FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED JUNE 30, 1994 COMMISSION FILE NUMBER 1-2981
FIRSTAR CORPORATION
(Exact Name of Registrant as Specified in its Charter)
WISCONSIN 39-0711710
(State of Incorporation) (I.R.S. EMPLOYER
Identification No.)
777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
Telephone Number (414) 765-4985
The registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the precedeing
12 months and (2) has been subject to such filing requirements for the
past 90 days.
As of Augusst 1, 1994, 64,286,211 shares of common stock were outstanding.
FIRSTAR CORPORATION
CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets 1
Consolidated Statements of Income 2
Consolidated Statements of Cash Flows 3
Supplemental Footnotes 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
Additional Financial Data 11
PART II. OTHER INFORMATION
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 13
<TABLE>
FIRSTAR CORPORATION AND SUBSIDIARIES
<CAPTION>
CONSOLIDATED BALANCE SHEETS
- - ------------------------------------------------------------------------------------------------
June 30 December 31 June 30
(Thousands of Dollars) 1994 1993 1993
- - ---------------------------------------------------------------------------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS
Cash and Due from Banks $ 935,813 $ 1,228,957 $ 1,070,154
Interest-Bearing Deposits with Banks 4,637 4,328 4,229
Federal Funds Sold and Resale Agreements 222,501 282,517 173,666
Trading Account Securities 19,346 12,491 17,217
Investment Securities (market value $2,926,785,
$2,894,594 and $3,000,174 on June 30, 1994,
December 31, 1993 and June 30, 1993) 2,954,376 2,834,305 2,917,783
Loans:
Commercial and Industrial 2,505,935 2,470,454 2,330,577
Real Estate 2,065,325 1,948,789 1,862,803
Other 921,857 886,518 772,224
------------ ------------ ------------
Commercial Loans 5,493,117 5,305,761 4,965,604
Credit Card 503,678 546,051 491,702
Real Estate - Mortgage 1,350,986 1,363,671 1,311,098
Home Equity 476,642 445,135 428,903
Other 1,378,086 1,323,200 1,180,920
------------ ------------ ------------
Consumer Loans 3,709,392 3,678,057 3,412,623
------------ ------------ ------------
Total Loans 9,202,509 8,983,818 8,378,227
Reserve for Loan Losses (175,441) (174,873) (173,270)
------------ ------------ ------------
Loans - Net 9,027,068 8,808,945 8,204,957
Bank Premises and Equipment 267,447 264,569 259,606
Customer Acceptance Liability 17,038 17,412 18,594
Other Assets 374,976 340,471 352,290
------------ ------------ ------------
Total Assets $ 13,823,202 $ 13,793,995 $ 13,018,496
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $ 2,465,093 $ 3,064,314 $ 2,557,199
Interest-Bearing Demand 1,373,245 1,557,145 1,393,380
Savings Passbook 1,557,938 1,528,222 1,498,669
Consumer Time 4,074,247 4,041,411 4,126,380
Commercial Time 996,981 972,522 887,083
------------ ------------ ------------
Total Deposits 10,467,504 11,163,614 10,462,711
Short-Term Borrowed Funds 1,759,260 1,112,490 1,078,790
Long-Term Debt 135,025 126,275 130,852
Bank Acceptances Outstanding 17,038 17,412 18,594
Other Liabilities 232,364 218,307 202,745
------------ ------------ ------------
Total Liabilities 12,611,191 12,638,098 11,893,692
Stockholders' Equity:
Preferred Stock 500
Common Stock 81,224 81,149 80,032
Capital Surplus 150,776 149,882 186,116
Retained Earnings 988,234 928,559 862,431
Treasury Stock (7,582) (3,034) (4,275)
Restricted Stock (641) (659)
------------ ------------ ------------
Total Stockholders' Equity 1,212,011 1,155,897 1,124,804
------------ ------------ ------------
Total Liabilities and Stockholders' Equity $ 13,823,202 $ 13,793,995 $ 13,018,496
============ ============ ============
</TABLE> -1-
<TABLE>
FIRSTAR CORPORATION AND SUBSIDIARIES
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
- - ----------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
(Thousands of Dollars, Except Per Share Data) 1994 1993 1994 1993
- - ------------------------------------------------------------------------------ --------------------------
(Unaudited)
<S> <C> <C> <C> <C>
INTEREST REVENUE
Loans $ 183,483 $ 169,771 $ 356,914 $ 339,669
Investment Securities 39,955 44,869 79,204 90,380
Interest-Bearing Deposits with Banks 71 196 144 1,215
Federal Funds Sold and Resale Agreements 1,708 1,181 3,365 2,488
Trading Account Securities 298 236 537 402
----------- ---------- ----------- -----------
Total Interest Revenue 225,515 216,253 440,164 434,154
INTEREST EXPENSE
Deposits 60,820 65,742 118,791 134,701
Short-Term Borrowed Funds 13,801 6,298 23,247 11,867
Long-Term Debt 3,210 3,369 6,427 6,990
----------- ---------- ----------- -----------
Total Interest Expense 77,831 75,409 148,465 153,558
NET INTEREST REVENUE 147,684 140,844 291,699 280,596
Provision for Loan Losses 2,642 5,328 5,600 11,662
----------- ---------- ----------- -----------
NET INTEREST REVENUE AFTER
LOAN LOSS PROVISION 145,042 135,516 286,099 268,934
OTHER OPERATING REVENUE
Trust and Investment Management Fees 29,575 27,160 59,765 54,373
Service Charges on Deposit Accounts 18,212 18,272 36,592 35,356
Credit Card Service Revenue 13,451 13,165 25,700 24,970
Data Processing Fees 5,322 5,467 10,380 10,912
Investment Securities Gains 25 73 52 82
Other Revenue 17,511 20,148 34,720 37,917
----------- ---------- ----------- -----------
Total Other Operating Revenue 84,096 84,285 167,209 163,610
OTHER OPERATING EXPENSE
Salaries 65,659 62,617 131,336 123,364
Employee Benefits 15,553 15,568 32,049 32,385
Equipment Expense 11,588 12,058 23,883 23,798
Net Occupancy Expense 11,694 11,986 23,824 23,578
Net Other Real Estate (Revenue) Expense (499) 941 (842) 1,397
Other Expense 63,153 41,712 101,101 82,099
----------- ---------- ----------- -----------
Total Other Operating Expense 167,148 144,882 311,351 286,621
INCOME BEFORE INCOME TAXES 61,990 74,919 141,957 145,923
Applicable Income Taxes 19,485 24,522 46,230 45,500
----------- ---------- ----------- -----------
NET INCOME $ 42,505 $ 50,397 $ 95,727 $ 100,423
=========== ========== =========== ===========
Net Income Applicable to Common Stock $ 42,505 $ 49,560 $ 95,727 $ 98,698
PER COMMON SHARE
Net Income $ .66 $ .78 $ 1.49 $ 1.56
Dividends .30 .26 .56 .48
-2-
</TABLE
</TABLE>
<TABLE>
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
- - ----------------------------------------------------------------------------------------------------
Six Months Ended
June 30
(Thousands of Dollars) 1994 1993
