<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 9, 1998
---------------
FIRST EMPIRE STATE CORPORATION
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York
----------------------------------------------------------
(State or other jurisdiction of incorporation)
1-9861 16-0968385
- ------------------------ -----------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
One M&T Plaza, Buffalo, New York 14240
- ---------------------------------------- -----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (716) 842-5445
--------------
(NOT APPLICABLE)
----------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
On January 9, 1998, First Empire State Corporation ("First Empire") issued
a press release disclosing its earnings for the quarter and year ended December
31, 1997, together with related financial information about First Empire. A
copy of First Empire's January 9 press release is filed as Exhibit 99 hereto and
incorporated herein by reference.
First Empire, First Empire's wholly owned subsidiary, Olympia Financial
Corp. ("Olympia") and ONBANCorp, Inc. ("ONBANCorp") have entered into an
Agreement and Plan of Reorganization, dated as of October 28, 1997, providing
for the merger ("Merger") of ONBANCorp with and into Olympia, with Olympia as
the surviving corporation ("Reorganization Agreement"). The Reorganization
Agreement contemplated execution of an Agreement and Plan of Merger setting
forth the terms and conditions of the Merger ("Plan of Merger"). The Plan of
Merger now has been executed. A copy of the Plan of Merger is filed as
Exhibit 2 hereto and incorporated herein by reference.
Item 7. Financial Statements and Exhibits
The following exhibits are filed herewith or incorporated herein by reference:
Exhibit No.
2 Agreement and Plan of Merger dated as of October 28,
1997, by and among First Empire State Corporation,
Olympia Financial Corp. and ONBANCorp, Inc.
99 Press Release of First Empire State Corporation, dated
January 9, 1998
-1-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST EMPIRE STATE CORPORATION
By: _________________________________
Date: February __, 1998 Michael P. Pinto
Executive Vice President
and Chief Financial Officer
-2-
<PAGE>
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Report Dated: January 9, 1998 Commission File Number: 1-9861
---------------- --------
FIRST EMPIRE STATE CORPORATION
(Exact name of registrant as specified in its charter)
EXHIBITS
-3-
<PAGE>
EXHIBIT INDEX
Exhibit No.
-----------
2 Agreement and Plan of Merger dated as of October 28,
1997, by and among First Empire State Corporation,
Olympia Financial Corp. and ONBANCorp, Inc.
99 Press Release of First Empire State Corporation, dated
January 9, 1998
-4-
<PAGE>
Exhibit 2
AGREEMENT AND PLAN OF MERGER OF
ONBANCORP, INC.
WITH AND INTO
OLYMPIA FINANCIAL CORP.
AGREEMENT AND PLAN OF MERGER ("Plan of Merger") dated as of October 28,
1997, by and between ONBANCORP, INC. ("OBC"), a Delaware corporation having its
principal executive office at 101 South Salina Street, Syracuse, New York 13202
and OLYMPIA FINANCIAL CORP. ("Merger Sub"), a Delaware corporation having its
principal executive office at One M&T Plaza, Buffalo, New York, 14240 and joined
in by FIRST EMPIRE STATE CORPORATION ("FESC"), a New York corporation having its
principal executive office at One M&T Plaza, Buffalo, New York 14240.
WITNESSETH
WHEREAS, the respective Boards of Directors of OBC, Merger Sub and FESC deem
the merger of OBC with and into Merger Sub, under and pursuant to the terms and
conditions herein set forth or referred to, desirable and in the best interests
of the respective corporations and their respective shareholders, and the
respective Boards of Directors of OBC, Merger Sub and FESC have adopted
resolutions approving this Plan of Merger and an Agreement and Plan of
Reorganization dated of even date herewith ("Reorganization Agreement"); and
WHEREAS, the parties hereto desire that OBC shall be acquired by FESC
through the merger of OBC with and into Merger Sub, with Merger Sub as the
surviving corporation, subject to the terms and conditions of this Plan of
Merger and the Reorganization Agreement; and
WHEREAS, the parties hereto intend that the Merger shall qualify as or be
part of a tax-free reorganization under Section 368(a) of the Internal Revenue
Code of 1986, as amended ("Code").
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto do hereby agree as follows:
ARTICLE I.
MERGER
Subject to the terms and conditions of this Plan of Merger, at the Effective
Time (as hereinafter defined), OBC shall be merged with and into Merger Sub,
pursuant to the provisions of, and with the effect provided in, 8 Del. Code Ch.
1, subchapter IX (said transaction being hereinafter referred to as the
"Merger"). At the Effective Time, the separate existence of OBC shall cease and
Merger Sub, as the surviving entity, shall continue unaffected and unimpaired by
the Merger. (Merger Sub as existing at and after the Effective Time being
hereinafter sometimes referred to as the "Surviving Corporation").
ARTICLE II.
CERTIFICATE OF INCORPORATION AND BY-LAWS
The Certificate of Incorporation and the By-Laws of Merger Sub in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and the By-Laws of the Surviving Corporation, in each case until
amended in accordance with applicable law.
1
<PAGE>
ARTICLE III.
