<PAGE> 1
REGISTRATION NO. 33-56545
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
Under the Securities Act of 1933
------------------------------------
FIRSTAR CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
WISCONSIN 6022 39-0711710
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code No.) Identification No.)
</TABLE>
777 EAST WISCONSIN AVENUE, MILWAUKEE, WISCONSIN 53202 (414) 765-4321
(Address, including ZIP Code and telephone number, including area code,
of registrant's principal executive officers)
------------------------------------
<TABLE>
<S> <C>
HOWARD H. HOPWOOD III COPY TO:
SENIOR VICE PRESIDENT & GENERAL COUNSEL DANIEL O'ROURKE, ESQ.
FIRSTAR CORPORATION VEDDER, PRICE, KAUFMAN & KAMMHOLZ
777 EAST WISCONSIN AVENUE 222 NORTH LASALLE STREET
MILWAUKEE, WISCONSIN 53202 CHICAGO, ILLINOIS 60601-1003
(414) 765-5977 (312) 609-7500
(Name, address, including ZIP Code, and telephone
number,
including area code, of agent for service)
</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. / /
------------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE PER UNIT PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $1.25 par value,
with attached Preferred 7,720,697 shares and
Share Purchase Rights....... 3,860,349 rights(1) $26.3425(2) $203,382,385(2) $70,132
Depositary Shares............. 775,500 shares(3) $30.00(4) $23,265,000(4) $8,022
Series D Convertible Preferred
Stock, $1.00 par value...... 38,775 shares N/A(4) N/A(4) N/A(4)
Common Stock, $1.25 par value,
with attached Preferred
Share Purchase Rights....... (5) N/A N/A N/A
--------
$78,155(6)
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</TABLE>
(1) Represents the maximum number of shares of Common Stock of Firstar
Corporation ("Firstar") and associated Preferred Share Purchase Rights
issuable upon consummation of the merger of First Colonial Bankshares
Corporation ("First Colonial") into Firstar Corporation of Illinois as
described herein. Each share of Firstar Common Stock issued will have
attached thereto one-half of one Preferred Share Purchase Right.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f) under the Securities Act of 1933 based on (a) the
average of the high and low prices for First Colonial Class A Common Stock
as reported on the Nasdaq National Market on November 16, 1994 ($21.50) and
the 8,425,829 shares of First Colonial Class A Common Stock that may be
outstanding at closing of the merger and which are the maximum number to be
received by Firstar or cancelled in the merger and (b) the book value for
First Colonial Class B Common Stock on October 31, 1994 ($14.17) and the
1,568,600 shares of First Colonial Class B Common Stock that may be
outstanding at closing of the merger and which are the maximum number to be
received by Firstar or cancelled in the merger. The value attributable to
the Preferred Share Purchase Rights is reflected in the market price of the
Firstar Common Stock to which the Rights are attached.
(3) Each Depositary Share of Firstar represents 1/20 share of Series D
Convertible Preferred Stock of Firstar.
(4) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(1) under the Securities Act of 1933 based on the
average of the high and low prices for First Colonial Depositary Shares as
reported on the Nasdaq National Market on November 15, 1994 and the 775,500
shares of First Colonial Depositary Shares (representing 38,775 shares of
First Colonial Series C Convertible Preference Stock) that are outstanding
and which are the maximum number to be received by Firstar or cancelled in
the merger.
(5) Such indeterminate number of shares of Firstar common stock and Preferred
Share Purchase Rights as may be issuable upon conversion of the Firstar
Series D Convertible Preferred Stock registered hereby.
(6) Previously paid.
------------------------------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE> 2
FIRSTAR CORPORATION
CROSS-REFERENCE SHEET TO
PROXY STATEMENT-PROSPECTUS PURSUANT TO
RULE 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
LOCATION IN PROXY
ITEM OF FORM S-4 STATEMENT-PROSPECTUS
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<S> <C> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus..................... Cross Reference Sheet; Outside
Front Cover Page of Proxy
Statement-Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus......................................... Available Information;
Incorporation of Certain
Information by Reference
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information.............................. Summary
4. Terms of the Transaction........................... Summary; Proposed Merger
5. Pro Forma Financial Information.................... Pro Forma Combining Financial
Statements
6. Material Contacts with the Company Being
Acquired........................................... Proposed Merger
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be Underwriters...... *
8. Interests of Named Experts and Counsel............. Experts; Opinions
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities..... *
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants....... Firstar Corporation;
Comparative Rights of
Stockholders
11. Incorporation of Certain Information by
Reference......................................... Incorporation of Certain
Information by Reference
12. Information with Respect to S-2 or S-3
Registrants....................................... *
13. Incorporation of Certain Information by
Reference......................................... *
14. Information with Respect to Registrants other than
S-3 or S-2 Registrants............................ *
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3 Companies......... First Colonial Bankshares
Corporation; Comparative
Rights of Stockholders
16. Information with Respect to S-2 or S-3
Companies......................................... *
17. Information with Respect to Companies other than
S-3 or S-2 Companies.............................. *
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents and
Authorizations are to be Solicited................ Outside Front Cover Page of
Proxy Statement-Prospectus;
Summary; Meeting Information;
Proposed Merger
19. Information if Proxies, Consents or Authorizations
are not to be Solicited or in an Exchange Offer.... *
</TABLE>
- ---------------
* Omitted because answer to item is negative or item is not applicable.
<PAGE> 3
[FIRST COLONIAL LOGO]
FIRST COLONIAL BANKSHARES CORPORATION
December 9, 1994
Dear Fellow Stockholder:
We are pleased to enclose materials relating to a Special Meeting of Common
Stockholders of First Colonial Bankshares Corporation ("First Colonial") to be
held at 9:00 a.m. (local time), on Wednesday, January 18, 1995, at the Chicago
Cultural Center, 77 East Randolph Street, Chicago, Illinois.
The purpose of the meeting is to consider and vote on an Agreement and Plan
of Reorganization among Firstar Corporation ("Firstar"), Firstar Corporation of
Wisconsin ("FCW"), a subsidiary of Firstar, and First Colonial, dated as of July
31, 1994, and the Plan of Merger attached thereto (together, the "Merger
Agreements"), relating to the proposed merger (the "Merger") of First Colonial
with and into FCW. Pursuant to the Merger, First Colonial will become a wholly
owned subsidiary of Firstar.
Under the terms of the Merger Agreements and upon consummation of the
Merger, each outstanding share of Class A Common Stock and Class B Common Stock
of First Colonial ("First Colonial Common Stock") will be converted into 0.7725
of a share of Firstar Common Stock (including associated Preferred Share
Purchase Rights), and each outstanding Depositary Share representing an interest
in First Colonial Series C Convertible Preference Stock ("First Colonial
Depositary Shares") will be converted into one Depositary Share representing an
interest in a newly created class of Firstar convertible preferred stock having
substantially the same terms ("Firstar Preferred Stock"), as more fully
described in the accompanying Proxy Statement-Prospectus.
The Merger is intended to be tax-free to First Colonial stockholders for
federal income tax purposes except as described under "PROPOSED MERGER --
Certain Federal Income Tax Consequences of the Merger" in the accompanying Proxy
Statement-Prospectus.
The enclosed Proxy Statement-Prospectus of Firstar and First Colonial
contains a more complete description of the terms of the proposed Merger. You
are urged to read the Proxy Statement-Prospectus carefully.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENTS AS
BEING IN THE BEST INTERESTS OF FIRST COLONIAL AND ITS STOCKHOLDERS AND
RECOMMENDS THAT HOLDERS OF FIRST COLONIAL COMMON STOCK VOTE IN FAVOR OF THE
MERGER. IN MAKING THIS RECOMMENDATION, THE BOARD OF DIRECTORS HAS CONSIDERED
NUMEROUS FACTORS, INCLUDING, BUT NOT LIMITED TO THE CONSIDERATION OFFERED BY
FIRSTAR AND THE STRUCTURE OF THE PROPOSED MERGER, WHICH IS DESIGNED TO MAKE THE
MERGER TAX-FREE FOR FEDERAL INCOME TAX PURPOSES TO STOCKHOLDERS OF FIRST
COLONIAL WHO RECEIVE FIRSTAR COMMON STOCK (EXCEPT FOR CASH RECEIVED IN LIEU OF
FRACTIONAL SHARES OF FIRSTAR COMMON STOCK) OR FIRSTAR PREFERRED STOCK (OR
DEPOSITARY SHARES REPRESENTING AN INTEREST IN SUCH FIRSTAR PREFERRED STOCK) AND
TO ALLOW FIRST COLONIAL STOCKHOLDERS TO PARTICIPATE IN THE FUTURE OF THE
COMBINED ORGANIZATION.
Whether or not you plan to attend the Special Meeting, holders of First
Colonial Common Stock are asked to please fill out, sign, and date the enclosed
proxy card, and return it promptly in the accompanying envelope, which requires
no postage if mailed in the United States. If you later find that you may be
present at the Special Meeting or for any other reason desire to revoke your
proxy, you may do so at any time before it is
<PAGE> 4
voted. Please note that holders of the receipts representing First Colonial
Depositary Shares are not entitled to vote on the Merger.
[SIG.]
C. Paul Johnson
Chairman of the Board and
Chief Executive Officer
PLEASE DO NOT SEND YOUR STOCK CERTIFICATES OR RECEIPTS AT THIS TIME. IF THE
MERGER IS CONSUMMATED, YOU WILL BE SENT INSTRUCTIONS REGARDING THE SURRENDER OF
YOUR STOCK CERTIFICATES AND RECEIPTS.
<PAGE> 5
[FIRST COLONIAL LOGO]
FIRST COLONIAL BANKSHARES CORPORATION
30 NORTH MICHIGAN AVENUE, SUITE 300
CHICAGO, ILLINOIS 60602-0493
------------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 18, 1995
------------------------------
To the Stockholders of First Colonial Bankshares Corporation:
NOTICE IS HEREBY GIVEN that a special meeting of the holders of Class A and
Class B Common Stock of First Colonial Bankshares Corporation, a Delaware
corporation ("First Colonial"), pursuant to action of the Board of Directors,
will be held at the Chicago Cultural Center, 77 East Randolph Street, Chicago,
Illinois, on January 18, 1995, at 9:00 a.m. local time, for the following
purposes:
1. To consider and vote upon the approval and adoption of an Agreement
and Plan of Reorganization and a Plan of Merger (the "Merger Agreements"),
each dated as of July 31, 1994, that provide for, among other things, the
merger (the "Merger") of First Colonial with and into Firstar Corporation
of Wisconsin, a wholly owned subsidiary of Firstar Corporation, the
conversion of the outstanding shares of First Colonial Class A and Class B
Common Stock into the right to receive shares of Firstar Corporation Common
Stock and associated Preferred Share Purchase Rights, and the conversion of
the outstanding shares of First Colonial Series C Convertible Preference
Stock into the right to receive shares of Firstar Corporation Series D
Convertible Preferred Stock, as described in the Proxy Statement-Prospectus
accompanying this notice; and
2. To transact such other business as may properly be brought before
the Special Meeting or any adjournments thereof.
The close of business on December 5, 1994 has been fixed as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Special Meeting and any adjournment or postponement thereof. Please note that
holders of depositary receipts representing an interest in First Colonial Series
C Convertible Preference Stock are not entitled to vote on the Merger Agreements
but are entitled to receive this notice of the Special Meeting.
Holders of First Colonial Class B Common Stock have the statutory right to
dissent from the Merger and, if the Merger is consummated, to receive payment in
cash for the "fair value" of their shares of First Colonial Class B Common Stock
upon compliance with the provisions of Section 262 of the Delaware General
Corporation Law. To perfect this right, a holder of First Colonial Class B
Common Stock must not vote such shares in favor of the Merger Agreements at the
Special Meeting (this may be done by marking a proxy either to vote against the
Merger Agreements or to abstain from voting thereon or by not voting at all),
must deliver written notice of dissent before the vote on the Merger is taken
and must otherwise comply with this statute. A copy of Section 262 of the
Delaware General Corporation Law is attached as Appendix A to the Proxy
Statement - Prospectus.
The Special Meeting may be postponed or adjourned from time to time without
any notice other than by announcement at the Special Meeting of any
postponements or adjournments thereof, and any and all business for which notice
is hereby given may be transacted at such postponed or adjourned Special
Meeting.
THE BOARD OF DIRECTORS OF FIRST COLONIAL BELIEVES THE PROPOSED MERGER IS IN
THE BEST INTERESTS OF FIRST COLONIAL AND ITS STOCKHOLDERS AND UNANIMOUSLY
RECOMMENDS THAT THE COMMON STOCKHOLDERS OF FIRST COLONIAL VOTE "FOR" PROPOSAL
NUMBER (1) ABOVE.
Whether or not you plan to attend the Special Meeting, holders of First
Colonial Class A and Class B Common Stock are asked to please complete, date and
sign the enclosed proxy, which is solicited by the Board
<PAGE> 6
of Directors of First Colonial, and return it promptly in the accompanying
envelope. No postage is required if mailed in the United States. The giving of
such proxy does not affect your right to vote in person in the event you attend
the Special Meeting. You may revoke the proxy at any time prior to its exercise
in the manner described in the Proxy Statement-Prospectus.
By Order of the Board of Directors,
[SIG.]
C. Paul Johnson
Chairman of the Board and
Chief Executive Officer
Chicago, Illinois
December 9, 1994
PLEASE DO NOT SEND YOUR STOCK CERTIFICATES OR RECEIPTS AT THIS TIME. IF THE
MERGER IS CONSUMMATED, YOU WILL BE SENT INSTRUCTIONS REGARDING THE SURRENDER OF
YOUR STOCK CERTIFICATES AND RECEIPTS.
<PAGE> 7
[FIRSTAR LOGO] [FIRST COLONIAL LOGO]
PROXY STATEMENT
FIRST COLONIAL BANKSHARES CORPORATION
30 NORTH MICHIGAN AVENUE, SUITE 300
CHICAGO, ILLINOIS 60602-0493
(312) 419-9891
SPECIAL MEETING OF COMMON STOCKHOLDERS
------------------------------
PROSPECTUS
FIRSTAR CORPORATION
------------------------------
This Proxy Statement-Prospectus is being furnished to the stockholders of
First Colonial Bankshares Corporation, a Delaware corporation ("First
Colonial"), in connection with the solicitation of proxies of common
stockholders of First Colonial by the Board of Directors of First Colonial for
use at the special meeting of stockholders of First Colonial to be held on
January 18, 1995, at the Chicago Cultural Center, 77 East Randolph Street,
Chicago, Illinois, commencing at 9:00 a.m., local time, and any adjournments or
postponements thereof (the "Special Meeting"). At the Special Meeting, holders
of First Colonial's Class A common stock, $1.25 par value ("First Colonial Class
A Common Stock"), and Class B common stock, $1.25 par value ("First Colonial
Class B Common Stock" and, together with the First Colonial Class A Common
Stock, "First Colonial Common Stock"), will consider and vote upon the approval
and adoption of an Agreement and Plan of Reorganization, dated as of July 31,
1994 (the "Reorganization Agreement"), among First Colonial, Firstar
Corporation, a Wisconsin corporation ("Firstar"), and Firstar Corporation of
Wisconsin (as successor to Firstar Corporation of Illinois), a Wisconsin
corporation and wholly owned subsidiary of Firstar ("FCW"), and a related Plan
of Merger, dated as of July 31, 1994, by and between First Colonial and FCW and
joined in by Firstar for certain limited purposes (the "Plan of Merger" and,
together with the Reorganization Agreement, the "Merger Agreements"), which
provide for the merger of First Colonial with and into FCW (the "Merger").
Under the Merger Agreements, each outstanding share of First Colonial
Common Stock will be converted into the right to receive 0.7725 of a share of
common stock of Firstar, $1.25 par value, and associated Preferred Share
Purchase Rights (collectively referred to herein as "Firstar Common Stock"), and
each outstanding share of First Colonial's Series C Convertible Preference
Stock, no par value ("First Colonial Series C Preference Stock"), will be
converted into the right to receive one share of Series D Convertible Preferred
Stock, $1.00 par value, of Firstar ("Firstar Preferred Stock"), which is a new
class of preferred stock of Firstar with terms substantially the same as the
First Colonial Series C Preference Stock.
The Merger will not be taxable for federal income tax purposes, except with
respect to cash received by holders of First Colonial Common Stock in lieu of
fractional shares of Firstar Common Stock or by holders of First Colonial Class
B Common Stock as a result of their exercise of statutory rights to dissent from
the Merger. For a more complete description of the Merger Agreements and the
terms of the Merger, see "PROPOSED MERGER."
This Proxy Statement-Prospectus also constitutes a prospectus of Firstar
with respect to shares of Firstar Common Stock to be issued in the Merger in
exchange for outstanding shares of First Colonial Common Stock and shares of
Firstar Preferred Stock to be issued in the Merger in exchange for outstanding
shares of First Colonial Series C Preference Stock. In addition, this Proxy
Statement-Prospectus constitutes a prospectus of Firstar with respect to the
shares of Firstar Common Stock issuable upon conversion of the Firstar Preferred
Stock. This Proxy Statement-Prospectus also relates to depositary shares each of
which currently represents ownership of one-twentieth of a share of First
Colonial Series C Preference Stock deposited with First Chicago Trust Company of
New York and each of which entitles the holder thereof to all proportional
rights and preferences of the First Colonial Series C Preference Stock. In
accordance with the terms of the Deposit Agreement between First Colonial, First
Chicago Trust Company of New York, as depositary (the "Depositary"), and all
holders from time to time of the depositary receipts issued thereunder, dated as
of April 27, 1992 (the "Deposit Agreement"), upon the conversion of First
Colonial Series C Preference Stock into Firstar Preferred Stock in the Merger,
each depositary share will thereafter, at the direction of FCW as the surviving
corporation in the Merger (the "Surviving Corporation"), represent ownership of
one-twentieth of a share of Firstar Preferred Stock. The depositary shares that
currently represent First Colonial Series C Preference Stock and that after the
Merger will represent Firstar Preferred Stock are collectively referred to
herein as the "Depositary Shares".
Copies of this Proxy Statement-Prospectus are first being mailed to
stockholders of First Colonial on or about December 9, 1994.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS ANY
SUCH COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------------
The date of this Proxy Statement-Prospectus is December 7, 1994.
------------------------------
<PAGE> 8
AVAILABLE INFORMATION
Firstar and First Colonial are subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549 and at the Regional Offices of the Commission
at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material may also be obtained from the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. In addition, Firstar Common Stock is listed on the New York Stock
Exchange and the Chicago Stock Exchange, and reports, proxy statements and other
information filed by Firstar with such exchanges may be inspected at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005
and the Chicago Stock Exchange, Incorporated, 440 South LaSalle Street, Chicago,
Illinois 60605.
This Proxy Statement-Prospectus does not contain all of the information set
forth in the Registration Statement on Form S-4 and exhibits thereto (the
"Registration Statement") covering the securities offered hereby which Firstar
has filed with the Commission, certain portions of which have been omitted
pursuant to the rules and regulations of the Commission, and to which portions
reference is hereby made for further information with respect to Firstar, First
Colonial and the securities offered hereby.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS AND, IF GIVEN OR MADE, THE
INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY FIRSTAR, FCW OR FIRST COLONIAL. THIS PROXY STATEMENT-PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO PURCHASE
THE SECURITIES OFFERED HEREBY, OR THE SOLICITATION OF A PROXY, IN ANY
JURISDICTION TO OR FROM ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION OF AN OFFER OR PROXY IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROXY STATEMENT-PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES TO WHICH
THIS PROXY STATEMENT-PROSPECTUS RELATES SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF FIRSTAR, FCW OR
FIRST COLONIAL SINCE THE DATE OF THIS PROXY STATEMENT-PROSPECTUS.
2
<PAGE> 9
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF DOCUMENTS RELATING TO
FIRSTAR, EXCLUDING EXHIBITS UNLESS SPECIFICALLY INCORPORATED HEREIN, ARE
AVAILABLE UPON REQUEST WITHOUT CHARGE FROM MR. WILLIAM H. RISCH, SENIOR VICE
PRESIDENT-FINANCE AND TREASURER, FIRSTAR CORPORATION, 777 EAST WISCONSIN AVENUE,
MILWAUKEE, WISCONSIN 53202 (TELEPHONE (414) 765-4985). COPIES OF DOCUMENTS
RELATING TO FIRST COLONIAL, EXCLUDING EXHIBITS UNLESS SPECIFICALLY INCORPORATED
HEREIN, ARE AVAILABLE WITHOUT CHARGE FROM MS. BARBARA A. KILIAN, SENIOR VICE
PRESIDENT AND CHIEF FINANCIAL OFFICER, FIRST COLONIAL BANKSHARES CORPORATION, 30
NORTH MICHIGAN AVENUE, SUITE 300, CHICAGO, ILLINOIS 60602-0493 (TELEPHONE (312)
696-1321). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE BY JANUARY 11, 1995.
The following documents filed with the Commission are incorporated herein
by reference:
(a) Firstar's Annual Report on Form 10-K for the year ended December
31, 1993;
(b) Firstar's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30, and September 30, 1994;
(c) the description of Firstar Common Stock (including the Preferred
Share Purchase Rights) contained in Firstar's registration statements filed
pursuant to Section 12 of the Exchange Act and any amendment or report
filed for the purpose of updating such description;
(d) First Colonial's Annual Report on Form 10-K for the year ended
December 31, 1993;
(e) First Colonial's Quarterly Reports on Form 10-Q for the quarters
ended March 31, June 30, and September 30, 1994;
(f) First Colonial's Current Report on Form 8-K filed August 4, 1994;
and
(g) the descriptions of First Colonial Common Stock, First Colonial
Series C Preference Stock and the depositary shares representing such
preference stock contained in First Colonial's registration statements
filed pursuant to Section 12 of the Exchange Act and any amendment or
report filed for the purpose of updating such description.
All documents filed by Firstar or First Colonial pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the Special Meeting will be deemed to be incorporated by reference into
this Proxy Statement-Prospectus and to be a part hereof from the date of filing
of the documents.
Any statement contained in a document incorporated by reference herein or
deemed to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes hereof to the extent that a statement contained herein
(or in any subsequently filed document which also is, or is deemed to be,
incorporated by reference herein) modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed to constitute a part
hereof except as so modified or superseded.
3
<PAGE> 10
FIRSTAR CORPORATION
AND
FIRST COLONIAL BANKSHARES CORPORATION
PROXY STATEMENT-PROSPECTUS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY............................................................................... 6
The Companies...................................................................... 6
Proposed Merger.................................................................... 6
The Meeting........................................................................ 7
Vote Required...................................................................... 7
Recommendation of the Board of Directors........................................... 7
Opinion of Financial Advisor....................................................... 7
Dissenters' Rights................................................................. 7
Certain Federal Income Tax Consequences............................................ 8
Accounting Treatment............................................................... 8
Date of Merger..................................................................... 8
Regulatory Approvals............................................................... 8
Dividends on First Colonial Stock.................................................. 9
Management and Operations After the Merger......................................... 9
Waivers and Amendments to the Merger Agreements.................................... 9
Termination........................................................................ 9
Termination Fee.................................................................... 10
Interests of Certain Persons in the Merger......................................... 10
Resales of Firstar Common Stock by Affiliates...................................... 10
Preferred Share Purchase Rights.................................................... 10
Markets and Market Prices.......................................................... 10
Comparative Per Common Share Data.................................................. 11
Historical and Pro Forma Selected Financial Contributions.......................... 13
Selected Consolidated Financial Data of Firstar.................................... 14
Selected Consolidated Financial Data of First Colonial............................. 15
Selected Combined Pro Forma Data of Firstar and First Colonial..................... 16
MEETING INFORMATION................................................................... 17
General............................................................................ 17
Date, Place and Time............................................................... 17
Record Date; Vote Required......................................................... 17
Voting and Revocation of Proxies................................................... 17
Solicitation of Proxies............................................................ 18
PROPOSED MERGER....................................................................... 18
Background of the Merger........................................................... 18
First Colonial's Reasons for the Merger and Board Recommendation................... 23
Opinion of Financial Advisor....................................................... 24
Terms of the Merger................................................................ 31
Firstar Preferred Stock............................................................ 31
Depositary Shares.................................................................. 35
Options............................................................................ 38
Assignment and Assumption Agreements............................................... 39
Effective Time of the Merger....................................................... 39
Surrender of Certificates.......................................................... 40
Conditions to the Merger........................................................... 40
Regulatory Approvals............................................................... 41
Business Pending the Merger........................................................ 43
</TABLE>
4
<PAGE> 11
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Dividends.......................................................................... 44
Termination, Amendment and Waiver.................................................. 44
Management and Operations After the Merger......................................... 45
Interests of Certain Persons in the Merger......................................... 45
Effect on Employee Benefits........................................................ 48
Termination Fee.................................................................... 49
Certain Federal Income Tax Consequences of the Merger.............................. 49
Accounting Treatment............................................................... 50
Expenses........................................................................... 51
Resale of Firstar Common Stock, Firstar Preferred Stock and Firstar Subordinated
Notes............................................................................ 51
Rights of Dissenting Stockholders.................................................. 51
COMPARATIVE RIGHTS OF STOCKHOLDERS.................................................... 53
Preferred Stock.................................................................... 53
Preferred Share Purchase Rights.................................................... 53
Appraisal Rights and Dissenters' Rights............................................ 54
Assessability; Potential Liability For Wages....................................... 54
Takeover Statutes.................................................................. 54
Directors.......................................................................... 55
Liability of Directors; Indemnification............................................ 56
Action Without A Meeting........................................................... 56
Voting Rights...................................................................... 56
Dividend Rights.................................................................... 57
FIRSTAR CORPORATION................................................................... 57
General............................................................................ 57
Competition........................................................................ 57
Supervision........................................................................ 58
Other Acquisitions and Transactions................................................ 59
Incorporation of Certain Information by Reference.................................. 60
FIRST COLONIAL BANKSHARES CORPORATION................................................. 60
General............................................................................ 60
Subsidiary Banks................................................................... 61
Incorporation of Certain Information by Reference.................................. 61
OPINIONS.............................................................................. 61
EXPERTS............................................................................... 62
STOCKHOLDER PROPOSALS................................................................. 62
PRO FORMA COMBINING FINANCIAL STATEMENTS.............................................. 63
APPENDIX A -- Section 262 of the Delaware General Corporation Law
APPENDIX B -- Merger Agreement
APPENDIX C -- Fairness Opinion of Donaldson, Lufkin & Jenrette
</TABLE>
5
<PAGE> 12
SUMMARY
The following is a brief summary of certain information with respect to
matters to be considered at the Special Meeting of holders of First Colonial
Common Stock. As used in this Proxy Statement-Prospectus, the terms "Firstar"
and "First Colonial" refer to such corporations, respectively, and except where
the context otherwise requires, such entities and their respective subsidiaries.
All information concerning Firstar included in this Proxy Statement-Prospectus
has been furnished by Firstar, and all information concerning First Colonial has
been furnished by First Colonial. This summary is not intended to be complete
and is qualified in its entirety by reference to the more detailed information
contained elsewhere in this Proxy Statement of First Colonial and Prospectus of
Firstar, including the appendices hereto (this "Proxy Statement-Prospectus"),
and the documents incorporated in this Proxy Statement-Prospectus by reference.
Stockholders are urged to review carefully the entire Proxy
Statement-Prospectus.
THE COMPANIES
Firstar Corporation and Firstar Corporation of Wisconsin
Firstar, a Wisconsin corporation, whose common stock is listed on the New
York Stock Exchange ("NYSE") and the Chicago Stock Exchange, is a multi-bank
holding company organized in 1929. The principal assets of Firstar are its
investments in 31 banks with offices located in the states of Wisconsin,
Minnesota, Illinois, Iowa and Arizona. On September 30, 1994, Firstar had
consolidated total assets of $14.3 billion and stockholders' equity of $1.2
billion. Firstar's principal executive offices are located at 777 East Wisconsin
Avenue, Milwaukee, Wisconsin 53202 (telephone: (414) 765-4321). Firstar
Corporation of Illinois, which was a wholly owned subsidiary of Firstar, merged
into FCW on November 29, 1994. FCW, a wholly owned subsidiary of Firstar, owns
18 banks with 126 offices, including 15 in Illinois. At the time of the Merger,
one subsidiary bank of FCW, Firstar Bank Illinois, will operate Firstar's
existing Illinois offices. See "FIRSTAR CORPORATION."
First Colonial Bankshares Corporation
First Colonial, a Delaware corporation, is a multi-bank holding company
that commenced operations in 1978. On September 30, 1994, First Colonial had
consolidated total assets of $1.8 billion and stockholders' equity of $158
million. First Colonial's principal executive offices are located at 30 North
Michigan Avenue, Suite 300, Chicago, Illinois 60602-0493 (telephone (312)
419-9891). The principal assets of First Colonial are its investments in 17
banks located in the Chicago metropolitan area. See "FIRST COLONIAL BANKSHARES
CORPORATION."
PROPOSED MERGER
Firstar, First Colonial and FCW have entered into an Agreement and Plan of
Reorganization dated as of July 31, 1994 and a related Plan of Merger dated as
of July 31, 1994, providing, among other things, for the merger of First
Colonial with and into FCW, as a result of which Firstar will directly own 100%
of the stock of the surviving corporation, FCW. Upon the Merger, the rights of
First Colonial stockholders will be governed by Wisconsin law and the Restated
Articles of Incorporation and Bylaws of Firstar. See "PROPOSED MERGER."
Upon consummation of the Merger, each outstanding share of First Colonial
Common Stock will be converted into 0.7725 of a share of Firstar Common Stock
(subject to the payment of cash in lieu of fractional shares and, in the case of
First Colonial Class B Common Stock, except for shares as to which dissenters'
rights are perfected) (such ratio, the "Exchange Ratio") and each outstanding
share of First Colonial Series C Preference Stock will be converted into one
share of Firstar Preferred Stock. Pursuant to the Deposit Agreement, upon
conversion of First Colonial Series C Preference Stock into Firstar Preferred
Stock, each Depositary Share will thereafter automatically and with no action on
the part of the holder thereof represent ownership of one-twentieth of a share
of Firstar Preferred Stock. See "PROPOSED MERGER -- Terms of the Merger"; "--
Firstar Preferred Stock"; "-- Depositary Shares"; "-- Options"; and "--
Assignment and Assumption Agreements."
6
<PAGE> 13
THE MEETING
The Special Meeting of the holders of First Colonial Common Stock will be
held at the Chicago Cultural Center, 77 East Randolph Street, Chicago, Illinois,
on January 18, 1995 at 9:00 a.m., local time. The close of business on December
5, 1994 is the record date (the "Record Date") for determining the stockholders
of First Colonial entitled to notice of and, in the case of holders of First
Colonial Common Stock, to vote at the Special Meeting and any postponement or
adjournments thereof. The purpose of the Special Meeting is to consider and vote
upon a proposal to approve the Merger Agreements. For additional information
relating to the Special Meeting, see "MEETING INFORMATION."
VOTE REQUIRED
The Delaware General Corporation Law ("DGCL") requires that the Merger
Agreements be approved by the affirmative vote of a majority of the votes
attributable to the outstanding shares of First Colonial Common Stock, voting as
a single class. As of the Record Date, there were outstanding 8,106,047 shares
of First Colonial Class A Common Stock, each of which is entitled to one vote,
and 1,552,840 shares of First Colonial Class B Common Stock, each of which is
entitled to 20 votes. Holders of First Colonial Series C Preference Stock are
entitled to notice of the Special Meeting but are not entitled to vote on the
Merger Agreements.
As of the Record Date, directors and executive officers of First Colonial
and their affiliates owned beneficially approximately 6.70% of the outstanding
shares of First Colonial Class A Common Stock and approximately 77.76% of the
outstanding shares of First Colonial Class B Common Stock, representing
approximately 63.05% of the voting power of the First Colonial Common Stock. As
of the Record Date, directors and executive officers of First Colonial owned
beneficially 1,000 shares of Firstar Common Stock. As of the Record Date,
directors and executive officers of Firstar owned beneficially 7,500 shares
(less than .02% of the voting power of First Colonial Common Stock) of First
Colonial Class A Common Stock and no shares of First Colonial Class B Common
Stock. See "MEETING INFORMATION -- Record Date; Vote Required."
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF FIRST COLONIAL UNANIMOUSLY RECOMMENDS THAT FIRST
COLONIAL'S COMMON STOCKHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENTS. The
Board, after consideration of the terms and conditions of the Merger Agreements
and other factors deemed relevant by the Board of Directors, including the
opinion of Donaldson, Lufkin & Jenrette Securities Corporation, First Colonial's
financial advisor ("DLJ"), believes that the terms of the Merger Agreements are
fair and that the Merger is in the best interest of First Colonial and its
stockholders. See "PROPOSED MERGER -- Background of the Merger" and "-- First
Colonial's Reasons for the Merger and Board Recommendation."
OPINION OF FINANCIAL ADVISOR
First Colonial's financial advisor, DLJ, has rendered its opinion to the
Board of Directors of First Colonial to the effect that the Exchange Ratio is
fair, from a financial point of view, to the holders of First Colonial Common
Stock. The opinion of DLJ, attached as Appendix C to this Proxy
Statement-Prospectus, sets forth the assumptions made, the matters considered,
and the limitations in the review undertaken in rendering such opinion. See
"PROPOSED MERGER -- Opinion of Financial Advisor."
DISSENTERS' RIGHTS
Under the provisions of Delaware law, any holders of First Colonial Class B
Common Stock who assert dissenters' rights will have a statutory right to have
the value of their shares appraised. To perfect this right, a holder of First
Colonial Class B Common Stock must not vote such shares in favor of the Merger
Agreements at the Special Meeting (this may be done by marking the proxy either
to vote against the Merger Agreements or to abstain from voting thereon or by
not voting at all) and must take such other action as is required by the
7
<PAGE> 14
provisions of Section 262 of the DGCL, including delivering written demand for
appraisal of such First Colonial Class B Common Stock. Under Section 262 of the
DGCL, holders of First Colonial Class A Common Stock and First Colonial Series C
Preference Stock (represented by the Depositary Shares) are not entitled to
assert dissenters' rights. See "PROPOSED MERGER -- Rights of Dissenting
Stockholders" and Appendix A hereto.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is expected to qualify as a tax-free reorganization for federal
income tax purposes. First Colonial and Firstar have received an opinion from
Vedder, Price, Kaufman & Kammholz, counsel to First Colonial, that the Merger
will be treated as a tax-free reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), subject to
customary assumptions and representations. Consummation of the Merger is
conditioned on such opinion not having been withdrawn or modified in any
material respect prior to such consummation. Such opinion, however, is not
binding on the Internal Revenue Service. In the event the Merger qualifies as a
tax-free reorganization, stockholders of First Colonial will generally recognize
no gain or loss for federal income tax purposes as a result of (a) the exchange
of their First Colonial Common Stock for Firstar Common Stock, except to the
extent they receive cash in lieu of fractional shares of Firstar Common Stock
or, in the case of holders of First Colonial Class B Common Stock, upon the
receipt of cash pursuant to the exercise of their statutory dissenters' rights,
or (b) the exchange of their First Colonial Series C Preference Stock for
Firstar Preferred Stock. See "PROPOSED MERGER -- Certain Federal Income Tax
Consequences of the Merger."
FIRST COLONIAL STOCKHOLDERS SHOULD READ CAREFULLY THE DISCUSSION SET FORTH
UNDER "PROPOSED MERGER -- CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER"
AND ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC CONSEQUENCES
TO THEM OF THE MERGER UNDER FEDERAL, STATE, LOCAL AND ANY OTHER APPLICABLE TAX
LAWS.
ACCOUNTING TREATMENT
Firstar anticipates that the Merger will be accounted for as a pooling of
interests. See "PROPOSED MERGER -- Accounting Treatment."
DATE OF MERGER
The Merger Agreements provide that the Merger will be consummated on a date
(the "Closing Date") within five business days of the latest to occur of (a)
expiration of the statutory 15-day to 30-day waiting period after approval of
the Merger by the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), (b) approval of the Merger by the Illinois Commissioner of
Banks and Trust Companies (the "Illinois Commissioner"), and (c) the Special
Meeting, or on another mutually agreed upon date. It is presently anticipated
that the Merger will be consummated in the first quarter of 1995. See "PROPOSED
MERGER -- Effective Time of the Merger" and "-- Conditions to the Merger."
REGULATORY APPROVALS
The Merger is conditioned upon prior approval by the Federal Reserve Board
and the Illinois Commissioner. Firstar submitted applications with the Federal
Reserve Board seeking approval of the Merger and related matters on September
28, 1994, which were accepted for filing on December 6, 1994. Firstar submitted
an application with the Illinois Commissioner seeking approval of the Merger on
September 30, 1994; this application was accepted for processing on October 24,
1994. There are no assurances that all required regulatory approvals will be
obtained or when such required approvals will be obtained. See "PROPOSED MERGER
- -- Effective Time of the Merger"; "-- Conditions to the Merger" and "--
Regulatory Approvals."
8
<PAGE> 15
DIVIDENDS ON FIRST COLONIAL STOCK
Under the Reorganization Agreement, First Colonial is allowed to declare
regular quarterly cash dividends on First Colonial Class A Common Stock and
First Colonial Class B Common Stock at a rate not in excess of $.15 per share
and $.125 per share, respectively, and regular quarterly cash dividends on First
Colonial Series C Preference Stock as required by First Colonial's currently
effective certificate of incorporation (the "First Colonial Certificate").
Increases in the rates of dividends on the First Colonial Class A Common Stock
and First Colonial Class B Common Stock are permitted beginning with the
dividends payable in the second quarter of 1995 at rates of increase no greater
than 9.09% and 9.08%, respectively.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
In the Merger, First Colonial will be merged into FCW and the separate
corporate existence of First Colonial will cease. FCW, as the surviving
corporation in the Merger and a wholly owned subsidiary of Firstar, will
continue operations and will own the 17 bank subsidiaries now owned by First
Colonial (the "First Colonial Banks"). The officers and directors of FCW prior
to the Merger will continue as officers and directors of the surviving
corporation. Immediately following the Closing Date, one or more management
representatives of Firstar will be added to the board of each First Colonial
Bank. Within several months of the Closing Date, Firstar and FCW intend to merge
each of the First Colonial Banks into Firstar Bank Illinois, FCW's sole Illinois
bank subsidiary, subject to regulatory approval. At the time of the bank-level
mergers, a management representative of Firstar will serve as President and
Chief Executive Officer of Firstar Bank Illinois, and the remainder of
management of Firstar Bank Illinois will be drawn from management of Firstar and
its subsidiaries and the First Colonial Banks. Certain First Colonial Bank
directors may be invited to join the Board of Directors of the surviving bank.
See "PROPOSED MERGER -- Management and Operations of First Colonial After the
Merger" and "-- Interests of Certain Persons in the Merger."
WAIVERS AND AMENDMENTS TO THE MERGER AGREEMENTS
Firstar, FCW and First Colonial may amend, modify or waive certain terms
and conditions of the Merger Agreements. Any such action taken by First Colonial
following a favorable vote by holders of First Colonial Common Stock at the
Special Meeting may be taken only if the action would not have an adverse effect
on its stockholders, change the amount or kind of consideration in the Merger or
have a similar effect. See "PROPOSED MERGER -- Termination, Amendment and
Waiver."
TERMINATION
The Merger may be abandoned (i) by mutual consent of Firstar and First
Colonial at any time before the Merger takes place, (ii) by either Firstar or
First Colonial if (a) the Merger has not taken place by July 31, 1995; (b) any
warranty or representation made by the other party in the Merger Agreements is
discovered to have become untrue in any material respect; (c) the other party
commits one or more material breaches of the Merger Agreements; (d) any
permanent injunction preventing the consummation of the Merger shall have become
final and nonappealable; or (e) the Federal Reserve Board or the Illinois
Commissioner has denied approval of the Merger and neither Firstar nor First
Colonial has filed a petition seeking review of such order within thirty days;
or (iii) by First Colonial on either of the two trading days occurring
immediately after the ten consecutive trading days commencing on the first
business day following the date the Federal Reserve Board approves the Merger,
if (1) the average of the daily closing prices of a share of Firstar Common
Stock during such ten trading days is less than $29.00 and (2) the percentage
decline in the average price of the Firstar Common Stock since July 29, 1994
exceeds by more than 12.5% the percentage decline in the weighted average price
of a selected group of bank stocks (the "walk-away" provision). The average
daily closing price for Firstar Common Stock for the ten trading days ended
December 6, 1994 was $26.513, a percentage decline of 23.43% from July 29, 1994.
The percentage decline in the weighted average price of the selected group of
bank stocks over the same period was approximately 15%. See "PROPOSED MERGER --
Termination, Amendment and Waiver" for important information concerning these
termination rights, including the "walk-away" provision and the enforcement or
waiver thereof by First Colonial.
9
<PAGE> 16
TERMINATION FEE
Under the Reorganization Agreement, upon the occurrence of specified events
("Trigger Events"), First Colonial must pay Firstar a fee of $7,500,000 (the
"Termination Fee") in addition to expense reimbursement up to $2,000,000 that is
due upon certain events of termination of the Agreement. The Trigger Events
relate generally to unopposed offers by, or transactions or proposed
transactions with, third parties, acquisition of specified percentages of First
Colonial voting stock by third parties, and solicitation of proxies in
opposition to the Merger, none of which has occurred as of the date hereof, to
the best of Firstar's and First Colonial's knowledge. The Termination Fee may
tend to discourage other proposals to acquire First Colonial and is intended to
increase the likelihood that the Merger will be consummated. See "PROPOSED
MERGER -- Termination Fee" and "-- Expenses."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In the Reorganization Agreement, Firstar has agreed to elect C. Paul
Johnson, First Colonial's Chairman and Chief Executive Officer, to Firstar's
Board of Directors. Further, directors, executive officers and/or employees of
First Colonial have an interest in the consummation of the Merger under certain
employment and severance agreements, and provisions of the Reorganization
Agreement relating to indemnification and insurance for First Colonial directors
and officers. See "PROPOSED MERGER -- Management and Operations of First
Colonial after the Merger" and "-- Interests of Certain Persons in the Merger."
RESALES OF FIRSTAR COMMON STOCK BY AFFILIATES
Resales of Firstar Common Stock issued to "affiliates" of First Colonial in
connection with the Merger and of Depositary Shares held by affiliates of First
Colonial have not been registered under applicable securities laws in connection
with the Merger. Such shares may only be sold (a) under a separate registration
for distribution (which Firstar has not agreed to provide), (b) pursuant to Rule
145 under the Securities Act of 1933, as amended, or (c) pursuant to some other
exemption from registration. For Firstar to be able to account for the Merger as
a pooling of interests, certain additional restrictions will be placed on
affiliates of First Colonial and Firstar with respect to dispositions of First
Colonial Common Stock, Firstar Common Stock, Depositary Shares and other
instruments during the period beginning 30 days before the Merger and ending
when the results for at least 30 days of post-Merger combined operations have
been published. See "PROPOSED MERGER -- Resale of Firstar Common Stock, Firstar
Preferred Stock and Firstar Subordinated Notes" and "-- Assignment and
Assumption Agreements."
PREFERRED SHARE PURCHASE RIGHTS
Firstar has adopted a Shareholder Rights Plan, pursuant to which each share
of Firstar Common Stock, including the Firstar Common Stock to be issued in the
Merger, entitles its holder to one-half of a right ("Preferred Share Purchase
Right") to purchase one one-hundredth of a share of Firstar's Series C Preferred
Stock under certain limited circumstances. The Rights have certain anti-takeover
effects. The Rights will cause substantial dilution to a person or group that
attempts to acquire Firstar without conditioning the offer on redemption of the
Rights or on a substantial number of Rights being acquired. The Rights should
not interfere with any merger or other business combination approved by
Firstar's Board of Directors prior to the time that the Rights have become
nonredeemable. See "COMPARATIVE RIGHTS OF STOCKHOLDERS -- Preferred Share
Purchase Rights."
MARKETS AND MARKET PRICES
Firstar Common Stock is listed on the New York Stock Exchange and the
Chicago Stock Exchange. First Colonial Class A Common Stock is quoted on the
Nasdaq National Market. The Depositary Shares representing interests in the
First Colonial Series C Preference Stock are quoted on the Nasdaq National
Market. There is no established public trading market for First Colonial Class B
Common Stock.
10
<PAGE> 17
The following table sets forth the closing price per share of Firstar
Common Stock as reported on the Consolidated Tape System for NYSE stock and the
last reported sale price per share of First Colonial Class A Common Stock on the
dates set forth, which include July 29, 1994, the last trading day preceding
public announcement of the Merger, and December 6, 1994, the last trading date
available for practical purposes before the mailing of this Proxy
Statement-Prospectus, as well as the equivalent per share prices for First
Colonial Class A Common Stock as reported on the Nasdaq National Market. The
equivalent per share price of First Colonial Class A Common Stock at each
specified date represents the closing price of a share of Firstar Common Stock
on such date multiplied by the Exchange Ratio of 0.7725. See "PROPOSED
MERGER -- Terms of the Merger."
<TABLE>
<CAPTION>
FIRST COLONIAL EQUIVALENT
FIRSTAR CLASS A FIRST COLONIAL
COMMON STOCK COMMON STOCK PER SHARE PRICE
-------------- -------------------- ---------------
<S> <C> <C> <C>
Market Price Per Share at:
December 31, 1993............................ $30.750 $19.500 $23.754
July 29, 1994................................ $34.625 $24.125 $26.748
September 30, 1994........................... $31.000 $22.625 $23.948
December 6, 1994............................. $26.375 $19.563 $20.375
</TABLE>
Because the market price of Firstar Common Stock is subject to fluctuation
and the Exchange Ratio is fixed, the market value of the shares of Firstar
Common Stock that holders of First Colonial Common Stock will receive in the
Merger may increase or decrease prior to the Merger. First Colonial stockholders
are advised to obtain current market quotations for Firstar Common Stock and
First Colonial Class A Common Stock.
COMPARATIVE PER COMMON SHARE DATA
The following table presents selected comparative unaudited per share data
for Firstar Common Stock and First Colonial Common Stock on a historical and pro
forma combined basis and for First Colonial Common Stock on a pro forma
equivalent basis giving effect to the Merger accounted for as a pooling-of-
interests. For a description of the pooling-of-interests accounting basis with
respect to the Merger and the related effects on the historical financial
statements of Firstar, see "PROPOSED MERGER -- Accounting Treatment." The
information is derived from the consolidated historical financial statements of
Firstar and First Colonial, including the related notes thereto, incorporated by
reference into this Proxy Statement-Prospectus, and the pro forma financial
statements, including the notes thereto, appearing elsewhere herein. This
information should be read in conjunction with such historical and pro forma
financial statements and the related notes thereto. See "INCORPORATION OF
CERTAIN INFORMATION BY REFERENCE" and "PRO FORMA COMBINING FINANCIAL
STATEMENTS."
11
<PAGE> 18
This information is not necessarily indicative of the results of the future
operations of the combined entity or the actual results that would have occurred
had the Merger been consummated prior to the periods indicated.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
NINE MONTHS ENDED -----------------------------
SEPTEMBER 30, 1994 1993 1992 1991
------------------ ------- ------- -------
<S> <C> <C> <C> <C>
Firstar -- Historical:
Net income................................... $ 2.36 $ 3.15 $ 2.62 $ 2.14
Cash dividends declared...................... .86 1.00 .80 .705
Book value (at period end)................... 19.37 17.96 15.94 14.17
First Colonial -- Historical:
Net income................................... $ 1.06 $ 1.15 $ 1.08 $ 1.48
Cash dividends declared -- Class A common.... .45 .55 .50 .48
-- Class B common.... .375 .44 .417 .40
Book value (at period end)................... 14.11 13.72 12.93 12.38
Firstar-First Colonial -- Pro Forma Combined:
Net income(1)................................ $ 2.26 $ 2.99 $ 2.50 $ 2.12
Cash dividends declared(2)................... .86 1.00 .80 .705
Book value (at period end)(3)................ 19.26 17.94 16.02 14.37
First Colonial Common Stock -- Equivalent
Pro Forma Combined(4):
Net income(1)................................ $ 1.75 $ 2.31 $ 1.93 $ 1.64
Cash dividends declared...................... .66 .77 .62 .54
Book value (at period end)................... 14.88 13.86 12.38 11.10
</TABLE>
- ---------------
(1) The pro forma combined net income per common share (based on weighted
average shares outstanding) is based upon the combined historical net
income for Firstar and First Colonial reduced for dividend payments on
Firstar's outstanding series B preferred stock (which was redeemed in 1993)
and First Colonial's preference stock divided by the average pro forma
common shares of the combined entity.
(2) The pro forma combined dividends declared assume no changes in historical
dividends per share declared by Firstar.
(3) The pro forma combined book value per share of Firstar Common Stock are
based upon the historical total common equity for Firstar and First
Colonial divided by total pro forma common shares of the combined entity
assuming conversion of the First Colonial Common Stock.
(4) The equivalent pro forma combined income, dividends and book value per share
of First Colonial Common Stock represent the pro forma combined amounts
multiplied by the Exchange Ratio of 0.7725.
12
<PAGE> 19
HISTORICAL AND PRO FORMA SELECTED FINANCIAL CONTRIBUTIONS
The following table sets forth certain consolidated unaudited financial
data of Firstar as of and for the nine months ended September 30, 1994 and the
data on a pro forma combined basis after giving effect to the acquisition of
First Colonial and other pending Firstar acquisitions. The information is
derived from the consolidated historical financial statements of Firstar and
First Colonial, including the related notes thereto, incorporated by reference
into this Proxy Statement-Prospectus, and the pro forma financial statements,
including the notes thereto, appearing elsewhere herein. See "INCORPORATION OF
CERTAIN INFORMATION BY REFERENCE" and "PRO FORMA COMBINING FINANCIAL
STATEMENTS."
<TABLE>
<CAPTION>
PRO FORMA
COMBINED OTHER
FIRST FIRSTAR & PENDING
FIRSTAR COLONIAL FIRST ACQUISITIONS PRO FORMA
HISTORICAL HISTORICAL COLONIAL PRO FORMA COMBINED
---------- --------- ---------- ------------ ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
For the nine months ended
September 30, 1994:
Total revenue:
Amount..................... $ 927,432 $ 100,837 $ 1,028,269 $ 89,053 $ 1,117,322
Percentage of total........ 83.00% 9.03% 92.03% 9.97% 100.00%
Net income:
Amount..................... $ 151,596 $ 12,372 $ 163,968 $ 9,760 $ 173,728
Percentage of total........ 87.26% 7.12% 94.38% 5.62% 100.00%
At September 30, 1994:
Total assets:
Amount..................... $14,329,204 $1,802,941 $16,132,145 $ 1,544,231 $17,676,376
Percentage of total........ 81.06% 10.20% 91.26% 8.74% 100.00%
Stockholders' equity:
Amount..................... $ 1,241,011 $ 157,767 $ 1,398,778 $ 75,100 $ 1,473,878
Percentage of total........ 84.20% 10.70% 94.90% 5.10% 100.00%
Shares of common stock:
Amount..................... 64,054,211 7,560,712* 71,614,923 5,004,577* 76,619,500
Percentage of total........ 83.60% 9.87% 93.47% 6.53% 100.00%
</TABLE>
- ---------------
* Equivalent pro forma shares of Firstar.
13
<PAGE> 20
SELECTED CONSOLIDATED FINANCIAL DATA OF FIRSTAR
The following table sets forth in summary form certain selected
consolidated financial data of Firstar. The financial data included for the five
years ended December 31, 1993, are derived from the audited consolidated
financial statements of Firstar. The financial data included for the nine-month
periods ended September 30, 1994 and 1993, are derived from the unaudited
historical financial statements of Firstar and reflect, in the opinion of
management of Firstar, all adjustments necessary for a fair presentation of such
data. Results of the nine months ended September 30, 1994 are not necessarily
indicative of the results which may be expected for the year as a whole. This
information should be read in conjunction with the financial review and
consolidated financial statements of Firstar, and the related notes thereto,
included in the documents incorporated by reference in this Proxy
Statement-Prospectus. See "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE."
<TABLE>
<CAPTION>
UNAUDITED
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Income Summary (Thousands of dollars):
Net interest revenue........................... $440,106 $423,108 $568,056 $539,152 $480,596 $429,954 $413,102
Provision for loan losses...................... 8,274 18,451 24,567 44,821 50,276 49,161 52,362
-------- -------- -------- -------- -------- -------- --------
Net interest revenue after loan loss
provision.................................... 431,832 404,657 543,489 494,331 430,320 380,793 360,740
Other operating revenue........................ 249,612 251,668 342,265 300,767 272,535 248,301 225,521
Other operating expense........................ 454,665 434,506 587,744 557,566 515,536 464,800 429,508
-------- -------- -------- -------- -------- -------- --------
Income before income taxes..................... 226,779 221,819 298,010 237,532 187,319 164,294 156,753
Provision for income tax....................... 75,183 70,041 93,716 71,547 52,988 46,837 45,618
-------- -------- -------- -------- -------- -------- --------
Net income..................................... $151,596 $151,778 $204,294 $165,985 $134,331 $117,457 $111,135
======== ======== ======== ======== ======== ======== ========
Per common share:
Net income..................................... $ 2.36 $ 2.35 $ 3.15 $ 2.62 $ 2.14 $ 1.82 $ 1.72
Dividends...................................... .86 .74 1.00 .80 .705 .635 .545
Selected Period-End Balances
(Millions of dollars):
Total assets................................... $ 14,329 $ 13,429 $ 13,794 $ 13,169 $ 12,309 $ 12,020 $ 11,163
Loans.......................................... 9,520 8,533 8,984 8,111 7,545 7,346 6,871
Deposits....................................... 10,648 10,761 11,164 10,884 10,063 9,721 8,931
Long-term debt................................. 125 127 126 158 144 185 166
Stockholders' equity........................... 1,241 1,172 1,156 1,048 916 844 790
Selected Financial Ratios:
Net income as a % of average assets............ 1.50% 1.59% 1.59% 1.36% 1.16% 1.06% 1.07%
Net income as a % of average common equity..... 16.84 18.81 18.61 17.43 15.85 14.83 15.65
Net interest margin %.......................... 5.05 5.23 5.21 5.27 5.00 4.76 4.88
Total capital to risk-adjusted assets.......... 13.43 13.81 13.18 13.20 11.92 11.94 12.09
Nonperforming assets as a % of period-end loans
and other real estate........................ .73 .81 .72 1.09 1.43 1.87 1.61
Reserve for loan losses as a % of period-end
loans........................................ 1.80 2.06 1.95 2.08 2.00 1.83 1.69
Net charge-offs as a % of average loans........ .27 .27 .25 .43 .47 .48 .66
</TABLE>
14
<PAGE> 21
SELECTED CONSOLIDATED FINANCIAL DATA OF FIRST COLONIAL
The following table sets forth in summary form certain consolidated
financial data of First Colonial. The financial data included for the five years
ended December 31, 1993, are derived from the audited consolidated financial
statements of First Colonial. The financial data included for the nine-month
periods ended September 30, 1994 and 1993 are derived from the unaudited
historical financial statements of First Colonial and reflect, in the opinion of
management of First Colonial, all adjustments necessary for a fair presentation
of such data. Results for the nine months ended September 30, 1994 are not
necessarily indicative of the results which may be expected for the year as a
whole. This information should be read in conjunction with the financial review
and consolidated financial statements of First Colonial, and the related notes
thereto, included in the documents incorporated by reference in this Proxy
Statement-Prospectus. See "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE."
<TABLE>
<CAPTION>
UNAUDITED
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------ ---------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Income Summary (Thousands of dollars):
Net interest revenue.......................... $53,871 $48,836 $64,773 $64,020 $56,474 $54,039 $48,153
Provision for loan losses..................... 1,733 2,712 3,892 5,043 3,935 3,928 3,511
------- ------- ------- ------- ------- ------- -------
Net interest revenue after loan loss
provision................................... 52,138 46,124 60,881 58,977 52,539 50,111 44,642
Other operating revenue....................... 16,971 17,090 22,352 23,375 23,787 15,679 13,954
Other operating expense....................... 50,819 47,300 63,404 64,793 55,954 48,989 43,001
------- ------- ------- ------- ------- ------- -------
Income before income taxes.................... 18,290 15,914 19,829 17,559 20,372 16,801 15,595
Provision for income tax...................... 5,918 5,075 6,210 5,357 5,324 4,239 3,777
------- ------- ------- ------- ------- ------- -------
Net income.................................... $12,372 $10,839 $13,619 $12,202 $15,048 $12,562 $11,818
======= ======= ======= ======= ======= ======= =======
Per common share:
Net income.................................... $ 1.06 $ .92 $ 1.15 $ 1.08 $ 1.48 $ 1.35 $ 1.33
Dividends
Class A Common.............................. .45 .41 .55 .50 .48 .44 .39
Class B Common.............................. .38 .33 .44 .42 .40 .36 .32
Selected Period-End Balances
(Millions of dollars):
Total assets.................................. $ 1,803 $ 1,574 $ 1,604 $ 1,581 $ 1,635 $ 1,531 $ 1,251
Loans......................................... 1,090 984 962 996 921 948 747
Deposits...................................... 1,543 1,346 1,361 1,359 1,415 1,334 1,104
Long-term debt................................ 26 9 12 21 14 27 21
Stockholders' equity.......................... 158 153 156 149 121 109 83
Selected Financial Ratios:
Net income as a % of average assets........... .96% .93% .87% .77% .95% .87% 1.02%
Net income as a % of average common equity.... 10.92 9.76 9.10 8.90 13.41 13.42 15.65
Net interest margin %......................... 4.93 4.87 4.84 4.74 4.30 4.49 4.87
Total capital to risk-adjusted assets......... 12.90 14.00 14.15 13.44 11.55 9.76 9.87
Nonperforming assets as a % of period-end
loans and other real estate................. 1.95 1.74 1.49 1.70 1.74 1.51 .93
Reserve for loan losses as a % of period-end
loans....................................... 1.23 1.20 1.23 1.22 1.15 1.07 1.02
Net charge-offs as a % of average loans....... .18 .41 .43 .36 .38 .33 .44
</TABLE>
15
<PAGE> 22
SELECTED COMBINED PRO FORMA DATA OF FIRSTAR AND FIRST COLONIAL
The following table sets forth in summary form certain unaudited pro forma
combined financial data of Firstar and First Colonial, giving effect to the
Merger on a pooling-of-interests accounting basis. For a description of the
pooling-of-interests accounting basis with respect to the Merger and the related
effects on the historical financial statements of Firstar, see "PROPOSED MERGER
- -- Accounting Treatment." The financial data included for the five years ended
December 31, 1993, are derived from the audited consolidated financial
statements of Firstar and First Colonial. The financial data included for the
nine-month periods ended September 30, 1994 and 1993, are derived from the
unaudited historical financial statements of Firstar and First Colonial and
reflect, in the respective opinions of management of Firstar and First Colonial,
all adjustments necessary for a fair presentation of such data. The combined pro
forma data are not necessarily indicative of the results that would have
occurred had Firstar and First Colonial constituted a single entity during the
respective periods, nor are they indicative of future results of operations.
This information should be read in conjunction with the financial review and
consolidated financial statements of Firstar and First Colonial included in the
documents incorporated herein by reference and in conjunction with the unaudited
pro forma financial information, including the notes thereto, appearing
elsewhere in this Proxy Statement-Prospectus. See "INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE" and "PRO FORMA COMBINING FINANCIAL STATEMENTS."
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
-------------------- --------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Income Summary (Thousands of dollars):
Net interest revenue................... $493,977 $471,944 $632,829 $603,172 $537,070 $483,993 $461,255
Provision for loan losses.............. 10,007 21,163 28,459 49,864 54,211 53,089 55,873
-------- -------- -------- -------- -------- -------- --------
Net interest revenue after loan loss
provision............................ 483,970 450,781 604,370 553,308 482,859 430,904 405,382
Other operating revenue................ 266,583 268,758 364,617 324,142 296,322 263,980 239,475
Other operating expense................ 505,484 481,806 651,148 622,359 571,490 513,789 472,509
-------- -------- -------- -------- -------- -------- --------
Income before income taxes............. 245,069 237,733 317,839 255,091 207,691 181,095 172,348
Provision for income tax............... 81,101 75,116 99,926 76,904 58,312 51,076 49,395
-------- -------- -------- -------- -------- -------- --------
Net income............................. $163,968 $162,617 $217,913 $178,187 $149,379 $130,019 $122,953
======== ======== ======== ======== ======== ======== ========
Per common share:
Net income............................. $ 2.26 $ 2.23 $ 2.99 $ 2.50 $ 2.12 $ 1.82 $ 1.73
Dividends.............................. .86 .74 1.00 .80 .705 .635 .545
Selected Period-End Balances
(Millions of dollars):
Total assets........................... $ 16,120 $ 15,003 $ 15,398 $ 14,750 $ 13,944 $ 13,551 $ 12,414
Loans.................................. 10,598 9,517 9,946 9,107 8,466 8,294 7,618
Deposits............................... 12,191 12,107 12,525 12,243 11,478 11,055 10,035
Long-term debt......................... 151 136 138 179 158 212 187
Stockholders' equity................... 1,399 1,325 1,312 1,197 1,037 953 873
Selected Financial Ratios:
Net income as a % of average assets.... 1.44% 1.52% 1.51% 1.30% 1.13% 1.04% 1.07%
Net income as a % of average common
equity............................... 16.23 17.83 17.59 16.45 15.57 14.67 15.65
Net interest margin %.................. 5.04 5.20 5.17 5.20 4.92 4.73 4.88
Total capital to risk-adjusted
assets............................... 13.38 13.83 13.28 13.22 11.88 11.69 11.88
Nonperforming assets as a % of
period-end loans and other real
estate............................... .85 .90 .80 1.16 1.46 1.83 1.55
Reserve for loan losses as a % of
period-end loans..................... 1.75 1.97 1.88 1.98 1.90 1.74 1.63
Net charge-offs as a % of average
loans................................ .17 .25 .27 .43 .46 .46 .64
Ratio of earnings to combined fixed
charges and preferred stock
dividends............................ 20.36x 14.47x 14.87x 11.49x 9.06x 6.66x 6.20x
</TABLE>
16
<PAGE> 23
MEETING INFORMATION
GENERAL
This Proxy Statement of First Colonial and Prospectus of Firstar is being
furnished to the stockholders of First Colonial in connection with the
solicitation by the Board of Directors of First Colonial of proxies to be voted
at the Special Meeting of holders of First Colonial Common Stock to be held on
January 18, 1995, and any adjournment thereof. The purpose of the Special
Meeting and of the solicitation is (i) to obtain approval of the holders of
First Colonial Common Stock of the Merger Agreements and (ii) the transaction of
such other business as may properly come before the meeting or any adjournments
thereof. Each copy of this Proxy Statement-Prospectus mailed to holders of First
Colonial Common Stock is accompanied by a form of proxy for use at the Special
Meeting.
DATE, PLACE AND TIME
The Special Meeting will be held at the Chicago Cultural Center, 77 East
Randolph Street, Chicago, Illinois, on January 18, 1995, at 9:00 a.m. (local
time).
RECORD DATE; VOTE REQUIRED
The close of business on December 5, 1994, has been fixed by the Board of
Directors of First Colonial as the Record Date for the determination of
stockholders entitled to notice of, and to vote at, the Special Meeting. On that
date there were outstanding and entitled to vote 8,106,047 shares of First
Colonial Class A Common Stock, of which 543,277 (6.70%) were held by directors
or executive officers of First Colonial, and 1,552,840 shares of First Colonial
Class B Common Stock, of which 1,207,444 (77.76%) were held by directors or
executive officers of First Colonial. Neither Firstar nor any of its or FCW's
directors or executive officers owns any shares of First Colonial Common Stock,
except that a director of Firstar beneficially owns 7,500 shares (less than
.10%) of First Colonial Class A Common Stock.
Each outstanding share of First Colonial Class A Common Stock entitles the
record holder thereof to one vote on all matters to be acted upon at the Special
Meeting. Each outstanding share of First Colonial Class B Common Stock entitles
the record holder thereof to 20 votes on all matters to be acted upon at the
Special Meeting. The DGCL requires that the Merger Agreements be approved by the
affirmative vote of a majority of the votes attributable to the outstanding
shares of First Colonial Class A Common Stock and First Colonial Class B Common
Stock, voting together as a single class. Holders of Depositary Shares are not
entitled to vote at the Special Meeting.
VOTING AND REVOCATION OF PROXIES
Shares of First Colonial Common Stock represented by a proxy properly
signed and received at, or prior to, the Special Meeting, unless subsequently
revoked, will be voted at the Special Meeting in accordance with the
instructions thereon. If a proxy is signed and returned without indicating any
voting instructions, shares of First Colonial Common Stock represented by the
Proxy will be voted FOR the Merger Agreements. Both broker nonvotes and
abstentions have the same effect as votes against the Merger Agreements. Any
proxy given pursuant to this solicitation may be revoked by the person giving it
at any time before the proxy is voted by the filing of an instrument revoking it
or of a duly executed proxy bearing a later date with the Secretary of First
Colonial prior to or at the Special Meeting. Attendance at the Special Meeting
will not in and of itself constitute a revocation of a proxy.
The Board of Directors of First Colonial is not aware of any business to be
acted upon at the Special Meeting other than as described herein. If, however,
other matters are properly brought before the Special Meeting, or any
adjournments thereof, the persons appointed as proxies will have discretion to
vote or act thereon according to their best judgment.
17
<PAGE> 24
SOLICITATION OF PROXIES
In addition to solicitation by mail, directors, officers, and employees of
First Colonial, who will not be specifically compensated for such services, may
solicit proxies from the stockholders of First Colonial, personally or by
telephone or telegram or other forms of communication. Brokerage houses,
nominees, fiduciaries, and other custodians will be requested to forward
soliciting materials to beneficial owners and will be reimbursed for their
reasonable expenses incurred in sending proxy material to beneficial owners.
