any of
its Subsidiaries, except where the failure to hold such license, franchise,
permit or authorization or such noncompliance or default will not, either
individually or in the aggregate, have a Material Adverse Effect on Firstar.
3.14 CERTAIN CONTRACTS. (a) Neither Firstar nor any of its Subsidiaries is
a party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) with respect to the employment of any directors,
officers or employees, other than in the ordinary course of business consistent
with past practice, (ii) that is a "material contract" (as such term is defined
in Item 601(b)(10) of Regulation S-K of the SEC) to be performed after the date
of this Agreement that has not been filed or incorporated by reference in the
Firstar Reports, (iii) that materially restricts the conduct of any line of
business by Firstar or upon consummation of the Merger will materially restrict
the ability of the Surviving Corporation to engage in any line of business in
which a financial holding company or bank holding company may lawfully engage or
(iv) with or to a labor union or guild (including any collective bargaining
agreement). Each contract, arrangement, commitment or understanding of the type
described in this Section 3.14(a) and in Section 3.11(a), whether or not set
forth in the Firstar Disclosure Schedule, is referred to herein as a "Firstar
Contract," and neither Firstar nor any of its Subsidiaries knows of, or has
received notice of, any violation of the above by any of the other parties
thereto that will have, individually or in the aggregate, a Material Adverse
Effect on Firstar.
(b) (i) Each Firstar Contract is valid and binding on Firstar or any of its
Subsidiaries, as applicable, and in full force and effect, (ii) Firstar and each
of its Subsidiaries has in all material respects performed all obligations
required to be performed by it to date under each Firstar Contract, except where
such noncompliance, either individually or in the aggregate, will not have a
Material Adverse Effect on Firstar, and (iii) no event or condition exists that
constitutes or, after notice or lapse of time or both, will constitute, a
material default on the part of Firstar or any of its Subsidiaries under any
such Firstar Contract, except where such default, either individually or in the
aggregate, will not have a Material Adverse Effect on Firstar.
3.15 UNDISCLOSED LIABILITIES. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of Firstar
included in the Firstar December 31, 1999 Form 10-K and for liabilities incurred
in the ordinary course of business consistent with past practice, since
December 31, 1999, neither Firstar nor any of its Subsidiaries has incurred any
liability of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) that, either individually or in the
aggregate, has had or will have a Material Adverse Effect on Firstar.
3.16 INSURANCE. Firstar and its Subsidiaries have in effect insurance
coverage with reputable insurers that in respect of amounts, premiums, types and
risks insured, constitutes reasonably adequate coverage against all risks
customarily insured against by bank holding companies and their subsidiaries
comparable in size and operations to Firstar and its Subsidiaries.
3.17 CHARTER PROVISIONS; STATE TAKEOVER LAWS; FIRSTAR RIGHTS
AGREEMENT. (a) The provisions of Section 1131 of the WBCL are not applicable to
this Agreement, the Firstar Option Agreement or the transactions contemplated
hereby or thereby. The board of directors of Firstar has approved the
transactions contemplated by this Agreement and the Firstar Option Agreement for
purposes of Article V of the Firstar Articles and Section 1141 of the WBCL such
that the provisions of such Article V and such Section 1141 will not apply to
this Agreement or Firstar Option Agreement or any of the transactions
contemplated hereby or thereby.
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(b) Firstar has taken all action, if any, necessary or appropriate so that
the entering into of this Agreement and the Firstar Option Agreement, and the
consummation of the transactions contemplated hereby and thereby, do not and
will not result in the ability of any person to exercise any Firstar Shareholder
Rights under the Firstar Rights Agreement or enable or require the Firstar
Shareholder Rights to separate from the shares of Firstar Common Stock to which
they are attached or to be triggered or become exercisable. No "Distribution
Date" or "Shares Acquisition Date" (as such terms are defined in the Firstar
Rights Plan) has occurred.
3.18 REORGANIZATION; POOLING OF INTERESTS. As of the date of this
Agreement, Firstar has no reason to believe that the Merger will not qualify as
a "reorganization" within the meaning of Section 368(a) of the Code and as a
"pooling of interests" for accounting purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF U.S. BANCORP
Except as disclosed in the U.S. Bancorp disclosure schedule delivered to
Firstar concurrently herewith (the "U.S. Bancorp Disclosure Schedule") U.S.
Bancorp hereby represents and warrants to Firstar as follows:
4.1 CORPORATE ORGANIZATION. (a) U.S. Bancorp is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. U.S. Bancorp has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not, either individually or in the aggregate, have a Material Adverse
Effect on U.S. Bancorp. U.S. Bancorp is duly registered as a bank holding
company and has become a financial holding company under the BHC Act, and meets
the requirements of Section 4(l) of the BHC Act. True and complete copies of the
Certificate of Incorporation of U.S. Bancorp (the "U.S. Bancorp Certificate")
and By-Laws of U.S. Bancorp, as in effect as of the date of this Agreement, have
previously been made available by U.S. Bancorp to Firstar.
(b) Each U.S. Bancorp Subsidiary (i) is duly organized and validly existing
under the laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would have a Material Adverse Effect on U.S. Bancorp, and (iii) has
all requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
4.2 CAPITALIZATION. The authorized capital stock of U.S. Bancorp consists
of 1,500,000,000 shares of U.S. Bancorp Common Stock, of which, as of
October 3, 2000, 743,413,381 shares were issued and outstanding and 14,780,780
shares were held in treasury, and 50,000,000 shares of preferred stock, par
value $1.00 per share (the "U.S. Bancorp Preferred Stock" and, together with the
U.S. Bancorp Common Stock, the "U.S. Bancorp Capital Stock"), of which, as of
October 3, 2000, 53,739 shares were issued and outstanding. All of the issued
and outstanding shares of U.S. Bancorp Capital Stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. As of the
date of this Agreement, except pursuant to the terms of the U.S. Bancorp Option
Agreement, the U.S. Bancorp Stock Plans as in effect as of the date hereof
(including reload options that may be issued under the terms of such plans or
the award agreements thereunder), outstanding warrants to the extent reserved
for as described in clause (v) of the following sentence and the U.S. Bancorp
DRIP (as defined below), U.S. Bancorp does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or
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agreements of any character calling for the purchase or issuance of any shares
of U.S. Bancorp Capital Stock or any other equity securities of U.S. Bancorp or
any securities representing the right to purchase or otherwise receive any
shares of U.S. Bancorp Capital Stock (collectively, the "U.S. Bancorp Rights").
As of October 3, 2000, no shares of U.S. Bancorp Capital Stock were reserved for
issuance except for (i) 147,939,263 shares of U.S. Bancorp Common Stock reserved
for issuance upon exercise of the U.S. Bancorp Option Agreement,
(ii) 91,215,337 shares of U.S. Bancorp Common Stock reserved for issuance
pursuant to employee and director stock plans in effect as of the date hereof
(the "U.S. Bancorp Stock Plans"), (iii) 819,876 shares reserved for issuance
pursuant to the rights agreement, dated as of January 4, 1999, by and between
U.S. Bancorp and U.S. Bank National Association, (iv) 6,002,452 shares reserved
for issuance pursuant to the U.S. Bancorp Automatic Dividend Reinvestment and
Common Stock Purchase Plan (the "U.S. Bancorp DRIP"), and (v) 206,141 shares
reserved for issuance pursuant to warrants granted. Since October 3, 2000, U.S.
Bancorp has not issued any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock, other than
as expressly permitted by Section 5.2 and pursuant to (A) the exercise of
employee and director stock options granted and warrants issued prior to such
date, (B) the U.S. Bancorp DRIP and (C) pursuant to the U.S. Bancorp Option
Agreement. U.S. Bancorp shall terminate or suspend the U.S. Bancorp DRIP prior
to the next record date to be declared following the date hereof with respect to
the quarterly dividend payable on shares of U.S. Bancorp Common Stock (currently
anticipated to be on or about December 1, 2000) such that no shares of U.S.
Bancorp Capital Stock shall thereafter be issued or become issuable pursuant
thereto (the date of such termination or suspension, the "DRIP Suspension
Date"). As of the date hereof, the board of directors of U.S. Bancorp has taken
all action necessary to provide that (1) the payroll period ending on the date
following the date hereof shall be the last day of the last Purchase Period
under the U.S. Bancorp Employee Stock Purchase Plan of 1984 (as amended and
restated) and (2) no new Purchase Periods shall commence under such Plan.
4.3 AUTHORITY; NO VIOLATION. (a) U.S. Bancorp has full corporate power and
authority to execute and deliver this Agreement and each of the Option
Agreements and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and each of the Option Agreements
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly approved by the Board of Directors of U.S. Bancorp. The
Board of Directors of U.S. Bancorp has directed that this Agreement and the
transactions contemplated hereby be submitted to U.S. Bancorp's shareholders for
adoption at a meeting of such shareholders and, except for the approval of this
Agreement and the transactions contemplated hereby by the affirmative vote of
the holders of a majority of the outstanding shares of U.S. Bancorp Common Stock
entitled to vote thereon, no corporate proceedings on the part of U.S. Bancorp
are necessary to approve this Agreement and the Option Agreements and to
consummate the transactions contemplated hereby and thereby. This Agreement has
been duly and validly executed and delivered by U.S. Bancorp and (assuming due
authorization, execution and delivery by Firstar) constitutes the valid and
binding obligation of U.S. Bancorp, enforceable against U.S. Bancorp in
accordance with its terms (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors
generally and the availability of equitable remedies).
(b) Neither the execution and delivery of this Agreement by U.S. Bancorp,
nor the consummation by U.S. Bancorp of the transactions contemplated hereby,
nor compliance by U.S. Bancorp with any of the terms or provisions hereof, will
(i) violate any provision of the U.S. Bancorp Certificate or By-Laws, or
(ii) assuming that the consents and approvals referred to in Section 4.4 are
duly obtained, (A) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to U.S. Bancorp, any of
its Subsidiaries or Non-Subsidiary Affiliates or any of their respective
properties or assets or (B) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
that, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation
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under, accelerate the performance required by, or result in the creation of any
lien upon any of the respective properties or assets of U.S. Bancorp, any of its
Subsidiaries or its Non-Subsidiary Affiliates under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which U.S.
Bancorp, any of its Subsidiaries or Non-Subsidiary Affiliates is a party, or by
which they or any of their respective properties or assets may be bound or
affected, except (in the case of clause (B) above) for such violations,
conflicts, breaches or defaults that either individually or in the aggregate
will not have a Material Adverse Effect on U.S. Bancorp.
4.4 CONSENTS AND APPROVALS. Except for (a) the filing of applications and
notices, as applicable, with the Federal Reserve Board under the BHC Act and
approval of such applications and notices, (b) the pre-merger notification
requirements of the HSR Act, (c) the State Approvals, (d) the filing with the
SEC of the Joint Proxy Statement and the S-4 in which the Joint Proxy Statement
will be included as a prospectus and any filings under the Securities Act
required in connection with the issuance of shares of U.S. Bancorp Common Stock
pursuant to the U.S. Bancorp Option Agreement, (e) the filing of the Wisconsin
Articles with the Wisconsin Department pursuant to the WBCL, (f) the filing of
the Delaware Certificate with the Delaware Secretary pursuant to the DGCL,
(g) any consents, authorizations, approvals, filings or exemptions in connection
with compliance with the applicable provisions of federal and state securities
laws relating to the regulation of broker-dealers, insurance companies and
agents, investment advisers or transfer agents, and federal commodities laws
relating to the regulation of futures commission merchants and the rules and
regulations thereunder and of any applicable SRO, and the rules of the NYSE, or
that are required under consumer finance, mortgage banking and other similar
laws and (h) such filings and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states in connection with the
issuance of shares of Surviving Corporation Common Stock pursuant to this
Agreement or the resale of shares of U.S. Bancorp Common Stock as contemplated
by the U.S. Bancorp Stock Option Agreement, no consents or approvals of or
filings or registrations with any Governmental Entity are necessary in
connection with (i) the execution and delivery by U.S. Bancorp of this Agreement
and (ii) the consummation by U.S. Bancorp of the transactions contemplated
hereby, except to the extent that the absence of any such consent,
authorization, approval, filing or exemption would not, individually or in the
aggregate, have a Material Adverse Effect on U.S. Bancorp or the Surviving
Corporation.
4.5 REGULATORY COMPLIANCE. (a) Except for normal examinations conducted by
a Regulatory Agency in the ordinary course of the business of U.S. Bancorp and
its Subsidiaries, no Regulatory Agency has initiated any proceeding or, to the
best knowledge of U.S. Bancorp, investigation into the business or operations of
U.S. Bancorp or any of its Subsidiaries since January 1, 1998, except where such
proceedings or investigation will not have, either individually or in the
aggregate, a Material Adverse Effect on U.S. Bancorp. There is no unresolved
violation, criticism, or exception by any Regulatory Agency with respect to any
report or statement relating to any examinations of U.S. Bancorp or any of its
Subsidiaries that, in the reasonable judgment of U.S. Bancorp, will have, either
individually or in the aggregate, a Material Adverse Effect on U.S. Bancorp.
(b) Neither U.S. Bancorp nor any of its Subsidiaries is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a party
to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or has been since January 1, 1997, a recipient of any
supervisory letter from, or since January 1, 1997, has adopted any board
resolutions at the request of any Regulatory Agency or other Governmental Entity
that currently restricts in any material respect the conduct of its business or
that in any material manner relates to its capital adequacy, its credit
policies, its management or its business (each, whether or not set forth in the
U.S. Bancorp Disclosure Schedule, a "U.S. Bancorp Regulatory Agreement"), nor
has U.S. Bancorp or any of its Subsidiaries been advised since January 1,
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1997, by any Regulatory Agency or other Governmental Entity that it is
considering issuing or requesting any such U.S. Bancorp Regulatory Agreement.
4.6 FINANCIAL STATEMENTS. Copies of the consolidated balance sheets of
U.S. Bancorp and its Subsidiaries as of December 31, for the fiscal years 1998
and 1999, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for the fiscal years 1997 through 1999,
inclusive, as reported in U.S. Bancorp's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999 filed with the SEC under the Exchange Act
(the "U.S. Bancorp 10-K"), in each case accompanied by the audit report of
Ernst & Young LLP, independent accountants with respect to U.S. Bancorp, have
previously been made available to Firstar. The December 31, 1999 consolidated
balance sheet of U.S. Bancorp (including the related notes, where applicable)
fairly presents in all material respects the consolidated financial position of
U.S. Bancorp and its Subsidiaries as of the date thereof, and the other
financial statements referred to in this Section 4.6 (including the related
notes, where applicable) fairly present in all material respects the results of
the consolidated operations and changes in shareholders' equity and consolidated
financial position of U.S. Bancorp and its Subsidiaries for the respective
fiscal periods or as of the respective dates therein set forth; each of such
statements (including the related notes, where applicable) complies in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto; and each of such
statements (including the related notes, where applicable) has been prepared in
all material respects in accordance with GAAP consistently applied during the
periods involved, except, in each case, as indicated in such statements or in
the notes thereto. The books and records of U.S. Bancorp and its Subsidiaries
have been, and are being, maintained in all material respects in accordance with
GAAP and any other applicable legal and accounting requirements and reflect only
actual transactions.
4.7 BROKER'S FEES. Except for Goldman, Sachs & Co., none of U.S. Bancorp
nor any U.S. Bancorp Subsidiary nor any of their respective officers or
directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with the Merger or
related transactions contemplated by this Agreement or the Option Agreements.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as publicly disclosed
in U.S. Bancorp Reports (as defined below) filed prior to the date hereof, since
June 30, 2000, no event or events have occurred that has had, individually or in
the aggregate, a Material Adverse Effect on U.S. Bancorp.
(b) Except as publicly disclosed in U.S. Bancorp Reports filed prior to the
date hereof, since June 30, 2000, U.S. Bancorp and its Subsidiaries have carried
on their respective businesses in all material respects in the ordinary course.
4.9 LEGAL PROCEEDINGS. (a) Neither U.S. Bancorp nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of U.S.
Bancorp's knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against U.S. Bancorp or any of its Subsidiaries or challenging the
validity or propriety of the transactions contemplated by this Agreement or the
U.S. Bancorp Option Agreement as to which, in any such case, there is a
reasonable probability of an adverse determination and that, if adversely
determined, will have, either individually or in the aggregate, a Material
Adverse Effect on U.S. Bancorp.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply generally to financial holding
companies, bank holding companies or banks) imposed upon U.S. Bancorp, any of
its Subsidiaries or the assets of U.S. Bancorp or any of its Subsidiaries that
has had or will have, either individually or in the aggregate, a Material
Adverse Effect on U.S. Bancorp or the Surviving Corporation.
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4.10 TAXES AND TAX RETURNS. (a) Each of U.S. Bancorp and its Subsidiaries
has duly filed all federal, state, foreign and local information returns and tax
returns required to be filed by it on or prior to the date hereof (all such
returns being accurate and complete in all material respects) and has duly paid
or made provisions for the payment of all Taxes and other governmental charges
that have been incurred or are due or claimed to be due from it by federal,
state, foreign or local taxing authorities on or prior to the date of this
Agreement (including, without limitation, if and to the extent applicable, those
due in respect of its properties, income, business, capital stock, deposits,
franchises, licenses, sales and payrolls) other than (i) Taxes or other charges
that are not yet delinquent or are being contested in good faith and have not
been finally determined, or (ii) information returns, tax returns, Taxes or
other governmental charges as to which the failure to file, pay or make
provision for will not have, either individually or in the aggregate, a Material
Adverse Effect on U.S. Bancorp. The U.S. federal income tax returns of U.S.
Bancorp and its Subsidiaries have been examined by the IRS for all years to and
including 1993 or, in the case of West One Bancorp, 1987; the material state
income tax returns of U.S. Bancorp and its Subsidiaries have been examined by
the relevant state taxing authorities as follows: for U.S. Bancorp by the State
of Minnesota for all years to and including 1993; for Former U.S. Bancorp of
Portland, Ore. by the State of Oregon for all years to and including 1985 and by
the State of Idaho for all years to and including 1994; for West One Bancorp by
the State of Idaho for all years to and including 1994; and any liability with
respect thereto has been satisfied and any liability with respect to
deficiencies asserted as a result of such examination has been reserved against
in accordance with GAAP. There are no material disputes pending, or claims
asserted for, Taxes or assessments upon U.S. Bancorp or any of its Subsidiaries
for which U.S. Bancorp has not established reserves in accordance with GAAP. In
addition, (A) proper and accurate amounts have been withheld by U.S. Bancorp and
its Subsidiaries from their employees for all prior periods in compliance in all
material respects with the tax withholding provisions of applicable federal,
state and local laws, except where failure to do so will not, either
individually or in the aggregate, have a Material Adverse Effect on U.S.
Bancorp, (B) federal, state and local returns that are accurate and complete in
all material respects have been filed by U.S. Bancorp and its Subsidiaries for
all periods for which returns were due with respect to income tax withholding,
Social Security and unemployment taxes, except where failure to do so will not,
either individually or in the aggregate, have a Material Adverse Effect on U.S.
Bancorp, (C) the amounts shown on such federal, state or local returns to be due
and payable have been paid in full or provision therefor has been included by
U.S. Bancorp in its consolidated financial statements in accordance with GAAP,
except where failure to do so will not, individually or in the aggregate, have a
Material Adverse Effect on U.S. Bancorp and (D) there are no Tax liens upon any
property or assets of U.S. Bancorp or its Subsidiaries except liens for current
Taxes not yet due or liens that will not have, either individually or in the
aggregate, a Material Adverse Effect on U.S. Bancorp. Neither U.S. Bancorp nor
any of its Subsidiaries has been required to include in income any adjustment
pursuant to Section 481 of the Code by reason of a voluntary change in
accounting method initiated by U.S. Bancorp or any of its Subsidiaries, and the
IRS has not initiated or proposed in writing any such adjustment or change in
accounting method, in either case, that has had or will have, either
individually or in the aggregate, a Material Adverse Effect on U.S. Bancorp.
Except as set forth in the financial statements described in Section 4.6
(including the related notes, where applicable), neither U.S. Bancorp nor any of
its Subsidiaries has entered into a transaction that is being accounted for as
an installment obligation under Section 453 of the Code, that will have, either
individually or in the aggregate, a Material Adverse Effect on U.S. Bancorp.
(b) No deduction has been disallowed under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by U.S. Bancorp or any
Subsidiary of U.S. Bancorp under any contract, plan, program, arrangement or
understanding, except for such disallowed deductions that will not, either
individually or in the aggregate, have a Material Adverse Effect on U.S.
Bancorp.