BOARD OF DIRECTORS
The directors and officers of Merger Sub immediately prior to the Effective
Time shall be the directors and officers of the Surviving Corporation, each to
hold office in accordance with the Certificate of Incorporation and By-Laws of
the Surviving Corporation.
ARTICLE IV.
CAPITAL
At the Effective Time, all of the shares of capital stock of Merger Sub
issued and outstanding immediately prior to the Effective Time shall remain
outstanding and unchanged by virtue of the Merger and shall constitute all of
the issued and outstanding shares of capital stock of the Surviving Corporation.
ARTICLE V.
CONVERSION AND EXCHANGE OF OBC
SHARES; FRACTIONAL SHARE INTERESTS
1. At the Effective Time, each share of the common stock of OBC, par value
$1.00 per share ("OBC Common Stock"), issued and outstanding immediately prior
to the Effective Time (except as provided in Section 2 of this Article V, and
subject to Sections 5 and 7 of this Article V), together with the rights
attached thereto issued pursuant to the Rights Agreement, dated as of September
25, 1989 between OBC and The Bank of New York, as rights agent, shall, by virtue
of the Merger, automatically and without any action on the part of the holder
thereof, become and be converted into, at the election of the holder as provided
in and subject to the limitations set forth in this Article V, either (i) the
right to receive $69.50 in cash without interest (the "Cash Consideration") or
(ii) 0.161 of a share (the "Exchange Ratio") of common stock, par value $5.00
per share, of FESC ("FESC Common Stock") (the "Stock Consideration"). The Cash
Consideration and the Stock Consideration are sometimes referred to herein
collectively as the "Merger Consideration."
2. (a) At the Effective Time, all shares of OBC Common Stock held in the
treasury of OBC or owned beneficially by any Subsidiary of OBC other than in a
fiduciary capacity ("Trust Account Shares") or in connection with a debt
previously contracted ("DPC Shares") and all shares of OBC Common Stock owned by
FESC or owned beneficially by any subsidiary of FESC other than Trust Account
Shares and DPC Shares shall be canceled and no cash, stock or other property
shall be delivered in exchange therefor.
(b) Notwithstanding any other provision contained in this Plan of Merger, no
shares of OBC Common Stock that are issued and outstanding as of the Effective
Time and that are held by a stockholder who has properly exercised his appraisal
rights (any such shares being referred to herein as "Dissenting Shares") under
applicable law shall be converted into the right to receive the Merger
Consideration as provided in Section 1 of this Article V unless and until the
holder shall have failed to perfect, or shall have effectively withdrawn or
lost, his right to dissent from the Merger under applicable law and to receive
such consideration as may be determined to be due with respect to such
Dissenting Shares pursuant to and subject to the requirements of applicable law.
If any such holder shall have so failed to perfect or effectively withdrawn or
lost such right prior to the Election Deadline (as defined herein), each of such
holder's shares of OBC Common Stock shall thereupon be deemed to be Non-Election
Shares (as defined herein) for all purposes under this Article V. If any holder
of Dissenting Shares shall have so failed to perfect or effectively withdrawn or
lost such holder's right to dissent from the Merger after the Election Deadline,
each of such holder's shares of OBC Common Stock shall thereupon be deemed to
have been converted into and to have become, as of the Effective Time, the right
to receive the Stock Consideration or the Cash Consideration or a combination
thereof as determined by FESC in its sole discretion.
3. (a) An election form (an "Election Form") and other appropriate and
customary transmittal materials, which shall specify that delivery shall be
effected, and risk of loss and title to the certificates
2
<PAGE>
theretofore representing OBC Common Stock ("Certificates") shall pass, only upon
proper delivery of such Certificates to a bank or trust company designated by
FESC and reasonably satisfactory to OBC (the "Exchange Agent") in such form as
OBC and FESC shall mutually agree shall be mailed on the Mailing Date (as
defined below) to each holder of record of shares of OBC Common Stock (other
than holders of Dissenting Shares or shares of OBC Common Stock to be cancelled
as provided in Section 2(a) of this Article V) as of a record date which is not
less than five nor more than ten business days prior to the Mailing Date. The
"Mailing Date" shall be a date specified by OBC which date shall be not earlier
than the earlier to occur and not later than the later to occur of the date of
the OBC stockholder meeting contemplated by Section 4.1 of the Reorganization
Agreement or the tenth business day following the date upon which the last of
the regulatory approvals contemplated by Section 5.1(b) of the Reorganization
Agreement shall have been received (without regard to any waiting periods in
respect thereof).