First Colonial does not anticipate that anyone will be specially engaged to
solicit proxies or that special compensation will be paid for that purpose, but
First Colonial reserves the right to do so should it conclude that such efforts
are needed. First Colonial will bear its own expenses in connection with the
solicitation of proxies for the Special Meeting, except that Firstar and First
Colonial have agreed to share equally in the expense of printing this Proxy
Statement-Prospectus and the expense of all SEC and other regulatory filing fees
incurred in connection therewith. See "PROPOSED MERGER -- Expenses."
HOLDERS OF FIRST COLONIAL COMMON STOCK ARE REQUESTED TO COMPLETE, DATE, AND
SIGN THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY TO FIRST COLONIAL IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE.
PROPOSED MERGER
The following description of the Merger is qualified in its entirety by
reference to the Merger Agreements, which are attached as Appendix B to this
Proxy Statement-Prospectus and are incorporated herein by reference. All First
Colonial stockholders are urged to read the Merger Agreements in their entirety.
BACKGROUND OF THE MERGER
First Colonial. First Colonial has prospered by pursuing its "community
banking" philosophy, which emphasizes the delivery of services and products
tailored to the diverse banking needs of the communities in which it operates.
This approach emphasizes the autonomy of each subsidiary bank, with the local
management and board of directors responsible for tailoring the mix of loans,
deposits and services to meet the needs of the local community. Utilizing this
community banking approach, First Colonial has grown from a one-bank holding
company in 1983 to a multi-bank holding company operating 17 subsidiary banks
with 30 banking locations, and 5 nonbank subsidiaries which provide mortgage
origination, trust services, equipment leasing, broker/dealer investment
services and data processing and operational services.
First Colonial has from time to time previously received informal inquiries
regarding possible merger affiliations, none of which led to substantive
discussions because First Colonial's Board of Directors believed that
stockholder value was better enhanced by preserving First Colonial's
independence. Although maintaining independence has been a successful strategy
for First Colonial, the Board of Directors, cognizant of the opportunities
presented by the recent consolidation movement in the banking industry and
entrance of out-of-state financial institutions into Illinois, determined in the
Fall of 1993 that First Colonial should reassess its long-term strategic goals.
As a result of this reassessment, the Board of Directors of First Colonial
consulted with and retained the law firm of Vedder, Price, Kaufman & Kammholz
("Vedder Price"), a firm with extensive experience in representing financial
institutions in mergers and affiliations, to assist the Board by giving legal
counsel in evaluating strategic alternatives. The Board of Directors also
decided to retain an independent financial advisor to advise First Colonial on
various strategic alternatives, including the possible sale of First Colonial,
and to discuss and explore possible merger candidates for First Colonial.
Later in the year, First Colonial management raised for the first time with
several prospective merger partners, including Firstar, the possibility that
First Colonial might be willing to pursue merger discussions. First Colonial
also began evaluating financial advisor candidates during this time.
On February 25, 1994 First Colonial retained DLJ, a nationally recognized
investment banking firm, as its exclusive financial advisor to assist First
Colonial in soliciting indications of interest in a possible strategic
18
<PAGE> 25
business combination involving First Colonial. The Board selected DLJ on the
basis of, among other things, DLJ's expertise in mergers and acquisitions and
its familiarity with the Midwest regional banking industry and the most likely
potential affiliation partners for First Colonial.
During March and early April 1994, a Confidential Information Memorandum
containing financial and other information (the "Memorandum") was prepared by
First Colonial with the assistance of DLJ and Vedder Price. On April 20, 1994,
after execution and delivery of a Confidentiality and Standstill Agreement, DLJ
delivered the Memorandum to Firstar and three other midwestern-based bank
holding companies. Firstar and the three other bank holding companies were each
asked to review the Memorandum and submit an indication of interest (including a
narrow range of value on an aggregate and/or per-share basis, form of
consideration and structural features relating to price) as well as certain
additional information to assist First Colonial and its advisors in assessing
the value, timing and feasibility of the indication of interest.
Firstar and two of the other midwestern bank holding companies declined to
submit written indications of interest. On May 5, 1994, the remaining
midwestern-based bank holding company ("MBHC") submitted a preliminary
indication of interest to DLJ.
MBHC's May 5, 1994 preliminary indication of interest stated that MBHC was
prepared to offer, upon completion of satisfactory due diligence, between $24.50
and $27.00 per share for First Colonial Common Stock and to offer equivalent
securities for certain First Colonial stock options, First Colonial Series C
Preference Stock and the First Colonial 14% Subordinated Capital Notes due
October 17, 1996 ("First Colonial Subordinated Notes") issued pursuant to the
Mandatory Stock Purchase Agreements dated as of October 17, 1984 between First
Colonial and the noteholders (the "MSP Agreements"). MBHC indicated its
expectation that the proposed transaction would qualify as a tax-free
reorganization and that it anticipated offering First Colonial stockholders an
election to receive cash or MBHC stock, subject to the tax-free reorganization
requirements (a "cash election transaction"). MBHC indicated that it would seek
as conditions to the execution of a definitive agreement (i) an option to
purchase up to 19.9% of the then-outstanding number of shares of First Colonial
Class A Common Stock upon the occurrence of certain events (a "treasury stock
option") and (ii) agreements from the holders of First Colonial Class B Common
Stock to vote in favor of the transaction.
MBHC also indicated that it, among other things, (i) was prepared to
proceed in an expeditious manner to complete its due diligence investigation of
First Colonial and execute a definitive agreement; (ii) had adequate financial
resources to complete the proposed transaction; (iii) was unaware of any
securities or regulatory issues that would prevent the timely consummation of
the proposed transaction; and (iv) believed that it would close the transaction
within five months after the date of the execution of a definitive agreement.
Discussions between management of First Colonial and MBHC ensued, and in
mid-May 1994, MBHC amended its preliminary indication of interest to $27.00 per
share of First Colonial Common Stock in a cash election transaction, subject to
the terms and conditions of its letter of May 5, 1994.
During May 1994, DLJ, Firstar and First Colonial began a series of
discussions regarding a possible merger. On May 19, 1994, management of First
Colonial met with management of Firstar, at which time they agreed to proceed
with discussions with the assistance of DLJ regarding the pricing of a possible
transaction. On May 25, 1994, management of Firstar and DLJ agreed to explore
the possibility of developing a Firstar proposal to structure a merger involving
an exchange of shares of Firstar Common Stock with a nominal value of $25.00 to
$26.00 per share of First Colonial Common Stock. These discussions continued
during June 1994, focusing primarily on the possibility of a proposal with a
nominal value of $26.00 for each share of First Colonial Common Stock.
Management of First Colonial and representatives of DLJ discussed MBHC's
preliminary indication of interest and the exploratory discussions with Firstar
with the Executive Committee of First Colonial's Board of Directors (the
"Executive Committee") at a meeting held on June 14, 1994. After such
discussion, the Executive Committee determined that First Colonial should pursue
each opportunity and seek to improve the consideration to First Colonial
stockholders in connection with each opportunity.
19
<PAGE> 26
At its regular meeting on June 15, 1994, First Colonial's Board of
Directors was preliminarily informed by the Executive Committee of the potential
interest of two prospective merger partners in pursuing a transaction with First
Colonial. The Board was further informed of the Executive Committee's view that
an effort should be made to pursue such opportunities. After discussing the two
opportunities, First Colonial's Board of Directors also directed management and
DLJ to pursue the opportunities and to seek to improve the consideration payable
to First Colonial's stockholders under each, and discussions continued with each
of the two parties.
From June 15, 1994 through early July, DLJ and the management of First
Colonial contacted MBHC, seeking to improve the financial terms of its
indication of interest. A number of meetings ensued, but MBHC was not willing to
improve the financial terms of its indication of interest. Thereafter, and prior
to July 31, 1994, DLJ representatives had periodic, but nonsubstantive,
discussions with MBHC.
On June 29, 1994, management of First Colonial and Firstar reached a
preliminary agreement on a nominal purchase price of $26.50 per share of First
Colonial Common Stock in a pooling transaction, subject to satisfactory
completion of due diligence, arriving at a mutually satisfactory transaction
structure and negotiation of definitive agreements. C. Paul Johnson, the
Chairman of the Board of Directors and Chief Executive Officer of First
Colonial, was offered a position on the Firstar Board of Directors, effective
with the closing of the proposed merger.
A special First Colonial Board meeting was held on July 7, 1994 to discuss
and consider the two indications of interest in detail with First Colonial's
legal and financial advisors. All members of the Board were present at the
meeting. At the meeting, Vedder Price reviewed with the Board members (i) their
directors' duties in connection with a proposed transaction; (ii) certain tax
and legal considerations for a publicly held company involved in stock and cash
election transactions; (iii) certain requirements of the Securities and Exchange
Commission relating to mergers; and (iv) certain requirements for "pooling-of-
interests" accounting treatment. Vedder Price then presented to the Board the
substance of the two indications of interest and discussed the possible future
courses of action available to First Colonial, including (i) continuing
negotiations with one or both of Firstar and MBHC; (ii) soliciting indications
of interest from other parties; and (iii) discontinuation of the merger process
and remaining independent.
DLJ then made a presentation to the Board with respect to the two
indications of interest. DLJ's presentation included (i) a comparison of the
proposed financial and substantive terms of the indications of interest; (ii)
certain analyses regarding the value and prospects of First Colonial and First
Colonial Common Stock; (iii) the bank merger and acquisition environment
generally and in the Chicago area specifically; (iv) the stock price
performance, following announcement of certain mergers, of the larger of the two
merging parties in such mergers, and the likely negative, but normal, change in
Firstar's stock price that would follow announcement of the proposed
transaction; (v) a comparison of the proposed financial terms with those of
other recent unrelated but similar merger transactions; (vi) a comparison of the
ability to complete the transaction by, and cost of the transaction (in terms of
dilution and leverage ratio) to, each of Firstar and MBHC; and (vii) the
possibility of enhanced stockholder value for First Colonial's stockholders if
there were to be a subsequent merger or sale of Firstar or MBHC at a premium.
After a full and thorough discussion of the two indications of interest,
the Board of Directors authorized First Colonial's management to continue
negotiations with Firstar. Firstar was chosen as the preferred merger partner by
the Board of Directors based on a number of factors including the strong track
record of Firstar Common Stock, the strong similarities between First Colonial
and Firstar businesses, the cultural compatibility between the two
organizations, and the perceived greater likelihood of a subsequent sale of
Firstar than of MBHC.
Subsequent to the July 7, 1994 Board meeting, First Colonial and its legal
and financial advisors entered into three weeks of diligence discussions and
negotiations with Firstar. MBHC was not informed of the decision by First
Colonial's Board authorizing merger negotiations with Firstar, nor was MBHC's
offer rejected.
20
<PAGE> 27
On July 19, 1994, Firstar presented its merger proposal in written form by
delivering the first drafts of the Merger Agreements, an "Investment Agreement"
(i.e., a 19.9% treasury stock option to be granted by First Colonial to
Firstar), "Voting Agreements" (i.e., agreements from certain holders of First
Colonial Common Stock to vote in favor of the proposed transaction), and
Assignment and Assumption Agreements with respect to the MSP Agreements
(collectively, the "Related Documents"). The proposal included a limitation on
the number of shares of First Colonial Common Stock to be outstanding
immediately prior to the effective time of the proposed transaction and
reasonable comfort that the transaction would qualify for pooling-of-interests
accounting treatment. The First Colonial Board considered the Firstar proposal
as set forth in the draft Merger Agreements and Related Documents at its regular
Board meeting on July 20, 1994.
At the July 20, 1994 meeting of the Board of Directors, Vedder Price
informed the Board regarding the course and status of the negotiations with
Firstar and reviewed the proposed Merger Agreements and Related Documents in
detail with the Board. Vedder Price concluded its presentation by noting there
were several issues that required further negotiation, the more significant
being (i) the mechanism for establishing the exchange ratio, (ii) Firstar's
request for the Investment Agreement and Voting Agreements, (iii) the limitation
of the ability of the First Colonial directors to take certain steps in the
event of a competing third party offer, (iv) certain "non-standard"
representations and warranties, (v) termination rights, and (vii) Firstar's
desire to limit the number of shares of First Colonial Common Stock outstanding
immediately prior to the effective time of the proposed transaction. After
significant discussion and consideration, the First Colonial Board of Directors
authorized management, with the assistance of DLJ and Vedder Price, to proceed
with due diligence and attempt to negotiate a final definitive agreement with
Firstar.
On July 29, 1994, the First Colonial Board met with Vedder Price and DLJ to
consider the revised merger proposal and proposed form of Merger Agreements that
had been negotiated between the parties and their representatives during the
preceding week. At the meeting, the Chairman of First Colonial reported on the
status of the negotiations with Firstar stating that (i) the exchange ratio was
still being negotiated; (ii) the post-signing due diligence termination right of
Firstar had been deleted from the Merger Agreements with respect to matters
other than environmental; and (iii) certain provisions of the Transitional
Compensation Program adopted April 20, 1994 by First Colonial to provide
transitional compensation to affected executive and senior officers in the event
of a change in control of First Colonial (the "Transitional Compensation
Program") required modification in order to assure Firstar that the proposed
transaction would qualify for "pooling-of-interests" accounting treatment. See
"Interests of Certain Persons in the Merger" for a discussion of the
Transitional Compensation Program. The Chairman also related Firstar's desire to
limit the number of shares of First Colonial Common Stock that would be
outstanding immediately prior to the effective time of the proposed transaction.
The Board discussed the need to repurchase shares of First Colonial Common Stock
to meet the exercise or conversion of any First Colonial stock options, MSP
Agreements, or shares of First Colonial Series C Preference Stock that may occur
prior to the effective time of the proposed transaction.
Vedder Price then reviewed in detail the principal changes in the proposed
Merger Agreements and the proposed side letter regarding employee benefits
between Firstar and First Colonial to be executed simultaneously with the Merger
Agreements (the "Benefits Letter") and discussed the remaining issues which had
been identified at the July 20, 1994 meeting. DLJ followed with a detailed
presentation during which the terms and nature of the fairness opinion to be
issued by DLJ, and the analyses which DLJ would employ in arriving at its
opinion, were discussed and the directors were again informed of the possible
negative stock market effect on the price of Firstar Common Stock once the
proposed transaction was announced. At the conclusion of the DLJ presentation,
Vedder Price presented to the Board of Directors a letter dated July 29, 1994
from Firstar to the effect that, without the Investment Agreement, Voting
Agreements and certain other protective provisions, Firstar would be unwilling
to enter into the Merger Agreements. The nature, purpose and legal aspects of
the Investment Agreement, the Voting Agreements and termination fees demanded by
Firstar were reviewed in detail by Vedder Price. After significant discussion
and consideration, the First Colonial Board of Directors authorized management,
with the assistance of DLJ and Vedder Price, to proceed to negotiate a final
definitive agreement with Firstar.
On July 31, 1994, the First Colonial Board met with Vedder Price and DLJ to
consider the final merger proposal and Merger Agreements. At the meeting, the
Chairman of First Colonial announced that (i) the
21
<PAGE> 28
negotiations with Firstar had resulted in an exchange ratio of 0.7725, which
provided a valuation of $26.75 per share of First Colonial Common Stock based on
the closing price of Firstar Common Stock on July 29, 1994; and (ii) the
purchase price was equal to 2.60 times tangible book value of First Colonial
Common Stock. The Chairman further reported that, at the request of Firstar, he
had agreed to cancel his rights under the Transitional Compensation Program and
thereby waive approximately $1.2 million of compensation thereunder immediately
prior to the effective time of the proposed transaction under the terms of a
letter agreement with Firstar, pursuant to which Firstar consented to First
Colonial's approval of bonus and severance payments to Mr. Johnson in an
aggregate amount equal to Mr. Johnson's base annual salary of $470,000. See
"Interests of Certain Persons In The Merger" for a discussion of the bonus and
severance payments to Mr. Johnson.
Vedder Price reviewed in detail with the Board the revised Merger
Agreements and the form and content of the revisions. In particular, Vedder
Price reviewed (i) the changes to the exchange ratio resulting in the 0.7725
exchange ratio; (ii) the removal of the Investment Agreement requirement; (iii)
the incorporation of break-up fees of up to $9.5 million (consisting of a $7.5
million payment and up to $2 million in fees and expenses) payable by First
Colonial to Firstar in the event the Merger Agreements were terminated due to
First Colonial's agreement to a merger with or sale to a third party; (iv) the
final terms of the double trigger "walk-away" provision which permits First
Colonial to terminate the Merger Agreements under certain circumstances as
described under "Termination, Amendment and Waiver"; and (v) certain employee
benefits matters set forth in the Benefits Letter.
After presentation by the Chairman of First Colonial of the recommendation
of First Colonial's executive management in favor of the proposed merger and
receipt of an oral opinion from DLJ that the consideration to be received by
holders of the First Colonial Common Stock under the Firstar proposal was fair,
from a financial point of view, to the holders of First Colonial Common Stock,
the First Colonial Board unanimously (i) approved the Merger Agreements and the
Benefits Letter; (ii) authorized the execution of both the Merger Agreements and
the Benefits Letter; and (iii) approved and authorized the repurchase of up to
550,000 shares of First Colonial Class A Common Stock. The Merger Agreements and
Benefits Letter were executed by First Colonial and Firstar on July 31, 1994 at
the conclusion of the Board of Directors meeting. Prior to the opening of
business on August 1, 1994, First Colonial issued press releases announcing the
execution of the Merger Agreements and its plans to undertake the repurchase of
up to 550,000 shares of First Colonial Class A Common Stock.
On August 8, 1994, MBHC sent to DLJ a letter revising its previous
indication of interest as follows: (i) consideration of $27.00 per share, less
an amount equal to the per share amount of the break-up fees (up to $9.5
million) that would be due and payable to Firstar if First Colonial terminated
the Merger Agreements in order to enter into an agreement with MBHC; (ii) a
structure using either all MBHC stock or 50% stock and 50% cash; and (iii) an
intention to complete its due diligence and execute a definitive agreement
within twenty (20) days (the "August Letter"). Based upon aggregate break-up
fees of $9.5 million, the net per share consideration implied by the August
Letter was approximately $26.05.
Consideration of the August Letter occurred at a meeting of the First
Colonial Board on August 17, 1994. Vedder Price discussed with the Board the
basic contractual obligations of the Merger Agreements in light of the August
Letter and the basic Delaware law framework for considering the new MBHC
proposal contained in the August Letter. In reviewing the substance of the
proposal contained in the August Letter, the Board, among other things,
considered the following factors: (i) its view that the long term intrinsic
value of an interest in Firstar Common Stock remained unchanged despite the drop
in its market price that had occurred since the execution of the Merger
Agreements, i.e., $26.75 based on a $34.25 Firstar Common Stock price on July 31
as compared to $25.11 based on a $32.50 price for Firstar Common Stock at
approximately noon on August 17; (ii) the perceived excellent quality of
management of Firstar; (iii) Firstar's record of successful merger transactions;
(iv) the net per share value of the MBHC proposal of $26.05; and (v) the
resulting dip in Firstar's stock price in this stock-for-stock merger
transaction was discussed in advance by DLJ and the possibility of it occurring
had been factored into the decision by the Board to authorize the Merger
Agreements; and (vi) the potential impact of pursuing a transaction with MBHC on
First Colonial customers and employees due to the uncertainty that would be
created. In the original decision to authorize the Merger Agreements and in its
determination on August 17, the Board of Directors took into account the
possibility
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that Firstar might itself be acquired in a business combination in the future at
a price that would enhance the value of Firstar Common Stock received by First
Colonial stockholders in the Merger. The Board of Directors judged the
likelihood of this event against the likelihood of MBHC being later acquired
following a business combination with First Colonial.
The Board was advised by Vedder Price that it may have a legal obligation
to pursue the MBHC offer in the August Letter if it concluded that the offer was
superior to the terms of the Merger Agreements. Vedder Price also advised the
Board that if, in the Board's judgment, the MBHC offer was not, as a whole,
superior to Firstar's, the Board had no obligation under Delaware law to further
explore a transaction with MBHC. DLJ advised the Board of Directors that it had
uncovered no evidence that any permanent reevaluation or repricing of Firstar's
stock price had occurred as a result of the proposed merger with Firstar or
other factors. After consideration of the foregoing and other factors, the Board
determined that MBHC's proposal was not, as a whole, better than Firstar's, and
unanimously elected not to further explore a transaction with MBHC. On August
17, 1994, MBHC and Firstar were informed of the Board's decision not to pursue a
transaction with MBHC.
Firstar. Firstar concluded that the Merger would be in the best interests
of Firstar and its shareholders. Numerous factors were considered by the Board
of Directors of Firstar in approving the terms of the Merger. These factors
included information concerning the financial structure, results of operations,
and prospects of Firstar and First Colonial; the capital adequacy of the
resulting entity; the composition of the businesses of the two organizations;
the overall compatibility of the management and employees of the organizations;
the outlook for both organizations in the rapidly changing banking and financial
services industry; the historical and current market prices of each company's
stock and of certain other bank holding companies whose securities are publicly
traded; the relationship of the consideration to be paid in the Merger to such
market prices and the book value and earnings per share of First Colonial; and
the financial terms of certain other recent business combinations in the banking
industry. See "PRO FORMA COMBINING FINANCIAL STATEMENTS."
The Board of Directors of Firstar believes that the expansion of Firstar's
customer base and assets in the Chicago area will enable the new organization to
realize certain economies of scale, to provide a wider and improved array of
financial services to its customers and those of First Colonial and to achieve
added flexibility in dealing with the region's changing competitive environment.
Additionally, the Board of Directors of Firstar believes that the Merger will
provide the combined company with the market position and financial resources it
needs to meet the competitive challenges arising from changes in the banking and
financial industry.
FIRST COLONIAL'S REASONS FOR THE MERGER AND BOARD RECOMMENDATION
After careful study and evaluation, the First Colonial Board of Directors
has unanimously approved the Merger Agreements and has determined that the
Merger is fair to, and in the best interests of, First Colonial and First
Colonial's stockholders. The First Colonial Board of Directors believes that the
Merger will enable First Colonial stockholders to realize significant value on
their investment and also will enable them to participate in opportunities for
growth that First Colonial believes the Merger makes possible.
In reaching its determination that the Merger Agreements is fair to, and in
the best interests of, First Colonial and First Colonial's stockholders, the
Board of Directors carefully considered a variety of factors with the assistance
of its legal and financial advisors. Among the factors it considered were the
following:
(a) First Colonial's business, financial condition, results of
operations and prospects, including, but not limited to, its potential
growth, development, productivity and profitability were it to remain
independent;
(b) The current and prospective environment in which First Colonial
operates, including national and local economic conditions, the competitive
environment for banks and other financial institutions generally, and the
trend toward consolidation in the financial services industry generally and
in the Chicago metropolitan market specifically;
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(c) The historical market value, book value, earnings per share and
dividends of First Colonial as compared to the historical market value,
book value, earnings per share and dividends of Firstar;
(d) The strategic and competitive advantages expected to result from
the combination of First Colonial and Firstar;
(e) The anticipated tax-free nature of the Merger to First Colonial
stockholders receiving Firstar Common Stock in exchange for shares of First
Colonial Common Stock or Firstar Preferred Stock in exchange for shares of
First Colonial Series C Preference Stock;
(f) The financial terms of other recent business combinations in the
financial services industry generally and in the Chicago metropolitan
market specifically;
(g) Information concerning the business, financial condition, results
of operations and prospects of Firstar;
(h) The value to be received by the First Colonial stockholders
pursuant to the Merger in relation to the historical trading prices of the
First Colonial Common Stock;
(i) The review by the First Colonial Board with its legal and
financial advisors of the provisions of the proposed Merger Agreements;
(j) The financial advice rendered by DLJ to the First Colonial Board
of Directors and the opinion rendered by DLJ that the Exchange Ratio was
fair to holders of First Colonial Common Stock (See "Opinion of Financial
Advisor");
(k) The likelihood that the proposed transaction would be consummated;
(l) The likely beneficial effect of the proposed transaction on
customers and employees of First Colonial;
(m) The expectation that Firstar will continue to provide quality
service to the communities and customers served by First Colonial; and
(n) The compatibility of the respective businesses and management
philosophies of Firstar and First Colonial.
The Board of Directors also determined that the Merger is preferable to the
other alternatives available to First Colonial, such as (i) pursuing a possible
merger with MBHC; (ii) remaining independent and growing internally or through
acquisitions; (iii) remaining independent for a relatively short period of time
with a view toward being acquired in the future; or (iv) engaging in a merger of
equals with another party.
While each member of the First Colonial Board of Directors individually
evaluated each of the foregoing as well as other factors, the First Colonial
Board of Directors collectively did not assign any specific or relative weights
to the factors considered and did not make any determination with respect to any
individual factor. The First Colonial Board collectively made its determination
with respect to the Merger based on the unanimous conclusion reached by its
members that the Merger, in light of the factors that each of them individually
considered as appropriate, is fair and in the best interests of the First
Colonial stockholders.
FOR THE REASONS SET FORTH ABOVE, THE BOARD OF DIRECTORS OF FIRST COLONIAL
UNANIMOUSLY RECOMMENDS THAT HOLDERS OF FIRST COLONIAL COMMON STOCK VOTE TO
APPROVE THE MERGER AND THE MERGER AGREEMENTS.
OPINION OF FINANCIAL ADVISOR
In February 1994, the First Colonial Board of Directors retained Donaldson,
Lufkin & Jenrette Securities Corporation to act as its exclusive financial
advisor with respect to the sale, merger, consolidation, or any other business
combination involving First Colonial. As part of its services, DLJ analyzed
First Colonial and its operations, historical performance and future prospects;
identified and contacted a limited number of bank holding companies acceptable
to the First Colonial Board of Directors to solicit indications of interest in a
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possible business combination with First Colonial; participated in negotiations
concerning the financial aspects of the Merger Agreements under the guidance of
the First Colonial Board of Directors; and provided an opinion as to the
fairness, from a financial point of view, of the Exchange Ratio to the holders
of First Colonial Common Stock. The First Colonial Board of Directors imposed no
limitations upon DLJ with respect to the investigations made or procedures
followed by DLJ in rendering its opinion.
DLJ has rendered a written opinion to the First Colonial Board of Directors
to the effect that, as of the date of the mailing of this Proxy
Statement-Prospectus, the Exchange Ratio is fair, from a financial point of
view, to the holders of First Colonial Common Stock. Such opinion describes the
assumptions made, matters considered and the scope of the review undertaken and
procedures followed by DLJ. DLJ's opinion is attached hereto as Appendix C and
is incorporated herein by reference. STOCKHOLDERS ARE ENCOURAGED TO READ SUCH
OPINION IN ITS ENTIRETY.
DLJ's opinion is directed to the First Colonial Board of Directors only and
is directed only to the Exchange Ratio and does not constitute a recommendation
to any holder of First Colonial Common Stock as to how such holder should vote
at the Special Meeting. Moreover, DLJ's written opinion expressly states that it
is not expressing an opinion as to either (i) the continued availability of a
possible transaction with MBHC or (ii) the relative value of the Firstar Common
Stock which would be received in the Merger (either before, or on a pro forma
basis giving effect to, the Merger) compared to the value of the securities and
cash which might have been received in a transaction with MBHC, if available.
For purposes of its opinion and in connection with its review of the
proposed transaction, DLJ, among other things: (i) participated in discussions
and negotiations among representatives of First Colonial and Firstar and their
respective financial and legal advisors that resulted in the Merger Agreements;
(ii) reviewed the Merger Agreements and this Proxy Statement-Prospectus; (iii)
reviewed certain publicly available financial statements, both audited and
unaudited, for First Colonial and Firstar, including those included in the
Annual Reports on Form 10-K for the five years ended December 31, 1993, the
Quarterly Report on Form 10-Q for the period ended September 30, 1994, and the
most recent regular annual proxy statement available as of the date of DLJ's
opinion for First Colonial and Firstar; (iv) reviewed certain financial
statements and other financial and operating data concerning First Colonial and
Firstar prepared by their respective managements; (v) reviewed certain financial
projections of First Colonial and Firstar, both on a stand-alone and on a
combined basis, prepared by their respective managements; (vi) discussed certain
aspects of the past and current business operations, results of regulatory
examinations, financial condition and future prospects of First Colonial and
Firstar with certain members of the management of First Colonial and Firstar;
(vii) reviewed reported market prices and historical trading activity of First
Colonial Common Stock and Firstar Common Stock; (viii) reviewed certain aspects
of the financial performance of First Colonial and Firstar and compared such
financial performance of First Colonial and Firstar, together with the stock
market data relating to First Colonial Common Stock and Firstar Common Stock,
with similar data available for certain other financial institutions and certain
of their publicly traded securities; (ix) reviewed certain of the financial
terms, to the extent publicly available, of certain recent business combinations
involving other financial institutions; and (x) conducted such other studies,
analyses and examinations as DLJ deemed appropriate.
DLJ relied upon and assumed without independent verification the accuracy
and completeness of all of the financial and other information provided to it by
First Colonial, Firstar and their respective representatives and of the publicly
available information reviewed by DLJ. At the direction of the First Colonial
Board of Directors, DLJ also relied upon the managements of both First Colonial
and Firstar as to the reasonableness and achievability of the financial and
operating forecasts provided to DLJ (and the assumptions and bases therefor). In
that regard, DLJ assumed with the permission of the First Colonial Board of
Directors that such forecasts, including without limitation projected cost
savings and operating synergies resulting from the Merger, reflect the best
currently available estimates and judgments of such respective managements and
that such projections and forecasts will be realized in the amounts and in the
time periods currently estimated by the managements of both First Colonial and
Firstar. With the permission of the First Colonial Board of Directors, DLJ did
not independently verify and relied on and assumed that the aggregate allowances
for loan losses set forth in the balance sheets of each of First Colonial and
Firstar at September 30, 1994 were adequate
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to cover such losses and complied fully with applicable law, regulatory policy
and sound banking practice as of the date of such financial statements. With the
permission of the First Colonial Board of Directors, DLJ did not independently
verify the carrying values of other real estate owned and loans classified as
in-substance foreclosures of each of First Colonial and Firstar in their
respective September 30, 1994 balance sheets, and DLJ assumed with the
permission of the First Colonial Board of Directors that such carrying values
complied fully with applicable law, regulatory policy and sound banking practice
as of such date. DLJ was not retained to and did not conduct a physical
inspection of any of the properties or facilities of First Colonial or Firstar,
nor did DLJ make any independent evaluation or appraisal of the assets,
liabilities or prospects of First Colonial or Firstar, was not furnished with
any such evaluation or appraisal, and did not review any individual credit
files. With the permission of the First Colonial Board of Directors and that of
its counsel, in rendering its opinion DLJ relied on the general advice of such
counsel on all legal matters. DLJ also assumed with the permission of the First
Colonial Board of Directors that the Merger is, and will be, in compliance with
all laws and regulations that are applicable to First Colonial and Firstar. With
the permission of the First Colonial Board of Directors, DLJ assumed for
purposes of its opinion that the Merger will be recorded as a pooling of
interests under generally accepted accounting principles and will qualify as a
tax-free reorganization.
Prior to rendering its written opinion dated as of the date of the mailing
of this Proxy Statement-Prospectus to the First Colonial Board of Directors, DLJ
rendered an oral opinion to the First Colonial Board of Directors on July 31,
1994. Set forth below is a brief summary of the analyses performed by DLJ in
reaching its July 31, 1994 opinion.
Stock Trading History. DLJ examined the history of trading prices and
volume for First Colonial Common Stock and Firstar Common Stock and the
relationship between the movements of such common stock prices to the market
prices of the common stocks of the companies in the First Colonial Peer Group
(as defined below) and the DLJ Midwest Universe (as defined below).
Discounted Cash Flow Analysis. Using discounted cash flow analysis, DLJ
estimated the future dividend streams that First Colonial could produce over the
period from June 30, 1994 through December 31, 1998, assuming a minimum required
tangible equity level of 6.75% of tangible total assets, if First Colonial
performed in accordance with management's forecast. DLJ also estimated the
terminal value of First Colonial's common equity as of December 31, 1998 by
applying a range of multiples to First Colonial's projected 1998 earnings. The
dividend streams and terminal value were discounted to present values as of June
30, 1994 using discount rates ranging from 12% to 13%, which reflect different
assumptions regarding the required rates of return of holders and prospective
buyers of First Colonial Common Stock. The range of present values per fully
diluted share of First Colonial Common Stock resulting from this analysis was
$17.02 to $20.63.
Comparison with Selected Companies. DLJ compared selected financial ratios
for First Colonial to the corresponding ratios of the "First Colonial Peer
Group" (consisting of AMCORE Financial, Inc. of Rockford, Illinois; First
Midwest Bancorp, Inc. of Naperville, Illinois; First Oak Brook Bancshares, Inc.
of Oak Brook, Illinois; Firstbank of Illinois of Springfield, Illinois; Heritage
Financial Services, Inc. of Tinley Park, Illinois; Pinnacle Banc Group, Inc. of
Oak Brook, Illinois; River Forest Bancorp, Inc. of Chicago, Illinois; and
Suburban Bancorp, Inc. of Palatine, Illinois) and for Firstar to the
corresponding ratios of the "DLJ Midwest Universe" (consisting of Banc One
Corporation of Columbus, Ohio; Boatmen's Bancshares, Inc. of St. Louis,
Missouri; Comerica Incorporated of Detroit, Michigan; Fifth Third Bancorp of
Cincinnati, Ohio; First Bank System, Inc. of Minneapolis, Minnesota; First of
America Bank Corporation of Kalamazoo, Michigan; Huntington Bancshares
Incorporated of Columbus, Ohio; National City Corporation of Cleveland, Ohio;
NBD Bancorp, Inc. of Detroit, Michigan; Norwest Corporation of Minneapolis,
Minnesota; Old Kent Financial Corporation of Grand Rapids, Michigan; and Society
Corporation of Cleveland, Ohio). Such ratios included: market price to 1994
estimated earnings per share ("EPS"), market price to 1995 estimated EPS, market
price to tangible book value per share, leverage ratio, return on average
assets, return on average common equity, loan loss reserve to non-performing
loans (defined as non-accrual loans, loans 90 days or more past due but still
accruing interest and renegotiated loans), non-performing assets (defined as
non-performing loans plus other real estate owned) to total loans plus other
real estate owned, five-year historical compound annual growth rates of EPS,
five-year historical average return on average assets and five-year
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historical average return on average common equity. DLJ's analysis was based on
financial data at or for the five years ended December 31, 1993 and the six
months ended June 30, 1994, except that certain ratios for the companies
comprising the First Colonial Peer Group were based on financial data at or for
the three months ended March 31, 1994. In performing calculations, DLJ used
market prices as of July 29, 1994, except that DLJ used the market price for
Suburban Bancorp, Inc. common stock as of March 15, 1994, one month prior the
announcement of the merger of Suburban Bancorp, Inc. with Harris Bankcorp, Inc.
DLJ used projected earnings estimates for First Colonial and Firstar as provided
by management of both companies, and median projected earnings as published by
the Institutional Brokers Estimate System ("IBES") for the companies comprising
the First Colonial Peer Group and the DLJ Midwest Universe. IBES is a data
service which monitors and publishes a compilation of earnings estimates
produced by selected research analysts on companies of interest to investors.
DLJ compared the mean values for each of such ratios for the First Colonial
Peer Group with the corresponding ratio for First Colonial. This analysis showed
that the First Colonial Peer Group had a mean ratio of market price to 1994
estimated EPS of 12.4 times, as compared with 16.6 times for First Colonial; a
mean ratio of market price to 1995 estimated EPS of 11.3 times, as compared with
14.7 times for First Colonial; a mean ratio of market price to tangible book
value per share of 1.86 times, as compared to 2.34 times for First Colonial; a
mean leverage ratio of 7.90%, as compared to 6.95% for First Colonial; a mean
return on average assets of 1.11%, as compared to 1.05% for First Colonial; a
mean return on average stockholders' equity of 12.7%, as compared to 11.9% for
First Colonial; a mean ratio of loan loss reserves to non-performing loans of
98.3%, as compared to 112.8% for First Colonial; a mean ratio of non-performing
assets to total loans plus other real estate owned of 1.65%, as compared with
1.51% for First Colonial; a mean five year historical compound annual growth
rate of EPS of 8.6%, as compared to negative 3.6% for First Colonial; a mean
five-year historical average return on average assets of 1.26%, as compared with
0.90% for First Colonial; and a mean five-year historical average return on
average common equity of 15.0%, as compared with 12.1% for First Colonial.
DLJ also compared the mean values for each of such ratios for the DLJ
Midwest Universe with the corresponding ratio for Firstar. This analysis showed
that the DLJ Midwest Universe had a mean ratio of market price to 1994 estimated
EPS of 10.1 times, as compared with 10.5 times for Firstar; a mean ratio of
market price to 1995 estimated EPS of 9.1 times, as compared with 9.1 times for
Firstar; a mean ratio of market price to tangible book value per share of 2.10
times, as compared to 1.98 times for Firstar; a mean leverage ratio of 7.57%, as
compared to 8.50% for Firstar; a mean return on average assets of 1.39%, as
compared to 1.64% for Firstar; a mean return on average common equity of 17.6%,
as compared to 18.2% for Firstar; a mean ratio of loan loss reserves to
non-performing assets of 193%, as compared to 149% for Firstar; a mean ratio of
non-performing assets to total loans plus other real estate owned of 1.24%, as
compared with 1.30% for Firstar; a mean five-year historical compound annual
growth rate of EPS of 12.0%, as compared to 13.9%, for Firstar; a mean five-year
historical average return on average assets of 1.15%, as compared with 1.27% for
Firstar; and a mean five-year historical average return on average common equity
of 15.3%, as compared with 17.0% for Firstar.
Analysis of Selected Mergers. As part of its analyses, DLJ reviewed three
sets of mergers: (i) selected mergers involving Chicago-area banks or bank
holding companies announced between January 1, 1991 and July 29, 1994 in which
the total assets of the smaller of the merging parties were between $1 billion
and $2 billion (the "Chicago-Area Mergers"); (ii) selected mergers involving
banks or bank holding companies headquartered in Iowa, Illinois, Indiana,
Minnesota, Ohio or Wisconsin announced between January 1, 1992 and July 29, 1994
in which the total assets of the smaller of the merging parties were between $1
billion and $5 billion (the "Midwestern Mergers"); and (iii) selected mergers
involving banks or bank holding companies headquartered anywhere in the United
States announced between January 1, 1992 and July 29, 1994 in which the total
assets of the smaller of the merging parties were between $1 billion and $5
billion (the "National Mergers"). Specifically, DLJ reviewed the mergers
involving the following pairs of institutions: the Chicago-Area Mergers
consisted of Harris Bankcorp, Inc./Suburban Bancorp, Inc., First Chicago
Corporation/Lake Shore Bancorp., Inc., Banc One Corporation/First Illinois
Corp., and NBD Bancorp, Inc./FNW Bancorp, Inc.; the Midwestern Mergers consisted
of Harris Bankcorp, Inc./Suburban Bancorp, Inc., First Chicago
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Corporation/Lake Share Bancorp., Inc., First Bank System, Inc./Boulevard
Bancorp, Marshall & Ilsley Corporation/Valley Bancorp, National City
Corporation/Ohio Bancorp, Norwest Corporation/Lincoln Financial Corp., and First
Bank System, Inc./Bank Shares Inc.; and the National Mergers consisted of 34
mergers involving banks or bank holding companies headquartered anywhere in the
United States in which the total assets of the smaller of the merging parties
were between $1 billion and $5 billion. For each transaction, DLJ calculated the
multiple of the offer value to the acquired company's: (i) EPS for the twelve
months preceding ("LTM"), fiscal year containing ("FY Est.") and fiscal year
following ("FY+1 Est.") the announcement date of the transaction; (ii) book
value per share; (iii) tangible book value per share; and (iv) market price per
share.
The calculations for the Chicago-Area Mergers yielded a range of multiples
of offer value to LTM EPS of 14.8 times to 18.5 times, with a mean of 17.0 times
and a median of 17.3 times; a range of multiples of offer value to FY Est. EPS
of 16.0 times to 20.1 times, with a mean of 18.1 times and a median of 18.2
times; a range of multiples of offer value to FY+1 Est. EPS of 14.8 times to
18.0 times, with a mean of 16.6 times and a median of 16.8 times; a range of
multiples of offer value to book value of 2.20 times to 2.75 times, with a mean
of 2.46 times and a median of 2.44 times; a range of multiples of offer value to
tangible book value of 2.48 times to 2.92 times, with a mean of 2.62 times and a
median of 2.56 times; and a range of multiples of offer value to market price of
1.41 times to 1.78 times, with a mean of 1.54 times and a median of 1.48 times.
The calculations for the Midwestern Mergers yielded a range of multiples of
offer value to LTM EPS of 10.9 times to 33.0 times, with a mean of 19.7 times
and a median of 18.4 times; a range of multiples of offer value to FY Est. EPS
of 11.3 times to 29.7 times, with a mean of 20.4 times and a median of 18.7
times; a range of multiples of offer value to FY+1 Est. EPS of 13.6 times to
22.3 times, with a mean of 17.1 times and a median of 16.2 times; a range of
multiples of offer value to book value of 1.10 times to 2.46 times, with a mean
of 1.91 times and a median of 2.05 times; a range of multiples of offer value to
tangible book value of 1.27 times to 2.62 times, with a mean of 2.05 times and a
median of 2.24 times; and a range of multiples of offer value to market price of
1.22 times to 1.78 times, with a mean of 1.44 times and a median of 1.39 times.
The calculations for the National Mergers yielded a range of multiples of
offer value to LTM EPS of 7.4 times to 67.0 times, with a mean of 22.3 times and
a median of 17.0 times; a range of multiples of offer value to FY Est. EPS of
11.3 times to 45.2 times, with a mean of 23.0 times and a median of 19.3 times;
a range of multiples of offer value to FY+1 Est. EPS of 10.3 times to 22.3
times, with a mean of 16.1 times and a median of 15.0 times; a range of
multiples of offer value to book value of 0.23 times to 3.12 times, with a mean
of 1.85 times and a median of 2.04 times; a range of multiples of offer value to
tangible book value of 0.99 times to 3.22 times, with a mean of 2.03 times and a
median of 2.16 times; and a range of multiples of offer value to market price of
0.64 times to 1.78 times, with a mean of 1.35 times and a median of 1.36 times.
DLJ compared these multiples with the corresponding multiples for the
Merger, valuing the shares of Firstar Common Stock that would be received
pursuant to the Merger Agreements at $26.75 (the "Announced Nominal Dollar
Value") and $22.40 (the "Walkaway Value") per share of First Colonial Common
Stock. In calculating the multiples for the Merger, DLJ used First Colonial's
EPS for the twelve months ended June 30, 1994, estimated EPS for the year ending
December 31, 1994, estimated EPS for the year ending December 31, 1995, book
value per share and tangible book value per share as of June 30, 1994, and the
closing price per share of First Colonial Class A Common Stock on December 31,
1993. DLJ calculated that the Announced Nominal Dollar Value represented
multiples of First Colonial's LTM EPS, 1994 estimated EPS, 1995 estimated EPS,
book value per share, tangible book value per share and market price per share
of 22.7 times, 18.4 times, 16.3 times, 1.90 times, 2.59 times and 1.41 times
respectively. DLJ calculated that the Walkaway Value represented multiples of
First Colonial's LTM EPS, 1994 estimated EPS, 1995 estimated EPS, book value per
share, tangible book value per share and market price per share of 19.0 times,
15.5 times, 13.7 times, 1.59 times, 2.17 times and 1.18 times, respectively.
No company or transaction used in the above analyses as a comparison is
identical to First Colonial, Firstar or the Merger. Accordingly, an analysis of
the results of the foregoing is not mathematical; rather, it involves complex
considerations and judgments concerning differences in financial and operating
characteris-
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tics of the companies and other facts that could affect the public trading value
of the companies to which they are being compared.
Pro Forma Merger Analysis. In the course of discussions preceding
execution of the Merger Agreements, Firstar informed DLJ that, with various cost
savings and revenue enhancements that it believed could be obtained as a result
of the Merger, Firstar expected the transaction to be modestly dilutive to EPS
in the first year following the Effective Time and slightly accretive in the
second. Firstar also informed DLJ that it anticipated the transaction would
initially be modestly dilutive to Firstar's book value and tangible book value
per share. DLJ performed certain calculations to confirm Firstar's statements
regarding the anticipated effect of the Merger on Firstar's EPS, book value per
share and tangible book value per share.
DLJ also analyzed certain additional pro forma effects of the Merger. DLJ's
analysis showed that holders of First Colonial Common Class A Common Stock would
experience an increase in dividend income of 54.5%, based on First Colonial's
and Firstar's current dividend payments as of July 29, 1994, and that the shares
of Firstar Common Stock issued in the Merger would represent 10.8% of the pro
forma total number of outstanding shares of Firstar Common Stock.
In connection with its written opinion dated as of the date of the mailing
of this Proxy Statement-Prospectus, DLJ performed procedures to update certain
of its analyses and reviewed the assumptions on which such analyses were based
and the factors considered in connection therewith. Among other things, DLJ (i)
compared the market price performance of Firstar Common Stock from July 29, 1994
to December 2, 1994 with the market price performance of other bank stocks over
the same period; (ii) reviewed the principal financial terms of mergers
announced between July 31, 1994 and December 2, 1994 in which the total assets
of the smaller of the merging parties were between $1 billion and $5 billion
(the "Post-Announcement Mergers"); and (iii) updated its discounted cash flow
analysis based on revised projections provided by management of First Colonial.
DLJ noted that the $26.375 market price of Firstar Common Stock as of
December 2, 1994 represented a 23.8% decline from the $34.625 market price as of
July 29, 1994, and that the value of the shares of Firstar Common Stock that
would be received pursuant to the Merger Agreements had correspondingly declined
from $26.75 to $20.37 (the "December 2 Value"). DLJ further noted that the
weighted average price of the group of bank stocks specified in the Merger
Agreements to determine the second condition of First Colonial's termination
right had declined by approximately 15% over the same period.
DLJ calculated that the December 2 Value represented a multiple of 15.9
times First Colonial's EPS for the twelve months ended September 30, 1994, 14.5
times First Colonial's 1994 EPS as estimated by management, 13.0 times First
Colonial's 1995 EPS as estimated by management, 1.44 times First Colonial's
September 30, 1994 book value per share, and 1.98 times First Colonial's
September 30, 1994 tangible book value per share. DLJ compared these multiples
with the corresponding multiples for the Post-Announcement Mergers. The
calculations for the Post-Announcement Mergers yielded a range of multiples of
offer value to LTM EPS of 14.0 times to 53.8 times, with a mean of 17.2 times
and a median of 15.9 times; a range of multiples of offer value to FY Est. EPS
of 14.1 times to 19.8 times, with a mean of 16.9 times and a median of 16.9
times; a range of multiples of offer value to FY+1 Est. EPS of 12.4 times to
16.4 times, with a mean of 14.4 times and a median of 14.4 times; a range of
multiples of offer value to book value of 1.12 times to 2.12 times, with a mean
of 1.83 times and a median of 2.03 times; and a range of multiples of offer
value to tangible book value of 1.27 times to 2.53 times, with a mean of 2.03
times and a median of 2.17 times.
DLJ also updated its discounted cash flow analysis based on revised
projections provided by management and revised terminal multiples of 1999
earnings based on trading multiples of other bank stocks as of December 2, 1994.
The dividends streams and terminal value were discounted to present values as of
December 31, 1994 using discount rates of 12.75% to 13.75%, which reflect
revised assumptions regarding required rates of return of holders and
prospective buyers of First Colonial Common Stock in light of the increase in
interest rates that had occured after July 31, 1994. The range of present values
per fully diluted share of First Colonial Common Stock resulting from this
analysis was $13.98 to $17.00.
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Although the summary set forth above does not purport to be a complete
description of the analyses performed by DLJ, the material analyses performed by
DLJ in rendering its opinion have been summarized above. However, the
preparation of a fairness opinion is not necessarily susceptible to partial
analysis or summary description. DLJ believes that its analyses and the summary
set forth above must be considered as a whole and that selecting portions of its
analyses, without considering all factors and analyses, would create an
incomplete view of the process underlying the analyses by which DLJ reached its
opinions. In addition, DLJ may have given various analyses more or less weight
than other analyses, but no analysis was given materially more weight than any
other analysis. Also, DLJ may have deemed various assumptions more or less
probable than other assumptions, so that the ranges of valuations resulting from
any particular analysis described above should not be taken to be DLJ's view of
the actual value of First Colonial or the combined company.
In performing its analyses, DLJ made numerous assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond the control of First Colonial and Firstar. The
analyses performed by DLJ are not necessarily indicative of actual value or
actual future results, which may be significantly more or less favorable than
suggested by such analyses. Such analyses were prepared solely as part of DLJ's
analysis of the fairness of the Exchange Ratio, from a financial point of view,
to the holders of First Colonial Common Stock. The analyses do not purport to be
appraisals or to reflect the prices at which a company might actually be sold or
the prices at which any securities may trade at the present time or at any time
in the future. DLJ used in its analyses various projections of future
performance prepared by the managements of First Colonial and Firstar. The
projections are based on numerous variables and assumptions which are inherently
unpredictable and must be considered not certain of occurrence as projected.
Accordingly, actual results could vary significantly from those assumed in the
projections and any related analyses. DLJ's opinion does not address the
relative merits of the Merger as compared to any alternative business strategies
that might exist for First Colonial or the effect of any other business
combination in which First Colonial might engage. In addition, as described
above, DLJ's opinion to the First Colonial Board of Directors was one of many
factors taken into consideration by the First Colonial Board of Directors in
making its determination to approve the Merger Agreements.
Pursuant to the terms of a letter agreement dated February 25, 1994 (the
"Engagement Letter"), for DLJ's services in connection with the Merger,
including the rendering of its opinions, First Colonial (i) has paid DLJ
$425,000 and (ii) has agreed to pay DLJ an amount equal to 0.57% of the
aggregate amount of consideration received by First Colonial and/or its
stockholders (treating any shares of First Colonial issuable upon exercise of
options, warrants or other rights of conversion as outstanding), plus the amount
of any preferred stock redeemed or remaining outstanding in connection with the
Merger, including the net value of any assets not sold by First Colonial, less
the amount paid by First Colonial pursuant to clause (i) above. Because the
major portion of the aggregate consideration to be received by the holders of
First Colonial Common Stock is to be paid in the form of securities, the
Engagement Letter provides that the value of such securities, for purposes of
calculating the fee payable to DLJ, will be determined by the last sale price
for such securities on the last trading day thereof prior to consummation of the
Merger. Such fee shall be payable in cash upon consummation of the Merger. First
Colonial has also agreed under the Engagement Letter to reimburse DLJ for all
reasonable out-of-pocket expenses, including reasonable fees and expenses of
legal counsel, and has agreed to indemnify DLJ against certain expenses and
liabilities incurred in connection with its engagement, including liabilities
under federal securities law. The DLJ fee is an obligation of First Colonial,
which is payable at closing, and will have no impact on the consideration to be
received by the holders of First Colonial Common Stock.
DLJ may, in the ordinary course of its business, actively trade securities
of First Colonial and Firstar for its own account or for the accounts of
customers and thus may hold long or short positions in such securities at any
time.
DLJ has from time to time in the past been, and may in the future be,
considered or employed by First Colonial or Firstar to provide investment
banking and securities brokerage services. These relationships are considered by
First Colonial and Firstar, respectively, to be in the ordinary course of
business and to be immaterial to DLJ's engagement relative to the Merger.
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TERMS OF THE MERGER
At the Effective Time (as defined below), First Colonial will merge with
and into FCW, which will be the surviving corporation. The Articles of
Incorporation and By-laws of FCW in effect at the Effective Time will govern the
surviving corporation until amended or repealed in accordance with applicable
law. At the Effective Time, each outstanding share of First Colonial Common
Stock will be converted into the right to receive 0.7725 of a share of Firstar
Common Stock, subject in the case of First Colonial Class B Common Stock to
statutory dissenters' rights. See "Rights of Dissenting Stockholders." At the
Effective Time, each outstanding share of First Colonial Series C Preference
Stock will be converted into the right to receive one share of Firstar Preferred
Stock with the result that, pursuant to the Deposit Agreement, each outstanding
Depositary Share will thereafter, with no action on the part of the holder
thereof, represent ownership of one-twentieth of a share of Firstar Preferred
Stock.
The Reorganization Agreement provides that, if between the date of the
Reorganization Agreement and the Effective Time, Firstar declares a stock
dividend or distribution upon or subdivides, splits up, reclassifies or combines
its shares of Firstar Common Stock or declares a dividend or makes a
distribution on Firstar Common Stock of any security convertible into Firstar
Common Stock, appropriate adjustment or adjustments will be made in the Exchange
Ratio.
No fractional shares of Firstar Common Stock will be issued in the Merger.
Instead, Firstar will pay to each holder of First Colonial Common Stock who
would otherwise be entitled to a fractional share an amount of cash equal to the
fraction of a share of Firstar Common Stock to which the First Colonial
stockholder would otherwise be entitled multiplied by the closing price per
share of Firstar Common Stock at the Effective Time on the NYSE. The shares of
Firstar Common Stock and shares of common stock of FCW issued and outstanding
immediately prior to the Effective Time will remain issued and outstanding.
The terms of the Merger were determined on the basis of arm's length
negotiations. The conversion ratios applicable to First Colonial Common Stock
and First Colonial Series C Preference Stock were determined by First Colonial,
after consideration of the advice and recommendations of its financial advisor,
and by Firstar. See "Opinion of Financial Advisor."
FIRSTAR PREFERRED STOCK
At the Effective Time, each outstanding share of First Colonial Series C
Preference Stock will be converted into the right to receive one share of
Firstar Preferred Stock. The rights, preferences and privileges of the Firstar
Preferred Stock will be substantially the same as those of the First Colonial
Series C Preference Stock, and the Firstar Preferred Stock will be limited to
the estimated 38,775 shares to be exchanged in connection with the Merger. No
other shares of any series of preferred stock of Firstar are currently
outstanding, although Firstar has reserved 600,000 shares of Series C Preferred
Stock for issuance upon the exercise of the Preferred Share Purchase Rights. See
"COMPARATIVE RIGHTS OF STOCKHOLDERS -- Preferred Stock" and "-- Preferred Share
Purchase Rights." Upon issuance in accordance with the Merger Agreements, the
Firstar Preferred Stock will be fully paid and nonassessable, except with
respect to assessability as provided in the Wisconsin Business Corporation Law.
See "COMPARATIVE RIGHTS OF STOCKHOLDERS -- Assessability; Potential Liability
for Wages." Holders of Firstar Preferred Stock will have no preemptive rights.
The following is a brief description of the terms of the Firstar Preferred
Stock (which will be represented by the Depositary Shares after the Effective
Time) and, although it encompasses all of the material terms of the Firstar
Preferred Stock, it does not purport to be complete and is qualified in its
entirety by the terms of the Firstar Preferred Stock. Such terms are filed as an
exhibit to the Registration Statement of which this Proxy Statement-Prospectus
is a part.
Rank. Each share of the Firstar Preferred Stock will rank on a parity with
each other share of preferred stock, $1.00 par value, of Firstar, irrespective
of series, with respect to dividends and distributions upon liquidation,
dissolution or winding up of Firstar in the respective amounts determined for
such shares by the Board of Directors of Firstar. Firstar's Board of Directors
may issue additional series of preferred stock in the
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future without shareholder action. See "COMPARATIVE RIGHTS OF STOCKHOLDERS --
Preferred Stock."
Dividends. Holders of the Firstar Preferred Stock will be entitled to
receive, when and as declared by the Board of Directors of Firstar, out of
assets of Firstar legally available for such payment, cash dividends at the
annual amount of $35 per share (equivalent to $1.75 per Depositary Share).
Dividends will be payable quarterly in arrears on March 31, June 30, September
30 and December 31 of each year, commencing at the end of the first calendar
quarter following consummation of the Merger. The initial dividend to be paid by
Firstar will be $8.75 (equivalent to approximately $.44 per Depositary Share)
and will be payable at the end of the first calendar quarter following
consummation of the Merger. Dividends on the Firstar Preferred Stock will be
cumulative from the Effective Time. Each dividend will be payable to holders of
record as they appear on the stock register of Firstar on the record date fixed
by the Board of Directors of Firstar.
No full dividends shall be declared or paid or set apart for payment on any
class or series of capital stock of Firstar ranking, as to dividends, on a
parity with the Firstar Preferred Stock for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the Firstar
Preferred Stock for all dividend payment periods terminating on or prior to the
date of payment of such dividends. If dividends on the Firstar Preferred Stock
and on any other class or series of stock ranking on a parity as to dividends
with the Firstar Preferred Stock are in arrears, in making any dividend payment
on account of such arrears Firstar shall make payments ratably upon all
outstanding shares of the Firstar Preferred Stock and shares of such other class
or series of stock of Firstar in proportion to the respective amounts of
dividends in arrears on the Firstar Preferred Stock and on such other class or
series of stock to the date of such dividend payment. Holders of shares of the
Firstar Preferred Stock shall not be entitled to any dividend, whether payable
in cash, property or stock, in excess of full cumulative dividends as set forth
above.
Unless full cumulative dividends on all outstanding shares of Firstar
Preferred Stock shall have been paid or declared and set aside for payment for
all past dividend payment periods, no dividend (other than a dividend in Firstar
Common Stock or in any other class or series of stock ranking junior to the
Firstar Preferred Stock as to dividends and upon liquidation, and other than as
described in the preceding paragraph) shall be declared or made upon the Firstar
Common Stock or upon any other stock ranking junior to or on a parity with the
Firstar Preferred Stock as to dividends or upon liquidation, nor shall any
Firstar Common Stock or any other stock of Firstar ranking junior to or on a
parity with the Firstar Preferred Stock as to dividends or upon liquidation, be
redeemed, purchased or otherwise acquired for any consideration by Firstar
(except by conversion into or exchange for stock of Firstar ranking junior to
the Firstar Preferred Stock as to dividends and upon liquidation). No interest,
or sum of money in lieu of interest, shall be payable in respect of any dividend
payment or payments on the Firstar Preferred Stock which may be in arrears.
Conversion Rights. Shares of Firstar Preferred Stock will be convertible
at any time at the option of the holder into shares of Firstar Common Stock. The
number of shares of Firstar Common Stock issuable upon conversion of each share
of Firstar Preferred Stock will be equal to $500 divided by a conversion price
of $23.30 per share of Firstar Common Stock (equivalent to a conversion rate of
1.073 shares of Firstar Common Stock per Depositary Share), subject to
adjustment as described below (except that a share of Firstar Preferred Stock
that has been called for redemption will be convertible up to and including but
not after the close of business on the date fixed for redemption, unless Firstar
defaults in the payment of the redemption price). As provided by the terms of
the First Colonial Series C Preference Stock (which are virtually identical to
the terms of the Firstar Preferred Stock set forth in the second paragraph
below), the conversion price of $23.30 per share of Firstar Preferred Stock was
calculated based on the number of shares of Firstar Common Stock a holder of
First Colonial Series C Preference Stock would have received for each such share
as a result of the Merger (21.46 shares) if such holder had converted, at the
current conversion price of $18.00 per share, his or her shares of First
Colonial Series C Preference Stock into shares of First Colonial Class A Common
Stock prior to the Merger.
The conversion price is subject to adjustment upon certain events,
including the declaration and payment by Firstar of a dividend on shares of
Firstar Common Stock in shares of its capital stock; subdivisions, splits,
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combinations or reclassifications of outstanding shares of Firstar Common Stock;
the issuance to holders of Firstar Common Stock generally of rights or warrants
to subscribe for Firstar Common Stock at less than the then current market
price; or the distribution to holders of the Firstar Common Stock of evidences
of indebtedness, assets (excluding dividends or other distributions paid out of
earned surplus), or rights or warrants to subscribe for securities of Firstar
other than those mentioned above.
In the case of (i) any consolidation or merger to which Firstar is a party
(other than one in which Firstar is the continuing corporation) or (ii) a sale
or transfer of all or substantially all of the assets of Firstar, there will be
no adjustment of the conversion price, but the holder of each share of Firstar
Preferred Stock then outstanding will have the right thereafter to convert such
share into the kind and amount of securities, cash or other property that the
holder would have been entitled to receive immediately after such consolidation,
merger, sale or transfer if such share had been converted into Firstar Common
Stock immediately before the effective date of such consolidation, merger, sale
or transfer.
Upon conversion, no adjustments or payments will be made for accrued
dividends, and therefore, shares of Firstar Preferred Stock surrendered for
conversion after the record date next preceding a dividend payment date for the
Firstar Preferred Stock and before the dividend payment date must be accompanied
by payment of an amount equal to the dividend thereon which is to be paid on
such dividend payment date (unless the shares of Firstar Preferred Stock
surrendered for conversion have been called for redemption prior to such
dividend payment date).
No adjustment of the conversion price will be required to be made in any
case unless the adjustment amounts to one percent or more of the conversion
price, but any adjustment not made by reason of this limitation will be required
to be carried forward cumulatively and taken into account in any subsequent
adjustments.
If at any time Firstar makes a distribution of property to its shareholders
which would be taxable to such shareholders as a dividend for federal income tax
purposes (e.g., distributions of evidences of indebtedness or assets of Firstar,
but generally not stock dividends or rights to subscribe to capital stock) and,
pursuant to the antidilution provisions described above, the conversion price of
the Firstar Preferred Stock is reduced, such reduction may be deemed to be the
receipt of taxable income by holders of the Firstar Preferred Stock.
Fractional shares of Firstar Common Stock will not be delivered upon
conversion. Instead, a cash payment will be made in respect of such fractional
interest, based on the then current market price of the Firstar Common Stock.
A holder may effect the conversion of any shares of Firstar Preferred Stock
or any whole number of Depositary Shares (whether or not evenly divisible by 20)
by (i) delivering the certificate or certificates evidencing shares of Firstar
Preferred Stock or the depositary receipts evidencing the Depositary Shares (the
"Depositary Receipts"), as the case may be, to the transfer agent for the
Firstar Preferred Stock or at such other place as the Board of Directors of
Firstar designates and (ii) giving written notice to Firstar that he or she
elects to convert the same and stating in writing therein the name or names
(with addresses) in which the certificate or certificates for Firstar Common
Stock shall be issued. Firstar will, as soon as practicable thereafter, issue at
said place or office to such holder a certificate for the appropriate number of
full shares of Firstar Common Stock together with cash in lieu of any fraction
of a share.
Treasury Regulations issued under Section 305 of the Code treat as taxable
events certain constructive distributions of stock or stock rights. An
adjustment in the conversion price of the Firstar Preferred Stock to reflect
taxable distributions on Firstar Common Stock (but not stock splits or
nontaxable stock dividends) may be treated as a constructive distribution of
stock that is taxable as a dividend to the extent of the current and accumulated
earnings and profits of Firstar.
Redemption. Shares of Firstar Preferred Stock will not be redeemable prior
to June 30, 1997. Subject to obtaining any requisite prior approval of the
Federal Reserve Board, the shares of Firstar Preferred Stock will be redeemable
at the option of Firstar, in whole or in part, at any time or from time to time,
on and after June 30, 1997, on not less than 30 nor more than 60 days' notice by
mail, at a redemption price of $500 per share (equivalent to $25 per Depositary
Share) plus accrued and unpaid dividends to the redemption date.
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The Firstar Preferred Stock will not be subject to any sinking fund or
other obligation of Firstar to redeem or retire the Firstar Preferred Stock.
At its election, Firstar, before the redemption date, may deposit the funds
for such redemption, in trust, with a designated depository and authorize such
depository to complete the redemption notice, and after such deposit, all rights
of the holders of Firstar Preferred Stock so called for redemption shall cease,
except the right to receive the redemption price. However, as and to the extent
that Firstar or such depository is required or permitted under the abandoned
property laws of any jurisdiction to escheat any redemption funds held for the
benefit of any holder, Firstar and said depository shall be absolved of any
further liability or obligation to such holder to the full extent provided by
law.
If a notice of redemption has been given, from and after the redemption
date for the shares of Firstar Preferred Stock called for redemption (unless
default shall be made by Firstar in providing money for the payment of the
redemption price of the shares so called for redemption), dividends on the
Firstar Preferred Stock so called for redemption shall cease to accrue and such
shares shall no longer be deemed to be outstanding, and all rights of the
holders thereof as shareholders of Firstar (except the right to receive the
redemption price) shall cease. Upon surrender in accordance with such notice of
the certificates representing any shares so redeemed (properly endorsed or
assigned for transfer, if the Board of Directors of Firstar shall so require and
the notice shall so state), the redemption price set forth above shall be paid
out of funds provided by Firstar. If fewer than all of the shares represented by
any such certificates are redeemed, a new certificate shall be issued
representing the unredeemed shares without cost to the holder thereof.
Liquidation Rights. In the event of any voluntary or involuntary
dissolution, liquidation, or winding up of Firstar, the holders of the Firstar
Preferred Stock will be entitled to receive out of the assets of Firstar
available for distribution to its shareholders, before any payment or
distribution is made to holders of Firstar Common Stock or any other class or
series of stock ranking junior to the Firstar Preferred Stock as to
distributions upon liquidation, dissolution or winding up, a liquidating
distribution of $500 per share (equivalent to $25 per Depositary Share) plus
accrued and unpaid dividends. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of the Firstar
Preferred Stock will have no right or claim to any of the remaining assets of
Firstar. If, upon any voluntary or involuntary dissolution, liquidation, or
winding up of Firstar, the amounts payable with respect to the Firstar Preferred
Stock and any other shares of stock of Firstar ranking as to any such
distribution on a parity with the Firstar Preferred Stock are not paid in full,
the holders of the Firstar Preferred Stock and of such other shares will share
ratably in any such distribution of assets of Firstar in proportion to the full
respective distributable amounts to which they are entitled. Neither the sale of
all or substantially all the property or business of Firstar, nor the merger or
consolidation of Firstar into or with any other corporation, shall be deemed to
be a dissolution, liquidation, or winding up, voluntary or involuntary, of
Firstar.
