<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1996 Commission File Number 1-2981
FIRSTAR CORPORATION
<TABLE>
<S> <C>
WISCONSIN 39-0711710
(State of Incorporation) (I.R.S. Employer Identification No.)
</TABLE>
777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
Telephone Number (414) 765-4321
Securities Registered Pursuant to Section 12b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
<S> <C>
Common Stock, $1.25 par value New York Stock Exchange, Inc.
Chicago Stock Exchange, Inc.
Preferred Stock, Series D Nasdaq
Preferred Share Purchase Rights New York Stock Exchange, Inc.
Chicago Stock Exchange, Inc.
</TABLE>
Securities Registered Pursuant to Section 12(g) OF THE ACT: NONE
Indicated by check mark whether 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 preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. X Yes _ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ___
As of February 28, 1997, 144,497,866 shares of common stock were
outstanding, and the aggregate market value of the shares (based upon the
closing price) held by nonaffiliates was approximately $3.8 billion.
Documents Incorporated by Reference:
Portions of the 1997 Notice of Annual Meeting and Proxy Statement are
incorporated by reference into Part III of the Form 10-K.
================================================================================
<PAGE> 2
FORM 10-K TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I
Item 1 - Business........................................ 2
Item 2 - Properties...................................... 5
Item 3 - Legal Proceedings............................... 5
Item 4 - Submission of Matters to a Vote of Security
Holders................................................ 5
PART II
Item 5 - Market for the Registrant's Common Equity and
Related Stockholder Matters............................ 5
Item 6 - Selected Financial Data......................... 6
Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations... 7
Item 8 - Financial Statements and Supplementary Data..... 28
Item 9 - Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure............. 60
PART III
Item 10 - Directors and Executive Officers of the
Registrant............................................. 60
Item 11 - Executive Compensation.......................... 60
Item 12 - Security Ownership of Certain Beneficial Owners
and Management......................................... 60
Item 13 - Certain Relationships and Related
Transactions........................................... 60
PART IV
Item 14 - Exhibits, Financial Statement Schedules and
Reports on Form 8-K.................................... 60
Signatures................................................ 62
</TABLE>
1
<PAGE> 3
PART I
ITEM 1. BUSINESS
GENERAL
Firstar Corporation is a registered bank holding company incorporated in
Wisconsin in 1929. Firstar Corporation ("Firstar") is the largest bank holding
company headquartered in Wisconsin. Firstar's two bank subsidiaries in Wisconsin
had total assets of $10.3 billion at December 31, 1996. Its one bank and savings
and loan in Iowa, one Illinois bank and one Minnesota bank had total assets of
approximately $2.9 billion, $2.8 billion and $3.0 billion, respectively, as of
December 31, 1996. Firstar has one bank in Phoenix, Arizona with total assets of
$158 million. Firstar's principal subsidiary, Firstar Bank Milwaukee, N.A., had
total assets of $6.1 billion which represented 31 percent of Firstar's
consolidated assets at December 31, 1996, and is the largest commercial bank in
Wisconsin. Subsidiary asset totals are net of intercompany balances.
Firstar provides banking services throughout Wisconsin and Iowa and in the
Chicago, Minneapolis-St. Paul and Phoenix metropolitan areas. Its Wisconsin bank
subsidiaries operate in 118 locations, with offices in eight of the ten largest
metropolitan population centers of the state, including 41 offices in the
Milwaukee metropolitan area. Its Iowa bank subsidiary operates in 51 locations;
its Illinois bank subsidiary in 40 locations; its Minnesota bank subsidiary in
31 locations; and its Arizona bank in three locations. Firstar also provides
trust services in its five-state banking locations and in Florida at two
locations. Firstar's bank subsidiaries provide a broad range of financial
services for companies based in Wisconsin, Iowa, Illinois and Minnesota,
national business organizations, governmental entities and individuals. These
commercial and consumer banking activities include accepting demand, time and
savings deposits; making both secured and unsecured business and personal loans;
and issuing and servicing credit cards. The bank subsidiaries also engage in
correspondent banking and provide trust and investment management services to
individual and corporate customers. Firstar Bank Milwaukee, N.A. also conducts
international banking services consisting of foreign trade financing, issuance
and confirmation of letters of credit, funds collection and foreign exchange
transactions. Nonbank subsidiaries provide retail brokerage services, trust and
investment management services, residential mortgage banking activities, title
insurance, business insurance, consumer and credit related insurance, and
corporate computer and operational services.