(b) Each Election Form shall entitle the holder of shares of OBC Common
Stock (or the beneficial owner through appropriate and customary documentation
and instructions) to (i) elect to receive the Cash Consideration for all of such
holder's shares (a "Cash Election"), (ii) elect to receive the Stock
Consideration for all of such holder's shares (a "Stock Election"), (iii) elect
to receive the Cash Consideration with respect to some of such holder's shares
and the Stock Consideration with respect to such holder's remaining shares (a
"Mixed Election"), or (iv) make no election or to indicate that such holder has
no preference as to the receipt of the Cash Consideration or the Stock
Consideration (a "Non-Election"), PROVIDED, HOWEVER, that a holder may make a
Mixed Election only if such election would result in a Cash Election with
respect to at least 100 shares of OBC Common Stock and a Stock Election with
respect to at least 100 shares of OBC Common Stock. Holders of record of shares
of OBC Common Stock who hold such shares as nominees, trustees or in other
representative capacities (a "Representative") may submit multiple Election
Forms, provided that such Representative certifies that each such Election Form
covers all the shares of OBC Common Stock held by that Representative for a
particular beneficial owner. Shares of OBC Common Stock as to which a Cash
Election has been made (including pursuant to a Mixed Election) are referred to
herein as "Cash Election Shares." Shares of OBC Common Stock as to which a Stock
Election has been made (including pursuant to a Mixed Election) are referred to
herein as "Stock Election Shares." Shares of OBC Common Stock as to which no
election has been made are referred to as "Non-Election Shares." The aggregate
number of shares of OBC Common Stock with respect to which a Stock Election has
been made is referred to herein as the "Stock Election Number."
(c) To be effective, a properly completed Election Form shall be submitted
to the Exchange Agent on or before 5:00 p.m. New York City time on the 20th
calendar day following the Mailing Date (or such other time and date as OBC and
FESC may mutually agree) (the "Election Deadline"). An election shall have been
properly made only if the Exchange Agent shall have actually received a properly
completed Election Form by the Election Deadline. An Election Form shall be
deemed properly completed only if accompanied by one or more Certificates (or
customary affidavits and, if required by FESC pursuant to Section 9 of this
Article V, indemnification regarding the loss or destruction of such
Certificates or the guaranteed delivery of such Certificates) representing all
shares of OBC Common Stock covered by such Election Form, together with duly
executed transmittal materials included with the Election Form. Any OBC
stockholder may at any time prior to the Election Deadline change his or her
election by written notice received by the Exchange Agent prior to the Election
Deadline accompanied by a properly completed and signed revised Election Form.
Any OBC stockholder may, at any time prior to the Election Deadline, revoke his
or her election by written notice received by the Exchange Agent prior to the
Election Deadline or by withdrawal prior to the Election Deadline of his or her
Certificates, or of the guarantee of delivery of such Certificates, previously
deposited with the Exchange Agent. All elections shall be revoked automatically
if the Exchange Agent is notified in writing by FESC and OBC that this Plan of
Merger has been terminated. If a stockholder either (i) does not submit a
properly completed Election Form by the Election Deadline, or (ii) revokes its
Election Form prior to the Election Deadline, the shares of OBC Common Stock
held by such stockholder shall be designated "Non-Election Shares." FESC shall
cause the Certificates representing OBC Common Stock described in (ii) to be
promptly returned without charge to
3
<PAGE>
the person submitting the Election Form upon written request to that effect from
the person who submitted the Election Form. Subject to the terms of this Plan of
Merger and of the Election Form, the Exchange Agent shall have reasonable
discretion to determine whether any election, revocation or change has been
properly or timely made and to disregard immaterial defects in any Election
Form, and any good faith decisions of the Exchange Agent regarding such matters
shall be binding and conclusive.
(d) Notwithstanding any other provision contained in this Plan of Merger,
the number of shares of OBC Common Stock to be converted into the Stock
Consideration in the Merger shall not be less than 60% of the total number of
shares of OBC Common Stock issued and outstanding immediately prior to the
Effective Time, or more than 70% of the total number of shares of OBC Common
Stock issued and outstanding immediately prior to the Effective Time (in each
case, excluding (x) shares of OBC Common Stock to be cancelled as provided in
Section 2(a) of this Article V and (y) Dissenting Shares (the shares remaining
outstanding after such exclusion constituting, for purposes of this Agreement,
the "Outstanding OBC Shares")); PROVIDED, HOWEVER, that notwithstanding anything
to the contrary contained herein, in order that the Merger will not fail to
satisfy continuity of interest requirements under applicable federal income tax
principles relating to reorganizations under Section 368(a) of the Code and that
the tax opinion referred to in Section 5.1(g) of the Reorganization Agreement
can be rendered (each as reasonably determined by Arnold & Porter, special tax
counsel to FESC), FESC shall reduce the number of Outstanding OBC Shares that
will be converted into the right to receive the Cash Consideration in accordance
with a written agreement which shall be entered into between FESC and OBC on or
prior to the Closing Date.