Voting. Except as otherwise expressly required by applicable law or as
described below, holders of Firstar Preferred Stock or Depositary Shares will
not be entitled to vote on any matter, including but not limited to any merger,
consolidation or transfer of assets, and will not be entitled to notice of any
meeting of shareholders of Firstar. Whenever the approval or other action of
holders of the Firstar Preferred Stock is required, each share of the Firstar
Preferred Stock will be entitled to one vote. Holders of Depositary Shares will
be entitled to vote the shares of Firstar Preferred Stock which their Depositary
Shares represent. See "Depositary Shares -- Voting."
The affirmative vote of the holders of a majority of the outstanding shares
of Firstar Preferred Stock is required to (i) amend the Restated Articles of
Incorporation of Firstar to create or authorize, or increase the authorized
number of, any shares of any class or series of stock ranking prior to the
Firstar Preferred Stock in respect of dividends or distribution of assets on
liquidation or dissolution of Firstar or otherwise alter or abolish the
liquidation preferences or any other preferential right of the Firstar Preferred
Stock, (ii) alter or abolish the conversion rights of the Firstar Preferred
Stock, (iii) reduce the redemption price or otherwise alter any redemption
rights of the Firstar Preferred Stock, (iv) alter or abolish any right of the
Firstar Preferred Stock to receive dividends, or (v) exclude or limit the voting
rights as to these matters.
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If at any time Firstar falls in arrears in the payment of dividends on the
Firstar Preferred Stock in an aggregate amount at least equal to the full
accrued dividends for six quarterly dividend periods, the number of directors of
Firstar will be increased by two and the holders of the Firstar Preferred Stock,
voting separately as a single class, will have the right to elect two directors
to fill the positions so created, and such right will continue until all
dividends in arrears shall have been paid.
Under regulations adopted by the Federal Reserve Board, if the holders of
the Firstar Preferred Stock become entitled to vote for the election of
directors because dividends on the Firstar Preferred Stock are in arrears, the
series may then be deemed a "class of voting securities", and a holder of, or a
person seeking to acquire, 25% or more of the shares of Firstar Preferred Stock
(or a holder of 5% or more if such holder otherwise exercises a "controlling
influence" over Firstar) may then be required to seek the approval of the
Federal Reserve Board to become a bank holding company under the Bank Holding
Company Act of 1956, as amended. If such holder fails to receive approval, such
holder may be required to sell some or all of the shares of Firstar Preferred
Stock. In addition, at such time as the Firstar Preferred Stock is deemed a
class of voting securities, any other bank holding company may be required to
obtain the approval of the Federal Reserve Board to retain or acquire 5% or more
of the Firstar Preferred Stock, and any person other than a bank holding company
may be required by the Change in Bank Control Act to obtain the prior approval
of the Federal Reserve to acquire 10% or more of the Firstar Preferred Stock.
Transfer Agent. The transfer agent and registrar for the Firstar Preferred
Stock will be Firstar Trust Company, Milwaukee, Wisconsin.
DEPOSITARY SHARES
Each Depositary Share currently represents one-twentieth of one share of
First Colonial Series C Preference Stock deposited under the Deposit Agreement.
Subject to the terms of the Deposit Agreement, each owner of a Depositary Share
is currently entitled, proportionately, to all the rights and preferences of the
First Colonial Series C Preference Stock represented thereby (including
dividend, conversion, liquidation, redemption and voting rights). The Deposit
Agreement provides that in the event of a merger affecting First Colonial, the
Depositary Shares will thereafter, at the direction of First Colonial or its
successors, represent the same proportionate interest in any stock that is
received in exchange for or upon conversion of the underlying First Colonial
Series C Preference Stock. Accordingly, upon conversion of the First Colonial
Series C Preference Stock into Firstar Preferred Stock in the Merger, each
Depositary Share will, at the direction of FCW, thereafter represent
one-twentieth of one share of Firstar Preferred Stock. At the Effective Time, it
is anticipated that First Chicago Trust Company of New York will resign as
Depositary and will be succeeded by Firstar Trust Company. Simultaneous with the
appointment of Firstar Trust Company as successor Depositary, Firstar will
become a signatory to the Deposit Agreement and the Deposit Agreement will be
amended and restated to reflect the conversion of the First Colonial Series C
Preference Stock into Firstar Preferred Stock. Firstar Trust Company is a
subsidiary of Firstar and is the transfer agent and registrar for Firstar Common
Stock.
The Depositary Shares are evidenced by the Depositary Receipts issued
pursuant to the Deposit Agreement. Following consummation of the Merger, the
Depositary Receipts will remain outstanding and will thereafter, at the
direction of FCW, represent an interest in shares of Firstar Preferred Stock.
Holders of Depositary Receipts are not required to take any action in connection
with the Merger.
The following is a brief description of the terms of the Deposit Agreement
as such will be amended and restated to reflect, among other things, the
conversion of the First Colonial Series C Preference Stock into Firstar
Preferred Stock. Although the following discussion encompasses all of the
material terms of the Deposit Agreement, it does not purport to be complete and
is subject to and qualified in its entirety by reference to the Deposit
Agreement and form of Depositary Receipt, as such are proposed to be amended.
The Deposit Agreement and form of Depositary Receipt as proposed to be amended
and restated are filed as an exhibit to the Registration Statement of which this
Proxy Statement-Prospectus is a part.
Withdrawal of Stock. Upon surrender of the Depositary Receipts at the
office of the Depositary (unless the related Depositary Shares have previously
been called for redemption), the owner of the Depositary
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<PAGE> 42
Shares evidenced thereby is entitled to delivery at such office, to or upon his
order, of the number of whole shares of Firstar Preferred Stock and any money or
other property represented by such Depositary Shares. Owners of Depositary
Shares will be entitled to receive whole shares of Firstar Preferred Stock on
the basis of one share of Firstar Preferred Stock for each 20 Depositary Shares.
Fractional shares of Firstar Preferred Stock will not be delivered. If the
Depositary Receipts delivered by the holder evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the number of
whole shares of Firstar Preferred Stock to be withdrawn, the Depositary will
deliver to such holder at the same time a new Depositary Receipt evidencing such
excess number of Depositary Shares. Holders of shares of Firstar Preferred Stock
thus withdrawn, and any subsequent holders of those shares, will not thereafter
be entitled to deposit such shares under the Deposit Agreement or to receive
Depositary Shares therefor. Firstar does not expect that there will be any
public trading market for the Firstar Preferred Stock except as represented by
the Depositary Shares.
Dividends and Other Distributions. The Depositary will distribute all cash
dividends and other cash distributions received in respect of the Firstar
Preferred Stock to the record holders of Depositary Shares relating to such
Firstar Preferred Stock in proportion to the number of Depositary Shares owned
by such holders. The Depositary shall distribute only such amount, however, as
can be distributed without attributing to any holder of Depositary Shares a
fraction of one cent, and the Depositary shall be authorized to round up to the
next whole cent any fraction of one-half cent or greater and round down to the
last whole cent any fraction less than one-half cent.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
Firstar, adopt such method as it deems equitable and practical for purposes of
making such distribution, including selling such property and distributing the
net proceeds from such sale to such holders.
The amount distributed in any of the foregoing cases will be reduced by any
amounts required to be withheld by Firstar or the Depositary on account of
taxes.
Conversion of Firstar Preferred Stock. The Depositary Shares, as such, are
not convertible into Firstar Common Stock or any other securities or property of
Firstar. Nevertheless, Firstar has agreed, as a matter of convenience, to accept
delivery of Depositary Receipts for purposes of effecting conversion of the
Firstar Preferred Stock underlying the Depositary Shares evidenced by such
Depositary Receipts into Firstar Common Stock, utilizing the same procedures as
those provided for delivery of certificates for shares of Firstar Preferred
Stock to effect conversions in accordance with the Restated Articles of
Incorporation of Firstar. If the Depositary Shares evidenced by a Depositary
Receipt are to be converted in part only, a new Depositary Receipt or Receipts
will be issued for any Depositary Shares not to be converted. No fractional
shares of Firstar Common Stock will be issued upon conversion, but if such
conversion results in a fraction, an amount in respect thereof will be paid in
cash by Firstar. See "Firstar Preferred Stock -- Conversion Rights."
Redemption of Depositary Shares. The Depositary Shares will be redeemed
from the proceeds received by the Depositary resulting from the redemption, in
whole or in part, at Firstar's option but subject to the terms and conditions
applicable thereto, of Firstar Preferred Stock held by the Depositary (including
any accrued but unpaid dividends). The Depositary shall mail notice of
redemption not less than 30 and not more than 60 days prior to the date fixed
for redemption to the record holders of the Depositary Shares to be so redeemed
at their respective addresses appearing in the Depositary's books. The
redemption price per Depositary Share will be $25, which is equal to
one-twentieth of the redemption price per share of Firstar Preferred Stock.
Whenever Firstar redeems shares of Firstar Preferred Stock held by the
Depositary, the Depositary will redeem as of the same redemption date the number
of Depositary Shares representing shares of Firstar Preferred Stock so redeemed.
If less than all the Depositary Shares are to be redeemed, the Depositary Shares
to be redeemed will be selected by lot or pro rata (with adjustments to avoid
fractional shares) or in any other equitable manner determined by Firstar.
From and after the date fixed for redemption, the Depositary Shares so
called for redemption will no longer be deemed to be outstanding and all rights
of the holders of the Depositary Shares will cease, except the
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<PAGE> 43
right to receive the moneys payable upon such redemption and any money or other
property to which the holders of such Depositary Shares were entitled upon such
redemption upon surrender to the Depositary of the Depositary Receipts
evidencing such Depositary Shares.
Voting. Upon receipt of notice of any meeting at which the holders of the
Firstar Preferred Stock are entitled to vote, the Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Shares representing such Firstar Preferred Stock. Each record holder
of Depositary Shares on the record date (which will be the same date as the
record date for the Firstar Preferred Stock) will be entitled to instruct the
Depositary as to the exercise of the voting rights pertaining to the number of
shares of Firstar Preferred Stock underlying such holder's Depositary Shares.
The Depositary will endeavor, insofar as practicable, to vote the number of
shares of Firstar Preferred Stock underlying such Depositary Shares in
accordance with such instructions, and Firstar has agreed to take all action
which may be deemed necessary by the Depositary in order to enable the
Depositary to do so. The Depositary will abstain from voting shares of Firstar
Preferred Stock to the extent it does not receive specific instructions from the
holders of the Depositary Shares representing such Firstar Preferred Stock.
Amendment and Termination of the Deposit Agreement. The form of Depositary
Receipt evidencing the Depositary Shares and any provision of the Deposit
Agreement may at any time be amended by agreement between Firstar and the
Depositary. However, any amendment which imposes any fees, taxes or charges upon
holders of Depositary Shares (other than taxes and other governmental charges,
fees and other expenses payable by such holders as stated below under "Charges
of Depositary"), or which otherwise prejudices any substantial existing right of
holders of Depositary Shares, will not take effect as to outstanding Depositary
Shares until the expiration of 30 days after notice of such amendment has been
mailed to the record holders of outstanding Depositary Shares. In no event may
any amendment impair the right of any owner of any Depositary Shares, subject to
the conditions specified in the Deposit Agreement, to surrender any Depositary
Receipt or Receipts evidencing such Depositary Shares with instructions to the
Depositary to deliver to such holder the Firstar Preferred Stock and any money
or other property represented thereby, except in order to comply with mandatory
provisions of applicable law.
Whenever directed by Firstar, the Depositary will terminate the Deposit
Agreement by mailing notice of such termination to the owners of all outstanding
Depositary Shares at least 30 days prior to the date of termination. The
Depositary may likewise terminate the Deposit Agreement at any time 45 days
after the Depositary has delivered to Firstar a written notice of its election
to resign if a successor depositary has not theretofore been appointed and
accepted its appointment. If any Depositary Shares remain outstanding after the
date of termination, the Depositary thereafter will discontinue the transfer of
Depositary Shares, will suspend the distribution of dividends to the owners
thereof, and will not give any further notices (other than notice of such
termination) or perform any further acts under the Deposit Agreement except as
provided below and except that the Depositary will continue (i) to collect
dividends on the Firstar Preferred Stock and any other distributions with
respect thereto and (ii) to deliver Firstar Preferred Stock together with such
dividends and distributions and the net proceeds of any sales of rights,
preferences, privileges or other property, without liability for interest, in
exchange for Depositary Shares surrendered. At any time after the expiration of
two years from the date of termination, the Depositary may sell the shares of
Firstar Preferred Stock then held by it at public or private sales, at such
place or places and upon such terms as it deems proper and may thereafter hold
the net proceeds of any such sale, together with any money and other property
then held by it, without liability for interest, for the pro rata benefit of the
owners of Depositary Shares which have not been surrendered. In the event the
Deposit Agreement is terminated, Firstar will use its best efforts to list or
designate the Firstar Preferred Stock for quotation on a national securities
exchange or the Nasdaq National Market, as the case may be. Firstar does not
intend to terminate the Deposit Agreement or to permit the resignation of the
Depositary without appointing a successor depositary.
Charges of Depositary. Firstar will pay all transfer and other taxes and
governmental charges arising solely from the existence of the depositary
arrangements. Firstar will pay charges of the Depositary in connection with the
initial deposit of the Firstar Preferred Stock as a result of the Merger and any
redemption of the Firstar Preferred Stock. Holders of Depositary Shares will pay
transfer and other taxes and
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<PAGE> 44
governmental charges and such other charges as are expressly provided in the
Deposit Agreement to be for their accounts.
Resignation and Removal of Depositary. The Depositary may resign at any
time by delivering to Firstar notice of its election to do so, and Firstar may
at any time remove the Depositary, any such resignation or removal to take
effect upon the appointment of a successor Depositary and its acceptance of such
appointment. Such successor Depositary must be appointed within 45 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50 million.
Registrar. The Depositary will be the registrar for the Depositary Shares.
Federal Income Taxation. Owners of Depositary Shares will be treated for
federal income tax purposes as if they were owners of the Firstar Preferred
Stock represented by such Depositary Shares and, accordingly, must take into
account for federal income tax purposes income, gain, or loss to which they
would be entitled if they were holders of such Firstar Preferred Stock. In
addition, (i) no gain or loss will be recognized for federal income tax purposes
upon the withdrawal of Firstar Preferred Stock in exchange for the Depositary
Shares as provided in the Deposit Agreement, (ii) the tax basis of each share of
Firstar Preferred Stock to an exchanging owner of Depositary Shares will, upon
such exchange, be the same as the aggregate tax basis of the Depositary Shares
exchanged therefor, and (iii) the holding period for shares of the Firstar
Preferred Stock in the hands of an exchanging owner of Depositary Shares who
holds such Depositary Shares at the time of the exchange thereof for Firstar
Preferred Stock will include the period during which such person owned such
Depositary Shares.
General. The Depositary will forward to the holders of Depositary Shares
all reports and communications from Firstar which are delivered to the
Depositary and which Firstar is required to furnish to the holders of the
Firstar Preferred Stock.
Neither the Depositary nor Firstar will be liable if the Depositary is
prevented or delayed by law or any circumstances beyond its control in
performing its obligations under the Deposit Agreement. The obligations of
Firstar and the Depositary under the Deposit Agreement are limited to
performance in good faith of their duties thereunder and they will not be
obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or Firstar Preferred Stock unless satisfactory indemnity is
furnished. They may rely upon written advice of counsel or accountants, or
information provided by persons presenting Firstar Preferred Stock for deposit,
holders of Depositary Shares or other persons believed to be competent and on
documents believed to be genuine.
Firstar has applied to have the Depositary Shares quoted on the Nasdaq
National Market under the symbol "FSRPZ."
OPTIONS
Options to purchase First Colonial Class A Common Stock ("First Colonial
Stock Options") are outstanding under several different stock option plans of
First Colonial or its subsidiaries (the "First Colonial Stock Option Plans"). A
total of 1,456,295 First Colonial Stock Options were outstanding as of December
5, 1994 to First Colonial's directors, officers and other key individuals. Upon
consummation of the Merger, each First Colonial Stock Option that is outstanding
immediately prior to the Effective Time will automatically become an option to
purchase the number of shares of Firstar Common Stock (a "Firstar Stock Option")
determined by multiplying the number of shares of First Colonial Class A Common
Stock subject to the First Colonial Stock Option by 0.7725, the Merger
conversion ratio. The exercise price per share of Firstar Common Stock will be
equal to the exercise price per share of First Colonial Class A Common Stock
under the First Colonial Stock Option divided by 0.7725. Pursuant to the terms
of the First Colonial Stock Option Plans, the First Colonial Stock Options, to
the extent not already exercisable, become immediately exercisable upon a
"change in control" (which includes a transaction such as the Merger).
Therefore, the Firstar Stock Options that replace the First Colonial Stock
Options upon consummation of the Merger will be immediately exercisable. Each
Firstar Stock Option will otherwise be exercisable on the same terms and
conditions as applied to the First Colonial Stock Options.
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ASSIGNMENT AND ASSUMPTION AGREEMENTS
The First Colonial Subordinated Notes were issued in tandem with the MSP
Agreements. The obligors under the MSP Agreements ("Obligors") have agreed to
purchase shares of First Colonial Class B Common Stock at a price within a range
of $3.40 to $4.60 per share. The Obligors must, at any time prior to October 17,
1996, purchase First Colonial Class B Common Stock equal to the amount of notes
they hold. The First Colonial Subordinated Notes are redeemable only to the
extent of First Colonial Class B Common Stock purchased. All current holders of
First Colonial Subordinated Notes and Obligors under the MSP Agreements are
executive officers or directors of First Colonial or its subsidiaries.
As of August 8, 1994, Firstar entered into Assignment and Assumption
Agreements with each of the Obligors (the "Assignment and Assumption
Agreements"). Under the Assignment and Assumption Agreements, as of the
Effective Time, each of the MSP Agreements will represent the obligation to
purchase shares of Firstar Common Stock, and Firstar will assume the obligations
of First Colonial under the First Colonial Subordinated Notes.
Set forth below are the names of the executive officers and directors of
First Colonial who are Obligors, the aggregate principal amount of their
respective First Colonial Subordinated Notes and the number of shares of First
Colonial Class B Common Stock each Obligor has agreed to purchase:
<TABLE>
<CAPTION>
SHARES OF FIRST COLONIAL
PRINCIPAL AMOUNT CLASS B COMMON STOCK
---------------- ------------------------
<S> <C> <C>
C. Paul Johnson........................................ $486,370 105,733
Robert F. Sherman...................................... 249,190 54,172
Robert J. Leander...................................... 116,563 25,340
John F. Burns*......................................... 124,592 27,085
Thomas J. Wigdahl...................................... 124,592 27,085
Ronald J. Aronberg..................................... 124,592 27,085
Alan G. Schwartz....................................... 124,592 27,085
Wallace E. Zook........................................ 118,904 25,849
John A. Benson......................................... 30,604 6,653
</TABLE>
- ---------------
* Director Emeritus
EFFECTIVE TIME OF THE MERGER
Subject to satisfaction or waiver of all other conditions to the Merger,
the closing of the Merger will take place on a date to be specified by Firstar
and First Colonial which is required to be no later than the fifth business day
after the later to occur of (i) approval of the Merger by the Federal Reserve
Board and the expiration of any waiting period, (ii) approval of the Merger by
the Illinois Commissioner and (iii) the date on which the Special Meeting is
held. If the closing does not take place on the date referred to in the
preceding sentence because any condition to the obligations of Firstar and FCW,
on the one hand, or First Colonial, on the other hand, under the Reorganization
Agreement is not met on that date, the other party may postpone the closing from
time to time to any designated subsequent business day not more than ten
business days after the original or postponed date on which the closing was to
occur. As soon as practicable on or after the closing date, executed Articles of
Merger will be filed with the Secretary of State of the State of Wisconsin and
an executed Certificate of Merger will be filed with the Secretary of State of
the State of Delaware, and the Merger will become effective upon the filing of
such Articles of Merger and Certificate of Merger (the "Effective Time").
Subject to the conditions contained in the Merger Agreements, the closing date
is currently expected to occur during the first quarter of 1995. See "Conditions
to the Merger" and "Regulatory Approvals."
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<PAGE> 46
SURRENDER OF CERTIFICATES
As soon as reasonably practicable after the Effective Time, Firstar Trust
Company, or such other bank or trust company designated as exchange agent for
Firstar (the "Exchange Agent"), is required to mail to each holder of record of
First Colonial Common Stock a letter of transmittal and instructions for use in
effecting the surrender of such holder's First Colonial stock certificates for
certificates representing Firstar Common Stock ("Certificates").
FIRST COLONIAL STOCKHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES OR
DEPOSITARY RECEIPTS UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL FORM AND
INSTRUCTIONS.
Upon surrender to the Exchange Agent of one or more certificates for First
Colonial Common Stock, together with a properly completed letter of transmittal,
there will be issued and mailed to the holder a Certificate or Certificates to
which the holder is entitled and, where applicable, a check for the amount
representing any fractional share. A Certificate may be issued in a name other
than the name in which the surrendered certificate is registered only if a
certificate representing such First Colonial Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect a
transfer to the new name and by evidence that any applicable stock transfer
taxes have been paid.
All Firstar Common Stock and Firstar Preferred Stock issued pursuant to the
Merger will be deemed issued as of the Effective Time. No dividends or other
distributions declared or made after the Effective Time with respect to Firstar
Common Stock with a record date after the Effective Time will be paid to the
holder of any unsurrendered certificate representing First Colonial Common Stock
with respect to the shares of Firstar Common Stock represented thereby, and no
cash payment in lieu of fractional shares will be paid to any such holder, until
the holder of record of such certificate surrenders the certificate. Subject to
the effect of applicable laws, following surrender of any certificate, there
will be paid to the record holder of the Certificates issued in exchange,
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of Firstar Common Stock and the amount of
dividends or other distributions with record and payment dates after the
Effective Time and before the date of such surrender and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to the whole shares of Firstar Common Stock
represented by the Certificates. In no event shall the persons entitled to
receive such dividends, distributions and cash in lieu of fractional shares be
entitled to receive interest on amounts payable.
HOLDERS OF THE DEPOSITARY RECEIPTS ARE NOT REQUIRED TO TAKE ANY ACTION IN
CONNECTION WITH THE MERGER. Following the Effective Time, the Depositary
Receipts will remain outstanding and will thereafter, at the direction of the
Surviving Corporation, represent an interest in shares of Firstar Preferred
Stock.
CONDITIONS TO THE MERGER
The Merger will occur only if the Merger Agreements are approved by the
requisite vote by the holders of First Colonial Common Stock. Consummation of
the Merger is subject to the satisfaction of certain other conditions unless
waived to the extent waiver is permitted by applicable law. Such conditions
include the following, which constitute all material conditions: (i) the receipt
of all necessary regulatory approvals, including the approval of the Federal
Reserve Board and the Illinois Commissioner, with no terms or conditions that
Firstar does not accept and that (A) are not customarily contained in such
approvals, or (B) would, as determined by Firstar in good faith, have a material
adverse effect on its business or financial condition, or materially detract
from the value of First Colonial to Firstar; (ii) the effectiveness of the
Registration Statement and the absence of a stop order suspending such
effectiveness or proceedings seeking a stop order; (iii) the absence of a
temporary restraining order, injunction or other order of any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Merger; (iv) authorization for listing on the NYSE upon official notice
of issuance of the shares of Firstar Common Stock issuable in the Merger,
pursuant to the Firstar Stock Options and under the Mandatory Stock Purchase
Agreements; (v) the receipt by Firstar of opinions from KPMG Peat Marwick LLP,
as Firstar's independent auditors and as First Colonial's independent auditors,
to the effect that the Merger qualifies for pooling of
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<PAGE> 47
interests accounting treatment; (vi) the receipt by Firstar of executed letter
agreements in the form attached to the Agreement, relating to securities law
matters and pooling of interests treatment, from affiliates of First Colonial;
(vii) the opinion of Vedder Price delivered to Firstar and First Colonial that
the Merger qualifies as a tax-free reorganization within the meaning of Section
368(a) of the Code shall not have been withdrawn or modified in any material
respect; (viii) the receipt of all consents or approvals from third parties
required under agreements for consummation of the Merger other than those
agreements for which failure to obtain such consents or approvals would not have
a material adverse effect on First Colonial; (ix) the receipt by Firstar of
"cold comfort" letters of KPMG Peat Marwick LLP, as First Colonial's independent
auditors, dated the date on which the Registration Statement becomes effective
and the Effective Time; (x) the absence of any material adverse change since
December 31, 1993, in the financial condition, results of operations or business
of First Colonial and Firstar, other than any changes resulting primarily by
reason of changes in banking business of First Colonial and Firstar, other than
any changes resulting primarily by reason of changes in banking laws or
regulations (or interpretations thereof), changes in the general level of
interest rates or changes in economic, financial or market conditions affecting
the banking industry generally in the regions in which First Colonial or
Firstar, as the case may be, operates; (xi) the absence of any material action,
suit or proceeding commenced against Firstar, First Colonial or any affiliate,
associate, officer or director of either of them seeking to restrain, enjoin,
prevent, change or rescind the transactions contemplated by the Merger
Agreements or questioning the validity or legality of any such transaction which
action, suit or proceeding Firstar reasonably determines does not involve only
frivolous claims; (xii) the continued accuracy of representations and warranties
by Firstar and First Colonial regarding, among other things, the organization of
the parties, financial statements, capitalization, pending and threatened
litigation, enforceability of the Merger Agreement, compliance with law, and tax
matters; (xiii) the aggregate of (A) the fractional share interests in Firstar
Common Stock that will be paid in cash and (B) the shares of Firstar Common
Stock that would be issuable by virtue of the Merger with respect to shares of
First Colonial Class B Common Stock outstanding on the record date for the
Special Meeting that will not be converted into Firstar Common Stock due to the
exercise of dissenters' rights shall not be more than 10% of the maximum
aggregate number of shares of Firstar Common Stock which could be issued as a
result of the Merger; (xiv) First Colonial's consolidated allowance for loan
losses shall not be less than an amount requested by Firstar; and (xv) the
number of outstanding shares of First Colonial Common Stock shall not be greater
than 9,994,429. See "Termination, Amendment and Waiver" and "Regulatory
Approvals."
As of December 5, 1994, 9,658,887 shares of First Colonial Common Stock
were issued and outstanding, and 1,782,382 shares of First Colonial Common Stock
were issuable pursuant to exercisable First Colonial Stock Options and pursuant
to the Mandatory Stock Purchase Agreements. First Colonial Common Stock is also
issuable upon conversion of First Colonial Series C Preference Stock. First
Colonial has agreed to use its best efforts to repurchase First Colonial Common
Stock under certain conditions. See "Business Pending the Merger."
In addition, unless waived, each party's obligation to effect the Merger is
subject to performance by the other party of its obligations under the Merger
Agreements and the receipt of certain certificates from the other party and
legal opinions.
REGULATORY APPROVALS
Federal. The Merger is subject to prior approval by the Federal Reserve
Board under the Bank Holding Company Act of 1956, as amended (the "BHC Act"),
which requires that the Federal Reserve Board take into consideration, among
other factors, the financial and managerial resources and future prospects of
the respective institutions and the convenience and needs of the communities to
be served. The BHC Act prohibits the Federal Reserve Board from approving the
Merger if it would result in a monopoly or 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 if its effect in any section of the country
may be to substantially lessen competition or to tend to create a monopoly, or
if it would in any other manner be a restraint of trade, unless the Federal
Reserve Board finds that the anticompetitive effects of the Merger are clearly
outweighed in the public interest by the probable effect of the transaction in
meeting the convenience and needs of the
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<PAGE> 48
communities to be served. The Federal Reserve Board has the authority to deny an
application if it concludes that the combined organization would have an
inadequate capital position. Furthermore, the Federal Reserve Board must also
assess the records of the bank subsidiaries of Firstar and First Colonial under
the Community Reinvestment Act of 1977, as amended (the "CRA"). The CRA requires
that the Federal Reserve Board analyze, and take into account when evaluating an
application, each bank's record of meeting the credit needs of it local
communities, including low -- and moderate-income neighborhoods, consistent with
safe and sound operation.
Under the BHC Act, the Merger may not be consummated until up to 30 days
following the date of Federal Reserve Board approval, during which time the
United States Department of Justice may challenge the Merger on antitrust
grounds. The commencement of an antitrust action would stay the effectiveness of
the Federal Reserve Board's approval unless a court specifically orders
otherwise. The BHC Act provides for the publication of notice and public comment
on the applications and authorizes the regulatory agency to permit interested
parties to intervene in the proceedings.
Firstar filed an application with the Federal Reserve Bank of Chicago (the
"Federal Reserve Bank") that was accepted for filing by the Reserve Bank on
December 6, 1994.
Firstar has been advised that the Federal Reserve Bank has accepted the
application for processing under delegated authority from the Federal Reserve
Board. Under the regulations of the Federal Reserve Board, the Federal Reserve
Bank will act on the application within the 30-day period that began on the date
the application was accepted for filing (a period that will be tolled by any
public comments or other circumstances that may trigger further requests for
information from the Federal Reserve Bank). There can be no assurance that the
Federal Reserve Bank will continue processing the application under delegated
authority.
There can be no assurance that the Federal Reserve Board will approve the
Merger, and if the Merger is approved, there can be no assurance as to the date
of such approval. There can likewise be no assurance that the Department of
Justice will not challenge the Merger or, if such a challenge is made, as to the
result thereof.
Illinois. The Merger is also subject to the prior approval by the Illinois
Commissioner under the Illinois Bank Holding Company Act of 1957, as amended
(the "Illinois Act"), which requires that the Illinois Commissioner take into
consideration whether (i) the proposed transaction will promote the safety and
soundness of the institution to be acquired, (ii) the banks already controlled
by the applicant meet the convenience and needs of the communities served by
them in accordance with the CRA, (iii) the applicant intends to adequately meet
the convenience and needs of the communities serviced by the institution to be
acquired in accordance with the CRA, and (iv) the transaction will bring net new
benefits to the state of Illinois. Under the Illinois Act, the Merger may be
consummated immediately following an approval from the Illinois Commissioner.
Firstar filed an application with the Illinois Commissioner that was
accepted for processing on October 21, 1994. There can be no assurance that the
Illinois Commissioner will approve the Merger, and if the Merger is approved,
there can be no assurance as to the date of such approval.
General. The Merger cannot proceed in the absence of all requisite
regulatory approvals. See "Conditions to the Merger," "Effective Time of the
Merger" and "Termination, Amendment and Waiver." In the Agreement, Firstar and
First Colonial have agreed to take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed with respect to the
Merger, including furnishing information to the Federal Reserve Board or in
connection with approvals or filings with other governmental entities. Firstar
and First Colonial have also agreed to take all reasonable action necessary to
obtain approvals of the Federal Reserve Board, the Illinois Commissioner and
other governmental entities. However, the obligation to take reasonable actions
is not to be construed as including an obligation to accept any terms of or
conditions to an agreement or other approval of, or any exemption by, any party
that are not customarily contained in approvals of similar transactions granted
by such regulators or if Firstar in good faith determines that such terms or
conditions would have a material adverse effect on its business or financial
condition or would materially detract from the value of First Colonial to
Firstar. There can be no assurance that any
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<PAGE> 49
regulatory approvals will not contain a term or condition that causes such
approvals to fail to satisfy the conditions described above under "Conditions to
the Merger."
Firstar and First Colonial are not aware of any other governmental
approvals or actions that are required for consummation of the Merger except as
described above. Should any other approval or action be required, it is
presently contemplated that such approval or action would be sought. There can
be no assurance that any such approval or action, if needed, could be obtained
and, if such approvals or actions are obtained, there can be no assurance as to
the timing thereof.
BUSINESS PENDING THE MERGER
Under the Reorganization Agreement, First Colonial is generally obligated
to, and to cause its subsidiaries to, operate their respective businesses only
in the usual, regular and ordinary course consistent with past practices; use
its best efforts to preserve its business organization and assets, maintain its
rights and franchises, retain the services of employees and maintain its
relationships with customers; maintain its properties; keep in full force and
effect insurance; perform obligations under material agreements; and comply with
obligations imposed by laws. The Reorganization Agreement also provides that
prior to the Effective Time, without Firstar's prior written consent, First
Colonial may not, and may not allow its subsidiaries to, among other things: (i)
incur any material liabilities or obligations, except in the ordinary course;
(ii) increase the compensation of employees, directors or officers, except in
accordance with past practice; (iii) increase retirement benefits or change any
other benefit plans, or enter into employment or similar agreements; (iv) effect
any fundamental corporate acquisition; (v) issue or redeem any of its capital
stock, other than (A) repurchase of First Colonial Common Stock in satisfaction
of its obligation under the Reorganization Agreement as described in the next
paragraph, (B) the issuance of First Colonial Class A Common Stock upon
conversions at the option of the holder of First Colonial Series C Preference
Stock or First Colonial Class B Common Stock, or pursuant to the First Colonial
Stock Option Plans, or (C) issuances of First Colonial Class B Common Stock
pursuant to the Mandatory Stock Purchase Agreements; (vi) propose or adopt any
amendments to its corporate charter or bylaws in any way adverse to Firstar;
(vii) except in fiduciary capacities, purchase any shares of Firstar Common
Stock; or (viii) change the lending, investment, liability, management and other
material policies concerning the banking business of First Colonial.
First Colonial has agreed to use its best efforts, consistent with law,
pooling-of-interests accounting rules and the provisions of the Code governing
tax-free reorganizations, to repurchase enough First Colonial Common Stock to
satisfy anticipated future issuances of such stock upon the conversion of First
Colonial Series C Preference Stock, upon the exercise of First Colonial Stock
Options or pursuant to the Mandatory Stock Purchase Agreements.
In addition, the Reorganization Agreement provides that prior to the
Effective Time First Colonial may not initiate, solicit or encourage, or take
any other action to facilitate, any inquiries or the making of any proposal
which constitutes, or may reasonably be expected to lead to, any "Competing
Transaction," or negotiate with any person in furtherance of such inquiries or
to obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize or permit any of its officers, directors, employees,
investment banker, financial advisor, attorney, accountant or other
representative to take any such action. "Competing Transaction" means any of the
following involving First Colonial or any of its subsidiaries: any merger or
other business combination; a sale or other disposition of a substantial portion
of assets; a sale of capital stock or a right to acquire capital stock; a tender
offer or exchange offer for at least 10% of the outstanding share of any class
of its capital stock; a solicitation of proxies in opposition to approval of the
Merger by First Colonial's stockholders; or a public announcement of a bona fide
proposal, plan or intention to do any of the foregoing. The Reorganization
Agreement provides, however, that the Board of Directors of First Colonial is
not prohibited from (i) furnishing or permitting certain persons to furnish
information to any party that requests information as to First Colonial if the
Board of Directors is required to take such action, and receives an opinion of
counsel confirming such requirements, to comply with its fiduciary duties to
stockholders imposed by law and, prior to furnishing such information, First
Colonial receives a confidentiality agreement or (ii) complying with Rules 14d-2
and 14e-2 promulgated under the Exchange Act with regard to a Competing
Transaction.
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<PAGE> 50
First Colonial has agreed to, through its Board of Directors, (i)
unanimously recommend to its stockholders approval of the Merger Agreements;
(ii) not withdraw, modify, or amend such recommendation; and (iii) use its best
efforts to obtain stockholder approval. However, the Reorganization Agreement
does not prohibit the Board of Directors of First Colonial from failing to
recommend such approval or withdrawing, modifying or amending its recommendation
if (A) the Board of Directors of First Colonial is required to take such action
to comply with its fiduciary duty to stockholders imposed by law as a result of
the receipt by such Board of Directors of a bona fide proposal from a third
party not affiliated with First Colonial to acquire control of First Colonial or
substantially all of the assets of First Colonial after July 31, 1994, (B) First
Colonial's Board obtains an opinion of counsel confirming such requirement prior
to taking such action and (C) First Colonial's Board takes such action as is
necessary to allow First Colonial's stockholders to vote upon the Merger
Agreements in accordance with the DGCL.
DIVIDENDS
Under the Reorganization Agreement, First Colonial is allowed to declare
regular quarterly cash dividends on First Colonial Class A Common Stock and
First Colonial Class B Common Stock at a rate not in excess of $.15 per share
and $.125 per share, respectively, and regular quarterly cash dividends on its
Series C Preference Stock as required by the First Colonial Certificate.
Increases of up to 9.09% in the rate of dividends on the First Colonial Class A
Common Stock and up to 9.08% in the rate of dividends on the First Colonial
Class B Common Stock are permitted beginning with the dividends payable in the
second quarter of 1995.
TERMINATION, AMENDMENT AND WAIVER
The Reorganization Agreement provides that it may be terminated, whether
before or after approval of the matters presented in connection with the Merger
by the stockholders of First Colonial or Firstar, (i) by mutual consent of
Firstar and First Colonial; (ii) by either Firstar or First Colonial (A) if
there has been a material breach of a representation, warranty, covenant or
agreement on the part of the other party set forth in the Reorganization
Agreement or (B) if any representation or warranty of the other party shall be
discovered to have become materially untrue, in either case which breach or
other condition has not been cured within ten business days following receipt by
the nonterminating party of notice of such breach or other condition; (iii) by
either Firstar or First Colonial if any permanent injunction preventing the
consummation of the Merger shall have become final and non-appealable; (iv) by
either Firstar or First Colonial if the Merger shall not have been consummated
before July 31, 1995, for a reason other than the failure of the terminating
party to comply with its obligations under the Reorganization Agreement; and (v)
by either Firstar or First Colonial if the Federal Reserve Board or the Illinois
Commissioner has denied approval of the Merger and neither Firstar nor First
Colonial has, within 30 days after the entry of the order denying such approval,
filed a petition seeking review of such order.
The Reorganization Agreement also provides that it may be terminated by
First Colonial on either of the two trading days occurring immediately after the
ten consecutive trading days commencing on the first business day following the
date the Federal Reserve Board approves the Merger (the "Ten-Day Calculation
Period"), if both of the following conditions are satisfied: (i) the average of
the daily closing prices of a share of Firstar Common Stock as reported on the
Consolidated Tape System for NYSE stocks during the Ten-Day Calculation Period
is less than $29.00 and (ii) the percentage decline in the price of Firstar
Common Stock after July 29, 1994, determined by reference to such average of the
daily closing prices, exceeds the percentage decline in the weighted average
price of a selected group of bank stocks by more than 12.5%. This provision is
known as the "walk-away" provision. If the foregoing conditions were applied as
of December 6, 1994, the applicable average Firstar Common Stock price would be
$26.513 per share, representing a percentage decline in the price of such stock
from July 29, 1994 that exceeded by approximately 8.5% the percentage decline in
the weighted average price of such group of bank stocks. The selected group of
bank stocks is identified on Exhibit 10.01 to the Reorganization Agreement,
which is included in Appendix B to this Proxy Statement-Prospectus.
Thus, if the two conditions precedent to the "walk-away" provision were
applied as of the date of this Proxy Statement-Prospectus, First Colonial would
not have the right to terminate the Reorganization Agreement based upon the
"walk-away" provision. However, if the "walk-away" provision becomes operative
44
<PAGE> 51
prior to the Closing, then the Board of Directors of First Colonial, depending
upon the circumstances, may exercise First Colonial's rights under the provision
and terminate the Reorganization Agreement or, alternatively, may waive the
"walk-away" provision and proceed to consummate the Merger pursuant to the terms
and conditions of the Merger Agreements. Any decision the Board of Directors may
make regarding the "walk-away" provision may be made without the resolicitation
of the First Colonial stockholders and may depend on certain factors, including
without limitation (a) the price of Firstar Common Stock during the Ten-Day
Calculation Period; (b) any action Firstar may offer to take to induce First
Colonial to consummate the Merger (this is not meant to imply that Firstar will
take any such action or that First Colonial would require such action as a
condition to waiving its rights); (c) the factors the Board of Directors of
First Colonial considered in approving the Merger Agreements and the Merger; (d)
DLJ's view as to the fairness of the Exchange Ratio from a financial point of
view; and (e) such other economic and noneconomic factors as the Board of
Directors may deem relevant. See "First Colonial's Reasons for the Merger and
Board Recommendation."
The Reorganization Agreement also gave Firstar the right to terminate the
Agreement at any time prior to November 3, 1994, if certain environmental
conditions were found. Firstar did not exercise this right.
The Merger Agreements may be amended by the parties at any time before or
after approval of the matters presented in connection with the Merger by the
stockholders of First Colonial, but after any such approval, no amendment may be
made which would have an adverse effect on First Colonial's stockholders, change
the consideration to be provided to such shareholders pursuant to the Merger
Agreements or have a similar effect. At any time prior to the Effective Time,
either party may, to the extent legally allowed, extend the time for performance
of any of the obligations of the other party, waive any inaccuracies and
representations and warranties of the other and waive compliance with any of the
agreements or conditions.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
In the Merger, First Colonial will be merged into FCW and the separate
corporate existence of First Colonial will cease. Firstar will thereby acquire
control of First Colonial and the 17 bank subsidiaries it now owns (the "First
Colonial Banks"), as well as its five nonbank subsidiaries. FCW, as the
surviving corporation in the Merger and a wholly owned subsidiary of Firstar,
will continue operations under the name "Firstar Corporation of Wisconsin."
The officers and directors of FCW prior to the Merger will continue as
officers and directors of the surviving corporation. First Colonial's current
Chairman and CEO, C. Paul Johnson, will become a director of Firstar but plans
to retire from management after the Merger. Immediately following the Closing
Date, one or more management representatives of Firstar will be added to the
board of each First Colonial Bank. Within several months of the Effective Time,
Firstar and FCW intend to merge each of the First Colonial Banks into Firstar
Bank Illinois, subject to regulatory approval. When this planned consolidation
into one bank is completed, John B. ("Jay") Williams, an Executive Vice
President of Firstar's lead bank, Firstar Bank Milwaukee, N.A., will serve as
Firstar Bank Illinois' President and Chief Executive Officer, and the remainder
of management of Firstar Bank Illinois will be drawn from management of Firstar
and its subsidiaries and the First Colonial Banks. Certain First Colonial bank
directors may be invited to join the Board of Directors of the surviving bank.
See "Interests of Certain Persons in the Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The directors and executive officers of First Colonial hold First Colonial
Stock Options granted pursuant to the First Colonial Stock Option Plans.
Pursuant to their terms, such options, to the extent not then exercisable, will
become immediately exercisable upon the occurrence of a "change in control"
(which includes a transaction such as the Merger). Therefore, upon the
consummation of the Merger and related replacement of the First Colonial Stock
Options with Firstar Stock Options in accordance with the Merger Agreements, all
the resulting Firstar Stock Options will be immediately exercisable.
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<PAGE> 52
Set forth below is certain information with respect to the Firstar Stock
Options which will replace the First Colonial Stock Options held by First
Colonial's directors and executive officers upon consummation of the Merger. The
closing price per share of Firstar Common Stock on December 6, 1994 was $26.375.
<TABLE>
<CAPTION>
OPTIONS EXERCISABLE OPTIONS FIRST
AS OF JANUARY 18, 1995 EXERCISABLE UPON THE MERGER
-------------------------------- --------------------------------
SHARES OF SHARES OF
FIRSTAR AVERAGE PER SHARE FIRSTAR AVERAGE PER SHARE
OUTSIDE DIRECTORS COMMON STOCK EXERCISE PRICE COMMON STOCK EXERCISE PRICE
- ------------------------------------- ------------ ----------------- ------------ -----------------
<S> <C> <C> <C> <C>
Ronald J. Aronberg................... 14,136 $ 16.55 5,716 $ 21.84
Thomas L. Cox........................ 8,497 21.70 -- --
Robert J. Leander.................... 14,078 16.53 5,542 21.86
Patrick L. O'Malley.................. 5,330 16.56 2,394 21.50
Henry B. Pearsall.................... 7,010 16.38 2,027 21.68
Alan G. Schwartz..................... 35,844 16.09 8,458 21.92
William P. White..................... 1,989 17.53 1,873 21.52
Thomas J. Wigdahl.................... 4,821 16.61 1,873 21.52
</TABLE>
<TABLE>
<CAPTION>
OPTIONS EXERCISABLE OPTIONS FIRST
AS OF JANUARY 18, 1995 EXERCISABLE UPON THE MERGER
--------------------------------- ---------------------------------
SHARES OF SHARES OF
FIRSTAR AVERAGE PER SHARE FIRSTAR AVERAGE PER SHARE
EXECUTIVE OFFICERS COMMON STOCK EXERCISE PRICE COMMON STOCK EXERCISE PRICE
- --------------------------------- ------------ ----------------- ------------ -----------------
<S> <C> <C> <C> <C>
John A. Benson................... 17,381 $ 16.63 8,961 $ 21.74
Thomas A. Caravello.............. 17,381 16.63 8,883 21.73
Michael J. Clawson............... 21,050 16.62 9,076 21.68
Craig B. Collinson............... 9,752 16.87 6,083 21.92
William J. Hornig................ 2,414 21.57 7,242 22.40
C. Paul Johnson.................. 88,258 16.60 21,436 23.39
Barbara A. Kilian................ 4,635 16.96 5,021 22.51
Jon Knutsen...................... 1,931 15.05 8,111 21.91
Martin J. Noll................... 1,448 21.69 5,890 22.19
Debra J. Pawlik.................. 8,207 17.25 6,933 21.91
Bette B. Sherman................. 5,021 17.23 8,111 21.91
Robert F. Sherman................ 28,862 16.30 20,471 21.76
Wallace E. Zook.................. 22,981 16.59 9,076 21.68
</TABLE>
The Reorganization Agreement provides, among other things, that upon the
consummation of the Merger the Firstar Board of Directors will be increased by
one director and C. Paul Johnson will be elected to fill the newly created
vacancy. The Reorganization Agreement also provides that upon consummation of
the Merger Firstar will indemnify and obtain insurance coverage for each officer
and director of First Colonial and its subsidiaries against all losses, claims,
damages, costs, expenses, liabilities or judgments (i) arising out of the fact
that such person was an officer or director of First Colonial or one of its
subsidiaries prior to the consummation of the Merger, and (ii) arising out of or
pertaining to the Reorganization Agreement or the transactions contemplated
thereby, in each case to the fullest extent permitted under applicable law.
On April 20, 1994, First Colonial adopted the Transitional Compensation
Program to provide transitional compensation to affected executive and senior
officers in the event of a change in control of First Colonial (which includes a
transaction such as the Merger). Pursuant to the Reorganization Agreement and
the Benefits Letter, First Colonial has agreed to amend the Transitional
Compensation Program in certain respects prior to the Merger. The Transitional
Compensation Program, as amended, will provide for monthly cash payments,
payment of a pro rata bonus and continuation of certain benefits under employee
benefit plans
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<PAGE> 53
for a Transitional Period (as defined below) for Participants (as defined below)
whose employment is terminated within such Transitional Period after the Merger.
"Participants" under the Transitional Compensation Plan are members of the First
Colonial Senior Management Committee ("Senior Management Committee") and each of
those employees designated a "Senior Officer Group Member" by the First Colonial
Board of Directors. A Participant is considered terminated under the
Transitional Compensation Plan if termination of employment occurs during such
Participant's Transitional Period (as defined below) and is (i)
employer-initiated for reasons other than a felony conviction, or the
Participant's continued and willful failure to be present and perform his or her
duties, or (ii) employee-initiated within ninety days after (a)(1) the failure
by the employer to maintain the Participant's salary, benefits or perquisites at
the same level as in effect upon the occurrence of the "change in control," or
as may be increased from time to time in accordance with the regular practices
of the employer with respect to employees with similar duties, (2) a change in
the Participant's duties and responsibilities such that they are not at least
commensurate with those of other employees of equivalent compensation, or (3) a
change in the Participant's primary employment location by more than 35 miles,
or (b) with respect to Senior Management Committee members only, a good faith
determination by the Participant that there has been a significant adverse
change in the Participant's working conditions or status. Monthly cash payments
begin upon termination, continue through the Transitional Period and are equal
to the Participant's base annual salary as of the date of termination, or if
greater, as of the date of the "change of control," divided by twelve. Certain
employee benefit plan coverage continues after termination through the
Transitional Period. If termination of employment occurs during the first six
months of the Transitional Period, the Participant will be entitled to out
placement counseling. Compensation payable under the Transitional Compensation
Program is limited, however, to the extent necessary so that such compensation
will not be subject to excise tax as an excess parachute payment under the Code.
A Participant's "Transitional Period" is twenty-one months for members of the
Senior Management Committee, and fifteen months for Senior Officer Group
Members. However, the otherwise applicable Transitional Period is extended by
(i) two months for Participants with ten but less than fifteen years of service
upon the "change in control," (ii) four months for Participants with fifteen but
less than twenty years of such service, and (iii) six months for Participants
with twenty or more years of such service. Set forth below are the names of
executive officers of First Colonial who are Participants and the estimated
amount, based on salary levels as of the date of the Proxy Statement-Prospectus,
of the maximum aggregate monthly cash payments that could be due to the
executive in the event of termination of employment subsequent to the Merger:
<TABLE>
<CAPTION>
ESTIMATED MAXIMUM
CASH PAYMENTS
-----------------
<S> <C>
John A. Benson...................................... $ 269,100
Thomas A. Caravello................................. 295,650
Michael J. Clawson.................................. 246,750
Craig B. Collinson.................................. 138,125
William J. Hornig................................... 175,000
Barbara A. Kilian................................... 154,000
Jon Knutsen......................................... 220,500
Martin J. Noll...................................... 218,750
Debra J. Pawlik..................................... 93,750
Bette B. Sherman.................................... 179,375
Wallace E. Zook..................................... 314,167
</TABLE>
The maximum aggregate amount of all monthly cash payments that could be required
to be made to all Participants under the Transitional Compensation Program,
based upon the Participants' 1994 annual salaries, is approximately $4,360,000.
Also on April 20, 1994, C. Paul Johnson, Chairman and Chief Executive
Officer, and Robert F. Sherman, President and Chief Operating Officer, of First
Colonial entered into Transitional Employment Agreements with First Colonial
providing for Transitional Periods of thirty and thirty-two months, respec-
47
<PAGE> 54
tively. In connection with the consummation of the Merger, Mr. Johnson has
agreed to the cancellation of his Transitional Employment Agreement, thereby
waiving his right to approximately $1.2 million of aggregate cash compensation
based on his 1994 base annual salary of $470,000. In connection with such
cancellation and waiver, First Colonial has awarded to Mr. Johnson a one-time
bonus of $200,000 for services rendered in connection with the negotiation of
the Merger Agreements and has authorized cash payments aggregating $270,000 and
other benefits in connection with Mr. Johnson's retirement upon the Merger. See
"PROPOSED MERGER -- Background of the Merger." Mr. Sherman has agreed to amend
his Transitional Employment Agreement to conform its terms and conditions to
those of the amended Transitional Compensation Program applicable to Senior
Management Committee Participants, except with a Transitional Period of
thirty-two months. Based upon his salary as of the date of this Proxy
Statement-Prospectus, the maximum aggregate amount of monthly cash payments that
could be required to be paid to Mr. Sherman under his Transitional Employment
Agreement is approximately $715,000.
On April 20, 1994, First Colonial also adopted the First Colonial
Bankshares Corporation SuperCobra Continuation Plan ("SuperCobra Plan") to
provide the opportunity for certain eligible officers and employees to have
access to group medical coverage in the event of termination of employment
following a change in control (which includes a transaction such as the Merger).
Pursuant to the Reorganization Agreement, First Colonial has agreed to amend the
SuperCobra Plan prior to the Merger. The SuperCobra Plan, as amended, will
provide for the continuation of the applicable employer group health plan
benefits implementing the continuation coverage requirements of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA Coverage"),
following the maximum required period of COBRA Coverage. The opportunity to
maintain extended coverage will be provided to Covered Persons (as defined
below) whose employment is terminated within a certain period of time after the
Merger. In most cases, the group health plan benefits available will be limited
to a health maintenance organization (HMO), unless such option is determined to
be unavailable, in which case coverage under another group health plan
maintained by FCW will be permitted. "Covered Persons" include Participants
under the Transitional Compensation Program, parties to Transitional Employment
Agreements, and employees who are fifty years of age or who have completed
twenty years of service, in all cases as of the date of the Merger. A Covered
Person is considered terminated under the SuperCobra Plan if such person is
considered terminated under either the Transitional Compensation Program and is
a Participant thereunder, or a Transitional Employment Agreement and is a party
thereto. Any other Covered Person is considered terminated if such termination
occurs within twelve months of the Merger and is (i) employer-initiated for
reasons other than misconduct or performance below acceptable standards under
the disciplinary policy applicable to such Covered Person, or (ii) employee-
initiated within thirty days of (a) a reduction in the Covered Person's base
annual salary or hourly rate of pay or benefits, or (b) transfer of such Covered
Person to an employment location more than thirty-five miles from such Covered
Person's location as of the date of the "change in control." However, such other
Covered Persons are not considered terminated if they (x) leave employment
voluntarily under non-qualifying circumstances, or (y) are offered another
position with comparable compensation and decline such position. A Covered
Person's continuation of COBRA Coverage under the SuperCobra Plan expires upon
the earlier to occur of (A) their eligibility for Medicare benefits, (B) upon
the occurrence of any event which would then entitle an employer to terminate
COBRA Coverage (other than the expiration of the maximum required period of
COBRA Coverage), or (C) the completion of sixty months of such extended COBRA
Coverage.
Certain directors and executive officers of First Colonial have entered
into MSP Agreements with First Colonial. See "PROPOSED MERGER -- Assignment and
Assumption Agreements."
EFFECT ON EMPLOYEE BENEFITS
Under the Reorganization Agreement, Firstar covenants to comply with its
agreements to provide certain employee benefits set forth in the Benefits
Letter. The Benefits Letter states, among other things, that Firstar will
provide, or cause to be provided, to each employee of FCW or its subsidiaries
who was an employee of First Colonial at the time of the consummation of the
Merger the opportunity to participate in Firstar's employee benefit plans on a
basis comparable to that of similarly situated employees of Firstar and its
subsidiaries, with full credit for years of employment with First Colonial. The
Benefits Letter also provides
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<PAGE> 55
that Firstar will implement such bonus, incentive and equity-based plans for
former First Colonial employees as Firstar deems appropriate, after giving
consideration to factors similar to those used in creating and administering
similar plans for current employees in the Firstar organization. Finally, the
Benefits Letter provides that after the Merger, Firstar will honor or will cause
FCW to honor the Transitional Compensation Program, Transitional Employment
Agreements and SuperCobra Plan described above, as well as the First Colonial
Severance Benefits Program, as such programs and agreements may be amended by
the Benefits Letter, and will maintain the employee benefit plans of First
Colonial for the benefit of the employees of First Colonial at the time of the
Merger until such time as corresponding Firstar plans are extended to such
employees.
TERMINATION FEE
As a condition to Firstar's willingness to enter into the Agreement, First
Colonial agreed to pay to Firstar a fee of $7,500,000 (the "Termination Fee")
within two days of a "Trigger Event." A Trigger Event means the occurrence of
one or more of the following events: (i) a Transaction Proposal (as defined
below); (ii) termination of the Reorganization Agreement following a wilful and
material breach thereof by First Colonial; or (iii) any withdrawal, modification
or amendment in any respect by First Colonial's Board of Directors of its
approval or recommendation regarding the Reorganization Agreement and
stockholder vote relating thereto or First Colonial's Board of Directors
adopting a resolution relating to any such withdrawal, modification or
amendment.
A "Transaction Proposal" means any of the following: (a) a bona fide tender
offer or exchange offer for at least 25% of the then outstanding shares of any
class of capital stock of First Colonial made by any entity or person other than
Firstar or its subsidiaries or affiliates, (b) any entity or person filing an
application under the BHC Act or the Change in Bank Control Act with respect to
the acquisition by such entity or person of any shares of capital stock of First
Colonial, (c) a merger, consolidation or other business combination with First
Colonial or any of its subsidiaries is effected by any entity or person, (d) any
sale, lease, transfer, mortgage or other disposition involving a substantial
part of First Colonial's or any of its subsidiaries' consolidated assets, or any
agreement to effect such a transaction, (e) the acquisition by any entity or
person of 10% or more of the outstanding shares of any class of capital stock of
First Colonial or acquisition of additional shares by any entity or person
currently holding 10% or more of such shares, except for certain acquisitions
made pursuant to certain First Colonial benefit plans, (f) any reclassification
of the securities of, or recapitalization of, First Colonial that has the
effect, directly or indirectly, of increasing the proportionate share of any
class of equity security of First Colonial that is owned by an entity or person
other than Firstar or its subsidiaries or affiliates, or any agreement to effect
such a reclassification or recapitalization, (g) any transaction having an
effect similar to those described in (a) through (f) above, or (h) a public
announcement regarding a proposal, plan or intention by First Colonial or
another entity or person to effect any of the foregoing transactions; provided,
however, that events described in clauses (a), (b) and (h) of this definition do
not constitute a "Transaction Proposal" unless either (x) the Board of Directors
of First Colonial takes or fails to take certain actions in connection therewith
or (y) First Colonial's stockholders fail to approve the Merger Agreements.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Firstar and First Colonial have received an opinion of Vedder Price that
the Merger will qualify as a tax-free reorganization under Sections 368(a)(1)(A)
and 368(a)(2)(D) of the Code. Accordingly First Colonial, Firstar and FCW will
recognize no gain or loss for federal income tax purposes as a result of the
Merger and no gain or loss will be recognized by any First Colonial stockholder
upon receipt of Firstar Common Stock or Firstar Preferred Stock pursuant to the
Merger (except upon the receipt of cash in lieu of fractional shares of Firstar
Common Stock). This discussion of federal income tax consequences of the Merger
assumes that none of the holders of First Colonial Class B Common Stock will
exercise dissenters' rights. The Internal Revenue Service ("Service") has not
been asked to rule upon the tax consequences of the Merger and such request will
not be made. The opinion of Vedder Price is based entirely upon the Code,
regulations now in effect thereunder, current administrative rulings and
practice, and judicial authority, all of which are subject to change. Unlike a
ruling from the Service, an opinion of counsel is not binding on the
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<PAGE> 56
Service and there can be no assurance, and none is hereby given, that the
Service will not take a position contrary to one or more positions reflected
herein or that the opinion will be upheld by the courts if challenged by the
Service. EACH STOCKHOLDER OF FIRST COLONIAL IS URGED TO CONSULT HIS OR HER OWN
TAX AND FINANCIAL ADVISORS AS TO THE EFFECT OF SUCH FEDERAL INCOME TAX
CONSEQUENCES ON HIS OR HER OWN PARTICULAR FACTS AND CIRCUMSTANCES AND ALSO AS TO
ANY STATE, LOCAL, FOREIGN OR OTHER TAX CONSEQUENCES ARISING OUT OF THE MERGER.
Based upon the opinion of Vedder Price, which in turn is based upon various
representations and subject to various assumptions and qualifications, the
following federal income tax consequences to the First Colonial stockholders
will result from the Merger. For purposes of this discussion, holders of
Depositary Shares are treated as if they directly held the stock represented by
such Depositary Shares:
(i) Provided that the Merger of First Colonial with and into FCW
qualifies as a statutory merger under applicable law, the Merger will
qualify as a reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(D) of the Code, and First Colonial, Firstar and FCW will each be
"a party to a reorganization" within the meaning of Section 368(b) of the
Code for purposes of this reorganization.
(ii) No gain or loss will be recognized by the holders of First
Colonial Common Stock or First Colonial Series C Preference Stock upon the
exchange of First Colonial Common Stock or First Colonial Series C
Preference Stock solely for Firstar Common Stock or Firstar Preferred
Stock, respectively, pursuant to the Merger, except with respect to cash
received in lieu of fractional shares of Firstar Common Stock.
(iii) A First Colonial stockholder's aggregate basis in the Firstar
Common Stock (including any fractional share interest to which he or she
may be entitled) or Firstar Preferred Stock received in the exchange will
be the same as the aggregate basis of the First Colonial Common Stock or
First Colonial Series C Preference Stock exchanged therefor, respectively.
(iv) The holding period of the Firstar Common Stock and Firstar
Preferred Stock received by a stockholder of First Colonial pursuant to the
Merger will include the period during which the First Colonial Common Stock
or First Colonial Series C Preference Stock exchanged therefor was held,
provided that the First Colonial stock surrendered was held as a capital
asset as of the time of the Merger.
(v) A First Colonial stockholder receiving cash in lieu of fractional
share interests of Firstar Common Stock in the Merger will be treated as if
he or she actually received such fractional share interests which were
subsequently redeemed by Firstar. The cash a First Colonial stockholder
receives will be treated as having been received as full payment in
exchange for the stock redeemed as provided in Section 302(a) of the Code.
The foregoing is only a general description of certain material federal
income tax consequences of the Merger for stockholders who are citizens or
residents of the United States and who hold their shares as capital assets,
without regard to the particular facts and circumstances of the tax situation of
each stockholder of First Colonial. It does not discuss all of the consequences
that may be relevant to First Colonial stockholders entitled to special
treatment under the Code (such as insurance companies, financial institutions,
dealers in securities, tax-exempt organizations or foreign persons). The summary
set forth above does not purport to be a complete analysis of all potential tax
effects of the transactions contemplated by the Merger Agreements or the Merger
itself. No information is provided herein with respect to the tax consequences,
if any, of the Merger under state, local or foreign tax laws.
ACCOUNTING TREATMENT
Consummation of the Merger is conditioned upon qualification of the Merger
as a pooling-of-interests for accounting purposes as evidenced by the receipt by
Firstar of opinions from Firstar's and First Colonial's independent public
accountants to the effect that the Merger qualifies for pooling-of-interests
method of accounting. Under the pooling-of-interests accounting treatment the
historical basis of the assets and liabilities
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of Firstar and First Colonial will be combined at the Effective Time and carried
forward at their previously recorded amounts and the shareholders' equity
accounts of First Colonial will be combined on Firstar's consolidated balance
sheet. Income and other financial statements of Firstar issued after
consummation of the Merger will be restated retroactively to reflect the
consolidated operations of Firstar and First Colonial as if the Merger had taken
place prior to the periods covered by such financial statements.
For the Merger to qualify for pooling-of-interests accounting treatment,
substantially all (90% or more) of the outstanding First Colonial Common Stock
must be exchanged for Firstar Common Stock. Firstar and First Colonial have
agreed not to take any action which would preclude use of pooling-of-interests
accounting treatment for the Merger by Firstar.
EXPENSES
The Agreement provides that if the Merger Agreements or the transactions
contemplated thereby are terminated, other than for certain excepted reasons
including a termination due to a breach by Firstar of its obligations under the
Merger Agreement, First Colonial will pay Firstar its out-of-pocket expenses
incurred in connection with the consummation of the transactions contemplated by
the Merger Agreements, but not to exceed $2.0 million. If the Merger Agreements
or the transactions contemplated thereby are terminated by First Colonial as a
result of Firstar's breach of the Merger Agreement, Firstar will pay First
Colonial its out-of-pocket expenses incurred in connection with the consummation
of the transactions contemplated by the Merger Agreements, but not to exceed
$2.0 million.
Firstar and First Colonial have also agreed to share equally in the expense
of printing and distributing this Proxy Statement-Prospectus and related proxy
materials and the expense of all SEC and regulatory filing fees incurred in
connection therewith.
Except as described above, the Merger Agreement provides, in general, that
Firstar and First Colonial will each pay its own expenses in connection with the
Merger and the transactions contemplated thereby, including fees and expenses of
its own accountants and counsel. For information with respect to financial
advisory fees incurred in connection with the Merger, see "Opinions of Financial
Advisors."
RESALE OF FIRSTAR COMMON STOCK, FIRSTAR PREFERRED STOCK AND FIRSTAR SUBORDINATED
NOTES
The shares of Firstar Common Stock to be issued in connection with the
Merger to stockholders of First Colonial and the Depositary Shares have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and may be freely traded by stockholders of First Colonial who, at the Effective
Time, are not "affiliates" of First Colonial (and are not affiliates of Firstar
at the time of the proposed resale). Pursuant to the Merger Agreements, First
Colonial must use its best efforts to cause each affiliate of First Colonial to
deliver to Firstar a written undertaking to the effect that (a) he or she will
not sell or dispose of the Firstar Common, Depositary Shares or the Subordinated
Notes to be assumed by Firstar pursuant to the Assignment and Assumption
Agreements (the "Firstar Subordinated Notes") acquired by him or her in
connection with the Merger other than in accordance with the Securities Act,
except under (i) a separate registration statement for distribution (which
Firstar has not agreed to provide), or (ii) Rule 145 promulgated thereunder by
the Commission, or (iii) pursuant to some other exemption from registration; and
(b) he or she will not otherwise dispose of the Firstar Common Stock, Depositary
Shares or Firstar Subordinated Notes or otherwise reduce his or her risk
relative to the Firstar Common Stock or Firstar Subordinated Notes prior to the
publication by Firstar of an earnings statement covering at least 30 days of
combined operations after the Effective Time.
RIGHTS OF DISSENTING STOCKHOLDERS
Under the provisions of Section 262 of the DGCL, a copy of which is
attached to this Proxy Statement-Prospectus as Appendix A, any holder of record
of First Colonial Class B Common Stock has the right to object to the Merger and
demand payment of the fair value of any of the stockholder's shares in cash. Any
such stockholder electing to do so must file a written objection with First
Colonial, at 30 North Michigan Avenue, Suite 300, Chicago, Illinois 60602-0493,
before the vote on the Merger at the Special Meeting. A
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stockholder may object as to less than all of the shares registered in the
stockholder's name. A PROXY OR VOTE AGAINST THE MERGER WILL NOT, OF ITSELF, BE
REGARDED AS A WRITTEN OBJECTION FOR PURPOSES OF ASSERTING APPRAISAL RIGHTS.