4.11 EMPLOYEE BENEFIT PLANS. (a) The U.S. Bancorp Disclosure Schedule sets
forth a true and complete list of each material employee or director benefit,
employment or compensation plan,
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arrangement or agreement that is maintained, or contributed to, as of the date
of this Agreement (the "U.S. Bancorp Benefit Plans") by U.S. Bancorp, any of its
Subsidiaries or by any trade or business, whether or not incorporated (a "U.S.
Bancorp ERISA Affiliate"), all of which together with U.S. Bancorp would be
deemed a "single employer" within the meaning of Section 4001 of ERISA.
(b) True and complete copies of each of the U.S. Bancorp Benefit Plans have
previously been made available to Firstar. The copies of the U.S. Bancorp
Benefit Plans set forth as exhibits to the U.S. Bancorp 10-K are true and
complete copies thereof.
(c) (i) Each of the U.S. Bancorp Benefit Plans has been operated and
administered in all material respects in compliance with applicable laws,
including, but not limited to, ERISA and the Code, (ii) each of the U.S. Bancorp
Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code is so qualified, and, to the knowledge of U.S. Bancorp, there are no
existing circumstances or any events that have occurred that will adversely
affect the qualified status of any such U.S. Bancorp Benefit Plan, (iii) with
respect to each U.S. Bancorp Benefit Plan that is subject to Title IV of ERISA,
the present value of accrued benefits under such U.S. Bancorp Benefit Plan,
based upon the actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by such U.S. Bancorp Benefit Plan's actuary
with respect to such U.S. Bancorp Benefit Plan, did not, as of its latest
valuation date, exceed the then current value of the assets of such U.S. Bancorp
Benefit Plan allocable to such accrued benefits, (iv) no U.S. Bancorp Benefit
Plan provides benefits, including, without limitation, death or medical benefits
(whether or not insured), with respect to current or former employees or
directors of U.S. Bancorp or its Subsidiaries beyond their retirement or other
termination of service, other than (A) coverage mandated by applicable law,
(B) death benefits or retirement benefits under any "employee pension plan" (as
such term is defined in Section 3(2) of ERISA), (C) deferred compensation
benefits accrued as liabilities on the books of U.S. Bancorp or its Subsidiaries
or (D) benefits the full cost of which is borne by the current or former
employee or director (or his or her beneficiary), (v) no material liability
under Title IV of ERISA has been incurred by U.S. Bancorp, its Subsidiaries or
any U.S. Bancorp ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to U.S. Bancorp, its Subsidiaries
or any U.S. Bancorp ERISA Affiliate of incurring a material liability
thereunder, (vi) no U.S. Bancorp Benefit Plan is a "multiemployer pension plan"
(as such term is defined in Section 3(37) of ERISA), (vii) all contributions or
other amounts payable by U.S. Bancorp or its Subsidiaries as of the Effective
Time with respect to each U.S. Bancorp Benefit Plan in respect of current or
prior plan years have been paid or accrued in accordance with GAAP and
Section 412 of the Code, (viii) none of U.S. Bancorp, its Subsidiaries or any
other person, including any fiduciary, has engaged in a transaction in
connection with which U.S. Bancorp, its Subsidiaries or any U.S. Bancorp Benefit
Plan will be subject to either a material civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a material tax imposed pursuant to
Section 4975 or 4976 of the Code, and (ix) to the best knowledge of U.S. Bancorp
there are no pending, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against any of the U.S. Bancorp Benefit
Plans or any trusts related thereto that could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect on U.S.
Bancorp.
(d) Neither the execution and delivery of this Agreement nor the shareholder
approval or consummation of the transactions contemplated hereby will (either
alone or in conjunction with any other event) (i) result (either alone or upon
the occurrence of any additional acts or events) in any payment (including,
without limitation, severance, unemployment compensation, "excess parachute
payment" (within the meaning of Section 280G of the Code), forgiveness of
indebtedness or otherwise) becoming due to any director or any employee of U.S.
Bancorp or any of its affiliates from U.S. Bancorp or any of its affiliates
under any U.S. Bancorp Benefit Plan or otherwise, (ii) increase or affect the
calculation of the amount of any benefits otherwise payable under any U.S.
Bancorp Benefit Plan, (iii) result in any acceleration of the time of payment or
vesting of any such benefits, (iv) require the
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funding of any trust or other funding vehicle or (v) limit or prohibit the
ability to amend, merge, terminate or receive a reversion of assets from any
U.S. Bancorp Benefit Plan or related trust.
4.12 SEC REPORTS. An accurate and complete copy of each (a) final
registration statement, prospectus, report, schedule and definitive proxy
statement filed since January 1, 1997 by U.S. Bancorp with the SEC pursuant to
the Securities Act or the Exchange Act (the "U.S. Bancorp Reports") and prior to
the date hereof and (b) communication mailed by U.S. Bancorp to its shareholders
since January 1, 1997 and prior to the date hereof, has previously been made
available to Firstar, and no such U.S. Bancorp Report or communication, as of
the date thereof, contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances in which they were
made, not misleading, except that information as of a later date (but before the
date hereof) shall be deemed to modify information as of an earlier date. Since
January 1, 1997, as of their respective dates, all U.S. Bancorp Reports filed
under the Securities Act and the Exchange Act complied in all material respects
with the published rules and regulations of the SEC with respect thereto.
4.13 COMPLIANCE WITH APPLICABLE LAW. U.S. Bancorp and each of its
Subsidiaries hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to each, and have complied in all material respects with and are not in
default in any material respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to U.S.
Bancorp or any of its Subsidiaries, except where the failure to hold such
license, franchise, permit or authorization or such noncompliance or default
will not, either individually or in the aggregate, have a Material Adverse
Effect on U.S. Bancorp.
4.14 CERTAIN CONTRACTS. (a) Neither U.S. Bancorp nor any of its
Subsidiaries is a party to or bound by any contract, arrangement, commitment or
understanding (whether written or oral) (i) with respect to the employment of
any directors, officers or employees other than in the ordinary course of
business consistent with past practice, (ii) that is a "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of this Agreement that has not been filed or
incorporated by reference in the U.S. Bancorp Reports, (iii) that materially
restricts the conduct of any line of business by U.S. Bancorp or upon
consummation of the Merger will materially restrict the ability of the Surviving
Corporation to engage in any line of business in which a financial holding
company or bank holding company may lawfully engage or (iv) with or to a labor
union or guild (including any collective bargaining agreement). Each contract,
arrangement, commitment or understanding of the type described in this
Section 4.14(a) and in Section 4.11(a), whether or not set forth in the U.S.
Bancorp Disclosure Schedule, is referred to herein as a "U.S. Bancorp Contract",
and neither U.S. Bancorp nor any of its Subsidiaries knows of, or has received
notice of, any violation of the above by any of the other parties thereto that
will have, individually or in the aggregate, a Material Adverse Effect on U.S.
Bancorp.
(b) (i) Each U.S. Bancorp Contract is valid and binding on U.S. Bancorp or
any of its Subsidiaries, as applicable, and in full force and effect, (ii) U.S.
Bancorp and each of its Subsidiaries has in all material respects performed all
obligations required to be performed by it to date under each U.S. Bancorp
Contract, except where such noncompliance, either individually or in the
aggregate, will not have a Material Adverse Effect on U.S. Bancorp, and
(iii) no event or condition exists that constitutes or, after notice or lapse of
time or both, will constitute, a material default on the part of U.S. Bancorp or
any of its Subsidiaries under any such U.S. Bancorp Contract, except where such
default, either individually or in the aggregate, will not have a Material
Adverse Effect on U.S. Bancorp.
4.15 UNDISCLOSED LIABILITIES. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of U.S. Bancorp
included in the U.S. Bancorp December 31, 1999
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Form 10-K and for liabilities incurred in the ordinary course of business
consistent with past practice, since December 31, 1999, neither U.S. Bancorp nor
any of its Subsidiaries has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or to become
due) that, either individually or in the aggregate, has had or will have a
Material Adverse Effect on U.S. Bancorp.
4.16 INSURANCE. U.S. Bancorp and its Subsidiaries have in effect insurance
coverage with reputable insurers, that in respect of amounts, premiums, types
and risks insured, constitutes reasonably adequate coverage against all risks
customarily insured against by bank holding companies and their Subsidiaries
comparable in size and operations to U.S. Bancorp and its Subsidiaries.
4.17 CHARTER PROVISIONS; STATE TAKEOVER LAWS. The board of directors of
U.S. Bancorp has approved the transactions contemplated by this Agreement and
the U.S. Bancorp Option Agreement for purposes of Article Eighth of the U.S.
Bancorp Certificate and Section 203 (a)(1) of the DGCL such that the provisions
of Article Eighth of the U.S. Bancorp Certificate or Section 203 of the DGCL
will not apply to this Agreement or the U.S. Bancorp Option Agreement or any of
the transactions contemplated hereby or thereby.
4.18 REORGANIZATION; POOLING OF INTERESTS. As of the date of this
Agreement, U.S. Bancorp has no reason to believe that the Merger will not
qualify as a "reorganization" within the meaning of Section 368(a) of the Code
and as a "pooling of interests" for accounting purposes.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME. During the period
from the date of this Agreement to the Effective Time, except as expressly
contemplated or permitted by this Agreement (including the Firstar Disclosure
Schedule and the U.S. Bancorp Disclosure Schedule) or the Option Agreements,
each of U.S. Bancorp and Firstar shall, and shall cause each of their respective
Subsidiaries to, (a) conduct its business in the ordinary course, (b) use
reasonable best efforts to maintain and preserve intact its business
organization, employees and advantageous business relationships and (c) take no
action that would adversely affect or delay the ability of either U.S. Bancorp
or Firstar to obtain any necessary approvals of any Regulatory Agency or other
Governmental Entity required for the transactions contemplated hereby or to
perform its covenants and agreements under this Agreement or the Option
Agreements or to consummate the transactions contemplated hereby or thereby.
5.2 FORBEARANCES. During the period from the date of this Agreement to the
Effective Time, except as set forth in the U.S. Bancorp Disclosure Schedule or
the Firstar Disclosure Schedule, as the case may be, and, except as expressly
contemplated or permitted by this Agreement or the Option Agreements or as
otherwise indicated in this Section 5.2, neither U.S. Bancorp nor Firstar shall,
and neither U.S. Bancorp nor Firstar shall permit any of their respective
Subsidiaries to, without the prior written consent of the other party to this
Agreement (such consent not to be unreasonably withheld or delayed):
(a) other than in the ordinary course of business, incur any material amount
of indebtedness for borrowed money (other than short-term indebtedness incurred
to refinance short-term indebtedness (it being understood that for purposes of
this Section 5.2(a) "short-term" shall mean maturities of six months or less)
and indebtedness of it or any of its Subsidiaries to it or any of its
wholly-owned Subsidiaries), assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other individual,
corporation or other entity, or make any loan or advance (it being understood
and agreed that incurrence of indebtedness in the ordinary course of business
shall
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include, without limitation, the creation of deposit liabilities, purchases of
federal funds, sales of certificates of deposit and entering into repurchase
agreements);
(b) (i) adjust, split, combine or reclassify any capital stock, (ii) make,
declare or pay any dividend, or make any other distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible (whether currently
convertible or convertible only after the passage of time or the occurrence of
certain events) into or exchangeable for any shares of its capital stock (except
(A) in the case of Firstar, for regular quarterly cash dividends at a rate not
in excess of $.1625 per share of Firstar Common Stock, (B) in the case of U.S.
Bancorp, for regular quarterly cash dividends on U.S. Bancorp Common Stock at a
rate not in excess of $.215 per share of U.S. Bancorp Common Stock and for
dividends required by the terms of the Term Preferred Stock as in effect as of
the date hereof and (C) dividends paid by any of the Subsidiaries of each of
U.S. Bancorp and Firstar to U.S. Bancorp or Firstar or any of their wholly-owned
Subsidiaries, respectively, (iii) grant any stock appreciation rights or similar
rights the value or payment of which is based upon the price of any capital
stock thereof, or grant any individual, corporation or other entity any stock
option (other than reload options issued in connection with the exercise of
stock options outstanding as of the date hereof), warrant, convertible security
or other right to acquire any shares of its capital stock; PROVIDED, HOWEVER,
that, notwithstanding the foregoing, U.S. Bancorp may, to the extent consistent
with the treatment of the Merger as a "pooling of interests," issue new options
for up to 1 million shares of U.S. Bancorp Common Stock in connection with hires
and counteroffers after consultation with Firstar, or (iv) issue any additional
shares of capital stock except pursuant to (A) the exercise of stock options or
warrants outstanding as of the date hereof or of reload options issued in
connection with the exercise of such stock options or (B) the U.S. Bancorp
Option Agreement, in the case of U.S. Bancorp, or the Firstar Option Agreement,
in the case of Firstar; or
(c) sell, transfer, mortgage, encumber or otherwise dispose of any material
part of its business or any of its material properties or assets to any
individual, corporation or other entity other than a Subsidiary, or cancel,
release or assign any indebtedness to any such person or any claims held by any
such person, except in the ordinary course of business or pursuant to contracts
or agreements in force at the date of this Agreement;
(d) except for transactions in the ordinary course of business or pursuant
to contracts or agreements in force at the date of or permitted by this
Agreement, make any material investment (either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of any
property or assets) in any other individual, corporation or other entity other
than a Subsidiary thereof;
(e) except for transactions in the ordinary course of business, terminate,
or waive any material provision of, any Firstar Contract or U.S. Bancorp
Contract, as applicable, or make any change in any instrument or agreement
governing the terms of any of its securities, or material lease or contract,
other than normal renewals of contracts and leases without material adverse
changes of terms;
(f) (i) other than in the ordinary course of business or as required by
agreements and plans as in effect as of the date hereof, increase in any manner
the compensation or fringe benefits of any of its employees or directors or
(ii) pay any pension or retirement allowance not required by any existing plan
or agreement to any such employees or directors or (iii) become a party to,
amend or commit itself to any pension, retirement, profit-sharing, consulting,
change of control, severance or welfare benefit plan or agreement (or any
individual agreements evidencing grants or awards thereunder) or employment
agreement with or for the benefit of any employee or director, or
(iv) accelerate the vesting of, or the lapsing of restrictions with respect to,
any stock options or other stock-based compensation;
(g) solicit or encourage from any third party or enter into any
negotiations, discussions or agreement in respect of, or authorize any
individual, corporation or other entity to solicit or encourage
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from any third party or enter into any negotiations, discussions or agreement in
respect of, or provide or cause to be provided any confidential information in
connection with, any inquiries or proposals relating to the disposition of all
or substantially all of its business or assets, or the acquisition of its voting
securities, or the merger or consolidation of it or any of its Subsidiaries with
any corporation or other entity, other than as provided by this Agreement (and
it has discontinued any such negotiations or discussions initiated prior to the
date hereof and shall promptly notify the other party hereto of all of the
relevant details relating to all inquiries and proposals that it may receive
from and after the date hereof through and excluding the Effective Time relating
to any of such matters); PROVIDED that it may, and may permit its employees,
agents and representatives to, furnish or cause to be furnished confidential
information and participate in such negotiations or discussions to the extent
that that such actions are required in order to comply with the fiduciary duties
of it and its directors under applicable law; PROVIDED further that prior to
providing any non-public information permitted to be provided pursuant to the
foregoing proviso, it shall have entered into a confidentiality agreement with
such third party on terms at least as favorable to it as the Confidentiality
Agreement (as defined in Section 6.2(b));
(h) settle any material claim, action or proceeding involving money damages,
except in the ordinary course of business, or involving any restriction on the
conduct of its business;
(i) knowingly take any action that would prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368(a) of the Code; PROVIDED,
HOWEVER, that nothing contained herein shall limit the ability of U.S. Bancorp
or Firstar to exercise its rights under the Firstar Option Agreement or the U.S.
Bancorp Option Agreement, as the case may be;
(j) amend its certificate of incorporation or its by-laws;
(k) other than in consultation with the other party to this Agreement,
materially restructure or change its investment securities portfolio or its gap
position, through purchases, sales or otherwise, or the manner in which the
portfolio is classified or reported;
(l) take any action that is intended or that would reasonably be expected to
result in any of the conditions to the Merger set forth in Article VII not being
satisfied or in a violation of any provision of this Agreement, except, in every
case, as may be required by applicable law;
(m) implement or adopt any change in its accounting principles, practices or
methods, other than as may be required by GAAP or regulatory guidelines;
(n) file or amend any tax return except in the ordinary course of business
and consistent with past practice, settle or compromise any material tax
liability, make, change or revoke any material tax election, or change any
method of tax accounting except as required by applicable law; or
(o) agree to take, make any commitment to take, or adopt any resolutions of
its board of directors in support of, any of the actions prohibited to it by
this Section 5.2.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS. (a) U.S. Bancorp and Firstar shall promptly
prepare and file with the SEC the Joint Proxy Statement and U.S. Bancorp shall
promptly prepare and file with the SEC the S-4, in which the Joint Proxy
Statement will be included as a prospectus. Each of U.S. Bancorp and Firstar
shall use their reasonable best efforts to have the S-4 declared effective under
the Securities Act as promptly as practicable after such filing, and U.S.
Bancorp and Firstar shall thereafter mail or deliver the Joint Proxy Statement
to their respective shareholders. U.S. Bancorp shall also use its reasonable
best efforts to obtain all necessary state securities law or "Blue Sky" permits
and approvals required to carry out the transactions contemplated by this
Agreement, and Firstar shall furnish all information concerning Firstar and the
holders of Firstar Common Stock as may be reasonably requested in connection
with any such action.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities that are necessary
or advisable to consummate the transactions contemplated by this Agreement
(including, without limitation, the Merger) and the Option Agreements, and to
comply with the terms and conditions of all such permits, consents, approvals
and authorizations of all such Governmental Entities. U.S. Bancorp and Firstar
shall have the right to review in advance, and, to the extent practicable, each
will consult the other on, in each case subject to applicable laws relating to
the exchange of information, all the information relating to Firstar or U.S.
Bancorp, as the case may be, and any of their respective Subsidiaries, that
appears in any filing made with, or written materials submitted to, any third
party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing rights of review and
consultation, each of the parties hereto shall act reasonably and as promptly as
practicable. The parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and the
Option Agreements and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated herein.
(c) U.S. Bancorp and Firstar shall, upon request, promptly furnish each
other with all information concerning themselves, their Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable in connection with the Joint Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of U.S. Bancorp,
Firstar or any of their respective Subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement.
(d) U.S. Bancorp and Firstar shall promptly advise each other upon receiving
any communication from any Governmental Entity whose consent or approval is
required for consummation of the transactions contemplated by this Agreement or
the Option Agreements that causes such party to believe that there is a
reasonable likelihood that any Requisite Regulatory Approval (as defined in
Section 7.1(c)) will not be obtained or that the receipt of any such approval
will be materially delayed.
6.2 ACCESS TO INFORMATION. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each of U.S. Bancorp
and Firstar, for the purposes of verifying the representations and warranties of
the other and preparing for the Merger and the other matters contemplated by
this Agreement, shall, and shall cause each of their respective Subsidiaries to,
afford to the officers, employees, accountants, counsel and other
representatives of the other party, access, during normal business hours during
the period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, each of U.S. Bancorp and
Firstar shall,
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and shall cause their respective Subsidiaries to, make available to the other
party (i) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of federal securities laws or federal or state banking laws (other than reports
or documents that U.S. Bancorp or Firstar, as the case may be, is not permitted
to disclose under applicable law) and (ii) all other information concerning its
business, properties and personnel as such party may reasonably request. Neither
U.S. Bancorp nor Firstar nor any of their respective Subsidiaries shall be
required to provide such access or to disclose such information where such
access or disclosure would violate or prejudice the rights of U.S. Bancorp's or
Firstar's, as the case may be, customers, jeopardize the attorney-client
privilege of the institution in possession or control of such information or
contravene any law, rule, regulation, order, judgment, decree, fiduciary duty or
binding agreement entered into prior to the date of this Agreement. The parties
hereto will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply.
(b) Each of U.S. Bancorp and Firstar shall hold all information furnished by
or on behalf of the other party or any of such party's Subsidiaries or
representatives pursuant to Section 6.2(a) in confidence to the extent required
by, and in accordance with, the provisions of confidentiality agreement, dated
September 30, 2000, between U.S. Bancorp and Firstar (the "Confidentiality
Agreement").
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
6.3 SHAREHOLDERS' APPROVALS. Each of U.S. Bancorp and Firstar shall call a
meeting of its shareholders to be held as soon as reasonably practicable for the
purpose of voting upon the requisite shareholder approvals required in
connection with this Agreement and the transactions contemplated hereby, and
each shall use its reasonable best efforts to cause such meetings to occur as
soon as reasonably practicable and on the same date. The boards of directors of
each of Firstar and U.S. Bancorp shall use its reasonable best efforts to obtain
from such shareholders the vote in favor of the approval of this Agreement
required by the WBCL, in the case of Firstar, or by the DGCL and, as applicable,
the rules of the NYSE, in the case of U.S. Bancorp, to consummate the
transactions contemplated hereby; PROVIDED that the use of such reasonable best
efforts shall not be deemed to require a party to maintain in place a
recommendation that such party's shareholders adopt this Agreement and approve
the transactions contemplated hereby to the extent such action is inconsistent
with the fiduciary duties of such party's board of directors under applicable
law.