(e) Within five business days after the later to occur of the Election
Deadline or the Effective Time, FESC shall cause the Exchange Agent to effect
the allocation among holders of OBC Common Stock of rights to receive the Cash
Consideration and the Stock Consideration as follows:
(i) If the Stock Election Number exceeds 70% of the total number of
Outstanding OBC Shares, then all Cash Election Shares and all Non-Election
Shares shall be converted into the right to receive the Cash Consideration,
and, subject to Section 7 of this Article V, each holder of Stock Election
Shares will be entitled to receive the Stock Consideration in respect of
that number of Stock Election Shares equal to the product obtained by
multiplying (x) the number of Stock Election Shares held by such holder by
(y) a fraction, the numerator of which is 70% of the total number of
Outstanding OBC Shares and the denominator of which is the Stock Election
Number, with the remaining number of such holder's Stock Election Shares
being converted into the right to receive the Cash Consideration;
(ii) If the Stock Election Number is less than 60% of the total number
of Outstanding OBC Shares (the amount by which 60% of the total number of
Outstanding OBC Shares exceeds the Stock Election Number being referred to
herein as the "Shortfall Number"), then all Stock Election Shares shall be
converted into the right to receive the Stock Consideration and the
Non-Election Shares and Cash Election Shares shall be treated in the
following manner:
(A) if the Shortfall Number is less than or equal to the number of
Non-Election Shares, then, subject to Section 7 of Article V, each holder
of Non-Election Shares shall receive the Stock Consideration in respect
of that number of Non-Election Shares equal to the product obtained by
multiplying (x) the number of Non-Election Shares held by such holder by
(y) a fraction, the numerator of which is the Shortfall Number and the
denominator of which is the total number of Non-Election Shares, with the
remaining number of such holder's Non-Election Shares being converted
into the right to receive the Cash Consideration; or
(B) if the Shortfall Number exceeds the number of Non-Election
Shares, then all Non-Election Shares shall be converted into the right to
receive the Stock Consideration, and, subject to Section 7 of this
Article V, each holder of Cash Election Shares shall receive the Stock
Consideration in respect of that number of Cash Election Shares equal to
the product obtained by multiplying (x) the number of Cash Election
Shares held by such holder by (y) a fraction, the
4
<PAGE>
numerator of which is the amount by which (1) the Shortfall Number
exceeds (2) the total number of Non-Election Shares and the denominator
of which is the total number of Cash Election Shares, with the remaining
number of such holder's Cash Election Shares being converted into the
right to receive the Cash Consideration; and
(iii) In the event that the Stock Election Number equals or exceeds 60%
of the total number of Outstanding OBC Shares but is less than or equal to
70% of the total number of Outstanding OBC Shares, then all Cash Election
Shares and Non-Election Shares shall be converted into the right to receive
the Cash Consideration and all Stock Election Shares shall be converted into
the right to receive the Stock Consideration.
For purposes of this Section 3(e), if FESC is obligated to increase the
number of Outstanding OBC Shares to be converted into shares of FESC Common
Stock as a result of the application of the last clause of Section 3(d) above,
then the higher number shall be substituted for 60% of the total number of
Outstanding OBC Shares in the calculations set forth in this Section 3(e).
(f) All of the shares of OBC Common Stock converted into and exchangeable
for the Merger Consideration pursuant to this Article V shall no longer be
outstanding and shall automatically be cancelled and cease to exist as of the
Effective Time. Each Certificate previously representing any such shares of OBC
Common Stock shall thereafter represent the right to receive the Merger
Consideration pursuant to this Article V, as allocated among the holders of OBC
Common Stock in accordance with this Section 3.
(g) On the Effective Date, FESC shall deposit, or shall cause to be
deposited, with the Exchange Agent, for exchange in accordance with this Section
3, certificates representing the aggregate number of shares of FESC Common Stock
into which the outstanding shares of OBC Common Stock shall be converted
pursuant to this Article V, and cash in the amount of the aggregate Cash
Consideration and the aggregate amount of cash to be paid in lieu of fractional
shares (such cash and certificates are hereinafter referred to as the "Exchange
Fund"). After the Effective Date, FESC shall, on the applicable payment or
distribution date, tender to the Exchange Agent as an addition to the Exchange
Fund all dividends and other distributions applicable to shares of FESC Common
Stock held in the Exchange Fund. As soon as practicable after the Effective
Date, the Exchange Agent shall distribute to holders of shares of OBC Common
Stock, upon surrender to the Exchange Agent (to the extent not previously
surrendered with an Election Form) of one or more Certificates for cancellation,
(i) a certificate representing that number of whole shares of FESC Common Stock,
if any, that such holder has the right to receive pursuant to this Plan of
Merger, and (ii) a check for an amount equal to the cash, if any, which such
holder has the right to receive pursuant to this Plan of Merger (including any
cash in lieu of any fractional shares of FESC Common Stock to which such holder
is entitled pursuant to Section 7 hereof and any dividends or other
distributions to which such holder is entitled pursuant to the provisions set
forth below). In no event shall the holder of any such surrendered Certificates
be entitled to receive interest on any of the Cash Consideration or cash in lieu
of fractional share interests to be received in the Merger. If a check is to be
issued in the name of a person other than the person in whose name the
Certificates surrendered for exchange therefor are registered, it shall be a
condition of the exchange that the person requesting such exchange shall pay to
the Exchange Agent any transfer taxes required by reason of issuance of such
check to a person other than the registered holder of the Certificates
surrendered, or shall establish to the reasonable satisfaction of the Exchange
Agent that such tax has been paid or is not applicable. No dividends or other
distributions declared after the Effective Time with respect to FESC Common
Stock shall be paid to the holder of any unsurrendered Certificate until the
holder thereof shall surrender such Certificate in accordance with this Article
V. After the surrender of a Certificate in accordance with this Article V, the
record holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of FESC Common Stock, if any, represented by such
Certificate. Certificates surrendered for exchange by any person who is an
"affiliate" of OBC for purposes of Rule 145(c) under the Securities Act of 1933,
as
5
<PAGE>
amended, shall not be exchanged for certificates representing shares of FESC
Common Stock until FESC has received the written agreement of such person
contemplated by Section 4.10 of the Reorganization Agreement. If any certificate
for shares of FESC Common Stock is to be issued in a name other than that in
which a Certificate surrendered for exchange is issued, the Certificate so
surrendered shall be properly endorsed and otherwise in proper form for transfer
and the person requesting such exchange shall affix any requisite stock transfer
tax stamps to the Certificate surrendered or provide funds for their purchase or
establish to the reasonable satisfaction of FESC or its agent that such taxes
have been paid or are not payable.