If the Merger is approved by the requisite vote of holders of First
Colonial Common Stock, any holder of First Colonial Class B Common Stock seeking
appraisal rights who has preserved his or her rights of appraisal by filing an
objection and refraining from voting in favor of the Merger ("Stockholder
Seeking Appraisal Rights"), will, within ten days after the Closing Date, be
notified by the surviving corporation of the Closing Date. Within 120 days after
the Closing Date, any Stockholder Seeking Appraisal Rights may file a petition
in the Delaware Court of Chancery demanding a determination of the value of the
First Colonial Class B Common Stock of all Stockholders Seeking Appraisal
Rights. Notwithstanding the foregoing, any such Stockholder, within 60 days
after the Closing Date, has the right to withdraw his or her demand for
appraisal and accept the terms of the Merger Agreements. Within 120 days after
the Closing Date, any Stockholder Seeking Appraisal Rights, upon written
request, will be entitled to receive from the surviving corporation a statement
setting forth the aggregate numbers of Stockholders Seeking Appraisal Rights and
shares they hold. The surviving corporation will mail such a statement to the
Stockholder Seeking Appraisal Rights within ten days of the request or within
ten days after the Closing Date, whichever is later.
Upon the filing of such a petition by a Stockholder Seeking Appraisal
Rights, the Delaware Court of Chancery will appraise the shares of Class B
Common Stock as to which the Stockholder has demanded appraisal rights,
determining their "fair value" exclusive of any element of value arising from
the accomplishment or expectation of the Merger, together with a "fair rate of
interest," if any, to be paid on the amount determined to be the fair value. The
court may require the Stockholders Seeking Appraisal Rights to submit their
certificates of First Colonial Common Stock as to which appraisal rights have
been demanded to the Delaware Register in Chancery for notation thereon that the
appraisal proceedings are pending.
The Delaware Court of Chancery will direct the payment of such fair value
and interest, if any, by the surviving corporation to the Stockholders Seeking
Appraisal Rights upon their surrender of the certificate or certificates
representing such shares of First Colonial Class B Common Stock.
In the event any holder of First Colonial Class B Common Stock fails to
perfect his or her rights of appraisal by failing to comply strictly with the
applicable statutory requirements, the stockholder will be bound by the terms of
the Merger Agreements and will not be entitled to payment for the stockholder's
shares under Section 262. Any holder of First Colonial Class B Common Stock who
wishes to object to the transaction and demand payment for the Stockholder's
shares of First Colonial Class B Common Stock should consider consulting his or
her own legal advisor.
Because an executed proxy relating to First Colonial Class B Common Stock
on which no voting direction is made will be voted at the Special Meeting in
favor of the Merger, a Stockholder Seeking Appraisal Rights who wishes to have
his or her shares of First Colonial Class B Common Stock represented by proxy at
the Special Meeting but preserve statutory rights of appraisal must mark his or
her proxy either to vote against the Merger or to abstain from voting thereon,
give the required notice of intent to seek appraisal rights and make the
required submission of stock certificates, as described herein.
Only holders of record of First Colonial Class B Common Stock may assert
rights of appraisal. Such rights are not available for holders of First Colonial
Class A Common Stock or First Colonial Series C Preference Stock (represented by
the Depositary Shares). Any written objection or demand should be signed by or
for the holder of record of the shares to which it relates in the same manner
indicated on the accompanying proxy card. Any beneficial owner of First Colonial
Class B Common Stock who is not also the holder of record of the shares, and who
wishes to assert statutory rights of appraisal with respect thereto, should
instruct the holder of record to act accordingly on the beneficial owner's
behalf. First Colonial will not accept written objections or demands for payment
from any party other than the holder of record (whose name appears in the stock
records of First Colonial) of the shares to which the objection or demand
relates.
The foregoing is only a summary of the provisions of the DGCL and is
qualified in its entirety by reference to the text of Section 262, which is set
forth in Appendix A hereto.
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COMPARATIVE RIGHTS OF STOCKHOLDERS
First Colonial is incorporated under the laws of the state of Delaware, and
Firstar is incorporated under the laws of the state of Wisconsin. Stockholders
of First Colonial, whose rights are governed by First Colonial's Certificate of
Incorporation and By-laws and by the DGCL, will, on consummation of the Merger,
become shareholders of Firstar. Their rights as Firstar shareholders will then
be governed by Firstar's Restated Articles of Incorporation and By-laws and by
the Wisconsin Business Corporation Law (the "WBCL"). The following is a summary
of the material differences between the rights of stockholders of First Colonial
and the rights of shareholders of Firstar.
PREFERRED STOCK
The Certificate of Incorporation of First Colonial authorizes the Board of
Directors of First Colonial to issue up to 200,000 shares of preference stock,
no par value, from time to time in one or more series with such rights,
preferences, limitations and powers as the Board of Directors of First Colonial
may establish. As of December 5, 1994, 38,775 shares of First Colonial Series C
Preference Stock were issued and outstanding, which shares entitle the holders
to priority over the rights of holders of First Colonial Common Stock with
respect to the payment of dividends and distribution of assets in the event of
any voluntary or involuntary liquidation or dissolution of First Colonial.
The Restated Articles of Incorporation of Firstar authorize the Board of
Directors of Firstar to issue up to 2,500,000 shares of preferred stock, $1.00
par value. The Board of Directors may establish the relative rights and
preferences of preferred stock issued in the future without shareholder action
and issue such stock in series. As of the date hereof, no shares of any series
of Firstar preferred stock are issued and outstanding; however, upon
consummation of the Merger, up to 39,700 shares of Firstar Preferred Stock will
be issued to the holders of First Colonial Series C Preference Stock. See "The
Proposed Merger." Firstar has reserved 600,000 shares of Series C Preferred
Stock for issuance upon exercise of the Preferred Share Purchase Rights, as
further described below.
PREFERRED SHARE PURCHASE RIGHTS
Firstar has adopted a Shareholder Rights Plan, pursuant to which each share
of Firstar Common Stock entitles its holder to one-half Preferred Share Purchase
Right. Under certain conditions, each Right entitles the holder to purchase one
one-hundredth of a share of Firstar's Series C Preferred Stock at a price of
$85, subject to adjustment. Recipients of Firstar Common Stock in connection
with the Merger will also receive one-half Right per share of Firstar Common
Stock. The description of the terms of the Rights Agreement is set forth in a
Rights Agreement dated as of January 19, 1989 (the "Rights Agreement"), between
Firstar and Firstar Trust Company (formerly First Wisconsin Trust Company) as
Rights Agent. The description of the Rights contained herein is qualified in its
entirety by reference to the Rights Agreement. The Rights will only be
exercisable if a person or group has acquired, or announced an intention to
acquire, 20% or more of the outstanding shares of Firstar Common Stock. Under
certain circumstances, including the existence of a 20% acquiring party, each
holder of a Right, other than the acquiring party, will be entitled to purchase
at the exercise price Firstar Common Stock having a market value of two times
the exercise price. In the event of the acquisition of Firstar by another
company subsequent to a party acquiring 20% or more of the Firstar Common Stock,
each holder of a Right is entitled to purchase the acquiring company's common
shares having a market value of two times the exercise price. The Rights may be
redeemed at a price of $.01 per Right prior to the existence of a 20% acquiring
party, and thereafter may be exchanged for one share of Firstar Common Stock per
Right prior to the existence of a 50% acquiring party. The Rights will expire on
January 19, 1999. The Rights do not have voting or dividend rights, and until
they become exercisable, have no dilutive effect on the earnings of Firstar.
Under the Rights Agreement, the Board of Directors of Firstar may reduce the
thresholds applicable to the Rights from 20% to not less than 10%.
First Colonial does not have a shareholder rights plan.
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APPRAISAL RIGHTS AND DISSENTERS' RIGHTS
Under the DGCL, stockholders of a corporation who dissent from a merger or
consolidation of the corporation in the manner provided by Delaware law are
entitled to receive payment of the fair value of their stock, as determined by
the Court of Chancery. However, such right is not available to stockholders (i)
whose shares are listed on a national securities exchange, quoted on The Nasdaq
Stock Market or held of record by more than 2,000 stockholders, or (ii) where
the vote of such stockholders of the corporation surviving or resulting from the
merger or consolidation was not required for approval thereof. First Colonial's
Class A Common Stock is quoted on the Nasdaq National Market; its Class B Common
Stock is not listed on any national exchange. Delaware law does not provide
appraisal rights to stockholders who dissent from the sale of all or
substantially all of the corporation's assets unless the corporation's
certificate of incorporation provides otherwise. First Colonial's Certificate of
Incorporation does not provide for appraisal rights in the context of a sale of
all or substantially all of First Colonial's assets.
Under the WBCL, a shareholder of a corporation is generally entitled to
receive payment of the fair value of such shareholder's stock if such
shareholder dissents from a proposed merger or share exchange or a sale or
exchange of all or substantially all of the property and assets of the
corporation. However, dissenters' rights are not available to holders of shares,
such as shares of Firstar Common Stock, which are registered on a national
securities exchange or quoted on NASDAQ on the record date fixed to determine
shareholders entitled to notice of the meeting at which shareholders are to vote
on the proposed corporation action. Firstar Common Stock is listed on the New
York Stock Exchange and the Chicago Stock Exchange.
ASSESSABILITY; POTENTIAL LIABILITY FOR WAGES
Firstar Common Stock and Firstar Preferred Stock are subject to possible
assessment in certain circumstances. Section 180.0622(2)(b) of the WBCL provides
that shareholders of Wisconsin corporations are personally liable 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 such corporation, but not exceeding six
months' service in any one case. The liability imposed by the predecessor to
this statute was interpreted in a trial court decision to extend to the original
issue price for shares, rather than the stated par value. Although affirmed by
the Wisconsin Supreme Court, the case offers no precedential value due to the
fact that the decision was affirmed by an equally divided court. Firstar Common
Stock is not otherwise subject to call or assessment.
Shares of stock of Delaware corporations are nonassessable under the DGCL.
The DGCL does not impose personal liability on holders of First Colonial Common
Stock for debts owing to employees or otherwise.
TAKEOVER STATUTES
Wisconsin law regulates a broad range of "business combinations" between a
Wisconsin corporation and an "interested stockholder." Wisconsin law defines a
"business combination" as including a merger or a share exchange, sale of
assets, issuance of stock or rights to purchase stock and certain related party
transactions. An "interested stockholder" is defined as a person who
beneficially owns, directly or indirectly, 10% of the outstanding voting stock
of a corporation or who is an affiliate or associate of the corporation and
beneficially owned 10% of the voting stock within the last three years. In
certain cases, Wisconsin law prohibits a corporation from engaging in a business
combination with an interested stockholder for a period of three years following
the date on which the person became an interested stockholder, unless the board
of directors approved the business combination or the acquisition of the stock
prior to the acquisition date, (ii) the business combination is approved by a
majority of the outstanding voting stock not owned by the interested
stockholder, (iii) the consideration to be received by shareholders meets
certain requirements of the statute with respect to form and amount or (iv) the
business combination is of a type specifically excluded from the coverage of the
statute.
Section 180.1150 of the WBCL provides that in particular circumstances the
voting of shares of a Wisconsin "issuing public corporation" (a Wisconsin
corporation which has at least 100 Wisconsin resident
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shareholders, 500 or more shareholders of record and total assets exceeding $1
million) held by any person in excess of 20% of the voting power is limited to
10% of the full voting power of such excess shares. Full voting power may be
restored under Section 180.1150 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 such restoration.
In addition, the WBCL sets forth certain fair price provisions which govern
mergers and share exchanges with, or sales of substantially all a Wisconsin
issuing public corporation's assets to, a 10% shareholder, mandating that any
such transaction meet one of two requirements. The first requirement is that the
transaction be approved by 80% of all shareholders and two-thirds of
"disinterested" shareholders, which generally exclude the 10% shareholder. The
second requirement is the payment of a statutory fair price, which is intended
to insure that shareholders in the second step merger, share exchange or asset
sale receive at least what shareholders received in the first step.
Further, the WBCL requires shareholder approval for certain transactions in
the context of a tender offer or similar action for in excess of 50% of a
Wisconsin corporation's stock. Shareholder approval is required for the
acquisition of more than 5% of the corporation's stock at a price above market
value, unless the corporation makes an equal offer to acquire all shares.
Shareholder approval is also required for the sale or option of assets which
amount to at least 10% of the market value of the corporation, but this
requirement does not apply if the corporation meets certain minimum outside
director standards.
DGCL Section 203 (the "Delaware Business Combination Statute") applies to
certain business combinations involving a corporation and certain of its
stockholders. The Delaware Business Combination Statute prevents an "interested
stockholder" (defined generally as a person with 15% or more of the
corporation's outstanding voting stock) from engaging in a "business
combination" (defined to include a variety of transactions, including the sale
of assets, mergers and almost any related party transaction) with a Delaware
corporation for three years following the date such person became an interested
stockholder, unless (i) before such person became an interested stockholder, the
board of directors of the corporation approved the transaction in which the
interested stockholder became an interested stockholder or approved the business
combination, (ii) upon consummation of the transaction which resulted in the
interested stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding stock held by
directors who are also officers of the corporation and by certain employee stock
ownership plans), or (iii) following the transaction in which such person became
an interested stockholder, the business combination is approved by the board of
directors of the corporation and authorized at a meeting of stockholders by the
affirmative vote of the holders of two-thirds of the outstanding voting stock of
the corporation not owned by the interested stockholder.
DIRECTORS
The Board of Directors of First Colonial consists of a single class of
eleven directors, each of whom serves a term of one year. Holders of First
Colonial Class A Common Stock, voting as a separate class (each share entitled
to one vote), are entitled to elect one director. Holders of First Colonial
Common Stock, voting as a single class, are entitled to elect the remaining
number of directors. Any director may be removed either for or without cause at
any time by the affirmative vote of the holders of a majority of all the shares
of stock outstanding and entitled to vote at a special meeting of stockholders
called for that purpose.
The Board of Directors of Firstar is divided into three classes as nearly
equal in number as possible, with the directors in each class serving for
staggered three-year terms. At each annual meeting of Firstar's shareholders,
the successors to the class of directors whose term expires at the time of such
meeting are elected by a majority of the votes cast, assuming a quorum is
present. A director of Firstar may be removed, with or without cause, only by
the affirmative vote of not less than 75% of the then issued and outstanding
shares taken at a special meeting of shareholders called for that purpose.
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LIABILITY OF DIRECTORS; INDEMNIFICATION
In accordance with the DGCL, First Colonial has indemnified its directors
and officers against liabilities arising because the indemnified individual is
or was a director or officer if the individual acted in good faith, reasonably
believed his or her conduct was in the corporation's best interests (or in
certain cases at least not opposed to the corporation's best interests) and, in
the case of any criminal proceeding, the individual had no reasonable cause to
believe the individual's conduct was unlawful. However, under the DGCL a
corporation cannot indemnify a director or officer in connection with a
proceeding by or in the right of the corporation in which the director or
officer in connection with a proceeding by or in the right of the corporation in
which the director or officer was adjudged liable to the corporation or in
connection with any other proceeding charging improper personal benefit in which
the individual was adjudged liable on the basis that personal benefit was
improperly received. Further, the DGCL allows a corporation, by amendment to its
articles of incorporation, to eliminate or limit the personal liability of a
director to the corporation or its shareholders for monetary damages for breach
of fiduciary duty as a director, except that the provision cannot eliminate or
limit the liability of a director for a breach of the director's duty of loyalty
to the corporation or its shareholders, for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, for a
transaction from which the director derives an improper personal benefit or with
respect to liability relating to a distribution to shareholders made in
violation of law. First Colonial adopted an amendment to its Restated
Certificate of Incorporation to eliminate personal liability under this
provision.
Under Firstar's By-laws and the WBCL, Firstar indemnifies 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 shareholders 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 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 willful misconduct. In addition, under the WBCL, a director of
Firstar is not liable to the corporation, its shareholders or any person
asserting rights on behalf of the corporation or its shareholders for
liabilities arising from a breach of, or failure to perform, any duty resulting
solely from his or her status as a director, unless the person asserting
liability proves that the breach or failure to perform constitutes any of the
circumstances under which indemnification would not be provided.
ACTION WITHOUT A MEETING
Under the DGCL, any action required or permitted to be taken at a meeting
of shareholders may be taken without a meeting if a consent in writing, setting
forth the action taken, is signed by holders of not less than the minimum number
of shares necessary to authorize or approve such action. Under the WBCL, such
action without a meeting is allowed only if the consent is signed by all of the
shareholders entitled to vote with respect to the subject matter.
VOTING RIGHTS
The Certificate of Incorporation of First Colonial provides that, except as
otherwise required by law, the holders of First Colonial Class A Common Stock
are entitled to one vote per share on all matters to be voted on by First
Colonial's stockholders, and the holders of First Colonial Class B Common Stock
are entitled to 20 votes per share on all matters to be voted on by First
Colonial's stockholders. The shares of First Colonial Common Stock vote together
as a single class on all matters, except (i) the holders of First Colonial Class
A Common Stock and First Colonial Class B Common Stock are entitled to vote as
separate classes on any merger or similar transaction that requires the approval
of the stockholders and in which the consideration per share to be received by
holders of one class differs in any respect from the consideration to be
received by the holders of the other class, (ii) as described above in
connection with the election of one director by the holders of First Colonial
Class A Common Stock, (iii) the holders of First Colonial Class A Common Stock
are
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entitled to vote as a separate class on any proposal to issue any shares of
First Colonial Class B Common Stock after December 31, 1994 and (iv) as
otherwise required by law. Each share of Firstar Common Stock is entitled to one
vote on any matter requiring shareholder action.
DIVIDEND RIGHTS
First Colonial's Certificate of Incorporation provides that no dividend,
other than a dividend payable in shares of First Colonial Class B Common Stock,
may be declared or paid on shares of First Colonial Class B Common Stock, unless
there is declared or paid, as the case may be, an accompanying dividend on the
shares of First Colonial Class A Common Stock of at least 120% of the dividend
on the shares of First Colonial Class B Common Stock. In the event that
dividends are declared that are payable in shares of First Colonial Class A
Common Stock or First Colonial Class B Common Stock, dividends will be declared
that are payable at the same rate on both classes of stock, and the dividends
payable in shares of First Colonial Class A Common Stock will be payable to the
holders of such shares, and the dividends payable in shares of First Colonial
Class B Common Stock will be payable to holders of such shares.
Each share of Firstar Common Stock carries an identical entitlement to
dividend payments.
FIRSTAR CORPORATION
GENERAL
Firstar is a registered bank holding company incorporated in Wisconsin in
1929. Firstar is the largest bank holding company headquartered in Wisconsin.
Firstar's sixteen bank subsidiaries in Wisconsin had total assets of $10.1
billion at September 30, 1994. Its eleven Iowa banks, two Illinois banks and one
Minnesota bank had total assets of approximately $2.6 billion, $988 million and
$1.2 billion, respectively, as of September 30, 1994. Firstar has one bank in
Phoenix, Arizona, with total assets of $96 million.
Firstar provides banking services throughout Wisconsin and Iowa and in the
Chicago, Minneapolis-St. Paul and Phoenix metropolitan areas. Its Wisconsin bank
subsidiaries operate in 111 locations, with offices in eight of the ten largest
metropolitan population centers of the state, including 47 offices in the
Milwaukee metropolitan area. Its Iowa bank subsidiaries operate in 42 locations;
its Illinois bank subsidiaries in 15 locations; its Minnesota bank subsidiary in
24 locations; and its Arizona bank in 3 locations. Firstar's bank subsidiaries
provide a broad range of financial services for companies based in Wisconsin,
Iowa, Illinois and Minnesota, national business organizations, governmental
entities and individuals. These commercial and consumer banking activities
include accepting demand, time and savings deposits; making both secured and
unsecured business and personal loans; and issuing and servicing credit cards.
The bank subsidiaries also engage in correspondent banking and provide trust and
investment services to individual and corporate customers. Firstar Bank
Milwaukee, N.A., Firstar Bank Cedar Rapids, N.A. and Firstar Bank Madison, N.A.
also conduct international banking services consisting of foreign trade
financing, issuance and confirmation of letters of credit, funds collection and
foreign exchange transactions. Nonbank subsidiaries provide retail brokerage
services, trust and investment services, residential mortgage banking
activities, title insurance, business insurance, consumer and credit related
insurance, and corporate computer and operational services.
At September 30, 1994, Firstar and its subsidiaries employed 7,393
full-time and 2,223 part-time employees, of which approximately 956 full-time
employees are represented by a union under a collective bargaining agreement
that expires on August 31, 1996. Management considers its relations with its
employees to be good.
COMPETITION
Banking and bank-related services is a highly competitive business.
Firstar's subsidiaries compete primarily in Wisconsin and the Midwestern United
States. Firstar and its subsidiaries have numerous competitors, some of which
are larger and have greater financial resources. Firstar competes with other
commercial banks and financial intermediaries, such as savings banks, savings
and loan associations, credit
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unions, mortgage companies, leasing companies and a variety of financial
services and advisory companies located throughout the country.
SUPERVISION
Firstar's business activities as a bank holding company are regulated by
the Federal Reserve Board under the BHC Act, which imposes various requirements
and restrictions on its operations. The activities of Firstar and those of its
banking and nonbanking subsidiaries are limited to the business of banking and
activities closely related or incidental to banking.
The business of banking is highly regulated, and there are various
requirements and restrictions in the laws of the United States and the states in
which the subsidiary banks operate, including the requirement to maintain
reserves against deposits and adequate capital to support their operations,
restrictions on the nature and amount of loans which may be made by the banks,
restrictions relating to investment (including loans to and investments in
affiliates), branching and other activities of the banks.
Firstar's subsidiary banks with a national charter are supervised and
examined by the Comptroller of the Currency. The subsidiary banks with a state
charter are supervised and examined by their respective state banking agencies
and either by the Federal Reserve if a member bank of the Federal Reserve or by
the FDIC if a nonmember. All of the Firstar subsidiary banks are also subject to
examination by the Federal Deposit Insurance Corporation.
In recent years Congress has enacted significant legislation which has
substantially changed the federal deposit insurance system and the regulatory
environment in which depository institutions and their holding companies
operate. The Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA"), the Comprehensive Thrift and Bank Fraud Prosecution and Taxpayer
Recovery Act of 1990 and the Federal Deposit Insurance Corporation Improvement
Act of 1991 ("FDICIA") have significantly increased the enforcement powers of
the federal regulatory agencies having supervisory authority over Firstar and
its subsidiaries. Certain parts of such legislation, most notably those which
increase deposit insurance assessments and authorize further increases to
recapitalize the bank deposit insurance fund, increase the cost of doing
business for depository institutions and their holding companies. FIRREA also
provides that all commonly controlled FDIC insured depository institutions may
be held liable for any loss incurred by the FDIC resulting from a failure of, or
any assistance given by the FDIC, to any of such commonly controlled
institutions. Federal regulatory agencies have implemented provisions of FDICIA
with respect to taking prompt corrective action when a depository institution's
capital falls to certain levels. Under the new rules, five capital categories
have been established which range from "critically undercapitalized" to "well
capitalized." Failure of a depository institution to maintain a capital level
within the top two categories will result in specific actions from the federal
regulatory agencies. These actions could include the inability to pay dividends,
restricting new business activity, prohibiting bank acquisitions, asset growth
limitations and other restrictions on a case by case basis.
In addition to the impact of regulation, commercial banks are affected
significantly by the actions of the Federal Reserve Board as it attempts to
control the money supply and credit availability in order to influence the
economy. Changes to such monetary policies have had a significant effect on
operating results of financial institutions in the past and are expected to have
such an effect in the future; however, the effect of possible future changes in
such policies on the business and operations of Firstar cannot be determined.
58
<PAGE> 65
The following table sets out the risk-based capital position of each of
Firstar's bank subsidiaries as of September 30, 1994. All of Firstar's bank
subsidiaries exceeded the risk-based capital requirements as of such date.
FIRSTAR BANK SUBSIDIARIES
RISK-BASED CAPITAL RATIOS
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
TIER 1 TOTAL
CAPITAL CAPITAL
------- -------
<S> <C> <C>
Minimum Statutory Requirement............................................. 4.00% 8.00%
Firstar Bank Milwaukee, N.A............................................... 9.58% 11.42%
Firstar Bank Appleton..................................................... 10.25% 11.50%
Firstar Bank Eau Claire, N.A.............................................. 10.59% 11.84%
Firstar Bank Fond du Lac, N.A............................................. 10.87% 12.12%
Firstar Bank Grantsburg, N.A.............................................. 16.30% 17.56%
Firstar Bank Green Bay.................................................... 10.77% 12.02%
Firstar Bank Lake Geneva, N.A............................................. 14.94% 16.20%
Firstar Bank Madison, N.A................................................. 12.58% 13.84%
Firstar Bank Manitowoc.................................................... 11.25% 12.51%
Firstar Bank Minocqua..................................................... 15.32% 16.58%
Firstar Bank Oshkosh, N.A................................................. 10.10% 11.35%
Firstar Bank Portage...................................................... 18.30% 19.56%
Firstar Bank Rice Lake, N.A............................................... 13.45% 14.71%
Firstar Bank Sheboygan, N.A............................................... 10.02% 11.27%
Firstar Bank Wausau, N.A.................................................. 15.10% 16.39%
Firstar Bank Wisconsin Rapids, N.A........................................ 14.17% 15.42%
Firstar Bank Ames......................................................... 11.50% 12.75%
Firstar Bank Burlington, N.A.............................................. 13.18% 14.44%
Firstar Bank Cedar Falls.................................................. 10.16% 11.41%
Firstar Bank Cedar Rapids, N.A............................................ 9.88% 11.13%
Firstar Bank Council Bluffs............................................... 10.28% 11.53%
Firstar Bank Davenport, N.A............................................... 10.95% 12.20%
Firstar Bank Des Moines, N.A.............................................. 10.13% 11.39%
Firstar Bank Mount Pleasant............................................... 11.64% 12.89%
Firstar Bank Ottumwa...................................................... 12.02% 13.27%
Firstar Bank Red Oak, N.A................................................. 12.66% 13.91%
Firstar Bank Sioux City, N.A.............................................. 9.60% 10.85%
Firstar Bank of Minnesota, N.A............................................ 12.94% 14.20%
Firstar Bank DuPage....................................................... 15.75% 17.01%
Firstar Bank North Shore.................................................. 17.10% 18.36%
Firstar Bank Park Forest.................................................. 14.36% 15.61%
Firstar Bank West, N.A.................................................... 11.95% 13.20%
Firstar Metropolitan Bank & Trust......................................... 22.55% 23.81%
</TABLE>
OTHER ACQUISITIONS AND TRANSACTIONS
Since the enactment of interstate banking statutes by Wisconsin, Minnesota,
Illinois and Iowa, Firstar has actively acquired banks within that four-state
area. Firstar has also acquired one bank in Arizona, primarily to offer trust
services to customers in that state.
59
<PAGE> 66
On August 22, 1994, Firstar announced that it had signed a definitive
agreement to acquire Investors Bank Corp., parent company of Investors Savings
Bank, FSB, a $1 billion savings bank headquartered in Wayzata, Minnesota. Up to
3.2 million shares of Firstar Common Stock will be issued, and $8.4 million in
cash paid, in the transaction. It is anticipated that this acquisition will be
completed in the first quarter of 1995.
On August 26, 1994, Firstar announced that it had signed a definitive
agreement to acquire First Moline Financial Corp., parent of the $80 million
First Federal Savings Bank, of Moline, Illinois. Under the agreement, Firstar
would issue up to 314,000 shares of Firstar Common Stock in exchange for all the
common stock of First Moline Financial Corp. This acquisition is also expected
to close in the first quarter of 1995.
Firstar anticipates that it will acquire additional banks in the Midwest
region in the future. Firstar may pay cash or issue common stock, debt
securities, preferred stock or combinations of the foregoing in connection with
any such acquisitions.
Firstar also will continue to monitor external markets and may raise
additional capital as needed and when financially attractive by issuing common
stock, debt securities, preferred stock or combinations of the foregoing.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
Additional information concerning Firstar, including certain financial
information, information regarding voting securities of Firstar and principal
holders thereof, and information concerning directors and executive officers of
Firstar, is included in the documents filed by Firstar with the Commission under
the Exchange Act.
FIRST COLONIAL BANKSHARES CORPORATION
GENERAL
First Colonial is a registered bank holding company, incorporated in
Delaware, with 17 subsidiary banks located in the Chicago metropolitan area.
First Colonial augments the products and services offered by the subsidiary
banks through 5 nonbank subsidiaries engaged in mortgage origination, trust
services, equipment leasing, broker/dealer-investment services, and data
processing and operational services. At September 30, 1994, First Colonial had
total assets of approximately $1.8 billion, total deposits of $1.5 billion and
stockholders' equity of $157.8 million.
First Colonial employs a community bank business philosophy in serving the
diverse banking needs of retail and commercial customers in the communities in
which it operates. Contrary to the industry trend toward branch banking, this
approach maintains the independent status of an individual subsidiary bank, with
the local management and board of directors responsible for tailoring the loan,
deposit and other service mix to meet the needs of the local community. First
Colonial believes that the support from its specialized staff in the areas of
marketing and product development provides a competitive advantage over smaller,
local competitors, while at the same time, its localized decision making
responsibilities for credit extensions and product pricing are believed to
provide faster response time and greater flexibility than larger competitors.
The equipment leasing, brokerage, investment and trust services offered by the
nonbank subsidiaries of First Colonial have become increasingly important both
in the product and service mixes of the subsidiary banks and as sources of fee
income. Cost efficiencies are derived in the operation of the subsidiary banks
through the centralization of support functions such as data processing,
asset/liability management, human resources, audit, loan review, compliance and
strategic planning.
First Colonial has expanded through acquisitions and the formation of bank
and nonbank subsidiaries. In 1983, First Colonial was a one-bank holding company
with one nonbank subsidiary and total assets of approximately $250 million.
Since that time First Colonial has acquired 15 additional subsidiary banks and 2
nonbank subsidiaries and formed 2 de novo subsidiary banks and 2 nonbank
subsidiaries.
First Colonial's executive offices are located at 30 North Michigan Avenue,
Suite 300, Chicago, Illinois 60602, and its telephone number is (312) 419-9891.
60
<PAGE> 67
SUBSIDIARY BANKS
The following table identifies First Colonial's bank subsidiaries and sets
out the risk-based capital position of each of the bank subsidiaries as of
September 30, 1994. All of the First Colonial bank subsidiaries exceeded the
risk-based capital requirements as of such date.
FIRST COLONIAL BANK SUBSIDIARIES
RISK-BASED CAPITAL RATIOS(1)
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
TIER 1 TOTAL
CAPITAL CAPITAL
------- -------
<S> <C> <C>
Minimum Statutory Requirement........................................... 4.00% 8.00%
All American Bank....................................................... 9.34% 10.48%
Colonial Bank........................................................... 9.96% 10.73%
Community Bank of Edgewater............................................. 9.89% 10.99%
Michigan Avenue National Bank........................................... 9.36% 10.58%
First Colonial Bank Southwest........................................... 14.68% 15.90%
First Colonial Bank of McHenry County................................... 16.02% 16.98%
First Colonial Bank of Downers Grove.................................... 13.76% 14.68%
York State Bank......................................................... 12.40% 13.40%
Fox Lake State Bank..................................................... 10.18% 11.20%
First Colonial Bank of DuPage County.................................... 13.57% 14.56%
First Colonial Bank Northwest........................................... 9.86% 10.86%
First Colonial Bank/Northlake........................................... 10.54% 11.66%
Avenue Bank of Oak Park................................................. 12.27% 13.25%
First Colonial Bank/Rosemont............................................ 9.87% 11.07%
First Colonial Bank of Lake County...................................... 9.20% 9.98%
First Colonial Bank/Highwood............................................ 10.86% 11.99%
First Colonial Bank/Mundelein........................................... 12.53% 13.78%
</TABLE>
- ---------------
(1) The above risk-based capital ratios include as capital the effect of
Statement of Financial Accounting Standards #115 (SFAS #115), "Accounting
for Certain Investments in Debt and Equity Securities". This component of
capital represents the after-tax effect of the difference between the fair
value and book value of securities classified as available-for-sale.
Recently the federal banking agencies have announced their joint decision
not to adopt SFAS #115 for regulatory capital purposes. As of September 30,
1994, this component of capital reduced the otherwise recorded capital of
each bank subsidiary; therefore, each of these ratios would increase if
computed excluding the impact of SFAS #115.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
Additional information concerning First Colonial, including certain
financial information, information regarding the voting securities of First
Colonial and principal holders thereof, and information concerning the executive
officers and directors of First Colonial, is included in the documents filed by
First Colonial with the Commission under the Exchange Act.
OPINIONS
Certain legal matters in connection with the Merger will be passed upon for
First Colonial by Vedder, Price, Kaufman & Kammholz, 222 North LaSalle Street,
Chicago, Illinois 60601-1003, and for Firstar by Howard H. Hopwood III, Senior
Vice President and General Counsel of Firstar. Mr. Hopwood is a full-time
employee of Firstar and at September 30, 1994, directly or beneficially owned
approximately 20,048 shares of Firstar Common Stock. He also holds 34,800
options to acquire Firstar Common Stock under Firstar's 1988 Incentive Stock
Plan.
61
<PAGE> 68
EXPERTS
The consolidated financial statements of Firstar and subsidiaries as of
December 31, 1993 and 1992, and for each of the years in the three-year period
ended December 31, 1993 have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of First Colonial and subsidiaries as
of December 31, 1993 and 1992, and for each of the years in the three-year
period ended December 31, 1993 have been incorporated by reference herein and in
the registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
STOCKHOLDER PROPOSALS
If the Merger has not been consummated, pursuant to Rule 14a-8 under the
Exchange Act, First Colonial stockholders may present proper proposals for
inclusion in First Colonial's proxy statement for consideration at First
Colonial's next annual meeting of its stockholders by submitting their proposals
to First Colonial in a timely manner. As noted in First Colonial's proxy
statement relating to the 1994 annual meeting of First Colonial stockholders, in
order to be so included for the 1995 annual meeting stockholder proposals must
have been received by First Colonial no later than December 1, 1994.
Pursuant to Rule 14a-8 under the Exchange Act, Firstar shareholders may
present proper proposals for inclusion in Firstar's proxy statement for
consideration at the next annual meeting of its shareholders by submitting their
proposals to Firstar in a timely manner. As noted in Firstar's proxy statement
relating to the 1994 annual meeting of Firstar shareholders, in order to be so
included for the 1995 annual meeting shareholder proposals must have been
received by Firstar no later than November 29, 1994.
62
<PAGE> 69
PRO FORMA COMBINING FINANCIAL STATEMENTS
The following unaudited pro forma combining capitalization, balance sheet
and statements of income are based upon the historical results of Firstar and
First Colonial giving effect to the acquisition accounted for as a pooling of
interests. Pro forma adjustments, and the assumptions on which they are based,
are described in the accompanying footnotes to the pro forma combining financial
statements. The other pending acquisitions refers to and includes the historical
results and pro forma adjustments to effect the acquisitions of three additional
companies as described in the accompanying footnotes. These financial statements
should be read in conjunction with the historical financial statements of
Firstar and First Colonial, incorporated by reference into this Proxy
Statement-Prospectus. The pro forma combining financial statements are not
necessarily indicative of the results that would have occurred had the companies
constituted a single entity during the respective periods, nor are they
indicative of future results of operations.
FIRSTAR CORPORATION
PRO FORMA COMBINING CAPITALIZATION
SEPTEMBER 30, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA OTHER
COMBINED PENDING
FIRSTAR FIRST COLONIAL PRO FORMA FIRSTAR & ACQUISITIONS PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS FIRST COLONIAL PRO FORMA(3) COMBINED
--------- -------------- ----------- -------------- ------------ ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Long-term Debt:*
10.25% notes due 5-1-98............... $ 78,405 $ $ $ 78,405 $ $ 78,405
10% notes due 6-1-96.................. 43,950 43,950 43,950
11.5% notes due 1-5-96................ 2,706 2,706 2,706
14% notes due 10-17-96................ 1,500 1,500 1,500
9.25% notes due 12-15-02.............. 0 23,000 23,000
10% notes due 4-1-96.................. 0 391 391
Other................................. 57 57 57
--------- --------- ------- ---------- -------- -------
Total long-term debt................ 125,118 1,500 0 126,618 23,391 150,009
Stockholders' Equity:
Preference stock...................... 19,713 19,713 19,713
Common stock.......................... 81,233 13,408 (3,757) 90,884 6,256 97,140
Capital surplus....................... 150,729 56,678 (7,207) 200,200 16,477 216,677
Retained earnings..................... 1,024,825 79,927 1,104,752 55,378 1,160,130
Net unrealized losses on securities
available for sale.................. (995) (995) (1,976) (2,971)
Treasury stock........................ (15,221) (10,964) 10,964 (15,221) (15,221)
Restricted stock...................... (555) (555) (1,035) (1,590)
--------- --------- ------- ---------- -------- ---------
Total stockholders' equity............ 1,241,011 157,767 0 1,398,778 75,100 1,473,878
---------- --------- ------- ---------- -------- ---------
Total capital....................... $1,366,129 $ 159,267 $ 0 $1,525,396 $ 98,491 $1,623,887
========== ========= ======= ========== ======== ==========
</TABLE>
- ---------------
* Qualifying as secondary capital.
63
<PAGE> 70
FIRSTAR CORPORATION
PRO FORMA COMBINING BALANCE SHEET
SEPTEMBER 30, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA OTHER
COMBINED PENDING
FIRSTAR FIRST COLONIAL PRO FORMA FIRSTAR & ACQUISITIONS PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS FIRST COLONIAL PRO FORMA(3) COMBINED
---------- -------------- ----------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
(THOUSANDS OF DOLLARS)
ASSETS
Cash and due from banks............ $ 945,890 $ 89,964 $ 0 $ 1,035,854 $ 30,528 $ 1,066,382
Short-term investments............. 362,833 12,366 0 375,199 1,353 376,552
Securities available for sale...... 5,502 167,763 0 173,265 111,281 284,546
Securities held to maturity........ 3,006,724 363,276 0 3,370,000 89,768 3,459,768
Total loans........................ 9,520,174 1,090,202 (10,524)(2) 10,599,852 1,250,912 11,850,764
Less reserve for loan losses....... (171,734) (13,396) 0 (185,130) (9,261) (194,391)
---------- ------------ ----------- -------------- ------------ ----------
Loans -- net....................... 9,348,440 1,076,806 (10,524) 10,414,651 1,241,651 11,656,373
Bank premises and equipment........ 273,988 25,878 0 299,866 29,245 329,111
Other assets....................... 293,842 29,656 0 323,498 30,492 353,990
Deposit base intangible............ 18,092 0 0 18,092 0 18,092
Goodwill........................... 70,812 37,232 0 108,044 5,814 113,858
Mortgage servicing rights.......... 3,081 0 0 3,081 3,993 7,074
----------- ------------ ----------- ---------- --------- ----------
Total assets................. $14,329,204 $ 1,802,941 $ (10,524) $16,121,621 $ 1,544,125 $17,665,746
=========== ============ =========== ============ ========== ==========
LIABILITIES AND EQUITY
Deposits........................... $10,647,946 $ 1,542,589 $ 0 $12,190,535 $ 1,045,044 $13,235,579
Short-term borrowed funds.......... 2,071,589 67,222 0 2,138,811 271,488 2,410,299
Long-term debt
Secondary capital................ 125,118 1,500 0 126,618 23,391 150,009
Other............................ 150 24,170 (10,524)(2) 13,796 110,687 124,483
Other liabilities.................. 240,853 9,693 0 250,546 18,168 268,714
Minority interest.................. 2,537 0 0 2,537 247 2,784
---------- ------------ ----------- ---------- --------- ----------
Total liabilities............ 13,088,193 1,645,174 (10,524) 14,722,843 1,469,025 16,191,868
Preferred stock.................... 19,713 0 19,713 0 19,713
Common stock....................... 81,233 13,408 (3,757)(1) 90,844 6,256 97,140
Capital surplus.................... 150,729 56,678 (7,207)(1) 200,200 16,477 216,677
Retained earnings.................. 1,024,825 79,927 0 1,104,752 55,378 1,160,130
Net unrealized losses on securities
available for sale............... (995) 0 (995) (1,976) (2,971)
Treasury stock..................... (15,221) (10,964) 10,964 (15,221) 0 (15,221)
Restricted stock................... (555) 0 0 (555) (1,035) (1,590)
---------- ----------- ----------- ---------- --------- ----------
Total stockholders' equity... 1,241,011 157,767 0 1,398,778 75,100 1,473,878
----------- ----------- ----------- ----------- ----------- ----------
Total liabilities and
stockholders' equity....... $14,329,204 $ 1,802,941 $ (10,524) $16,121,621 $ 1,544,125 $17,665,746
=========== =========== =========== =========== =========== ===========
</TABLE>
64
<PAGE> 71
FIRSTAR CORPORATION
PRO FORMA COMBINING STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA OTHER
COMBINED PENDING
FIRSTAR FIRST COLONIAL PRO FORMA FIRSTAR & ACQUISITIONS PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS FIRST COLONIAL PRO FORMA(3) COMBINED
---------- -------------- ----------- -------------- ------------ ---------
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE)
<S> <C> <C> <C> <C> <C> <C>
Interest revenue
Loans.............................. $ 549,760 $ 65,609 $ (251)(2) $ 615,118 $ 61,894 $ 677,012
Investment securities.............. 121,091 17,677 0 138,768 8,178 146,946
Other.............................. 6,969 580 0 7,549 900 8,449
---------- ------- ---------- ------------- ---------- ---------
Total interest revenue........... 677,820 83,866 (251) 761,435 70,972 832,407
Interest expense
Deposits........................... 186,242 26,950 0 213,192 25,615 238,807
Short-term borrowed funds........ 41,832 1,660 0 43,492 8,276 51,768
Long-term debt..................... 9,640 1,385 (251)(2) 10,774 3,795 14,569
---------- ------- ---------- ------------- ---------- ---------
Total interest expense........... 237,714 29,995 (251) 267,458 37,686 305,144
---------- ------- ---------- ------------- ---------- ---------
Net interest revenue............... 440,106 53,871 0 493,977 33,286 527,263
Provision for loan losses............ 8,274 1,733 0 10,007 355 10,362
---------- ------- ---------- ------------- ---------- ---------
Net interest revenue after loan
loss provision................... 431,832 52,138 0 483,970 32,931 516,901
Other operating revenue
Trust and investment management
fees............................. 88,928 1,926 0 90,854 189 91,043
Service charges on deposit
accounts......................... 54,716 6,781 0 61,497 1,195 62,692
Credit card service revenue........ 39,622 0 0 39,622 0 39,622
Mortgage banking revenue........... 12,090 755 0 12,845 9,241 22,086
Gains on the sales of securities... 77 617 0 694 1,293 1,987
Other revenue...................... 54,179 6,892 0 61,071 6,153 67,224
---------- ------- ---------- ------------- ---------- ---------
Total other operating revenue.... 249,612 16,971 0 266,583 18,071 284,654
Other operating expense
Salaries and employee benefits..... 243,726 23,931 0 267,657 17,654 285,311
Net occupancy and equipment
expenses......................... 71,795 8,578 0 80,373 4,775 85,148
Other operating expense............ 139,144 18,310 0 157,454 11,149 168,603
---------- ------- ---------- ------------ --------- --------
Total other operating expense.... 454,665 50,819 0 505,484 33,578 539,062
---------- ------- ---------- ------------ --------- --------
Income before income taxes........... 226,779 18,290 0 245,069 17,424 262,493
Applicable income taxes.............. 75,183 5,918 0 81,101 7,664 88,765
---------- ------- ---------- ------------ --------- --------
Net income........................... $ 151,596 $ 12,372 $ 0 $ 163,968 $ 9,760 $ 173,728
========== ======= ========== ============ ========= ========
Net income applicable to common...... $ 151,596 $ 11,323 $ 0 $ 162,919 $ 9,134 $ 172,053
Net income per common share.......... $ 2.36 $ 2.26 $ 2.23
Average number of common shares
outstanding(4)..................... 64,299,467 7,650,650 71,950,117 5,053,934 77,004,051
</TABLE>
65
<PAGE> 72
FIRSTAR CORPORATION
PRO FORMA COMBINING STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1993
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
COMBINED OTHER
FIRSTAR & PENDING
FIRSTAR FIRST COLONIAL FIRST ACQUISITIONS PRO FORMA
HISTORICAL HISTORICAL COLONIAL PRO FORMA(3) COMBINED
---------- -------------- --------- ------------ ---------
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE)
<S> <C> <C> <C> <C> <C>
Interest revenue
Loans............................ $ 685,530 $ 82,592 $ 768,122 $ 78,340 $ 846,462
Securities....................... 174,652 18,221 192,873 10,932 203,805
Other............................ 6,772 808 7,580 1,193 8,773
---------- ----------- --------- ---------- ---------
Total interest revenue........ 866,954 101,621 968,575 90,465 1,059,040
Interest expense
Deposits......................... 261,634 33,921 295,555 34,317 329,872
Short-term borrowed funds........ 23,811 1,378 25,189 373 25,562
Long-term debt................... 13,453 1,549 15,002 12,987 27,989
---------- ----------- --------- ---------- ---------
Total interest expense........ 298,898 36,848 335,746 47,677 383,423
---------- ----------- --------- ---------- ---------
Net interest revenue............... 568,056 64,773 632,829 42,788 675,617
Provision for loan losses.......... 24,567 3,892 28,459 5,490 33,949
---------- ----------- --------- ---------- ---------
Net interest revenue after loan
loss provision................ 543,489 60,881 604,370 37,298 641,668
Other operating revenue
Trust and investment management
fees.......................... 110,185 2,336 112,521 249 112,770
Service charges on deposit
accounts...................... 74,071 8,693 82,764 2,101 84,865
Credit card service revenue...... 53,316 0 53,316 0 53,316
Mortgage banking revenue......... 26,774 2,176 28,950 13,628 42,578
Gains on the sales of
securities.................... 182 238 420 49 469
Other revenue.................... 77,737 8,909 86,646 5,857 92,503
---------- ----------- --------- ---------- ---------
Total other operating
revenue..................... 342,265 22,352 364,617 21,884 386,501
Other operating expense
Salaries and employee benefits... 316,848 28,406 345,254 23,298 368,552
Net occupancy and equipment
expenses...................... 96,870 10,855 107,725 5,986 113,711
Other operating expenses......... 174,026 24,143 198,169 14,830 212,999
---------- ----------- --------- ---------- ---------
Total other operating
expense..................... 587,744 63,404 651,148 44,114 695,262
---------- ----------- --------- ---------- ---------
Income before income taxes......... 298,010 19,829 317,839 15,068 332,907
Applicable income taxes............ 93,716 6,210 99,926 5,403 105,329
---------- ----------- --------- ---------- ---------
Net income......................... $ 204,294 $ 13,619 $ 217,913 $ 9,665 $ 227,578
========= ========== ========= ========== =========
Net income applicable to common
stock............................ $ 201,028 $ 11,824 $ 212,852 $ 8,720 $ 221,572
Net income per common share........ $ 3.15 $ 2.99 $ 2.91
Average number of common shares
outstanding(4)................... 63,746,924 7,532,695 71,279,619 4,960,834 76,240,453
</TABLE>
66
<PAGE> 73
FIRSTAR CORPORATION
PRO FORMA COMBINING STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1992
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
COMBINED OTHER
FIRSTAR & PENDING
FIRSTAR FIRST COLONIAL FIRST ACQUISITIONS PRO FORMA
HISTORICAL HISTORICAL COLONIAL PRO FORMA(3) COMBINED
---------- -------------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE)
Interest revenue
Loans............................ $ 693,594 $ 86,306 $ 779,900 $ 77,601 $ 857,501
Securities....................... 191,736 22,709 214,445 11,563 226,008
Other............................ 13,191 3,313 16,504 839 17,343
---------- ----------- --------- ---------- ---------
Total interest revenue........ 898,521 112,328 1,010,849 90,003 1,100,852
Interest expense
Deposits......................... 321,405 44,635 366,040 42,698 408,738
Short-term borrowed funds........ 23,423 2,029 25,452 295 25,747
Long-term debt................... 14,541 1,644 16,185 7,567 23,752
---------- ----------- --------- ---------- ---------
Total interest expense........ 359,369 48,308 407,677 50,560 458,237
---------- ----------- --------- ---------- ---------
Net interest revenue............... 539,152 64,020 603,172 39,443 642,615
Provision for loan losses.......... 44,821 5,043 49,864 1,603 51,467
---------- ----------- --------- ---------- ---------
Net interest revenue after loan
loss provision................ 494,331 58,977 553,308 37,840 591,148
Other operating revenue
Trust and investment management
fees.......................... 95,926 2,370 98,296 178 98,474
Service charges on deposit
accounts...................... 66,301 8,752 75,053 2,092 77,145
Credit card service revenue...... 51,867 0 51,867 0 51,867
Mortgage banking revenue......... 13,058 2,234 15,292 11,298 26,590
Gains on the sales of
securities.................... 981 1,563 2,544 2,151 4,695
Other revenue.................... 72,634 8,456 81,090 3,681 84,771
---------- ----------- --------- ---------- ---------
Total other operating
revenue..................... 300,767 23,375 324,142 19,400 343,542
Other operating expense
Salaries and employee benefits... 287,607 25,752 313,359 20,394 333,753
Net occupancy and equipment
expenses...................... 93,128 10,182 103,310 5,536 108,846
Other operating expenses......... 176,831 28,859 205,690 13,258 218,948
---------- ----------- --------- ---------- ---------
Total other operating
expense..................... 557,566 64,793 622,359 39,188 661,547
---------- ----------- --------- ---------- ---------
Income before income taxes......... 237,532 17,559 255,091 18,052 273,143
Applicable income taxes............ 71,547 5,357 76,904 6,385 83,289
---------- ----------- --------- ---------- ---------
Net income......................... $ 165,985 $ 12,202 $ 178,187 $ 11,667 $ 189,854
========= ========== ========= ========== =========
Net income applicable to common
stock............................ $ 162,238 $ 10,770 $ 173,008 $ 10,699 $ 183,707
Net income per common share........ $ 2.62 $ 2.50 $ 2.48
Average number of common shares
outstanding(4)................... 61,879,175 7,317,822 69,196,997 4,793,111 73,990,108
</TABLE>
67
<PAGE> 74
FIRSTAR CORPORATION
PRO FORMA COMBINING STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1991
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
COMBINED OTHER
FIRSTAR & PENDING
FIRSTAR FIRST COLONIAL FIRST ACQUISITIONS PRO FORMA
HISTORICAL HISTORICAL COLONIAL PRO FORMA(3) COMBINED
---------- -------------- --------- ------------ ---------
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE)
<S> <C> <C> <C> <C> <C>
Interest revenue
Loans............................ $ 757,069 $ 94,923 $ 851,992 $ 86,735 $ 938,727
Securities....................... 206,577 29,107 235,684 12,532 248,216
Other............................ 18,033 5,460 23,493 552 24,045
---------- ----------- --------- ---------- ---------
Total interest revenue........ 981,679 129,490 1,111,169 99,819 1,210,988
Interest expense
Deposits......................... 438,799 67,796 506,595 59,626 566,221
Short-term borrowed funds........ 45,434 3,383 48,817 489 49,306
Long-term debt................... 16,850 1,837 18,687 5,760 24,447
---------- ----------- --------- ---------- ---------
Total interest expense........ 501,083 73,016 574,099 65,875 639,974
---------- ----------- --------- ---------- ---------
Net interest revenue............... 480,596 56,474 537,070 33,944 571,014
Provision for loan losses.......... 50,276 3,935 54,211 1,977 56,188
---------- ----------- --------- ---------- ---------
Net interest revenue after loan
loss provision................ 430,320 52,539 482,859 31,967 514,826
Other operating revenue
Trust and investment management
fees.......................... 80,813 2,219 83,032 163 83,195
Service charges on deposit
accounts...................... 59,368 8,185 67,553 2,098 69,651
Credit card service revenue...... 54,594 0 54,594 0 54,594
Mortgage banking revenue......... 7,922 2,268 10,190 6,543 16,733
Gains on the sales of
securities.................... 1,619 4,160 5,779 (2,930) 2,849
Other revenue.................... 68,219 6,955 75,174 3,814 78,988
---------- ----------- --------- ---------- ---------
Total other operating
revenue..................... 272,535 23,787 296,322 9,688 306,010
Other operating expense
Salaries and employee benefits... 266,757 25,532 292,289 16,967 309,256
Net occupancy and equipment
expenses...................... 84,735 9,448 94,183 5,275 99,458
Other operating expenses......... 164,044 20,974 185,018 11,861 196,879
---------- ----------- --------- ---------- ---------
Total other operating
expense..................... 515,536 55,954 571,490 34,103 605,593
---------- ----------- --------- ---------- ---------
Income before income taxes......... 187,319 20,372 207,691 7,552 215,243
Applicable income taxes............ 52,988 5,324 58,312 3,011 61,323
---------- ----------- --------- ---------- ---------
Net income......................... $ 134,331 $ 15,048 $ 149,379 $ 4,541 $ 153,920
========= ========== ========= ========== =========
Net income applicable to common
stock............................ $ 130,277 $ 14,567 $ 144,844 $ 4,436 $ 149,280
Net income per common share........ $ 2.14 $ 2.12 $ 2.05
Average number of common shares
outstanding(4)................... 60,997,625 7,186,769 68,184,394 4,632,777 72,817,171
</TABLE>
68
<PAGE> 75
FIRSTAR CORPORATION
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
(UNAUDITED)
1) The acquisition of First Colonial will be accounted for as a pooling of
interests. Firstar will issue 7,560,712 shares of Firstar Common Stock in
exchange for all the outstanding shares of First Colonial Common Stock
based on the 0.7725 exchange ratio. Firstar will also issue up to 39,700
shares of Firstar Preferred Stock for all the outstanding First Colonial
Series C Preference Stock. Nonrecurring expenses associated with the
transaction totalling $23 million, or $14 million after tax, are not
included in the pro forma financial statements.
2) Represents the elimination of loans between First Colonial and a bank
subsidiary of Firstar.
3) The acquisition of First Southeast Banking Corp. was completed on October
18, 1994 and was accounted for as a pooling of interests. Firstar issued
1,801,577 shares of Firstar Common Stock for all the outstanding shares of
First Southeast Banking Corp. Intercompany cash and short-term investment
balances between First Southeast and a bank subsidiary of Firstar have been
eliminated.
The acquisition of Investors Bank Corp. will be accounted for as a pooling
of interests. Firstar will issue 3,200,000 shares of Firstar Common Stock
in exchange for all the outstanding shares of Investors Bank Corp. based on
a 0.8678 exchange ratio. Investors Bank Corp. will redeem its preferred
stock at completion of the merger for a payment of $8,350,000 and is
reflected in the pro forma balance sheet.
The acquisition of First Moline Financial Corp. will be accounted for as a
purchase. Firstar will issue 314,000 shares of Firstar Common Stock in
exchange for all the outstanding shares of First Moline Financial Corp. for
a total purchase price of $9,780,000. Firstar will repurchase Firstar
Common Stock on the open market equal to the shares issued to acquire First
Moline Financial Corp. The excess of the purchase price over the net assets
acquired of $3,940,000 is allocated to goodwill for these statements. Net
income has been reduced for the amortization of the excess purchase price
over a 15 year period and adjustments have been made to interest income on
short-term investments assumed to have been used to fund the repurchase of
shares issued in the transaction.
Nonrecurring expenses associated with these transactions totalling $13
million, or $8 million after tax, are not included in the pro forma
financial statements.
4) Pro forma combined and average shares outstanding data reflects the exchange
ratio of 0.7725 shares of Firstar Common Stock for each share of First
Colonial Common Stock; the exchange of shares of Firstar Common Stock for
shares of First Southeast Common Stock; and the exchange ratio of 0.8676
shares of Firstar Common Stock for each share of Investors Common Stock.
69
<PAGE> 76
APPENDIX A
SECTION 262 OF THE
DELAWARE GENERAL CORPORATION LAW
SEC. 262. APPRAISAL RIGHTS. (a) Any stockholder of a corporation of this
State who holds shares of stock on the date of the making of a demand pursuant
to subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to sec. 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of his shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251, 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock which, at
the record date fixed to determine the stockholders entitled to receive
notice of and to vote at the meeting of stockholders to act upon the
agreement of merger or consolidation, were either (i) listed on a national
securities exchange or designated as a national market system security on
an interdealer quotation system by the National Association of Securities
Dealers, Inc. or (ii) held of record by more than 2,000 stockholders; and
further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger
did not require for its approval the vote of the stockholders of the
surviving corporation as provided in subsection (f) of sec. 251 of this
title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
secs. 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation;
b. Shares of stock of any other corporation which at the effective
date of the merger or consolidation will be either listed on a national
securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of
Securities Dealers, Inc. or held of record by more than 2,000
stockholders;
c. Cash in lieu of fractional shares of the corporations described
in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock and cash in lieu of
fractional shares described in the foregoing subparagraphs a., b. and c.
of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a
A-1
<PAGE> 77
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to sec. 228
or 253 of this title, the surviving or resulting corporation, either before
the effective date of the merger or consolidation or within 10 days
thereafter, shall notify each of the stockholders entitled to appraisal
rights of the effective date of the merger or consolidation and that
appraisal rights are available for any or all of the shares of the
constituent corporation, and shall include in such notice a copy of this
section. The notice shall be sent by certified or registered mail, return
receipt requested, addressed to the stockholder at his address as it
appears on the records of the corporation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of the
notice, demand in writing from the surviving or resulting corporation the
appraisal of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown
A-2
<PAGE> 78
on the list at the addresses therein stated. Such notice shall also be given by
1 or more publications at least 1 week before the day of the hearing, in a
newspaper of general circulation published in the City of Wilmington, Delaware
or such publication as the Court deems advisable. The forms of the notices by
mail and by publication shall be approved by the Court, and the costs thereof
shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and in the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
A-3
<PAGE> 79
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
A-4
<PAGE> 80
APPENDIX B
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
FIRSTAR CORPORATION,
FIRSTAR CORPORATION OF ILLINOIS
AND
FIRST COLONIAL BANKSHARES CORPORATION
- --------------------------------------------------------------------------------
<PAGE> 81
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
THE MERGER............................................................................. B-1
1.01. The Merger........................................................... B-1
1.02. Effective Time of the Merger......................................... B-1
1.03. Closing.............................................................. B-1
1.04. Form of Transaction.................................................. B-2
ARTICLE II
EFFECT OF THE MERGER ON CAPITAL STOCK.................................................. B-2
2.01. Effect on Capital Stock of First Colonial............................ B-2
2.02. Effect on Options to Purchase FCBC Class A Common Stock.............. B-2
2.03. Effect on Common Stock of Sub........................................ B-3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FIRST COLONIAL....................................... B-3
3.01. Organization, Standing and Power..................................... B-3
3.02. First Colonial Subsidiaries.......................................... B-3
3.03. Capital Structure.................................................... B-4
3.04. Authority............................................................ B-6
3.05. First Colonial Financial Statements.................................. B-6
3.06. Reports.............................................................. B-7
3.07. Information Supplied................................................. B-7
3.08. Authorizations; Compliance with Applicable Laws...................... B-8
3.09. Litigation and Claims................................................ B-9
3.10. Taxes................................................................ B-9
3.11. Certain Agreements................................................... B-10
3.12. Benefit Plans........................................................ B-11
3.13. Insurance............................................................ B-12
3.14. Conduct of First Colonial to Date.................................... B-12
3.15. Material Adverse Change.............................................. B-13
3.16. Properties, Leases and Other Agreements.............................. B-13
3.17. Opinion of Financial Advisor......................................... B-13
3.18. Vote Required........................................................ B-14
3.19. Accounting and Tax Matters........................................... B-14
3.20. Dissenters' Rights................................................... B-14
3.21. Affiliates........................................................... B-14
3.22. Regulatory Impediments............................................... B-14
3.23. Full Disclosure...................................................... B-14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FIRSTAR AND SUB...................................... B-14
4.01. Organization, Standing and Power..................................... B-14
4.02. Firstar Subsidiaries................................................. B-14
4.03. Capital Structure.................................................... B-15
4.04. Authority............................................................ B-15
4.05. Firstar Financial Statements......................................... B-16
4.06. Reports.............................................................. B-16
4.07. Information Supplied................................................. B-16
</TABLE>
B-i
<PAGE> 82
<TABLE>
<CAPTION>
PAGE
<S> <C>
4.08. Authorizations; Compliance with Applicable Laws...................... B-17
4.09. Litigation and Claims................................................ B-17
4.10. Taxes................................................................ B-18
4.11. Certain Agreements................................................... B-18
4.12. Benefit Plans........................................................ B-18
4.13. Absence of Certain Changes or Events................................. B-19
4.14. Properties, Leases and Other Agreements.............................. B-19
4.15. Accounting and Tax Matters........................................... B-19
4.16. Material Adverse Change.............................................. B-19
4.17. Full Disclosure...................................................... B-19
4.18. Regulatory Impediments............................................... B-19
ARTICLE V
COVENANTS OF FIRST COLONIAL............................................................ B-20
5.01. Affirmative Covenants................................................ B-20
5.02. Negative Covenants................................................... B-20
5.03. Letter of First Colonial's Accountants............................... B-22
5.04. Access and Information............................................... B-23
5.05. Update Disclosure; Breaches.......................................... B-23
5.06. Affiliates; Accounting and Tax Treatment; Stock Repurchases.......... B-23
5.07. Dissent Process...................................................... B-24
5.08. Expenses............................................................. B-24
5.09. Delivery of Stockholder List......................................... B-24
5.10. Audited Financial Statements......................................... B-25
5.11. Bank-Level Transactions.............................................. B-25
5.12. Sale of Certain Assets............................................... B-25
5.13. Allowance for Loan Losses............................................ B-25
5.14. Stockholder Meeting.................................................. B-25
5.15. Certain Agreements................................................... B-25
5.16. Environmental Matters................................................ B-25
ARTICLE VI
COVENANTS OF FIRSTAR AND SUB........................................................... B-27
6.01. Affirmative Covenants................................................ B-27
6.02. Negative Covenants................................................... B-27
6.03. Rights Plan.......................................................... B-27
6.04. Access and Information............................................... B-27
6.05. Breaches............................................................. B-27
6.06. Stock Exchange Listing............................................... B-27
6.07. Firstar Board........................................................ B-28
6.08. Indemnification...................................................... B-28
6.09. Accounting and Tax Treatment......................................... B-29
6.10. Regulatory Filings................................................... B-29
6.11. Employee Benefits.................................................... B-29
6.12. Form S-8 Registration Statement for Firstar Stock Options............ B-29
6.13. Post-Merger Financial Statements..................................... B-29
6.14. Notice of Anticipated Breach or Failure of Condition................. B-29
6.15. Expenses............................................................. B-29
</TABLE>
B-ii
<PAGE> 83
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE VII
ADDITIONAL AGREEMENTS.................................................................. B-29
7.01. Preparation of S-4 and the Proxy Statement........................... B-29
7.02. Legal Conditions to Merger........................................... B-30
7.03. Reports.............................................................. B-30
7.04. Brokers or Finders................................................... B-30
7.05. Additional Agreements; Reasonable Efforts............................ B-31
ARTICLE VIII
CONDITIONS PRECEDENT................................................................... B-31
8.01. Conditions to Each Party's Obligation to Effect the Merger........... B-31
8.02. Conditions of Obligations of Firstar and Sub......................... B-31
8.03. Conditions of Obligations of First Colonial.......................... B-33
ARTICLE IX
INDUCEMENT............................................................................. B-35
9.01. Inducement........................................................... B-35
ARTICLE X
TERMINATION AND AMENDMENT.............................................................. B-36
10.01. Termination.......................................................... B-36
10.02. Environmental Conditions Termination................................. B-38
10.03. Effect of Termination................................................ B-38
10.04. Amendment............................................................ B-38
10.05. Extension; Waiver.................................................... B-38
ARTICLE XI
GENERAL PROVISIONS..................................................................... B-39
11.01. Nonsurvival of Representations, Warranties and Agreements............ B-39
11.02. Notices.............................................................. B-39
11.03. Interpretation....................................................... B-39
11.04. Counterparts......................................................... B-40
11.05. Entire Agreement; No Third Party Beneficiaries; Rights of B-40
Ownership............................................................