6.4 LEGAL CONDITIONS TO MERGER. Each of U.S. Bancorp and Firstar shall,
and shall cause its Subsidiaries to, use their reasonable best efforts (a) to
take, or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements that may be imposed on such party or its
Subsidiaries with respect to the Merger and, subject to the conditions set forth
in Article VII, to consummate the transactions contemplated by this Agreement,
and (b) to obtain (and to cooperate with the other party to obtain) any material
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party that is required to be obtained by
Firstar or U.S. Bancorp or any of their respective Subsidiaries in connection
with the Merger and the other transactions contemplated by this Agreement.
6.5 AFFILIATES; PUBLICATION OF COMBINED FINANCIAL RESULTS. (a) Each of
U.S. Bancorp and Firstar shall use its reasonable best efforts to cause each
director, executive officer and other person who is an "affiliate" (as
applicable, for purposes of Rule 145 under the Securities Act and for purposes
of qualifying the Merger for "pooling of interests" accounting treatment) of
such party to deliver to the other party hereto, as soon as practicable after
the date of this Agreement, and prior to the date of the shareholders' meetings
called by U.S. Bancorp and Firstar to approve this Agreement, a written
agreement, in the form of Exhibit 6.5(a)(1) or (2), as applicable, hereto,
providing that such person will not sell, pledge, transfer or otherwise dispose
of any shares of U.S. Bancorp Common Stock or Firstar
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Common Stock held by such "affiliate" and, in the case of the "affiliates" of
Firstar, the shares of Surviving Corporation Common Stock to be received by such
"affiliate" in the Merger.
(b) The Surviving Corporation shall use its best efforts to publish as
promptly as reasonably practical, but in no event later than 90 days after the
end of the first month after the Effective Time in which there are at least
30 days of post-Merger combined operations (which month may be the month in
which the Effective Time occurs), combined sales and net income figures as
contemplated by and in accordance with the terms of SEC Accounting Series
Release No. 135.
6.6 STOCK EXCHANGE LISTING. U.S. Bancorp shall cause the shares of
Surviving Corporation Common Stock to be issued in the Merger to be approved for
listing on the NYSE, subject to official notice of issuance, prior to the
Effective Time.
6.7 EMPLOYEE BENEFIT PLANS. (a) From and after the Effective Time, unless
otherwise mutually determined, the Firstar Benefit Plans and U.S. Bancorp
Benefit Plans in effect as of the date of this Agreement shall remain in effect
with respect to employees of Firstar or U.S. Bancorp (or their Subsidiaries),
respectively, covered by such plans at the Effective Time until such time as the
Surviving Corporation shall, subject to applicable law, the terms of this
Agreement and the terms of such plans, adopt new benefit plans with respect to
employees of the Surviving Corporation and its subsidiaries (the "New Benefit
Plans"). Prior to the Closing Date, Firstar and U.S. Bancorp shall cooperate in
reviewing, evaluating and analyzing the U.S. Bancorp Benefit Plans and Firstar
Benefit Plans with a view towards developing appropriate New Benefit Plans for
the employees covered thereby. From and after the Effective Time, the Surviving
Corporation will recognize the prior service with U.S. Bancorp, Firstar or their
respective Subsidiaries of each employee of U.S. Bancorp, Firstar or any of
their respective subsidiaries as of the Effective Time (the "Employees") in
connection with all employee benefit plans in which such Employees are eligible
to participate following the Effective Time, for purposes of eligibility,
vesting and levels of benefits (but not for purposes of benefit accruals under
any defined benefit pension plan). From and after the Effective Time, the
Surviving Corporation will (i) cause any pre-existing conditions or limitations
and eligibility waiting periods under any group health plans of Surviving
Corporation to be waived with respect to the Employees and their eligible
dependents (to the extent such conditions, limitations or waiting periods have
been otherwise satisfied under the applicable U.S. Bancorp Benefit Plan or
Firstar Benefit Plan) and (ii) give each Employee credit for the plan year in
which the Effective Time occurs towards applicable deductibles and annual
out-of-pocket limits for eligible expenses incurred under the applicable U.S.
Bancorp Benefit Plan or Firstar Benefit Plan prior to the Effective Time.
(b) The foregoing notwithstanding, the Surviving Corporation agrees to honor
and cause to be paid in accordance with their terms all benefits vested as of
the Effective Time under the Firstar Benefit Plans and the U.S. Bancorp Benefit
Plans, including change-of-control benefits related to the Merger as required by
plans and agreements as in effect on the date hereof; PROVIDED, HOWEVER, that,
with respect to the U.S. Bancorp Benefit Plan, the U.S. Bancorp board of
directors or the appropriate committee thereof has taken all action necessary
(to the extent such action is not inconsistent with Section 5.2(i)) to deem the
transactions contemplated hereby to be no more than a "partial change of
control" for purposes of each U.S. Bancorp Benefit Plan to which such concept
applies, including those set forth on Schedule 6.7(b), and has not and shall not
cause or permit the funding of any rabbi or grantor trust associated with any
U.S. Bancorp Benefit Plan.
(c) Nothing in this Section 6.7 shall be interpreted as preventing the
Surviving Corporation from amending, modifying or terminating any U.S. Bancorp
Benefit Plans, Firstar Benefit Plans, or other contracts, arrangements,
commitments or understandings, in accordance with their terms and applicable
law.
6.8 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a) In the event
of any threatened or actual claim, action, suit, proceeding or investigation,
whether civil, criminal or administrative,
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including, without limitation, any such claim, action, suit, proceeding or
investigation in which any individual who is now, or has been at any time prior
to the date of this Agreement, or who becomes prior to the Effective Time, a
director or officer or employee of Firstar, U.S. Bancorp or any of their
respective subsidiaries, (the "Indemnified Parties"), is, or is threatened to
be, made a party based in whole or in part on, or arising in whole or in part
out of, or pertaining to (i) the fact that he or she is or was a director,
officer or employee of U.S. Bancorp or Firstar or any of their subsidiaries or
any of their respective predecessors or (ii) this Agreement, the Option
Agreements or any of the transactions contemplated hereby or thereby, whether in
any case asserted or arising before or after the Effective Time, the parties
hereto agree to cooperate and use their best efforts to defend against and
respond thereto. It is understood and agreed that after the Effective Time, the
Surviving Corporation shall indemnify and hold harmless, as and to the fullest
extent permitted by law, each such Indemnified Party against any losses, claims,
damages, liabilities, costs, expenses (including reasonable attorney's fees and
expenses in advance of the final disposition of any claim, suit, proceeding or
investigation to each Indemnified Party to the fullest extent permitted by law
upon receipt of any undertaking required by applicable law), judgments, fines
and amounts paid in settlement in connection with any such threatened or actual
claim, action, suit, proceeding or investigation.
(b) The Surviving Corporation shall use its reasonable best efforts to cause
the individuals serving as officers and directors of U.S. Bancorp, Firstar, and
each of their respective subsidiaries immediately prior to the Effective Time to
be covered for a period of six years from the Effective Time (or the period of
the applicable statute of limitations, if longer) by the directors' and
officers' liability insurance policy maintained by U.S. Bancorp (PROVIDED that
Surviving Corporation may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions that are not less
advantageous than such policy) with respect to acts or omissions occurring prior
to the Effective Time that were committed by such officers and directors in
their capacity as such.
(c) In the event the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of the
Surviving Corporation assume the obligations set forth in this Section 6.8.
(d) The provisions of this Section 6.8 shall survive the Effective Time and
are intended to be for the benefit of, and shall be enforceable by, each
Indemnified Party and his or her heirs and representatives.
6.9 ADDITIONAL AGREEMENTS. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement (including, without limitation, any merger between a Subsidiary of
Firstar, on the one hand, and a Subsidiary of U.S. Bancorp, on the other hand)
or to vest the Surviving Corporation with full title to all properties, assets,
rights, approvals, immunities and franchises of any of the parties to the
Merger, the proper officers and directors of each party to this Agreement and
their respective Subsidiaries shall take all such necessary action as may be
reasonably requested by, and at the sole expense of, Firstar.
6.10 ADVICE OF CHANGES. U.S. Bancorp and Firstar shall each promptly
advise the other party of any change or event (i) having a Material Adverse
Effect on it or (ii) that it believes would or would be reasonably likely to
cause or constitute a failure of any of the conditions to consummation of the
Merger contained herein.
6.11 DIVIDENDS. After the date of this Agreement, each of U.S. Bancorp and
Firstar shall coordinate with the other the declaration of any dividends in
respect of U.S. Bancorp Common Stock and Firstar Common Stock and the record
dates and payment dates relating thereto, it being the intention of the parties
hereto that holders of neither Firstar Common Stock nor U.S. Bancorp
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<PAGE>
Common Stock shall receive two dividends, or fail to receive one dividend, for
any quarter with respect to their shares of Firstar Common Stock or U.S. Bancorp
Common Stock, as the case may be, and any shares of Surviving Corporation Common
Stock any such holder receives in exchange therefor in the Merger. It is
understood that the parties intend that the first regular quarterly dividend of
Surviving Corporation following consummation of the Merger shall be increased in
accordance with past practices, subject to approval by the board of directors.
6.12 EXEMPTION FROM LIABILITY UNDER SECTION 16(B). FIRSTAR
INSIDERS. Assuming that Firstar delivers to U.S. Bancorp the Firstar
Section 16 Information (as defined below) in a timely fashion prior to the
Effective Time, the board of directors of U.S. Bancorp, or a committee of
Non-Employee Directors thereof (as such term is defined for purposes of
Rule 16b-3(d) under the Exchange Act), shall reasonably promptly thereafter and
in any event prior to the Effective Time adopt a resolution providing in
substance that the receipt by the Firstar Insiders (as defined below) of
Surviving Corporation Common Stock in exchange for shares of Firstar Common
Stock, and of options to purchase shares of Surviving Corporation Common Stock
upon conversion of options to purchase shares of Firstar Common Stock, in each
case pursuant to the transactions contemplated hereby and to the extent such
securities are listed in the Firstar Section 16 Information, are intended to be
exempt from liability pursuant to Section 16(b) under the Exchange Act such that
any such receipt shall be so exempt. "Firstar Section 16 Information" shall mean
information accurate in all respects regarding the Firstar Insiders, the number
of shares of Firstar Common Stock held by each such Firstar Insider and expected
to be exchanged for Surviving Corporation Common Stock in the Merger, and the
number and description of the options to purchase shares of Firstar Common Stock
held by each such Firstar Insider and expected to be converted into options to
purchase shares of Surviving Corporation Common Stock in connection with the
Merger. "Firstar Insiders" shall mean those officers and directors of Firstar
who are subject to the reporting requirements of Section 16(a) of the Exchange
Act and who are listed in the Firstar Section 16 Information.
6.13 EXEMPTION FROM LIABILITY UNDER SECTION 16(B). U.S. BANCORP
INSIDERS. The board of directors of U.S. Bancorp, or a committee of
Non-Employee Directors thereof (as such term is defined for purposes of
Rule 16b-3(d) under the Exchange Act), shall adopt a resolution providing in
substance that the receipt by the U.S. Bancorp Insiders (as defined below) of
Surviving Corporation Common Stock in exchange for shares of U.S. Bancorp Common
Stock, and of options to purchase shares of Surviving Corporation Common Stock
upon conversion of options to purchase shares of U.S. Bancorp Common Stock, in
each case pursuant to the transactions contemplated hereby and to the extent
such securities are listed in the U.S. Bancorp Section 16 Information, are
intended to be exempt from liability pursuant to Section 16(b) under the
Exchange Act such that any such receipt shall be so exempt. "U.S. Bancorp
Section 16 Information" shall mean information accurate in all respects
regarding the U.S. Bancorp Insiders, the number of shares of U.S. Bancorp Common
Stock held by each such U.S. Bancorp Insider and expected to be exchanged for
Surviving Corporation Common Stock in the Merger, and the number and description
of the options to purchase shares of U.S. Bancorp Common Stock held by each such
U.S. Bancorp Insider and expected to be converted into options to purchase
shares of Surviving Corporation Common Stock in connection with the Merger.
"U.S. Bancorp Insiders" shall mean those officers and directors of U.S. Bancorp
who are subject to the reporting requirements of Section 16(a) of the Exchange
Act and who are listed in the U.S. Bancorp Section 16 Information.
6.14 LIST OF OPTION HOLDERS. Within five business days of the date hereof,
each party shall provide the other party with a list of its option holders, the
date of each option to purchase U.S. Bancorp Common Stock or Firstar Common
Stock, as the case may be, granted, the number of shares subject to each such
option, the expiration date of each such option and the price at which each such
option may be exercised under the applicable stock plan.
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<PAGE>
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of the parties to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) SHAREHOLDER APPROVAL. This Agreement and the transactions contemplated
hereby shall have been approved by the respective requisite affirmative votes of
the holders of Firstar Common Stock and U.S. Bancorp Common Stock entitled to
vote thereon.
(b) NYSE LISTING. The shares of Surviving Corporation Common Stock that
shall be issued upon consummation of the Merger shall have been authorized for
listing on the NYSE, subject to official notice of issuance.
(c) OTHER APPROVALS. All regulatory approvals required to consummate the
transactions contemplated hereby shall have been obtained and shall remain in
full force and effect and all statutory waiting periods in respect thereof shall
have expired (all such approvals and the expiration of all such waiting periods
being referred to herein as the "Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the Securities Act and no
stop order suspending the effectiveness of the S-4 shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order, injunction or decree
issued by any court or agency of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the Merger or any of the other
transactions contemplated by this Agreement shall be in effect. No statute,
rule, regulation, order, injunction or decree shall have been enacted, entered,
promulgated or enforced by any Governmental Entity that prohibits, materially
restricts or makes illegal consummation of the Merger.
(f) FEDERAL TAX OPINION. Firstar shall have received an opinion from
Wachtell, Lipton, Rosen & Katz, and U.S. Bancorp shall have received an opinion
from Sullivan & Cromwell, in form and substance reasonably satisfactory to
Firstar and U.S. Bancorp, respectively, in each case dated the Closing Date (as
defined in Section 9.1), substantially to the effect that, on the basis of
facts, representations and assumptions set forth in each such opinion that are
consistent with the state of facts existing at the Effective Time: (i) the
Merger will constitute a reorganization within the meaning of Section 368(a) of
the Code, and U.S. Bancorp and Firstar will each be a party to the
reorganization within the meaning of Section 368(b) of the Code; (ii) no gain or
loss will be recognized by U.S. Bancorp or Firstar as a result of the Merger;
and (iii) no gain or loss will be recognized by shareholders who exchange all of
their U.S. Bancorp Common Stock or Firstar Common Stock, as the case may be,
solely for Surviving Corporation Common Stock pursuant to the Merger (except
with respect to cash received in lieu of a fractional share interest in
Surviving Corporation Common Stock). In rendering such opinions, counsel may
require and rely upon representations contained in certificates of officers of
U.S. Bancorp, Firstar and others.
(g) POOLING OF INTERESTS. U.S. Bancorp and Firstar shall each have received
a letter from their respective independent accountants addressed to Firstar or
U.S. Bancorp, as the case may be, to the effect that the Merger will qualify for
"pooling of interests" accounting treatment.
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<PAGE>
7.2 CONDITIONS TO OBLIGATIONS OF U.S. BANCORP. The obligation of U.S.
Bancorp to effect the Merger is also subject to the satisfaction, or waiver by
U.S. Bancorp, at or prior to the Effective Time, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Firstar set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date; PROVIDED, HOWEVER, that for
purposes of this paragraph, such representations and warranties (other than the
representations set forth in Section 3.2, which shall be true in all material
respects) shall be deemed to be true and correct unless the failure or failures
of such representations and warranties to be so true and correct, either
individually or in the aggregate, and without giving effect to any qualification
as to materiality or Material Adverse Effect set forth in such representations
or warranties, has had or will have a Material Adverse Effect on Firstar or the
Surviving Corporation. U.S. Bancorp shall have received a certificate signed on
behalf of Firstar by the chief executive officer and the chief financial officer
of Firstar to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF FIRSTAR. Firstar shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and U.S. Bancorp shall have received
a certificate signed on behalf of Firstar by the chief executive officer and the
chief financial officer of Firstar to such effect.
7.3 CONDITIONS TO OBLIGATIONS OF FIRSTAR. The obligation of Firstar to
effect the Merger is also subject to the satisfaction or waiver by Firstar at or
prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
U.S. Bancorp set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, PROVIDED, HOWEVER,
that for purposes of this paragraph, such representations and warranties (other
than the representations set forth in Section 4.2, which shall be true in all
material respects) shall be deemed to be true and correct unless the failure or
failures of such representations and warranties to be so true and correct,
either individually or in the aggregate, and without giving effect to any
qualification as to materiality set forth in such representations or warranties,
has had or will have a Material Adverse Effect on U.S. Bancorp. Firstar shall
have received a certificate signed on behalf of U.S. Bancorp by the chief
executive officer and the chief financial officer of U.S. Bancorp to the
foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF U.S. BANCORP. U.S. Bancorp shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Firstar shall have
received a certificate signed on behalf of U.S. Bancorp by the chief executive
officer and the chief financial officer of U.S. Bancorp to such effect.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the shareholders of U.S. Bancorp or Firstar:
(a) by mutual consent of U.S. Bancorp and Firstar in a written instrument,
if the board of directors of each so determines by a vote of a majority of the
members of its entire board;
(b) by either the board of directors of U.S. Bancorp or the board of
directors of Firstar if any Governmental Entity that must grant a Requisite
Regulatory Approval has denied approval of the
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Merger and such denial has become final and nonappealable or any Governmental
Entity of competent jurisdiction shall have issued a final nonappealable order
permanently enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement;
(c) by either the board of directors of U.S. Bancorp or the board of
directors of Firstar if the Merger shall not have been consummated on or before
the date that is nine months after the date of this Agreement, unless the
failure of the Closing (as defined in Section 9.1) to occur by such date shall
be due to the failure of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such party set forth herein;
or
(d) by either the board of directors of U.S. Bancorp or the board of
directors of Firstar (PROVIDED that the terminating party is not then in breach
of any representation, warranty, covenant or other agreement contained herein)
if there shall have been a breach of any of the covenants or agreements or any
of the representations or warranties set forth in this Agreement on the part of
Firstar, in the case of a termination by U.S. Bancorp, or U.S. Bancorp, in the
case of a termination by Firstar, which breach, either individually or in the
aggregate, would constitute, if occurring or continuing on the Closing Date, the
failure of the conditions set forth in Section 7.2 or 7.3, as the case may be,
and that is not cured within 45 days following written notice to the party
committing such breach or by its nature or timing cannot be cured prior to the
Closing Date.
8.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either U.S. Bancorp or Firstar as provided in Section 8.1, this Agreement
shall forthwith become void and have no effect, and none of U.S. Bancorp,
Firstar, any of their respective Subsidiaries or any of the officers or
directors of any of them shall have any liability of any nature whatsoever
hereunder, or in connection with the transactions contemplated hereby, except
that (i) Sections 6.2(b), 8.2, 9.2 and 9.3 shall survive any termination of this
Agreement, and (ii) notwithstanding anything to the contrary contained in this
Agreement, neither U.S. Bancorp nor Firstar shall be relieved or released from
any liabilities or damages arising out of its willful breach of any provision of
this Agreement.
8.3 AMENDMENT. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective boards of directors, at any time before or after approval of the
matters presented in connection with Merger by the shareholders of U.S. Bancorp
and Firstar; PROVIDED, HOWEVER, that after any approval of the transactions
contemplated by this Agreement by the respective shareholders of U.S. Bancorp or
Firstar, there may not be, without further approval of such shareholders, any
amendment of this Agreement that changes the amount or the form of the
consideration to be delivered hereunder to the holders of U.S. Bancorp Common
Stock or Firstar Common Stock, other than as contemplated by this Agreement.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
8.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective board of
directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein; PROVIDED, HOWEVER,
that after any approval of the transactions contemplated by this Agreement by
the respective shareholders of U.S. Bancorp or Firstar, there may not be,
without further approval of such shareholders, any extension or waiver of this
Agreement or any portion thereof that reduces the amount or changes the form of
the consideration to be delivered to the holders of U.S. Bancorp Common Stock or
Firstar Common Stock hereunder, other than as contemplated by this Agreement.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
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ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. on a date
and at a place to be specified by the parties, which shall be no later than five
business days after the satisfaction or waiver (subject to applicable law) of
the latest to occur of the conditions set forth in Article VII, unless extended
by mutual agreement of the parties (the "Closing Date").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement (other than the Option
Agreements and the Confidentiality Agreement, which shall terminate in
accordance with the terms thereof) shall survive the Effective Time, except for
Section 6.8 and for those other covenants and agreements contained herein and
therein that by their terms apply in whole or in part after the Effective Time.