(h) Any portion of the Exchange Fund consisting of cash deposited by FESC
into the Exchange Fund, of shares of FESC Common Stock or the cash dividends
paid on FESC Common Stock deposited by FESC into the Exchange Fund pursuant to
Section 3(g) (including the proceeds of any investments thereof) that remains
unclaimed by the holders of OBC Common Stock for one year after the Effective
Date shall be returned to FESC. Any holders of OBC Common Stock who have not
theretofore complied with the provisions of this Article V with respect to
exchange of their Certificates shall thereafter look only to FESC for delivery
of the shares of FESC Common Stock, the cash in lieu of fractional shares of
FESC Common Stock, any unpaid dividends and distributions on the FESC Common
Stock and the cash portion of the Merger Consideration deliverable in respect of
each share of OBC Common Stock that such holder holds, as determined pursuant to
this Plan of Merger, in each case without any interest thereon.
4. Upon the Effective Date, the stock transfer books of OBC shall be closed
and no transfer of OBC Common Stock shall thereafter be made or recognized. If,
after the Effective Time, Certificates representing such shares are presented
for transfer to the Exchange Agent, they shall be cancelled and exchanged for
the Merger Consideration as provided in this Article V. Any other provision of
this Plan of Merger notwithstanding, neither FESC or its agent nor any party to
the Merger shall be liable to a holder of OBC Common Stock for any amount paid
or properly delivered in good faith to a public official pursuant to any
applicable abandoned property, escheat or similar law.
5. In the event that prior to the Effective Date the outstanding shares of
FESC Common Stock shall have been increased, decreased or changed into or
exchanged for a different number or kind of shares or securities by
reorganization, recapitalization, reclassification, stock dividend, stock split
or other like changes in FESC's capitalization, then an appropriate and
proportionate adjustment shall be made to the Stock Consideration (including the
Exchange Ratio) and the formulas contained in Section 6 of this Article V.
6. (a) At the Effective Time, each option to acquire OBC Common Stock (each
an "OBC Option") granted under the 1992 OBC Directors' Stock Option Plan, the
OBC 1987 Stock Option and Appreciation Rights Plan or the Franklin First Savings
Bank Incentive Plan (collectively, the "OBC Stock Option Plans") which is
outstanding immediately prior to the Effective Time, whether vested or unvested,
will be assumed by FESC. Each OBC Option so assumed by FESC shall continue to
have, and be subject to, the same terms and conditions set forth in the OBC
Stock Option Plan (and any agreement) under which it was granted and as in
existence immediately prior to the Effective Time, except that (i) such OBC
Option shall be exercisable (when vested) for that number of whole shares of
FESC Common Stock equal to the product of the number of shares of OBC Common
Stock covered by the OBC Option multiplied by the Exchange Ratio, provided that
any fractional shares of FESC Common Stock resulting from such multiplication
shall be rounded down to the nearest share; and (ii) the exercise price per
share of FESC Common Stock shall be equal to the exercise price per share of OBC
Common Stock of such OBC Option divided by the Exchange Ratio, provided that
such exercise price shall be rounded up to the nearest cent. The adjustment
provided herein with respect to any OBC Options which are "incentive stock
options" (as defined in Section 422 of the Code) shall be and is intended to be
effected in a manner which is consistent with Section 424(a) of the Code.
6
<PAGE>
(b) Each holder of an OBC Option which will be fully vested immediately
prior to the Effective Time may elect to receive, in cancellation of such OBC
Option on the Effective Date, and without payment of any consideration by such
holder, an amount of cash computed by (i) multiplying the average closing price
of FESC Common Stock on the American Stock Exchange (as reported in THE WALL
STREET JOURNAL or, if not reported therein, another comparable authoritative
source) for the ten trading days immediately preceding the Effective Date by
0.105; (ii) adding $24.33 to the product obtained in the preceding clause (i);
(iii) subtracting from the sum obtained in the preceding clause (ii) the per
share exercise price of such OBC Option; and (iv) multiplying the difference
obtained in the preceding clause (iii) by the number of shares of OBC Common
Stock covered by the OBC Option being cancelled. Any such election shall be made
by the holder of an OBC Option not later than the close of business on the
Effective Date.