11.06. Governing Law........................................................ B-40
11.07. Publicity............................................................ B-40
11.08. Assignment........................................................... B-40
11.09. Knowledge of the Parties............................................. B-40
EXHIBIT A Plan of Merger....................................................... B-42
EXHIBIT 2.01(b) Firstar Preferred Stock [not included in Appendix]
EXHIBIT 5.06 Affiliate Letter [not included in Appendix]
EXHIBIT 5.15 Assignment and Assumption Agreement [not included in Appendix]
EXHIBIT 10.01 Index Group.......................................................... B-49
</TABLE>
B-iii
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INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
SECTION
----------------
<S> <C>
Agreement.................................................................. Page B-1
Affiliate.................................................................. 9.01(c)
Articles of Merger......................................................... 1.02
Benefit Plans.............................................................. 3.12(a)
BHC Act.................................................................... 3.01
CERCLA..................................................................... 3.08(b)
Certificate of Merger...................................................... 1.02
Closing.................................................................... 1.03
Closing Date............................................................... 1.03
Code....................................................................... 3.12(a)
Competing Proposal......................................................... 5.15
Competing Transaction...................................................... 5.02(f)
Comptroller................................................................ 3.06
DGCL....................................................................... 1.01
Disclosure Letter.......................................................... 4.02
Effective Time............................................................. 1.02
Environmental Laws......................................................... 3.08(b)
ERISA...................................................................... 3.12(a)
Exchange Act............................................................... 3.04
Exchange Ratio............................................................. 2.01(a)
Expenses................................................................... 5.08(b)
Fairness Opinion........................................................... 3.17
FCBC 1981 Stock Plan....................................................... 3.03(b)
FCBC 1988 Stock Plan....................................................... 3.03(b)
FCBC Balance Sheet......................................................... 3.05(b)
FCBC Benefit Plans......................................................... 3.12(a)
FCBC Certificate........................................................... 3.01
FCBC Class A Common Stock.................................................. 2.01
FCBC Class B Common Stock.................................................. 2.01
FCBC Common Stock.......................................................... 2.01
FCBC Deposit Agreement..................................................... 3.03(d)
FCBC Disclosure Letter..................................................... 3.02
FCBC Environmental Permits................................................. 3.08(b)
FCBC Financial Statements.................................................. 3.05(a)
FCBC Interested Property................................................... 3.08(b)
FCBC Material Adverse Effect............................................... 3.01
FCBC Permits............................................................... 3.08
FCBC Preference Stock...................................................... 3.03(a)
FCBC Preferred............................................................. 3.03(a)
FCBC Property.............................................................. 3.08(b)
FCBC Receipts.............................................................. 2.01
FCBC Reports............................................................... 3.06
FCBC Series C Preference Stock............................................. 2.01
FCBC Stock Options......................................................... 2.02
FCBC Subsidiary............................................................ 3.02
FDIC....................................................................... 3.02
</TABLE>
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<TABLE>
<CAPTION>
SECTION
----------------
<S> <C>
Federal Reserve Board...................................................... 1.03
Final Index Price.......................................................... 10.01(b)(iv)
Final Price................................................................ 10.01(b)(iii)
First Colonial............................................................. Page B-1
Firstar.................................................................... Page B-1
Firstar Average Price...................................................... 10.01(a)(vi)(1)
Firstar Benefit Plans...................................................... 4.11
Firstar Common Stock....................................................... 2.01(a)
Firstar Disclosure Letter.................................................. 4.02
Firstar Financial Statements............................................... 4.05
Firstar Material Adverse Effect............................................ 4.01
Firstar Permits............................................................ 4.08
Firstar Preferred Stock.................................................... 2.01(b)
Firstar Property........................................................... 4.08(b)
Firstar Receipts........................................................... 3.20
Firstar Reports............................................................ 4.06
Firstar Stock Option....................................................... 2.02
Firstar Subsidiary......................................................... 4.02
Governmental Entity........................................................ 3.04
IBCA....................................................................... 1.01
Illinois Commissioner...................................................... 1.03
Illinois Office............................................................ 3.06
Indemnified Liabilities.................................................... 6.08(a)
Indemnified Parties........................................................ 6.08(a)
Index Group................................................................ 10.01(b)(i)
Initial Index Price........................................................ 10.01(b)(ii)
Injunction................................................................. 8.01(d)
Latest Statement Date...................................................... 3.05(a)
Laws....................................................................... 3.08
Mandatory Stock Purchase Agreements........................................ 3.03(c)
Mary Stock Plan............................................................ 3.03(b)
Merger..................................................................... Page B-1
NYSE....................................................................... 6.06
Person..................................................................... 9.01(c)
Plan of Merger............................................................. Page B-1
Proceeding................................................................. 3.09
Proxy Statement............................................................ 3.07
Representatives............................................................ 5.03(f)
Right...................................................................... 2.01(a)
Rights Agreement........................................................... 2.01(a)
Securities Act............................................................. 3.04
Sub........................................................................ Page B-1
Subordinated Notes......................................................... 3.03(c)
Subsidiary................................................................. 3.01
Ten-Day Calculation Period................................................. 10.01(b)(v)
Toxic Substances........................................................... 3.08(b)
Transaction Proposal....................................................... 9.01(c)
Trigger Event.............................................................. 9.01(b)
</TABLE>
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<TABLE>
<CAPTION>
SECTION
----------------
<S> <C>
Violation.................................................................. 3.04
Voting Agreement........................................................... 3.21
Voting Debt................................................................ 3.03(e)
WBCL....................................................................... 4.02
William Stock Plan......................................................... 3.03(b)
</TABLE>
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of July 31, 1994
("Agreement"), among FIRSTAR CORPORATION, a Wisconsin corporation ("Firstar"),
FIRSTAR CORPORATION OF ILLINOIS, an Illinois corporation and a wholly-owned
subsidiary of Firstar ("Sub"), and FIRST COLONIAL BANKSHARES CORPORATION, a
Delaware corporation ("First Colonial").
WHEREAS, the respective Boards of Directors of Firstar, Sub and First
Colonial have approved the merger of First Colonial with and into Sub (the
"Merger") in accordance with the terms and conditions hereof and of the Plan of
Merger in the form attached hereto as Exhibit A executed concurrently herewith
between Sub and First Colonial, and joined in by Firstar for certain limited
purposes (the "Plan of Merger");
WHEREAS, the respective Boards of Directors of Firstar, Sub and First
Colonial believe that such proposed Merger, the exchange of shares of Firstar
Common Stock (as defined in Section 2.01(a) hereof) for shares of FCBC Common
Stock (as defined in Section 2.01 hereof) and the exchange of shares of Firstar
Preferred Stock (as defined in Section 2.01(a) hereof) for shares of FCBC Series
C Preference Stock (as defined in Section 2.01 hereof), pursuant and subject to
the terms of this Agreement and the Plan of Merger (the "Merger Agreements"), is
desirable and in the best short-term and long-term interests of their respective
corporations and stockholders; and
WHEREAS, Firstar, Sub and First Colonial desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01. The Merger. Subject to the terms and conditions of this Agreement,
Firstar, Sub and First Colonial agree to effect the Merger of First Colonial
with and into Sub in accordance with the Illinois Business Corporation Act (the
"IBCA") and the Delaware General Corporation Law (the "DGCL").
1.02. Effective Time of the Merger. Subject to the provisions of the Merger
Agreements, (a) articles of merger (the "Articles of Merger") shall be duly
prepared and executed by Sub and First Colonial and thereafter delivered to the
Secretary of State of the State of Illinois for filing, as provided in the IBCA,
on the Closing Date (as defined in Section 1.03) and (b) a certificate of merger
(the "Certificate of Merger") shall be duly prepared and executed by Sub and
First Colonial and thereafter delivered to the Secretary of State of the State
of Delaware for filing, as provided in the DGCL, on the Closing Date. The Merger
shall become effective upon the filing of the Articles of Merger with the
Secretary of State of the State of Illinois and the Certificate of Merger with
the Secretary of State of the State of Delaware (the "Effective Time").
1.03. Closing. The closing of the Merger (the "Closing") will take place at
10:00 a.m. on a date to be specified by the parties, which shall be no later
than the fifth business day after the later to occur of (i) approval of the
Merger by the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") and the expiration of any waiting period imposed by law, (ii)
approval of the Merger by the Illinois Commissioner of Banks and Trust Companies
(the "Illinois Commissioner") and the expiration of any waiting period imposed
by law and (iii) the date on which the stockholders meeting of First Colonial
called to approve the Merger is held (the "Closing Date"), at the offices of
Firstar, unless another date or place is agreed to in writing by the parties
hereto. Notwithstanding the foregoing, if the Closing does not take place on the
date referred to in the preceding sentence because any condition to the
obligations of Firstar and Sub, on the one hand, or First Colonial, on the other
hand, under this Agreement is not met on that date, the other party may postpone
the Closing from time to time to any designated subsequent business day not more
than ten business days after the original or postponed date on which the Closing
was to occur by delivering notice of such postponement on the date the Closing
was to occur.
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1.04. Form of Transaction. Firstar at its reasonable discretion may
restructure the transactions described herein in any format sufficient to have
the effects of the Merger on FCBC Common Stock and FCBC Series C Preferred Stock
provided that there is no effect upon the consideration to be delivered pursuant
to Section 2.01, change in the tax treatment to the recipients of Firstar Common
Stock and Firstar Preferred Stock to be delivered in the Merger, the holders of
options to purchase shares of First Colonial or any other holder of a security
of First Colonial, or change in the accounting treatment of the transactions
contemplated hereby as a pooling-of-interests. At the request of Firstar, the
parties each will take or perform any necessary or advisable steps to
restructure the transaction.
ARTICLE II
EFFECT OF THE MERGER ON CAPITAL STOCK
2.01. Effect on Capital Stock of First Colonial. As of the Effective Time,
by virtue of the Merger and without any action on the part of the holder of any
shares of First Colonial's Class A Common Stock, $1.25 par value ("FCBC Class A
Common Stock"), First Colonial's Class B Common Stock, $1.25 par value ("FCBC
Class B Common Stock" and, collectively with the FCBC Class A Common Stock, the
"FCBC Common Stock"), or First Colonial's Series C Convertible Preference Stock,
no par value ("FCBC Series C Preference Stock"), or holders of depositary
receipts evidencing depositary shares representing an interest in the FCBC
Series C Preference Stock ("FCBC Receipts"), but subject to the provisions of
Section 262 of the DGCL with respect to the rights of dissenting stockholders of
First Colonial:
(a) Conversion of FCBC Common Stock. Each then issued and outstanding share
of FCBC Common Stock shall be converted into the right to receive 0.7725 fully
paid and nonassessable shares of common stock, $1.25 par value, of Firstar
("Firstar Common Stock") (the "Exchange Ratio"), including with each such share
one-half of one Firstar Preferred Share Purchase Right ("Right") issued pursuant
to the Rights Agreement dated as of January 20, 1989, between Firstar and
Firstar Trust Company, as Rights Agent (the "Rights Agreement"). Prior to the
Distribution Date (as defined in the Rights Agreement), all references in this
Agreement to the Firstar Common Stock to be received pursuant to the Merger
shall be deemed to include the Rights.
(b) Conversion of FCBC Series C Preference Stock. Each then issued and
outstanding share of FCBC Series C Preference Stock shall be converted into the
right to receive one fully paid and nonassessable share of Series D Convertible
Preferred Stock, no par value, of Firstar ("Firstar Preferred Stock") which
Firstar Preferred Stock shall have terms substantially as set forth on Exhibit
2.01(b) hereto.
(c) Stock Held by First Colonial. Each then issued and outstanding share of
FCBC Common Stock or FCBC Series C Preference Stock owned by First Colonial, any
direct or indirect subsidiary of First Colonial (other than shares held in a
fiduciary capacity), Firstar or any direct or indirect subsidiary of Firstar
(other than shares held in a fiduciary capacity), and each share of FCBC Common
Stock or FCBC Series C Preference Stock issued and held in First Colonial's
treasury will be cancelled and retired.
(d) Cancellation of Shares. All shares of FCBC Common Stock and FCBC Series
C Preference Stock issued and outstanding immediately prior to the Effective
Time shall no longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a certificate representing
any such shares shall cease to have any rights with respect thereto, except the
right to receive the shares of Firstar Common Stock or Firstar Preferred Stock,
as the case may be, to be issued in consideration therefor upon the surrender of
such certificate in accordance with the Plan of Merger, without interest.
(e) Adjustment. If prior to the Effective Time Firstar shall declare a
stock dividend or distribution upon or subdivide, split up, reclassify or
combine its shares of Firstar Common Stock or declare a dividend or make a
distribution on Firstar Common Stock of any security convertible into Firstar
Common Stock, appropriate adjustment or adjustments will be made in the
conversion rate set forth in subsection (a) and Section 2.02.
2.02. Effect on Options to Purchase FCBC Class A Common Stock. Each FCBC
Stock Option (as defined in Section 3.03(b)) which is outstanding immediately
prior to the Effective Time shall, by virtue of the
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Merger and without any action on the part of the holder thereof, become and
represent an option to purchase the number of shares of Firstar Common Stock (a
"Firstar Stock Option") (decreased to the nearest full share) determined by
multiplying (a) the number of shares of FCBC Class A Common Stock subject to the
FCBC Stock Option immediately prior to the Effective Time by (b) the Exchange
Ratio, at an exercise price per share of Firstar Common Stock (rounded up to the
nearest whole cent) equal to the exercise price per share of FCBC Class A Common
Stock under the FCBC Stock Option immediately prior to the Effective Time
divided by the Exchange Ratio. Firstar shall pay cash to holders of FCBC Stock
Options in lieu of issuing fractional shares of Firstar Common Stock upon
exercise of a Firstar Stock Option. After the Effective Time, and except as
provided in this Section 2.02, each Firstar Stock Option shall be exercisable on
the same terms and conditions as were applicable under the FCBC Stock Option as
of the Effective Time, giving effect to the acceleration of the exercisability
of such FCBC Stock Option as a result of the Merger.
2.03. Effect on Common Stock of Sub. At the Effective Time, the shares of
Sub Common Stock validly issued and outstanding immediately prior to the
Effective Time will continue to evidence 400 shares of common stock, $2.50 par
value, of the Surviving Corporation so that all shares of capital stock of the
Surviving Corporation will continue to be owned by Firstar. The outstanding
certificate(s) representing shares of Sub Common Stock will, after the Effective
Time, continue to represent the same number of shares of the Surviving
Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FIRST COLONIAL
First Colonial represents and warrants to Firstar and Sub as follows:
3.01. Organization, Standing and Power. First Colonial is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, except where the failure to have such power or authority would not
have a material adverse effect on the business, operations or financial
condition of First Colonial and its Subsidiaries (as hereinafter defined) taken
as a whole (a "FCBC Material Adverse Effect"). First Colonial is qualified to do
business and is in good standing in each other state or foreign jurisdiction
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and where the failure to be so qualified would
have a FCBC Material Adverse Effect. First Colonial is registered as a bank
holding company with the Federal Reserve Board under the Bank Holding Company
Act of 1956, as amended (the "BHC Act"). First Colonial has delivered to Firstar
true, accurate and complete copies of the currently effective certificate of
incorporation (the "FCBC Certificate") and by-laws of First Colonial, including
all amendments thereto. As used in this Agreement, the word "Subsidiary" means
any corporation or other organization, whether incorporated or unincorporated
(i) of which such party or any other Subsidiary of such party is a general
partner (excluding partnerships, the general partnership interest of which held
by such party or any Subsidiary of such party does not have a majority of the
voting interest in such partnership) or (ii) at least a majority of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.
3.02. First Colonial Subsidiaries. Except as set forth in the FCBC
Disclosure Letter (which is a letter of even date herewith delivered by First
Colonial to Firstar and Sub, the receipt thereof having been acknowledged by
Firstar and Sub executing a copy thereof, that identifies, as to each matter
disclosed therein, the section of this Agreement to which the matter relates),
First Colonial beneficially owns, directly or indirectly, all of the shares of
the outstanding capital stock of each of the Subsidiaries listed on such letter
(herein called collectively the "FCBC Subsidiaries" or individually a "FCBC
Subsidiary"), which constitute First Colonial's sole Subsidiaries. No equity
securities of any of the FCBC Subsidiaries are or may become required to be
issued by reason of any option, warrants, calls, rights or agreements of any
character
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whatsoever; there are outstanding no securities or rights convertible into or
exchangeable for shares of any capital stock of any FCBC Subsidiary; and there
are no other contracts, commitments, understandings or arrangements by which any
FCBC Subsidiary is bound to issue additional shares of its capital stock or
options, warrants, calls, rights or agreements to purchase or acquire any
additional shares of its capital stock. Except as provided for under any
applicable banking statute, all of the shares of capital stock of each of the
FCBC Subsidiaries owned by First Colonial are fully paid and nonassessable and
are owned by it free and clear of any claim, lien, encumbrance or agreement with
respect thereto. Each FCBC Subsidiary is a banking association or a corporation,
in each case duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has the corporate power and
authority to own or lease its properties and assets and to carry on its business
as it is now being conducted. Each FCBC Subsidiary that is a national bank is a
member of the Federal Reserve System. Each FCBC Subsidiary that is a banking
institution is identified as such on the FCBC Disclosure Letter. The deposits of
each FCBC Subsidiary that is a banking institution and accepts deposits are
insured by the Federal Deposit Insurance Corporation ("FDIC") to the extent
provided by law. First Colonial has delivered to Firstar true, accurate and
complete copies of the currently effective charter, certificate or articles of
incorporation and by-laws of the FCBC Subsidiaries, including all amendments
thereto. Except as set forth in the FCBC Disclosure Letter and except for
securities held in its capacity as fiduciary, First Colonial does not own
beneficially, directly or indirectly, more than 5% of any class of equity
securities or similar interests of any corporation, bank, business trust,
association or similar organization. There are no obligations, contingent or
otherwise, of First Colonial or any FCBC Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock of any FCBC Subsidiary or to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any FCBC Subsidiary or any other entity, other
than pursuant to commercial loan arrangements and similar obligations arising in
the ordinary course of the business of the FCBC Subsidiaries.
3.03. Capital Structure. (a) As of the date hereof, the authorized capital
stock of First Colonial consists of 20,000,000 shares of FCBC Class A Common
Stock; 3,000,000 shares of FCBC Class B Common Stock; 100,000 shares of
preferred stock, $57 par value ("FCBC Preferred"); and 200,000 shares of
preference stock, no par value ("FCBC Preference Stock").
(b) As of the date hereof, (i) 8,400,829 shares of FCBC Class A Common
Stock are issued and outstanding, (ii) no shares of FCBC Class A Common Stock
are reserved for issuance pursuant to First Colonial's 1981 Incentive Stock
Option Plan (the "FCBC 1981 Stock Plan"), and options to purchase no shares of
FCBC Class A Common Stock are outstanding under the FCBC 1981 Stock Plan, (iii)
2,019,394 shares of FCBC Class A Common Stock are reserved for issuance pursuant
to First Colonial's 1988 Stock Option Plan, as amended (the "FCBC 1988 Stock
Plan"), and options to purchase 1,444,754 shares of FCBC Class A Common Stock
are outstanding under the FCBC 1988 Stock Plan, (iv) 22,293 shares of FCBC Class
A Common Stock are reserved for issuance pursuant to the Hi-Bancorp., Inc.
Employees' Combined Incentive and Non-Statutory Stock options to purchase 22,293
shares of FCBC Class A Common Stock are outstanding under the William Stock
Plan, (v) 7,458 shares of FCBC Class A Common Stock are reserved for issuance
pursuant to the GNP Bancorp, Inc. Employees' Combined Incentive and
Non-Statutory Stock Option and Stock Appreciation Rights Plan (the "Mary Stock
Option Plan"), and options to purchase 7,458 shares of FCBC Class A Common Stock
are outstanding under the Mary Stock Plan (such stock options under such Stock
Plans collectively "FCBC Stock Options"), (vi) 1,102,777 shares of FCBC Class A
Common Stock are reserved for issuance upon conversion of outstanding shares of
FCBC Series C Preferred Stock, (vii) 1,894,687 shares of FCBC Class A Common
Stock are reserved for issuance upon conversion of outstanding shares of FCBC
Class B Common Stock, and (viii) 475,798 shares of FCBC Class A Common Stock are
held in treasury. As of the date hereof, pursuant to the FCBC Certificate, the
price at which shares of FCBC Class A Common Stock are deliverable upon
conversion of FCBC Series C Preference Stock is $18.00 per share of FCBC Class A
Common Stock, and each share of FCBC Series C Preference Stock is convertible
into 27.780 shares of FCBC Class A Common Stock. There is no adjustment in the
conversion price for the FCBC Series C Preference Stock that was not required to
be made by virtue of Section 1.3(c)(viii) of the certificate of designations,
preferences and rights of the FCBC Series C Preference Stock, but which is
required to be carried forward and taken into account in any subsequent
adjustment. The Merger will have the effect on FCBC Stock Options described in
Section 2.02.
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(c) As of the date hereof, (i) 1,568,600 shares of FCBC Class B Common
Stock are issued and outstanding, (ii) 326,087 shares of FCBC Class B Common
Stock are reserved for issuance pursuant to Mandatory Stock Purchase Agreements
dated as of October 17, 1984 between First Colonial and each of the obligors
identified in the FCBC Disclosure Letter (the "Mandatory Stock Purchase
Agreements") which were entered into in tandem with the issuance of First
Colonial's outstanding 14% Subordinated Capital Notes due October 17, 1996
payable to the obligors identified in the FCBC Disclosure Letter (the
"Subordinated Notes"), and (iii) 281,250 shares of Class B Common Stock are held
in treasury. As of the date hereof, Subordinated Notes in the aggregate
principal amount of $1,500,000 are issued and outstanding, and obligors under
the related Mandatory Stock Purchase Agreements have agreed to purchase shares
of FCBC Class B Common Stock at a variable price that will be $4.60 per share so
long as the market price of the FCBC Class A Common Stock exceeds $4.60 per
share. First Colonial has delivered to Firstar correct and complete copies of
the form(s) of the outstanding Mandatory Stock Purchase Agreements and
Subordinated Notes. Upon execution of the agreements contemplated by Section
5.15, each such agreement will constitute a valid and binding obligation of the
parties thereto other than Firstar, enforceable in accordance with its terms.
(d) As of the date hereof, no shares of FCBC Preferred are issued and
outstanding or reserved for issuance, 39,700 shares of FCBC Series C Preference
Stock are issued and outstanding, all of which have been deposited under a
Deposit Agreement, dated as of April 24, 1992 among First Colonial, First
Chicago Trust of New York, as depositary, and all holders from time to time of
FCBC Receipts issued thereunder (the "FCBC Deposit Agreement"), and no other
shares of FCBC Preference Stock are issued and outstanding or reserved for
issuance. As of the date hereof, 794,000 FCBC Receipts issued and outstanding
under the FCBC Deposit Agreement represent 794,000 issued and outstanding
depositary shares, each of which represents an interest in one-twentieth of a
share of FCBC Series C Preference Stock.
(e) As of the date hereof, other than in connection with the Subordinated
Notes, neither First Colonial nor any Subsidiary of First Colonial has issued
and outstanding bonds, debentures, notes or other indebtedness having the right
to vote (or convertible into securities having the right to vote) on any matters
on which stockholders may vote ("Voting Debt"). All outstanding shares of First
Colonial capital stock are validly issued, fully paid and nonassessable and not
subject to or issued in violation of any preemptive rights. As of the date of
this Agreement, except pursuant to this Agreement, the FCBC 1981 Stock Plan, the
FCBC 1988 Stock Plan, the William Stock Plan, the Mary Stock Plan, the FCBC
Series C Preference Stock and the Mandatory Stock Purchase Agreements, there are
no options, warrants, calls, rights, or agreements of any character whatsoever
to which First Colonial or any Subsidiary of First Colonial is a party or by
which it is bound obligating First Colonial or any such Subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or any Voting Debt of First Colonial or of any Subsidiary of First
Colonial or obligating First Colonial or any Subsidiary of First Colonial to
grant, extend or enter into any such option, warrant, call, right or agreement.
Immediately after the Effective Time, there will be no option, warrant, call,
right or agreement obligating First Colonial or any Subsidiary of First Colonial
to issue, deliver or sell, or cause to be issued, delivered or sold, any shares
of capital stock or any Voting Debt of First Colonial or any Subsidiary of First
Colonial, or obligating First Colonial or any Subsidiary of First Colonial to
grant, extend or enter into any such option, warrant, call, right or agreement.
(f) On September 30, 1993, First Colonial voluntarily redeemed 68,907
shares of First Colonial's Series A preferred stock, $57 par value, which
constituted all of the issued and outstanding shares of FCBC Preferred, at a
price of $62.00 per share in accordance with the FCBC Certificate. On March 7,
1994, 7,500 shares of First Colonial's Series B preference stock, no par value,
constituting all of the issued and outstanding shares of such series of FCBC
Preference Stock, were converted into 75,000 shares of FCBC Class A Common Stock
in accordance with the FCBC Certificate. Except in accordance with such
redemption of FCBC Preferred Stock and such conversion of FCBC Preference Stock
and as set forth in the FCBC Disclosure Letter, First Colonial has not
purchased, redeemed, canceled or otherwise acquired any of its capital stock
during the two years preceding the date hereof. Except as set forth in the FCBC
Certificate, there are no obligations, contingent or otherwise, of First
Colonial or any FCBC Subsidiary to repurchase, redeem or otherwise acquire any
shares of FCBC Common Stock or FCBC Series C Preference Stock.
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3.04. Authority. First Colonial has all requisite corporate power and
authority to enter into this Agreement, the Plan of Merger and the agreements
contemplated by Section 5.15 and to consummate the transactions contemplated
hereby and thereby, subject only to approval of this Agreement and the Plan of
Merger by the stockholders of First Colonial. The execution and delivery of this
Agreement, the Plan of Merger and the agreements contemplated by Section 5.15
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of First
Colonial, subject to such approval of this Agreement and the Plan of Merger by
the stockholders of First Colonial. The execution and delivery of this
Agreement, the Plan of Merger and the agreements contemplated by Section 5.15
and the consummation of the transactions contemplated hereby and thereby
received unanimous approval at a meeting of the Board of Directors of First
Colonial duly called and held on July 31, 1994. Such approval by the Board of
Directors of First Colonial is all action necessary to insure that the
restrictions set forth in Section 203 of the DGCL do not or will not apply to
the transactions contemplated herein. This Agreement and the Plan of Merger have
been, and when executed and delivered by First Colonial the agreements
contemplated by Section 5.15 will be, duly executed and delivered by First
Colonial, and upon such execution and delivery each constitutes a valid and
binding obligation of First Colonial enforceable in accordance with its terms.
The execution and delivery of this Agreement, the Plan of Merger and the
agreements contemplated by Section 5.15 do not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit under, or the
creation of a lien, pledge, security interest or other encumbrance on assets
(any such conflict, violation, default, right of termination, cancellation or
acceleration loss or creation, a "Violation"), pursuant to any provision of (a)
the FCBC Certificate, the by-laws of First Colonial or the charter, certificate
or articles of incorporation or by-laws of any FCBC Subsidiary or (b) except (i)
as set forth in the FCBC Disclosure Letter or (ii) as contemplated by the next
sentence hereof, any loan or credit agreement, note, mortgage, indenture, lease,
FCBC Benefit Plan (as defined in Section 3.12) or other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to First Colonial or any
Subsidiary of First Colonial or their respective properties or assets which
Violation pursuant to this clause (b) would have a FCBC Material Adverse Effect.
Other than in connection or in compliance with the provisions of the DGCL or the
IBCA, the Securities Act of 1933, as amended, and the rules and regulations
thereunder (the "Securities Act"), the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (the "Exchange Act"), the
securities or "blue sky" laws of the various states, and consents,
authorizations, approvals, notices or exemptions required under the BHC Act and
from the Illinois Commissioner, no consent, approval, order or authorization of,
or registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (a "Governmental Entity"), is required by or with respect to First
Colonial or any of the FCBC Subsidiaries in connection with the execution and
delivery of this Agreement and the Plan of Merger by First Colonial or the
consummation by First Colonial of the transactions contemplated hereby and
thereby, the failure to obtain which would have a FCBC Material Adverse Effect.
3.05. First Colonial Financial Statements. (a) The consolidated balance
sheets of First Colonial as of December 31, 1993 and 1992 and the related
consolidated statements of income, consolidated statements of cash flows and
consolidated statements of changes in stockholders' equity for the three years
in the period ended December 31, 1993 (the "Latest Statement Date"), accompanied
by the unqualified opinion of KPMG Peat Marwick, copies of which have been
furnished by First Colonial to Firstar; like financial information included in
Forms 10-Q filed with the SEC subsequent to the Latest Statement Date; and the
unaudited consolidated balance sheet of First Colonial as of June 30, 1994 and
the related consolidated statement of income for the six months then ended, in
the form prepared for First Colonial's internal use, copies of which have been
furnished by First Colonial to Firstar (collectively, the "FCBC Financial
Statements"), have been prepared in accordance with generally accepted
accounting principles and practices as utilized in the FCBC Financial Statements
applied on a consistent basis, and present fairly the consolidated financial
condition of First Colonial at the dates, and the consolidated results of
operations, changes in stockholders' equity and cash flows for the periods,
stated therein. In the case of interim fiscal periods, all
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adjustments, consisting only of normal recurring items, which management of
First Colonial believes necessary for a fair presentation of such financial
information, have been made, subject to year-end audit adjustments, none of
which will have a material adverse effect on the consolidated financial position
or results of operations of First Colonial.
(b) Except as and to the extent set forth on the consolidated balance sheet
of First Colonial and its Subsidiaries as of December 31, 1993, including all
notes thereto (the "FCBC Balance Sheet"), neither First Colonial nor any
Subsidiary of First Colonial has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected on a balance sheet, or in the notes thereto, prepared in accordance
with generally accepted accounting principles, except (i) for liabilities or
obligations incurred in the ordinary course of business since the Latest
Statement Date that would not, in the aggregate, have a FCBC Material Adverse
Effect or (ii) as otherwise reflected in the FCBC Reports filed prior to the
date of this Agreement. Except as disclosed in the FCBC Disclosure Letter,
neither First Colonial nor any Subsidiary of First Colonial has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) that are not required to be reflected on a balance sheet, or in the
notes thereto, except for liabilities or obligations that do not, in the
aggregate, have a FCBC Material Adverse Effect.
(c) Without limitation to the foregoing, First Colonial's consolidated
allowance for loan losses included in the FCBC Financial Statements as of June
30, 1994 was $13,295,759, representing 1.24% of total consolidated loans
reflected on such statements. The allowance for possible loan losses shown on
First Colonial's consolidated balance sheet as of June 30, 1994 is adequate in
all material respects to provide for all losses, net of recoveries relating to
loans previously charged off, on loans outstanding as of the date of such
statement, and First Colonial has no reason to believe that the loan portfolios
of the First Colonial Subsidiaries at such date will incur losses in excess of
such reserves.
3.06. Reports. Since January 1, 1991, First Colonial and the FCBC
Subsidiaries have filed all reports, registrations and statements, together with
any amendments required to be made with respect thereto, that were and are
required to be filed with (i) the SEC, including but not limited to Forms 10-K,
Forms 10-Q, Forms 8-K and proxy statements, (ii) the Federal Reserve Board,
(iii) the United States Comptroller of the Currency (the "Comptroller"), (iv)
the FDIC, (v) the Office of the Illinois Commissioner of Banks and Trust
Companies (the "Illinois Office") and (vi) any other applicable federal or state
securities or banking authorities (all such reports and statements are
collectively referred to herein as the "FCBC Reports"). As of their respective
dates, the FCBC Reports that have been filed complied in all material respects
with all of the statutes, rules and regulations enforced or promulgated by the
regulatory authority with which they were filed and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
3.07. Information Supplied. None of the information supplied or to be
supplied by First Colonial for inclusion or incorporation by reference in (i)
the registration statement on Form S-4 to be filed with the SEC by Firstar in
connection with the issuance of shares of Firstar Common Stock and Firstar
Preferred Stock in the Merger (the "S-4") will, at the time the S-4 is filed
with the SEC and at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, (ii) the proxy statement-prospectus in definitive form relating
to the meeting of First Colonial's stockholders to be held in connection with
the Merger, copies of which will also be sent to holders of FCBC Receipts (the
"Proxy Statement"), will, at the date mailed to First Colonial's stockholders
(including such holders of FCBC Receipts) and at the time of such meeting of
stockholders, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading, and (iii) any other documents to be filed with the SEC, the
Federal Reserve Board, the Illinois Commissioner or any regulatory agency in
connection with the transactions contemplated hereby will, at the time of
filing, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Proxy
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Statement, insofar as it relates to information other than that supplied by
Firstar, will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder.
3.08. Authorizations; Compliance with Applicable Laws. (a) First Colonial
and its Subsidiaries hold all authorizations, permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities which are material
to the operations of the businesses of First Colonial and the FCBC Subsidiaries
taken as a whole (the "FCBC Permits"), including appropriate authorizations from
the Comptroller and the Illinois Commissioner. First Colonial and the
Subsidiaries of First Colonial are in compliance with the terms of the FCBC
Permits, except where the failure so to comply would not have a FCBC Material
Adverse Effect. Except as disclosed in the FCBC Reports filed prior to the date
of this Agreement or in the FCBC Disclosure Letter, the businesses of First
Colonial and the FCBC Subsidiaries are not being, and have not been, conducted
in violation of any domestic (federal, state or local) or foreign law, statute,
ordinance or regulation of any Governmental Entity (collectively "Laws"),
including without limitation Regulation O of the Federal Reserve Board, except
for possible violations which in the aggregate do not and, insofar as reasonably
can be foreseen, in the future will not, have a FCBC Material Adverse Effect.
Except as set forth in the FCBC Disclosure Letter, as of the date hereof, no
investigation or review by any Governmental Entity with respect to First
Colonial or any of the FCBC Subsidiaries is pending or, to the knowledge of
First Colonial, threatened, nor has any Governmental Entity indicated an
intention to conduct the same. The provisions of this Section 3.08(a) are not
intended to be applicable to those matters expressly governed by Section 3.08(b)
below.
(b) The FCBC Disclosure Letter identifies each parcel of real estate
currently owned, leased or otherwise possessed or controlled by First Colonial
or any FCBC Subsidiary, including, without limitation, properties held as a
result of foreclosure or repossession and other properties carried on First
Colonial's books as "other real estate owned" (collectively, the "FCBC
Property"). Without limiting the foregoing and except as disclosed in the FCBC
Disclosure Letter, to the best knowledge of First Colonial, First Colonial and
its Subsidiaries (i) have obtained all material permits, licenses and other
authorizations which are required of First Colonial and its Subsidiaries with
respect to the operation of their respective businesses and all FCBC Property
under any Environmental Laws (as defined below) (such permits, licenses and
authorizations being hereinafter referred to as "FCBC Environmental Permits")
and (ii) are in compliance in all material respects with all terms and
conditions of all FCBC Environmental Permits. Without limiting the foregoing,
and except as set forth in the FCBC Disclosure Letter, to the best knowledge of
First Colonial, there are not now nor have there ever been Toxic Substances (as
hereinafter defined) stored, deposited, treated, recycled, used or accidentally
or intentionally disposed of, discharged, spilled, released, dumped, emitted or
otherwise placed on, under or at, or used in any construction on, any parcel of
FCBC Property (or tanks or other facilities thereon containing Toxic Substances)
in violation of the Environmental Laws. Without limiting the foregoing, and
except as set forth in the FCBC Disclosure Letter, to the best knowledge of
First Colonial, there are no past, present or known future events, conditions,
circumstances, plans, errors or omissions that have occurred, are occurring or
are reasonably expected to occur on or with respect to FCBC Property, or any
other property as to which First Colonial or any FCBC Subsidiary has held or
currently holds ownership or indicia of ownership ("FCBC Interested Property"),
including without limitation (A) the creation of any federal, state or common
law nuisance, (B) the failure to comply with any federal, state or local
environmental laws, including, without limitation, the Solid Waste Disposal Act,
the Hazardous Materials Transportation Act, the Clean Water Act, the Clean Air
Act, the Resource Conservation and Recovery Act, the Toxic Substances Control
Act and the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA"), any so-called "Superfund" or "Superlien" laws,
the Illinois Responsible Property Transfer Act, as amended, their state and
local law counterparts, all rules and regulations promulgated thereunder, any
order, judgment or injunction issued, entered, promulgated or approved
thereunder (collectively, "Environmental Laws"), or (C) the presence of any
petroleum or petroleum-based substance or waste, solid waste, PCBs, pesticides,
herbicides, lead, radioactive materials, urea formaldehyde foam insulation, or
substances defined as "hazardous substances" or "toxic substances" in any
Environmental Laws (collectively, "Toxic Substances"), as a result of which
events, conditions, circumstances, plans, errors or omissions First Colonial or
any FCBC Subsidiary is subject to or reasonably likely to incur liabilities,
damages, penalties or removal, remediation or other costs that would have a FCBC
Material Adverse Effect. To the best knowledge of First
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Colonial, there are no conditions or circumstances in connection with the FCBC
Property that could reasonably be anticipated to (i) cause any FCBC Property to
be subject to any restrictions on ownership, occupancy, use or transferability
under any applicable Environmental Laws or (ii) materially reduce the value of
any FCBC Property. No claim, action, suit, demand, investigation, or proceeding
is pending or known to be threatened against First Colonial or any FCBC
Subsidiary relating to any FCBC Property or FCBC Interested Property or
otherwise, or involving any FCBC Property, before any court or other
governmental authority or arbitration tribunal relating to Toxic Substances,
pollution, Environmental Laws or the environment; there is no outstanding
judgment, order, writ, injunction, decree, or award against or affecting First
Colonial or any FCBC Subsidiary with respect to FCBC Property or, to the
knowledge of First Colonial, FCBC Interested Property; and, to the best
knowledge of First Colonial and its Subsidiaries, neither First Colonial nor any
FCBC Subsidiary has been identified as a potentially responsible party by any
Governmental Entity in a matter arising under any Environmental Laws. The FCBC
Disclosure Letter includes a list of all environmental reports, investigations
or audits relating to any FCBC Property or FCBC Interested Property of which
First Colonial has knowledge, whether conducted by or on behalf of First
Colonial or a FCBC Subsidiary or a third party, and whether done at the
initiative of First Colonial or a FCBC Subsidiary or directed by a Governmental
Entity or other third party. First Colonial has delivered to Firstar complete
and accurate copies of each such report, or the results of each such
investigation or audit, in each case to the extent reasonably available to First
Colonial.
3.09. Litigation and Claims. Except as disclosed in the FCBC Reports filed
prior to the date of this Agreement, in the FCBC Disclosure Letter or the most
recent First Colonial consolidated financial statements delivered by First
Colonial to Firstar prior to the date of this Agreement: (a) neither First
Colonial nor any of the FCBC Subsidiaries is subject to any continuing order of,
or written agreement or memorandum of understanding with, or continuing material
investigation by, any federal or state banking or insurance authority or, to
their knowledge, other Governmental Entity, or any judgment, order, writ,
injunction, decree or award of any Governmental Entity or arbitrator, including,
without limitation, cease-and-desist or other orders of any bank regulatory
authority, (b) there is no claim of any kind, action, suit, litigation,
proceeding, arbitration, investigation, or controversy ("Proceeding") against or
affecting First Colonial, any Subsidiary of First Colonial or any directors,
officers, employees or agents of First Colonial or any Subsidiary of First
Colonial (in their respective capacities as directors, officers, employees or
agents) pending or, to the knowledge of First Colonial, threatened, which would,
if adversely determined, have a FCBC Material Adverse Effect, (c) there is no
Proceeding affecting First Colonial, any Subsidiary of First Colonial or any
directors, officers, employees or agents of First Colonial or any Subsidiary of
First Colonial (in their respective capacities as directors, officers, employees
or agents) pending or, to the knowledge of First Colonial, threatened, except
for matters which in the aggregate will not have, and cannot reasonably be
expected to have, a FCBC Material Adverse Effect, and (d) there are no uncured
material violations, or violations with respect to which material refunds or
restitutions may be required, cited in any compliance report to First Colonial
or any FCBC Subsidiary as a result of the examination by any bank regulatory
authority.
3.10. Taxes. (a) First Colonial and each Subsidiary of First Colonial has
filed all tax returns required to be filed by them since January 1, 1991 and has
paid (or First Colonial has paid on its behalf), or has set up an adequate
reserve for the payment of, all taxes required to be paid as shown on such
returns, and the most recent First Colonial consolidated financial statements
contained in the FCBC Reports or otherwise delivered by First Colonial to
Firstar reflect an adequate reserve for all taxes payable by First Colonial and
its Subsidiaries accrued through the date of such financial statements;
provided, however, that the foregoing representation is made only to the best of
First Colonial's knowledge with respect to each FCBC Subsidiary that has been,
directly or indirectly, acquired by First Colonial subsequent to July 1, 1989.
The FCBC Disclosure Letter sets forth, as of the date hereof, the following
information with respect to First Colonial and each Subsidiary of First
Colonial: (a) the most recent tax year through which the United States Internal
Revenue Service ("IRS") has completed its examination of such corporation, (b)
whether there is an examination pending by the IRS with respect to such
corporation and, if so, the tax years involved, (c) whether such corporation has
executed or filed with the IRS any agreement which is still in effect extending
the period for assessment and collection of any federal tax and, if so, the tax
years covered by such agreement and the expiration date of such extension, and
(d) whether there are any existing material disputes
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as to foreign, state, or local taxes. There are no liens for taxes upon the
assets of First Colonial or of any FCBC Subsidiary, except for statutory liens
for taxes not yet delinquent or the validity of which is being contested in good
faith by appropriate proceedings and, in either case, only if adequate reserves
therefor have been established on First Colonial's books. Except as disclosed in
the FCBC Disclosure Letter, neither First Colonial nor any FCBC Subsidiary is a
party to any action or proceeding by any governmental authority for assessment
and collection of taxes, and, to the best of the knowledge of First Colonial, no
claim for assessment and collection of taxes has been asserted against any of
them. For the purpose of this Agreement, the term "tax" (including, with
correlative meaning, the terms "taxes" and "taxable") shall include all federal,
state, local and foreign income, profits, franchise, gross receipts, payroll,
sales, employment, use, personal and real property, withholding, excise and
other taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to such amounts. First
Colonial and each Subsidiary of First Colonial has withheld from its employees
(and timely paid to the appropriate governmental agency) proper and accurate
amounts for all periods through the date hereof in material compliance with all
tax withholding provisions of applicable federal, state, foreign and local laws
(including without limitation income, social security and employment tax
withholding for all types of compensation). To the knowledge of First Colonial,
except as disclosed in the FCBC Disclosure Letter, neither First Colonial nor
any Subsidiary of First Colonial has, since January 1, 1986, been a member of an
affiliated group of corporations (within the meaning of Section 1504(a) of the
Code) filing consolidated federal income tax returns, other than the affiliated
group of which First Colonial is the common parent or an affiliated group all of
the members of which were acquired by First Colonial. Except as disclosed in the
FCBC Disclosure Letter, neither First Colonial nor any FCBC Subsidiary has made
any payments, or been a party to an agreement that under any circumstances could
obligate it to make payments, that are or will not be deductible because of
Section 280G of the Code.
(b) There is no plan or intention by the stockholders of First Colonial who
own five percent or more of the outstanding FCBC Class A Common Stock, FCBC
Class B Common Stock or FCBC Series C Preference Stock and, to the best of the
knowledge of First Colonial, there is no plan or intention on the part of the
remaining stockholders of First Colonial to sell, exchange or otherwise dispose
of a number of shares of Firstar Common Stock and/or Firstar Preferred Stock
received in the Merger that would reduce such stockholders' ownership of Firstar
Common Stock and Firstar Preferred Stock to a number of shares having a value,
as of the Effective Time, of less than 50 percent of the value of all of the
formerly outstanding FCBC Class A Common Stock, FCBC Class B Common Stock or
FCBC Series C Preference Stock as of the Effective Time. For purposes of this
representation, shares of FCBC Common Stock or (if holders of FCBC Series C
Preference Stock have dissenters' rights) FCBC Series C Preference Stock
surrendered by dissenters or exchanged for cash in lieu of fractional shares of
Firstar Common Stock will be treated as outstanding at the Effective Time.
3.11. Certain Agreements. Except as discussed in the FCBC Reports filed
prior to the date of this Agreement or as disclosed in the FCBC Disclosure
Letter, and except for this Agreement, as of the date hereof, neither First
Colonial nor any FCBC Subsidiary is a party to any oral or written (i)
consulting agreement not terminable on 60 days' or less notice or employment
agreement or other agreement providing any term of employment, compensation
guarantee, or severance or supplemental retirement benefit, (ii) union, guild or
collective bargaining agreement, (iii) agreement or plan, including any stock
option plan, stock appreciation right plan, restricted stock plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of the transactions contemplated by
this Agreement, (iv) contract containing covenants which limit the ability of
First Colonial or any FCBC Subsidiary to compete in any line of business or with
any person or which involve any restriction of the geographical area in which,
or method by which, First Colonial or any FCBC Subsidiary may carry on its
business (other than as may be required by law or applicable regulatory
authorities), (v) any contract, agreement or other instrument or undertaking
which is not terminable by First Colonial or any FCBC Subsidiary without
additional payment or penalty within 60 days and obligates First Colonial or any
FCBC Subsidiary for payments or other consideration with a value in excess of
$250,000, or (vi) other executory material agreement as defined by the
instructions to Exhibit 10 under Item 601 of SEC Regulation S-K. Except as set
forth in the FCBC Disclosure Letter, neither First Colonial nor any of the
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FCBC Subsidiaries is in Violation of any loan or credit agreement, note,
mortgage, indenture or other agreement, obligation or instrument applicable to
First Colonial or any FCBC Subsidiary or their respective properties or assets,
except for any such Violations that would not, individually or in the aggregate,
have a FCBC Material Adverse Effect.
3.12. Benefit Plans. (a) The FCBC Disclosure Letter lists (i) each employee
bonus, incentive, deferred compensation, stock purchase, stock appreciation
right, stock option and severance pay plan, (ii) each pension, profit sharing,
stock bonus, thrift, savings and employee stock ownership plan, and (iii) every
other employee benefit plan (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (collectively
"Benefit Plans"), which First Colonial or any FCBC Subsidiary maintains or to
which First Colonial or any FCBC Subsidiary contributes on behalf of current or
former employees. Except as disclosed in the FCBC Disclosure Letter, all of the
plans and programs listed in the FCBC Disclosure Letter (collectively, "FCBC
Benefit Plans") comply with all applicable requirements of ERISA and all other
applicable federal and state laws, including without limitation the reporting
and disclosure requirements of Part 1 of Title I of ERISA, except where the
failure to so comply could not reasonably result in a FCBC Material Adverse
Effect. Each of the FCBC Benefit Plans that is intended to be a pension, profit
sharing, stock bonus, thrift, savings or employee stock ownership plan that is
qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), has been determined by the IRS to qualify under Section 401(a) of
the Code, or an application for the determination of such qualification has been
or will be filed by First Colonial with the IRS prior to the end of the
applicable remedial amendment period under the Code and regulations thereunder,
and to the best knowledge of First Colonial, there exist no circumstances which
could reasonably be expected to adversely affect the qualified status of any
such FCBC Benefit Plan under that section. Except as set forth in the FCBC
Disclosure Letter, each FCBC Benefit Plan that is a defined benefit pension plan
has assets with an aggregate value that exceeds the actuarially determined
present value of its liability for accrued benefits as determined on the basis
of the actuarial assumptions used for the most recent actuarial valuation of
such Plan (which assumptions are set forth in the FCBC Reports and are
reasonable), no such Plan has incurred an accumulated funding deficiency within
the meaning of Section 412(a) of the Code, and no such Plan is a "multi-employer
plan" within the meaning of Section 3(37) of ERISA. Except as set forth in the
FCBC Disclosure Letter, there is no pending or, to the knowledge of First
Colonial, threatened litigation, governmental proceeding or investigation
against or relating to any FCBC Benefit Plan, and to the knowledge of First
Colonial there is no reasonable basis for any material proceedings, claims,
actions or proceedings against any Plan. Except as set forth in the FCBC
Disclosure Letter, no "reportable event" (as defined in Section 4043(b) of
ERISA) has occurred with respect to any FCBC Benefit Plan. No FCBC Benefit Plan
has engaged in a "prohibited transaction" (as defined in Section 406 of ERISA
and Section 4975(c) of the Code) since the date on which said sections became
applicable to such Plan which could reasonably result in a FCBC Material Adverse
Effect. Neither First Colonial nor any FCBC Subsidiary has incurred any
"accumulated funding deficiency" (within the meaning of Section 412(a) of the
Code), whether or not waived, with respect to any Plan which could reasonably
result in a FCBC Material Adverse Effect. All FCBC Benefit Plans that are group
health plans, within the meaning of Section 4980B of the Code or Section 601 of
ERISA, have been operated in material compliance with the group health plan
continuation coverage requirements of Section 4980B of the Code and Section 601
of ERISA to the extent such requirements are applicable.
(b) First Colonial has delivered to Firstar copies of (i) each FCBC Benefit
Plan, (ii) current summary plan descriptions of each FCBC Benefit Plan, (iii)
each trust agreement, insurance policy or other instrument relating to the
funding of any FCBC Benefit Plan, (iv) the three most recent Annual Reports
(Form 5500 series) and accompanying schedules filed with the IRS or United
States Department of Labor with respect to each FCBC Benefit Plan, (v) the most
recent determination letter issued by the IRS with respect to each FCBC Benefit
Plan that is intended to qualify under Section 401 of the Code, (vi) the most
recent available financial statements for each FCBC Benefit Plan that has
assets, (vii) the most recent actuarial report for any FCBC Benefit Plan that is
a defined benefit pension plan, and if any such Plan was amended subsequent to
the date of such report, information about the financial effects of such
amendment and (viii) the most recent audited financial statements for each FCBC
Benefit Plan for which audited financial statements are required by ERISA.
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(c) With respect to any FCBC Benefit Plan that is an "eligible individual
account plan" within the meaning of Section 407(d)(3) of ERISA (including
without limitation any employee stock ownership plan described in Section
4975(e)(7) of the Code), (i) there have been no transactions involving the
purchase or sale by the FCBC Benefit Plan of employer securities from or to a
"disqualified person" (within the meaning of Section 4975 of the Code); and (ii)
there has been no loan by any party to such FCBC Benefit Plan, whether or not
any portion of such loan remains unpaid.
(d) The FCBC Disclosure Letter describes any obligation that First Colonial
and/or any Subsidiaries of First Colonial has to provide health and welfare
benefits to retirees and other former employees or their dependents (other than
rights arising solely under Section 601 of ERISA or Section 4980B of the Code)
including information as to the number of retirees, other former employees and
dependents entitled to such coverage and their ages.
3.13. Insurance. First Colonial and each FCBC Subsidiary is presently
insured, and during each of the past five calendar years First Colonial and, to
the knowledge of First Colonial, each FCBC Subsidiary has been insured, for
reasonable amounts with financially sound and reputable insurance companies
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. First Colonial
has delivered to Firstar correct and complete copies of all material policies of
insurance of First Colonial and the FCBC Subsidiaries currently in effect.
Neither First Colonial nor any FCBC Subsidiary has any material liability for
unpaid premiums or premium adjustments not properly reflected on the FCBC
Financial Statements, and no notice of cancellation or termination has been
received by FCBC or any FCBC Subsidiary with respect to any material insurance
policy currently in effect. To the knowledge of First Colonial, within the last
five years, neither First Colonial nor any Subsidiary of First Colonial has been
refused any insurance with respect to any assets or operations, nor has any
coverage been limited in any material respect as to any assets or operations, by
any insurance carrier to which it has applied for any such insurance or with
which it has carried insurance during the last five years.
3.14. Conduct of First Colonial to Date. Except as disclosed in FCBC
Reports filed prior to the date of this Agreement or in the FCBC Disclosure
Letter, and except as contemplated by this Agreement and the Plan of Merger,
from and after January 1, 1994: (a) First Colonial and the FCBC Subsidiaries
have carried on their respective businesses in the ordinary and usual course
consistent with past practices; (b) First Colonial has not issued or sold any of
its capital stock or made grants of its capital stock, or issued or sold any
corporate debt securities which would be classified as long-term debt on the
balance sheet of First Colonial; (c) First Colonial has not granted any option
for the purchase of its capital stock, effected any stock split, or otherwise
changed its capitalization; (d) First Colonial has not declared, set aside, or
paid any dividend or other distribution in respect of its capital stock, except
for regular quarterly cash dividends of $.15 per share of FCBC Class A Common
Stock and $.125 per share of FCBC Class B Common Stock and regular quarterly
cash dividends on shares of FCBC Series C Preference Stock as required by the
FCBC Certificate, in each case with usual record and payment dates or, directly
or indirectly, redeemed or otherwise acquired any of its capital stock; (e)
First Colonial has not incurred any obligation or liability (absolute or
contingent) material to First Colonial and the FCBC Subsidiaries taken as a
whole, except normal trade or business obligations or liabilities incurred in
the ordinary course of business, and neither First Colonial nor any FCBC
Subsidiary has mortgaged, pledged, or subjected to any lien, claim, security
interest, charge, encumbrance or restriction that is material to First Colonial
and the FCBC Subsidiaries taken as a whole any of its assets or properties; (f)
First Colonial has not discharged or satisfied any lien, mortgage, pledge,
claim, security interest, charge, encumbrance, or restriction material to First
Colonial and the FCBC Subsidiaries taken as a whole or paid any obligation or
liability (absolute or contingent) material to First Colonial and the FCBC
Subsidiaries taken as a whole, other than in the ordinary course of business;
(g) First Colonial has not sold, assigned, transferred, leased, exchanged, or
otherwise disposed of any of its properties or assets other than for a fair
consideration in the ordinary course of business; (h) neither First Colonial nor
any FCBC Subsidiary has increased the rate of compensation of, or paid any bonus
to, any of its directors, officers, or other employees, except merit or
promotion increases in accordance with existing policy; entered into any new, or
amended or supplemented any existing, employment, management, consulting,
deferred compensation, severance, or other similar contract; adopted, entered
into, terminated, amended or modified any FCBC Benefit Plan in respect of any of
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present or former directors, officers or other employees; made any adjustment
pursuant to Section 4(g) of the FCBC 1988 Stock Plan or Section IX.F. of the
FCBC 1981 Stock Plan; or agreed to do any of the foregoing; (i) neither First
Colonial nor any FCBC Subsidiary has suffered any material damage, destruction,
or loss material to First Colonial and the FCBC Subsidiaries taken as a whole,
whether as the result of fire, explosion, earthquake, accident, casualty, labor
trouble, requisition or taking of property by any government or any agency of
any government, flood, windstorm, embargo, riot, act of God or the enemy, or
other similar or dissimilar casualty or event or otherwise, and whether or not
covered by insurance; (j) neither First Colonial nor any FCBC Subsidiary has
cancelled or compromised any debt to an extent exceeding $100,000 owed to First
Colonial or any FCBC Subsidiary or claim to an extent exceeding $100,000
asserted by First Colonial or any FCBC Subsidiary; (k) neither First Colonial
nor any FCBC Subsidiary has entered, or agreed to enter, into any agreement or
arrangement granting any preferential right to purchase any of its assets,
properties or rights material to First Colonial and the FCBC Subsidiaries taken
as a whole or requiring the consent of any party to the transfer and assignment
of any such material assets, properties or rights; (l) there has not been any
other transaction, commitment, dispute or other event or condition (financial or
otherwise) of any character (whether or not in the ordinary course of business)
individually or in the aggregate having or which, insofar as reasonably can be
foreseen, in the future is reasonably likely to have, a FCBC Material Adverse
Effect; and (m) there has not been any change in the method of accounting or
accounting practices of First Colonial and or any of the FCBC Subsidiaries.
3.15. Material Adverse Change. Since December 31, 1993, there has been no
material adverse change in the financial condition, results of operations or
business of First Colonial and the FCBC Subsidiaries taken as a whole, other
than any changes resulting primarily by reason of changes in banking laws or
regulations (or interpretations thereof), changes in the general level of
interest rates, changes in economic, financial or market conditions affecting
the banking industry generally in the regions in which First Colonial and the
FCBC Subsidiaries operate or changes that may occur as a consequence of actions
that First Colonial is expressly obligated to take under this Agreement.
3.16. Properties, Leases and Other Agreements. Except as may be reflected
in the FCBC Financial Statements or the FCBC Disclosure Letter, for any lien for
current taxes not yet delinquent, for pledges to secure deposits and for such
other liens, security interests, claims, charges, options or other encumbrances
and imperfections of title which do not materially affect the value of personal
or real property reflected in the FCBC Financial Statements or acquired since
the date of such Statements and which do not materially interfere with or impair
the present and continued use of such property, First Colonial and its
Subsidiaries have good title, free and clear of any liens, security interests,
claims, charges, options or other encumbrances, to all of the personal and real
property reflected in the FCBC Financial Statements, and all personal and real
property acquired since the date of such Statements, except such personal and
real property as has been disposed of in the ordinary course of business. The
FCBC Disclosure Letter lists all acquisitions or dispositions of capital assets
currently planned by First Colonial or any FCBC Subsidiary, other than
individual transactions in the ordinary course of business and consistent with
past practice and in no event with a value in excess of $250,000. To the best
knowledge of First Colonial and its Subsidiaries, substantially all First
Colonial's and each FCBC Subsidiary's buildings and equipment in regular use
(including such buildings and equipment as are leased) have been well maintained
and are in good and serviceable condition, reasonable wear and tear excepted.
First Colonial or the applicable FCBC Subsidiary, as lessee, has the right under
valid and effective leases to occupy, use, possess or control, as applicable,
all real property or other material property leased by First Colonial or any
FCBC Subsidiary, qualified only by the written terms of such leases, true and
correct copies of which First Colonial has delivered to Firstar. There is not,
under any of such leases, any material existing default by First Colonial, its
Subsidiaries or, to the best knowledge of First Colonial, any other party
thereto, or any event with notice or lapse of time or both would constitute such
a material default.
3.17. Opinion of Financial Advisor. First Colonial has received the opinion
of Donaldson, Lufkin & Jenrette on the date hereof to the effect that, as of the
date hereof, in the opinion of such firm, the consideration to be received in
the Merger by First Colonial's stockholders is fair to First Colonial's
stockholders from a financial point of view (the "Fairness Opinion").
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3.18. Vote Required. The affirmative vote of a majority of the votes that
holders of the outstanding shares of FCBC Common Stock are entitled to cast is
the only vote of the holders of any class or series of First Colonial capital
stock necessary to approve this Agreement and the transactions contemplated
hereby.
3.19. Accounting and Tax Matters. Neither First Colonial nor any of its
affiliates has taken or agreed to take any action that would prevent Firstar
from accounting for the business combination to be effected by the Merger as a
pooling of interests or would prevent the Merger from qualifying as a
reorganization under Section 368(a)(1)(A) of the Code.
3.20. Dissenters' Rights. Shares of FCBC Class A Common Stock and FCBC
Receipts are currently quoted on the Nasdaq National Market of the Nasdaq Stock
Market. Assuming Firstar Common Stock is listed on the New York Stock Exchange
and depositary receipts evidencing depositary shares representing an interest in
the Firstar Preferred Stock ("Firstar Receipts") will be listed on the Nasdaq
National Market or a national securities exchange (within the meaning of Section
262(b)(1) of the DGCL) upon official notice of issuance, holders of shares of
FCBC Class A Common Stock and FCBC Series C Preference Stock will not be
entitled to assert dissenters' rights granted under Section 262 of the DGCL.
3.21. Affiliates. The FCBC Disclosure Letter identifies persons who are now
or may be "Affiliates" of First Colonial for purposes of Rule 145 under the
Securities Act.
3.22. Regulatory Impediments. As of the date hereof, First Colonial is not
aware of the existence of any factor that would materially delay or materially
hinder the issuance of any of the required regulatory approvals necessary to
consummate the Merger and the transactions contemplated hereby, other than any
protests by any nongovernmental parties and information contained in the Firstar
Disclosure Letter.
3.23. Full Disclosure. No statement contained in any document, certificate
or any other writing furnished or to be furnished by or on behalf of First
Colonial to Firstar in or pursuant to the provisions of this Agreement contains
or shall contain any untrue statement of a material fact or omits or shall omit
to state any material fact necessary, in light of the circumstances in which it
was made, in order to make the statements herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FIRSTAR AND SUB
Firstar and Sub, jointly and severally, represent and warrant to First
Colonial as follows:
4.01. Organization, Standing and Power. Firstar is a corporation duly
organized, validly existing and in active status under the laws of the State of
Wisconsin and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted,
except where the failure to have such power or authority would not have a
material adverse effect on the business, operations or financial condition of
Firstar and its Subsidiaries taken as a whole. Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted,
except where the failure to have such power or authority would not have a
material adverse effect on the business, operations or financial condition of
Firstar and its Subsidiaries taken as a whole (a "Firstar Material Adverse
Effect"). Each of Firstar and Sub is qualified to do business and is in good
standing in each other state or foreign jurisdiction where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and where the failure to be so qualified would have a Firstar Material
Adverse Effect. Each of Firstar and Sub is registered as a bank holding company
with the Federal Reserve Board under the BHC Act. Firstar has delivered to First
Colonial true, accurate and complete copies of the currently effective Restated
Articles of Incorporation and By-laws of Firstar, including all amendments
thereto.
4.02. Firstar Subsidiaries. Except as set forth in the Firstar Disclosure
Letter (which is a letter of even date herewith delivered by Firstar and Sub to
First Colonial, the receipt thereof having been acknowledged by First Colonial
executing a copy thereof), Firstar beneficially owns, directly or indirectly,
all of the shares of the
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outstanding capital stock of Sub and each of the Subsidiaries listed in the
Firstar Disclosure Letter (herein, including Sub, called collectively the
"Firstar Subsidiaries" or individually a "Firstar Subsidiary"), which constitute
Firstar's principal operating subsidiaries as of the date of this Agreement. No
equity securities of any of the Firstar Subsidiaries are or may become required
to be issued by reason of any option, warrants, calls, rights or agreements of
any character whatsoever; there are outstanding no securities or rights
convertible into or exchangeable for shares of any capital stock of any Firstar
Subsidiary; and there are no other contracts, commitments, understandings or
arrangements by which any Firstar Subsidiary is bound to issue additional shares
of its capital stock or options, warrants, calls, rights or agreements to
purchase or acquire any additional shares of its capital stock. Except as
provided for under any applicable banking statute and except as set forth in the
Firstar Disclosure Letter, all of the shares of capital stock of each of the
Firstar Subsidiaries owned by Firstar are fully paid and nonassessable (except
as provided in Section 180.0622(2)(b) of the Wisconsin Business Corporation Law
("WBCL")) and are owned by it free and clear of any claim, lien, encumbrance or
agreement with respect thereto. Each Firstar Subsidiary is a banking association
or a corporation, in each case duly organized, validly existing and in good
standing or in active status under the laws of its jurisdiction of
incorporation, and has the corporate power and authority to own or lease its
properties and assets and to carry on its business as it is now being conducted,
except where the failure to have such power or authority would not have a
Firstar Material Adverse Effect. Each Firstar Subsidiary that is a national bank
is a member of the Federal Reserve System. The deposits of each Firstar
Subsidiary that is a banking institution and accepts deposits are insured by the
FDIC to the extent provided by law. Firstar has delivered to First Colonial
true, accurate and complete copies of the currently effective Articles of
Incorporation and By-laws of Sub. Except as set forth in the Firstar Disclosure
Letter and except for securities held in its capacity as fiduciary, Firstar does
not own beneficially, directly or indirectly, more than 5% of any class of
equity securities or similar interests of any corporation, bank, business trust,
association or similar organization. There are no obligations, contingent or
otherwise, of Firstar or any Firstar Subsidiary material to Firstar and the
Firstar Subsidiaries taken as a whole to repurchase, redeem or otherwise acquire
any shares of capital stock of any Firstar Subsidiary or to provide funds to or
make any investment (in the form of a loan, capital contribution or otherwise)
in any Firstar Subsidiary or any other entity, other than pursuant to commercial
loan arrangements and similar obligations arising in the ordinary course of the
business of the Firstar Subsidiaries.
4.03. Capital Structure. As of the date hereof, the authorized capital
stock of Firstar consists of 120,000,000 shares of Firstar Common Stock and
2,500,000 shares of preferred stock, par value $1.00. No shares of such
preferred stock are issued and outstanding on the date hereof. Except as
contemplated in the Merger Agreements, as set forth in the Firstar Disclosure
Letter or as set forth in the most recent report of Firstar filed with the SEC
on Form 10-K, there are, as of the date of the Merger Agreements, no outstanding
options, warrants, calls, rights, commitments or agreements of any character
whatsoever to which Firstar or any Firstar Subsidiary is a party or by which it
is bound obligating Firstar or any Firstar Subsidiary to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital stock or
any Voting Debt securities of Firstar or of any Firstar Subsidiary or obligating
Firstar or any Firstar Subsidiary to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement. All outstanding shares of
Firstar capital stock are, and the shares of Firstar Common Stock and Firstar
Preferred Stock to be issued pursuant to or as specifically contemplated by the
Merger Agreements when issued will be, validly issued, fully paid and
nonassessable (except as provided in WBCL Section 180.0622(2)(b)) and not
subject to preemptive rights. As of the date hereof, the authorized capital
stock of Sub consists of 10,000 shares of common stock, $2.50 par value, 400 of
which are validly issued, fully paid and nonassessable, and all such shares are
owned by Firstar.
4.04. Authority. Firstar and Sub have all requisite corporate power and
authority to enter into this Agreement, the Plan of Merger and the agreements
contemplated by Section 5.15 and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement, the Plan of
Merger and the agreements contemplated by Section 5.15 and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of Firstar and Sub. This Agreement
and the Plan of Merger have been, and when executed and delivered by Firstar the
agreements contemplated by Section 5.15 will be, duly executed and delivered by
Firstar and/or Sub, and upon such execution and delivery each constitutes a
valid and binding obligation of Firstar and/or
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Sub enforceable in accordance with its terms. The execution and delivery of this
Agreement, the Plan of Merger and the agreements contemplated by Section 5.15 do
not, and the consummation of the transactions contemplated hereby and thereby
will not, result in any Violation pursuant to any provision of the Restated
Articles of Incorporation or By-laws of Firstar or any Firstar Subsidiary or,
except as set forth in the Firstar Disclosure Letter or as contemplated by the
next sentence hereof, result in any Violation of any loan or credit agreement,
note, mortgage, indenture, lease, Firstar Benefit Plan (as defined in Section
4.12) or other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Firstar or any Firstar Subsidiary or their respective properties
or assets which Violation would have a Firstar Material Adverse Effect. Other
than in connection or in compliance with the provisions of the WBCL and the
IBCA, the Securities Act, the Exchange Act, the securities or blue sky laws of
the various states, and consents, authorizations, approvals, notices or
exemptions required under the BHC Act and from the Illinois Commissioner, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to Firstar
or any Firstar Subsidiary in connection with the execution and delivery of this
Agreement and the Plan of Merger by Firstar or the consummation by Firstar of
the transactions contemplated hereby and thereby, the failure to obtain which
would have a Firstar Material Adverse Effect.
4.05. Firstar Financial Statements. The consolidated balance sheets of
Firstar as of December 31, 1993 and 1992 and the related consolidated statements
of income, consolidated statements of cash flows and consolidated statements of
shareholders' equity for the three years in the period ended December 31, 1993,
accompanied by the unqualified opinion of KPMG Peat Marwick, copies of which
have been furnished by Firstar to First Colonial; the unaudited consolidated
balance sheet of Firstar as of June 30, 1994 and the related consolidated
statement of income, consolidated statement of cash flows and consolidated
statement of shareholders' equity for the six months then ended, in the form
prepared for Firstar's internal use, copies of which have been furnished by
Firstar to First Colonial; and like financial information included in Forms 10-Q
filed with the SEC subsequent to the Latest Statement Date (collectively, the
"Firstar Financial Statements"), have been prepared in accordance with generally
accepted accounting principles and practices as utilized in the Firstar
Financial Statements applied on a consistent basis (except as may be indicated
therein or in the notes thereto), and present fairly the consolidated financial
condition of Firstar at the dates, and the consolidated results of operations
and cash flows for the periods, stated therein. In the case of interim fiscal
periods, all adjustments, consisting only of normal recurring items, which
management of Firstar believes necessary for a fair presentation of such
financial information, have been made, subject to year-end audit adjustments.