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C>
(Unaudited)
Cash Flows from Operating Activities:
Net Income $ 95,727 $ 100,423
Adjustments:
Provision for loan losses 5,600 11,662
Depreciation, amortization, and accretion 17,127 13,374
Net (increase) decrease in trading account securities (6,855) 3,656
Net decrease in loans held for resale 165,366 51,435
Gains on sale of assets (1,560) (4,959)
Increase in other assets (38,002) (10,712)
Increase in other liabilities 17,513 8,497
Other net 771 2,425
------------- -------------
Net cash provided by operating activities 255,687 175,801
Cash Flows from Investing Activities:
Net decrease in federal funds sold and resale agreements 60,016 56,095
Net (increase) decrease in interest-bearing deposits with banks (309) 178,954
Sales of investment securities 7,948
Maturities of investment securities 388,850 680,477
Purchase of investment securities (506,872) (698,909)
Net increase in loans (395,983) (251,250)
Cash acquired in acquisitions 12,916 11,290
Proceeds from sale of other real estate 8,704 8,844
Purchase of bank premises and equipment (21,339) (16,818)
Proceeds from sale of bank premises and equipment 291 170
------------- -------------
Net cash used in investing activities (453,726) (23,199)
Cash Flows from Financing Activities:
Net decrease in deposits (710,852) (528,476)
Net increase in short-term borrowed funds 646,770 215,105
Proceeds from issuance of other debt 9,000
Repayment of long-term debt (271) (26,505)
Common stock transactions (3,700) (317)
Cash dividends (36,052) (32,205)
------------- -------------
Net cash used in financing activities (95,105) (372,398)
Net decrease in cash and due from banks (293,144) (219,796)
Cash and due from banks at beginning of period 1,228,957 1,289,950
------------- -------------
Cash and due from banks at end of period $ 935,813 $ 1,070,154
============= =============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 148,254 $ 158,517
Income taxes 63,662 44,945
Transfer to other real estate from loans $ 6,542 $ 4,199
</TABLE> -3-
FIRSTAR CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FOOTNOTES (Unaudited)
- - -------------------------------------------------------------------------------
(Thousands of Dollars except as Otherwise Indicated)
1. The financial data presented herein are unaudited, but in the opinion
of management, reflect all adjustments which are necessary for a fair
presentation of such information. Results for interim periods should
not be considered indicative of results for a full year. Reference
should be made to the financial statements contained in the
registrant's annual report on Form 10-K for the year ended December
31, 1993.
<TABLE>
2. Investment Securities
The amortized cost and approximate market values of investment securities as of June 30, 1994 are as follows:
<CAPTION>
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
U.S. Treasury and federal agencies $ 1,523,114 $ 5,255 $ (34,938)$ 1,493,431
Mortgage backed obligations of federal agencies 340,182 6,741 (5,347) 341,576
State and political subdivisions 954,048 10,131 (9,326) 954,853
Corporate debt 61,543 337 (444) 61,436
Equity securities 17,863 17,863
Other 57,626 57,626
----------- ---------- ------------ ----------
Total $ 2,954,376 $ 22,464 $ (50,055)$ 2,926,785
=========== ========== ============ ==========
</TABLE>
<TABLE>
3. Nonperforming Assets and Past Due Loans
<CAPTION>
June 30 December 31 June 30
1994 1993 1993
---------- ------------ ----------
<S> <C> <C> <C>
Nonaccrual Loans:
Commercial $ 41,662 $ 21,243 $ 22,366
Commercial - Real Estate 20,616 25,477 25,862
Consumer 5,731 6,417 8,392
---------- ------------ ----------
68,009 53,137 56,620
Renegotiated Loans:
Commercial 79 823 1,962
Commercial - Real Estate 639 690 488
718 1,513 2,450
---------- ------------ ----------
Other Real Estate 8,129 10,215 17,257
---------- ------------ ----------
Total $ 76,856 $ 64,865 $ 76,327
========== ============ ==========
Nonperforming Assets as a Percent of:
Loans and Other Real Estate .83 % .72 % .91 %
Total Assets .56 .47 .59
Loans Past Due 90 Days and Still Accruing
Commercial $ 8,424 $ 5,521 $ 5,625
Commercial - Real Estate 19,756 3,934 10,916
Consumer 12,763 12,348 12,076
---------- ------------ ----------
Total $ 40,943 $ 21,803 $ 28,617
========== ============ ==========
</TABLE>
-4-
FIRSTAR CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FOOTNOTES (Unaudited)
- - --------------------------------------------------------------------------
<TABLE>
4. Reserve for Loan Losses
<CAPTION>
Six Months Ended
June 30
1994 1993
------------ ----------
<S> <C> <C>
Balance - Beginning of period $ 174,873 $ 168,482
Provision for Loan Losses 5,600 11,662
Loan Recoveries 8,827 9,099
Loan Charge-Offs (13,859) (17,343)
Reserves of Acquired Banks 1,370
------------ ----------
Balance - End of period $ 175,441 $ 173,270
============ ==========
Net Charge-Offs to Average Loans .11 % .20 %
Reserve to Period-End Loans 1.91 2.07
</TABLE>
<TABLE>
5. Changes in Stockholders' Equity
<CAPTION>
Three Months Ended Six Months Ended
----------------------- ------------------------
June 30 June 30
1994 1993 1994 1993
----------------------- ------------------------
(unaudited)
<S> <C> <C> <C> <C>
Balance - Beginning of Period $ 1,190,386 $ 1,092,491 $ 1,155,897 $ 1,048,388
Net Income 42,505 50,397 95,727 100,423
Net Common Stock Transactions (1,590) (730) (3,561) 8,198
Dividends - Common Stock (19,290) (16,488) (36,052) (30,430)
- Preferred Stock (866) (1,775)
----------------------- ------------------------
Balance - End of Period $ 1,212,011 $ 1,124,804 $ 1,212,011 $ 1,124,804
======================= ========================
</TABLE>
6. Firstar uses interest rate swaps, caps and floors in the process of
managing interest rate sensitivity. The use of these hedges allows
Firstar to change interest rate sensitivity while retaining the
ability to offer products that satisfy customers needs. Interest
rate instruments have been used to alter the rate characteristics of
both loans and deposits. The table below shows information on
interest rate risk management instruments. The notional amount of
these agreements was $1.6 billion on June 30, 1994. Additionally,
Firstar has $1.3 billion of interest rate instruments for which it
serves as an intermediary for customers. Where Firstar acts as an
intermediary, it enters into positions that essentially offset one
another. Notional principal amounts are the basis for the exchange
of interest rate payments.