7. Notwithstanding any other provision hereof, each holder of shares of OBC
Common Stock who would otherwise have been entitled to receive pursuant to this
Article V a fraction of a share of FESC Common Stock (after taking into account
all Certificates delivered by such holder) shall receive, in lieu thereof, cash
in an amount equal to such fraction of a share of FESC Common Stock multiplied
by the market value (as defined below) of FESC Common Stock. The "market value"
of FESC Common Stock shall be the average of the closing prices of the FESC
Common Stock on the American Stock Exchange-- Composite Transactions List (as
reported by THE WALL STREET JOURNAL or, if not reported therein, another
comparable authoritative source) for the ten trading days preceding the date on
which the Effective Time occurs. No such holder shall be entitled to dividends,
voting rights or any other shareholder right in respect of such fractional
share.
8. The provisions pertaining to OBC Options contained in Paragraphs 5 and 6
of this Article V are intended to be for the benefit of, and shall be
enforceable by, the respective holders of OBC Options and his or her heirs and
representatives.
9. In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by FESC, the
posting by such person of a bond in such amount as FESC may reasonably direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the shares of FESC Common Stock constituting the Stock
Consideration and cash in lieu of fractional shares and/or the cash constituting
the Cash Consideration deliverable in respect thereof pursuant to this Plan of
Merger.
ARTICLE VI.
EFFECTIVE DATE OF THE MERGER
A certificate of merger evidencing the transactions contemplated herein
shall be delivered to the Delaware Secretary of State for filing as provided in
the Reorganization Agreement. The Merger shall be effective at the time and on
the date specified in such certificate of merger (such date and time being
herein referred to as the "Effective Time").
ARTICLE VII.
CONDITIONS PRECEDENT
The obligations of FESC, Merger Sub and OBC to effect the Merger as herein
provided shall be subject to satisfaction, unless duly waived, of the conditions
set forth in Article 5 of the Reorganization Agreement.
7
<PAGE>
ARTICLE VIII.
TERMINATION
Anything contained in the Plan of Merger to the contrary notwithstanding,
and notwithstanding adoption hereof by the shareholders of OBC, this Plan of
Merger may be terminated and the Merger abandoned as provided in the
Reorganization Agreement.
ARTICLE IX.
MISCELLANEOUS
1. This Plan of Merger may be amended or supplemented at any time prior to
the Effective Time by mutual agreement of Merger Sub, FESC and OBC. Any such
amendment or supplement must be in writing and approved by their respective
Boards of Directors and/or by officers authorized thereby and shall be subject
to the proviso in Section 6.4 of the Reorganization Agreement.
2. Any notice or other communication required or permitted under this Plan
of Merger shall be given, and shall be effective, in accordance with the
provisions of the Reorganization Agreement.
3. The headings of the several Articles herein are inserted for convenience
of reference only and are not intended to be a part of or to affect the meaning
or interpretation of this Plan of Merger.
4. This Plan of Merger shall be governed by and construed in accordance with
the laws of Delaware applicable to the internal affairs of OBC and Merger Sub.
5. This Plan of Merger, taken together with the Reorganization Agreement,
shall constitute a plan of reorganization within the meaning of Section 368 of
the Code.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Plan of Merger to be executed in counterparts by their
duly authorized officers and attested by their officers thereunto duly
authorized, all as of the day and year first above written.
<TABLE>
<S> <C> <C> <C>
Attest FIRST EMPIRE STATE CORPORATION
/s/ MARIE KING By: /s/ RICHARD A. LAMMERT
- ------------------------------------------ -----------------------------------
Marie King Richard A. Lammert
Secretary Senior Vice President and
General Counsel
Attest OLYMPIA FINANCIAL CORP.
/s/ GARY S. PAUL By: /s/ RICHARD A. LAMMERT
- ------------------------------------------ -----------------------------------
Gary S. Paul Richard A. Lammert
Secretary
Attest ONBANCORP, INC.
/s/ DAVID M. DEMBOWSKI By: /s/ ROBERT J. BENNETT
- ------------------------------------------ -----------------------------------
David M. Dembowski Robert J. Bennett
Secretary Chairman, President and
Chief Executive Officer
</TABLE>
9
<PAGE>
Exhibit 99
[LETTERHEAD]
CONTACT: Gary S. Paul FOR IMMEDIATE RELEASE:
(716) 842-5130 January 9, 1998
BUFFALO, NEW YORK -- First Empire State Corporation ("First Empire")
(AMEX: FES) today reported diluted earnings per share of $25.26 in 1997, an
increase of 20% from $21.08 in 1996. Net income for 1997 rose 17% to $176.2
million from $151.1 million in 1996. For the fourth quarter of 1997, diluted
earnings per common share increased 17% to $6.66 from $5.70 earned in the
year-earlier quarter. Net income in the recently completed quarter was $46.3
million, an increase of 15% from $40.4 million earned in the final quarter of
1996. All earnings per share amounts reflect the implementation of Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share."
SFAS No. 128 establishes new standards for computing and presenting earnings
per share and is effective for financial statements for both interim and
annual periods ending after December 15, 1997. SFAS No. 128 requires that all
prior period earnings per share data be restated to conform with the
provisions of the statement.