4.06. Reports. Since January 1, 1991, Firstar and the Firstar Subsidiaries
have filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that were and are required
to be filed with (i) the SEC, including but not limited to Forms 10-K, Forms
10-Q, Forms 8-K and proxy statements, (ii) the Federal Reserve Board, (iii) the
Comptroller, (iv) the FDIC and (v) any applicable federal or state securities or
banking authorities (all such reports and statements are collectively referred
to herein as the "Firstar Reports"). As of their respective dates, the Firstar
Reports filed prior to the date hereof complied in all material respects with
all of the statutes, rules and regulations enforced or promulgated by the
regulatory authority with which they were filed and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
4.07. Information Supplied. None of the information supplied by Firstar for
inclusion or incorporation by reference in (i) the S-4 will, at the time the S-4
is filed with the SEC and at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) the Proxy Statement will, at the date mailed to
First Colonial stockholders and at the time of the meeting of stockholders to be
held in connection with the Merger, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading and (iii) any other documents to be
filed with the SEC, the Federal Reserve Board, the Illinois Office or any
regulatory agency in connection with
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the transactions contemplated hereby will, at the time of filing, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The S-4, insofar as it
relates to information other than that supplied by First Colonial, will comply
as to form in all material respects with the provisions of the Securities Act
and the rules and regulations thereunder.
4.08. Authorizations; Compliance with Applicable Laws. (a) Firstar and the
Firstar Subsidiaries hold all authorizations, permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities which are material
to the operation of the businesses of Firstar and the Firstar Subsidiaries taken
as a whole (the "Firstar Permits"). Firstar and the Firstar Subsidiaries are in
compliance with the terms of the Firstar Permits, except where the failure so to
comply would not have a Firstar Material Adverse Effect. Except as disclosed in
the Firstar Reports filed prior to the date of this Agreement, the businesses of
Firstar and the Firstar Subsidiaries are not being conducted in violation of any
Law, except for possible violations which individually or in the aggregate do
not, and, insofar as reasonably can be foreseen, in the future will not, have a
Firstar Material Adverse Effect. Except as disclosed in the Firstar Reports
filed prior to the date hereof or set forth in the Firstar Disclosure Letter, as
of the date of this Agreement, no investigation or review by any Governmental
Entity with respect to Firstar or any of the Firstar Subsidiaries is pending or,
to the knowledge of Firstar, threatened, nor has any Governmental Entity
indicated an intention to conduct the same, other than, in each case, those the
outcome of which, as far as reasonably can be foreseen, will not have a Firstar
Material Adverse Effect.
(b) Without limiting the foregoing and except as disclosed in the Firstar
Disclosure Letter, to the best knowledge of Firstar, Firstar and its
Subsidiaries (i) have obtained all material permits, licenses and other
authorizations which are required of Firstar and its Subsidiaries with respect
to the operation of their respective businesses and all real estate currently
owned, leased or otherwise possessed or controlled by Firstar or any Firstar
Subsidiary, including, without limitation, properties held as a result of
foreclosure or repossession and other properties carried on Firstar's books as
"other real estate owned" (collectively, the "Firstar Property") under any
Environmental Laws (such permits, licenses and authorizations being hereinafter
referred to as "Firstar Environmental Permits") and (ii) are in compliance in
all material respects with all terms and conditions of all Firstar Environmental
Permits. Without limiting the foregoing, and except as set forth in the Firstar
Disclosure Letter, to the best knowledge of Firstar, there are no past, present
or known future events, conditions, circumstances, plans, errors or omissions
that have occurred, are occurring or are reasonably expected to occur on or with
respect to Firstar Property, or any other property as to which Firstar or any
Firstar Subsidiary has held or currently holds ownership or indicia of
ownership, including without limitation (A) the creation of any federal, state
or common law nuisance, (B) the failure to comply with any Environmental Laws,
or (C) the presence of any Toxic Substances, as a result of which events,
conditions, circumstances, plans, errors or omissions Firstar or any Firstar
Subsidiary is subject to or reasonably likely to incur liabilities, damages,
penalties or removal, remediation or other costs that would have a Firstar
Material Adverse Effect.
4.09. Litigation and Claims. Except as disclosed in the Firstar Reports
filed prior to the date of this Agreement, in the Firstar Disclosure Letter or
the most recent Firstar consolidated financial statements delivered by Firstar
to First Colonial prior to the date of this Agreement: (a) neither Firstar nor
any of the Firstar Subsidiaries is subject to any continuing order of, or
written agreement or memorandum of understanding with, or continuing material
investigation by, any federal or state banking or insurance authority or, to
their knowledge, other Governmental Entity, or any judgment, order, writ,
injunction, decree or award of any Governmental Entity or arbitrator, including,
without limitation, cease-and-desist or other orders of any bank regulatory
authority, (b) there is no Proceeding against or affecting Firstar, any
Subsidiary of Firstar or any directors, officers, employees or agents of Firstar
or any Subsidiary of Firstar (in their respective capacities as directors,
officers, employees or agents) pending or, to the knowledge of Firstar,
threatened, which would, if adversely determined, have a Firstar Material
Adverse Effect, (c) there is no Proceeding affecting Firstar, any Subsidiary of
Firstar or any directors, officers, employees or agents of Firstar or any
Subsidiary of Firstar (in their respective capacities as directors, officers,
employees or agents) pending or, to the knowledge of Firstar, threatened, except
for matters which in the aggregate will not have, and cannot reasonably be
expected to
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have, a Firstar Material Adverse Effect, and (d) there are no uncured material
violations, or violations with respect to which material refunds or restitutions
may be required, cited in any compliance report to Firstar or any Firstar
Subsidiary as a result of the examination by any bank regulatory authority.
4.10. Taxes. Firstar and each of the Firstar Subsidiaries has filed all tax
returns required to be filed by them since January 1, 1991 and has paid (or
Firstar has paid on its behalf), or has set up an adequate reserve for the
payment of, all taxes required to be paid as shown on such returns, and the most
recent consolidated financial statements contained in the Firstar Reports or
otherwise delivered by Firstar to First Colonial reflect an adequate reserve for
all taxes payable by Firstar and the Firstar Subsidiaries accrued through the
date of such financial statements; provided, however, that the foregoing
representation is made only to the best of Firstar's knowledge with respect to
each Firstar Subsidiary that has been, directly or indirectly, acquired by
Firstar subsequent to July 1, 1989. No material deficiencies for any taxes have
been proposed, asserted or assessed against Firstar or any Firstar Subsidiary.
4.11. Certain Agreements. Except as disclosed in the Firstar Reports filed
prior to the date of this Agreement, and except for this Agreement, as of the
date of this Agreement, neither Firstar nor any Firstar Subsidiary is a party to
any oral or written (i) agreement with any executive officer or other key
employee of Firstar or any Firstar Subsidiary the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction involving Firstar or any Firstar Subsidiary of the nature
contemplated by this Agreement or (ii) agreement or plan, including any stock
option plan, stock appreciation right plan, restricted stock plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement. Except as set forth in the Firstar Disclosure Schedule,
neither Firstar nor any of the Firstar Subsidiaries is in Violation of any loan
or credit agreement, note, mortgage, indenture or other agreement, obligation or
instrument applicable to Firstar or any Firstar Subsidiary or their respective
properties or assets, except for any such Violations that would not,
individually or in the aggregate, have a Firstar Material Adverse Effect.
4.12. Benefit Plans. The Benefit Plans that Firstar or any Firstar
Subsidiary maintains or to which Firstar or any Firstar Subsidiary contributes
on behalf of current or former employees that are employee benefit plans (within
the meaning of Section 3(3) of ERISA) (collectively, the "Firstar Benefit
Plans") comply with all applicable requirements of ERISA and all other
applicable federal and state laws, including without limitation the reporting
and disclosure requirements of Part 1 of Title I of ERISA, except where the
failure to so comply could not reasonably result in a Firstar Material Adverse
Effect. Each of the Firstar Benefit Plans that is intended to be a pension,
profit sharing, stock bonus, thrift, savings or employee stock ownership plan
that is qualified under Section 401(a) of the Code has been determined by the
IRS to qualify under Section 401(a) of the Code, or an application for the
determination of such qualification has been or will be filed by Firstar with
the IRS prior to the end of the applicable remedial amendment period under the
Code and regulations thereunder, and to the best knowledge of Firstar, there
exist no circumstances which could reasonably be expected to adversely affect
the qualified status of any such Firstar Benefit Plan under that section. Except
as set forth in the Firstar Disclosure Letter, each Firstar Benefit Plan that is
a defined benefit pension plan has assets with an aggregate value that exceeds
the actuarially determined present value of its liability for accrued benefits
as determined on the basis of the actuarial assumptions used for the most recent
actuarial valuation of such Plan (which assumptions are set forth in the Firstar
Reports and are reasonable), no such Plan has incurred an accumulated funding
deficiency within the meaning of Section 412(a) of the Code, and no such Plan is
a "multi-employer plan" within the meaning of Section 3(37) of ERISA. Except as
set forth in the Firstar Disclosure Letter, there is no pending or, to the
knowledge of Firstar, threatened litigation, governmental proceeding or
investigation against or relating to any Firstar Benefit Plan, and to the
knowledge of Firstar there is no reasonable basis for any material proceedings,
claims, actions or proceedings against any Plan. Except as set forth in the
Firstar Disclosure Letter, no "reportable event" (as defined in Section 4043(b)
of ERISA) has occurred with respect to any Firstar Benefit Plan. No Firstar
Benefit Plan has engaged in a "prohibited transaction" (as defined in Section
406 of ERISA and Section 4975(c) of the Code) since the date on which said
sections became applicable to such Plan which could reasonably result in a
Firstar Material
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Adverse Effect. Neither Firstar nor any Firstar Subsidiary has incurred any
"accumulated funding deficiency" (within the meaning of Section 412(a) of the
Code), whether or not waived, with respect to any Plan which could reasonably
result in a Firstar Material Adverse Effect. All Firstar Benefit Plans that are
group health plans, within the meaning of Section 4980B of the Code or Section
601 of ERISA, have been operated in material compliance with the group health
plan continuation coverage requirements of Section 4980B of the Code and Section
601 of ERISA to the extent such requirements are applicable.
4.13. Absence of Certain Changes or Events. Except as disclosed in the
Firstar Reports filed prior to the date of this Agreement or in the Firstar
Disclosure Letter, and except as contemplated by this Agreement and the Plan of
Merger, from and after January 1, 1994 and to the date of this Agreement: (a)
Firstar and the Firstar Subsidiaries have conducted their respective businesses
only in the ordinary and usual course consistent with past practice, (b) Firstar
has not declared, set aside or paid any dividend or other distribution in
respect to any of Firstar's capital stock, except for regular quarterly cash
dividends not exceeding $.30 per share on Firstar Common Stock with usual record
and payment dates for such dividends, (c) there has not been any transaction,
commitment, dispute or other event or condition (financial or otherwise) of any
character (whether or not in the ordinary course of business) individually or in
the aggregate having or which, insofar as reasonably can be foreseen, in the
future is reasonably likely to have, a Firstar Material Adverse Effect and (d)
there has not been any material change in the method of accounting or accounting
practices of Firstar and the Firstar Subsidiaries.
4.14. Properties, Leases and Other Agreements. Except as may be reflected
in the Firstar Financial Statements, for any lien for current taxes not yet
delinquent, for pledges to secure deposits and for such other liens, security
interests, claims, charges, options or other encumbrances and imperfections of
title which do not materially affect the value of personal or real property
reflected in the Firstar Financial Statements or acquired since the date of such
Statements and which do not materially interfere with or impair the present and
continued use of such property, Firstar and the Firstar Subsidiaries have good
title, free and clear of any liens, security interests, claims, charges, options
or other encumbrances to all of the personal and real property reflected in the
Firstar Financial Statements, and all personal and real property acquired since
the date of such Statements, except such personal and real property as has been
disposed of in the ordinary course of business. All leases material to Firstar
and the Firstar Subsidiaries pursuant to which Firstar or any of the Firstar
Subsidiaries, as lessee, leases real or personal property are valid and
effective in accordance with their respective terms and there is not, under any
of such leases, any material existing default by Firstar, any of the Firstar
Subsidiaries or, to the best knowledge of Firstar, any other party thereto, or
any event with notice or lapse of time or both would constitute such a material
default.
4.15. Accounting and Tax Matters. Neither Firstar nor any of its affiliates
has through the date hereof taken or agreed to take any action that would
prevent Firstar from accounting for the business combination to be effected by
the Merger as a pooling of interests or would prevent the Merger from qualifying
as a reorganization under Section 368(a)(1)(A) of the Code.
4.16. Material Adverse Change. Since December 31, 1993, except as disclosed
in the Firstar Disclosure Letter, there has been no material adverse change in
the financial condition, results of operations or business of Firstar and the
Firstar Subsidiaries taken as a whole, other than any changes resulting
primarily by reason of changes in banking laws or regulations (or
interpretations thereof), changes in the general level of interest rates or
changes in economic, financial or market conditions affecting the banking
industry generally in the regions in which Firstar and the Firstar Subsidiaries
operate.
4.17. Full Disclosure. No statement contained in any document, certificate
or other writing furnished or to be furnished by or on behalf of Firstar to
First Colonial in or pursuant to the provisions of this Agreement contains or
shall contain any untrue statement of a material fact or omits or shall omit to
state any material fact necessary, in light of the circumstances in which it was
made, in order to make the statements herein or therein not misleading.
4.18. Regulatory Impediments. As of the date hereof, except as set forth in
the Firstar Disclosure Letter, Firstar is not aware of the existence of any
factor that would materially delay or materially hinder issuance of
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any of the required regulatory approvals necessary to consummate the Merger and
the transactions contemplated hereby, other than any protests by any
nongovernmental parties.
ARTICLE V
COVENANTS OF FIRST COLONIAL
5.01. Affirmative Covenants. First Colonial hereby covenants and agrees
with Firstar that prior to the Effective Time, unless the prior written consent
of Firstar shall have been obtained and except as otherwise contemplated herein,
it will and it will cause its respective Subsidiaries to:
(a) operate its business only in the usual, regular and ordinary course
consistent with past practices;
(b) use its best efforts to preserve intact its business organization and
assets, maintain its rights and franchises, retain the services of its officers
and key employees (except that it shall have the right to terminate the
employment of any officer or key employee in accordance with established
employment procedures) and maintain its relationships with customers;
(c) maintain and keep its properties in as good repair and condition as at
present, except for depreciation due to ordinary wear and tear;
(d) keep in full force and effect insurance and bonds comparable in amount
and scope of coverage to that now maintained by it;
(e) perform in all material respects all obligations required to be
performed by it under all material contracts, leases, and documents relating to
or affecting its assets, properties, and business;
(f) comply with and perform in all material respects all obligations and
duties imposed upon it by all Laws; and
(g) notify Firstar immediately by telephone, and thereafter promptly
confirm in writing, if any of the matters described in Section 5.02(f) occurs,
whether as a result of action by First Colonial, any FCBC Subsidiaries or any
Representatives (as defined therein) of First Colonial, or if any person makes
any offer or other proposal concerning a Competing Transaction (as defined in
Section 5.02(f)); such notice shall include the name of any person other than
First Colonial, a FCBC Subsidiary and their Representatives involved in such
matter and, after receipt of any written offer or proposal from such person, a
copy of any written offers, proposals, agreements or other documents with
respect to such offer or proposal; as of the date of this Agreement, First
Colonial hereby represents and warrants that neither it nor any FCBC Subsidiary,
nor any of its or their Representatives, are, directly or indirectly,
soliciting, initiating or engaged in any discussions or other negotiations with,
or providing any information to, any third party concerning any possible
proposal regarding a Competing Transaction.
5.02. Negative Covenants. Except as specifically contemplated by this
Agreement, from the date hereof until the Effective Time, First Colonial shall
not do, or permit any of its Subsidiaries to do, without the prior written
consent of Firstar (which consent shall not be unreasonably withheld) any of the
following:
(a) incur any material liabilities or material obligations, whether
directly or by way of guaranty, including any obligation for borrowed money
whether or not evidenced by a note, bond, debenture or similar instrument,
except in the ordinary course of business consistent with past practice;
(b)(i) grant any general increase in compensation to its employees as a
class, or to its officers or directors, except in accordance with past practice
or as required by law, or increases which are not material, (ii) effect any
change in retirement benefits to any class of employees or officers (unless any
such change shall be required by applicable law) which would increase its
retirement benefit liabilities, (iii) adopt, enter into, amend or modify any
FCBC Benefit Plan (except as may be required by applicable law), make any
adjustments pursuant to Section 4(g) of the FCBC 1988 Stock Plan or Section
IX.F. of the FCBC 1981 Stock Plan or similar sections of the William Stock Plan
or the Mary Stock Plan or make any grants pursuant to such Stock Plans or (iv)
enter into or amend any employment, severance or similar agreements or
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arrangements with any directors or officers, except as expressly permitted
hereunder or under the letter contemplated by Section 6.11;
(c)(i) declare or pay any dividend on, or make any other distribution in
respect of, its outstanding shares of capital stock, except for (A) regular
quarterly cash dividends on the FCBC Class A Common Stock at a rate not in
excess of $.15 per share, regular quarterly cash dividends on the FCBC Class B
Common Stock at a rate not in excess of $.125 per share and regularly quarterly
cash dividends on the FCBC Series C Preference Stock as required by the FCBC
Certificate, in each case with usual record and payment dates for such dividends
and (B) dividends by a wholly-owned Subsidiary of First Colonial; provided,
however, that First Colonial shall be entitled to increase the rate of regular
quarterly cash dividends on the FCBC Class A Common Stock and on the FCBC Class
B Common Stock, effective with the fourth regular quarterly cash dividend
payable after the increase in the dividend rate effected in 1994, so long as the
rate of increase does not exceed the rate of increase effected in 1994 with
respect to FCBC Class A Common Stock and the FCBC Class B Common Stock,
respectively;
(ii) except as hereinbelow provided, declare or pay any dividends or make
any distributions in any amount on FCBC Common Stock in the quarter in which the
Effective Time shall occur and in which the stockholders of FCBC Common Stock
are entitled to receive dividends on the shares of Firstar Common Stock into
which the shares of FCBC Common Stock have been converted; it is the intent of
this clause (ii) to provide that the holders of FCBC Common Stock will receive
either the payment of cash dividends on their shares of FCBC Common Stock or the
payment of cash dividends as the holders of shares of Firstar Common Stock
received in exchange for the shares of FCBC Common Stock for the calendar
quarter during which the Effective Time shall occur, but will not receive and
will not become entitled to receive for the same calendar quarter both the
payment of a cash dividend as shareholders of FCBC Common Stock and the payment
of a cash dividend as the holders of the shares of Firstar Common Stock received
in exchange for the shares of FCBC Common Stock; and if First Colonial does not
declare and pay cash dividends in a particular calendar quarter because of First
Colonial's reasonable expectation that the Effective Time was to have occurred
in such calendar quarter wherein the holders of FCBC Common Stock would have
become entitled to receive cash dividends for such calendar quarter on the
shares of Firstar Common Stock to have been exchanged for the shares of FCBC
Common Stock, and the Effective Time does not in fact occur in such calendar
quarter, then, as a result thereof, First Colonial shall be entitled to declare
and pay a cash dividend (within the limitations of this Section 5.02) on such
shares of FCBC Common Stock for such calendar quarter by the declaration and
payment of such cash dividends as soon as reasonably practicable;
(d)(i) except as provided in Section 5.06, 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, or any
options, warrants, conversion or other rights to acquire any shares of its
capital stock or any such securities or obligations, other than conversions at
the option of the holder of FCBC Series C Preference Stock or shares of FCBC
Class B Common Stock in accordance with the FCBC Certificate; (ii) merge with or
into any other corporation or bank, permit any other corporation or bank to
merge into it or consolidate with any other corporation or bank, or effect any
reorganization or recapitalization; (iii) purchase or otherwise acquire any
substantial portion of the assets, or more than 5% of any class of stock, of any
corporation, bank or other business; (iv) liquidate, sell, dispose of, or
encumber any assets or acquire any assets, other than in the ordinary course of
its business consistent with past practice; or (v) split, combine or reclassify
any of its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock;
(e) issue, deliver, award, grant or sell, or authorize or propose the
issuance, delivery, award, grant or sale of, any shares of its capital stock of
any class (including shares held in treasury), any Voting Debt or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, Voting Debt or convertible securities, other than (i) the issuance of
FCBC Class A Common Stock upon the conversion of FCBC Series C Preference Stock
or FCBC Class B Common Stock or pursuant to the FCBC 1981 Stock Plan, the FCBC
1981 Stock Plan, the William Stock Plan or the Mary Stock Plan, in each case in
accordance with their present terms, (ii) issuances of FCBC Class B Common Stock
pursuant to the Mandatory Stock
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Purchase Agreements in accordance with their present terms, and (iii) issuances
by a wholly-owned Subsidiary of its capital stock to its parent;
(f) initiate, solicit or encourage (including by way of furnishing
information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal which constitutes, or may reasonably be
expected to lead to, any Competing Transaction (as such term is defined below),
or negotiate with any person in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor (including the firm named in Section 3.17),
attorney, accountant or other representative retained by it or any of the FCBC
Subsidiaries ("Representatives") to take any such action, provided, however,
that nothing contained in this subsection (f) shall prohibit the Board of
Directors of First Colonial from (1) taking any such action or permitting any of
its Representatives to take any such action if (i) the Board of Directors of
First Colonial is required to take such action to comply with its fiduciary
duties to stockholders imposed by law and such Board of Directors receives an
opinion of counsel confirming such requirement prior to taking or permitting the
action and (ii) prior to furnishing any information to any person, First
Colonial receives from the person an executed confidentiality agreement in
reasonably customary form or (2) complying with Rules 14d-2 and 14e-2
promulgated under the Exchange Act with regard to a Competing Transaction; for
purposes of this Agreement, "Competing Transaction" shall mean any of the
following involving First Colonial or any of the FCBC Subsidiaries: any merger,
consolidation, share exchange or other business combination; a sale, lease,
exchange, mortgage, pledge, transfer or other disposition of a substantial
portion of assets; a sale of shares of capital stock (or securities convertible
or exchangeable into or otherwise evidencing, or any agreement or instrument
evidencing, the right to acquire capital stock); a tender offer or exchange
offer for at least 10% of the outstanding shares of FCBC Class A Common Stock,
FCBC Class B Common Stock or FCBC Series C Preference Stock; a solicitation of
proxies in opposition to approval of the Merger by First Colonial's
stockholders; or a public announcement of a bona fide proposal, plan or
intention to do any of the foregoing;
(g) propose or adopt any amendments to its corporate charter or by-laws in
any way adverse to Firstar;
(h) authorize, recommend, propose or announce an intention to authorize,
recommend or propose, or enter into an agreement in principle with respect to
any acquisition of a material amount of assets or securities or any release or
relinquishment of any material contract rights not in the ordinary course of
business;
(i) except in their fiduciary capacities, purchase any shares of Firstar
Common Stock;
(j) change any of its methods of accounting in effect at December 31, 1993,
or change any of its methods of reporting income or deductions for federal
income tax purposes from those employed in the preparation of the federal income
tax returns for the taxable year ending December 31, 1993, except as may be
required by law or generally accepted accounting principles;
(k) take action which would or is reasonably likely to (i) adversely affect
the ability of either of Firstar or First Colonial to obtain any necessary
approvals of governmental authorities required for the transactions contemplated
hereby; (ii) adversely affect First Colonial's ability to perform its covenants
and agreements under this Agreement; or (iii) result in any of the conditions to
the Merger set forth in Article VIII not being satisfied or in a violation of
any provision of the agreements contemplated by Section 5.15;
(l) change the lending, investment, liability management and other material
policies concerning the banking business of First Colonial and the FCBC
Subsidiaries, unless required by Law or order or unless such change does not
cause a FCBC Material Adverse Effect; or
(m) agree in writing or otherwise to do any of the foregoing.
5.03. Letter of First Colonial's Accountants. At the request of Firstar,
First Colonial shall use its best efforts to cause to be delivered to Firstar
"cold comfort" letters of KPMG Peat Marwick, First Colonial's independent public
accountants, dated the date on which the S-4 shall become effective and the
Effective Time, respectively, and addressed to Firstar, reasonably customary in
form, scope and substance for letters
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delivered by independent public accountants in connection with registration
statements similar to the S-4 and transactions such as those contemplated by the
Merger Agreements.
5.04. Access and Information. (a) Upon reasonable notice, First Colonial
shall (and shall cause its Subsidiaries to) afford to Firstar's officers,
employees, accountants, counsel and other representatives, access, during normal
business hours during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records. During such period, First
Colonial will cause one or more of its representatives to confer on a regular
and frequent basis with representatives of Firstar, to report on the general
status of its ongoing operations and to consult as to the making of any
decisions or the taking of any actions in matters other than in the ordinary
course of business. During such period, First Colonial shall (and shall cause
each of its Subsidiaries to) furnish promptly to Firstar (i) a copy of each FCBC
Report filed or received by it during such period pursuant to the requirements
of federal securities laws, the BHC Act and any other federal or state banking
laws promptly after such documents are available, (ii) the monthly financial
statements of First Colonial and the FCBC Subsidiaries (as prepared by First
Colonial in accordance with its normal accounting procedures) promptly after
such financial statements are available, (iii) a summary of any action taken by
the Board of Directors, or any committee thereof, of First Colonial, (iv) the
reports of management of First Colonial and each of the Subsidiaries of First
Colonial customarily provided to their respective Boards of Directors, and (v)
all other information concerning its business, properties and personnel as
Firstar may reasonably request.
(b) From the date hereof through the Effective Time, First Colonial shall
(and shall cause its Subsidiaries to) inform Firstar of the date, time and
location of each meeting of each of the Boards of Directors of First Colonial
and the FCBC Subsidiaries and each meeting of the senior credit committee or
similar committee of First Colonial and each of the FCBC Subsidiaries and permit
Firstar to have at least two representatives of Firstar attend the regular
business portion of such meetings. Firstar's representatives shall not
participate in such meetings other than as observers, shall not be entitled to
vote and shall not be counted as an attendee for purposes of determining the
existence of a quorum, but First Colonial shall insure that such representatives
receive all information given by First Colonial, any FCBC Subsidiary or their
respective agents to the members of such Boards of Directors or committees.
5.05. Update Disclosure; Breaches.
(a) From and after the date hereof until the Effective Time, First Colonial
shall update the FCBC Disclosure Letter on a monthly basis by notice to Firstar
to reflect any matters which have occurred from and after the date hereof which,
if existing on the date hereof, would have been required to be described
therein; provided, however, that no such update shall affect the conditions to
the obligation of Firstar and Sub to consummate the transactions contemplated
hereby, and any and all changes contained in any such update shall be considered
in determining whether such conditions have been satisfied.
(b) First Colonial shall, in the event it becomes aware of the impending or
threatened occurrence of any event or condition which would cause or constitute
a material breach of any of its representations or agreements contained or
referred to herein, which has a FCBC Material Adverse Effect or which would
cause any of the conditions to the obligations of any party set forth in Article
VIII not to be satisfied, give prompt written notice thereof to Firstar and use
its best efforts to prevent or promptly remedy the same.
5.06. Affiliates; Accounting and Tax Treatment; Stock Repurchases. Within
15 days after the date of this Agreement, (a) First Colonial shall deliver to
Firstar a listing of the persons who are then "Affiliates" of First Colonial for
purposes of Rule 145 under the Securities Act, which shall constitute a
representation and warranty of First Colonial to that effect, (b) First Colonial
shall advise the persons identified in such listing of the resale restrictions
imposed by applicable securities laws and (c) FCBC shall use its best efforts to
obtain from each such person a written agreement, substantially in the form
attached as Exhibit 5.06 hereto. First Colonial shall cause any person who
becomes an affiliate of First Colonial after the date hereof, and on or prior to
the Closing Date, to deliver to Firstar a written agreement substantially in the
form attached as Exhibit 5.06 hereto as soon as practicable after attaining such
status and advise such person of the restrictions imposed by applicable
securities laws upon the resale of Firstar Common Stock and Firstar Preferred
Stock delivered pursuant to the Merger. First Colonial will use its best efforts
to cause the Merger to qualify (i) for pooling-of-
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interests accounting treatment and (ii) as a reorganization under Section
368(a)(1)(A) of the Code. Prior to the Closing, First Colonial shall use its
best efforts to repurchase FCBC Common Stock in amounts sufficient to satisfy
reasonably anticipated future issuances of shares of FCBC Common Stock prior to
the Effective Time upon the conversion of FCBC Series C Preference Stock, upon
the exercise of FCBC Stock Options or pursuant to the Mandatory Stock Purchase
Agreements, which repurchases will be made, and First Colonial shall be required
to make such repurchases only to the extent that they are made, (a) in
compliance with applicable law, (b) in a manner that will not adversely affect
the ability of the Merger to qualify for such accounting and tax treatment and
(c) in a manner that will not result in First Colonial having "tainted" stock
for purposes of pooling-of-interests accounting treatment in connection with the
Merger. As soon as practicable after the date hereof, First Colonial shall use
its best efforts to obtain any consents necessary to enable it to make such
repurchases of FCBC Common Stock.
5.07. Dissent Process. First Colonial will give to Firstar prompt notice of
its receipt of any written notice relating to the exercise of dissenters' rights
granted under Section 262 of the DGCL including the name of the dissenting
stockholder and the number of shares of FCBC Class B Common Stock or (if
dissenters' rights are available for FCBC Series C Preference Stock) FCBC Series
C Preference Stock to which the dissent relates. Firstar will have the right to
participate in all negotiations and proceedings with First Colonial stockholders
relating to any such notice or the exercise of such rights, and except as
required by law, First Colonial will not make any payment with respect to, or
settle or offer to settle, any dissent demands without the prior written consent
of Firstar.
5.08. Expenses.
(a) First Colonial hereby agrees that (x) if this Agreement or the
transactions contemplated hereby are terminated, other than pursuant to (A) a
termination by First Colonial pursuant to Section 10.01(a)(ii) or Section
10.01(a)(vi), (B) a termination by either party pursuant to Section
10.01(a)(iii) or Section 10.01(a)(iv), (C) a termination by mutual consent
pursuant to Section 10.01(a)(i), (D) a termination by Firstar pursuant to
Section 10.02 or (E) a termination pursuant to Section 10.01(a)(v)in which (i)
the denial has been issued by the Board of Governors of the Federal Reserve
System or the Illinois Commissioner, (ii) the reasons for such denial do not
include a reason attributable to or relating to actions taken by First Colonial
or any of its Subsidiaries, or attributable to the business or operations of
First Colonial or any of its Subsidiaries, and (iii) at the time of such
termination, a Competing Transaction shall not have occurred, or (y) if this
Agreement or the transactions contemplated hereby are terminated and a Trigger
Event (as defined below) has occurred, then First Colonial shall promptly (and
in any event within two days after such termination) pay Firstar all Expenses
(as defined below) of Firstar, but not to exceed $2.0 million.
(b) "Expenses" as used in this Agreement shall include all reasonable
out-of-pocket expenses (including all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to the party and its affiliates)
incurred by it or on its behalf in connection with the consummation of the
transactions contemplated by this Agreement.
(c) Except as otherwise provided herein, all Expenses incurred by Firstar
(or Sub) and First Colonial in connection with or related to the authorization,
preparation and execution of this Agreement and the Plan of Merger, the
solicitation of stockholder approval and all other matters related to the
closing of the transactions contemplated hereby, including, without limitation
of the generality of the foregoing, all fees and expenses of agents,
representatives, counsel and accountants employed by either such party or its
affiliates, shall be borne solely and entirely by the party which has incurred
the same, except that the parties shall share equally in the expense of printing
the S-4 and Proxy Statement and the expense of all SEC and other regulatory
filing fees incurred in connection herewith.
5.09. Delivery of Stockholder List. First Colonial shall arrange to have
its transfer agent deliver to Firstar or its designee, immediately prior to the
Closing Date, a true and complete list setting forth the names and addresses of
the First Colonial stockholders (including holders of FCBC Receipts). From time
to time prior to the Closing Date, First Colonial shall deliver to Firstar such
information as Firstar may request regarding the holdings of stock of persons
who may be affiliates of First Colonial and such other stockholder information
as Firstar may reasonably request.
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5.10. Audited Financial Statements. First Colonial shall use reasonable
efforts to cause its independent public accountants to deliver to Firstar, by
January 31, 1995, an audited consolidated financial report of First Colonial as
of and for the period ended December 31, 1994, and to make available to Firstar
and its independent public accountants for their review the working papers of
First Colonial's independent public accountants prepared in connection with such
audit prior to and after January 31, 1995.
5.11. Bank-Level Transactions. First Colonial will, and will cause FCBC
Subsidiaries to, cooperate with Firstar and Sub in the preparation by Firstar or
Sub of applications to the Federal Reserve Board, the Comptroller, the Illinois
Commissioner and other appropriate regulatory authorities to effect, contingent
on and as soon as reasonably practicable after consummation of the Merger, the
transfer of certain FCBC Subsidiary assets and liabilities to and/or the merger
of FCBC Subsidiaries with one or more Subsidiaries of Firstar or Sub; provided,
however, that Firstar shall bear any Expenses incurred by First Colonial and the
FCBC Subsidiaries pursuant to this Section 5.11.
5.12. Sale of Certain Assets. From time to time prior to the Effective
Time, upon the reasonable request of Firstar, First Colonial shall cause its
Subsidiaries to sell such financial instruments as Firstar may identify.
5.13. Allowance for Loan Losses. Immediately prior to the Effective Time,
and contingent upon the Effective Time, First Colonial's consolidated allowance
for loan losses after all anticipated loan losses have been charged off shall
not be less than an amount requested by Firstar.
5.14. Stockholder Meeting. (a) First Colonial shall call a meeting of its
stockholders to be held as promptly as practicable for the purpose of voting
upon the Merger Agreements and related matters and deliver notice of such
meeting, as part of the Proxy Statement, to First Colonial stockholders
(including holders of FCBC Receipts) in accordance with applicable law, the FCBC
Certificate and the FCBC Deposit Agreement. First Colonial shall coordinate and
cooperate with Firstar with respect to the timing of such meeting and shall use
its best efforts to hold such meeting as soon as practicable after the date
hereof, but in no event later than the latest of (i) December 1, 1994, (ii)
thirty-five days after the S-4 becomes effective under the Securities Act and
(iii) thirty-five days after Firstar's rights to terminate this Agreement under
Section 10.03 have terminated. First Colonial shall not, at such stockholders'
meeting, submit any other matter for approval of its stockholders (except with
the prior written consent of Firstar).
(b) First Colonial will, through its Board of Directors, (i) unanimously
recommend to its stockholders approval of such matters, (ii) not withdraw,
modify or amend such recommendations, and (iii) use its best efforts to obtain
such stockholder approval; provided, however, that nothing contained in this
sentence shall prohibit the Board of Directors of First Colonial from failing to
recommend such approval or withdrawing, modifying or amending its recommendation
if (A) the Board of Directors of First Colonial is required to take such action
to comply with its fiduciary duties to stockholders imposed by law as a result
of the receipt of such Board of Directors of a bona fide proposal from a third
party not affiliated with First Colonial to acquire control of First Colonial or
substantially all of the assets of First Colonial (whether by means of a tender
offer, exchange offer, merger, sale of assets or other transaction) after the
date hereof (a "Competing Proposal"), (B) the Board of Directors of First
Colonial obtains an opinion of counsel confirming such requirement prior to
taking such action, and (C) the Board of Directors of First Colonial takes such
action as is necessary to allow the stockholders of First Colonial to vote upon
the Merger Agreements in accordance with the DGCL.
5.15. Certain Agreements. Within 15 days after the date of this Agreement,
First Colonial shall cause each of the holders of Subordinated Notes and
obligors under the Mandatory Stock Purchase Agreements to duly execute and
deliver to Firstar a written agreement with First Colonial and Firstar in the
form attached hereto as Exhibit 5.15 pursuant to which, as of the Effective
Time, each of the then outstanding Mandatory Stock Purchase Agreements shall
thereafter represent the right and obligation to purchase shares of Firstar
Common Stock rather than shares of FCBC Class B Common Stock and Firstar will
assume the obligations of First Colonial under the then outstanding Subordinated
Notes.
5.16. Environmental Matters.
(a) Phase I. Firstar shall engage a mutually acceptable environmental
consultant to conduct a preliminary ("Phase I") environmental assessment of
customary scope of each of the parcels of FCBC
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Property, other than residential real property. Firstar and First Colonial will
use reasonable efforts to agree upon the consultant within five business days
after the date hereof, and Firstar will engage such consultant as soon as
practicable after such agreement. The fees and expenses of the consultant with
respect to the Phase I assessments shall be shared equally by Firstar and First
Colonial. The consultant shall complete and deliver the Phase I assessments not
later than 55 days after the date the consultant for the Phase I assessments is
chosen. If any environmental conditions are found, suspected, or would tend to
be indicated by the report of the consultant which, if known by First Colonial
to be existing on the date hereof, may be contrary to the representations and
warranties set forth in Section 3.08(b), then the parties shall obtain from one
or more mutually acceptable consultants or contractors, as appropriate,
recommendations as to any further environmental investigation, sampling,
analysis, remediation, or other follow-up work that may be necessary to address
those conditions in a manner sufficient to obtain a "no further action letter"
or similar letter from state environmental authorities and estimates of the cost
thereof.
(b) Mutual Agreement. Upon receipt of the estimates of the costs of all
follow-up work to the Phase I assessments or any subsequent investigation phases
that may be conducted, the parties shall attempt to agree upon a course of
action for further investigation and remediation of any environmental condition
suspected, found to exist, or that would tend to be indicated by the report of
the consultant. All work plans for any post-Phase I assessments or remediation,
and any removal or remediation actions that may be performed, shall be mutually
satisfactory to Firstar and First Colonial, except that (i) Firstar shall be
entitled to cause to be performed such "Phase II" assessments as Firstar shall
reasonably request, in each case having a scope reasonable under the
circumstances, taking into account among other things the recommendations set
forth in the Phase I assessments and (ii) First Colonial shall bear the costs of
any measures taken under this Section 5.16 other than as provided in subsection
(a). Firstar and First Colonial shall thereafter cooperate in the review,
approval, and implementation of all work plans. If the work plans or removal or
remediation actions with respect to all FCBC Property would entail an aggregate
cost to complete that would be reasonably likely to exceed $3,000,000 in the
aggregate, Firstar and First Colonial shall discuss a mutually acceptable
modification to this Agreement under the standards of fair dealing and objective
good faith.
(c) Termination Right. If (i) the parties are unable to agree upon a course
of action for further investigation and remediation of all environmental
conditions and/or issues raised by environmental assessments with respect to all
FCBC Property and/or a mutually acceptable modification of this Agreement within
85 days after the consultant for the Phase I assessments is chosen and (ii) the
conditions and/or issues are not such that it can be determined to a reasonable
degree of certainty within such 85-day period, based upon information then
available to Firstar and First Colonial, that the risk and expense to which
Firstar and its subsidiaries would be subject as the owner and/or operator of
the FCBC Property involved can be quantified and limited to an amount that would
not be reasonably likely to exceed $3,000,000 in the aggregate (including costs
incurred by First Colonial or any FCBC Subsidiary prior to the Effective Time),
then Firstar may terminate this Agreement pursuant to Section 10.02.
(d) Cooperation. The specified time limitations on the rights of Firstar
under this Section 5.16 and under Section 10.02 shall be conditioned upon the
prompt and full cooperation of First Colonial and its representatives in
connection with the matters herein involving the choice of mutually acceptable
environmental consultants or contractors.
(e) Other Action. During the period prior to the Effective Time, First
Colonial shall cause each FCBC Subsidiary that proposes to acquire ownership or
possession of any real property, through foreclosure or repossession or
otherwise, to conduct a Phase I environmental assessment of such real property
and any further environmental investigation, sampling or analysis reasonably
required to ensure that such FCBC Subsidiary shall not acquire ownership or
possession of any real property that is reasonably likely to cause the FCBC
Subsidiary to be subject to or incur any liabilities, damages, penalties or
removal, remediation or other costs as a result of its ownership or control of
the property that will exceed the value of the property.
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ARTICLE VI
COVENANTS OF FIRSTAR AND SUB
6.01. Affirmative Covenants. Firstar hereby covenants and agrees with First
Colonial that prior to the Effective Time, unless the prior written consent of
First Colonial shall have been obtained (which consent shall not be unreasonably
withheld) and except as otherwise contemplated herein, it will:
(a) maintain its corporate existence in good standing and maintain all
books and records in accordance with accounting principles and practices as
utilized in the Firstar Financial Statements applied on a consistent basis,
except as may be required to implement changes in generally accepted accounting
principles; and
(b) conduct its business in a manner that does not violate any Law, except
for possible violations which individually or in the aggregate do not, and,
insofar as reasonably can be foreseen, in the future will not, have a Firstar
Material Adverse Effect.
6.02. Negative Covenants. Except as specifically contemplated by this
Agreement, from the date hereof until the Effective Time, Firstar shall not do,
or agree or commit to do, or permit any of its Subsidiaries to do, without the
prior written consent of First Colonial (which shall not be unreasonably
withheld) any of the following:
(a) propose or adopt any amendments to its corporate charter or by-laws in
any way adverse to First Colonial; provided, however, that any amendment to the
bylaws of Firstar to increase the size of its Board of Directors shall not be
deemed adverse to First Colonial and any amendment to the Restated Articles of
Incorporation of Firstar effected solely by action of the Board of Directors of
Firstar shall not be deemed adverse to First Colonial;
(b) take action which would or is reasonably likely to (i) adversely affect
the ability of either of Firstar or First Colonial to obtain any necessary
approvals of governmental authorities required for the transactions contemplated
hereby; (ii) adversely affect Firstar's ability to perform its covenants and
agreements under this Agreement; or (iii) result in any of the conditions to the
Merger set forth in Article VIII not being satisfied; or
(c) agree in writing or otherwise to do any of the foregoing.
6.03. Rights Plan. Nothing herein shall be deemed to prohibit Firstar from
(a) redeeming the Rights or (b) if the Rights are so redeemed, entering into a
new rights agreement similar to the Rights Agreement which shall take effect
immediately following the Effective Time.
6.04. Access and Information. For no more than fifteen days in total after
the date hereof and prior to the Closing Date, upon reasonable notice, Firstar
shall (and shall cause each of its respective Subsidiaries to) afford to the
officers, employees, accountants, counsel and other representatives of First
Colonial, access, during normal business hours to all its properties, books,
contracts, commitments and records. During the period prior to the Effective
Time, Firstar shall (and shall cause each of its respective Subsidiaries to)
furnish promptly to First Colonial (i) a copy of each Firstar Report filed by it
during such period pursuant to the requirements of federal securities laws
promptly after such documents are available and (ii) all other information
concerning its business, properties and personnel as First Colonial may
reasonably request.
6.05. Breaches. Firstar shall, in the event it becomes aware of the
impending or threatened occurrence of any event or condition which would cause
or constitute a material breach (or would have caused or constituted a breach
had such event occurred or been known prior to the date hereof) of any of its
representations or agreements contained or referred to herein, which has a
Firstar Material Adverse Effect or which would cause any of the conditions to
the obligations of any party set forth in Article VIII not to be satisfied, give
prompt written notice thereof to First Colonial and use its best efforts to
prevent or promptly remedy the same.
6.06. Stock Exchange Listing. Firstar shall use its best efforts to cause
the shares of Firstar Common Stock to be issued in the Merger, pursuant to the
Firstar Stock Options and under the Mandatory Stock Purchase Agreements to be
approved for listing on the New York Stock Exchange ("NYSE"), subject to
official notice of issuance, prior to the Closing Date. Firstar shall use all
reasonable efforts to cause the Firstar
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Receipts to be approved, prior to the mailing of the Proxy Statement, for
listing on the Nasdaq National Market or a national securities exchange (within
the meaning of Section 262(b)(1) of the DGCL), subject to official notice of
issuance.
6.07. Firstar Board. Promptly after the Effective Time, Firstar shall cause
the number of directors on its Board of Directors to be increased by one and the
vacancy thus created to be filled by the election of C. Paul Johnson.
6.08. Indemnification.
(a) From and after the Effective Time, Firstar shall indemnify, defend and
hold harmless each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, an officer or director of
First Colonial or any of the FCBC Subsidiaries (the "Indemnified Parties")
against (i) all losses, claims, damages, costs, expenses, liabilities or
judgments or amounts that are paid in settlement with the approval of the
indemnifying party (which approval shall not be unreasonably withheld) of or in
connection with any claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that such
person is or was a director or officer of First Colonial or any FCBC Subsidiary,
whether pertaining to any matter existing or occurring at or prior to the
Effective Time and whether asserted or claimed prior to, or at or after, the
Effective Time ("Indemnified Liabilities") and (ii) all Indemnified Liabilities
based in whole or in part on, or arising in whole or in part out of, or
pertaining to this Agreement or the transactions contemplated hereby, in each
case to the full extent a corporation is permitted under the DGCL to indemnify
its own directors and officers, as the case may be (and Firstar will pay
expenses in advance of the final disposition of any such action or proceeding to
each Indemnified Party to the full extent permitted by law upon receipt of any
undertaking contemplated by Section 8.05(a) of the Bylaws of Firstar). Without
limiting the foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Party (whether arising before
or after the Effective Time), (i) the Indemnified Parties may retain counsel
satisfactory to them and Firstar; (ii) after the Effective Time, Firstar shall
pay all reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; and (iii) after the Effective
Time, Firstar will use all reasonable efforts to assist in the vigorous defense
of any such matter, provided that Firstar shall not be liable for any settlement
of any claim effected without its written consent, which consent shall not be
unreasonably withheld. Any Indemnified Party wishing to claim indemnification
under this Section 6.08, upon learning of any such claim, action, suit,
proceeding or investigation, shall notify Firstar (but the failure so to notify
Firstar shall not relieve it from any liability which it may have under this
Section 6.08 except to the extent such failure prejudices such party), and shall
deliver to Firstar the undertaking contemplated by Section 8.05(a) of the Bylaws
of Firstar. The Indemnified Parties as a group may retain only one law firm to
represent them with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties.
(b) Notwithstanding subsection (a) of this Section 6.08, Firstar shall
ensure that all rights to indemnification and all limitations of liability
existing in favor of the Indemnified Parties and employees of First Colonial and
each FCBC Subsidiary as provided in First Colonial's Certificate of
Incorporation and By-laws or similar governing documents of any of its
Subsidiaries, as in effect as of the date hereof, with respect to claims or
liabilities arising from facts or events existing or occurring prior to the
Effective Time, shall survive the Merger and shall continue in full force and
effect, without any amendment to such rights, for a period of five (5) years
from the Effective Time; provided, however, that all rights to indemnification
in respect of any claim asserted or made within such period shall continue until
the final disposition of such claim. From and after the Effective Time, Firstar
will maintain or cause Sub to maintain First Colonial's current insurance policy
for directors' and officers' liabilities or an equivalent policy having terms
and conditions no less favorable than those in effect on the date of this
Agreement for all present and former directors and officers of First Colonial
who are covered by such current insurance policy; provided, however, that
Firstar's obligation under this subsection (b) shall be completely satisfied at
such time as Firstar and/or Sub shall have satisfied either of the following
conditions: (i) Firstar or Sub shall have maintained an insurance policy in
accordance with this subsection for a period of three years from and after the
Effective
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Time or (ii) Firstar and Sub shall have incurred aggregate costs to maintain
insurance in accordance with this subsection equal to $250,000.
(c) The provisions of this Section 6.08 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
6.09. Accounting and Tax Treatment. Firstar and Sub will use their best
efforts to cause the Merger to qualify (i) for pooling-of-interests accounting
treatment and (ii) as a reorganization under Section 368(a)(1)(A) of the Code.
6.10. Regulatory Filings. Firstar will (a) proceed as expeditiously as
possible to prepare any and all necessary regulatory applications, notices and
requests for waivers for submission to the Federal Reserve Board, the Illinois
Commissioner and any other regulatory agency to obtain such approvals as may be
necessary to facilitate the Merger, (b) no later than sixty (60) days from the
date hereof, submit for filing all such applications, notices or requests for
waivers and (c) provide First Colonial and its counsel with an opportunity to
review the portions of drafts of all such applications that contain information
regarding First Colonial and all nonconfidential portions and to comment on such
portions. The obligation of Firstar to submit applications, notices or requests
referred to in this Section 6.10 within the specified time limit shall be
conditioned upon the prompt and full cooperation of First Colonial and its
representatives in providing information with regard to First Colonial and the
FCBC Subsidiaries required therein and in commenting upon the drafts provided
First Colonial and its counsel. Firstar will provide First Colonial and its
counsel with copies of the public portions of all such applications as filed,
together with nonconfidential portions of correspondence to or from the Federal
Reserve Board and Illinois Commissioner with respect thereto.
6.11. Employee Benefits. Effective as of and after the Effective Time,
Firstar will comply with its agreements to provide employee benefits set forth
in the letter of even date herewith between Jon H. Stowe and C. Paul Johnson.
6.12. Form S-8 Registration Statement for Firstar Stock Options. On or
prior to the Effective Time, Firstar shall cause to be prepared and filed with
the SEC, and to have become effective, a Registration Statement on Form S-8
relating to the shares of Firstar Common Stock that may be issued under the
Firstar Stock Options after the Effective Time.
6.13. Post-Merger Financial Statements. Not later than 150 days after the
Effective Date, Firstar will publish financial results covering at least 30 days
of combined operations of the parties to the Merger within the meaning of
Section 201.01 of the SEC's Codification of Financial Reporting Policies.
6.14. Notice of Anticipated Breach or Failure of Condition. Firstar shall,
in the event it becomes aware of any event or condition which would cause or
constitute a material breach of any of First Colonial's representations or
agreements contained or referred to herein, or which would cause any of the
conditions to the obligations of Firstar set forth in Article VIII not to be
satisfied, use its best efforts to give prompt written notice thereof to First
Colonial; provided, however, that the rights and obligations of Firstar and
First Colonial hereunder shall not be affected by Firstar's failure to give such
notice or delay in giving such notice.
6.15 Expenses. Firstar agrees that if this Agreement or the transactions
contemplated hereby are terminated by First Colonial pursuant to Section
10.01(a)(ii), Firstar shall promptly (and in any event within two days after
such termination) pay First Colonial all Expenses of First Colonial, but not to
exceed $2.0 million.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.01. Preparation of S-4 and the Proxy Statement. First Colonial shall
promptly prepare and file with the SEC the Proxy Statement, and Firstar shall
promptly prepare and file with the SEC the S-4, in which the Proxy Statement
will be included as a prospectus. Each of Firstar and First Colonial shall use
its best efforts to have the S-4 declared effective under the Securities Act as
promptly as practicable after such filing. Firstar
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shall also take any action (other than qualifying to do business in any
jurisdiction in which it is now not so qualified) required to be taken under any
applicable state securities laws in connection with the issuance of Firstar
Common Stock and Firstar Preferred Stock in the Merger, and First Colonial shall
furnish all information concerning First Colonial, the holders of FCBC Common
Stock and the holders of FCBC Series C Preference Stock as may be reasonably
requested in connection with any such action.
7.02. Legal Conditions to Merger. Each of First Colonial, Firstar and Sub
will take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on itself with respect to the Merger
(including furnishing all information required by the Federal Reserve Board or
in connection with approvals of or filings with any other Governmental Entity)
and will promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or any of their
Subsidiaries in connection with the Merger. Each of First Colonial, Firstar and
Sub will, and will cause its Subsidiaries to, take in a prompt manner all
reasonable actions necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other public or private third party, required to
be obtained or made by Firstar, First Colonial or any of their Subsidiaries in
connection with the Merger or the taking of any action contemplated thereby or
by this Agreement or the Plan of Merger. The obligation to take all reasonable
actions shall not be construed as including an obligation to accept any terms of
or conditions to a consent, authorization, order or approval of, or any
exemption by, any party that (i) are not customarily contained in approvals of
similar transactions granted by such regulators, (ii) would, as determined by
Firstar in good faith, have a material adverse effect on the business or
financial condition of Firstar and its Subsidiaries, or (iii) would, as
determined by Firstar in good faith, materially detract from the value of First
Colonial and its Subsidiaries to Firstar. In the event of a restraining order or
injunction which prevents the Closing by reason of the operation of Section
8.01(d), First Colonial, Firstar and Sub shall use their respective best efforts
to cause such order or injunction to be lifted and the Closing consummated as
soon as reasonably practicable.
7.03. Reports.
(a) Prior to the Effective Time, (i) First Colonial shall prepare and file
as and when required all FCBC Reports and (ii) Firstar shall prepare and file as
and when required all Firstar Reports.
(b) First Colonial and Firstar shall prepare such FCBC Reports and Firstar
Reports, respectively, such that (i) they comply in all material respects with
all of the statutes, rules and regulations enforced or promulgated by the
regulatory authority with which they are filed and do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (ii) with
respect to any FCBC Reports or Firstar Reports containing financial information
of the type included in the FCBC Financial Statements or the Firstar Financial
Statements, respectively, the financial information (A) is prepared in
accordance with generally accepted accounting principles and practices as
utilized in the FCBC Financial Statements or the Firstar Financial Statements,
as the case may be, applied on a consistent basis (except as stated therein or
in the notes thereto), (B) presents fairly the consolidated financial condition
of First Colonial or Firstar, as the case may be, at the dates, and the
consolidated results of operations and cash flows for the periods, stated
therein and (C) in the case of interim fiscal periods, reflects all adjustments,
consisting only of normal recurring items, subject to year-end audit
adjustments.
7.04. Brokers or Finders. Each of Firstar and First Colonial represents, as
to itself, its Subsidiaries and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement,
except Donaldson, Lufkin & Jenrette, whose fees and expenses will be paid by
First Colonial in accordance with First Colonial's agreement with such firm (a
copy of which has been delivered by First Colonial to Firstar prior to the date
of this Agreement), and Merrill Lynch & Co., whose fees and expenses will be
paid by Firstar in accordance with Firstar's agreements with such firm, and each
of Firstar and First Colonial respectively agree to indemnify and hold the other
harmless from and against any and all claims, liabilities or obligations with
respect to any other fees, commissions or expenses
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asserted by any person on the basis of any act or statement alleged to have been
made by such party or its affiliate.
7.05. Additional Agreements; Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, subject to the appropriate vote of stockholders of First
Colonial described in Section 8.01(a), including cooperating fully with the
other party.
ARTICLE VIII
CONDITIONS PRECEDENT
8.01. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction prior to the Closing Date of the following conditions:
(a) Corporate Approval. The Merger Agreements shall have been approved and
adopted by the requisite vote of the holders of the outstanding shares of FCBC
Common Stock.
(b) Federal Reserve Board and Illinois Commissioner. The Merger Agreements
and the transactions contemplated hereby shall have been approved by the Federal
Reserve Board and the Illinois Commissioner with no terms or conditions that
Firstar both does not accept and is not obligated under Section 7.02 to accept,
all conditions required to be satisfied prior to the Effective Time imposed by
the terms of such approvals shall have been satisfied and all waiting periods
relating to such approvals shall have expired.
(c) S-4; Securities Laws. The S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order. Firstar shall have received all state securities or "blue
sky" permits and other authorizations necessary to issue the Firstar Common
Stock and Firstar Preferred Stock in exchange for the FCBC Common Stock and FCBC
Series C Preference Stock and to consummate the Merger.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger shall be in effect.
(e) Listing of Firstar Common Stock. The Firstar Common Stock issuable in
the Merger, pursuant to the Firstar Stock Options and under the Mandatory Stock
Purchase Agreements shall have been authorized for listing on the New York Stock
Exchange, upon official notice of issuance.
(f) Opinion of Financial Adviser. As of the date of the mailing of the
Proxy Statement, the Fairness Opinion may not be included in the Proxy Statement
because Donaldson, Lufkin & Jenrette shall have withdrawn or modified in any
material respect the Fairness Opinion due to a determination by such firm that
the Fairness Opinion was erroneous.
8.02. Conditions of Obligations of Firstar and Sub. The obligations of
Firstar and Sub to effect the Merger are subject to the satisfaction of the
following conditions unless waived in writing by Firstar and Sub:
(a) Representations and Warranties. Each of the representations and
warranties of First Colonial set forth in this Agreement, without giving effect
to any update to the FCBC Disclosure Letter or notice to Firstar under Section
5.05, shall be true and correct in all material respects (except that where any
statement in a representation or warranty expressly includes a standard of
materiality, such statement shall be true and correct in all 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, except for changes expressly contemplated by this
Agreement, and Firstar and Sub shall have received a certificate signed on
behalf of First Colonial by the chief executive officer and by the chief
financial officer of First Colonial to such effect.
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(b) Performance of Obligations of First Colonial. First Colonial shall have
performed in all material respects each of the obligations required to be
performed by it under this Agreement and the Plan of Merger at or prior to the
Closing Date, and Firstar and Sub shall have received a certificate signed on
behalf of First Colonial by the chief executive officer and by the chief
financial officer of First Colonial to such effect.
(c) Letters from FCBC Affiliates. Firstar shall have received from each
person named in the FCBC Disclosure Letter or otherwise referred to in Section
5.06 an executed copy of an agreement substantially in the form of Exhibit 5.06
hereto.
(d) Tax Opinion. An opinion of Vedder, Price, Kaufman & Kammholz, to the
effect that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and that
Firstar, Sub and First Colonial will each be a party to that reorganization
within the meaning of Section 368(b) of the Code, dated on or about the date
that is two business days prior to the date the Proxy Statement is first mailed
to stockholders of First Colonial, shall have been delivered and shall not have
been withdrawn or modified in any material respect.
(e) Consents Under Agreements. First Colonial shall have obtained the
consent or approval of each person whose consent or approval shall be required
in order to permit the succession by Sub pursuant to the Merger to any
obligation, right or interest of First Colonial or any FCBC Subsidiary under any
loan or credit agreement, note, mortgage, indenture, lease or other agreement or
instrument, except those for which failure to obtain such consents and approvals
would not, individually or in the aggregate, have a FCBC Material Adverse
Effect, whether prior to or following the consummation of the transactions
contemplated hereby.
(f) Pooling Opinions. Firstar shall have received an opinion from KPMG Peat
Marwick, as independent public accountants of Firstar, and an opinion from KPMG
Peat Marwick, as independent public accountants of First Colonial, to the effect
that the Merger qualifies for pooling-of-interests accounting treatment if
consummated in accordance with the Merger Agreements.
(g) No Amendments to Resolutions. Neither the Board of Directors of First
Colonial nor any committee thereof shall have amended, modified, rescinded or
repealed the resolutions adopted by the Board of Directors at a meeting duly
called and held on July 31, 1994 (accurate and complete copies of which have
been provided to Firstar) and shall not have adopted any other resolutions in
connection with this Agreement and the transactions contemplated hereby
inconsistent with such resolutions.
(h) No Material Adverse Change. There shall have been no material adverse
change since the Latest Statement Date in the financial condition, results of
operations or business of First Colonial and the FCBC Subsidiaries taken as a
whole, other than any changes resulting primarily by reason of changes in
banking laws or regulations (or interpretations thereof), changes in the general
level of interest rates, changes in economic, financial or market conditions
affecting the banking industry generally in the regions in which First Colonial
and the FCBC Subsidiaries operate or changes that may occur as a consequence of
actions that First Colonial is expressly obligated to take under this Agreement.
(i) No Proceeding or Litigation. No material action, suit or proceeding
before any court or any governmental or regulatory authority shall be pending
against Firstar, First Colonial or any affiliate, associate, officer or director
of either of them (other than litigation commenced by Firstar or any of its
affiliates so long as no order or injunction of a court of competent
jurisdiction is in effect in such litigation on the Closing Date that does
restrain, enjoin or prevent the Closing), seeking to restrain, enjoin, prevent,
change or rescind the transactions contemplated hereby or questioning the
validity or legality of any such transactions which action, suit or proceeding
Firstar reasonably determines does not involve only frivolous claims.
(j) Accountant's Review Letters. Firstar shall have received the letters
described in Section 5.03 regarding the financial statements of First Colonial.
(k) Opinion of Counsel. First Colonial shall have delivered to Firstar an
opinion of its counsel, Vedder, Price, Kaufman & Kammholz, dated as of the
Closing Date and in form and substance satisfactory to the counsel of Firstar,
to the effect that: (i) First Colonial is a corporation validly existing and in
good standing under the laws of its jurisdiction of incorporation with full
corporate power and authority to enter into this
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Agreement and the Plan of Merger and to consummate the transactions contemplated
thereby; (ii) all corporate proceedings on the part of First Colonial necessary
to be taken in connection with the Merger and (except for the filing of the
Articles of Merger and Certificate of Merger) necessary to make same effective
have been duly and validly taken; (iii) this Agreement and the Plan of Merger
have been duly and validly authorized, executed and delivered on behalf of First
Colonial and constitute (subject to standard exceptions to enforceability
arising from the bankruptcy laws and rules of equity) valid and binding
agreements of First Colonial; (iv) the execution of the Articles of Merger and
Certificate of Merger by First Colonial has been duly and validly authorized;
and (v) in the course of the preparation of the S-4 and the Proxy Statement such
counsel has considered the information set forth therein in light of the matters
required to be set forth therein, and has participated in conferences with
officers and representatives of First Colonial and Firstar, including their
respective counsel and independent public accountants, during the course of
which the contents of the S-4 and the Proxy Statement and related matters were
discussed. Such counsel has not independently checked the accuracy or
completeness of, or otherwise verified, and accordingly is not passing upon, and
does not assume responsibility for, the accuracy, completeness or fairness of
the statements contained in the S-4 or the Proxy Statement; and such counsel has
relied as to materiality, to a large extent, upon the judgment of officers and
representative of First Colonial and Firstar. However, as a result of such
consideration and participation, nothing has come to such counsel's attention
which causes such counsel to believe that the S-4 (other than the financial
statements, financial data, statistical data and supporting schedules included
therein, and information relating to or supplied by Firstar as to which such
counsel expresses no belief), at the time it became effective, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
or that the Proxy Statement (other than the financial statements, financial
data, statistical data and supporting schedules included therein, and
information relating to or supplied by Firstar, as to which such counsel
expresses no belief), at the time the S-4 became effective, included any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(l) Fractional Shares; Dissenters. The aggregate of (i) the fractional
share interests in Firstar Common Stock to be paid in cash pursuant to Section
2.02(e) of the Plan of Merger, (ii) the shares of Firstar Common Stock that
would be issuable by virtue of the Merger with respect to shares of FCBC Class B
Common Stock outstanding on the record date for the meeting of First Colonial
stockholders to consider the Merger that will not be converted into Firstar
Common Stock due, directly or indirectly, to the exercise of dissenters' rights
granted under Section 262 of the DGCL, and (iii) the shares of Firstar Common
Stock that would be issuable upon conversion of Firstar Preferred Stock that
would be issuable by virtue of the Merger with respect to shares of FCBC Series
C Preference Stock outstanding on the record date for the meeting of First
Colonial stockholders to consider the Merger that will not be converted into
Firstar Preferred Stock due, directly or indirectly, to the exercise of such
dissenters' rights (if any), shall not be more than 10% of the maximum aggregate
number of shares of Firstar Common Stock which could be issued at the Effective
Time as a result of the Merger.
(m) Allowance of Loan Losses. As of the Effective Time, and contingent upon
the Effective Time, First Colonial's consolidated allowance for loan losses
after all anticipated loan losses have been charged off shall not be less an
amount requested by Firstar.
(n) Outstanding FCBC Common Stock. As of the Closing Date, the number of
outstanding shares of FCBC Common Stock shall not be greater than 9,994,429.
8.03. Conditions of Obligations of First Colonial. The obligation of First
Colonial to effect the Merger is subject to the satisfaction of the following
conditions unless waived in writing by First Colonial:
(a) Representations and Warranties. Each of the representations and
warranties of Firstar and Sub set forth in this Agreement, without giving effect
to any notice to First Colonial pursuant to Section 6.05, shall be true and
correct in all material respects (except that where any statement in a
representation or warranty expressly includes a standard of materiality, such
statement shall be true and correct in all respects) as of the date of this
Agreement and (except to the extent such representations speak as of an earlier
date) as of the
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Closing Date as though made on and as of the Closing Date, except for changes
expressly contemplated by this Agreement, and First Colonial shall have received
a certificate signed on behalf of Firstar by the Chief Executive Officer and by
the chief financial officer of Firstar to such effect.
(b) Performance of Obligations of Firstar and Sub. Firstar and Sub shall
have performed in all material respects each of the obligations required to be
performed by them under this Agreement and the Plan of Merger at or prior to the
Closing Date, and First Colonial shall have received a certificate signed on
behalf of Firstar by the Chief Executive Officer and by the chief financial
officer of Firstar to such effect.
(c) Tax Opinion. An opinion of Vedder, Price, Kaufman & Kammholz, to the
effect that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and that
Firstar, Sub and First Colonial will each be a party to that reorganization
within the meaning of Section 368(b) of the Code, dated on or about the date
that is two business days prior to the date the Proxy Statement is first mailed
to stockholders of First Colonial, shall have been delivered and shall not have
been withdrawn or modified in any material respect.
(d) Consents Under Agreements. Firstar shall have obtained the consent or
approval of each person whose consent or approval shall be required in
connection with the transactions contemplated hereby under any loan or credit
agreement, note, mortgage, indenture, lease or other agreement or instrument,
except those for which failure to obtain such consents and approvals would not,
in the reasonable opinion of First Colonial, individually or in the aggregate,
have a Firstar Material Adverse Effect or upon the consummation of the
transactions contemplated hereby.