<TABLE>
Interest Rate Derivative Instruments
(Millions of Dollars)
<CAPTION>
Unrealized
Market Value
December 31 June 30 June 30
1993 1994 1994
---------- ------------ ----------
<S> <C> <C> <C>
Interest rate swaps:
Receive fixed rate pay variable rate $ 260 $ 330 $ (16)
Receive variable rate pay fixed rate 117 87 0
Receive variable rate pay variable rate 720 930 (21)
---------- ------------ ----------
Subtotal 1,097 1,347 (37)
Interest rate caps 120 120 2
Interest rate floors 60 120 1
---------- ------------ ----------
Total $ 1,277 $ 1,587 $ (35)
========== ============ ==========
</TABLE>
-5-
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Firstar Corporation reported earnings for the six months ended June 30, 1994
of $95.7 million, or $1.49 per common share, down 4% from $100.4 million, or
$1.56 per common share, for the same period last year. Return on equity was
16.21% for the first half of the year, compared with 19.12% for the same period
last year, while return on assets was 1.44% compared to 1.60% during the same
period last year. Earnings declined as a result of a $13.1 million after-tax
charge, or 20 cents per share, taken in the second quarter to cover the full
amount of a processing loss.
The processing loss resulted from a series of check transactions between two
commercial customers who are affiliated with one another. Firstar paid $22
million worth of checks written by these customers before discovering that
their actual balances were not sufficient to cover this amount. Firstar has
initiated legal action to recover the processing loss and to obtain repayment
of secured loans to the same customers totaling $3.8 million. The customers
have filed for bankruptcy and the amount and the timing of any recovery are
uncertain.
Net income for the second quarter totaled $42.5 million, or $.66 per common
share, down from $50.4 million, or $.78 per common share, for the same quarter
of 1993. Return on equity was 14.13% in the second quarter of 1994 compared
to 18.77% a year ago. Return on assets was 1.26% compared with 1.58% in the
same period last year. Table 1 shows the components of net interest revenue,
net income and net interest margin.
<TABLE>
Table 1. Condensed income statements - taxable equivalent basis
<CAPTION>
Three Months Ended June 30 Six Months Ended June 30
-------------------------------- --------------------------------
1994 1993 Change 1994 1993 Change
---------- ---------- ---------- ---------- ---------- ----------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Interest revenue $ 225.5 $ 216.2 $ 9.3 $ 440.2 $ 434.2 $ 6.0
Taxable-equivalent adjustment 7.3 6.8 0.5 14.2 13.8 0.4
---------- ---------- ---------- ---------- ---------- ----------
Interest revenue - taxable-equivalent 232.8 223.0 9.8 454.4 448.0 6.4
Interest expense 77.8 75.4 2.4 148.5 153.6 (5.1)
---------- ---------- ---------- ---------- ---------- ----------
Net interest revenue - taxable-equivalent 155.0 147.6 7.4 305.9 294.4 11.5
Provision for loan losses 2.6 5.3 (2.7) 5.6 11.7 (6.1)
Other operating revenue 84.1 84.3 (0.2) 167.2 163.6 3.6
Other operating expense 167.2 144.9 22.3 311.4 286.6 24.8
---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes 69.3 81.7 (12.4) 156.1 159.7 (3.6)
Provision for income taxes 19.5 24.5 (5.0) 46.2 45.5 0.7
Taxable-equivalent adjustment 7.3 6.8 0.5 14.2 13.8 0.4
---------- ---------- ---------- ---------- ---------- ----------
Net income $ 42.5 $ 50.4 $ (7.9)$ 95.7 $ 100.4 $ (4.7)
========== ========== ========== ========== ========== ==========
Yield on earning assets 7.64% 7.86% -0.22% 7.58% 7.98% -0.40%
Cost of interest-bearing liabilities 3.26% 3.37% -0.11% 3.17% 3.46% -0.29%
---------- ---------- ---------- ---------- ---------- ----------
Interest spread 4.38% 4.49% -0.11% 4.41% 4.52% -0.11%
Impact of interest-free funds 0.71% 0.71% 0.00% 0.69% 0.72% -0.03%
---------- ---------- ---------- ---------- ---------- ----------
Net interest margin 5.09% 5.20% -0.11% 5.10% 5.24% -0.14%
========== ========== ========== ========== ========== ==========
</TABLE>
Net interest revenue during the first six months of 1994, on a taxable
equivalent basis, was $305.9 million which was $11.5 million, or 4%, above the
level of the same period last year. The net interest margin was 5.10% during
the first six months compared to 5.24% a year earlier. The increase in net
interest revenue was attributable to the higher average earning asset balances,
up 6.7% from a year earlier, partially offset by the reduced net interest
margin. The margin has been compressed as a result of narrowing interest rate
spreads between earning assets and liabilities.
Table 2 shows the components of interest revenue and expense along with
changes related to volumes and rates. Total interest revenue on a taxable-
equivalent basis increased by 1.4% to $454.4 million during the first six
months of 1994 compared to the same period last year. This resulted from a 6.8%
increase in average earning assets, partially offset by lower interest rates.