Taxable-equivalent net interest income increased 5% to $562.7 million in
1997 from $535.5 million in 1996. Average loans outstanding totaled $11.0
billion in 1997, an 8% increase from $10.1 billion in 1996. The beneficial
impact on net interest income of growth in loans exceeded the effect of a
narrowing of the spread between yields on earning assets and
-more-
<PAGE>
2-2-2-2-2
FIRST EMPIRE STATE CORPORATION
rates paid on interest-bearing liabilities. As a result of such narrowing, net
interest margin, or taxable-equivalent net interest income expressed as a
percentage of average earning assets, was 4.38% in 1997 compared with 4.45% in
1996.
The provision for possible credit losses was $46.0 million in 1997,
compared with $43.3 million in 1996. Net charge-offs for 1997 were $41.8
million or .38% of average loans, compared with $35.2 million or .35% in the
prior year. Consumer loan net charge-offs for the recent year were $35.9
million, compared with $28.5 million in 1996. The allowance for possible credit
losses was $274.7 million or 2.39% of loans outstanding at December 31, 1997,
compared with $270.5 million or 2.52% at the prior year-end. Nonperforming
loans totaled $80.7 million at December 31, 1997, compared with $97.9 million at
December 31, 1996. The ratio of the allowance to nonperforming loans was 341%
and 276% at December 31, 1997 and 1996, respectively. Assets taken in
foreclosure of defaulted loans were $8.4 million and $8.5 million at the end of
1997 and 1996, respectively.
Other income rose 13% to $193.1 million in 1997 from $170.2 million in
1996. Higher revenues associated with mortgage banking and trust activities
contributed to this increase. Other expense was $421.8 million in 1997, up 3%
from $409.0 million in 1996. Included in other expense for 1996 was a $7.0
million charge for a special assessment by the Federal Deposit Insurance
Corporation
-more-
<PAGE>
3-3-3-3-3
FIRST EMPIRE STATE CORPORATION
to recapitalize the Savings Association Insurance Fund.
The rates of return on average total assets and average common
stockholders' equity in 1997 were 1.32% and 18.49%, respectively, compared with
1.21% and 17.60% in 1996.
At December 31, 1997, First Empire had total assets of $14.0 billion,
compared with $12.9 billion a year earlier. Loans and leases, net of
unearned discount, were $11.5 billion at the end of 1997, up from $10.7
billion at December 31, 1996. Deposits were $11.2 billion and $10.5 billion
at December 31, 1997 and 1996, respectively. Total common stockholders'
equity was $1.0 billion or 7.36% of total assets at year-end 1997, compared
with $906 million or 7.00% a year earlier. Common stockholders' equity per
share was $155.86 at the recent year-end and $135.45 at December 31, 1996.
As previously announced, in October 1997 First Empire entered into a
definitive agreement with ONBANCorp, Inc., Syracuse, New York, for a merger
between the two companies. The merger is subject to the approval of
stockholders of both companies, as well as various regulatory agencies, and is
expected to be completed in the first quarter of 1998.
In February 1997, First Empire announced a plan to repurchase up to 303,317
shares of its common stock for
-more-
<PAGE>
4-4-4-4-4
FIRST EMPIRE STATE CORPORATION
reissuance upon the possible future exercise of outstanding stock options. As
of December 31, 1997, First Empire had repurchased
178,011 common shares pursuant to such plan at an average cost of
$331.78.
First Empire is a bank holding company with subsidiaries that include
Manufacturers and Traders Trust Company (Buffalo, New York) and M&T Bank,
National Association (Oakfield, New York).
-more-
<PAGE>
5-5-5-5-5
FIRST EMPIRE STATE CORPORATION
Condensed Consolidated Statement of Income
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
AMOUNTS IN THOUSANDS, --------------------- ---------------------
EXCEPT PER SHARE 1997 1996 CHANGE 1997 1996 CHANGE
- --------------------------------------------------------- ---------- --------- ----------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net interest income...................................... $ 142,283 136,624 4% $ 556,868 531,024 5%
Less: Provision for possible credit losses............... 12,000 11,475 5 46,000 43,325 6
Gain (loss) on sales of bank investment securities....... -- (449) -- (280) (37) --
Other income............................................. 52,979 48,090 10 193,347 170,285 14
Less:
Salaries and employee benefits........................... 54,627 54,564 -- 220,017 208,342 6
Other expenses........................................... 56,089 52,518 7 201,759 200,636 1
---------- --------- ---------- ---------
Income before income taxes............................... 72,546 65,708 10 282,159 248,969 13
Applicable income taxes.................................. 26,246 25,288 4 105,918 97,866 8
---------- --------- ---------- ---------
Net income............................................... $ 46,300 40,420 15% $ 176,241 151,103 17%
Taxable-equivalent net interest income................... $ 143,896 137,853 4% $ 562,708 535,511 5%
Dividends on preferred stock............................. $ -- -- -- $ -- 900 -100%
Per common share:
Net income
Basic.................................................. $ 7.01 6.03 16% $ 26.60 22.54 18%
Diluted................................................ 6.66 5.70 17 25.26 21.08 20
Net income excluding securities transactions
Basic.................................................. 7.01 6.07 15 26.63 22.54 18
Diluted................................................ 6.66 5.73 16 25.29 21.08 20
Cash dividends........................................... $ 0.80 0.70 14% $ 3.20 2.80 14%