9.3 EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, PROVIDED, HOWEVER, that the costs and expenses of
printing and mailing the Joint Proxy Statement, and all filing and other fees
paid to the SEC in connection with the Merger, shall be borne equally by U.S.
Bancorp and Firstar.
9.4 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to U.S. Bancorp, to:
U.S. Bancorp
U.S. Bank Place
601 Second Avenue South
Suite 2902
Minneapolis, MN 55402
Attention: Lee R. Mitau, Executive Vice President--
Corporate Development and General Counsel
Telecopier: (612) 973-4072
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Mitchell S. Eitel, Esq.
Telecopier: (212) 558-3588
and
(b) if to Firstar, to:
Firstar Corporation
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
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<PAGE>
Attention: Jennie P. Carlson, Executive Vice President,
General Counsel and Secretary
Telecopier: (414) 765-6111
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 W. 52nd Street
New York, NY 10019-6150
Attention: Edward D. Herlihy
Telecopier: (212) 403-2000
9.5 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." This Agreement shall not be interpreted or construed to require any
person to take any action, or fail to take any action, if to do so would violate
any applicable law or regulation.
9.6 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
9.7 ENTIRE AGREEMENT. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof other than the Option
Agreements and the Confidentiality Agreement.
9.8 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to any
applicable conflicts of law principles.
9.9 PUBLICITY. Except as otherwise required by applicable law or the rules
of the NYSE, neither U.S. Bancorp or Firstar shall, or shall permit any of its
Subsidiaries to, issue or cause the publication of any press release or other
public announcement with respect to, or otherwise make any public statement
concerning, the transactions contemplated by this Agreement without the consent
of Firstar, in the case of a proposed announcement or statement by U.S. Bancorp,
or U.S. Bancorp, in the case of a proposed announcement or statement by Firstar,
which consent shall not be unreasonably withheld.
9.10 ASSIGNMENT; THIRD PARTY BENEFICIARIES. Neither this Agreement nor any
of the rights, interests or obligations shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. Except as otherwise specifically
provided in Section 6.8, this Agreement (including the documents and instruments
referred to herein) is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
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<PAGE>
IN WITNESS WHEREOF, U.S. Bancorp and Firstar have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
<TABLE>
<S> <C> <C>
FIRSTAR CORPORATION
By: /s/ JERRY A. GRUNDHOFER
-----------------------------------------
Jerry A. Grundhofer
President and Chief Executive Officer
U.S. BANCORP
By: /s/ JOHN F. GRUNDHOFER
-----------------------------------------
John F. Grundhofer
Chairman, President and Chief
Executive Officer
</TABLE>
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<PAGE>
APPENDIX A-1
AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
AMENDMENT No. 1, dated as of October 23, 2000 (this "Amendment") by and
between U.S. Bancorp, a Delaware corporation ("U.S. Bancorp"), and Firstar
Corporation, a Wisconsin corporation ("Firstar").
WHEREAS, U.S. Bancorp and Firstar have previously entered into that certain
Agreement and Plan of Merger, dated as of October 3, 2000 (the "Agreement"); and
WHEREAS, such persons wish to amend the Agreement pursuant to Section 8.3
thereof and as contemplated by Sections 1.7 and 1.8 thereof, in the manner set
forth below;
NOW, THEREFORE, the parties hereto agree as follows:
1. All capitalized terms used and not defined herein shall have the
meanings given them in the Agreement. All references to the Agreement in
any other agreement between U.S. Bancorp and Firstar relating to the
transactions contemplated by the Agreement shall be deemed to refer to
the Agreement as amended hereby.
2. Section 1.7 of the Agreement is hereby amended and restated to state in
its entirety as follows:
1.7 CERTIFICATE OF INCORPORATION. Subject to the terms and
conditions of this Agreement, at the Effective Time, the Certificate
of Incorporation of the Surviving Corporation shall be the U.S.
Bancorp Certificate as in effect on the date hereof, except that the
first sentence of Article Fourth thereof shall state in its entirety:
The total number of shares of all classes of stock which the
corporation shall have the authority to issue is 4,050,000,000,
consisting of 50,000,000 shares of Preferred Stock of the par
value of $1.00 each and 4,000,000,000 shares of Common Stock of
the par value of $1.25 each.
3. Section 1.8 of the Agreement is hereby amended and restated to state in
its entirety as follows:
1.8 BY-LAWS. Subject to the terms and conditions of this Agreement,
at the Effective Time, the By-Laws of the Surviving Corporation shall
be in the form attached hereto as Exhibit C until changed or amended
as provided therein or by applicable law.
4. Section 3.3(b)(i) of the agreement is hereby amended and restated to
state in its entirety as follows:
(i) violate any provision of the Articles of Incorporation of
Firstar (the "Firstar Articles") or By-Laws or
5. The Agreement is hereby amended by inserting, after Exhibit B thereto,
Annex 1 hereto as Exhibit C thereto.
6. This Amendment shall be governed by and construed in accordance with the
laws of the state of Delaware, without regard to any applicable conflict
of laws principles.
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<PAGE>
7. This Amendment may be executed in counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the
same counterpart.
8. Except as expressly amended hereby, the Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
FIRSTAR CORPORATION
By: /s/ JERRY A. GRUNDHOFER
-----------------------------------
Name: Jerry A. Grundhofer
Title: PRESIDENT AND CHIEF
EXECUTIVE OFFICER
U.S. BANCORP
By: /s/ JOHN F. GRUNDHOFER
-----------------------------------
Name: John F. Grundhofer
Title: CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
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<PAGE>
ANNEX 1
RESTATED BYLAWS
OF
U.S. BANCORP
ARTICLE I.
OFFICES
Section 1. OFFICES.
The registered office of the Corporation in the State of Delaware shall be
in the City of Wilmington, County of New Castle, State of Delaware.
The Corporation shall have offices at such other places as the Board of
Directors may from time to time determine.
ARTICLE II.
STOCKHOLDERS
Section 1. ANNUAL MEETING.
The annual meeting of the stockholders for the election of Directors and for
the transaction of such other business as may properly come before the meeting
shall be held on such date as the Board of Directors shall each year fix. Each
such annual meeting shall be held at such place, within or without the State of
Delaware, and hour as shall be determined by the Board of Directors. The day,
place and hour of such annual meeting shall be specified in the notice of annual
meeting.
The meeting may be adjourned from time to time and place to place until its
business is completed.
Section 2. SPECIAL MEETING.
Special meetings of stockholders may be called by the Board of Directors or
the Chief Executive Officer. The notice of such meeting shall state the purpose
of such meeting and no business shall be transacted thereat except as stated in
the notice thereof. Any such meeting may be held at such place within or without
the State of Delaware as may be fixed by the Board of Directors or the Chief
Executive Officer, and as may be stated in the notice of such meeting.
Section 3. NOTICE OF MEETING.
Notice of every meeting of the stockholders shall be given in the manner
prescribed by law.
Section 4. QUORUM.
Except as otherwise required by law, the Certificate of Incorporation or
these Bylaws, the holders of not less than one-third of the shares entitled to
vote at any meeting of the stockholders, present in person or by proxy, shall
constitute a quorum and the act of the majority of such quorum shall be deemed
the act of the stockholders.
If a quorum shall fail to attend any meeting, the chairman of the meeting
may adjourn the meeting to another place, date, or time.
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<PAGE>
Section 5. QUALIFICATION OF VOTERS.
The Board of Directors may fix a day and hour not more than sixty nor less
than ten days prior to the day of holding any meeting of the stockholders as the
time as of which the stockholders entitled to notice of and to vote at such
meeting shall be determined. Only those persons who were holders of record of
voting stock at such time shall be entitled to notice of and to vote at such
meeting.
Section 6. PROCEDURE.
The presiding officer at each meeting of stockholders shall conclusively
determine the order of business, all matters of procedure and whether or not a
proposal is proper business to be transacted at the meeting and has been
properly brought before the meeting.
The Board shall appoint two or more inspectors of election to serve at every
meeting of the stockholders at which Directors are to be elected.
Section 7. NOMINATION OF DIRECTORS.
Only persons nominated in accordance with the following procedures shall be
eligible for election by stockholders as Directors. Nominations of persons for
election as Directors at a meeting of stockholders called for the purpose of
electing Directors may be made (a) by or at the direction of the Board of
Directors or (b) by any stockholder in the manner herein provided. For a
nomination to be properly made by a stockholder, the stockholder must give
written notice to the Secretary of the Corporation so as to be received at the
principal executive offices of the Corporation not less than (i) with respect to
an annual meeting of stockholders, 120 days in advance of the date of the
Corporation's proxy statement released to stockholders in connection with the
previous year's annual meeting of stockholders, except that if no annual meeting
was held in the previous year or the date of the annual meeting has been changed
by more than 30 days from the date contemplated at the time of the previous
year's proxy statement, such notice must be so received a reasonable time before
the solicitation is made, and (ii) with respect to a special meeting of
stockholders for the election of Directors, the close of business on the seventh
day following the date on which the notice of such meeting is first given to
stockholders. Each such notice shall set forth (a) the name and address of the
stockholder who intends to make the nomination and of the person or persons to
be nominated; (b) a representation that the stockholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons specified
in the notice; (c) a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder; (d) such other Information regarding each nominee
proposed by such stockholder as would have been required to be included in a
proxy statement filed pursuant to the proxy rules of the Securities and Exchange
Commission had each nominee been nominated, or intended to be nominated, by the
Board; and (e) the consent of each nominee to serve as a Director of the
Corporation if so elected.
Section 8. BUSINESS AT ANNUAL MEETING.
At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be (a) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of the Board
of Directors; (b) otherwise properly brought before the meeting by or at the
direction of the Board of Directors; (c) in the case of a nomination for
Director, properly brought in accordance with the procedures set forth in
Section 7 of Article II hereof; or (d) otherwise properly brought before the
meeting by a stockholder entitled to vote at such meeting. For business other
than a nomination for Director to be properly brought before an annual meeting
by a stockholder, the stockholder must have given written notice to the
Secretary of the Corporation so as to be received at the principal executive
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offices of the Corporation not less than 120 days in advance of the date of the
Corporation's proxy statement released to stockholders in connection with the
previous year's annual meeting of stockholders, except that if no annual meeting
was held in the previous year or the date of the annual meeting has been changed
by more than 30 days from the date contemplated at the time of the previous
year's proxy statement, such notice must be so received a reasonable time before
the solicitation is made. Each such notice shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (v) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting; (w) the name and address of
the stockholder proposing such business; (x) the class and number of shares of
the Corporation which are beneficially owned by the stockholder; (y) any
material interest of the stockholder in such business; and (z) such other
information regarding such business as would be required to be included in a
proxy statement filed pursuant to the proxy rules of the Securities and Exchange
Commission had the matter been proposed by the Board of Directors.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
considered properly brought before an annual meeting by a stockholder unless it
is brought in accordance with the procedures set forth in this Section 8 of
Article II.
ARTICLE III.
DIRECTORS
Section 1. NUMBER AND ELECTION.
The Board of Directors of the Corporation shall consist of such number of
Directors as are fixed from time to time by resolution of the Board and within
the requirements set forth in the Certificate of Incorporation. Commencing with
the annual election of Directors by the stockholders in 1986, the Directors
shall be divided into three classes: Class I, Class II and Class III, each such
class, as nearly as possible, to have the same number of Directors. The term of
office of the initial Class I Directors shall expire at the annual election of
Directors by the stockholders in 1987, the term of office of the initial
Class II Directors shall expire at the annual election of Directors by the
stockholders in 1988, and the term of office of the initial Class III Directors
shall expire at the annual election of Directors by the stockholders in 1989. At
each annual election of Directors by the stockholders held after 1985, the
Directors chosen to succeed those whose terms have then expired shall be
identified as being of the same class as the Directors they succeed and shall be
elected by the stockholders for a term expiring at the third succeeding annual
election of Directors. In all cases, Directors shall hold office until their
respective successors are elected by the stockholders and have qualified.
In the event that the holders of any class or series of stock of the
Corporation having a preference as to dividends or upon liquidation of the
Corporation shall be entitled, by a separate class vote, to elect Directors as
may be specified pursuant to Article Fourth of the Corporation's Restated
Certificate of Incorporation, then the provisions of such class or series of
stock with respect to their rights shall apply. The number of Directors that may
be elected by the holders of any such class or series of stock shall be in
addition to the number fixed pursuant to the preceding paragraph. Except as
otherwise expressly provided pursuant to Article Fourth of the Corporation's
Restated Certificate of Incorporation, the number of Directors that may be so
elected by the holders of any such class or series of stock shall be elected for
terms expiring at the next annual meeting of stockholders and without regard to
the classification of the remaining members of the Board of Directors and
vacancies among Directors so elected by the separate class vote of any such
class or series of stock shall be filled by the remaining Directors elected by
such class or series, or, if there are no such remaining Directors, by the
holders of such class or series in the same manner in which such class or series
initially elected a Director.
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If at any meeting for the election of Directors, more than one class of
stock, voting separately as classes, shall be entitled to elect one or more
Directors and there shall be a quorum of only one such class of stock, that
class of stock shall be entitled to elect its quota of Directors notwithstanding
the absence of a quorum of the other class or classes of stock.
Section 2. VACANCIES.
Vacancies and newly created directorships resulting from an increase in the
number of Directors shall be filled by a majority of the Directors then in
office, although less than a quorum, or by a sole remaining Director, and such
Directors so chosen shall hold office until the next election of the class for
which such Directors shall have been chosen, and until their successors are
elected and qualified.
Section 3. REGULAR MEETINGS.
Regular meetings of the Board shall be held at such times and places as the
Board may from time to time determine.
Section 4. SPECIAL MEETINGS.
Special meetings of the Board may be called at any time, at any place and
for any purpose by the Chairman of the Board, or the President, or by any
officer of the Corporation upon the request of a majority of the entire Board.
Section 5. NOTICE OF MEETINGS.
Notice of regular meetings of the Board need not be given.
Notice of every special meeting of the Board shall be given to the Directors
at their usual places of business, or at such other addresses as shall have been
furnished by them for the purpose. Such notice shall be given at least twelve
hours (three hours if meeting is to be conducted by conference telephone) before
the meeting by telephone or by being personally delivered, mailed, or
telegraphed. Such notice need not include a statement of the business to be
transacted at, or the purpose of, any such meeting.
Section 6. QUORUM.
Except as may be otherwise provided by law or in these Bylaws, the presence
of one-third of the entire Board shall be necessary and sufficient to constitute
a quorum for the transaction of business at any meeting of the Board, and the
act of a majority of such quorum shall be deemed the act of the Board.
Less than a quorum may adjourn any meeting of the Board from time to time
without notice.
Section 7. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE.
Members of the Board, or of any committee thereof, may participate in a
meeting of such Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and such participation shall constitute presence in
person at such meeting.
Section 8. POWERS.
The business, property, and affairs of the Corporation shall be managed by
or under the direction of its Board of Directors, which shall have and may
exercise all the powers of the Corporation to do all such lawful acts and things
as are not by law, or by the Certificate of Incorporation, or by these Bylaws,
directed or required to be exercised or done by the stockholders.
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Section 9. COMPENSATION OF DIRECTORS.
Directors shall receive such compensation for their services as shall be
determined by a majority of the entire Board provided that Directors who are
serving the Corporation as officers or employees and who receive compensation
for their services as such officers or employees shall not receive any salary or
other compensation for their services as Directors.
Section 10. COMMITTEES OF THE BOARD.
A majority of the entire Board of Directors may designate one or more
standing or temporary committees consisting of one or more Directors. The Board
may invest such committees with such powers and authority, subject to the
limitations of law and such conditions as it may see fit.
ARTICLE IV.
EXECUTIVE COMMITTEE
Section 1. ELECTION.
At any meeting of the Board, an Executive Committee, composed of the
Chairman of the Board, the President, and not less than three other members, may
be elected by a majority vote of the entire Board to serve until the Board shall
otherwise determine. Either the Chairman of the Board or the President,
whichever is the Chief Executive Officer, shall be the Chairman of the Executive
Committee, and the other shall be the Vice Chairman thereof, unless the Board
shall otherwise determine. Members of the Executive Committee shall be members
of the Board.
Section 2. POWERS.
The Executive Committee shall have and may exercise all of the powers of the
Board of Directors when the Board is not in session, except that, unless
specifically authorized by the Board of Directors, it shall have no power to
(a) elect directors or officers; (b) alter, amend, or repeal these Bylaws or any
resolution of the Board of Directors relating to the Executive Committee;
(c) declare any dividend or make any other distribution to the stockholders of
the Corporation; (d) appoint any member of the Executive Committee; or (e) take
any other action which legally may be taken only by the Board.
Section 3. RULES.
The Executive Committee shall adopt such rules as it may see fit with
respect to the calling of its meetings, the procedure to be followed thereat,
and its functioning generally. Any action taken with the written consent of all
members of the Executive Committee shall be as valid and effectual as though
formally taken at a meeting of said Executive Committee.
Section 4. VACANCIES.
Vacancies in the Executive Committee may be filled at any time by a majority
vote of the entire board.
ARTICLE V.
OFFICERS
Section 1. NUMBER.
The officers of the Corporation shall be appointed or elected by the Board
of Directors. The officers shall be a Chairman of the Board, a President, one or
more Vice Chairmen, such number of Vice Presidents or other officers as the
Board may from time to time determine, a Secretary, a
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Treasurer, and a Controller. The President shall be Chief Executive Officer
unless the Board shall determine otherwise. The Chairman of the Board shall
preside at all meetings of the Board and shall perform such other duties as may
be assigned from time to time by the Board. In the absence of the Chairman or if
such office shall be vacant, the President shall preside at all meetings of the
Board. In the absence of the Chairman of the Board and the President, any other
Board member designated by the Board may preside at all meetings of the
stockholders and of the Board. The Board of Directors may appoint or elect a
person as a Vice Chairman without regard to whether such person is a member of
the Board of Directors.
Section 2. STAFF AND DIVISIONAL OFFICERS.
The Chief Executive Officer may appoint at his discretion such persons to
hold the title of staff vice president, divisional chairman, divisional
president, divisional vice president or other similar designation. Such persons
shall not be officers of the Corporation and shall retain such title at the sole
discretion of the Chief Executive Officer who may at his will and from time to
time make or revoke such designation.
Section 3. TERMS OF OFFICE.
All officers, agents, and employees of the Corporation shall hold their
respective offices or positions at the pleasure of the Board of Directors or the
appropriate appointing authority and may be removed at any time by such
authority with or without cause.
Section 4. DUTIES.
The officers, agents, and employees shall perform the duties and exercise
the powers usually incident to the offices or positions held by them
respectively, and/or such other duties and powers as may be assigned to them
from time to time by the Board of Directors or the Chief Executive Officer.
ARTICLE VI.
INDEMNIFICATION OF DIRECTORS, OFFICERS, AND EMPLOYEES
Section 1. GENERAL.
The Corporation shall indemnify to the full extent permitted by and in the
manner permissible under the Delaware General Corporation Law, as amended from
time to time (but, in the case of any such amendment, only to the extent that
such amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such amendment), any
person made, or threatened to be made, a party to any action, suit, or
proceeding, whether criminal, civil, administrative, or investigative, by reason
of the fact that such person (i) is or was a director, advisory director, or
officer of the Corporation or any predecessor of the Corporation, or (ii) is or
was a director, advisory director or officer of the Corporation or any
predecessor of the Corporation and served any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise as a director,
advisory director, officer, partner, trustee, employee or agent at the request
of the Corporation or any predecessor of the Corporation; PROVIDED, HOWEVER,
that except as provided in Section 4 of this Article VI, the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors.
Section 2. ADVANCEMENT OF EXPENSES.
The right to indemnification conferred in this Article VI shall be a
contract right and shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition, such advances to be paid by the Corporation within 20 days after
the
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receipt by the Corporation of a statement or statements from the claimant
requesting such advance or advances from time to time; PROVIDED, HOWEVER, that
if the General Corporation Law of the State of Delaware requires, the payment of
such expenses incurred by a director, advisory director or officer in his or her
capacity as a director, advisory director or officer (and not in any other
capacity in which service was or is rendered by such person while a director,
advisory director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of a proceeding,
shall be made only upon delivery to the Corporation of an undertaking by or on
behalf of such director, advisory director or officer, to repay all amounts so
advanced if it shall ultimately be determined that such director, advisory
director or officer is not entitled to be indemnified under this Article VI or
otherwise.