(e) No Amendments to Resolutions. Neither the Board of Directors of Firstar
nor any committee thereof shall have amended, modified, rescinded or repealed
the resolutions adopted by the Board of Directors of Firstar at a meeting duly
called and held on July 29, 1994 (accurate and complete copies of which have
been provided to First Colonial) and shall not have adopted any other
resolutions in connection with this Agreement and the transactions contemplated
hereby inconsistent with such resolutions.
(f) Opinion of Counsel. Firstar shall have delivered to First Colonial an
opinion of Howard H. Hopwood III, Senior Vice President and General Counsel of
Firstar, dated as of the Closing Date and in form and substance reasonably
satisfactory to the counsel of First Colonial, to the effect that: (i) each of
Firstar and Sub is a corporation validly existing under the laws of its
jurisdiction of incorporation with full corporate power and authority to enter
into this Agreement and the Plan of Merger and to consummate the transactions
contemplated thereby; (ii) all corporate proceedings on the part of Firstar and
Sub necessary to be taken in connection with the Merger and (except for the
filing of the Articles of Merger and Certificate of Merger) necessary to make
same effective have been duly and validly taken; (iii) this Agreement has been
duly and validly authorized, executed and delivered on behalf of Firstar and
constitutes (subject to standard exceptions to enforceability arising from the
bankruptcy laws and rules of equity) a valid and binding agreement of Firstar;
(iv) the execution of the Articles of Merger and Certificate of Merger by
Firstar and Sub has been duly and validly authorized; (v) the shares of Firstar
Common Stock and Firstar Preferred Stock to be issued in the Merger will, when
issued, be duly authorized, validly issued, fully paid and non-assessable
(except as provided in Section 180.0622(2)(b) of the WBCL) and not have been
issued in violation of any preemptive rights; and (vi) in the course of the
preparation of the S-4 and the Proxy Statement such counsel has considered the
information set forth therein in light of the matters required to be set forth
therein, and has participated in conferences with officers and representatives
of First Colonial and Firstar, including their respective counsel and
independent public accountants, during the course of which the contents of the
S-4 and the Proxy Statement and related matters were discussed. Such counsel has
not independently checked the accuracy or completeness of, or otherwise
verified, and accordingly is not passing upon, and does not assume
responsibility for, the accuracy, completeness or fairness of the statements
contained in the S-4 or the Proxy Statement; and such counsel has relied as to
materiality, to a large extent, upon the judgment of officers and representative
of First Colonial and Firstar. However, as a result of such consideration and
participation, nothing has come to such counsel's attention which causes such
counsel to believe that the S-4 (other than the financial statements, financial
data, statistical data and supporting schedules included therein, and
information relating to or supplied by First Colonial as to which such counsel
expresses no belief), at the time it became
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effective, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Proxy Statement (other than the
financial statements, financial data, statistical data and supporting schedules
included therein, and information relating to or supplied by First Colonial, as
to which such counsel expresses no belief), at the time the S-4 became
effective, included any untrue statement of a material fact or omitted to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(g) No Material Adverse Change. Except as disclosed in the Firstar
Disclosure Letter, there shall have been no material adverse change since the
Latest Statement Date in the financial condition, results of operations or
business of Firstar and the Firstar Subsidiaries taken as a whole, other than
any changes resulting primarily by reason of changes in banking laws or
regulations (or interpretations thereof), changes in the general level of
interest rates or changes in economic, financial or market conditions affecting
the banking industry generally in the regions in which Firstar and the Firstar
Subsidiaries operate.
ARTICLE IX
INDUCEMENT
9.01. Inducement. (a) Subject to subsection (d), As a condition and
inducement to Firstar's willingness to enter into and perform this Agreement, in
the event that a Trigger Event (as hereinafter defined) has occurred, then First
Colonial shall pay to Firstar a fee of $7,500,000, which payment shall be in
addition to that contemplated by Section 5.08(a). Such fee shall be payable in
immediately available funds within two days following the occurrence of a
Trigger Event.
(b) As used herein, "Trigger Event" shall mean the occurrence of one or
more of the following events:
(i) A Transaction Proposal (as defined below) shall have occurred;
(ii) Termination of this Agreement following a wilful and material
breach thereof by First Colonial; or
(iii) (A) The Board of Directors of First Colonial (1) shall have
withdrawn, modified or amended in any respect its approval or
recommendation of this Agreement or the transactions contemplated thereby,
or (2) shall not at the appropriate time have recommended or shall have
withdrawn, modified or amended in any respect its recommendation that its
stockholders vote in favor of this Agreement, or (3) shall not have
included such recommendation in the Proxy Statement, or (B) the Board of
Directors of First Colonial shall have resolved to do any of the foregoing.
(c) As used in this Agreement, "Person" shall mean any individual, firm,
corporation, or other entity and shall include any syndicate or group of persons
deemed to be a "person" by Section 13(d)(3)(e) of the Exchange Act. As used in
this Agreement,
(i) "Transaction Proposal" shall mean (A) a bona fide tender offer or
exchange offer for at least 25% of the then outstanding shares of any class
of capital stock of First Colonial shall have been made by any Person
(excluding Firstar or any of its Subsidiaries or Affiliates), (B) any
Person (other than Firstar or any Subsidiary or Affiliate thereof) shall
have filed an application under the Bank Holding Company Act of 1956, as
amended, or the Change in Bank Control Act, as amended, with respect to the
acquisition by such person of any shares of the capital stock of First
Colonial, (C) a merger, consolidation or other business combination with
First Colonial, or with any Subsidiary of First Colonial, shall have been
effected by any Person, or an agreement relating to any such transaction
shall have been entered into, (D) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition (whether in one transaction or a
series of related transactions) involving a substantial part of First
Colonial's consolidated assets (including stock of any of First Colonial's
Subsidiaries), or all or a substantial part of the assets of any of First
Colonial's Subsidiaries, to any Person shall have been effected, or any
agreement relating to such transaction shall have been entered into, (E)
the acquisition by any Person, other than (1) Firstar or any
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Subsidiary or Affiliate of Firstar (other than in a fiduciary capacity) or
(2) any of First Colonial's Subsidiaries in a fiduciary capacity for third
parties, none of whom beneficially owns 10% or more of the outstanding
shares of any class of the capital stock of First Colonial, of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act, which
will be deemed for purposes hereof to provide that such Person beneficially
owns any shares of the capital stock of First Colonial that may be acquired
by such person pursuant to any right, option, warrant or other agreement,
regardless of when such acquisition would be permitted by the terms
thereof) of 10% or more of the outstanding shares of any class of the
capital stock of First Colonial (including capital stock currently
beneficially owned by such Person) or, if such Person currently
beneficially owns 10% or more of the outstanding shares of any class of
capital stock of First Colonial, of any additional shares of the capital
stock of First Colonial (other than pursuant to such Person's rights and
obligations as of the date hereof under FCBC Stock Options, Mandatory Stock
Purchase Agreements, FCBC Series C Preference Stock and/or FCBC Class B
Common Stock) (and other than, as to all of this clause (E), transfers of
securities of First Colonial contemplated by, and solely among the parties
to, that certain "Restatement of Stockholder Agreement and Stockholder
Insurance Agreement dated October 17, 1984," dated as of February 18, 1987,
as amended by an amendment dated March 6, 1994), (F) any reclassification
of securities or recapitalization of First Colonial or other transaction
that has the effect, directly or indirectly, of increasing the
proportionate share of any class of equity security (including securities
convertible into equity securities) of First Colonial which is owned by any
Person (excluding Firstar or any of its Subsidiaries or Affiliates) shall
have been effected, or any agreement relating to such transaction shall
have been entered into or plan with respect thereto adopted, (G) any
transaction having an effect similar to those described in (A) through (F)
above, or (H) a public announcement with respect to a proposal, plan or
intention by First Colonial or another Person (excluding Firstar or any of
its Subsidiaries or Affiliates) to effect any of the foregoing
transactions; provided, however, that in the case of the events described
in clauses (A), (B) and (H) in this definition, and events described in
clause (G) having an effect similar to those described in clauses (A) and
(B) (the "Events"), such Events shall not constitute a "Transaction
Proposal" hereunder unless after the occurrence of any such Event, either
(x) the Board of Directors of First Colonial (1) recommends such Event to
its stockholders for acceptance; (2) fails to undertake such acts as
Firstar reasonably requests to oppose such Event (provided that First
Colonial not incur significant legal expense); or (3) fails to recommend
approval of this Agreement to First Colonial's stockholders; or (y) First
Colonial's stockholders shall have failed to approve this Agreement at a
meeting duly called for such purpose; and provided, further, that any
transaction contemplated by this Agreement (other than transactions
contemplated by Section 5.01(g), Section 5.02(f) or the proviso to Section
5.14(b)) shall be specifically exempt from the definition of "Transaction
Proposal"; and
(ii) "Affiliate" shall mean a person that directly or indirectly,
through one or more intermediaries, (A) owns beneficially, directly or
indirectly, in excess of 10% of the voting capital stock of any other
Person or (B) controls, is controlled by, or is under common control with,
another person.
(d) The rights of Firstar hereunder shall terminate upon the earliest to
occur of (i) the Effective Time, (ii) the termination of this Agreement by First
Colonial pursuant to Section 10.01(a)(ii), (iii) the termination of this
Agreement by mutual agreement of the parties or (iv) the expiration of one year
after the termination of this Agreement (other than terminations described in
clause (ii) or (iii)).
ARTICLE X
TERMINATION AND AMENDMENT
10.01. Termination. (a) This Agreement and the Plan of Merger 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 First Colonial or Firstar:
(i) by mutual consent of the Board of Directors of Firstar and the
Board of Directors of First Colonial;
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(ii) by either Firstar or First Colonial (A) if there has been a
material breach (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall
have been breached in any respect) of any representation, warranty,
covenant or agreement on the part of First Colonial, on the one hand, or
Firstar and Sub, on the other hand, respectively, set forth in this
Agreement, or (B) if any representation or warranty of First Colonial, on
the one hand, or Firstar and Sub, on the other hand, respectively, shall be
discovered to have become materially untrue (except that where any
statement in a representation or warranty expressly includes a standard of
materiality, such statement shall have become untrue in any respect), in
either case which breach or other condition has not been cured within 10
business days following receipt by the nonterminating party of notice of
such breach or other condition;
(iii) by either Firstar or First Colonial if any permanent Injunction
preventing the consummation of the Merger shall have become final and
nonappealable;
(iv) by either the Board of Directors of Firstar or the Board of
Directors of First Colonial if the Merger shall not have been consummated
before July 31, 1995, for a reason other than the failure of the
terminating party to comply with its obligations under this Agreement;
(v) by the Board of Directors of either of Firstar or First Colonial
if the Federal Reserve Board or the Illinois Commissioner has denied
approval of the Merger and, if such denial is appealable, neither Firstar
nor First Colonial has, within 30 days after the entry of the Federal
Reserve Board's or the Illinois Commissioner's order denying such approval,
filed a petition seeking review of such order as provided by Section 9 of
the BCH Act or applicable Illinois law;
(vi) by First Colonial, on either of the two trading days immediately
after the Ten-Day Calculation Period, as defined below, if both of the
following conditions are satisfied:
(1) the average of the daily closing prices of a share of Firstar
Common Stock as reported on the consolidated tape of the NYSE during the
Ten-Day Calculation Period (the "Firstar Average Price") is less than
$29.00; and
(2) the number obtained by dividing the Firstar Average Price by
the closing price of Firstar Common Stock as reported on the
consolidated tape of the NYSE on the trading day immediately preceding
the public announcement of this Agreement is less than the number
obtaining by dividing the Final Index Price (as defined in subsection
(b) below) by the Initial Index Price (as defined in subsection (b)
below) and subtracting .125 from such quotient.
(b) For purposes of this Section 10.01:
(i) The "Index Group" shall mean all of those companies listed on
Exhibit 10.01 the common stock of which is publicly traded and as to which
there is no pending publicly announced proposal at any time during the
Ten-Day Calculation Period for such company to acquire another company or
companies in transactions with a value exceeding 10% of the acquiror's
market capitalization or for such company to be acquired. In the event that
any such company or companies are so removed from the Index Group, the
weights attributed to the remaining companies shall be adjusted
proportionately.
(ii) The "Initial Index Price" shall mean the weighted average
(weighted in accordance with the factors listed on Exhibit 10.01) of the
per share closing prices of the common stock of the companies comprising
the Index Group, as reported on the consolidated transactions reporting
system for the market or exchange on which such common stock is principally
traded, on the trading day immediately preceding the public announcement of
this Agreement.
(iii) The "Final Price" of any company belonging to the Index Group
shall mean the average of the daily closing sale prices of a share of
common stock of such company, as reported in the consolidated transaction
reporting system for the market or exchange on which such common stock is
principally traded, during the Ten-Day Calculation Period.
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(iv) The "Final Index Price" shall mean the weighted average (weighted
in accordance with the factors listed on Exhibit 10.01) of the Final Prices
for all of the companies comprising the Index Group.
(v) The "Ten-Day Calculation Period" shall mean the ten (10)
consecutive trading days commencing on the first business day following the
date the Federal Reserve Board issues an order approving consummation of
the Merger.
If Firstar or any company belonging to the Index Group declares a stock dividend
or effects a reclassification, recapitalization, split-up, combination, exchange
of shares or similar transaction between the date of this Agreement and the
Meeting Date, the closing prices for the common stock of such company shall be
appropriately adjusted for the purposes of the definitions above so as to be
comparable to the price on the date of this Agreement.
10.02. Environmental Conditions Termination. Subject to the next following
sentence, Firstar may terminate this Agreement within 95 days of the date that a
consultant is chosen pursuant to Section 5.16 if, and only if, (a) any
environmental conditions are found, suspected, or indicated by the environmental
assessments obtained pursuant to the investigation under Section 5.16 which, if
known by First Colonial to be existing on the date hereof, would be contrary to
First Colonial's representations and warranties set forth in Section 3.08(b);
(b) the parties are unable to agree upon a course of action for further
investigation and remediation of all environmental conditions and/or issues
raised by environmental assessments with respect to all FCBC Property and/or a
mutually acceptable modification to this Agreement within 85 days of the date
that a consultant is chosen pursuant to Section 5.16(a); (c) the conditions
and/or issues are not such that it can be determined to a reasonable degree of
certainty within such 85 day period, based upon information then available to
Firstar and First Colonial, that the risk and expense to which Firstar and its
subsidiaries would be subject as owner and/or operator of the FCBC Property
involved can be quantified and limited to an amount that would not be reasonably
likely to exceed $3,000,000 in the aggregate (including costs incurred by First
Colonial or any FCBC Subsidiary prior to the Effective Time); and (d) Firstar
gives First Colonial written notice of its intent to terminate this Agreement
pursuant hereto not less than five days prior to the effective date of such
termination. Notwithstanding the foregoing, Firstar may, pursuant to a written
instrument signed by it (which shall not be deemed to be an amendment or
modification to this Agreement) terminate its rights to terminate this Agreement
pursuant to this Section as of any date specified in such written instrument
that is prior to the date such rights would otherwise expire. Notwithstanding
any other provision of this Agreement to the contrary, Firstar shall not be
entitled to terminate this Agreement by virtue of any environmental matter
relating to FCBC Property on which any assessment is conducted pursuant to
Section 5.16(a), including but not limited to a breach of Section 3.08(b),
effective at any time that is later than the date 95 days after the date a
consultant is chosen pursuant to Section 5.16(a).
10.03. Effect of Termination. In the event of termination of this Agreement
by either First Colonial or Firstar as provided in Section 10.01 or Section
10.02, this Agreement and the Plan of Merger shall forthwith become void and
there shall be no liability or obligation on the part of Firstar or First
Colonial or their respective officers or directors except (x) with respect to
Sections 5.08, 6.15, 7.04 and 9.01, and (y) to the extent that such termination
results from the willful breach by a party hereto of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
10.04. Amendment. Subject to the next following sentence, this Agreement
and the Plan of Merger 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 the Merger by the
stockholders of First Colonial, but after any such approval by the stockholders
of First Colonial, no amendment shall be made which has any of the effects
described in Section 251(d) of the DGCL. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
10.05. Extension; Waiver. At any time prior to the Effective Time, Firstar
and Sub, on the one hand, and First Colonial, on the other hand, by action taken
or authorized by their respective Board of Directors, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties of the other contained herein or in any document
delivered by the other pursuant hereto, and (iii) waive compliance by the other
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with any of the agreements or conditions contained herein. 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.
ARTICLE XI
GENERAL PROVISIONS
11.01. Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Sections 2.01, 6.07, 6.08, 6.11,
6.12 and 6.13, the last sentence of Section 10.04 and Article XI, and the
agreements delivered pursuant to Section 5.06 and Section 5.15.
11.02. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
receipt confirmed) or mailed by registered or certified mail (return receipt
requested) 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 Firstar and/or Sub, to
Firstar Corporation
Attention: Jon H. Stowe,
Executive Vice President
777 East Wisconsin Avenue
Milwaukee, WI 53202
Telecopy: (414) 765-4349
with a copy to:
Firstar Corporation
Attention: Howard H. Hopwood III,
Senior Vice President & General Counsel
777 East Wisconsin Avenue
Milwaukee, WI 53202
Telecopy: (414) 765-6111
(b) if to First Colonial to:
First Colonial Bankshares Corporation
Attention: C. Paul Johnson,
Chairman and Chief Executive Officer
30 North Michigan Avenue, Suite 300
Chicago, Illinois 60602-0493
Telecopy: (312) 641-0493
with a copy to:
Vedder, Price, Kaufman & Kammholz
Attention: Daniel O'Rourke, Esq.
222 North LaSalle Street
Chicago, Illinois 60601-1003
Telecopy: (312) 609-5005
11.03. Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of 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." The phrase "made available" in this
Agreement
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shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available.
11.04. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more 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.
11.05. Entire Agreement; No Third Party Beneficiaries; Rights of Ownership.
This Agreement (including the documents and the instruments referred to herein,
including the Plan of Merger) (a) 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, except for the rights and
obligations of Firstar and First Colonial under the confidentiality letter
agreements to Firstar, dated April 20, 1994, and to First Colonial, dated July
11, 1994, which shall survive except as modified hereby, and (b) except as
provided in Section 6.07, Section 6.08, Section 6.11 and Section 6.12, is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder. The parties hereby acknowledge that, except as otherwise
hereinafter agreed to in writing, no party shall have the right to acquire or
shall be deemed to have acquired shares of common stock of the other party
pursuant to the Merger until consummation thereof.
11.06. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Wisconsin, except as the IBCA and the
DGCL is expressly applicable to the Merger.
11.07. Publicity. The parties hereto agree that they will consult with each
other concerning any proposed press release or public announcement pertaining to
the Merger and use their best efforts to agree upon the text of such press
release or public announcement prior to the publication of such press release or
the making of such public announcement.
11.08. Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder 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.
11.09. Knowledge of the Parties. Wherever in this Agreement any
representation or warranty is made upon the knowledge of a party hereto that is
not an individual, such knowledge shall include the actual knowledge, after due
inquiry, of any executive officer of such party.
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IN WITNESS WHEREOF, Firstar, Sub and First Colonial have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
FIRSTAR CORPORATION
By: /s/ JON H. STOWE
------------------------------------
Its: Executive Vice President
Attest:
/s/ JOHN A. KIELICH
- ------------------------------------
Its: Vice President
FIRSTAR CORPORATION OF ILLINOIS
By: /s/ JON H. STOWE
------------------------------------
Its: Vice President
Attest:
/s/ JOHN A. KIELICH
- ------------------------------------
Its: Vice President
FIRST COLONIAL BANKSHARES
CORPORATION
By: /s/ C. PAUL JOHNSON
------------------------------------
Its: Chairman and Chief
Executive Officer
Attest:
/s/ ROBERT F. SHERMAN
- ------------------------------------
Its: President
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EXHIBIT A
PLAN OF MERGER
PLAN OF MERGER, dated as of July 31, 1994 ("Plan of Merger"), by and
between Firstar Corporation of Illinois, an Illinois corporation ("Sub"), and
First Colonial Bankshares Corporation, a Delaware corporation ("First
Colonial"), and joined in by Firstar Corporation, a Wisconsin corporation
("Firstar"), for certain limited purposes.
WHEREAS, First Colonial is a corporation with authorized capital stock
consisting of (i) 20,000,000 shares of Class A Common Stock, $1.25 par value
("FCBC Class A Common Stock"), of which 8,400,829 shares are validly issued and
outstanding on the date hereof; (ii) 3,000,000 shares of Class B Common Stock,
$1.25 par value ("FCBC Class B Common Stock" and, collectively with the FCBC
Class A Common Stock, the "FCBC Common Stock"), of which 1,568,600 shares are
validly issued and outstanding on the date hereof; (iii) 100,000 shares of
preferred stock, $57 par value ("FCBC Preferred"), of which no shares are
validly issued and outstanding on the date hereof; and (iv) 200,000 shares of
preference stock, no par value ("FCBC Preference Stock"), in respect of which
there are issued and outstanding 39,700 shares of Series C Convertible
Preference Stock, no par value ("FCBC Series C Preference Stock");
WHEREAS, Sub is a corporation with authorized capital stock of 10,000
shares of common stock, $2.50 par value ("Sub Common Stock"), 400 of which are
validly issued and outstanding and are owned by Firstar;
WHEREAS, Firstar is a corporation duly organized and existing under the
laws of Wisconsin;
WHEREAS, concurrently with the execution and delivery of this Plan of
Merger, Firstar, Sub and First Colonial have entered into an Agreement and Plan
of Reorganization (the "Agreement" and, together with this Plan of Merger, the
"Merger Agreements") that contemplates the merger of First Colonial with and
into Sub (the "Merger") upon the terms and conditions provided in this Plan of
Merger and the Agreement and pursuant to the Illinois Business Corporation Act
(the "IBCA") and the Delaware General Corporation Law (the "DGCL");
WHEREAS, the Boards of Directors of Sub and First Colonial deem it fair and
equitable to, and in the best short-term and long-term interests of, their
respective corporations and stockholders that First Colonial be merged with and
into Sub with Sub being the surviving corporation, and each such Board of
Directors has approved this Plan of Merger, has authorized its execution and
delivery and has directed that this Plan of Merger and the Merger be submitted
to its respective stockholders for approval; and
WHEREAS, the Board of Directors of Firstar has authorized the execution and
delivery of this Plan of Merger and, subject to approval by the Board of
Directors of Firstar, the issuance of Firstar Common Stock (as defined in
Section 2.01(a)) and Firstar Preferred Stock (as defined in Section 2.01(b))
pursuant hereto.
NOW, THEREFORE, in consideration of the premises and the agreements herein
contained, the parties hereto adopt and agree to the following agreements, terms
and conditions relating to the Merger and the mode of carrying the same into
effect:
ARTICLE I
THE MERGER
1.01. The Merger. Subject to the terms and conditions of the Merger
Agreements, First Colonial will be merged with and into Sub, which will be the
surviving corporation, in accordance with and with the effect provided in the
IBCA and the DGCL.
1.02. Effective Time of the Merger. Subject to the provisions of the Merger
Agreements, (a) articles of merger (the "Articles of Merger") shall be duly
prepared and executed by Sub and First Colonial and thereafter delivered to the
Secretary of State of the State of Illinois for filing, as provided in the IBCA,
on the Closing Date (as defined in the Agreement) and (b) a certificate of
merger (the "Certificate of Merger")
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shall be duly prepared and executed by Sub and First Colonial and thereafter
delivered to the Secretary of State of the State of Delaware for filing, as
provided in the DGCL, on the Closing Date. The Merger shall become effective
upon the filing of the Articles of Merger with the Secretary of State of the
State of Illinois and the Certificate of Merger with the Secretary of State of
the State of Delaware (the "Effective Time").
1.03. Effects of the Merger. (a) At the Effective Time, (i) the separate
existence of First Colonial shall cease and First Colonial shall be merged with
and into Sub as provided in Section 5/11.35 of the IBCA and Sections 251 and 252
of the DGCL (Sub and First Colonial are sometimes referred to herein as the
"Constituent Corporations" and Sub is sometimes referred to herein as the
"Surviving Corporation"), (ii) the Articles of Incorporation of Sub in effect as
of the Effective Time (the "Articles") shall be the Articles of Incorporation of
the Surviving Corporation, (iii) the By-laws of Sub in effect as of the
Effective Time (the "By-laws") shall be the By-laws of the Surviving Corporation
and (iv) the members of the Board of Directors and committees thereof and the
officers of Sub immediately prior to the Effective Time shall be the members of
the Board of Directors and committees thereof and the officers of the Surviving
Corporation, respectively.
(b) At and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises of a public as well as
of a private nature, and be subject to all the restrictions, disabilities and
duties of each of the Constituent Corporations; and all and singular rights,
privileges, powers and franchises of each of the Constituent Corporations, and
all property, real, personal and mixed and all debts due to either of the
Constituent Corporations on whatever account, as well as for stock subscriptions
and all other things in action or belonging to each of the Constituent
Corporations, shall be vested in the Surviving Corporation; and all property,
rights, privileges, powers and franchises, and all and every other interest
shall be thereafter as effectually the property of the Surviving Corporation as
they were of the Constituent Corporations, and the title to any real estate
vested by deed or otherwise, in either of the Constituent Corporations, shall
not revert or be in any way impaired; but all rights of creditors and all liens
upon any property of either of the Constituent Corporations shall be preserved
unimpaired, and all debts, liabilities and duties of the Constituent
Corporations shall thenceforth attach to the Surviving Corporation, and may be
enforced against it to the same extent as if said debts and liabilities had been
incurred by it. Any action or proceeding, whether civil, criminal or
administrative, pending by or against either Constituent Corporation shall be
prosecuted as if the Merger had not taken place, and the Surviving Corporation
may be substituted as a party in such action or proceeding in place of any
Constituent Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
2.01. Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of FCBC
Class A Common Stock, FCBC Class B Common Stock or FCBC Series C Convertible
Preference Stock, or holders of depositary receipts evidencing depositary shares
representing an interest in the FCBC Series C Preference Stock, but subject to
the provisions of Section 262 of the DGCL with respect to the rights of
dissenting stockholders of First Colonial:
(a) Conversion of FCBC Common Stock. Each then issued and outstanding share
of FCBC Common Stock shall be converted into the right to receive 0.7725 fully
paid and nonassessable shares of common stock, $1.25 par value, of Firstar
("Firstar Common Stock"), including with each such share one-half of one Firstar
Preferred Share Purchase Right ("Right") issued pursuant to the Rights Agreement
dated as of January 20, 1989, between Firstar and Firstar Trust Company, as
Rights Agent (the "Rights Agreement"). Prior to the Distribution Date (as
defined in the Rights Agreement), all references in this Plan of Merger to the
Firstar Common Stock to be received pursuant to the Merger shall be deemed to
include the Rights.
(b) Conversion of FCBC Series C Preference Stock. Each then issued and
outstanding share of FCBC Series C Preference Stock shall be converted into the
right to receive one fully paid and nonassessable share of
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Series D Convertible Preferred Stock, no par value, of Firstar ("Firstar
Preferred Stock") which Firstar Preferred Stock shall have terms substantially
as set forth on Exhibit 2.01(b) hereto.
(c) Stock Held by First Colonial. Each then issued and outstanding share of
FCBC Common Stock or FCBC Series C Preference Stock owned by First Colonial or
any direct or indirect subsidiary of First Colonial (other than shares held in a
fiduciary capacity) and each share of FCBC Common Stock or FCBC Series C
Preference Stock issued and held in First Colonial's treasury will be cancelled
and retired.
(d) Cancellation of Shares. All shares of FCBC Common Stock and FCBC Series
C Preference Stock issued and outstanding immediately prior to the Effective
Time shall no longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a certificate representing
any such shares shall cease to have any rights with respect thereto, except the
right to receive the shares of Firstar Common Stock or Firstar Preferred Stock,
as the case may be, to be issued in consideration therefor upon the surrender of
such certificate in accordance with the Plan of Merger, without interest.
(e) Adjustment. If, prior to the Effective Time, Firstar shall declare a
stock dividend or distribution upon or subdivide, split up, reclassify or
combine its shares of Firstar Common Stock or declare a dividend or make a
distribution on Firstar Common Stock of any security convertible into Firstar
Common Stock, appropriate adjustment or adjustments will be made in the
conversion rate set forth in subsection (a).
(f) Each outstanding share of FCBC Class B Common Stock as to which
dissenters' rights have been asserted in accordance with the procedures of the
DGCL and not withdrawn shall be accorded the rights provided by the DGCL and
shall not be converted into or represent rights to receive the shares of Firstar
Common Stock or cash hereunder unless and until the holder shall have failed to
perfect or effectively withdrawn or lost such dissenters' rights.
2.02. Exchange of Certificates. (a) Exchange Agent. As of the Effective
Time, Firstar shall deposit with Firstar Trust Company or such other bank or
trust company designated by Firstar (and reasonably acceptable to First
Colonial) (the "Exchange Agent") for the benefit of the holders of shares of
FCBC Common Stock and FCBC Series C Preference Stock, for exchange in accordance
with this Article II through the Exchange Agent, certificates representing the
shares of Firstar Common Stock and Firstar Preferred Stock (such shares of
Firstar Common Stock and Firstar Preferred Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund") issuable pursuant to Section 2.01 in exchange for shares of
FCBC Common Stock and FCBC Series C Preference Stock outstanding immediately
prior to the Effective Time. To the extent Firstar owns shares of Firstar Common
Stock as treasury stock, such shares may be deposited into the Exchange Fund.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of FCBC Common Stock and FCBC Series C Preference
Stock (the "Certificates") whose shares were converted into the right to receive
shares of Firstar Common Stock or Firstar Preferred Stock pursuant to Section
2.01 (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such form and
have such other provisions as Firstar and First Colonial may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Firstar Common Stock or Firstar
Preferred Stock, as the case may be. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Firstar, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
a certificate representing that number of whole shares of Firstar Common Stock
or Firstar Preferred Stock, as the case may be, which such holder has the right
to receive pursuant to the provisions of this Article II, and the Certificate so
surrendered shall forthwith be cancelled. In the event of a transfer of
ownership of FCBC Common Stock which is not registered in the transfer records
of First Colonial, a certificate representing the proper number of shares of
Firstar Common Stock may be issued to a transferee if the Certificate
representing such FCBC Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as
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contemplated by this Section 2.02, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the certificate representing shares of Firstar Common Stock or Firstar
Preferred Stock, as the case may be, and cash in lieu of any fractional shares
of Firstar Common Stock as contemplated by this Section 2.02.
(c) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions declared or made after the Effective Time with respect to Firstar
Common Stock or Firstar Preferred Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Firstar Common Stock or Firstar Preferred Stock represented
thereby and no cash payment in lieu of fractional shares shall be paid to any
such holder pursuant to Section 2.02(e) until the holder of record of such
Certificate shall surrender such Certificate. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of
Firstar Common Stock or Firstar Preferred Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of Firstar Common Stock to which such
holder is entitled pursuant to Section 2.02(e) and the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Firstar Common Stock or Firstar Preferred
Stock, and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole shares of Firstar Common Stock or Firstar Preferred Stock.
(d) No Further Ownership Rights in FCBC Common Stock. All shares of Firstar
Common Stock and Firstar Preferred Stock issued upon the surrender for exchange
of shares of FCBC Common Stock or FCBC Series C Preference Stock in accordance
with the terms hereof (including any cash paid pursuant to Section 2.02(c) or
2.02(e)) shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of FCBC Common Stock or FCBC Series C Preference
Stock, subject, however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by First Colonial on such
shares of FCBC Common Stock or FCBC Series C Preference Stock in accordance with
the terms of the Agreement or prior to the date hereof and which remain unpaid
at the Effective Time, and there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the shares of FCBC
Common Stock or FCBC Series C Preference Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or Firstar for any
reason, they shall be cancelled and exchanged as provided in this Plan of
Merger.
(e) No Fractional Shares. Notwithstanding any other provision of this Plan
of Merger to the contrary, neither certificates nor scrip representing
fractional shares of Firstar Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of Firstar. Each
holder of shares of FCBC Common Stock who would otherwise have been entitled to
a fraction of a share of Firstar Common Stock shall receive in lieu thereof cash
(without interest) in an amount determined by multiplying the fractional share
interest to which such holder would otherwise be entitled by the closing price
per share of Firstar Common Stock at the Effective Time on the New York Stock
Exchange Composite Transaction Tape. From time to time at the request of the
Exchange Agent after the determination of amounts of cash to be paid to holders
of FCBC Common Stock in lieu of any fractional share interests, Firstar shall
make available such amounts to the Exchange Agent.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the stockholders of First Colonial for six months after
the Effective Time shall be delivered to Firstar, upon demand, and any
stockholders of First Colonial who have not theretofore complied with this
Section 2.02 shall thereafter look only to Firstar for payment of their claim
for Firstar Common Stock or Firstar Preferred Stock, any cash in lieu of
fractional shares of Firstar Common Stock and any dividends or distributions
with respect to Firstar Common Stock or Firstar Preferred Stock.
(g) No Liability. None of Firstar, Sub and First Colonial shall be liable
to any holder of shares of FCBC Common Stock or FCBC Series C Preference Stock
or Firstar Common Stock or Firstar Preferred Stock, as the case may be, for such
shares (or dividends or distributions with respect thereto) or cash from the
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Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(h) Withholding Rights. Firstar and Sub shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to the Agreements to
any former holder of shares of FCBC Common Stock or FCBC Series C Preference
Stock such amounts as Firstar or Sub is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by Firstar or Sub, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the former
holder of the shares of FCBC Common Stock or FCBC Series C Preference Stock in
respect of which such deduction and withholding was made by Firstar or Sub.
2.03. Effect on Common Stock of Sub. At the Effective Time, the shares of
Sub Common Stock validly issued and outstanding immediately prior to the
Effective Time will continue to evidence 1,000 shares of common stock, no par
value, of the Surviving Corporation so that all shares of capital stock of the
Surviving Corporation will continue to be owned by Firstar. The outstanding
certificates representing shares of Sub Common Stock will, after the Effective
Time, continue to represent the same number of shares of the Surviving
Corporation.
ARTICLE III
CONDITIONS; TERMINATION; AMENDMENT
3.01. Conditions to the Merger. Consummation of the Merger is conditional
upon the fulfillment or waiver of the conditions precedent set forth in Article
VIII of the Agreement.
3.02. Termination. This Plan of Merger may be terminated and the Merger
abandoned by mutual consent of the respective Boards of Directors of First
Colonial and Sub at any time prior to the Effective Time or otherwise in
accordance with Article X of the Agreement. If the Agreement is terminated in
accordance with Article X thereof, then this Plan of Merger will terminate
simultaneously and the Merger will be abandoned without further action by First
Colonial or Sub.
3.03. Amendment. Subject to the next following sentence, this Plan of
Merger 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 the Merger by the stockholders of First
Colonial or of Firstar, but after any such approval by the stockholders of First
Colonial, no amendment shall be made which has any of the effects described in
Section 251(d) of the DGCL. This Plan of Merger may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
3.04. Extension; Waiver. At any time prior to the Effective Time, Firstar
and Sub, on the one hand, and First Colonial, on the other hand, by action taken
or authorized by their respective Board of Directors, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other party hereto and (ii) waive compliance by the other with
any of the agreements or conditions contained herein. 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 on behalf of such party.
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ARTICLE IV
GENERAL PROVISIONS
4.01. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
receipt confirmed) or mailed by registered or certified mail (return receipt
requested) 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 Firstar and/or Sub, to
Firstar Corporation
Attention: Jon H. Stowe,
Executive Vice President
777 East Wisconsin Avenue
Milwaukee, WI 53202
Telecopy: (414) 765-4349
with a copy to:
Firstar Corporation
Attention: Howard H. Hopwood III,
Senior Vice President & General Counsel
777 East Wisconsin Avenue
Milwaukee, WI 53202
Telecopy: (414) 765-6111
(b) if to First Colonial to:
First Colonial Bankshares Corporation
Attention: C. Paul Johnson,
Chairman and Chief Executive Officer
30 North Michigan Avenue, Suite 300
Chicago, Illinois 60602-0493
Telecopy: (312) 641-0493
with a copy to:
Vedder, Price, Kaufman & Kammholz
Attention: Daniel O'Rourke, Esq.
222 North LaSalle Street
Chicago, Illinois 60601-1003
Telecopy: (312) 609-5005
4.02. Interpretation. When a reference is made in this Plan of Merger to
Sections, such reference shall be to a Section of this Plan of Merger unless
otherwise indicated. The headings contained in this Plan of Merger are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Plan of Merger.
4.03. Counterparts. This Plan of Merger may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more 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.
4.04. Governing Law. This Plan of Merger shall be governed and construed in
accordance with the laws of the State of Wisconsin, except as the IBCA and DGCL
are expressly applicable to the Merger.
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IN WITNESS WHEREOF, Sub, First Colonial and Firstar have caused this Plan
of Merger to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
FIRSTAR CORPORATION
By: /s/ JON H. STOWE
------------------------------------
Its: Executive Vice President
Attest:
/s/ JOHN A. KIELICH
- ------------------------------------
Its: Vice President
FIRSTAR CORPORATION OF ILLINOIS
By: /s/ JON H. STOWE
------------------------------------
Its: Vice President
Attest:
/s/ JOHN A. KIELICH
- ------------------------------------
Its: Vice President
FIRST COLONIAL BANKSHARES
CORPORATION
By: /s/ C. PAUL JOHNSON
------------------------------------
Its: Chairman and Chief
Executive Officer
Attest:
/s/ ROBERT F. SHERMAN
- ------------------------------------
Its: President
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EXHIBIT 10.01
INDEX GROUP
<TABLE>
<CAPTION>
WEIGHTING
COMPANY FACTOR
--------------------------------------------------------- ---------
<S> <C>
Banc One Corporation..................................... 12.70656%
Norwest Corporation...................................... 10.46989%
Key Corp................................................. 8.10532%
NBD Bancorp, Inc......................................... 5.26878%
National City Corporation................................ 4.98062%
Comerica Incorporated.................................... 3.93034%
First Bank System, Inc................................... 3.78827%
Boatmen's Bancshares, Inc................................ 3.47521%
Huntington Bancshares, Inc............................... 3.44211%
U.S. Bancorp............................................. 3.31781%
Marshall & Ilsley Corporation............................ 3.16064%
First Chicago Corporation................................ 2.87707%
South Trust Corporation.................................. 2.65273%
State Street Boston Corp................................. 2.53637%
Fifth Third Bancorp...................................... 2.05093%
First of America Bank Corp............................... 1.96361%
AmSouth Bancorporation................................... 1.95540%
Meridian Bancorp, Inc.................................... 1.91819%
Signet Banking Corporation............................... 1.88712%
Northern Trust Corporation............................... 1.79402%
Midlantic Corporation.................................... 1.73911%
UJB Financial Corp....................................... 1.72744%
First Security Corporation............................... 1.63194%
Mercantile Bancorporation, Inc........................... 1.43184%
Bancorp Hawaii, Inc...................................... 1.40692%
Regions Financial Corp................................... 1.39113%
Old Kent Financial Corporation........................... 1.34771%
Crestar Financial Corporation............................ 1.25164%
Union Bank............................................... 1.17684%
Integra Financial Corp................................... 1.11261%
BanPonce Corporation..................................... 1.08796%
First Tennessee National Corp............................ 1.05782%
BayBanks, Inc............................................ 0.62505%
Michigan National Corporation............................ 0.50751%
First Empire State Corporation........................... 0.22350%
</TABLE>
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<PAGE> 136
APPENDIX C
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
DECEMBER 9, 1994
Board of Directors
First Colonial Bankshares Corporation
30 North Michigan Avenue
Chicago, Illinois 60602
Members of the Board:
You have requested our opinion as to the fairness, from a financial point
of view, to the holders of the outstanding shares of Class A Common Stock, par
value $1.25 per share, and Class B Common Stock, par value $1.25 per share (the
Class A Common Stock and Class B Common Stock together, the "First Colonial
Common Stock"), of First Colonial Bankshares Corporation ("First Colonial") of
the Exchange Ratio (as defined in the Merger Agreement) set forth in the
Agreement and Plan of Reorganization dated July 31, 1994 among First Colonial,
Firstar Corporation ("Firstar") and Firstar Corporation of Wisconsin, the
successor by merger to Firstar Corporation of Illinois and a wholly-owned
subsidiary of Firstar (the "Merger Agreement").
At the time the Merger (as defined in the Merger Agreement) becomes
effective (the "Effective Time"), each share of First Colonial Common Stock
issued and outstanding at the Effective Time shall be converted into the right
to receive 0.7725 fully paid and nonassessable shares of common stock, par value
$1.25 per share, of Firstar ("Firstar Common Stock"), including with each such
share one-half of one Firstar Preferred Share Purchase Right issued pursuant to
the Rights Agreement, dated as of January 20, 1989, between Firstar and Firstar
Trust Company.
The Merger Agreement provides that First Colonial may terminate the Merger
Agreement on either of the two trading days immediately after the Ten-Day
Calculation Period (as defined below) if both of the following conditions are
satisfied: (1) the average of the daily closing prices of a share of Firstar
Common Stock (the "Firstar Average Price") as reported on the consolidated tape
of the New York Stock Exchange (the "NYSE") during the period of ten consecutive
trading days (the "Ten-Day Calculation Period") commencing on the first business
day following the date the Board of Governors of the Federal Reserve System
issues an order approving consummation of the Merger is less than $29.00; and
(2) the number obtained by dividing the Firstar Average Price by the closing
price of Firstar Common Stock as reported on the consolidated tape of the NYSE
on the trading day immediately preceding the public announcement of the Merger
is less than the number obtained by dividing the Final Index Price (as defined
in the Merger Agreement) by the Initial Index Price (as defined in the Merger
Agreement) and subtracting 0.125 from such quotient. At the date hereof, the
first but not the second of such conditions has been met.
The Merger is subject to, among other things, approvals of the Board of
Governors of the Federal Reserve System, the Office of the Comptroller of the
Currency and the Illinois Commissioner of Banks and Trust Companies, majority
approval by the holders of First Colonial Common Stock, and receipt of opinions
to the effect that the Merger will qualify for treatment as a tax-free
reorganization and a pooling of interests. The Merger Agreement also provides
that, in the event that a Trigger Event (as defined in the Merger Agreement) has
occurred, then First Colonial shall pay to Firstar a fee of $7.5 million within
two days following the occurrence of a Trigger Event. Each of First Colonial and
Firstar has agreed, under certain circumstances, to reimburse, up to a maximum
of $2 million each, the expenses incurred by the other in connection with the
Merger in the event the Merger is not consummated.
For purposes of this opinion and in connection with our review of the
proposed transaction, we have, among other things:
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1. Participated in discussions and negotiations among representatives of First
Colonial and their legal advisor and representatives of Firstar and their
financial and legal advisors that resulted in the Merger Agreement;
2. Reviewed the Merger Agreement and the proxy statement-prospectus dated
December 7, 1994 relating to the Merger to be sent to the holders of First
Colonial Common Stock in connection with the proposed transaction (the
"Proxy Statement-Prospectus");
3. Reviewed certain publicly available financial statements, both audited and
unaudited, for First Colonial and Firstar, including those included in the
Annual Reports on Form 10-K for the five years ended December 31, 1993, the
Quarterly Reports on Form 10-Q for the periods ended September 30, 1994,
and the most recent regular annual proxy statement available as of the date
hereof for First Colonial and Firstar;
4. Reviewed certain financial statements and other financial and operating
data concerning First Colonial and Firstar prepared by their respective
managements;
5. Reviewed certain financial projections of First Colonial and Firstar, both
on a stand-alone and on a combined basis, prepared by their respective
managements;
6. Discussed certain aspects of the past and current business operations,
results of regulatory examinations, financial condition and future
prospects of First Colonial and Firstar with certain members of the
management of First Colonial and Firstar;
7. Reviewed reported market prices and historical trading activity of First
Colonial Common Stock and Firstar Common Stock;
8. Reviewed certain aspects of the financial performance of First Colonial and
Firstar and compared such financial performance of First Colonial and
Firstar, together with the stock market data relating to First Colonial
Common Stock and Firstar Common Stock, with similar data available for
certain other financial institutions and certain of their publicly traded
securities;
9. Reviewed certain of the financial terms, to the extent publicly available,
of certain recent business combinations involving other financial
institutions; and
10. Conducted such other studies, analyses, and examinations as we deemed
appropriate.
We have relied upon and assumed without independent verification the
accuracy and completeness of all of the financial and other information that has
been provided to us by First Colonial, Firstar and their respective
representatives and of the publicly available information that was reviewed by
us. At your direction, we have also relied upon the managements of both First
Colonial and Firstar as to the reasonableness and achievability of the financial
and operating forecasts provided to us (and the assumptions and bases therefor).
In that regard, we have assumed with your permission that such forecasts,
including without limitation projected costs savings and operating synergies
resulting from the Merger, reflect the best currently available estimates and
judgments of such respective managements and that such projections and forecasts
will be realized in the amounts and in the time periods currently estimated by
the managements of both First Colonial and Firstar. We have not independently
verified and have relied on and assumed that the aggregate allowances for loan
losses set forth in the balance sheets of each of First Colonial and Firstar at
September 30, 1994 are adequate to cover such losses and complied fully with
applicable law, regulatory policy and sound banking practice as of the date of
such financial statements. With your permission, we did not independently verify
the carrying values of other real estate owned and loans classified as
in-substance foreclosures of each of First Colonial and Firstar in their
respective September 30, 1994 balance sheets, and we have assumed that such
carrying values complied fully with applicable law, regulatory policy and sound
banking practice as of such date. We were not retained to and we did not conduct
a physical inspection of any of the properties or facilities of First Colonial
or Firstar, nor did we make any independent evaluation or appraisal of the
assets, liabilities or prospects of First Colonial or Firstar, were not
furnished with any such evaluation or appraisal, and did not review any
individual credit files. With your permission and that of your counsel, in
rendering this opinion we have relied on the general advice of your counsel as
to all legal matters. We have also assumed with your
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permission that the Merger is, and will be, in compliance with all laws and
regulations that are applicable to First Colonial and Firstar. With your
permission, we have assumed for purposes of our opinion that the Merger will be
recorded as a pooling of interests under generally accepted accounting
principles and will qualify as a tax-free reorganization.
In rendering our opinion, we have been advised by Firstar and First
Colonial and have assumed with your permission that there are no other factors
that would impede any necessary regulatory or governmental approval for the
Merger and we have further assumed with your permission that, in the course of
obtaining the necessary regulatory and governmental approvals for the proposed
Merger, no restriction will be imposed on Firstar or the surviving corporation
in the Merger that would have a material adverse effect on Firstar or the
contemplated benefits of the Merger. We have also assumed with your permission
that there would not occur any change in the applicable law or regulation that
would cause a material adverse change in the prospects or operations of Firstar.
Donaldson, Lufkin & Jenrette Securities Corporation, as part of its
investment banking business, is regularly engaged, with respect to bank holding
companies and other corporations, in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements, and valuations for corporate and other
purposes. We were retained by First Colonial to act as its financial advisor
with respect to any sale, merger, consolidation, or other business combination,
in one or a series of transactions, involving all or a substantial amount of the
business, securities or assets of First Colonial. We have received and will
receive compensation from First Colonial in connection with our services, a
significant portion of which is contingent upon the consummation of the Merger.
At your direction, we solicited a limited number of institutions, including
Firstar, to determine their interest in a possible business combination with
First Colonial. In addition to the Firstar proposal, another indication of
interest was received which is described below. You subsequently instructed us
that, based on considerations identified by you, you determined to negotiate
with Firstar on an exclusive basis. Accordingly, at your direction, we ceased
discussions with parties other than Firstar. The ensuing negotiations with
Firstar led to execution of the Merger Agreement. We have not been authorized by
you to, and have not, solicited any institutions as to their interest subsequent
to the execution of the Merger Agreement.
In expressing the opinion below, it should be understood that we are not
expressing an opinion on the relative financial merits of the Exchange Ratio
compared to the value holders of First Colonial Common Stock might receive in
connection with a possible alternative transaction. In particular, we note that
a possible alternative transaction involving part-cash and part-stock at a
nominal value of $27.00 was proposed to the Board prior to its determination to
negotiate on an exclusive basis with Firstar. (As noted in the Proxy
Statement-Prospectus, subsequent to the execution of the Merger Agreement, the
proposed terms of the possible alternative transaction were modified as
described in such Proxy Statement-Prospectus.) We are not expressing an opinion
as to either (i) the continued availability of the possible alternative
transaction or (ii) the relative value of the Firstar Common Stock which would
be received in the Merger (either before, or on a pro forma basis giving effect
to, the Merger) compared to the value of the securities and cash which might
have been received in the possible alternative transaction, if available.
In the ordinary course of our business we may actively trade the debt and
equity securities of companies, including First Colonial and Firstar, for our
own account and for the accounts of customers and may hold a long or short
position in such securities at any time.
Our opinion is based solely upon the information available to us and the
economic, market, and other circumstances as they exist as of the date hereof.
Events occurring after the date hereof could materially affect the assumptions
used in preparing this opinion. We have not undertaken to reaffirm or revise
this opinion or otherwise comment upon any events occurring after the date
hereof.
We are not expressing any opinion herein as to the prices at which shares
of Firstar Common Stock issued in the Merger may trade if and when they are
issued or at any future time, nor does our opinion
C-3
<PAGE> 139
constitute a recommendation to any holder of First Colonial Common Stock as to
how such holder should vote with respect to the Merger Agreement at any meeting
of holders of First Colonial Common Stock.
This letter is for the information of the Board of Directors of First
Colonial and is not to be used, circulated, quoted or otherwise referred to for
any other purpose, except in each case with our prior written consent which
shall not be unreasonably withheld; provided, however, that this letter may be
filed with, referred to or included in any registration statement, proxy
statement, information statement or tender offer document to be delivered to the
holders of First Colonial Common Stock if set forth in its entirety therein,
unless it has been withdrawn prior to the date of such document.
Subject to the foregoing and based on our experience as investment bankers,
our activities as described above, and other factors we have deemed relevant, we
are of the opinion as of the date hereof that the Exchange Ratio is fair, from a
financial point of view, to the holders of First Colonial Common Stock.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ C. DOUGLAS MERCER II
--------------------------------------
C. Douglas Mercer II
Managing Director
C-4
<PAGE> 140
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to the provisions of Wisconsin Business Corporation Law, Sections
180.0850 through 180.0859, inclusive, directors and officers of Firstar are
entitled to mandatory indemnification from Firstar against certain liabilities
and expenses (i) to the extent such officers or directors are successful in the
defense of a proceeding; and (ii) in proceedings in which the director or
officer is not successful in defense thereof, unless it is determined that the
director or officer breached or failed to perform his or her duties to Firstar
and such breach or failure constituted: (a) a willful failure to deal fairly
with Firstar or its shareholders in connection with a matter in which the
director or officer had a material conflict of interest; (b) a violation of the
criminal law unless the director or officer had reasonable cause to believe his
or her conduct was lawful or had no reasonable cause to believe his or her
conduct was unlawful; (c) a transaction from which the director or officer
derived an improper personal profit; or (d) willful misconduct. Additionally,
under Section 180.0828 of the Wisconsin Business Corporation Law, directors of
Firstar are not subject to personal liability to Firstar, its shareholders or
any person asserting rights on behalf thereof for certain breaches or failures
to perform any duty resulting solely from their status as directors, except in
circumstances paralleling those outlined above.
Firstar's Bylaws contain similar indemnification provisions as to directors
and officers of Firstar. In addition, Firstar has entered into individual
indemnity agreements with all of its current directors. The indemnity agreements
are virtually identical in all substantive respects to Firstar's Bylaws.
Expenses for the defense of any action for which indemnification may be
available may be advanced by Firstar under certain circumstances.
Firstar maintains a liability insurance policy for officers and directors
which extends to, among other things, liability arising under the Securities Act
of 1933, as amended.
In addition, Firstar's Pension Plan and Thrift and Sharing Plan provide for
indemnification of members of the plan committees and directors of Firstar as
follows:
The Company shall indemnify each member of the Plan Committee and the
Board and hold each of them harmless from the consequences of his acts
or conduct in his official capacity, if he acted in good faith and in
a manner he reasonably believed to be solely in the best interests of
the Participants and their Beneficiaries, and with respect to any
criminal action or proceeding had no reasonable cause to believe his
conduct was unlawful. Such indemnification shall cover any and all
attorneys' fees and expenses, judgments, fines and amounts paid in
settlement, but only to the extent such amounts are not paid to such
person(s) under the Company's fiduciary insurance policy and to the
extent that such amounts are actually and reasonably incurred by such
person(s).
II-1
<PAGE> 141
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits have been filed (except where otherwise
indicated) as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- ------------------------------------------------------------------------------
<S> <C>
2(a) Agreement and Plan of Reorganization dated as of July 31, 1994, among Firstar
Corporation, Firstar Corporation of Illinois and First Colonial Bankshares
Corporation (Included as Appendix B of the Proxy Statement-Prospectus;
Registrant agrees to furnish supplementally a copy of any omitted schedule to
the Commission upon request.)*
2(b) Plan of Merger dated as of July 31, 1994, between First Colonial Bankshares
Corporation and Firstar Corporation of Illinois and joined in by Firstar
Corporation for certain limited purposes (Included as Exhibit A of Appendix B
of the Proxy Statement-Prospectus)*
3(a) Restated Articles of Incorporation, as amended, of Firstar*
3(b) Form of the Articles of Amendment to Firstar's Restated Articles of
Incorporation creating the Series D Convertible Preferred Stock*
4(a) Indenture dated as of June 1, 1986, between Firstar Corporation and Chemical
Bank, as Trustee, relating to Firstar Corporation's 10% Notes due 1996
(Exhibit 4(b) to Amendment No. 1 to Registration No. 33-5932; incorporated
herein by reference)
4(b) Indenture dated as of May 1, 1988, between Firstar Corporation and Chemical
Bank, as Trustee, relating to Firstar Corporation's 10 1/4% Notes due 1998
(Exhibit 4(a) to Amendment No. 1 to Registration No. 33-21527; incorporated
herein by reference)
4(c) Shareholder Rights Plan of Firstar Corporation (Exhibit 4 of Form 8-K dated
January 19, 1989; incorporated herein by reference)
4(d) Form of Mandatory Stock Purchase Agreement dated as of October 17, 1984
(Exhibit 10.1 to Registration Statement No. 2-61745; incorporated herein by
reference)
4(e) Form of 14% Subordinated Capital Note due October 17, 1996 (Exhibit 10.2 to
Registration Statement No. 2-61745; incorporated herein by reference)
4(f) Form of Assignment and Assumption Agreement among First Colonial, Firstar and
each of the obligors named on the signature pages thereof*
4(g) Form of Amended and Restated Deposit Agreement among Firstar, Firstar Trust
Company, as depositary and the holders from time to time of the Depositary
Receipts issued thereunder
4(h) Form of Depositary Receipt (attached to Exhibit 4(g) as Exhibit A)
5 Opinion of Howard H. Hopwood III, Esq.*
8 Tax Opinion of Vedder, Price, Kaufman & Kammholz
12 Statement Regarding Computation of Ratios*
23(a) Consent of KPMG Peat Marwick LLP addressed to Board of Directors of First
Colonial Bankshares Corporation
23(b) Consent of KPMG Peat Marwick LLP addressed to Board of Directors of Firstar
Corporation
23(c) Consent of Howard H. Hopwood III, Esq. (included in Exhibit 5)
23(d) Consent of Vedder, Price, Kaufman & Kammholz (included in Exhibit 8)
23(e) Consent of Donaldson, Lufkin & Jenrette (included in Appendix C to the Proxy
Statement-Prospectus)
24 Powers of Attorney
99 Form of Proxy for the First Colonial Special Meeting of Stockholders*
</TABLE>
- ---------------
*Previously filed.
(b) No financial statement schedules are required to be filed with regard
to Firstar or First Colonial.
II-2
<PAGE> 142
ITEM 22. UNDERTAKINGS.
(1) Firstar hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, as amended, each filing of the
Registrant's Special report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, as amended, 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.
(2) Firstar hereby undertakes 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.
(3) Firstar undertakes that every Prospectus (i) that is filed pursuant to
paragraph (2) immediately preceding, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, as amended, 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.
(4) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers and controlling
persons of Firstar pursuant to the foregoing provisions, or otherwise, Firstar
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Firstar of expenses incurred or paid
by a director, officer or controlling person or Firstar 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,
Firstar 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 is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
(5) Firstar 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.
(6) Firstar 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.
(7) Firstar hereby undertakes to remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
II-3
<PAGE> 143
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized in the City of Milwaukee and
State of Wisconsin on December 7, 1994.
FIRSTAR CORPORATION
By: /s/ ROGER L. FITZSIMONDS*
--------------------------------------
Roger L. Fitzsimonds
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ------------------------------------- -----------------
<S> <C> <C>
/s/ ROGER L. FITZSIMONDS* Chairman of the Board, Chief December 7, 1994
- ------------------------------------- Executive Officer and Director
Roger L. Fitzsimonds
/s/ JOHN A. BECKER President, Chief Operating Officer December 7, 1994
- ------------------------------------- and Director
John A. Becker
/s/ WILLIAM H. RISCH* Senior Vice President-Finance December 7, 1994
- ------------------------------------- and Treasurer
William H. Risch
/s/ MICHAEL E. BATTEN* Director December 7, 1994
- -------------------------------------
Michael E. Batten
Director
- -------------------------------------
Robert C. Buchanan
/s/ GEORGE M. CHESTER, JR.* Director December 7, 1994
- -------------------------------------
George M. Chester, Jr.
/s/ ROGER H. DERUSHA* Director December 7, 1994
- -------------------------------------
Roger H. Derusha
/s/ JAMES L. FORBES* Director December 7, 1994
- -------------------------------------
James L. Forbes
/s/ HOLMES FOSTER* Director December 7, 1994
- -------------------------------------
Holmes Foster
/s/ JOSEPH F. HEIL, JR.* Director December 7, 1994
- -------------------------------------
Joseph F. Heil, Jr.
</TABLE>
II-4
<PAGE> 144
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ------------------------------------- -----------------
<S> <C> <C>
- ------------------------------------- Director
John H. Hendee, Jr.
/s/ JERRY M. HIEGEL* Director December 7, 1994
- -------------------------------------
Jerry M. Hiegel
Director
- -------------------------------------
Joseph F. Hladky, III
/s/ JAMES H. KEYES* Director December 7, 1994
- -------------------------------------
James H. Keyes
/s/ SHELDON B. LUBAR* Director December 7, 1994
- -------------------------------------
Sheldon B. Lubar
/s/ DANIEL F. MCKEITHAN, JR.* Director December 7, 1994
- -------------------------------------
Daniel F. McKeithan, Jr.
/s/ GEORGE W. MEAD, II* Director December 7, 1994
- -------------------------------------
George W. Mead, II
/s/ GUY A. OSBORN* Director December 7, 1994
- -------------------------------------
Guy A. Osborn
/s/ JUDITH D. PYLE* Director December 7, 1994
- -------------------------------------
Judith D. Pyle
Director
- -------------------------------------
Clifford V. Smith, Jr.
/s/ WILLIAM W. WIRTZ* Director December 7, 1994
- -------------------------------------
William W. Wirtz
</TABLE>
By: /s/ HOWARD H. HOPWOOD III
--------------------------------------
Howard H. Hopwood III
Attorney-in-Fact
* Pursuant to authority granted by powers of attorney filed with
the Registration Statement or with this Amendment.
II-5
<PAGE> 145
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Exhibit No. Exhibit Page Number
----------- ------- -----------
<S> <C> <C>
2(a) Agreement and Plan of Reorganization dated as of July 31, 1994, among
Firstar Corporation, Firstar Corporation of Illinois and First
Colonial Bankshares Corporation (Included as Appendix B of the Proxy
Statement-Prospectus; Registrant agrees to furnish supplementally a
copy of any omitted schedule to the Commission upon request.)*
2(b) Plan of Merger dated as of July 31, 1994, between First Colonial
Bankshares Corporation and Firstar Corporation of Illinois and joined
in by Firstar Corporation for certain limited purposes (Included as
Exhibit A of Appendix B of the Proxy Statement-Prospectus)*
3(a) Restated Articles of Incorporation, as amended, of Firstar*
3(b) Form of the Articles of Amendment to Firstar's Restated Articles of
Incorporation creating the Series D Convertible Preferred Stock*
4(a) Indenture dated as of June 1, 1986, between Firstar Corporation and
Chemical Bank, as Trustee, relating to Firstar Corporation's 10%
Notes due 1996 (Exhibit 4(b) to Amendment No. 1 to Registration No.
33-5932; incorporated herein by reference)
4(b) Indenture dated as of May 1, 1988, between Firstar Corporation and
Chemical Bank, as Trustee, relating to Firstar Corporation's 10-1/4%
Notes due 1998 (Exhibit 4(a) to Amendment No. 1 to Registration No.
33-21527; incorporated herein by reference)
4(c) Shareholder Rights Plan of Firstar Corporation (Exhibit 4 of Form 8-K
dated January 19, 1989; incorporated herein by reference)
4(d) Form of Mandatory Stock Purchase Agreement dated as of October 17,
1984 (Exhibit 10.1 to Registration Statement No. 2-61745;
incorporated herein by reference)
4(e) Form of 14% Subordinated Capital Note due October 17, 1996 (Exhibit
10.2 to Registration Statement No. 2-61745; incorporated herein by
reference)
4(f) Form of Assignment and Assumption Agreement among First Colonial,
Firstar and each of the obligors named on the signature pages
thereof*
4(g) Form of Amended and Restated Deposit Agreement among Firstar, Firstar
Trust Company, as depositary and the holders from time to time of the
Depositary Receipts issued thereunder
4(h) Form of Depositary Receipt (attached to Exhibit 4(g) as Exhibit A)
5 Opinion of Howard H. Hopwood III, Esq.*
8 Tax Opinion of Vedder, Price, Kaufman & Kammholz
12 Statement Regarding Computation of Ratios*
23(a) Consent of KPMG Peat Marwick LLP addressed to Board of Directors of
First Colonial Bankshares Corporation
23(b) Consent of KPMG Peat Marwick LLP addressed to Board of Directors of
Firstar Corporation
</TABLE>
<PAGE> 146
<TABLE>
<CAPTION>
Sequential
Exhibit No. Exhibit Page Number
----------- ------- -----------
<S> <C> <C>
23(c) Consent of Howard H. Hopwood III, Esq. (included in Exhibit 5)
23(d) Consent of Vedder, Price, Kaufman & Kammholz (included in Exhibit 8)
23(e) Consent of Donaldson, Lufkin & Jenrette (included in Appendix C to
the Proxy Statement-Prospectus)
24 Powers of Attorney
99 Form of Proxy for the First Colonial Special Meeting of Stockholders*
</TABLE>
___________________
* Previously filed
2
<PAGE> 1
EXHIBIT 4(g)
FORM OF
FIRSTAR CORPORATION
and
FIRSTAR CORPORATION OF WISCONSIN
and
FIRSTAR TRUST COMPANY
As Depositary
and
HOLDERS OF DEPOSITARY RECEIPTS
AMENDED AND RESTATED DEPOSIT AGREEMENT
Dated as of _____________, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Restated Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Corporate Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Deposit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Depositary Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Depositary's Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Receipt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Record Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF STOCK, EXECUTION AND DELIVERY, REDEMPTIONS,
CONVERSIONS, TRANSFER, AND SURRENDER OF RECEIPTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.01. Form and Transferability of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.02. Deposit of Stock: Execution and Delivery of Receipts in Respect Thereof . . . . . . . . . . . 4
SECTION 2.03. Redemptions of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.04. Conversions of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.05. Transfer of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.06. Combination and Split-ups of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.07. Surrender of Receipts and Withdrawal of Stock . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.08. Limitations on Execution and Delivery, Transfer, Split-up,
Combination, Surrender and Exchange of Receipts. . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.09. Lost Receipts. Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.10. Cancellation and Destruction of Surrendered Receipts . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
CERTAIN OBLIGATIONS OF HOLDERS OF RECEIPTS AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.01. Filing Proofs. Certificates, and Other Information . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.02. Payment of Taxes or Other Governmental Charges . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 3.03. Representations and Warranties as to Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
THE STOCK, NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.01. Cash Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.02. Distributions Other Than Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.03. Subscription Rights, Preferences or Privileges . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.04. Notice of Dividends, Fixing of Record Date for Holders of Receipts . . . . . . . . . . . . . . 11
SECTION 4.05. Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.06. Changes Affecting Stock and Reclassifications, Recapitalizations, Etc. . . . . . . . . . . . . 12
ARTICLE V
THE DEPOSITARY AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.01. Maintenance of Offices, Agencies, Transfer Books by the Depositary; the Registrar . . . . . . 12
SECTION 5.02. Liability of the Depositary, the Depositary's Agents or the Company . . . . . . . . . . . . . 13
SECTION 5.03. Obligations of the Depositary, the Depositary's Agents and the Company . . . . . . . . . . . . 13
SECTION 5.04. Resignation and Removal of the Depositary, Appointment of Successor Depositary . . . . . . . . 14
SECTION 5.05. Corporate Notices and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.06. Deposit of Stock by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.07. Indemnification by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.08. Indemnification by the Company, as Depositary Agent . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.09. Fees, Charges and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI
AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.02. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION> Page
----
<S> <C> <C>
SECTION 7.01. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 7.02. Exclusive Benefits of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 7.03. Invalidity of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 7.04. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.05. Depositary's Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.06. Holders of Receipts Are Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.07. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.08. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>
-iii-
<PAGE> 5
AMENDED AND RESTATED DEPOSIT AGREEMENT
AMENDED AND RESTATED DEPOSIT AGREEMENT, dated as of ____________, 1995,
among FIRSTAR CORPORATION, a Wisconsin corporation (the "Company"), FIRSTAR
CORPORATION OF WISCONSIN (as successor to First Colonial Bankshares
Corporation), a Wisconsin corporation and wholly owned subsidiary of the
Company ("FCW"), FIRSTAR TRUST COMPANY, a Wisconsin state banking corporation
with trust powers, as "Depositary", and all holders from time to time of
Depositary Receipts issued hereunder.