Common shares outstanding:
Average (1).............................................. 6,955 7,098 -2% 6,977 7,170 -3%
Period end............................................... 6,610 6,686 -1% 6,610 6,686 -1%
Performance ratios, annualized
Net income to:
Average total assets..................................... 1.33% 1.26% 1.32% 1.21%
Average common stockholders' equity...................... 18.25% 18.05% 18.49% 17.60%
Yield on average earning assets (2)...................... 8.34% 8.31% 8.34% 8.32%
Cost of interest-bearing liabilities..................... 4.70% 4.54% 4.64% 4.52%
Net interest spread (2).................................. 3.64% 3.77% 3.70% 3.80%
Contribution of interest-free funds...................... 0.69% 0.69% 0.68% 0.65%
Net interest margin (2).................................. 4.33% 4.46% 4.38% 4.45%
</TABLE>
- ------------------------
(1) Includes common stock equivalents
(2) On a fully taxable-equivalent basis
-more-
<PAGE>
6-6-6-6-6
FIRST EMPIRE STATE CORPORATION
Condensed Consolidated Balance Sheet
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
DOLLARS IN THOUSANDS 1997 1996 CHANGE
- ----------------------------------------------------------- ------------ ---------- -------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks.................................... $ 333,805 324,659 3%
Money-market assets........................................ 111,046 209,968 -47
Investment securities...................................... 1,725,218 1,571,698 10
Loans and leases, net of unearned discount................. 11,496,568 10,722,123 7
Less: Allowance for possible credit losses................. 274,656 270,466 2
------------ ----------
Net loans and leases....................................... 11,221,912 10,451,657 7
Other assets............................................... 610,954 385,933 58
------------ ----------
Total assets............................................... $ 14,002,935 12,943,915 8%
------------ ----------
------------ ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing deposits at U.S. offices............... $ 1,458,241 1,352,929 8%
Interest-bearing deposits at U.S. offices.................. 9,453,989 8,968,324 5
Deposits at foreign office................................. 250,928 193,236 30
------------ ----------
Total deposits............................................. 11,163,158 10,514,489 6
Short-term borrowings...................................... 1,097,324 1,150,187 -5
Accrued interest and other liabilities..................... 284,368 195,578 45
Long-term borrowings....................................... 427,819 178,002 140
------------ ----------
Total liabilities.......................................... 12,972,669 12,038,256 8
Stockholders' equity (1)................................... 1,030,266 905,659 14
------------ ----------
Total liabilities and stockholders' equity................. $ 14,002,935 12,943,915 8%
------------ ----------
------------ ----------
</TABLE>
- ------------------------
(1) Includes the after-tax impact of net unrealized gains (losses) on investment
securities classified as available for sale of $12.0 million at December 31,
1997 and ($2.5) million at December 31, 1996.
-more-
<PAGE>
7-7-7-7-7
FIRST EMPIRE STATE CORPORATION
Condensed Consolidated Average Balance Sheet
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
------------------------- -------------------------
DOLLARS IN THOUSANDS 1997 1996 CHANGE 1997 1996 CHANGE
- ---------------------------------------- ------------- ---------- -------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Money-market assets..................... $ 137,992 122,201 13% $ 165,041 123,523 34%
Investment securities................... 1,721,290 1,659,285 4 1,699,004 1,806,250 -6
Loans and leases, net of unearned
discount.............................. 11,326,679 10,526,960 8 10,973,250 10,113,947 8
------------- ---------- ------------ ----------
------------- ---------- ---
Total earning assets.................... 13,185,961 12,308,446 7 12,837,295 12,043,720 7
Other assets............................ 598,656 419,604 43 471,264 434,946 8
------------- ---------- ------------- ----------
Total assets............................ $ 13,784,617 12,728,050 8% $ 13,308,559 12,478,666 7%
------------- ---------- ------------- ----------
------------- ---------- ------------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits............... $ 9,945,128 9,391,917 6% $ 9,724,628 8,991,125 8%
Borrowings.............................. 1,295,212 1,067,353 21 1,226,166 1,321,767 -7
------------- ---------- ------------- ----------
Total interest-bearing liabilities...... 11,240,340 10,459,270 7 10,950,794 10,312,892 6
Noninterest-bearing deposits............ 1,316,385 1,216,588 8 1,228,203 1,168,987 5
Other liabilities....................... 221,307 161,330 37 176,541 133,654 32
------------- ---------- ------------- ----------
Total liabilities....................... 12,778,032 11,837,188 8 12,355,538 11,615,533 6
Stockholders' equity
Preferred............................... -- -- -- -- 9,618 -100
Common.................................. 1,006,585 890,862 13 953,021 853,515 12
------------- ---------- ------------- ----------
Total stockholders' equity.............. 1,006,585 890,862 13 953,021 863,133 10
------------- ---------- ------------- ----------
Total liabilities and stockholders'
equity................................ $ 13,784,617 12,728,050 8% $ 13,308,559 12,478,666 7%
------------- ---------- ------------- ----------
------------- ---------- ------------- ----------
# # #
</TABLE>