Section 3. PROCEDURE FOR INDEMNIFICATION.
To obtain indemnification under this Article VI, a claimant shall submit to
the Corporation a written request, including therein or therewith such
documentation and information as is reasonably available to the claimant and is
reasonably necessary to determine whether and to what extent the claimant is
entitled to indemnification. Upon written request by a claimant for
indemnification pursuant to the first sentence of this Section 3, a
determination, if required by applicable law, with respect to the claimant's
entitlement thereto shall be made as follows: (1) if requested by the claimant,
by Independent Counsel (as hereinafter defined), or (2) if no request is made by
the claimant for a determination by Independent Counsel, (i) by a majority vote
of the Disinterested Directors (as hereinafter defined), even though less than a
quorum, or by a majority vote of a committee of Disinterested Directors
designated by a majority vote of Disinterested Directors, even though less than
a quorum, or (ii) if there are no Disinterested Directors or if the
Disinterested Directors so direct, by Independent Counsel in a written opinion
to the Board of Directors, a copy of which shall be delivered to the claimant,
or (iii) if the Disinterested Directors so direct, by the stockholders of the
Corporation. In the event the determination of entitlement to indemnification is
to be made by Independent Counsel at the request of the claimant, the
Independent Counsel shall be selected by the Board of Directors unless there
shall have occurred within two years prior to the date of the commencement to
the action, suit or proceeding for which indemnification is claimed a "Change of
Control of the Corporation" as defined in the Firstar Corporation 1998 Executive
Stock Incentive Plan, in which case the Independent Counsel shall be selected by
the claimant unless the claimant shall request that such selection be made by
the Board of Directors. If it is so determined that the claimant is entitled to
indemnification, payment to the claimant shall be made within 10 days after such
determination.
Section 4. CERTAIN REMEDIES.
If a claim under Section 1 of this Article VI is not paid in full by the
Corporation within thirty days after a written claim pursuant to Section 3 of
this Article VI has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standard of
conduct which makes it permissible under the General Corporation Law of the
State of Delaware for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors,
Independent Counsel or stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board of Directors, Independent
Counsel or stockholders) that the claimant
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has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
Section 5. BINDING EFFECT.
If a determination shall have been made pursuant to Section 3 of this
Article VI that the claimant is entitled to indemnification, the Corporation
shall be bound by such determination in any judicial proceeding commenced
pursuant to Section 4 of this Article VI.
Section 6. VALIDITY OF THIS ARTICLE VI.
The Corporation shall be precluded from asserting in any judicial proceeding
commenced pursuant to Section 4 of this Article VI that the procedures and
presumptions of this Article VI are not valid, binding and enforceable and shall
stipulate in such proceeding that the Corporation is bound by all the provisions
of this Article VI.
Section 7. NONEXCLUSIVITY, ETC.
The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Article VI shall not be exclusive of any other right which any person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-Laws, agreement, vote of stockholders or Disinterested
Directors or otherwise. No repeal or modification of this Article VI shall in
any way diminish or adversely affect the rights of any present or former
director, advisory director, officer, employee or agent of the Corporation or
any predecessor thereof hereunder in respect of any occurrence or matter arising
prior to any such repeal or modification.
Section 8. INSURANCE.
The Corporation may maintain insurance, at its expense, to protect itself
and any director, officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
General Corporation Law of the State of Delaware. To the extent that the
Corporation maintains any policy or policies providing such insurance, each such
director or officer, and each such agent or employee to whom rights to
indemnification have been granted as provided in Section 9 of this Article VI,
shall be covered by such policy or policies in accordance with its or their
terms to the maximum extent of the coverage thereunder for any such director,
officer, employee or agent.
Section 9. INDEMNIFICATION OF OTHER PERSONS.
The Corporation may grant rights to indemnification, and rights to be paid
by the Corporation the expenses incurred in defending any proceeding in advance
of its final disposition, to any present or former employee or agent of the
Corporation or any predecessor of the Corporation to the fullest extent of the
provisions of this Article VI with respect to the indemnification and
advancement of expenses of directors, advisory directors and officers of the
Corporation.
Section 10. SEVERABILITY.
If any provision or provisions of this Article VI shall be held to be
invalid, illegal or unenforceable for any reason whatsoever: (1) the validity,
legality and enforceability of the remaining provisions of this Article VI
(including, without limitation, each portion of any paragraph of this
Article VI containing any such provision held to be invalid, illegal or
unenforceable, that is not itself held to be invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (2) to the fullest
extent possible, the provisions of this Article VI (including, without
limitation, each such portion
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of any paragraph of this Article VI containing any such provision held to be
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.
Section 11. CERTAIN DEFINITIONS.
For purposes of this Article VI:
(1) "Disinterested Director" means a director of the Corporation who
is not and was not a party to the matter in respect of which
indemnification is sought by the claimant.
(2) "Independent Counsel" means a law firm, a member of a law firm,
or an independent practitioner that is experienced in matters of
corporation law and shall include any such person who, under the
applicable standards of professional conduct then prevailing, would not
have a conflict of interest in representing either the Corporation or the
claimant in an action to determine the claimant's rights under this
Article VI.
Section 12. NOTICES.
Any notice, request or other communication required or permitted to be given
to the Corporation under this Article VI shall be in writing and either
delivered in person or sent by telecopy, telex, telegram, overnight mail or
courier service, or certified or registered mail, postage prepaid, return
receipt requested, to the Secretary of the Corporation and shall be effective
only upon receipt by the Secretary.
ARTICLE VII.
STOCK
Section 1. CERTIFICATED OR UNCERTIFICATED SHARES.
The Board of Directors may authorize the issuance of stock either in
certificated or in uncertificated form. If shares are issued in uncertificated
form, each stockholder shall be entitled upon written request to a stock
certificate or certificates, representing and certifying the number and kind of
full shares held, signed as provided in Section 2 of this Article VII.
Certificates for shares of stock shall be in such form as the Board of Directors
may from time to time prescribe. The shares of the stock of the Corporation
shall be transferable on the books of the Corporation by the holder thereof in a
person or by his or her attorney upon surrender for cancellation of a
certificate or certificates for the same number of shares, or other evidence of
ownership if no certificates shall have been issued, with an assignment and
power of transfer endorsed thereon or attached thereto, duly executed, and with
such proof of the validity of the signature as the Corporation or its agents may
reasonably require.
Section 2. SIGNATURES.
The certificates of stock shall be signed by the Chairman, President, or a
Vice President and by the Secretary or an Assistant Secretary, provided that if
such certificates are signed by a transfer agent or transfer clerk and by a
registrar, the signatures of such Chairman, President, Vice President,
Secretary, or Assistant Secretary may be facsimiles, engraved, or printed.
Section 3. REPLACEMENT.
No certificate for shares of stock in the Corporation shall be issued in
place of any certificate alleged to have been lost, stolen, or destroyed except
upon production of such evidence of such loss, theft, or destruction and upon
delivery to the Corporation of a bond of indemnity in such amount, and upon such
terms and secured by such surety as the Board of Directors or the Executive
Committee in its discretion may require.
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ARTICLE VIII.
MISCELLANEOUS
Section 1. SEAL.
The Corporation seal shall bear the name of the Corporation, the date 1929
and the words "Corporate Seal, Delaware".
Section 2. FISCAL YEAR.
The fiscal year of the Corporation shall begin on the first day of January
in each year and shall end on the thirty-first day of December following.
ARTICLE IX.
AMENDMENTS
Section 1.
These Bylaws, or any of them, may from time to time be supplemented,
amended, or repealed (a) by a majority vote of the entire Board of Directors or
(b) at any annual or special meeting of the stockholders.
ARTICLE X.
EMERGENCY BYLAW
Section 1. OPERATIVE EVENT.
The Emergency Bylaw provided in this Article X shall be operative during any
emergency resulting from an attack on the United States, any nuclear or atomic
incident, or other event which creates a state of disaster of sufficient
severity to prevent the normal conduct and management of the affairs and
business of the Corporation, notwithstanding any different provision in the
preceding articles of the Bylaws or in the Certificate of Incorporation of the
Corporation or in the General Corporation Law of Delaware. To the extent not
inconsistent with this Emergency Bylaw, the Bylaws provided in the preceding
Articles shall remain in effect during such emergency and upon the termination
of such emergency the Emergency Bylaw shall cease to be operative unless and
until another such emergency shall occur.
Section 2. NOTICE OF MEETING.
During any such emergency, any meeting of the Board of Directors may be
called by any officer of the Corporation or by any Director. Notice shall be
given by such person or by any officer of the Corporation. The notice shall
specify the place of the meeting, which shall be the head office of the
Corporation at the time if feasible and otherwise any other place specified in
the notice. The notice shall also specify the time of the meeting. Notice may be
given only to such of the Directors as it may be feasible to reach at the time
and by such means as may be feasible at the time, including publication or
radio. If given by mail, messenger, telephone, or telegram, the notice shall be
addressed to the Directors at their residences or business addresses, or such
other places as the person giving the notice shall deem most suitable. Notice
shall be similarly given, to the extent feasible, to the other persons serving
as Directors referred to in Section 3 below. Notice shall be given at least two
days before the meeting if feasible in the judgment of the person giving the
notice and otherwise on any shorter time he may deem necessary.
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Section 3. QUORUM.
During any such emergency, at any meeting of the Board of Directors, a
quorum shall consist of one-third of the number of Directors fixed at the time
pursuant to Article III of the Bylaws. If the Directors present at any
particular meeting shall be fewer than the number required for such quorum,
other persons present, to the number necessary to make up such quorum, shall be
deemed Directors for such particular meeting as determined by the following
Provisions and in the following order of priority:
(a) All Executive Vice Presidents of the Corporation in order of their
seniority of first election to such office, or if two or more shall have
been first elected to such office on the same day, in the order of their
seniority in age; and
(b) All Senior Vice Presidents of the Corporation in order of their
seniority of first election to such office, or if two or more shall have
been first elected to such office on the same day, in the order of their
seniority in age; and
(c) All Vice Presidents of the Corporation in order of their seniority
of first election to such office, or if two or more shall have been first
elected to such office on the same day, in the order of their seniority in
age; and
(d) Any other persons that are designated on a list that shall have been
approved by the Board of Directors before the emergency, such persons to be
taken in such order of priority and subject to such conditions as may be
provided in the resolution approving the list.
Section 4. LINES OF MANAGEMENT SUCCESSION.
The Board of Directors, during as well as before any such emergency, may
provide and from time to time modify lines of succession in the event that
during such an emergency any or all officers or agents of the Corporation shall
for any reason be rendered incapable of discharging their duties.
Section 5. OFFICE RELOCATION.
The Board of Directors, during as well as before any such emergency, may,
effective in the emergency, change the head office or designate several
alternative head offices or regional offices, or authorize the officers to do
so.
Section 6. LIABILITY.
No officer, director, or employee acting in accordance with this Emergency
Bylaw shall be liable except for willful misconduct.
Section 7. REPEAL OR AMENDMENT.
This Emergency Bylaw shall be subject to repeal or change by further action
of the Board of Directors or by action of the stockholders, except that no such
repeal or change shall modify the provisions of the next preceding paragraph
with regard to action or inaction prior to the time of such repeal or change.
Any such amendment of this Emergency Bylaw may make any further or different
provision that may be practical and necessary for the circumstances of the
emergency deems it to be in the best interest of the Corporation to do so.
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APPENDIX B
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated October 3, 2000, between Firstar Corporation,
a Wisconsin corporation ("Issuer"), and U.S. Bancorp, a Delaware corporation
("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Stock Option Agreement
(this "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement and
in consideration therefor and for Grantee's entering into the U.S. Bancorp
Option Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to 195,895,138 fully
paid and nonassessable shares of Issuer's common stock, par value $0.01 per
share ("Common Stock"), at a price of $22.25 per share (the "Option Price");
PROVIDED, HOWEVER, that in no event shall the number of shares of Common Stock
for which this Option is exercisable exceed 19.9% of the Issuer's issued and
outstanding shares of Common Stock without giving effect to any shares subject
to or issued pursuant to the Option. The number of shares of Common Stock that
may be received upon the exercise of the Option and the Option Price are subject
to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are either
(i) issued or otherwise become outstanding after the date of this Agreement
(other than pursuant to this Agreement) or (ii) redeemed, repurchased, retired
or otherwise cease to be outstanding after the date of the Agreement, the number
of shares of Common Stock subject to the Option shall be increased or decreased,
as appropriate, so that, after such issuance, such number equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in whole
or part, and from time to time, if, but only if, both an Initial Triggering
Event (as hereinafter defined) and a Subsequent Triggering Event (as hereinafter
defined) shall have occurred prior to the occurrence of an Exercise Termination
Event (as hereinafter defined), PROVIDED that the Holder shall have sent the
written notice of such exercise (as provided in Section 2(e)) within 90 days
following such Subsequent Triggering Event. Each of the following shall be an
"Exercise Termination Event": (i) the Effective Time (as defined in the Merger
Agreement) of the Merger; (ii) termination of the Merger Agreement in accordance
with the provisions thereof if such termination occurs prior to the occurrence
of an Initial Triggering Event, except a termination by Grantee pursuant to
Section 8.1(d) of the Merger Agreement (unless the breach by Issuer giving rise
to such right of termination is non-volitional); or (iii) the passage of
12 months after termination of the Merger Agreement if such termination follows
the occurrence of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(d) of the Merger Agreement (unless the breach by Issuer
giving rise to such right of termination is non-volitional) (PROVIDED that if an
Initial Triggering Event continues or occurs beyond such termination and prior
to the passage of such 12-month period, the Exercise Termination Event shall be
12 months from the expiration of the Last Triggering Event but in no event more
than 18 months after such
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termination). The "Last Triggering Event" shall mean the last Initial Triggering
Event to expire. The term "Holder" shall mean the holder or holders of the
Option.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof: (i) Issuer or any of its
Subsidiaries (as defined in Rule 1-02 of Regulation S-X promulgated by the
Securities and Exchange Commission (the "SEC")) (each an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered into
an agreement to engage in an Acquisition Transaction (as hereinafter defined)
with any person (the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the rules and regulations
thereunder) other than Grantee or any of its Subsidiaries (each a "Grantee
Subsidiary") or the board of directors of Issuer shall have recommended that the
shareholders of Issuer approve or accept any Acquisition Transaction. For
purposes of this Agreement, "Acquisition Transaction" shall mean (A) a merger or
consolidation, or any similar transaction, involving Issuer or any Issuer
Subsidiary, (B) a purchase, lease or other acquisition or assumption of all or a
substantial portion of the assets or deposits of Issuer or any Issuer
Subsidiary, (C) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing 10% or
more of the voting power of Issuer, or (D) any substantially similar
transaction; PROVIDED, HOWEVER, that in no event shall any merger,
consolidation, purchase or similar transaction involving only the Issuer and one
or more Issuer Subsidiary or involving only any two or more of such Issuer
Subsidiaries, PROVIDED that any such transaction is not entered into in
violation of the terms of the Merger Agreement, be deemed to be an Acquisition
Transaction; (ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended, proposed or
publicly announced its intention to authorize, recommend or propose, to engage
in an Acquisition Transaction with any person other than Grantee or a Grantee
Subsidiary, or the board of directors of Issuer shall have publicly withdrawn or
modified, or publicly announced its interest to withdraw or modify, in any
manner adverse to Grantee, its recommendation that the shareholders of Issuer
approve the transactions contemplated by the Merger Agreement in anticipation of
engaging in an Acquisition Transaction; (iii) any person other than Grantee, any
Grantee Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity in
the ordinary course of its business shall have acquired beneficial ownership or
the right to acquire beneficial ownership of 10% or more of the outstanding
shares of Common Stock (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the 1934 Act,
and the rules and regulations thereunder); iv) any person other than Grantee or
any Grantee Subsidiary shall have made a BONA FIDE proposal to Issuer or its
shareholders by public announcement or written communication that is or becomes
the subject of public disclosure to engage in an Acquisition Transaction;
(v) after an overture is made by a third party to Issuer or its shareholders to
engage in an Acquisition Transaction, Issuer shall have breached any covenant or
obligation contained in the Merger Agreement and such breach (A) would entitle
Grantee to terminate the Merger Agreement and (B) shall not have been cured
prior to the Notice Date (as hereinafter defined); or (vi) any person other than
Grantee or any Grantee Subsidiary, other than in connection with a transaction
to which Grantee has given its prior written consent, shall have filed an
application or notice with the Federal Reserve Board, or other federal or state
bank regulatory authority, which application or notice has been accepted for
processing, for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof: (i) the
acquisition by any person of beneficial ownership of 20% or more of the
then-outstanding Common Stock; or (ii) the occurrence of the Initial Triggering
Event described in Section 2(b)(i), except that the percentage referred to in
clause (C) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of any
Initial Triggering Event or Subsequent Triggering Event of which it has notice
(together, a "Triggering Event"), it being understood that the giving of such
notice by Issuer shall not be a condition to the right of the Holder to exercise
the Option.
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(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the Notice Date
for the closing of such purchase (the "Closing Date"); PROVIDED that if prior
notification to or approval of the Federal Reserve Board or any other regulatory
agency is required in connection with such purchase, the Holder shall promptly
file the required notice or application for approval and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in Section 2(e), the Holder shall pay to
Issuer the aggregate purchase price for the shares of Common Stock purchased
pursuant to the exercise of the Option in immediately available funds by wire
transfer to a bank account designated by Issuer, PROVIDED that failure or
refusal of Issuer to designate such a bank account shall not preclude the Holder
from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in Section 2(f), Issuer shall deliver to the Holder
a certificate or certificates representing the number of shares of Common Stock
purchased by the Holder and, if the Option should be exercised in part only, a
new Option evidencing the rights of the Holder thereof to purchase the balance
of the shares purchasable hereunder, and the Holder shall deliver to Issuer a
copy of this Agreement and a letter agreeing that the Holder will not offer to
sell or otherwise dispose of such shares in violation of applicable law or the
provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
The transfer of the shares represented by this certificate is subject to
certain provisions of an agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the Securities Act of 1933,
as amended. A copy of such agreement is on file at the principal office of
Issuer and will be provided to the holder hereof without charge upon receipt
by Issuer of a written request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference; and (iii) the legend shall be removed
in its entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend as may be
required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under Section 2(e) and the tender of the
applicable purchase price in immediately available funds, the Holder shall be
deemed, subject to the receipt of applicable regulatory approvals, to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
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3. Issuer agrees: (a) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(b) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (c) promptly to take all action as may from time to time be required
(including (i) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (ii) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHCA"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or notice to the Federal
Reserve Board or to any state regulatory authority is necessary before the
Option may be exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the Federal Reserve
Board or such state regulatory authority as they may require) in order to permit
the Holder to exercise the Option and Issuer duly and effectively to issue
shares of Common Stock pursuant hereto; and (d) promptly to take all action
provided herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable, without
expense, at the option of the Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other Agreements providing for
Options of different denominations entitling the holder thereof to purchase, on
the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5. In the event of any change in, or distributions
in respect of, the Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, subdivisions, conversions, exchanges
of shares, distributions on or in respect of the Common Stock, or the like, the
type and number of shares of Common Stock purchasable upon exercise hereof and
the Option Price shall be appropriately adjusted in such manner as shall fully
preserve the economic benefits provided hereunder and proper provision shall be
made in any agreement governing any such transaction to provide for such proper
adjustment and the full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior to
an Exercise Termination Event, Issuer shall, at the request of Grantee delivered
within 90 days of such Subsequent Triggering Event (whether on its own behalf or
on behalf of any subsequent holder of this Option (or part thereof) or any of
the shares of Common Stock issued pursuant hereto), promptly prepare, file and
keep current a shelf registration statement under the 1933 Act covering this
Option and any shares issued and issuable pursuant to this Option and shall use
its reasonable best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition of
this Option and any shares of Common Stock issued upon total or partial exercise
of this Option ("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement first to become effective and then to
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remain effective for such period not in excess of 180 days from the day such
registration statement first becomes effective or such shorter time as may be
reasonably necessary to effect such sales or other dispositions. Grantee shall
have the right to demand two such registrations. The foregoing notwithstanding,
if, at the time of any request by Grantee for registration of the Option or
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering the inclusion of the Holder's
Option or Option Shares would interfere with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option Shares otherwise
to be covered in the registration statement contemplated hereby may be reduced;
and PROVIDED, HOWEVER, that after any such required reduction the number of
Option Shares to be included in such offering for the account of the Holder
shall constitute at least 25% of the total number of shares to be sold by the
Holder and Issuer in the aggregate; and PROVIDED FURTHER, HOWEVER, that if such
reduction occurs, then the Issuer shall file a registration statement for the
balance as promptly as practical and no reduction shall thereafter occur. Each
such Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. If requested by
any such Holder in connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of representations,
warranties, indemnities and other agreements customarily included in secondary
offering underwriting agreements for the Issuer. Upon receiving any request
under this Section 6 from any Holder, Issuer agrees to send a copy thereof to
any other person known to Issuer to be entitled to registration rights under
this Section 6, in each case by promptly mailing the same, postage prepaid, to
the address of record of the persons entitled to receive such copies.