W I T N E S S E T H:
WHEREAS, First Colonial Bankshares Corporation has previously entered into a
Deposit Agreement, dated as of April 27, 1992, with First Chicago Trust Company
of New York, a New York state trust company, and all holders from time to time
of Depositary Receipts issued thereunder, with respect to the deposit of shares
of First Colonial Bankshares Corporation Series C Convertible Preference Stock,
without par value (the "First Colonial Series C Preference Stock"); and
WHEREAS, effective as of the date hereof, First Colonial Bankshares
Corporation has been merged with and into FCW (the "Merger"); and
WHEREAS, pursuant to the Merger and in accordance with the Agreement and
Plan of Reorganization, dated as of July 31, 1994, among the Company, FCW and
First Colonial Bankshares Corporation, the outstanding shares of First Colonial
Series C Preference Stock have been converted into the right to receive, on a
share-for-share basis, shares of Series D Convertible Preferred Stock, $1.00
par value, of the Company; and
WHEREAS, the Deposit Agreement as previously entered into by First Colonial
Bankshares Corporation provides that (a) the depositary shall, if so instructed
by First Colonial Bankshares Corporation or its successor (i.e., FCW), treat
any securities received upon conversion of shares of First Colonial Series C
Preference Stock as new deposited securities under said Deposit Agreement, and
(b) upon such conversion the depositary receipts then outstanding evidencing an
interest in shares of First Colonial Series C Preference Stock shall thereafter
represent the new deposited securities received upon such conversion; and
WHEREAS, FCW (as successor to First Colonial Bankshares Corporation), as
evidenced by the execution of this Amended and Restated Deposit Agreement on
its behalf, hereby instructs the depositary to treat the shares of Series D
Convertible Preferred Stock of the Company received upon the conversion of the
shares of First Colonial Series C Preference Stock held by the depositary as
new deposited securities hereunder and further desires that the conversion of
such securities be handled in the manner as contemplated herein; and
WHEREAS, First Chicago Trust Company of New York has resigned as depositary
hereunder effective as of the effective time of the Merger; and
<PAGE> 6
WHEREAS, Firstar Trust Company satisfies the necessary prerequisites, has
been designated as successor depositary and, as evidenced by the execution of
this Amended and Restated Deposit Agreement on its behalf, hereby accepts its
appointment as such successor depositary; and
WHEREAS, the parties hereto deem it advisable that the Deposit Agreement as
previously entered into by First Colonial Bankshares Corporation be amended and
restated to reflect, among other things, (a) the conversion of First Colonial
Series C Preference Stock into Series D Convertible Preferred Stock of the
Company, (b) the appointment of Firstar Trust Company as successor depositary,
and (c) the addition of the Company as a signatory hereto.
NOW, THEREFORE, in consideration of the premises contained herein, it is
agreed by and among the parties hereto as follows:
ARTICLE I
DEFINITIONS
The following definitions shall apply to the respective terms (in the
singular and plural forms such terms) used in this Deposit Agreement and the
Depositary Receipts:
"Restated Articles of Incorporation" shall mean the Restated Articles of
Incorporation, as amended from time to time, of the Company.
"Common Stock" shall mean the Company's Common Stock, $1.25 par value.
"Company" shall mean Firstar Corporation, a Wisconsin corporation, and its
successors.
"Corporate Office" shall mean the office of the Depositary in Milwaukee,
Wisconsin, at which any particular time its business in respect of matters
governed by this Deposit Agreement shall be administered, which at the date of
this Deposit Agreement is located at 615 East Michigan Street, 4th Floor,
Milwaukee, Wisconsin 53202.
"Deposit Agreement" shall hereafter mean this Amended and Restated Deposit
Agreement, and as such may be further amended, modified, or supplemented from
time to time.
"Depositary" shall mean Firstar Trust Company and any successor as
depositary hereunder.
"Depositary Share" shall mean an interest in one-twentieth of a share of
Stock deposited with the Depositary hereunder and the same proportionate
interest in any and all other property received by the Depositary in respect of
such share of Stock and held under this Deposit Agreement, all as evidenced by
the Receipts issued hereunder. Each Depositary Share (and the corresponding
Receipt) which previously represented an interest in one-twentieth of a share
of First Colonial Series C Preference Stock shall, as of and from the date
hereof and with no action required on the part of the holder thereof, be deemed
to represent an interest in one-twentieth of a share of
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<PAGE> 7
Stock. Subject to the terms of this Deposit Agreement, each owner of a
Depositary Share is entitled, proportionately, to all the rights, preferences,
and privileges of the Stock represented by such Depositary Share, including the
dividend, voting, and liquidation rights contained in the Restated Articles of
Incorporation, and to the benefits of all obligations of the Company under the
Restated Articles of Incorporation.
"Depositary's Agent" shall mean an agent appointed by the Depositary as
provided, and for the purposes specified in Section 7.05.
"Receipt" shall mean a Depositary Receipt issued hereunder to evidence one
or more Depositary Shares.
"Record Holder" as applied to a Receipt shall mean the person in whose name
a Receipt is registered on the books maintained by the Depositary for such
purpose.
"Registrar" shall mean any bank or trust company appointed to register
Receipts and to register transfers thereof as herein provided, and if a
Registrar shall be so appointed, references herein to "the books" of or
maintained by the Depositary shall be deemed, as applicable, to refer as well
to the register maintained by such Registrar for such purpose.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stock" shall mean shares of the Company's Series D Convertible Preferred
Stock, $1.00 par value, heretofore or hereafter validly issued, fully paid and
nonassessable (except as otherwise provided by law).
ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF STOCK, EXECUTION AND
DELIVERY, REDEMPTIONS, CONVERSIONS, TRANSFER,
AND SURRENDER OF RECEIPTS
SECTION 2.01. Form and Transferability of Receipts. Receipts shall be
engraved or printed or lithographed and shall be substantially in the form set
forth in Exhibit A annexed to this Deposit Agreement, with appropriate
insertions, modifications, and omissions, as hereafter provided. Receipts
shall be executed by the Depositary by the manual signature of a duly
authorized signatory of the Depositary, provided, however, that such signature
may be a facsimile if a Registrar (other than the Depositary) shall have
countersigned the Receipts by manual signature of a duly authorized signatory
of the Registrar. No Receipt be entitled to any benefits under this Deposit
Agreement or be valid or obligatory for any purpose unless it shall have been
executed as provided in the preceding sentence. The Depositary shall record on
its books each Receipt executed as provided above and delivered as hereinafter
provided.
Except as the Depositary may otherwise determine, Receipts shall be in
denominations of any number of whole Depositary Shares. All Receipts shall be
dated the date of their execution.
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<PAGE> 8
Receipts may be endorsed with or have incorporated in the text thereof such
legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement as may be required by the Depositary or required to comply
with any applicable law or regulation or with the rules and regulations of any
securities exchange or securities market upon which the Stock, the Depositary
Shares or the Receipts may be listed or designated for quotation or to conform
with any usage with respect thereto.
Title to any Receipt (and to the Depositary Shares evidenced by such
Receipt) that is properly endorsed or accompanied by a properly executed
instrument of transfer or endorsement shall be transferable by delivery with
the same effect as in the case of a negotiable instrument; provided, however,
that until a Receipt shall be transferred on the books of the Depositary as
provided in Section 2.04, the Depositary may, notwithstanding any notice to the
contrary, treat the record holder thereof at such time as the absolute owner
thereof for the purpose of determining the person entitled to distribution of
dividends or other distributions or to any notice provided for in this Deposit
Agreement and for all other purposes.
SECTION 2.02. Deposit of Stock: Execution and Delivery of Receipts in
Respect Thereof. Subject to the terms and conditions of this Deposit
Agreement, any holder of Stock may deposit such Stock under this Deposit
Agreement by delivery to the Depositary of a certificate or certificates for
the Stock to be deposited, properly endorsed or accompanied, if required by the
Depositary, by a properly executed instrument of transfer or endorsement in
form satisfactory to the Depositary, together with (i) all such certifications
as may be required by the Depositary in accordance with the provisions of this
Deposit Agreement and (ii) a written order directing the Depositary to execute
and deliver to or upon the written order of the person or persons stated in
such order a Receipt or Receipts for the number of Depositary Shares
representing such deposited Stock.
If required by the Depositary, Stock presented for deposit at any time,
whether or not the register of shareholders of the Company is closed, shall
also be accompanied by an agreement or assignment, or other instrument
satisfactory to the Depositary, that will provide for the prompt transfer to
the Depositary or its nominee of any dividend or right to subscribe for
additional Stock or to receive other property that any person in whose name the
Stock is or has been registered may thereafter receive upon or in respect of
such deposited Stock, or in lieu thereof such agreement of indemnity or other
agreement as shall be satisfactory to the Depositary.
Upon receipt by the Depositary of a certificate or certificates for Stock to
be deposited hereunder, together with the other documents specified above, the
Depositary shall, as soon as transfer and registration can be accomplished,
present such certificate or certificates to the registrar and transfer agent of
the Stock for transfer and registration in the name of the Depositary or its
nominee of the Stock being deposited. Deposited Stock shall be held by the
Depositary in an account to be established by the Depositary at the Corporate
Office.
Upon receipt by the Depositary of a certificate or certificates for Stock to
be deposited hereunder, together with the other documents specified above, the
Depositary, subject to the terms and conditions of this Deposit Agreement,
shall execute and deliver to or upon the order of the person or persons named
in the written order delivered to the Depositary referred to in the first or
second paragraph of this Section 2.02 a Receipt or Receipts for the number of
whole Depositary
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<PAGE> 9
Shares representing the Stock so deposited and registered in such name or names
as may he requested by such person or persons. The Depositary shall execute
and deliver such Receipt or Receipts at the Corporate Office, except that, at
the request, risk and expense of any person requesting such delivery, such
delivery may be made at such other place as may be designated by such person.
In each case, delivery will be made only upon payment by such person to the
Depositary of all taxes and other governmental charges and any fees payable in
connection with such deposit and the transfer of the Deposited Stock.
The Depositary shall not issue any Receipt other than in accordance with the
express provisions of this Section 2.02 and, without limiting the foregoing,
shall not issue any Receipt prior to receiving the certificate or certificates
of Stock (together with properly executed instruments of transfer or
endorsement) to be represented by the Receipt.
The Company shall deliver to the Depositary from time to time such
quantities of Receipts as the Depositary may request to enable the Depositary
to perform its obligations under this Deposit.
SECTION 2.03. Redemptions of Stock. Whenever the Company shall elect to
redeem shares of Stock in accordance with the Restated Articles of
Incorporation, it shall (unless otherwise agreed in writing with the
Depositary) give the Depositary in its capacity as Depositary not less than (i)
ten days' prior notice, in the case of any redemption of the Stock in full, or
(ii) 15 days' prior notice, in the case of any partial redemption of the Stock,
of the proposed date of the mailing of a notice of redemption of Depositary
Shares to holders of Receipts to be effected in connection with a redemption of
Stock and of the number of such shares of Stock held by the Depositary to be
redeemed as hereinafter provided. On the date of any such redemption of Stock,
provided that the Company shall then have deposited with the Depositary the
funds payable upon redemption of the Stock deposited with the Depositary to be
redeemed, the Depositary shall redeem (using the funds deposited with it) the
number of Depositary Shares presenting such redeemed Stock. The Depositary
shall, as directed by the Company, mail, first class postage prepaid, notice of
the redemption of Stock and the proposed simultaneous redemption of the
Depositary Shares representing the Stock to be redeemed not less than 30 days
and not more than 60 days prior to the date fixed for redemption (the
"redemption date") of such Stock and Depositary Shares. The Company shall
provide the Depositary with such notice, and each such notice shall state: the
record date for such redemption; the redemption date; that all outstanding
Depositary Shares are to be redeemed or, in the case of a redemption of fewer
than all outstanding Depositary Shares in connection with a partial redemption
of Stock pursuant to the Restated Articles of Incorporation, the number of
Depositary Shares held by such holder to be so redeemed; the redemption price;
the place or places where Receipts evidencing Depositary Shares to be redeemed
are to be surrendered for redemption; and that dividends in respect of the
Stock represented by the Depositary Shares to be redeemed will cease to accrue
on such redemption date, unless the Company shall default in paying the
redemption price at the time and place specified in such notice. In case fewer
than all the outstanding Depositary Shares are to be redeemed, the Depositary
Shares to be redeemed shall be selected by lot or pro rata (as nearly as may be
practicable without creating fractional shares) or by any other equitable
method determined by the Company.
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<PAGE> 10
Notice having been mailed by the Depositary as aforesaid, from and after the
redemption date (unless the Company shall have failed to redeem the shares of
Stock to be redeemed by it as set forth in the Company's notice provided for in
the preceding paragraph), the Depositary Shares called for redemption shall be
deemed no longer to be outstanding and all rights of the holders of Receipts
evidencing such Depositary Shares (except the right to receive the redemption
price) shall cease and terminate.
If fewer than all of the Depositary Shares evidenced by a Receipt are called
for redemption, the Depositary will deliver to the holder of such Receipt upon
its surrender to the Depositary, together with the redemption price of the
Depositary Shares called for redemption, a new Receipt evidencing the
Depositary Shares evidenced by such prior Receipt and not called for
redemption.
The Depositary shall not be required (a) to issue, transfer or exchange any
Receipts for a period beginning at the opening of business ten days next
preceding any selection of Depositary Shares and Stock to be redeemed and
ending at the close of business on the day of the mailing of notice of
redemption of Depositary Shares or (b) to transfer or exchange for another
Receipt any Receipt evidencing Depositary Shares called or being called for
redemption in whole or in part, except as provided in the next preceding
paragraph of this Section 2.03.
SECTION 2.04. Conversions of Stock. The Company hereby agrees to accept,
and authorizes the Depositary, acting as transfer agent for the Company's
Common Stock to accept, the delivery of Receipts for purposes of effecting
conversions of the underlying Stock into Common Stock of the Company, utilizing
the same procedures as those provided for delivery of certificates for the
Stock to effect such conversions in accordance with the Restated Articles of
Incorporation. Any whole number of Depositary Shares (whether or not evenly
divisible by 20) represented by a Receipt may be surrendered for conversion.
If the Depositary Shares represented by a Receipt are to be converted in part
only, a new Receipt or Receipts will be issued by the Depositary for the
Depositary Shares not to be converted. No fractional shares of Common Stock
will be issued upon conversion, and if such conversion will result in a
fractional share being issued, an amount will be paid in cash by the Company
equal to the value of the fractional interest based upon the closing price of
the Common Stock on the last business day prior to the conversion, as
determined by the Company. For this purpose, a holder of a Receipt or Receipts
must surrender such Receipt or Receipts to the Company or to the Depositary,
acting as such transfer agent, together with a duly completed and executed
Notice of Conversion in the form included in the Receipt. In all cases the
foregoing shall be conditioned upon compliance in full by the holders with the
applicable terms and conditions of the Stock as provided in the Restated
Articles of Incorporation and of this Deposit Agreement. The Company and the
Depositary will thereafter effect the cancellation of each Receipt surrendered
for such conversion and of the certificates evidencing the underlying Stock so
converted.
Upon conversion no adjustments will be made for accrued dividends and,
therefore, Depositary Shares surrendered for conversion after the record date
next preceding a dividend payment date for the underlying Stock and prior to
such dividend payment date must be accompanied by payment of an amount equal to
the applicable fraction of the dividend thereon which is to be paid on such
dividend payment date (unless the Depositary Shares surrendered for conversion
have been called for redemption prior to such dividend payment date).
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<PAGE> 11
SECTION 2.05. Transfer of Receipts. Subject to the terms and conditions
of this Deposit Agreement, the Depositary shall make transfers on its books
from time to time of Receipts upon any surrender thereof by the holder in
person or by a duly authorized attorney, properly endorsed or accompanied by a
properly executed instrument of transfer or endorsement, together with evidence
of the payment of any transfer taxes as may be required by law, and any other
documents deemed appropriate by the Depositary. Up such surrender, the
Depositary shall execute a new Receipt or Receipts and deliver the same to or
upon the order of the person entitled thereto evidencing the same aggregate
number of Depositary Shares evidence by the Receipt or Receipts surrendered.
SECTION 2.06. Combination and Split-ups of Receipts. Upon surrender of a
Receipt or Receipts at the Corporate Office or such other office as the
Depositary may designate for the purpose of effecting a split-up or combination
of Receipts, subject to the terms and conditions of this Deposit Agreement, the
Depositary shall execute and deliver a new Receipt or Receipts in the
authorized denominations requested evidencing the same aggregate number of
Depositary Shares evidenced by the Receipt or Receipts surrendered; provided,
however, that the Depositary shall not issue any Receipt evidencing a
fractional Depositary Share.
SECTION 2.07. Surrender of Receipts and Withdrawal of Stock. Any holder
of a Receipt or Receipts may withdraw any or all of the Stock (but only in
whole shares of Stock) represented by the Depositary Shares evidenced by such
Receipts and all money and other property, if any, represented by such
Depositary Shares by surrendering such Receipt or Receipts at the Corporate
Office or at such other office as the Depositary may designate for such
withdrawals. After such surrender, without unreasonable delay, the Depositary
shall deliver to such holder, or to the person or persons designated by such
holder as hereinafter provided, the whole number of shares of Stock and all
such money and other property, if any, represented by the Depositary Shares
evidenced by the Receipt or Receipts so surrendered for withdrawal. If the
Receipt or Receipts delivered by the holder to the Depositary in connection
with such withdrawal shall evidence a number of Depositary Shares in excess of
the number of Depositary Shares representing the whole number of shares of
Stock to be withdrawn, the Depositary shall at the same time, in addition to
such whole number of shares of Stock and such money and other property, if any,
to be withdrawn, deliver to such holder, or (subject to Section 2.05) upon his
order, a new Receipt or Receipts evidencing such excess number of Depositary
Shares. Delivery of the Stock and such money and other property being
withdrawn may be made by the delivery of such certificates, documents of title
and other instruments as the Depositary may deem appropriate, which, if
required by the Depositary, shall be properly endorsed or accompanied by proper
instruments of transfer.
If the Stock and the money and other property being withdrawn are to be
delivered to a person or persons other than the record holder of the Receipt or
Receipts being surrendered for withdrawal of Stock, such holder shall execute
and deliver to the Depositary a written order so directing the Depositary and
the Depositary may require that the Receipt or Receipts surrendered by such
holder for withdrawal of such shares of Stock be properly endorsed in blank or
accompanied by a properly executed instrument of transfer or endorsement in
blank.
The Depositary shall deliver the Stock and the money and other property, if
any, represented by the Depositary Shares evidenced by Receipts surrendered for
withdrawal at the
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<PAGE> 12
Corporate Office, except that, at the request, risk and expense of the holder
surrendering such Receipt or Receipts and for the account of the holder
thereof, such delivery may be made at such other place as may be designated by
such holder.
The Depositary shall not withdraw any Stock other than in accordance with
the express provisions of this Section 2.07 and, without limiting the
foregoing, shall not transfer legal or beneficial ownership of the Stock other
than through registration of transfers of, or cancellation of the Receipts
evidencing, the Depositary Shares that represent the Stock.
SECTION 2.08. Limitations on Execution and Delivery, Transfer, Split-up,
Combination, Surrender and Exchange of Receipts. As a condition precedent to
the execution and delivery, transfer, split-up, combination, surrender,
conversion or exchange of any Receipt, the Depositary, any of the Depositary's
Agents or the Company may require any or all of the following: (i) payment to
it of a sum sufficient for the payment (or, in the event that the Depositary or
the Company shall have made such payment, the reimbursement to it) of any tax
or other governmental charge with respect thereto (including any such tax or
charge with respect to the Stock being deposited or withdrawn or with respect
to the Common Stock or other securities or property of the Company being issued
upon conversion); (ii) the production of proof satisfactory to it as to the
genuineness of any signature; and (iii) compliance with such regulations, if
any, as the Depositary or the Company may establish not inconsistent with the
provisions of this Deposit Agreement.
The deposit of Stock may be refused, the delivery of Receipts against Stock
may be suspended, the transfer of Receipts may be refused, and the transfer,
split-up, combination, surrender or exchange of outstanding Receipts may be
suspended (i) during any period when the register of shareholders of the
Company is closed, (ii) if any such action is deemed necessary or advisable by
the Depositary, any of the Depositary's Agents or the Company at any time or
from time to time because of any requirement of law or of any government or
governmental body or commission, or under any provision of this Deposit
Agreement, or (iii) with the approval of the Company, for any other reason.
Without limitation of the foregoing, the Depositary shall not knowingly accept
for deposit under this Deposit Agreement any shares of Stock that are required
to be registered under the Securities Act unless it receives notice from the
Company that a registration statement under the Securities Act is in effect as
to such shares of Stock.
SECTION 2.09. Lost Receipts. Etc.. In case any Receipt shall be mutilated
or destroyed or lost or stolen, the Depositary shall execute and deliver a
Receipt of like form and tenor in exchange and substitution for such mutilated
Receipt or in lieu of and in substitution for such destroyed, lost or stolen
Receipt, provided, however, that the holder thereof provides the Depositary
with (i) evidence satisfactory to the Depositary of such destruction, loss or
theft of such Receipt, of the authenticity thereof and of his ownership
thereof, (ii) reasonable indemnification satisfactory to the Depositary and
(iii) payment of any expense (including fees, charges and expenses of the
Depositary) in connection with such execution and delivery.
SECTION 2.10. Cancellation and Destruction of Surrendered Receipts. All
Receipts surrendered to the Depositary or any Depositary's Agent shall be
cancelled by the Depositary and returned to the Company. Except as prohibited
by applicable law or regulation, at
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<PAGE> 13
any time after six years from the date of issuance of any Receipt the Company
may destroy such Receipts so cancelled.
ARTICLE III
CERTAIN OBLIGATIONS OF HOLDERS OF RECEIPTS AND THE COMPANY
SECTION 3.01. Filing Proofs. Certificates, and Other Information. Any
person presenting Stock for deposit or any holder of a Receipt may be required
from time to time to file such proof of residence or other information, to
execute such certificates and to make such representations and warranties as
the Depositary or the Company may reasonably deem necessary or proper. The
Depositary or the Company may withhold or delay the delivery of any Receipt,
the transfer, redemption, conversion or exchange of any Receipt, the withdrawal
of the Stock represented by the Depositary Shares evidenced by any Receipt or
the distribution of any dividend or other distribution until such proof or
other information is filed, such certificates are executed or such
representations and warranties are made.
SECTION 3.02. Payment of Taxes or Other Governmental Charges. If any tax
or governmental charge shall become payable by or on behalf of the Depositary
with respect to any Receipt, the Depositary Shares evidenced by such Receipt,
the Stock (or fractional interest therein) represented by such Depositary
Shares or any transaction referred to in Section 4.06, such tax (including
transfer, issuance or acquisition taxes, if any) or governmental charge shall
be payable by the holder of such Receipt. Until such payment is made, transfer
of any Receipt or any withdrawal of the Stock or money or other property, if
any, represented by the Depositary Shares evidenced by such Receipt may be
refused, any dividend or other distribution may be withheld and any part or all
of the Stock or other property represented by the Depositary Shares evidenced
by such Receipt may be sold for the account of the holder thereof (after
attempting by reasonable means to notify such holder prior to such sale). Any
dividend or other distribution so withheld and the proceeds of any such sale
may be applied to any payment of such tax or other governmental charge, the
holder of such Receipt remaining liable for any deficiency. The Depositary
shall act as the withholding agent for any payments, distributions and
exchanges made with respect to the Depositary Shares and Receipts and the Stock
or other securities or assets represented thereby (collectively, the
"Securities"). The Depositary shall be responsible with respect to the
Securities for the timely (i) collection and deposit of any required
withholding or backup withholding tax, and (ii) filing of any information
returns or other documents with federal (and other applicable) taxing
authorities. In the event the Depositary is required to pay any such amounts,
the Company shall reimburse the Depositary for payment thereof upon the request
of the Depositary and the Depositary shall, upon the Company's request and as
instructed by the Company, pursue its rights against such holder at the
Company's expense.
SECTION 3.03. Representations and Warranties as to Stock. In the case of
the initial deposit of the Stock upon conversion of the First Colonial Series C
Preference Stock, the Company and, in the case of subsequent deposits thereof,
each person so depositing Stock under this Deposit Agreement, shall be deemed
thereby to represent and warrant that such Stock and each certificate therefor
are valid, full paid, and nonassessable (except as otherwise provided by law)
and
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<PAGE> 14
that the person making such deposit is duly authorized to do so. Such
representations and warranties shall survive the deposit of the Stock and the
issuance of Receipts.
ARTICLE IV
THE STOCK, NOTICES
SECTION 4.01. Cash Distributions. Whenever the Depositary shall receive
any cash dividend or other cash distribution on the Stock, the Depositary
shall, subject to Section 3.02, distribute to record holders of Receipts on the
record date fixed pursuant to Section 4.04 such amounts of such sum as are, as
nearly as practicable, in proportion to the respective numbers of Depositary
Shares evidenced by the Receipts held by such holders; provided, however, that
in case the Company or the Depositary shall be required to withhold and does
withhold from any cash dividend or other cash distribution in respect of the
Stock an amount on account of taxes, or as otherwise required by law,
regulation, or court process, the amount made available for distribution or
distributed in respect of Depositary Shares shall be reduced accordingly. The
Depositary shall distribute or make available for distribution, as the case may
be, only such amount, however, as can be distributed without attributing to any
owner of Depositary Shares a fraction of one cent and shall round up to the
next whole cent any fraction of one-half cent or greater and round down to the
last whole cent any fraction of less than one-half cent.
SECTION 4.02. Distributions Other Than Cash. Whenever the Depositary
shall receive any distribution other than cash on the Stock, the Depositary
shall, subject to Section 3.02, distribute to record holders of Receipts on the
record date fixed pursuant to Section 4.04 such amounts of the securities or
property received by it as are, as nearly as practicable, in proportion to the
respective numbers of Depositary Shares evidenced by the Receipts held by such
holders, in any manner that the Depositary and the Company may deem equitable
and practicable for accomplishing such distribution. If, in the opinion of the
Company after consultation with the Depositary, such distribution cannot be
made proportionately among such record holders, or if for any other reason
(including any requirement that the Company or the Depositary withhold an
amount on account of taxes or as otherwise required by law, regulation, or
court process), the Depositary deems, after consultation with the Company, such
distribution not to be feasible, the Depositary may, with the approval of the
Company, adopt such method as it deems equitable and practicable for the
purpose of effecting such distribution, including the sale (at public or
private sale) of the securities or property thus received, or any part thereof,
at such place or places and upon such terms as it may deem proper. The net
proceeds of any such sale shall, subject to Section 3.02, be distributed or
made available for distribution, as the case may be, by the Depositary to
record holders of Receipts as provided by Section 4.01 in the case of a
distribution received in cash.
SECTION 4.03. Subscription Rights, Preferences or Privileges. If the
Company shall at time offer or cause to be offered to the persons in whose
names Stock is registered on the books of the Company any rights, preferences
or privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance be made available by the Depositary to
the record holders of Receipts if the Company so directs in such manner as the
Company shall instruct (including by the issue to such record holders of
warrants representing such rights, preferences or privileges);
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<PAGE> 15
provided, however, that (a) if at the time of issue or offer of any such
rights, preferences or privileges the Company determines that it is not lawful
or feasible to make such rights, preferences or privileges available to some or
all holders of Receipts (by the issue of warrants or otherwise) or (b) if and
to the extent instructed by holders of Receipts who do not desire to exercise
such rights, preferences or privileges, the Depositary shall then, if so
instructed by the Company, and if applicable laws or the terms of such rights,
preferences or privileges so permit, sell such rights, preferences or
privileges of such holders at public or private sale, at such place or places
and upon such terms as it may deem proper. The net proceeds any such sale
shall be distributed by the Depositary to the record holders of Receipts
entitled thereto as provided by Section 4.01 in the case of a distribution
received in cash.
If registration under the Securities Act of the securities to which any
rights, preferences or privileges relate is required in order for holders of
Receipts to be offered or sold such securities, the Company shall promptly file
a registration statement pursuant to the Securities Act with respect to such
securities and use its best efforts and take all steps available to it to cause
such registration statement to become effective sufficiently in advance of the
expiration of such rights, preferences or privileges to enable such holders to
exercise such rights, preferences or privileges. In no event shall the
Depositary make available to the holders of Receipts any right, preference or
privilege to subscribe for or to purchase any securities unless and until the
Depositary has received written notice from the Company that such registration
statement shall have become effective or that the offering and sale of such
securities to such holders are exempt from registration under the provisions of
the Securities Act.
If any other action under the law of any jurisdiction or any governmental or
administrative authorization, consent or permit is required in order for such
rights, preferences or privileges to be made available to holders of Receipts,
the Company agrees with the Depositary that the Company will use its best
efforts to take such action or obtain such authorization, consent or permit
sufficiently in advance of the expiration of such rights, preferences or
privileges to enable such holders to exercise such rights, preferences or
privileges.
SECTION 4.04. Notice of Dividends, Fixing of Record Date for Holders of
Receipts. Whenever any cash dividend or other cash distribution shall become
payable, any distribution other than cash shall be made, or any rights,
preferences or privileges shall at any time be offered with respect to the
Stock, or whenever the Depositary shall receive notice of any meeting at which
holders of Stock are entitled to vote or of which holders of Stock are entitled
to notice or of any call of any shares of Stock, the Depositary shall in each
such instance fix a record date (which shall be the same date as the record
date fixed by the Company with respect to the Stock) for the determination of
the holders of Receipts who shall be entitled (i) to receive such dividend,
distribution, rights, preferences or privileges or the net proceeds of the sale
thereof, (ii) to receive notice of, and to give instructions for the exercise
of voting rights at, any such meeting or (iii) to receive notice of any such
call.
SECTION 4.05. Voting Rights. Upon receipt of notice of any meeting at
which the holders of Stock are entitled to vote, the Depositary shall, as soon
as practicable thereafter, mail to the record holders of Receipts a notice,
which shall be provided by the Company and which shall contain (i) such
information as is contained in such notice of meeting, (ii) a statement that
the holders
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<PAGE> 16
of Receipts at the close of business on a specified record date fixed pursuant
to Section 4.04 will be entitled, subject to any applicable provision of law or
the Restated Articles of Incorporation, to instruct the Depositary as to the
exercise of the voting rights pertaining to the amount of Stock represented by
their respective Depositary Shares, and (iii) a brief statement as to the
manner in which such instructions may be given. Upon the written request of a
holder of a Receipt on such record date, the Depositary shall endeavor insofar
as practicable to vote or cause to be voted the amount of Stock represented by
the Depositary Shares evidenced by such Receipt in accordance with the
instructions set forth in such request. The Company hereby agrees to take all
reasonable action that may be deemed necessary by the Depositary in order to
enable the Depositary to vote such Stock or cause such Stock to be voted. In
the absence of specific instructions from the holder of a Receipt, the
Depositary will abstain from voting to the extent of the Stock represented by
the Depositary Shares evidenced by such Receipt.
SECTION 4.06. Changes Affecting Stock and Reclassifications,
Recapitalizations, Etc.. Subject to the operation of Section 2.03, upon any
split-up, consolidation, or any other reclassification of Stock, or upon any
recapitalization, reorganization, merger, amalgamation, or consolidation
affecting the Company or to which it is a party, or upon any sale of all or
substantially all of the Company's assets, the Depositary shall, upon the
instructions of the Company, treat any shares of stock or other securities or
property (including cash) that shall be received by the Depositary in exchange
for or upon conversion of or in respect of the Stock as new deposited property
under this Deposit Agreement, and Receipts then outstanding shall thenceforth
represent the proportionate interests of holders thereof in the new deposited
property so received in exchange for or upon conversion or in respect of such
Stock. In any such case the Depositary may, in its discretion, with the
approval of the Company, execute and deliver additional Receipts, or may call
for the surrender of all outstanding Receipts to be exchanged for new Receipts
specifically describing such new deposited property.
ARTICLE V
THE DEPOSITARY AND THE COMPANY
SECTION 5.01. Maintenance of Offices, Agencies, Transfer Books by the
Depositary; the Registrar. Upon execution of this Deposit Agreement in
accordance with its terms, the Depositary shall maintain at the Corporate
Office facilities for the execution and delivery, transfer, surrender and
exchange, split-up and combination of Receipts and the deposit and withdrawal
of Stock and at the offices of the Depositary's Agents, if any, facilities for
the delivery, transfer, surrender and exchange, split-up, combination and
redemption of Receipts and the deposit and withdrawal of Stock, all in
accordance with the provisions of this Deposit Agreement.
The Depositary shall keep books at the Corporate Office for the registration
and transfer of Receipts, which books at all reasonable times shall be open for
inspection by the record holders of Receipts as and to the extent provided by
applicable law. The Depositary shall consult with the Company upon receipt of
any request for inspection. The Depositary may close such books, at any time
or from time to time, when deemed expedient by it in connection with the
performance of its duties hereunder.
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<PAGE> 17
The Depositary shall make available for inspection by holders of Receipts at
the Corporate Office and at such other places as it may from time to time deem
advisable during normal business hours any reports and communications received
from the Company that are both received by the Depositary as the holder of
Stock and generally available to the holders of Stock.
Promptly upon request from time to time by the Company, the Depositary shall
furnish to it a list, at the Company's sole expense, as of a recent date, of
the names, addresses and holdings of Depositary Shares of all persons in whose
names Receipts are registered on the books of the Depositary.
SECTION 5.02. Liability of the Depositary, the Depositary's Agents or the
Company. Neither the Depositary, any Depositary's Agent nor the Company shall
incur any liability to any holder of any Receipt, if by reason of any provision
of any present or future law or regulation thereunder of the United States of
America or of any other governmental authority or, in the case of the
Depositary or the Depositary's Agent, by reason of any provision, present or
future, of the Restated Articles of Incorporation or, in the case of the
Company, the Depositary or the Depositary's Agent, by reason of any act of God
or war or other circumstances beyond the control of the relevant party, the
Depositary, any Depositary's Agent or the Company shall be prevented or
forbidden from doing or performing any act or thing that the terms of this
Deposit Agreement provide shall be done or performed; nor shall the Depositary,
any Depositary's Agent or the Company incur any liability to any holder of a
Receipt by reason of any nonperformance or delay, caused as aforesaid, in the
performance or any act or thing that the terms of this Deposit Agreement
provide shall or may be done or performed, or by reason of any exercise of, or
failure to exercise, any discretion provided for in this Deposit Agreement.
SECTION 5.03. Obligations of the Depositary, the Depositary's Agents and
the Company. Neither the Depositary nor any Depositary's Agent nor the Company
assumes any obligation or shall be subject to any liability under this Deposit
Agreement or any Receipt to holders of Receipts other than that each of them
agrees to use good faith in the performance of such duties as are specifically
set forth in this Deposit Agreement.
Neither the Depositary nor any Depositary's Agent nor the Company shall be
under any obligation to appear in, prosecute or defend any action, suit or
other proceeding with respect to Stock, Depositary Shares, Receipts or Common
Stock that in its opinion may involve it in expense or liability, unless
indemnity satisfactory to it against all expense and liability be furnished as
often as may be required.
Neither the Depositary nor any Depositary's Agent nor the Company shall be
liable for any action or any failure to act by it in reliance upon the advice
of or information from legal counsel, accountants, any person presenting Stock
for deposit, any holder of a Receipt or any other person believed by it in good
faith to be competent to give such advice or information. The Depositary, any
Depositary's Agent and the Company may each rely and shall each be in protected
in acting upon any written notice, request, direction or other document
believed by it to be genuine and to have been signed or presented by the proper
party or parties.
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<PAGE> 18
The Depositary, its parent, affiliate, or subsidiaries and any Depositary's
Agent may own, buy, sell or deal in any class of securities of the Company and
its affiliates and in Receipts or Depositary Shares or become pecuniarily
interested in any transaction in which the Company or its affiliates may be
interested or contract with or lend money to or otherwise act as fully or as
freely as if it were not the Depositary or the Depositary's Agent hereunder.
The Depositary may also act as transfer agent or registrar of any of the
securities of the Company and its affiliates or act in any other capacity for
the Company or its affiliates.
It is intended that neither the Depositary nor any Depositary's Agent,
acting as the Depositary Agent, shall be deemed to be an "issuer" of the
securities under the federal securities law or applicable state securities
laws, it being expressly understood and agreed that the Depositary and any
Depositary's Agent are acting only in a ministerial capacity as Depositary for
the Stock. The Depositary agrees to comply with all information reporting and
withholding requirements applicable to it under law or this Deposit Agreement
in its capacity as Depositary.
Neither the Depositary (or its officers, directors, employees or agents) nor
any Depositary's Agent makes any representation or has any responsibility as to
the validity of the registration statement pursuant to which the Depositary
Shares are registered under the Securities Act, the Stock, the Depositary
Shares or the Receipts (except for its counter-signatures thereon) or any
instruments referred to therein or herein, or as to the correctness of any
statement made therein or herein; provided, however, that the Depositary is
responsible for its representations in this Deposit Agreement.
The Depositary assumes no responsibility for the correctness of the
description that appears in the Receipts, which can be taken as a statement of
the Company summarizing certain provisions of this Deposit Agreement.
Notwithstanding any other provision herein or in the Receipts, the Depositary
makes no warranties or representations as to the validity, genuineness or
sufficiency of any Stock at any time deposited with the Depositary hereunder or
of the Depositary Shares or Receipts (except its countersignature thereon), as
to the validity or sufficiency of this Deposit Agreement, as to the value of
the Depositary Shares or as to any right, title or interest of the record
holders of Receipts in and to the Depositary Shares, except that the Depositary
hereby represents and warrants as follows: (i) the Depositary has been duly
organized and is validly existing and in good standing under the laws of the
State of Wisconsin, with full power, authority and legal right under such laws
to execute, deliver and carry out the terms of this Deposit Agreement; (ii)
this Deposit Agreement has been duly authorized, executed and delivered by the
Depositary, and (iii) this Deposit Agreement constitutes a valid and binding
obligation of the Depositary, enforceable against the Depositary in accordance
with its terms. The Depositary shall not be accountable for the use or
application by the Company of the Depositary Shares or the Receipts or the
proceeds thereof.
SECTION 5.04. Resignation and Removal of the Depositary, Appointment of
Successor Depositary. The Depositary may at any time resign as Depositary
hereunder by notice of its election to do so delivered to the Company, such
resignation to take effect upon the appointment of a successor depositary and
its acceptance of such appointment as hereinafter provided.
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The Depositary may at any time be removed by the Company by notice of such
removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor depositary and its acceptance of such appointment as
hereinafter provided.
In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 45 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor depositary,
which shall be a bank or trust company having its principal office in the
United States of America and having a combined capital and surplus of at least
$50.000,000 or an affiliate of any such bank or trust company. If a successor
Depositary shall not have been appointed in 45 days, the resigning Depositary
may petition a court of competent jurisdiction to appoint a successor
depositary. Every successor depositary shall execute and deliver to its
predecessor and to the Company an instrument in writing accepting its
appointment hereunder, and thereupon such successor depositary, without any
further act or deed, shall become fully vested with all the rights, powers,
duties, and obligations of its predecessor and for all purposes shall be the
Depositary under this Deposit Agreement, and such predecessor, upon payment of
all sums due it and on the written request of the Company, shall promptly
execute and deliver an instrument transferring to such successor all rights and
powers of such predecessor hereunder, shall duly assign, transfer and deliver
all rights, title and interest in the Stock and any moneys or property held
hereunder to such successor and shall deliver to such successor a list of the
record holders of all outstanding Receipts. Any successor depositary shall
promptly mail notice of its appointment to the recordholders of Receipts.
Any corporation into or with which the Depositary may be merged,
consolidated or converted shall be the successor of such Depositary without the
execution or filing of any document or any further act. Such successor
depositary may execute the Receipts either in the name of the predecessor
depositary or in the name of the successor depositary.
SECTION 5.05. Corporate Notices and Reports. The Company agrees that it
will deliver to the Depositary, and the Depositary will, promptly after receipt
thereof, transmit to the record holders of Receipts, in each case at the
address recorded in the Depositary's books, copies of all notices reports
(including financial statements) required by law, by the rules of any national
securities exchange or market upon which the Stock, the Depositary Shares or
the Receipts are listed or designated for quotation, or by the Restated
Articles of Incorporation to be furnished by the Company to holders of Stock.
Such transmission will be at the Company's expense and the Company will provide
the Depositary with such number of copies of such documents as the Depositary
may reasonably request. In addition, the Depositary will transmit to the
record holders of Receipts at the Company's expense such other documents as may
be requested by the Company.
SECTION 5.06. Deposit of Stock by the Company. The Company agrees with
the Depositary that neither the Company nor any company controlled by the
Company will at any time deposit any Stock if such Stock is required to be
registered under the provisions of the Securities Act and no registration
statement is at such time in effect as to such Stock.
SECTION 5.07. Indemnification by the Company. The Company agrees to
indemnify the Depositary, any Depositary's Agent and any Registrar against, and
hold each of them harmless from, any liability, costs and expenses (including
reasonable attorneys' fees) that may arise
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out of or in connection with its acting as Depositary, Depositary's Agent or
Registrar, respectively, under this Deposit Agreement and the Receipts, except
for any liability arising out of negligence, bad faith or willful misconduct on
the part of any such person or persons.
SECTION 5.08. Indemnification by the Company, as Depositary Agent. The
Company, acting as Depositary Agent pursuant to Section 7.05 herein, also
agrees to indemnify the Depositary, any other Depositary Agent, and any
Registrar against, and hold each of them harmless from, any liability, costs,
and expenses (including reasonable attorneys' fees) that may arise out of or in
connection with its acting as Depositary, a Depositary's Agent, or Registrar,
respectively, under this Deposit Agreement and the Receipts, except for any
liability arising out of negligence, bad faith, or willful misconduct on the
part of any such person or persons.
SECTION 5.09. Fees, Charges and Expenses. No fees, charges, and expenses
of the Depositary or any Depositary's Agent hereunder or of any Registrar shall
be payable by any person other than the Company, except for any taxes and other
governmental charges and except as provided in this Deposit Agreement. If the
Depositary incurs fees, charges or expenses for which it is not otherwise
liable hereunder at the election of a holder of a Receipt or other person, such
holder or other person will be liable for such fees, charges and expenses. All
other fees, charges and expenses of the Depositary and any Depositary's Agent
hereunder and of any Registrar (including, in each case, fees and expenses of
counsel) incident to the performance of their respective obligations hereunder
will be paid from time to time in accordance with the fee schedule delivered
upon the date hereof, and such additional fee upon consultation and agreement
between the Depositary and the Company as to the amount and nature of such
fees, charges and expenses.
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.01. Amendment. The form of the Receipts and any provision of
this Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect that they may
deem necessary or desirable. Any amendment that shall impose any fees, taxes
or charges (other than fees and charges provided for herein or in the
Receipts), or that shall otherwise prejudice any substantial existing right of
holders of Receipts, shall not become effective as to outstanding Receipts
until the expiration of 30 days after notice of such amendment shall have been
given to the record holders of outstanding Receipts. Every holder of a
outstanding Receipt at the time any such amendment becomes effective shall be
deemed, by continuing to hold such Receipt, to consent and agree to such
amendment and to be bound by this Deposit Agreement as amended thereby. In no
event shall any amendment impair the right, subject to the provisions of
Sections 2.03, 2.04, 2.07, and 2.08 and Article III, of any owner of any
Depositary Shares to surrender the Receipt evidencing such Depositary Shares
with instructions to the Depositary to deliver to the holder the Stock and all
money and other property, if any, represented thereby, except in order to
comply with mandatory provisions of applicable law.
SECTION 6.02. Termination. Whenever so directed by the Company, the
Depositary will terminate this Deposit Agreement by mailing notice of such
termination to the record holders of all Receipts then outstanding at least 30
days prior to the date fixed in such notice
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for such termination. The Depositary may likewise terminate this Deposit
Agreement if at any time 45 days shall have expired after the Depositary shall
have delivered to the Company a written notice of its election to resign and a
successor depositary shall not have been appointed and accepted its appointment
as provided in Section 5.04.
If any Receipts shall remain outstanding after the date of termination of
this Deposit Agreement, the Depositary thereafter shall discontinue the
transfer of Receipts, shall suspend the distribution of dividends to the
holders thereof and shall not give any further notices (other than notice of
such termination) or perform any further acts under this Deposit Agreement,
except that the Depositary shall continue to collect dividends and other
distributions pertaining to Stock, shall sell rights, preferences or privileges
as provided in this Deposit Agreement and shall continue to deliver the Stock
and any money and other property represented by Receipts under surrender
thereof by the holders thereof. At any time after the expiration of two years
from the date of termination, the Depositary may sell Stock then held hereunder
at public or private sale, at such places and upon such terms as it deems
proper and may thereafter hold the net proceeds of any such sale, together with
any money and other property held by it hereunder, without liability for
interest, for the benefit, pro rata in accordance with their holdings, of the
holders of Receipts that have not theretofore been surrendered. After making
such sale, the Depositary shall be discharged from all obligations under this
Deposit Agreement except to account for such net proceeds and money and other
property. Upon the termination of this Deposit Agreement, the Company shall be
discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary, any Depositary's Agent and any Registrar under
Sections 5.07, 5.08, and 5.09. In the event this Deposit Agreement is
terminated, the Company hereby agrees to use its best efforts to designate the
underlying Stock for quotation on the Nasdaq National Market.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Counterparts. The Deposit Agreement may be executed by the
Company and the Depositary in separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed an original, but
all such counterparts taken together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to the
Deposit Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Deposit Agreement. Copies of the Deposit
Agreement shall be filed with the Depositary and the Depositary's Agents and
shall be open to inspection during business hours at the Corporate Office and
the respective offices of the Depositary's Agents, if any, by any holder of a
Receipt.
SECTION 7.02. Exclusive Benefits of Parties. This Deposit Agreement is
for the exclusive benefit of the parties hereto, and their respective
successors hereunder, and shall not be deemed to give any legal or equitable
right, remedy or claim to any other person whatsoever.
SECTION 7.03. Invalidity of Provisions. In case any one or more of the
provisions contained in this Deposit Agreement or in the Receipts should be or
become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein or therein
shall in no way be affected, prejudiced or disturbed thereby.
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SECTION 7.04. Notices. Any notices to be given to the Company hereunder
or under the Receipts shall be in writing and shall be deemed to have been duly
given if personally delivered or sent by mail, or by telegram or telex or
telecopier confirmed by letter, addressed to the Company at 777 East Wisconsin
Avenue, Milwaukee, Wisconsin 53202, Attention: Chief Executive Officer, or at
any other place to which the Company may have transferred its principal
executive office.
Any notices to be given to the Depositary hereunder or under the Receipts
shall be in writing and shall be deemed to have been duly given if personally
delivered or sent by mail, or by telegram or telex or telecopier confirmed by
letter, addressed to the Depositary at the Corporate Office.
Any notices given to any record holder of a Receipt hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail, or by telegram or telex or telecopier
confirmed by letter, addressed to such record holder at the address of such
record holder as it appears on the books of the Depositary or, if such holder
shall have timely filed with the Depositary a written request that notices
intended for such holder be mailed to some other address, at the address
designated in such request.
Delivery of a notice sent by mail or by telex or telex or telecopier shall
be deemed to be effected at the time when a duly addressed letter containing
the same (or a duly addressed letter confirming an earlier notice in the case
of a telegram or telex or telecopier message) is deposited, postage prepaid, in
a post office letter box. The Depositary or the Company may, however, act upon
any telegram or telex or telecopier message received by it from the other or
from any holder of a Receipt, notwithstanding that such telegram or telex or
telecopier message shall not subsequently be confirmed by letter as aforesaid.
SECTION 7.05. Depositary's Agents. The Depositary may from time to time
appoint Depositary's Agents to act in any respect for the Depositary for the
purposes of this Deposit Agreement and may at any time appoint additional
Depositary's Agents and vary or terminate the appointment of such Depositary's
Agents. The Depositary will notify the Company prior to any such action. It
is understood and agreed that the Company is hereby appointed as a Depositary's
Agent and may perform any and all of the obligations of the Depositary under
this Agreement, except that it may not hold Stock or other property which is to
be delivered to the Depositary.
SECTION 7.06. Holders of Receipts Are Parties. Notwithstanding that
holders of Receipts have not executed and delivered this Deposit Agreement or
any counterpart thereof, the holders of Receipts from time to time shall be
deemed to be parties to this Deposit Agreement and shall be bound by all of the
terms and conditions hereof and of the Receipts by acceptance of delivery of
Receipts.
SECTION 7.07. Governing Law. This Deposit Agreement and the Receipts and
all rights hereunder and thereunder and provisions hereof and thereof shall be
governed by, construed and in accordance with, the law of the State of
Wisconsin without giving effect to principles of conflict of laws.
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SECTION 7.08. Headings. The headings of articles and sections in this
Deposit Agreement and in the form of the Receipt set forth in Exhibit A hereto
have been inserted for convenience only and are not to be regarded as a part of
this Deposit Agreement or to have any bearing upon the meaning or
interpretation of any provision contained herein or in the Receipts.
IN WITNESS WHEREOF, Firstar Corporation, Firstar Corporation of Wisconsin
and Firstar Trust Company have duly executed this agreement as of the day and
year first above set forth and all holders of Receipts shall be deemed to have
automatically become parties hereto.
FIRSTAR CORPORATION
Attest:
By: ________________________ By: _________________________
Authorized Officer
FIRSTAR CORPORATION OF WISCONSIN
Attest:
By: ________________________ By: _________________________
Authorized Officer
FIRSTAR TRUST COMPANY
Attest:
By: ________________________ By: _________________________
Authorized Signatory
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<PAGE> 24
EXHIBIT A
DEPOSITARY RECEIPT FOR DEPOSITARY SHARES,
EACH REPRESENTING ONE-TWENTIETH OF A SHARE OF
SERIES D CONVERTIBLE PREFERRED STOCK, OF
FIRSTAR CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF WISCONSIN
THIS CERTIFICATE IS TRANSFERABLE IN MILWAUKEE
OR IN THE CITY OF NEW YORK
__________________________
No. _________________ ______________________
DEPOSITARY SHARES
CUSIP ______ __ _
__________________________
FIRSTAR TRUST COMPANY, as Depositary (the "Depositary"), hereby certifies
that _______________ is the registered owner of _________ Depositary Shares
("Depositary Shares"), each Depositary Share representing one-twentieth (1/20)
of one share of Series D Convertible Preferred Stock, $1.00 par value, of
Firstar Corporation, a Wisconsin corporation (the "Corporation"), on deposit
with the Depositary, subject to the terms and entitled to the benefits of the
Amended and Restated Deposit Agreement, dated as of ___________, 1995 (the
"Deposit Agreement"), among the Corporation, Firstar Corporation of Wisconsin
and the Depositary. By accepting this Depositary Receipt the holder hereof
becomes a party to and agrees to be bound by all the terms and conditions of
the Deposit Agreement. This Depositary Receipt shall not be valid or
obligatory for any purpose or entitled to any benefits under the Deposit
Agreement unless it shall have been executed by the Depositary by the manual or
facsimile signature of a duly authorized officer thereof.
Dated:
FIRSTAR TRUST COMPANY
Depositary
By: ______________________________
Authorized Officer
Countersigned and Registered:
FIRSTAR TRUST COMPANY
Registrar
By: ___________________________
Authorized Officer
A-1
<PAGE> 25
FIRSTAR CORPORATION
FIRSTAR CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH RECEIPTHOLDER WHO SO
REQUESTS A COPY OF THE DEPOSIT AGREEMENT AND A STATEMENT OR SUMMARY OF THE
DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES, AND LIMITATIONS OF THE STOCK
REPRESENTED BY THIS RECEIPT AND OF EACH CLASS OF SHARES OR SERIES THEREOF WHICH
THE CORPORATION IS AUTHORIZED TO ISSUE, AND THE VARIATIONS IN RIGHTS,
PREFERENCES AND LIMITATIONS FOR EACH SERIES, AND THE AUTHORITY OF THE BOARD OF
DIRECTORS OF THE CORPORATION TO DETERMINE VARIATIONS FOR FUTURE SERIES. ANY
SUCH REQUEST IS TO BE ADDRESSED TO THE DEPOSITARY NAMED ON THE FACE OF THIS
RECEIPT.
__________________________
The following abbreviations, when used in the inscription on the face of
this Receipt, shall be construed as though they were written out in full
according to applicable laws and regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and
not as tenants in common
UNIF GIFT MIN ACT - __________ Custodian ____________
(Cust) (Minor)
under Uniform Gifts to Minors Act
____________________________________
(State)
Additional abbreviations may also be used though not in the above list.
A-2
<PAGE> 26
ASSIGNMENT
FOR VALUE RECEIVED, _____________________________ hereby sell(s), assign(s)
and transfer(s) unto
____________________________________
Insert Social Security or Other
Identifying Number of Assignee
______________________________________________________________________________
Please Print or Type Name and Address Including Zip Code of Assignee
______________________________________________________________________________
____________________ Depositary Shares represented by the within Receipt,
and do hereby irrevocably constitute and appoint __________________ Attorney
to transfer the said Depositary Shares on the books of the within-named
Depositary on behalf of the Corporation with full power of substitution in the
premises.
Dated: ________________
Signature: _____________________________________
______________________________________
NOTICE: The signature(s) to this
assignment must correspond with
the name as written upon the face of
the Receipt, in every particular,
without alteration or enlargement or
any change whatever.
NOTICE OF CONVERSION
The undersigned holder of this Receipt for Depositary Shares hereby
irrevocably exercises the option to convert that number of shares of Series D
Convertible Preferred Stock, $1.00 par value per share, of the Corporation
represented by ___________ Depositary Shares into shares of Common Stock, $1.25
par value per share, of the Corporation (the "Common Stock") in accordance with
the terms of and subject to the conditions of such preferred stock, including
the Articles of Amendment to the Restated Articles of Incorporation of the
Corporation in respect thereof, and the Deposit Agreement, and directs that the
Common Stock deliverable upon such conversion be registered in the name of and
delivered together with a check in payment for any fractional shares of Common
Stock to the undersigned unless a different name has been indicated below. If
the shares of Common Stock are to be registered in the
A-3
<PAGE> 27
name of a person other than the undersigned, the undersigned will pay all
transfer and similar taxes payable with respect thereto. If the number of
shares of such preferred stock represented by the number of Depositary Shares
set forth above is less than the number of shares of such preferred stock on
deposit in respect of this Receipt, the undersigned directs that the Depositary
issue to the undersigned, unless a different name is indicated below, a new
Receipt evidencing Depositary Shares for the balance of the such preferred
stock not to be converted.
Dated: ________________ Signature:______________________________________
NOTICE: The signature to this notice
of conversion must correspond with the
name as written upon the face of this
Receipt (or with the name of the
assignee appearing in the assignment
form) in every particular, without
alteration or enlargement, or any
change whatsoever.
Name____________________________
Address__________________________
(Please print name and address of registered holder)
Name____________________________
Address__________________________
(Please indicate other delivery instructions, if applicable)
A-4
<PAGE> 1
EXHIBIT 8
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, Illinois 60601-1003
312/609-7500
<TABLE>
<S> <C> <C>
VEDDER, PRICE, KAUFMAN, KAMMHOLZ & DAY VEDDER, PRICE, KAUFMAN & KAMMHOLZ VEDDER, PRICE, KAUFMAN, KAMMHOLZ & DAY
805 Third Avenue 4615 East State Street, Suite 201 1600 M Street, N.W.
New York, New York 10022-2203 Rockford, Illinois 61108-2100 Washington, D.C. 20036-3208
212/407-7700 815/226-7700 202/296-0500
</TABLE>
December 7, 1994
Board of Directors Board of Directors
First Colonial Bankshares Corporation Firstar Corporation
30 North Michigan Avenue, Suite 300 777 East Wisconsin Avenue
Chicago, Illinois 60602-0493 Milwaukee, Wisconsin 53202
Gentlemen:
In connection with the solicitation of proxies relating to the proposed
merger ("Merger") of First Colonial Bankshares Corporation, a Delaware
corporation ("First Colonial"), into Firstar Corporation of Wisconsin, a
Wisconsin corporation ("FCW") and a wholly-owned subsidiary of Firstar
Corporation, a Wisconsin corporation ("Firstar"), you have requested our
opinion with respect to certain federal income tax consequences of the Merger.
The Merger contemplates the acquisition by FCW of all the assets and
liabilities of First Colonial in exchange for common stock, $1.25 par value, of
Firstar, and associated Firstar preferred share purchase rights, and Series D
convertible preferred stock, $1.00 par value, of Firstar pursuant to an
Agreement and Plan of Reorganization, dated as of July 31, 1994 (the
"Agreement"), and a related Plan of Merger, dated as of July 31, 1994 (together
with the Agreement referred to herein as the "Merger Agreements"), entered into
by First Colonial, Firstar and Firstar Corporation of Illinois, an Illinois
corporation and wholly-owned subsidiary of Firstar ("FCI"), as predecessor to
FCW.
The opinion expressed in this letter is based on the Internal Revenue Code of
1986, as amended (the "Code"), the Income Tax Regulations promulgated by the
Treasury Department thereunder and judicial authority reported as of the date
hereof. We have also considered the position of the Internal Revenue Service
(the "Service") reflected in published and private rulings. Although we are
not aware of any pending changes to these authorities that would alter
<PAGE> 2
Board of Directors
December 7, 1994
Page 2
our opinions, there can be no assurance that future legislative or
administrative changes, court decisions or Service interpretations will not
significantly modify the statements or opinions expressed herein. Although the
discussion herein is based upon our best interpretation of existing sources of
law and expresses what we believe a court would properly conclude if presented
with these issues, no assurance can be given that such interpretations would be
followed if they were to become the subject of judicial or administrative
proceedings. We express no opinion herein as to any issue of federal law other
than those specifically considered herein. We also do not express any opinion
as to any issue of state or local law.
For the purposes indicated above, and based upon our review, the conditions
set forth below, and representations made to us by First Colonial, Firstar and
FCI, it is our opinion that:
Provided the Merger qualifies as a statutory merger under applicable law, the
Merger of First Colonial into FCW, pursuant to the Merger Agreements, will
constitute a reorganization within the meaning of section 368(a)(1)(A) and
section 368(a)(2)(D) of the Code. First Colonial, FCW and Firstar will each
be considered "a party to a reorganization" within the meaning of section
368(b) of the Code for purposes of this reorganization.
In rendering this opinion, we have examined the Merger Agreements and such
other documents as we have deemed necessary or appropriate. We have assumed
the genuineness of all signatures, the legal capacity of all natural persons,
the authenticity of all documents submitted to us as originals, the conformity
to original documents of all documents submitted to us as copies, the
authenticity of the originals of such copies, and that the Merger will be
consummated pursuant to the applicable states' laws in the manner set forth in
the Merger Agreements. We have also assumed that any written representations
and covenants of First Colonial, Firstar and FCI made in connection with
rendering our opinion will be accurate and complete in all respects as of the
time they are provided to us and as of the closing and that the obligations and
rights of FCI under the Merger Agreements will be assumed by FCW pursuant to a
statutory merger of FCI into FCW prior to the closing of the Merger. Any
changes in these facts, or in the accuracy of these assumptions,
representations or covenants, may necessitate reconsideration of our opinion
and possibly result in different conclusions.
Our opinion is limited to those federal income tax issues specifically
considered herein and is addressed to and is only for the benefit of First
Colonial and Firstar. The opinion is furnished to you pursuant to sections
8.02(d) and 8.03(c) of the Agreement and may not be used or relied upon for any
other purpose and may not be circulated or otherwise referred to for any other
purpose without our express written consent.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement relating to the Merger and to the use of our name under
the captions "Proposed Merger - Certain
<PAGE> 3
Board of Directors
December 7, 1994
Page 3
Federal Income Tax Consequences of the Merger" and "Opinions" in the Joint
Proxy Statement - Prospectus contained in such Registration Statement. In
giving such consent, we do not thereby concede that we are within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
/s/ Vedder, Price, Kaufman & Kammholz
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
First Colonial Bankshares Corporation:
We consent to incorporation by reference in the Registration Statement on Form
S-4 of Firstar Corporation of our report dated February 18, 1994, relating to
the consolidated balance sheet of First Colonial Bankshares Corporation and
Subsidiaries as of December 31, 1993 and 1992, and the related consolidated
statements of income, changes in stockholders' equity, and cash flows for each
of the years in the three-year period ended December 31, 1993, which report
appears in the December 31, 1993 annual report on Form 10-K of First Colonial
Bankshares Corporation and to the reference to our firm under the heading
"Experts" in the Proxy Statement-Prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Chicago, Illinois
December 6, 1994
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
Firstar Corporation:
We consent to incorporation by reference in the Registration Statement on Form
S-4 of Firstar Corporation of our report dated January 20, 1994, relating to
the consolidated balance sheets of Firstar Corporation and subsidiaries as of
December 31, 1993 and 1992, and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1993, which report appears in the December 31, 1993
annual report on Form 10-K of Firstar Corporation and to the reference to our
firm under the heading "Experts" in the Proxy Statement-Prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Milwaukee, Wisconsin
December 6, 1994
<PAGE> 1
EXHIBIT 24
FIRSTAR CORPORATION
POWER OF ATTORNEY WITH RESPECT TO
REGISTRATION STATEMENTS
COVERING SECURITIES OF FIRSTAR CORPORATION
(FIRST COLONIAL BANKSHARES CORPORATION)
KNOW ALL MEN BY THESE PRESENTS that the undersigned, an officer and/or director
of FIRSTAR CORPORATION, does hereby constitute and appoint Roger L.
Fitzsimonds, John A. Becker, Howard H. Hopwood, William H. Risch and William J.
Schulz, and each of them, severally, his or her true and lawful attorney and
agent at any time and from time to time to do any and all acts and things and
execute, in his or her name (whether on behalf of Firstar Corporation, or as an
officer or director of Firstar Corporation, or otherwise) any and all
instruments which said attorney and agent may deem necessary, appropriate or
desirable to enable Firstar Corporation to comply with the Securities Act of
1933, as amended, and any requirements of the Securities and Exchange
Commission in respect thereof, in connection with one or more Registration
Statements and any and all amendments (including post-effective amendments) to
each such Registration Statement relating to the issuance of common stock,
$1.25 par value, and associated preferred stock purchase rights; preferred
stock, $1 par value; options, warrants and rights to purchase common or
preferred stock; and other debt or convertible securities of Firstar
Corporation in connection with the acquisition by Firstar Corporation (or a
subsidiary thereof) of First Colonial Bankshares Corporation pursuant to and in
accordance with an Agreement and Plan of Reorganization and related Plan of
Merger entered into by Firstar Corporation, including specifically but without
limitation thereto, power and authority to sign his or her name (whether on
behalf of Firstar Corporation, or as an officer or director of Firstar
Corporation or by attesting the seal of Firstar Corporation, or otherwise) to
each such Registration Statement and to such amendments (including
post-effective amendments) to each Registration Statement to be filed with the
Securities and Exchange Commission, or any of the exhibits, financial
statements and schedules, or the Proxy Statements-Prospectuses, filed
therewith, and to file the same with the Securities and Exchange Commission;
and the undersigned does hereby ratify and confirm all that said attorneys and
agents, and each of them, shall do or cause to be done by virtue hereof. Any
one of said attorneys and agents shall have, and may exercise, all the powers
hereby conferred.
IN WITNESS WHEREOF, the undersigned has signed his or her name hereto on the
2nd day of November, 1994.
/s/ William H. Risch
<PAGE> 2
EXHIBIT 24
FIRSTAR CORPORATION
POWER OF ATTORNEY WITH RESPECT TO
REGISTRATION STATEMENTS
COVERING SECURITIES OF FIRSTAR CORPORATION
(FIRST COLONIAL BANKSHARES CORPORATION)
KNOW ALL MEN BY THESE PRESENTS that the undersigned, an officer and/or director
of FIRSTAR CORPORATION, does hereby constitute and appoint Roger L.
Fitzsimonds, John A. Becker, Howard H. Hopwood, William H. Risch and William J.
Schulz, and each of them, severally, his or her true and lawful attorney and
agent at any time and from time to time to do any and all acts and things and
execute, in his or her name (whether on behalf of Firstar Corporation, or as an
officer or director of Firstar Corporation, or otherwise) any and all
instruments which said attorney and agent may deem necessary, appropriate or
desirable to enable Firstar Corporation to comply with the Securities Act of
1933, as amended, and any requirements of the Securities and Exchange
Commission in respect thereof, in connection with one or more Registration
Statements and any and all amendments (including post-effective amendments) to
each such Registration Statement relating to the issuance of common stock,
$1.25 par value, and associated preferred stock purchase rights; preferred
stock, $1 par value; options, warrants and rights to purchase common or
preferred stock; and other debt or convertible securities of Firstar
Corporation in connection with the acquisition by Firstar Corporation (or a
subsidiary thereof) of First Colonial Bankshares Corporation pursuant to and in
accordance with an Agreement and Plan of Reorganization and related Plan of
Merger entered into by Firstar Corporation, including specifically but without
limitation thereto, power and authority to sign his or her name (whether on
behalf of Firstar Corporation, or as an officer or director of Firstar
Corporation or by attesting the seal of Firstar Corporation, or otherwise) to
each such Registration Statement and to such amendments (including
post-effective amendments) to each Registration Statement to be filed with the
Securities and Exchange Commission, or any of the exhibits, financial
statements and schedules, or the Proxy Statements-Prospectuses, filed
therewith, and to file the same with the Securities and Exchange Commission;
and the undersigned does hereby ratify and confirm all that said attorneys and
agents, and each of them, shall do or cause to be done by virtue hereof. Any
one of said attorneys and agents shall have, and may exercise, all the powers
hereby conferred.
IN WITNESS WHEREOF, the undersigned has signed his or her name hereto on the
1st day of November, 1994.
/s/ Roger L. Fitzsimonds