-6-
The rate received on earning assets declined from 7.98% in the first six months
of 1993 to 7.58% in the same period in 1994. Loan revenue increased $17.4
million, or 5.1%, in the first six months of 1994 compared to the same period
last year. The increased loan balances, up 10.7% from the same period last year
accounted for the increase in revenue, which was partially offset by lower
interest rates. The entire increase in loan revenue was due to commercial loans
While consumer loan balances have increased, they were more than offset by the
lower rates earned.
Total interest expense was $148.5 million during the first six months in 1994,
a reduction of $5.5 million, or 3.3%, from the same period last year. The
interest rates on liabilities, declining from 3.46% in 1993 to 3.17% in 1994,
produced the lower expense. Expense on total deposits decreased $15.9 million,
or 11.8% in the first six months of 1994 compared to the same period last year,
due entirely to lower interest rates. Interest paid on borrowed funds increased
$10.8 million, or 57.4%, due mainly to higher average balances.
<TABLE>
Table 2. Analysis of interest revenue and expense
<CAPTION>
Six months ended June 30
----------------------
Interest Total Due to
--------------------- ---------------------
1994 1993 Change Volume Rate
---------- ---------- ---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Interest-bearing deposits $ $ $ $ $
with banks 144 1,215 (1,071) (1,533) 462
Federal funds sold and
resale agreements 3,365 2,488 877 328 549
Trading account securities 686 484 202 103 99
Investment securities 90,054 101,126 (11,072) (2,143) (8,929)
Commercial loans 207,546 189,854 17,692 21,015 (3,323)
Consumer loans 152,624 152,878 (254) 14,453 (14,707)
---------- ---------- ----------
Total loans 360,170 342,732 17,438 35,430 (17,992)
---------- ---------- ----------
Total interest revenue 454,419 448,045 6,374 29,679 (23,305)
Interest-bearing demand 8,909 12,990 (4,081) 153 (4,234)
Savings passbook 17,585 19,424 (1,839) 1,189 (3,028)
Consumer time 77,280 88,105 (10,825) (2,429) (8,396)
Commercial time 15,017 14,182 835 974 (139)
---------- ---------- ----------
Total deposits 118,791 134,701 (15,910) 283 (16,193)
Short-term borrowed funds 23,247 11,867 11,380 8,297 3,083
Long-term debt 6,427 6,990 (563) (391) (172)
---------- ---------- ----------
Total interest expense 148,465 153,558 (5,093) 8,294 (13,387)
---------- ---------- ----------
Net interest revenue $ 305,954 $ 294,487 $ 11,467 19,619 (8,152)
========== ========== ==========
___________________
Calculations are computed on a taxable-equivalent basis using a tax rate
of 35% in 1994 and 34% in 1993. The change attributable to both volume
and rate has been allocated proportionately to the changes due to volume
and rate.
</TABLE>
The provision for loan losses of $5.6 million was $6.1 million lower than last
year, with net charge-offs decreasing $3.2 million from the same period last
year. Net charge-offs for the first six months were at a level of .11% of
average outstanding loans compared to .20% a year earlier. Credit card charge-
offs have decreased to 1.83% of outstanding loans during the second quarter of
1994 from a level of 2.42% during the same period last year. This level of
charge-offs may not be representative of full year results. The reserve for
loan losses represented 1.91% of total loans at June 30, 1994, down from the
year-end level of 1.95% and 2.07% a year earlier.
Nonperforming assets were $76.9 million at June 30, 1994, which amounted to
.83% of total loans and other real estate. This was a $3.1 million decrease
from the March 31, 1994 level. Nonperforming real estate related assets
decreased $4.0 million during the second quarter. Commercial nonperforming
loans increased $1.6 million, while consumer nonperforming loans decreased
$724,000. commercial nonperforming assets represent the major portion of the
nonperforming portfolio, with the balance at June 30, 1994 of $41.7 million,
or 54%, of total nonperforming assets. Real estate related nonperforming
assets currently represent 38% of the nonperforming portfolio.
-7-
Other operating revenue rose by 2% to a level of $167.2 million. While this
first six months growth is less than the 14% achieved during 1993, Firstar
anticipates stronger growth later in the year. Firstar continues to emphasize
growth in non-interest revenue. This focus provides several benefits to
Firstar. Much of Firstar's fee revenue is not subject to the fluctuations that
are inherent in the interest rate cycle. Firstar's broad customer base
provides opportunities for expanded revenues as the marketplace looks to
financial institutions for services beyond traditional lending and deposit
activities. Table 3 shows the composition of other operating revenue.
<TABLE>
Table 3. Other operating revenue
<CAPTION>
Six months ended
June 30
---------------------
1994 1993 Change
---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C>
Trust and investment management fees $ 59,765 $ 54,373 9.92 %
Service charges on deposit accounts 36,592 35,356 3.50
Credit card service revenue 25,700 24,970 2.92
Data processing fees 10,380 10,912 (4.88)
Mortgage banking revenue 8,731 11,429 (23.61)
Insurance revenue 4,565 4,688 (2.62)
Brokerage revenue 4,049 4,331 (6.51)
International fees 2,768 2,593 6.75
Foreign exchange gains 950 730 30.14
ATM fees 1,864 1,703 9.45
Safe deposit fees 1,721 1,723 (0.12)
Trading securities gains (losses) (513) 1,188 (143.18)
Municipal finance fees 398 970 (58.97)
Investment securities gains 52 82 (36.59)
Other 10,187 8,562 18.98
---------- ----------
Total $ 167,209 $ 163,610 2.20
========== ==========
</TABLE>
Other operating revenue now represents 35% of Firstar's revenue. An industry
measure of fee revenue prominence is the ratio of this revenue stream to average
assets. During the first six months of 1994, this ratio was 2.51% compared
to 2.60% during the same period last year.
Trust and investment management fees are the single largest source of fee
revenue, contributing $59.8 million, or 36%, of other operating revenue. This
level represents a 9.9% growth in revenue during the first six months of 1994
compared to the same period last year. Trust assets under management were
$14.5 billion on June 30, 1994, a $129 million decrease from the year-end
level, reflecting general market declines. Additional assets held in custody
accounts rose 1.8% to $40.5 billion since year-end.
Revenue from service charges on deposit accounts increased 3.5% in the first
six months of 1994 to a level of $36.6 million. This growth resulted from an
increase in deposits, along with increased service volume on business accounts.
Credit card service revenues are the third largest source of fee revenue
totaling $25.7 million during the first six months of 1994, which was a 2.9%
increase over the same period last year.