Notwithstanding anything to the contrary contained herein, in no event shall
Issuer be obligated to effect more than two registrations pursuant to this
Section 6 by reason of the fact that there shall be more than one Grantee as a
result of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event (as
hereinafter defined), (i) following a request of the Holder, delivered prior to
an Exercise Termination Event, Issuer (or any successor thereto) shall
repurchase the Option from the Holder at a price (the "Option Repurchase Price")
equal to the amount by which (A) the Market/Offer Price (as hereinafter defined)
exceeds (B) the Option Price, multiplied by the number of shares for which this
Option may then be exercised and (ii) at the request of the owner of Option
Shares from time to time (the "Owner"), delivered within 90 days of such
occurrence (or such later period as provided in Section 10), Issuer shall
repurchase such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase Price") equal to the
Market/Offer Price multiplied by the number of Option Shares so designated. The
term "Market/Offer Price" shall mean the highest of (A) the price per share of
Common Stock at which a tender offer or exchange offer therefor has been made,
(B) the price per share of Common Stock to be paid by any third party pursuant
to an agreement with Issuer, (C) the highest closing price for shares of Common
Stock within the six-month period immediately preceding the date the Holder
gives notice of the required repurchase of this Option or the Owner gives notice
of the required repurchase of Option Shares, as the case may be, or (D) in the
event of a sale of all or a substantial portion of Issuer's assets, the sum of
the price paid in such sale for such assets and the current market value of the
remaining assets of Issuer as determined by a nationally recognized investment
banking firm selected by the Holder or the Owner, as the case may be, and
reasonably acceptable to the Issuer, divided by the number of shares of Common
Stock of Issuer outstanding at the time of such sale. In determining the
Market/Offer Price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm selected by the
Holder or Owner, as the case may be, and reasonably acceptable to the Issuer.
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(b) The Holder and the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office, a
copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the Holder or the Owner,
as the case may be, elects to require Issuer to repurchase this Option and/or
the Option Shares in accordance with the provisions of this Section 7. Within
the latter to occur of (a) five business days after the surrender of the Option
and/or certificates representing Option Shares and the receipt of such notice or
notices relating thereto and (b) the time that is immediately prior to the
occurrence of a Repurchase Event, Issuer shall deliver or cause to be delivered
to the Holder the Option Repurchase Price and/or to the Owner the Option Share
Repurchase Price therefor or the portion thereof, if any, that Issuer is not
then prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation from repurchasing the Option and/or the Option Shares in full, Issuer
shall immediately so notify the Holder and/or the Owner and thereafter deliver
or cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; PROVIDED, HOWEVER, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation from delivering to the Holder and/or the
Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full (and Issuer hereby undertakes to use its
best efforts to obtain all required regulatory and legal approvals and to file
any required notices, in each case as promptly as practicable in order to
accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to the extent
of the prohibition, whereupon, in the latter case, Issuer shall promptly
(i) deliver to the Holder and/or the Owner, as appropriate, that portion of the
Option Repurchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Stock Option Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock Option
Agreement was exercisable at the time of delivery of the notice of repurchase by
a fraction, the numerator of which is the Option Repurchase Price less the
portion thereof theretofore delivered to the Holder and the denominator of which
is the Option Repurchase Price, or (B) to the Owner, a certificate for the
Option Shares it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed to
have occurred (i) upon the consummation of any merger, consolidation or similar
transaction involving Issuer or any purchase, lease or other acquisition of all
or a substantial portion of the assets of Issuer, other than any such
transaction which would not constitute an Acquisition Transaction pursuant to
the provisos to Section 2(b)(i) or (ii) upon the acquisition by any person of
beneficial ownership of 50% or more of the then outstanding shares of Common
Stock, PROVIDED that no such event shall constitute a Repurchase Event unless a
Subsequent Triggering Event shall have occurred prior to an Exercise Termination
Event. The parties hereto agree that Issuer's obligations to repurchase the
Option or Option Shares under this Section 7 shall not terminate upon the
occurrence of an Exercise Termination Event unless no Subsequent Triggering
Event shall have occurred prior to the occurrence of an Exercise Termination
Event.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or any Grantee Subsidiary, and shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one any Grantee Subsidiary, to merge into Issuer
and Issuer shall be the continuing or surviving corporation, but, in connection
with such merger, the then
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outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger represent less
than 50% of the outstanding voting shares and voting share equivalents of the
merged company, or (iii) to sell or otherwise transfer all or substantially all
of its assets to any person, other than Grantee or any Grantee Subsidiary, then,
and in each such case, the agreement governing such transaction shall make
proper provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (A) the Acquiring Corporation (as hereinafter defined) or
(B) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated: (i) "Acquiring
Corporation" shall mean (A) the continuing or surviving corporation of a
consolidation or merger with Issuer (if other than Issuer), (B) Issuer in a
merger in which Issuer is the continuing or surviving person, and (C) the
transferee of all or substantially all of Issuer's assets; (ii) "Substitute
Common Stock" shall mean the common stock issued by the issuer of the Substitute
Option upon exercise of the Substitute Option; (iii) "Assigned Value" shall mean
the Market/Offer Price, as defined in Section 7; and (iv) "Average Price" shall
mean the average closing price of a share of the Substitute Common Stock for the
one year immediately preceding the consolidation, merger or sale in question,
but in no event higher than the closing price of the shares of Substitute Common
Stock on the day preceding such consolidation, merger or sale; PROVIDED that if
Issuer is the issuer of the Substitute Option, the Average Price shall be
computed with respect to a share of common stock issued by the person merging
into Issuer or by any company that controls or is controlled by such person, as
the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option, PROVIDED,
that if the terms of the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall be as similar as possible and in no event
less advantageous to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the Substitute Option
in substantially the same form as this Agreement, which shall be applicable to
the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option is then exercisable,
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option is then exercisable and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in Section 8(a)
unless the Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer hereunder.
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9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the case
may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable, and in any event within five business
days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or, in either case, the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer following a
request for repurchase pursuant to this Section 9 shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion of the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within five business days after the date on which
the Substitute Option Issuer is no longer so prohibited; PROVIDED, HOWEVER, that
if the Substitute Option Issuer is at any time after delivery of a notice of
repurchase pursuant to Section 9(b) prohibited under applicable law or
regulation from delivering to the Substitute Option Holder and/or the Substitute
Share Owner, as appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the Substitute
Option Issuer shall use its best efforts to obtain all required regulatory and
legal approvals, in each case as promptly as practicable, in order to accomplish
such repurchase), the Substitute Option Holder or Substitute Share Owner may
revoke its notice of repurchase of the Substitute Option or the Substitute
Shares either in whole or to the extent of the prohibition, whereupon, in the
latter case, the Substitute Option Issuer shall promptly (i) deliver to the
Substitute Option Holder or Substitute Share Owner, as appropriate, that portion
of the Substitute Option Repurchase Price or the Substitute Share Repurchase
Price that the Substitute Option Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option
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Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, or (B) to the Substitute Share Owner, a certificate for the
Substitute Common Shares it is then so prohibited from repurchasing.
10. The 90-day or six-month periods for exercise of certain rights under
Sections 2, 6, 7, 13 and 15 shall be extended: (a) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights and for the
expiration of all statutory waiting periods; (b) to the extent necessary to
avoid liability under Section 16(b) of the 1934 Act by reason of such exercise;
and (c) during any period in which Grantee is precluded from exercising such
rights due to an injunction or other legal restriction, plus in each case such
additional period as is reasonably necessary for the exercise of such rights
promptly following the obtaining of such approvals or the expiration of such
periods.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
board of directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and reserve
and to permit it to issue, and at all times from the date hereof through the
termination of this Agreement in accordance with its terms will have reserved
for issuance upon the exercise of the Option, that number of shares of Common
Stock equal to the maximum number of shares of Common Stock at any time and from
time to time issuable hereunder, and all such shares, upon issuance pursuant
hereto, will be duly authorized, validly issued, fully paid, nonassessable, and
will be delivered free and clear of all claims, liens, encumbrance and security
interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including if required redeeming all of the
Firstar Shareholder Rights or amending or terminating the Firstar Rights
Agreement) so that the entering into of this Option Agreement, the acquisition
of shares of Common Stock hereunder and the other transactions contemplated
hereby do not and will not result in the grant of any rights to any person under
the Firstar Rights Agreement or enable or require the Rights to be exercised,
distributed or triggered.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter into
this Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Grantee.
This Agreement has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the 1933 Act.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within
90 days following such Subsequent Triggering Event (or such later period as
provided in Section 10); PROVIDED, HOWEVER, that until the date 15 days
following the date on which the Federal Reserve Board approves an application by
Grantee under the
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BHCA to acquire the shares of Common Stock subject to the Option, Grantee may
not assign its rights under the Option except in (a) a widely dispersed public
distribution, (b) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (c) an assignment to
a single party (E.G., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's behalf, or
(d) any other manner approved by the Federal Reserve Board.
14. Each of Grantee and Issuer will use its best efforts to make all filings
with, and to obtain consents of, all third parties and governmental authorities
necessary to the consummation of the transactions contemplated by this
Agreement, including without limitation making application to list the shares of
Common Stock issuable hereunder on the New York Stock Exchange upon official
notice of issuance and applying to the Federal Reserve Board under the BHCA for
approval to acquire the shares issuable hereunder, but Grantee shall not be
obligated to apply to state banking authorities for approval to acquire the
shares of Common Stock issuable hereunder until such time, if ever, as it deems
appropriate to do so.
15. (a) Grantee in its sole discretion may, at any time during which Issuer
would be required to repurchase the Option or any Option Shares pursuant to
Section 7, surrender the Option (together with any Option Shares issued to and
then owned by the Holder) to Issuer in exchange for a cash payment equal to the
Surrender Price (as hereinafter defined); PROVIDED, HOWEVER, that Grantee may
not exercise its rights pursuant to this Section 15 if Issuer has previously
repurchased the Option (or any portion thereof) or any Option Shares pursuant to
Section 7. The "Surrender Price" shall be equal to (i) $420 million, plus
(ii) if applicable, the aggregate purchase price previously paid pursuant hereto
by Grantee with respect to any Option Shares, minus (iii) if applicable, the
excess of (A) the net cash, if any, received by Grantee pursuant to the
arm's-length sale of Option Shares (or any other securities into which such
Option Shares were converted or exchanged) to any party not affiliated with
Grantee, over (B) the purchase price paid by Grantee with respect to such Option
Shares.
(b) Grantee may exercise its right to surrender the Option and any Option
Shares pursuant to this Section 15 by surrendering for such purpose to Issuer,
at its principal office, a copy of this Agreement, together with certificates
for Option Shares, if any, accompanied by a written notice stating (i) that
Grantee elects to surrender the Option and Option Shares, if any, in accordance
with the provisions of this Section 15 and (ii) the Surrender Price. Within two
business days after the surrender of the Option and the Option Shares, if
applicable, Issuer shall deliver or cause to be delivered to Grantee the
Surrender Price.
(c) To the extent that the Issuer is prohibited under applicable law or
regulation from paying the Surrender Price to Grantee in full, Issuer shall
immediately so notify Grantee and thereafter deliver, or cause to be delivered,
from time to time, to Grantee, that portion of the Surrender Price that Issuer
is not or no longer prohibited from paying, within two business days after the
date on which Issuer is no longer so prohibited; PROVIDED, HOWEVER, that if
Issuer at any time after delivery of a notice of surrender pursuant to
Section 15(b) is prohibited under applicable law or regulation from paying to
Grantee the Surrender Price in full, (i) Issuer shall (A) use its best efforts
to obtain all required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to make such payments, (B) within
two business days of the submission or receipt of any documents relating to any
such regulatory and legal approvals, provide Grantee with copies of the same,
and (C) keep Grantee advised of both the status of any such request for
regulatory and legal approvals and any discussions with any relevant regulatory
or other third party reasonably related to the same, and (ii) Grantee may revoke
such notice of surrender by delivery of a notice of revocation to Issuer and,
upon delivery of such notice of revocation, the Exercise Termination Event shall
be extended to a date six months from the date on which the Exercise Termination
Event would have occurred if not for the provisions of this Section 15(c)
(during which period Grantee may exercise any of its rights hereunder, including
any and all rights pursuant to this Section 15).
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(d) Grantee shall have rights substantially identical to those set forth in
Sections 15(a), 15(b) and 15 (c) with respect to the Substitute Option and the
Substitute Option Issuer during any period in which the Substitute Option Issuer
would be required to repurchase the Substitute Option pursuant to Section 9.
16. (a) Notwithstanding any other provision herein, in no event shall
Grantee's Total Profit (as defined in Section 16(c)) exceed $630 million (the
"Maximum Profit"), and, if the Total Profit would otherwise exceed such amount,
Grantee, at its sole election, shall either (i) reduce the number of shares
subject to the Option (and any Substitution Option), (ii) deliver to Issuer, or
Substitute Issuer, as the case may be, for cancellation shares of Common Stock
or Substitute Common Stock, as the case may be, previously purchased by Grantee
valued at fair market value at the time of delivery, (iii) pay cash to Issuer,
or Substitute Issuer, as the case may be, (iv) reduce the amount of the Option
Repurchase Price or Substitute Option Repurchase Price, or (v) undertake any
combination of the foregoing, so that Grantee's actually realized Total Profit
shall not exceed the Maximum Profit after taking into account the foregoing
actions.
(b) Notwithstanding any other provision of this Agreement, the Option may
not be exercised for a number of shares as would, as of the date of exercise,
result in a Notional Total Profit (as defined in Section 16(d)) of more than the
Maximum Profit and, if exercise of the Option would otherwise result in the
Notional Total Profit exceeding such amount, Grantee, in its discretion, may
take any of the actions specified in Section 16(a) so that the Notional Total
Profit shall not restrict any subsequent exercise of the Option which at such
time complies with this sentence.
(c) For purposes of this Agreement, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the excess of (A) the net
cash amounts or fair market value of any property received by Grantee pursuant
to the sale of Option Shares (or any other securities into which such Option
Shares are converted or exchanged) to any unaffiliated party, other than any
amount received by Grantee upon the repurchase of Option Shares by Issuer
pursuant to Section 7, after payment of application brokerage or sales
commissions and discounts, over (B) Grantee's aggregate purchase price for such
Option Shares (or other securities), plus (ii) all amounts received by Grantee
upon the repurchase of the Option by Issuer pursuant to Section 7, plus
(iii) all equivalent amounts with respect to the Substitute Option and any
amounts paid pursuant to Section 9.
(d) For purposes of this Agreement, the term "Notional Total Profit" with
respect to any number of shares as to which Grantee may propose to exercise the
Option shall be the Total Profit, determined as of the date of such proposed
exercise assuming that the Option were exercised on such date for such number of
shares, and assuming that such shares, together with all other Option Shares
held by Grantee and its affiliates as of such date, were sold for cash at the
closing market price for the Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions). For purposes of
this Section 16, transactions by a wholly-owned Subsidiary transferee of Grantee
in respect of the Option Shares transferred to it shall be treated as if made by
Grantee.
17. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
18. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer or Substitute Option
Issuer, as the case may be, is not permitted to repurchase pursuant to
Section 7 or Section 9, as the case may be, the full number of shares of Common
Stock provided in Section 1(a) (as adjusted pursuant to Section 1(b) or 5), or
Issuer or Substitute Option Issuer is not
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permitted to pay the full Surrender Price, it is the express intention of Issuer
(which shall be binding on the Substitute Option Issuer) to allow the Holder to
acquire or to require Issuer or the Substitute Option Issuer, as the case may
be, to repurchase such lesser number of shares, or to pay such portion of the
Surrender Price, as may be permissible, without any amendment or modification
hereof.
19. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
20. This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof (except to the
extent that mandatory provisions of federal law apply).
21. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
22. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
23. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
24. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
<TABLE>
<S> <C> <C>
FIRSTAR CORPORATION
By: /s/ JERRY A. GRUNDHOFER
-----------------------------------------
Jerry A. Grundhofer
President and Chief Executive Officer
U.S. BANCORP
By: /s/ JOHN F. GRUNDHOFER
-----------------------------------------
John F. Grundhofer
Chairman, President and Chief Executive
Officer
</TABLE>
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APPENDIX C
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated October 3, 2000, between U.S. Bancorp, a
Delaware corporation ("Issuer"), and Firstar Corporation, a Wisconsin
corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Stock Option Agreement
(this "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement and
in consideration therefor and for Grantee's entering into the Firstar Option
Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to 147,939,263 fully
paid and nonassessable shares of Issuer's common stock, par value $1.25 per
share ("Common Stock"), at a price of $23.1875 per share (the "Option Price");
PROVIDED, HOWEVER, that in no event shall the number of shares of Common Stock
for which this Option is exercisable exceed 19.9% of the Issuer's issued and
outstanding shares of Common Stock without giving effect to any shares subject
to or issued pursuant to the Option. The number of shares of Common Stock that
may be received upon the exercise of the Option and the Option Price are subject
to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are either
(i) issued or otherwise become outstanding after the date of this Agreement
(other than pursuant to this Agreement) or (ii) redeemed, repurchased, retired
or otherwise cease to be outstanding after the date of the Agreement, the number
of shares of Common Stock subject to the Option shall be increased or decreased,
as appropriate, so that, after such issuance, such number equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in whole
or part, and from time to time, if, but only if, both an Initial Triggering
Event (as hereinafter defined) and a Subsequent Triggering Event (as hereinafter
defined) shall have occurred prior to the occurrence of an Exercise Termination
Event (as hereinafter defined), PROVIDED that the Holder shall have sent the
written notice of such exercise (as provided in Section 2(e)) within 90 days
following such Subsequent Triggering Event. Each of the following shall be an
"Exercise Termination Event": (i) the Effective Time (as defined in the Merger
Agreement) of the Merger; (ii) termination of the Merger Agreement in accordance
with the provisions thereof if such termination occurs prior to the occurrence
of an Initial Triggering Event, except a termination by Grantee pursuant to
Section 8.1(d) of the Merger Agreement (unless the breach by Issuer giving rise
to such right of termination is non-volitional); or (iii) the passage of
12 months after termination of the Merger Agreement if such termination follows
the occurrence of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(d) of the Merger Agreement (unless the breach by Issuer
giving rise to such right of termination is non-volitional) (PROVIDED that if an
Initial Triggering Event continues or occurs beyond such termination and prior
to the passage of such 12-month period, the Exercise Termination Event shall be
12 months from the expiration of the Last Triggering Event but in no event more
than 18 months after such
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termination). The "Last Triggering Event" shall mean the last Initial Triggering
Event to expire. The term "Holder" shall mean the holder or holders of the
Option.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof: (i) Issuer or any of its
Subsidiaries (as defined in Rule 1-02 of Regulation S-X promulgated by the
Securities and Exchange Commission (the "SEC")) (each an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered into
an agreement to engage in an Acquisition Transaction (as hereinafter defined)
with any person (the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the rules and regulations
thereunder) other than Grantee or any of its Subsidiaries (each a "Grantee
Subsidiary") or the board of directors of Issuer shall have recommended that the
shareholders of Issuer approve or accept any Acquisition Transaction. For
purposes of this Agreement, "Acquisition Transaction" shall mean (A) a merger or
consolidation, or any similar transaction, involving Issuer or Issuer
Subsidiary, (B) a purchase, lease or other acquisition or assumption of all or a
substantial portion of the assets or deposits of Issuer or any Issuer
Subsidiary, (C) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing 10% or
more of the voting power of Issuer, or (D) any substantially similar
transaction; PROVIDED, HOWEVER, that in no event shall any merger,
consolidation, purchase or similar transaction involving only the Issuer and one
or more Issuer Subsidiary or involving only any two or more of such Issuer
Subsidiaries, PROVIDED that any such transaction is not entered into in
violation of the terms of the Merger Agreement, be deemed to be an Acquisition
Transaction; (ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended, proposed or
publicly announced its intention to authorize, recommend or propose, to engage
in an Acquisition Transaction with any person other than Grantee or a Grantee
Subsidiary, or the board of directors of Issuer shall have publicly withdrawn or
modified, or publicly announced its interest to withdraw or modify, in any
manner adverse to Grantee, its recommendation that the shareholders of Issuer
approve the transactions contemplated by the Merger Agreement in anticipation of
engaging in an Acquisition Transaction; (iii) any person other than Grantee, any
Grantee Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity in
the ordinary course of its business shall have acquired beneficial ownership or
the right to acquire beneficial ownership of 10% or more of the outstanding
shares of Common Stock (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the 1934 Act,
and the rules and regulations thereunder); (iv) any person other than Grantee or
any Grantee Subsidiary shall have made a BONA FIDE proposal to Issuer or its
shareholders by public announcement or written communication that is or becomes
the subject of public disclosure to engage in an Acquisition Transaction;
(v) after an overture is made by a third party to Issuer or its shareholders to
engage in an Acquisition Transaction, Issuer shall have breached any covenant or
obligation contained in the Merger Agreement and such breach (A) would entitle
Grantee to terminate the Merger Agreement and (B) shall not have been cured
prior to the Notice Date (as hereinafter defined); or (vi) any person other than
Grantee or any Grantee Subsidiary, other than in connection with a transaction
to which Grantee has given its prior written consent, shall have filed an
application or notice with the Federal Reserve Board, or other federal or state
bank regulatory authority, which application or notice has been accepted for
processing, for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof: (i) the
acquisition by any person of beneficial ownership of 20% or more of the
then-outstanding Common Stock; or (ii) the occurrence of the Initial Triggering
Event described Section 2(b)(i), except that the percentage referred to in
clause (C) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of any
Initial Triggering Event or Subsequent Triggering Event of which it has notice
(together, a "Triggering Event"), it being understood that the giving of such
notice by Issuer shall not be a condition to the right of the Holder to exercise
the Option.