Revenue from mortgage banking activities decreased 23.6% to $8.7 million
during the first six months of 1994 compared to the same period last year,
due to substantially reduced refinancing activity resulting from higher
interest rates.
Data processing fee income declined 4.9% in the first six months of 1994
from the same period last year. A shrinking customer base due to continuing
bank consolidations through mergers or acquisitions and conversions by
smaller community banks to in-house data processing systems have acted to
reduce revenues.
The remaining sources of other operating revenue derive from a wide range
of services and collectively increased by 4.8%, exclusive of trading and
investment securities transactions, in the first six months of 1994 compared
to the same period last year.
-8-
Other operating expense increased to a level of $311.4 million. Excluding
the processing loss, the increase was less than 1%. Personnel costs rose by
5% to a level of $163.4 million due in the most part to merit increases taking
effect at the beginning of the year. Nonpersonnel costs, excluding the
processing loss decreased 4%. The efficiency ratio, which is the ratio of
expense to revenue improved further during the quarter. This ratio, excluding
excluding the processing loss, was 61.2% in the first six months of 1994
compared to 62.6% a year earlier. It is Firstar's goal to reach a 60%
efficiency ratio in 1995. The detail of other expense is shown in table 4.
<TABLE>
Table 4. Other operating expense
<CAPTION>
Six months ended
June 30
---------------------
1994 1993 Change
---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C>
Salaries $ 131,336 $ 123,364 6.46 %
Employee benefits 32,049 32,385 (1.04)
---------- ----------
Total personnel expense 163,385 155,749 4.90
Net occupancy expense 23,824 23,578 1.04
Equipment expense 23,883 23,798 0.36
Business development 10,573 10,292 2.73
F.D.I.C. insurance 11,975 12,022 (0.39)
Stationery and supplies 8,295 8,775 (5.47)
Delivery 6,844 7,157 (4.37)
Professional fees 6,911 6,987 (1.09)
Information processing expense 7,583 7,406 2.39
Amortization of intangibles 4,079 6,821 (40.20)
Employee education/recruiting 3,635 3,167 14.78
Federal Reserve processing fees 2,379 2,573 (7.54)
Commissions and service fees 2,543 2,685 (5.29)
Wire communication 2,592 2,118 22.38
Processing and other losses 23,529 1,542 1,425.88
Credit card assessment fees 1,990 1,745 14.04
Net other real estate expense (842) 1,397 (160.27)
Published information 1,061 1,149 (7.66)
Insurance 562 612 (8.17)
Other 6,550 7,048 (7.07)
---------- ----------
Total nonpersonnel expense 147,966 130,872 13.06
---------- ----------
Total other operating expense $ 311,351 $ 286,621 8.63
========== ==========
</TABLE>
Total assets on June 30, 1994 were $13.8 billion, an increase of $804.7
million from the same time last year.
Earning assets totaled $12.4 billion on June 30, 1994, an increase of $912
million, or 7.9%, over June 30, 1993. Loans, the largest category of earning
assets, represented 74.2% of earning assets as compared to 72.9% a year
earlier. Total loans were $9.2 million on June 30, 1994, an increase of
824.3 million, or 9.8%, over the 1993 level.
Commercial loans, which account for 60% of the loan portfolio, increased by
$528 million, or 10.6%, to $5.5 billion on June 30, 1994. Consumer loans
totaled $3.7 billion, an increase of $297 million, or 8.7%, compared to the
same time last year.
Short-term investments, which include interest-bearing deposits with banks,
trading account securities and federal funds sold and resale agreements,
totaled $246.5 million on June 30, 1994, an increase of $51.4 million, or
26.3%, from a year earlier.
Investment securities represent 24% of earning assets. They totaled $3.0
billion on June 30, 1994, an increase of $37 million, or 1.3%, over last year.
The average maturity of the portfolio was 2.5 years at the end of June.
Total fund sources, consisting of deposits and borrowed funds, increased by
$689 million, or 5.9%, to $12.4 billion on June 30, 1994. Total deposits were
$10.5 billion, an increase of $5 million, or less than 1% over a year earlier.
-9-
Core deposits, which include transaction accounts and consumer deposits,
equaled $9.5 billion on June 30, 1994, a decrease of $105 million, or 1.1%,
from last year. Lower business demand deposits, which fluctuate with interest
rate levels, produced the decline in core deposits. Core deposits represent
77% of fund sources. Commercial time deposits were increased by $110 million.
Short-term borrowed funds were increased by $680 million, or 63%, which was
used in part to fund the loan growth.
Stockholders' equity totaled $1,212.0 million at the end of the second
quarter, an increase of $56.1 million from the level at year-end and $87.2
million over last year. Total equity as a percent of total assets amounted
to 8.77%. Under risk-based capital rules, total capital is 13.29% of risk-
adjusted assets, compared to an 8% requirement. A summary of capital components
and ratios is shown in tabel 5.
<TABLE>
Table 5. Capital components and ratios
<CAPTION>
June 30 December 31 June 30
1994 1993 1993
---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C>
Risk-based capital:
Stockholders' equity $1,212,011 $1,155,897 $1,124,804
Minority interest in subsidiaries 2,435 2,214 2,048
Less goodwill (72,026) (72,602) (74,991)
---------- ---------- ----------
Total Tier I capital 1,142,420 1,085,509 1,051,861
Allowable reserve for loan losses 126,155 123,953 115,741
Allowable long-term debt 56,374 81,486 81,638
---------- ---------- ----------
Total Tier II capital 182,529 205,439 197,379
---------- ---------- ----------
Total capital $1,324,949 $1,290,948 $1,249,240
========== ========== ==========
Risk-adjusted assets $9,971,092 $9,792,746 $9,126,774
Tier I capital to risk-adjusted assets 11.46% 11.08% 11.53%
Total capital to risk-adjusted assets 13.29% 13.18% 13.69%
Tier I leverage ratio 8.50% 8.30% 8.30%
</TABLE>
The Board of Directors declared a quarterly dividend to common stockholders
of 30 cents per share which is payable August 15 to shareholders of record
August 1.
-10-
FIRSTAR CORPORATION AND SUBSIDIARIES
ADDITIONAL FINANCIAL DATA (Unaudited)
- - --------------------------------------------------------------------------
<TABLE>
Selected Financial Data
(Thousands of dollars, except per share)
<CAPTION>
Quarter ended June 30 Six Months ended June 30
---------------------- -------------------------
1994 1993 1994 1993
----------------------------------------------------
<S> <C> <C> <C> <C>
Earnings and Dividends
Net income $ 42,505 $ 50,397 $ 95,727 $ 100,423
Per common share:
Net income 0.66 0.78 1.49 1.56
Dividends 0.30 0.26 0.56 0.48
Stockholders' equity 18.85 16.95
Performance Ratios
Return on average assets 1.26 % 1.58 % 1.44 % 1.60 %
Return on average common equity 14.13 18.77 16.21 19.12
Dividend payout ratio 45.45 33.33 37.60 30.77
Equity to assets 8.77 8.64
Net loan charge-offs as a percentage
of average loans 0.11 0.20 0.11 0.20
Nonperforming assets as a
percentage of loans and other
real estate 0.83 0.91
Net interest margin 5.09 5.20 5.10 5.24
Statistical Data
Full-time equivalent staff 8,720 8,589
Number of common stockholders 9,900 9,788
Average common shares
outstanding (000's) 64,300 63,448 64,337 63,290
Actual common shares
outstanding (000's) 64,282 63,427
Stock Price Information
High $ 35.375 $ 37.25 $ 35.375 $ 37.25
Low 33 29.5 29.75 29.5
Close 35.375 32.5 35.375 32.5
</TABLE>
-11-
FIRSTAR CORPORATION AND SUBSIDIARIES
ADDITIONAL FINANCIAL DATA (Unaudited)
- - ------------------------------------------------------------------------------
<TABLE>
Consolidated Average Balance Sheets, Net Interest Revenue and Rate Analysis
(Thousands of Dollars)
<CAPTION>
Quarter ended June 30
------------------------------------------------------------------
1994 1993
---------------------------------- -------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
---------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-bearing deposits
with banks $ 4,618 $ 71 6.17 % $ 16,364 $ 196 4.80 %
Federal funds sold and
resale agreements 164,043 1,708 4.18 155,471 1,181 3.05
Trading account securities 22,388 378 6.77 19,741 280 5.69
Investment securities:
Taxable 1,963,294 28,994 5.92 2,035,656 33,470 6.59
Nontaxable 946,767 16,479 6.96 928,260 16,681 7.19
----------- --------- ----------- ---------
Total investment
securities 2,910,061 45,473 6.26 2,963,916 50,151 6.78
Loans:
Commercial 5,456,744 108,542 7.98 4,884,778 95,370 7.83
Consumer 3,649,079 76,632 8.42 3,327,349 75,890 9.14
----------- --------- ----------- ---------
Total loans 9,105,823 185,174 8.15 8,212,127 171,260 8.36
----------- --------- ----------- ---------
Interest earning assets 12,206,933 232,804 7.64 11,367,619 223,068 7.86
Reserve for loan losses (175,549) (172,669)
Cash and due from banks 859,063 935,376
Other assets 637,633 639,104
----------- -----------
Total assets $13,528,080 $12,769,430
=========== ===========
Liabilities and
Stockholders' Equity
Interest-bearing demand $ 1,412,188 $ 4,412 1.25 % $ 1,410,267 $ 6,226 1.77 %
Savings passbook 1,557,400 8,888 2.29 1,482,016 9,687 2.62
Consumer time 4,063,764 39,304 3.88 4,162,160 42,793 4.12
Commercial time 1,021,103 8,216 3.23 918,138 7,036 3.07
Short-term borrowed funds 1,405,429 13,801 3.94 872,175 6,298 2.90
Long-term debt 126,817 3,210 10.12 131,101 3,369 10.28
----------- --------- ----------- ---------
Interest-bearing liabilities 9,586,701 77,831 3.26 8,975,857 75,409 3.37
Demand deposits 2,487,797 2,453,086
Other liabilities 247,141 231,267
Stockholders' equity 1,206,441 1,109,220
----------- -----------
Total liabilities and
stockholders' equity $13,528,080 $12,769,430
=========== ===========
Net interest
revenue/margin $ 154,973 5.09 % $ 147,659 5.20 %
========= =========
Six months ended June 30
---------------------------------- -------------------------------
1994 1993
--------------------------------- -------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
---------------------------------- -------------------------------
Assets
Interest-bearing deposits
with banks $ 4,605 $ 144 6.31 % $ 62,037 $ 1,215 3.95 %
Federal funds sold and
resale agreements 181,238 3,365 3.74 161,460 2,488 3.11
Trading account securities 20,589 686 6.72 17,239 484 5.66
Investment securities:
Taxable 1,952,040 57,657 5.94 2,009,733 67,216 6.72
Nontaxable 929,551 32,397 6.97 935,381 33,910 7.25
----------- --------- ----------- ---------
Total investment
securities 2,881,591 90,054 6.27 2,945,114 101,126 6.89
Loans:
Commercial 5,366,481 207,546 7.80 4,824,357 189,854 7.93
Consumer 3,617,105 152,624 8.49 3,290,454 152,878 9.34
----------- --------- ----------- ---------
Total loans 8,983,586 360,170 8.07 8,114,811 342,732 8.50
----------- --------- ----------- ---------
Interest earning assets 12,071,609 454,419 7.58 11,300,661 448,045 7.98
Reserve for loan losses (175,545) (171,581)
Cash and due from banks 885,102 911,991
Other assets 635,548 637,199
----------- -----------
Total assets $13,416,714 $12,678,270
=========== ===========
Liabilities and
Stockholders' Equity
Interest-bearing demand $ 1,429,603 $ 8,909 1.26 % $ 1,407,022 $ 12,990 1.86 %
Savings passbook 1,546,232 17,585 2.29 1,453,139 19,424 2.70
Consumer time 4,047,266 77,280 3.85 4,208,287 88,105 4.22
Commercial time 970,953 15,017 3.12 908,786 14,182 3.15
Short-term borrowed funds 1,319,975 23,247 3.55 824,332 11,867 2.90
Long-term debt 126,546 6,427 10.16 139,305 6,990 10.04
----------- --------- ---------
Interest-bearing liabilities 9,440,575 148,465 3.17 8,940,871 153,558 3.46
Demand deposits 2,535,732 2,417,960
Other liabilities 249,527 228,243
Stockholders' equity 1,190,880 1,091,196
----------- -----------
Total liabilities and
stockholders' equity $13,416,714 $12,678,270
===========
Net interest
revenue/margin $ 305,954 5.10 % $ 294,487 5.24 %
========= =========
</TABLE>
-12-
PART II. OTHER INFORMATION
Item 5. Other Information
On July 31, 1994, Firstar announced it had reached an agreement to
acquire First Colonial Bankshares Corporation. First Colonial is a
$1.8 billion holding company with 17 banks and 30 offices in the
Chicago area. The agreement calls for Firstar to exchange .7725 of
its shares for each outstanding share of the Class A and Class B
common stock of First Colonial. Firstar also will issue up to 39,700
shares of new Series D convertible preferred stock for all the
outstanding preferred shares of First Colonial. Based on the July 29,
1994 closing price of Firstar stock, the total value of the
transaction is $314 million. Firstar expects to complete this
transaction in the first quarter of 1995 subject to approval by
regulators and First Colonial shareholders.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2. Agreement and Plan of Reorganization among
Firstar Corporation, Firstar Corporation of
Illinois and First Colonial Bankshares
Corporation dated July 31, 1994.