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(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the Notice Date
for the closing of such purchase (the "Closing Date"); PROVIDED that if prior
notification to or approval of the Federal Reserve Board or any other regulatory
agency is required in connection with such purchase, the Holder shall promptly
file the required notice or application for approval and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in Section 2(e), the Holder shall pay to
Issuer the aggregate purchase price for the shares of Common Stock purchased
pursuant to the exercise of the Option in immediately available funds by wire
transfer to a bank account designated by Issuer, PROVIDED that failure or
refusal of Issuer to designate such a bank account shall not preclude the Holder
from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in Section 2(f), Issuer shall deliver to the Holder
a certificate or certificates representing the number of shares of Common Stock
purchased by the Holder and, if the Option should be exercised in part only, a
new Option evidencing the rights of the Holder thereof to purchase the balance
of the shares purchasable hereunder, and the Holder shall deliver to Issuer a
copy of this Agreement and a letter agreeing that the Holder will not offer to
sell or otherwise dispose of such shares in violation of applicable law or the
provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
The transfer of the shares represented by this certificate is subject to
certain provisions of an agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the Securities Act of 1933,
as amended. A copy of such agreement is on file at the principal office of
Issuer and will be provided to the holder hereof without charge upon receipt
by Issuer of a written request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference; and (iii) the legend shall be removed
in its entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend as may be
required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under Section 2(e) and the tender of the
applicable purchase price in immediately available funds, the Holder shall be
deemed, subject to the receipt of applicable regulatory approvals, to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
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3. Issuer agrees: (a) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(b) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (c) promptly to take all action as may from time to time be required
(including (i) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (ii) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHCA"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or notice to the Federal
Reserve Board or to any state regulatory authority is necessary before the
Option may be exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the Federal Reserve
Board or such state regulatory authority as they may require) in order to permit
the Holder to exercise the Option and Issuer duly and effectively to issue
shares of Common Stock pursuant hereto; and (d) promptly to take all action
provided herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable, without
expense, at the option of the Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other Agreements providing for
Options of different denominations entitling the holder thereof to purchase, on
the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5. In the event of any change in, or distributions
in respect of, the Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, subdivisions, conversions, exchanges
of shares, distributions on or in respect of the Common Stock, or the like, the
type and number of shares of Common Stock purchasable upon exercise hereof and
the Option Price shall be appropriately adjusted in such manner as shall fully
preserve the economic benefits provided hereunder and proper provision shall be
made in any agreement governing any such transaction to provide for such proper
adjustment and the full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior to
an Exercise Termination Event, Issuer shall, at the request of Grantee delivered
within 90 days of such Subsequent Triggering Event (whether on its own behalf or
on behalf of any subsequent holder of this Option (or part thereof) or any of
the shares of Common Stock issued pursuant hereto), promptly prepare, file and
keep current a shelf registration statement under the 1933 Act covering this
Option and any shares issued and issuable pursuant to this Option and shall use
its reasonable best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition of
this Option and any shares of Common Stock issued upon total or partial exercise
of this Option ("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement first to become effective and then to
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remain effective for such period not in excess of 180 days from the day such
registration statement first becomes effective or such shorter time as may be
reasonably necessary to effect such sales or other dispositions. Grantee shall
have the right to demand two such registrations. The foregoing notwithstanding,
if, at the time of any request by Grantee for registration of the Option or
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering the inclusion of the Holder's
Option or Option Shares would interfere with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option Shares otherwise
to be covered in the registration statement contemplated hereby may be reduced;
and PROVIDED, HOWEVER, that after any such required reduction the number of
Option Shares to be included in such offering for the account of the Holder
shall constitute at least 25% of the total number of shares to be sold by the
Holder and Issuer in the aggregate; and PROVIDED FURTHER, HOWEVER, that if such
reduction occurs, then the Issuer shall file a registration statement for the
balance as promptly as practical and no reduction shall thereafter occur. Each
such Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. If requested by
any such Holder in connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of representations,
warranties, indemnities and other agreements customarily included in secondary
offering underwriting agreements for the Issuer. Upon receiving any request
under this Section 6 from any Holder, Issuer agrees to send a copy thereof to
any other person known to Issuer to be entitled to registration rights under
this Section 6, in each case by promptly mailing the same, postage prepaid, to
the address of record of the persons entitled to receive such copies.
Notwithstanding anything to the contrary contained herein, in no event shall
Issuer be obligated to effect more than two registrations pursuant to this
Section 6 by reason of the fact that there shall be more than one Grantee as a
result of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event (as
hereinafter defined), (i) following a request of the Holder, delivered prior to
an Exercise Termination Event, Issuer (or any successor thereto) shall
repurchase the Option from the Holder at a price (the "Option Repurchase Price")
equal to the amount by which (A) the Market/Offer Price (as hereinafter defined)
exceeds (B) the Option Price, multiplied by the number of shares for which this
Option may then be exercised and (ii) at the request of the owner of Option
Shares from time to time (the "Owner"), delivered within 90 days of such
occurrence (or such later period as provided in Section 10), Issuer shall
repurchase such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase Price") equal to the
Market/Offer Price multiplied by the number of Option Shares so designated. The
term "Market/Offer Price" shall mean the highest of (w) the price per share of
Common Stock at which a tender offer or exchange offer therefor has been made,
(x) the price per share of Common Stock to be paid by any third party pursuant
to an agreement with Issuer, (y) the highest closing price for shares of Common
Stock within the six-month period immediately preceding the date the Holder
gives notice of the required repurchase of this Option or the Owner gives notice
of the required repurchase of Option Shares, as the case may be, or (z) in the
event of a sale of all or a substantial portion of Issuer's assets, the sum of
the price paid in such sale for such assets and the current market value of the
remaining assets of Issuer as determined by a nationally recognized investment
banking firm selected by the Holder or the Owner, as the case may be, and
reasonably acceptable to the Issuer, divided by the number of shares of Common
Stock of Issuer outstanding at the time of such sale. In determining the
Market/Offer Price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm selected by the
Holder or Owner, as the case may be, and reasonably acceptable to the Issuer.
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(b) The Holder and the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office, a
copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the Holder or the Owner,
as the case may be, elects to require Issuer to repurchase this Option and/or
the Option Shares in accordance with the provisions of this Section 7. Within
the latter to occur of (i) five business days after the surrender of the Option
and/or certificates representing Option Shares and the receipt of such notice or
notices relating thereto and (ii) the time that is immediately prior to the
occurrence of a Repurchase Event, Issuer shall deliver or cause to be delivered
to the Holder the Option Repurchase Price and/or to the Owner the Option Share
Repurchase Price therefor or the portion thereof, if any, that Issuer is not
then prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation from repurchasing the Option and/or the Option Shares in full, Issuer
shall immediately so notify the Holder and/or the Owner and thereafter deliver
or cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; PROVIDED, HOWEVER, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation from delivering to the Holder and/or the
Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full (and Issuer hereby undertakes to use its
best efforts to obtain all required regulatory and legal approvals and to file
any required notices, in each case as promptly as practicable in order to
accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to the extent
of the prohibition, whereupon, in the latter case, Issuer shall promptly
(i) deliver to the Holder and/or the Owner, as appropriate, that portion of the
Option Repurchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Stock Option Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock Option
Agreement was exercisable at the time of delivery of the notice of repurchase by
a fraction, the numerator of which is the Option Repurchase Price less the
portion thereof theretofore delivered to the Holder and the denominator of which
is the Option Repurchase Price, or (B) to the Owner, a certificate for the
Option Shares it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed to
have occurred (i) upon the consummation of any merger, consolidation or similar
transaction involving Issuer or any purchase, lease or other acquisition of all
or a substantial portion of the assets of Issuer, other than any such
transaction which would not constitute an Acquisition Transaction pursuant to
the provisos to Section 2(b)(i) or (ii) upon the acquisition by any person of
beneficial ownership of 50% or more of the then outstanding shares of Common
Stock, PROVIDED that no such event shall constitute a Repurchase Event unless a
Subsequent Triggering Event shall have occurred prior to an Exercise Termination
Event. The parties hereto agree that Issuer's obligations to repurchase the
Option or Option Shares under this Section 7 shall not terminate upon the
occurrence of an Exercise Termination Event unless no Subsequent Triggering
Event shall have occurred prior to the occurrence of an Exercise Termination
Event.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or any Grantee Subsidiary, and shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or any Grantee Subsidiary, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but, in connection with
such merger, the then
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outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger represent less
than 50% of the outstanding voting shares and voting share equivalents of the
merged company, or (iii) to sell or otherwise transfer all or substantially all
of its assets to any person, other than Grantee or any Grantee Subsidiary, then,
and in each such case, the agreement governing such transaction shall make
proper provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (A) the Acquiring Corporation (as hereinafter defined) or
(B) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated: (i) "Acquiring
Corporation" shall mean (A) the continuing or surviving corporation of a
consolidation or merger with Issuer (if other than Issuer), (B) Issuer in a
merger in which Issuer is the continuing or surviving person, and (C) the
transferee of all or substantially all of Issuer's assets; (ii) "Substitute
Common Stock" shall mean the common stock issued by the issuer of the Substitute
Option upon exercise of the Substitute Option; (iii) "Assigned Value" shall mean
the Market/Offer Price, as defined in Section 7; and (iv) "Average Price" shall
mean the average closing price of a share of the Substitute Common Stock for the
one year immediately preceding the consolidation, merger or sale in question,
but in no event higher than the closing price of the shares of Substitute Common
Stock on the day preceding such consolidation, merger or sale; PROVIDED that if
Issuer is the issuer of the Substitute Option, the Average Price shall be
computed with respect to a share of common stock issued by the person merging
into Issuer or by any company that controls or is controlled by such person, as
the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option, PROVIDED,
that if the terms of the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall be as similar as possible and in no event
less advantageous to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the Substitute Option
in substantially the same form as this Agreement, which shall be applicable to
the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option is then exercisable,
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option is then exercisable and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in Section 8(a)
unless the Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer hereunder.
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9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the case
may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable, and in any event within five business
days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or, in either case, the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer following a
request for repurchase pursuant to this Section 9 shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion of the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within five business days after the date on which
the Substitute Option Issuer is no longer so prohibited; PROVIDED, HOWEVER, that
if the Substitute Option Issuer is at any time after delivery of a notice of
repurchase pursuant to Section 9(b) prohibited under applicable law or
regulation from delivering to the Substitute Option Holder and/or the Substitute
Share Owner, as appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the Substitute
Option Issuer shall use its best efforts to obtain all required regulatory and
legal approvals, in each case as promptly as practicable, in order to accomplish
such repurchase), the Substitute Option Holder or Substitute Share Owner may
revoke its notice of repurchase of the Substitute Option or the Substitute
Shares either in whole or to the extent of the prohibition, whereupon, in the
latter case, the Substitute Option Issuer shall promptly (i) deliver to the
Substitute Option Holder or Substitute Share Owner, as appropriate, that portion
of the Substitute Option Repurchase Price or the Substitute Share Repurchase
Price that the Substitute Option Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option
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Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, or (B) to the Substitute Share Owner, a certificate for the
Substitute Common Shares it is then so prohibited from repurchasing.
10. The 90-day or six-month periods for exercise of certain rights under
Sections 2, 6, 7, 13 and 15 shall be extended: (a) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights, and for the
expiration of all statutory waiting periods; (b) to the extent necessary to
avoid liability under Section 16(b) of the 1934 Act by reason of such exercise
and (c) during any period in which Grantee is precluded from exercising such
rights due to an injunction or other legal restriction, plus in each case such
additional period as is reasonably necessary for the exercise of such rights
promptly following the obtaining of such approvals or the expiration of such
periods.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
board of directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and reserve
and to permit it to issue, and at all times from the date hereof through the
termination of this Agreement in accordance with its terms will have reserved
for issuance upon the exercise of the Option, that number of shares of Common
Stock equal to the maximum number of shares of Common Stock at any time and from
time to time issuable hereunder, and all such shares, upon issuance pursuant
hereto, will be duly authorized, validly issued, fully paid, nonassessable, and
will be delivered free and clear of all claims, liens, encumbrance and security
interests and not subject to any preemptive rights.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter into
this Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Grantee.
This Agreement has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the 1933 Act.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within
90 days following such Subsequent Triggering Event (or such later period as
provided in Section 10); PROVIDED, HOWEVER, that until the date 15 days
following the date on which the Federal Reserve Board approves an application by
Grantee under the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (a) a
widely dispersed public distribution, (b) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (c) an assignment to a single party (E.G., a broker or investment
banker) for the purpose of conducting a widely dispersed public distribution on
Grantee's behalf, or (d) any other manner approved by the Federal Reserve Board.
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14. Each of Grantee and Issuer will use its best efforts to make all filings
with, and to obtain consents of, all third parties and governmental authorities
necessary to the consummation of the transactions contemplated by this
Agreement, including without limitation making application to list the shares of
Common Stock issuable hereunder on the New York Stock Exchange upon official
notice of issuance and applying to the Federal Reserve Board under the BHCA for
approval to acquire the shares issuable hereunder, but Grantee shall not be
obligated to apply to state banking authorities for approval to acquire the
shares of Common Stock issuable hereunder until such time, if ever, as it deems
appropriate to do so.
15. (a) Grantee in its sole discretion may, at any time during which Issuer
would be required to repurchase the Option or any Option Shares pursuant to
Section 7, surrender the Option (together with any Option Shares issued to and
then owned by the Holder) to Issuer in exchange for a cash payment equal to the
Surrender Price (as hereinafter defined); PROVIDED, HOWEVER, the Grantee may not
exercise its rights pursuant to this Section 15 if Issuer has previously
repurchased the Option (or any portion thereof) or any Option Shares pursuant to
Section 7. The "Surrender Price" shall be equal to (i) $420 million, plus
(ii) if applicable, the aggregate purchase price previously paid pursuant hereto
by Grantee with respect to any Option Shares, minus (iii) if applicable, the
excess of (A) the net cash, if any, received by Grantee pursuant to the
arm's-length sale of Option Shares (or any other securities into which such
Option Shares were converted or exchanged) to any party not affiliated with
Grantee, over (B) the purchase price paid by Grantee with respect to such Option
Shares.
(b) Grantee may exercise its right to surrender the Option and any Option
Shares pursuant to this Section 15 by surrendering for such purpose to Issuer,
at its principal office, a copy of this Agreement, together with certificates
for Option Shares, if any, accompanied by a written notice stating (i) that
Grantee elects to surrender the Option and Option Shares, if any, in accordance
with the provisions of this Section 15 and (ii) the Surrender Price. Within two
business days after the surrender of the Option and the Option Shares, if
applicable, Issuer shall deliver or cause to be delivered to Grantee the
Surrender Price.
(c) To the extent that the Issuer is prohibited under applicable law or
regulation from paying the Surrender Price to Grantee in full, Issuer shall
immediately so notify Grantee and thereafter deliver, or cause to be delivered,
from time to time, to Grantee, that portion of the Surrender Price that Issuer
is not or no longer prohibited from paying, within two business days after the
date on which Issuer is no longer so prohibited; PROVIDED, HOWEVER, that if
Issuer at any time after delivery of a notice of surrender pursuant to
Section 15(b) is prohibited under applicable law or regulation from paying to
Grantee the Surrender Price in full, (i) Issuer shall (A) use its best efforts
to obtain all required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to make such payments, (B) within
two business days of the submission or receipt of any documents relating to any
such regulatory and legal approvals, provide Grantee with copies of the same,
and (C) keep Grantee advised of both the status of any such request for
regulatory and legal approvals and any discussions with any relevant regulatory
or other third party reasonably related to the same, and (ii) Grantee may revoke
such notice or surrender by delivery of a notice of revocation to Issuer and,
upon delivery of such notice of revocation, the Exercise Termination Event shall
be extended to a date six months from the date on which the Exercise Termination
Event would have occurred if not for the provisions of this Section 15(c)
(during which period Grantee may exercise any of its rights hereunder, including
any and all rights pursuant to this Section 15).
(d) Grantee shall have rights substantially identical to those set forth in
Sections 15(a), 15(b) and 15(c) with respect to the Substitute Option and the
Substitute Option Issuer during any period in which the Substitute Option Issuer
would be required to repurchase the Substitute Option pursuant to Section 9.
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16. (a) Notwithstanding any other provision herein, in no event shall
Grantee's Total Profit (as defined in Section 16(c)) exceed $630 million (the
"Maximum Profit"), and, if the Total Profit would otherwise exceed such amount,
Grantee, at its sole election, shall either (i) reduce the number of shares
subject to the Option (and any Substitution Option), (ii) deliver to Issuer, or
Substitute Issuer, as the case may be, for cancellation shares of Common Stock
or Substitute Common Stock, as the case may be, previously purchased by Grantee
valued at fair market value at the time of delivery, (iii) pay cash to Issuer,
or Substitute Issuer, as the case may be, (iv) reduce the amount of the Option
Repurchase Price or Substitute Option Repurchase Price, or (v) undertake any
combination of the foregoing, so that Grantee's actually realized Total Profit
shall not exceed the Maximum Profit after taking into account the foregoing
actions.
(b) Notwithstanding any other provision of this Agreement, the Option may
not be exercised for a number of shares as would, as of the date of exercise,
result in a Notional Total Profit (as defined in Section 16(d)) of more than the
Maximum Profit and, if exercise of the Option would otherwise result in the
Notional Total Profit exceeding such amount, Grantee, in its discretion, may
take any of the actions specified in Section 16(a) so that the Notional Total
Profit shall not restrict any subsequent exercise of the Option which at such
time complies with this sentence.
(c) For purposes of this Agreement, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the excess of (A) the net
cash amounts or fair market value of any property received by Grantee pursuant
to the sale of Option Shares (or any other securities into which such Option
Shares are converted or exchanged) to any unaffiliated party, other than any
amount received by Grantee upon the repurchase of Option Shares by Issuer
pursuant to Section 7, after payment of application brokerage or sales
commissions and discounts, over (B) Grantee's aggregate purchase price for such
Option Shares (or other securities), plus (ii) all amounts received by Grantee
upon the repurchase of the Option by Issuer pursuant to Section 7, plus
(iii) all equivalent amounts with respect to the Substitute Option and any
amounts paid pursuant to Section 9.
(d) For purposes of this Agreement, the term "Notional Total Profit" with
respect to any number of shares as to which Grantee may propose to exercise the
Option shall be the Total Profit, determined as of the date of such proposed
exercise assuming that the Option were exercised on such date for such number of
shares, and assuming that such shares, together with all other Option Shares
held by Grantee and its affiliates as of such date, were sold for cash at the
closing market price for the Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions). For purposes of
this Section 16, transactions by a wholly-owned Subsidiary transferee of Grantee
in respect of the Option Shares transferred to it shall be treated as if made by
Grantee.
17. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
18. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer or Substitute Option
Issuer, as the case may be, is not permitted to repurchase pursuant to
Section 7 or Section 9, as the case may be, the full number of shares of Common
Stock provided in Section 1(a) (as adjusted pursuant to Section 1(b) or 5), or
Issuer or Substitute Option Issuer is not permitted to pay the full Surrender
Price, it is the express intention of Issuer (which shall be binding on the
Substitute Option Issuer) to allow the Holder to acquire or to require Issuer or
the Substitute Option Issuer, as the case may be, to repurchase such lesser
number of shares, or to pay such portion of the Surrender Price, as may be
permissible, without any amendment or modification hereof.