(b) No reports on Form 8-K were filed during the quarter.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
FIRSTAR CORPORATION
/s/ William H. Risch
----------------------
August 11, 1994 William H. Risch
Senior Vice President-Finance and
Treasurer (Chief Financial Officer)
-13-
EXHIBIT 2
EXECUTED
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
FIRSTAR CORPORATION,
FIRSTAR CORPORATION OF ILLINOIS
AND
FIRST COLONIAL BANKSHARES CORPORATION
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01. The Merger . . . . . . . . . . . . . . . . . . . . . . . 1
1.02. Effective Time of the Merger . . . . . . . . . . . . . . 1
1.03. Closing . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04. Form of Transaction . . . . . . . . . . . . . . . . . . 2
ARTICLE II
EFFECT OF THE MERGER ON CAPITAL STOCK . . . . . . . . . . . . . . . . 2
2.01. Effect on Capital Stock of First Colonial . . . . . . . 2
2.02. Effect on Options to Purchase FCBC Class A Common Stock 3
2.03. Effect on Common Stock of Sub . . . . . . . . . . . . . 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FIRST COLONIAL . . . . . . . . . . 4
3.01. Organization, Standing and Power . . . . . . . . . . . . 4
3.02. First Colonial Subsidiaries . . . . . . . . . . . . . . 5
3.03. Capital Structure . . . . . . . . . . . . . . . . . . . 5
3.04. Authority . . . . . . . . . . . . . . . . . . . . . . . 8
3.05. First Colonial Financial Statements . . . . . . . . . . 9
3.06. Reports . . . . . . . . . . . . . . . . . . . . . . . . 10
3.07. Information Supplied . . . . . . . . . . . . . . . . . . 10
3.08. Authorizations; Compliance with Applicable Laws . . . . 11
3.09. Litigation and Claims . . . . . . . . . . . . . . . . . 12
3.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.11. Certain Agreements . . . . . . . . . . . . . . . . . . . 14
3.12. Benefit Plans . . . . . . . . . . . . . . . . . . . . . 15
3.13. Insurance . . . . . . . . . . . . . . . . . . . . . . . 16
3.14. Conduct of First Colonial to Date . . . . . . . . . . . 17
3.15. Material Adverse Change . . . . . . . . . . . . . . . . 18
3.16. Properties, Leases and Other Agreements . . . . . . . . 18
3.17. Opinion of Financial Advisor . . . . . . . . . . . . . . 19
3.18. Vote Required . . . . . . . . . . . . . . . . . . . . . 19
3.19. Accounting and Tax Matters . . . . . . . . . . . . . . . 19
3.20. Dissenters' Rights . . . . . . . . . . . . . . . . . . . 19
3.21. Affiliates . . . . . . . . . . . . . . . . . . . . . . . 19
3.22. Regulatory Impediments . . . . . . . . . . . . . . . . . 19
3.23. Full Disclosure . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FIRSTAR AND SUB . . . . . . . . . . 20
4.01. Organization, Standing and Power . . . . . . . . . . . . 20
4.02. Firstar Subsidiaries . . . . . . . . . . . . . . . . . . 20
4.03. Capital Structure . . . . . . . . . . . . . . . . . . . 21
4.04. Authority . . . . . . . . . . . . . . . . . . . . . . . 21
4.05. Firstar Financial Statements . . . . . . . . . . . . . . 22
4.06. Reports . . . . . . . . . . . . . . . . . . . . . . . . 23
4.07. Information Supplied . . . . . . . . . . . . . . . . . . 23
4.08. Authorizations; Compliance with Applicable Laws . . . . 23
4.09. Litigation and Claims . . . . . . . . . . . . . . . . . 24
4.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.11. Certain Agreements . . . . . . . . . . . . . . . . . . . 25
4.12. Benefit Plans . . . . . . . . . . . . . . . . . . . . . 25
4.13. Absence of Certain Changes or Events . . . . . . . . . . 26
4.14. Properties, Leases and Other Agreements . . . . . . . . 26
4.15. Accounting and Tax Matters . . . . . . . . . . . . . . . 27
4.16. Material Adverse Change . . . . . . . . . . . . . . . . 27
4.17. Full Disclosure . . . . . . . . . . . . . . . . . . . . 27
4.18. Regulatory Impediments . . . . . . . . . . . . . . . . . 27
ARTICLE V
COVENANTS OF FIRST COLONIAL . . . . . . . . . . . . . . . . . . . . . 28
5.01. Affirmative Covenants . . . . . . . . . . . . . . . . . 28
5.02. Negative Covenants . . . . . . . . . . . . . . . . . . . 29
5.03. Letter of First Colonial's Accountants . . . . . . . . . 32
5.04. Access and Information . . . . . . . . . . . . . . . . . 32
5.05. Update Disclosure; Breaches . . . . . . . . . . . . . . 33
5.06. Affiliates; Accounting and Tax Treatment; Stock
Repurchases . . . . . . . . . . . . . . . . . . . . . . 33
5.07. Dissent Process . . . . . . . . . . . . . . . . . . . . 34
5.08. Expenses . . . . . . . . . . . . . . . . . . . . . . . . 34
5.09. Delivery of Stockholder List . . . . . . . . . . . . . . 35
5.10. Audited Financial Statements . . . . . . . . . . . . . . 35
5.11. Bank-Level Transactions . . . . . . . . . . . . . . . . 35
5.12. Sale of Certain Assets . . . . . . . . . . . . . . . . . 35
5.13. Allowance for Loan Losses . . . . . . . . . . . . . . . 35
5.14. Stockholder Meeting . . . . . . . . . . . . . . . . . . 35
5.15. Certain Agreements . . . . . . . . . . . . . . . . . . . 36
5.16. Environmental Matters . . . . . . . . . . . . . . . . . 36
ARTICLE VI
COVENANTS OF FIRSTAR AND SUB . . . . . . . . . . . . . . . . . . . . 38
6.01. Affirmative Covenants . . . . . . . . . . . . . . . . . 38
6.02. Negative Covenants . . . . . . . . . . . . . . . . . . . 38
6.03. Rights Plan . . . . . . . . . . . . . . . . . . . . . . 38
6.04. Access and Information . . . . . . . . . . . . . . . . . 39
6.05. Breaches . . . . . . . . . . . . . . . . . . . . . . . . 39
6.06. Stock Exchange Listing . . . . . . . . . . . . . . . . . 39
6.07. Firstar Board . . . . . . . . . . . . . . . . . . . . . 39
6.08. Indemnification . . . . . . . . . . . . . . . . . . . . 39
6.09. Accounting and Tax Treatment . . . . . . . . . . . . . . 41
6.10. Regulatory Filings . . . . . . . . . . . . . . . . . . . 41
6.11. Employee Benefits . . . . . . . . . . . . . . . . . . . 41
6.12. Form S-8 Registration Statement for Firstar Stock
Options . . . . . . . . . . . . . . . . . . . . . . . . 41
6.13. Post-Merger Financial Statements . . . . . . . . . . . . 41
ARTICLE VII
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 42
7.01. Preparation of S-4 and the Proxy Statement . . . . . . . 42