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19. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
20. This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof (except to the
extent that mandatory provisions of federal law apply).
21. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
22. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
23. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
24. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
C-12
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
<TABLE>
<S> <C> <C>
U.S. BANCORP
By: /s/ JOHN F. GRUNDHOFER
-----------------------------------------
John F. Grundhofer
Chairman, President and
Chief Executive Officer
FIRSTAR CORPORATION
By: /s/ JERRY A. GRUNDHOFER
-----------------------------------------
Jerry A. Grundhofer
President and Chief Executive Officer
</TABLE>
C-13
<PAGE>
APPENDIX D
PERSONAL AND CONFIDENTIAL
October 3, 2000
Board of Directors
U.S. Bancorp
U.S. Bank Place
601 Second Avenue South
Minneapolis, MN 55402
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders (other than Firstar (as defined below)) of the outstanding
shares of Common Stock, par value $1.25 per share (the "Shares"), of U.S.
Bancorp (the "Company") of the exchange ratio of 1.265 shares of Common Stock,
par value $1.25 per share (the "Surviving Corporation Common Stock"), of the
surviving corporation (the "Surviving Corporation") in the merger of Firstar
Corporation ("Firstar") with and into the Company to be received for each Share
(the "Exchange Ratio") pursuant to the Agreement and Plan of Merger, dated as of
October 3, 2000, between Firstar and the Company (the "Agreement"). The
Agreement contemplates the merger of Firstar into the Company (the "Merger"),
pursuant to which merger, the holders of each share of common stock, par value
$0.01 per share, of Firstar will receive one share of Surviving Corporation
Common Stock in exchange therefor.
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company having provided certain investment banking services to
the Company from time to time, including having acted as co-advisor to First
Bank System, Inc. (the predecessor to the Company) in connection with its merger
with U.S. Bancorp in March 1997, lead manager of a public offering of
$45,000,000 of floating rate bank notes of the Company due 2000 in July 1997,
lead manager of a public offering of $49,000,000 of floating rate CD notes of
the Company due 2000 in August 1998, lead manager of a public offering of
$49,000,000 of floating rate CD notes of the Company due 2001 in
September 1998, lead manager of a public offering of $49,000,000 of floating
rate CD notes of the Company due 1999 in September 1998, and having acted as its
financial advisor in connection with, and having participated in the
negotiations leading to, the Agreement. We also have provided certain investment
banking services to Firstar from time to time. Goldman, Sachs & Co. provides a
full range of financial advisory and securities services and, in the course of
its normal trading activities, may from time to time effect transactions and
hold securities, including derivative securities, of the Company or Firstar for
its own account and for the accounts of customers. Goldman, Sachs & Co. may
provide investment banking services to Firstar and its subsidiaries in the
future.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of the
Company and Firstar for the five years ended December 31, 1999; certain interim
reports to stockholders and Quarterly Reports on Form 10-Q of the Company and
Firstar; certain other communications from the Company and Firstar to their
respective stockholders; and certain internal financial analyses and forecasts
for the Company and Firstar prepared by their respective managements (the
"Forecasts"), including certain cost savings and operating synergies projected
by the management of Firstar to result from the transaction contemplated by the
Agreement and the impact of certain divestitures projected by the managements
D-1
<PAGE>
of the Company and Firstar (the "Synergies"). We also have held discussions with
members of the senior management of the Company and Firstar regarding their
assessment of the strategic rationale for, and the potential benefits of, the
transaction contemplated by the Agreement and the past and current business
operations, financial condition and future prospects of their respective
companies. In addition, we have reviewed the reported price and trading activity
for the Shares and the Firstar Common Stock, compared certain financial and
stock market information for the Company and Firstar with similar information
for certain other companies the securities of which are publicly traded,
reviewed the financial terms of certain recent business combinations in the
commercial banking industry specifically and in other industries generally and
performed such studies and analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial
and other information discussed with or reviewed by us and have assumed such
accuracy and completeness for purposes of rendering this opinion. As you are
aware, Firstar has not prepared a forecast of expected future performance beyond
fiscal 2001. Accordingly, with your consent, our review with respect to earnings
after fiscal 2001 for Firstar was limited to discussions with senior managers of
Firstar and the Company, including with respect to the earnings growth estimates
of research analysts for such periods. We have assumed that the Forecasts,
including the Synergies, have been reasonably prepared and reflect the best
currently available judgments and estimates of the managements of Firstar and
the Company and that the Synergies will be realized in the amounts and at the
times contemplated thereby. We are not experts in the evaluation of loan and
lease portfolios for purposes of assessing the adequacy of the allowances for
losses with respect thereto and have assumed, with your consent, that such
allowances for Firstar are in the aggregate adequate to cover all such losses.
In addition, we have not reviewed individual credit files nor have we made an
independent evaluation or appraisal of the assets and liabilities (including any
hedge or derivative positions) of the Company and Firstar or any of their
subsidiaries and we have not been furnished with any such evaluation or
appraisal. We have also assumed with your consent that the transaction
contemplated by the Agreement will be accounted for as a pooling-of-interests
under generally accepted accounting principles. We also have assumed that all
material governmental, regulatory or other consents and approvals necessary for
the consummation of the transaction contemplated by the Agreement will be
obtained without any adverse effect on the Company or Firstar or on the expected
benefits of the transaction contemplated by the Agreement. We were not requested
to solicit, and did not solicit, interest from other parties with respect to an
acquisition of or a business combination with the Company. Our advisory services
and the opinion expressed herein are provided for the information and assistance
of the Board or Directors of the Company in connection with its consideration of
the transaction contemplated by the Agreement and such opinion does not
constitute a recommendation as to how any holder of the Shares should vote with
respect to such transaction.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that as of the date hereof the Exchange
Ratio pursuant to the Agreement is fair from a financial point of view to the
holders (other than Firstar) of Shares.
Very truly yours,
D-2
<PAGE>
APPENDIX E
October 3, 2000
The Board of Directors
Firstar Corporation
777 Wisconsin Avenue
Milwaukee, WI 53202
Ladies and Gentlemen:
You have asked us to advise you with respect to the fairness to the
shareholders of Firstar Corporation (the "Company") from a financial point of
view of the Exchange Ratio (as defined below) pursuant to the terms of the
Agreement and Plan of Merger, dated as of October 3, 2000 (the "Agreement"), by
and between the Company and U.S. Bancorp ("U.S. Bancorp"). Pursuant to the
Agreement, the Company will merge (the "Merger") with and into U.S. Bancorp
whereby each outstanding share of common stock, par value $1.25 per share, of
U.S. Bancorp will be converted into 1.265 shares of common stock (the "Exchange
Ratio") of the corporation surviving the Merger (the "Surviving Corporation")
and each outstanding share of common stock, par value $0.01 per share, of the
Company will be converted into one share of common stock of the Surviving
Corporation.
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to the Company and U.S. Bancorp, as
well as the Agreement and certain related documents. We have also reviewed
certain other information, including financial forecasts, provided to us by the
Company and U.S. Bancorp, and have met with the Company's and U.S. Bancorp's
management to discuss the business and prospects of the Company and U.S.
Bancorp.
We have also considered certain financial and stock market data of the
Company and U.S. Bancorp, and we have compared those data with similar data for
other publicly held companies in businesses similar to those of the Company and
U.S. Bancorp and we have considered the financial terms of certain other
business combinations and other transactions which have recently been effected.
We also considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which we deemed
relevant. We have also relied upon the views of the Company's and U.S. Bancorp's
management concerning the business, operational and strategic benefits and
implications of the Merger, including financial forecasts provided to us by the
Company and U.S. Bancorp relating to the synergistic values and operating cost
savings expected to be achieved through the combination of the operations of the
Company and U.S. Bancorp.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects. With respect to the
financial forecasts, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
Company's and U.S. Bancorp's management as to the future financial performance
of the Company and U.S. Bancorp and as to the cost savings and other potential
synergies (including the amount, timing and achievability thereof) anticipated
to result from the Merger.
You also have informed us, and we have assumed, that the Merger will be
treated as a tax-free reorganization for federal income tax purposes and
accounted for as a pooling of interests in accordance with generally accepted
accounting principles. In addition, we have not been requested to make, and have
not made, an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of U.S. Bancorp, nor have we been furnished with any
such evaluations or appraisals. Our opinion is necessarily based upon financial,
economic, market and other conditions as they exist and can be evaluated on the
date hereof. We are not expressing any opinion as to the actual value of
E-1
<PAGE>
the common stock of the Surviving Corporation when issued to U.S. Bancorp's or
the Company's shareholders pursuant to the Merger or the prices at which such
stock will trade subsequent to the Merger.
We have acted as financial advisor to the Company in connection with the
Merger and will receive a fee for our services, a significant portion of which
is contingent upon the consummation of the Merger.
In the ordinary course of our business, we and our affiliates may actively
trade the debt and equity securities of both the Company and U.S. Bancorp for
our and such affiliates' own accounts and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
It is understood that this letter is for the information of the Board of
Directors of the Company in connection with its consideration of the Merger and
does not constitute a recommendation as to how any shareholder of the Company
should vote or act on any matter relating to the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Exchange Ratio is fair to the Company's shareholders from a
financial point of view.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
/s/ CREDIT SUISSE FIRST BOSTON
CORPORATION
------------------------------------------
E-2
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the Delaware General Corporation Law and the U.S. Bancorp by-laws,
U.S. Bancorp will indemnify any person made, or threatened to be made, a party
to any action, suit, or proceeding, whether criminal, civil, administrative, or
investigative, by reason of the fact that such person is or was a director,
advisory director, or officer of U.S. Bancorp, or is or was a director, advisory
director or officer of U.S. Bancorp and served any other corporation or
enterprise as a director, advisory director, officer, partner, trustee, employee
or agent at the request of U.S. Bancorp, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding,
provided that the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that his or her conduct was unlawful.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated October 3, 2000, by and
between Firstar Corporation, a Wisconsin corporation, and
U.S. Bancorp, a Delaware corporation (included as Appendix A
to the Joint Proxy Statement-Prospectus included in this
Registration Statement).
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated as of
October 23, 2000 by and between Firstar Corporation, a
Wisconsin corporation, and U.S. Bancorp, a Delaware
corporation (included as Appendix A-1 to the Joint Proxy
Statement-Prospectus included in this Registration
Statement).
2.3 Stock Option Agreement, dated October 3, 2000, between U.S.
Bancorp, a Delaware corporation, and Firstar Corporation, a
Wisconsin corporation (included as Appendix B to the Joint
Proxy Statement-Prospectus included in this Registration
Statement).
2.4 Stock Option Agreement, dated October 3, 2000, between
Firstar Corporation, a Wisconsin corporation, and U.S.
Bancorp, a Delaware corporation (included as Appendix C to
the Joint Proxy Statement-Prospectus included in this
Registration Statement).
3.1 Certificate of Incorporation, as amended (incorporated by
reference to Exhibit 3.1 to report on Form 10-Q for the
quarter ended March 31, 1998).
3.2 Bylaws of U.S. Bancorp, as amended (incorporated by
reference to Exhibit 3.1 to report on Form 10-Q for the
quarter ended June 30, 1998).
4.1 Certificate of Designation and Terms of Term Participating
Preferred Stock of U.S. Bancorp (incorporated by reference
to Exhibit 4.1 to Registration Statement on Form S-4, filed
April 2, 1999, file number 333-75603).
4.2 Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, copies
of instruments defining the rights of holders of long-term
debt are not filed. U.S. Bancorp agrees to furnish a copy
thereof to the Securities and Exchange Commission upon
request.
4.3 Warrant Agreement, dated as of October 2, 1995, between U.S.
Bancorp and First Chicago Trust Company of New York, as
Warrant Agent and Form of Warrant (incorporated by reference
to Exhibits 4.18 and 4.19 to Registration Statement on
Form S-3, File No. 33-61667).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------
<C> <S>
4.4 Warrant Agreement, dated as of November 20, 1990, between
Metropolitan Financial Corporation and American Stock
Transfer and Trust Company, as Warrant Agent; Supplemental
Warrant Agreement, dated as of January 24, 1995, between
U.S. Bancorp and American Stock Transfer and Trust Company,
as Warrant Agent; and Form of Warrant (incorporated by
reference to Exhibit 4E to report on Form 10-K for the year
ended December 31, 1996).
4.5 Forms of Warrant Agreements, dated as of November 15, 1996,
between Monarch Bancorp (predecessor of Western Bancorp) and
certain warrantholders, and accompanying forms of warrants,
assumed by U.S. Bancorp upon its acquisition of Western
Bancorp on November 15, 1999. (Incorporated by reference to
Exhibit 4.5 to report on Form 10-K for the year ended
December 31, 1999).
5.1 Opinion and consent of Sullivan & Cromwell as to the
validity of the securities being registered.*
8.1 Opinion of Sullivan & Cromwell regarding the federal income
tax consequences of the merger.*
8.2 Opinion and consent of Wachtell, Lipton, Rosen & Katz
regarding the federal income tax consequences of the
merger.*
23.1 Consent of Ernst & Young LLP regarding the audited financial
statements of U.S. Bancorp.
23.2 Consent of PricewaterhouseCoopers LLP regarding the audited
financial statements of Firstar Corporation.
23.3 Consent of Sullivan & Cromwell (included in Exhibit 5.1
hereto).*
23.4 Consent of Sullivan & Cromwell (included in Exhibit 8.1
hereto).*
23.5 Consent of Wachtell, Lipton, Rosen & Katz (included as
Exhibit 8.2 hereto).*
23.6 Form of Consent of Goldman, Sachs & Co.
23.7 Consent of Credit Suisse First Boston Corporation.
24.1 Power of Attorney.
99.1 Form of Opinion of Goldman, Sachs & Co. (included as
Appendix D to the Joint Proxy Statement-Prospectus included
in this Registration Statement).
99.2 Opinion of Credit Suisse First Boston Corporation (included
as Appendix E to the Joint Proxy Statement-Prospectus
included in this Registration Statement).
99.3 Form of Proxy to be used by U.S. Bancorp.
99.4 Form of Proxy to be used by Firstar Corporation.
</TABLE>
* To be filed by amendment.
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement, or the most recent
post-effective amendment of the Registration Statement, which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities
II-2
<PAGE>
offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the SEC pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table
in the effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change in such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at the time will be deemed to be the initial
BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, as amended (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial BONA FIDE offering thereof.
(d) The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(e) The undersigned Registrant hereby undertakes that every prospectus:
(i) that is filed pursuant to paragraph (d) immediately preceding, or (ii) that
purports to meet the requirements of Sections 10(a)(3) of the Securities Act and
is used in connection with an offering of securities subject to Rule 415, will
be filed as a part of an amendment to the Registration Statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act, each such post-effective amendment shall
be deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(f) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(g) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Minneapolis, State of
Minnesota, on October 24, 2000.
<TABLE>
<S> <C> <C>
U.S. BANCORP
By /s/ JOHN F. GRUNDHOFER
-----------------------------------------
John F. Grundhofer
Chairman, President and Chief
Executive Officer
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Date
--------- ----
<C> <S>
/s/ JOHN F. GRUNDHOFER October 24, 2000
-------------------------------------------
John F. Grundhofer
Chairman, President, Chief Executive Officer
and Director (principal executive officer)
/s/ ANDREW CECERE October 24, 2000
-------------------------------------------
Andrew Cecere
Chief Financial Officer
(principal financial officer)
/s/ TERRANCE R. DOLAN October 24, 2000
-------------------------------------------
Terrance R. Dolan
Senior Vice President and Controller
(principal accounting officer)
* October 24, 2000
-------------------------------------------
Linda L. Ahlers, Director
* October 24, 2000
-------------------------------------------
Harry L. Bettis, Director
* October 24, 2000
-------------------------------------------
Arthur D. Collins, Jr., Director
* October 24, 2000
-------------------------------------------
Peter H. Coors, Director
* October 24, 2000
-------------------------------------------
Robert L. Dryden, Director
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Date
--------- ----
<C> <S>
* October 24, 2000
-------------------------------------------
Joshua Green III, Director
* October 24, 2000
-------------------------------------------
Delbert W. Johnson, Director
* October 24, 2000
-------------------------------------------
Joel W. Johnson, Director
* October 24, 2000
-------------------------------------------
Jerry W. Levin, Director
* October 24, 2000
-------------------------------------------
Lester Pollack, Director
* October 24, 2000
-------------------------------------------
Paul A. Redmond, Director
* October 24, 2000
-------------------------------------------
Richard G. Reiten, Director
* October 24, 2000
-------------------------------------------
S. Walter Richey, Director
* October 24, 2000
-------------------------------------------
Warren R. Staley, Director
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ TERRANCE R. DOLAN
--------------------------------------
Terrance R. Dolan
Pro se and as Attorney-in-Fact
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------
<C> <S>
2.1 Agreement and Plan of Merger dated October 3, 2000, by and
between Firstar Corporation, a Wisconsin corporation, and
U.S. Bancorp, a Delaware corporation, (included as Appendix
A to the Joint Proxy Statement-Prospectus included in this
Registration Statement).
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated as of
October 23, 2000 by and between Firstar Corporation, a
Wisconsin corporation, and U.S. Bancorp, a Delaware
corporation (included as Appendix A-1 to the Joint Proxy
Statement-Prospectus included in this Registration
Statement).
2.3 Stock Option Agreement, dated October 3, 2000, between U.S.
Bancorp, a Delaware corporation, and Firstar Corporation, a
Wisconsin corporation (included as Appendix B to the Joint
Proxy Statement-Prospectus included in this Registration
Statement).
2.4 Stock Option Agreement, dated October 3, 2000, between
Firstar Corporation, a Wisconsin corporation, and U.S.
Bancorp, a Delaware corporation (included as Appendix C to
the Joint Proxy Statement-Prospectus included in this
Registration Statement).
3.1 Certificate of Incorporation, as amended (incorporated by
reference to Exhibit 3.1 to Form 10-Q for the quarter ended
March 31, 1998).
3.2 Bylaws of U.S. Bancorp, as amended (incorporated by
reference to Exhibit 3.1 to the report on Form 10-Q for the
quarter ended June 30, 1998).
4.1 Certificate of Designation and Terms of Term Participating
Preferred Stock of U.S. Bancorp (incorporated by reference
to Exhibit 4.1 to the report on Form S-4, filed April 2,
1999, file number 333-75603).
4.2 Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, copies
of instruments defining the rights of holders of long-term
debt are not filed. U.S. Bancorp agrees to furnish a copy
thereof to the Securities and Exchange Commission upon
request.
4.3 Warrant Agreement, dated as of October 2, 1995, between U.S.
Bancorp and First Chicago Trust Company of New York, as
Warrant Agent and Form of Warrant (incorporated by reference
to Exhibits 4.18 and 4.19 to Registration Statement on
Form S-3, File No. 33-61667).
4.4 Warrant Agreement, dated as of November 20, 1990, between
Metropolitan Financial Corporation and American Stock
Transfer and Trust Company, as Warrant Agent; Supplemental
Warrant Agreement, dated as of January 24, 1995, between
U.S. Bancorp and American Stock Transfer and Trust Company,
as Warrant Agent; and Form of Warrant (incorporated by
reference to Exhibit 4E to report on Form 10-K for the year
ended December 31, 1996).
5.1 Opinion and consent of Sullivan & Cromwell as to the
validity of the securities being registered.*
8.1 Opinion and consent of Sullivan & Cromwell regarding the
federal income tax consequences of the merger.*
8.2 Opinion and consent of Wachtell, Lipton, Rosen & Katz
regarding the federal income tax consequences of the
merger.*
23.1 Consent of Ernst & Young LLP regarding the audited financial
statements of U.S. Bancorp.
23.2 Consent of PricewaterhouseCoopers LLP regarding the audited
financial statements of Firstar Corporation.
23.3 Consent of Sullivan & Cromwell (included in Exhibit 5.1
hereto).*
23.4 Consent of Sullivan & Cromwell (included in Exhibit 8.1
hereto).*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------
<C> <S>
23.5 Consent of Wachtell, Lipton, Rosen & Katz (included as
Exhibit 8.2 hereto).*
23.6 Form of Consent of Goldman, Sachs & Co.
23.7 Consent of Credit Suisse First Boston Corporation.
24.1 Power of Attorney.
99.1 Form of Opinion of Goldman, Sachs & Co. (included as
Appendix D to the Joint Proxy Statement-Prospectus included
in this Registration Statement).
99.2 Opinion of Credit Suisse First Boston Corporation (included
as Appendix E to the Joint Proxy Statement-Prospectus
included in this Registration Statement).
99.3 Form of Proxy to be used by U.S. Bancorp.
99.4 Form of Proxy to be used by Firstar Corporation.
</TABLE>
* To be filed by amendment.