7.02. Legal Conditions to Merger . . . . . . . . . . . . . . . 42
7.03. Reports . . . . . . . . . . . . . . . . . . . . . . . . 43
7.04. Brokers or Finders . . . . . . . . . . . . . . . . . . . 43
7.05. Additional Agreements; Reasonable Efforts . . . . . . . 43
ARTICLE VIII
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . 44
8.01. Conditions to Each Party's Obligation to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.02. Conditions of Obligations of Firstar and Sub . . . . . . 44
8.03. Conditions of Obligations of First Colonial . . . . . . 47
ARTICLE IX
INDUCEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.01. Inducement . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE X
TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . . . . . 52
10.01. Termination . . . . . . . . . . . . . . . . . . . . . . 52
10.02. Environmental Conditions Termination . . . . . . . . . . 54
10.03. Effect of Termination . . . . . . . . . . . . . . . . . 55
10.04. Amendment . . . . . . . . . . . . . . . . . . . . . . . 55
10.05. Extension; Waiver . . . . . . . . . . . . . . . . . . . 55
ARTICLE XI
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.01. Nonsurvival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . . . 55
11.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . 55
11.03. Interpretation . . . . . . . . . . . . . . . . . . . . . 56
11.04. Counterparts . . . . . . . . . . . . . . . . . . . . . . 57
11.05. Entire Agreement; No Third Party Beneficiaries; Rights
of Ownership . . . . . . . . . . . . . . . . . . . . . . 57
11.06. Governing Law . . . . . . . . . . . . . . . . . . . . . 57
11.07. Publicity . . . . . . . . . . . . . . . . . . . . . . . 57
11.08. Assignment . . . . . . . . . . . . . . . . . . . . . . . 57
11.09. Knowledge of the Parties . . . . . . . . . . . . . . . . 57
<PAGE>
EXHIBIT A Plan of Merger*
EXHIBIT 2.01(b) Firstar Preferred Stock*
EXHIBIT 5.06 Affiliate Letter*
EXHIBIT 5.15 Assignment and Assumption Agreement*
EXHIBIT 10.01 Index Group
___________________
* Pursuant to Item 601(b)(2) of Regulation S-K, this exhibit is not
filed herewith. Firstar Corporation agrees to furnish supplementally
a copy of any such omitted exhibit to the Commission upon request.
<PAGE>
INDEX OF DEFINED TERMS
Section
Agreement . . . . . . . . . . . . . . . . . . . . . . . Page 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
Federal Reserve Board . . . . . . . . . . . . . . . . . 1.03
Final Index Price . . . . . . . . . . . . . . . . . . . 10.01(b)(iv)
Final Price . . . . . . . . . . . . . . . . . . . . . . 10.01(b)(iii)
First Colonial . . . . . . . . . . . . . . . . . . . . Page 1
Firstar . . . . . . . . . . . . . . . . . . . . . . . . Page 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 1
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . 6.06
Person . . . . . . . . . . . . . . . . . . . . . . . . 9.01(c)
Plan of Merger . . . . . . . . . . . . . . . . . . . . Page 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 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)
Violation . . . . . . . . . . . . . . . . . . . . . . . 3.04
Voting Agreement . . . . . . . . . . . . . . . . . . . 3.21
Voting Debt . . . . . . . . . . . . . . . . . . . . . . 3.03(e)
WBCL . . . . . . . . . . . . . . . . . . . . . . . . . 4.02
William Stock Plan . . . . . . . . . . . . . . . . . . 3.03(b)
<PAGE>
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.
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 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 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 Option and Stock Appreciation
Rights Plan (the "William Stock Option Plan"), and 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.
(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.
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 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 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 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 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 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.
(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 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").
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
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 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 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 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 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 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 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 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
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-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.
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
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.
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 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 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 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 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.
(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 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
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 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 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;
(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.
(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 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 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.
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: First Vice President
FIRSTAR CORPORATION OF ILLINOIS
By: /s/ Jon H. Stowe
Its: Vice President
Attest:
/s/ John A. Kielich
Its: First Vice President
FIRST COLONIAL BANKSHARES CORPORATION
By: /s/ C. Paul Johnson
Its: Chairman and Chief Executive
Officer
Attest:
/s/ Robert F. Sherman
Its: President
<PAGE>
EXHIBIT 10.01
INDEX GROUP
Weighting
Company Factor
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