COMPETITION
Banking and bank-related services is a highly competitive business.
Firstar's subsidiaries compete primarily in Wisconsin and the Midwestern United
States. Firstar and its subsidiaries have numerous competitors, some of which
are larger and have greater financial resources. Firstar competes with other
commercial banks and financial intermediaries, such as savings banks, savings
and loan associations, credit unions, mortgage companies, leasing companies and
a variety of financial services and advisory companies located throughout the
country.
SUPERVISION
Firstar's business activities as a bank holding company are regulated by
the Federal Reserve Board under the Bank Holding Company Act of 1956 which
imposes various requirements and restrictions on its operations. The activities
of Firstar and those of its banking and nonbanking subsidiaries are limited to
the business of banking and activities closely related or incidental to banking.
The business of banking is highly regulated, and there are various
requirements and restrictions in the laws of the United States and the states in
which the subsidiary banks operate including the requirement to maintain
reserves against deposits and adequate capital to support their operations,
restrictions on the nature and amount of loans which may be made by the banks,
restrictions relating to investment (including loans to and investments in
affiliates), branching and other activities of the banks.
Firstar's subsidiary banks with a national charter are supervised and
examined by the Comptroller of the Currency. The subsidiary banks with a state
charter are supervised and examined by their respective state
2
<PAGE> 4
banking agency and either by the Federal Reserve if a member bank of the Federal
Reserve or by the FDIC if a nonmember. All of the Firstar subsidiary banks are
also subject to examination by the Federal Deposit Insurance Corporation.
In recent years Congress has enacted significant legislation which has
substantially changed the federal deposit insurance system and the regulatory
environment in which depository institutions and their holding companies
operate. The Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA"), the Comprehensive Thrift and Bank Fraud Prosecution and Taxpayer
Recovery Act of 1990 and the Federal Deposit Insurance Corporation Improvement
Act of 1991 ("FDICIA") have significantly increased the enforcement powers of
the federal regulatory agencies having supervisory authority over Firstar and
its subsidiaries. Certain parts of such legislation, most notably those which
increase deposit insurance assessments and authorize further increases to
recapitalize the bank deposit insurance fund, increase the cost of doing
business for depository institutions and their holding companies. FIRREA also
provides that all commonly controlled FDIC insured depository institutions may
be held liable for any loss incurred by the FDIC resulting from a failure of, or
any assistance given by the FDIC, to any of such commonly controlled
institutions. Federal regulatory agencies have implemented provisions of FDICIA
with respect to taking prompt corrective action when a depository institution's
capital falls to certain levels. Under the rules, five capital categories have
been established which range from "critically undercapitalized" to "well
capitalized". Failure of a depository institution to maintain a capital level
within the top two categories will result in specific actions from the federal
regulatory agencies. These actions could include the inability to pay dividends,
restricting new business activity, prohibiting bank acquisitions, asset growth
limitations and other restrictions on a case by case basis.
In addition to the impact of regulation, commercial banks are affected
significantly by the actions of the Federal Reserve Board as it attempts to
control the money supply and credit availability in order to influence the
economy. Changes to such monetary policies have had a significant effect on
operating results of financial institutions in the past and are expected to have
such an effect in the future; however, the effect of possible future changes in
such policies on the business and operations of Firstar cannot be determined.
3
<PAGE> 5
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of all the executive officers (14) of Firstar as of
December 31, 1996. All of these officers are elected annually by their
respective boards of directors. All of the officers have been employed by
Firstar and/or one or more of its subsidiaries during the past five years. There
are no family relationships among any of the executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Roger L. Fitzsimonds............................... 58 Chairman of the Board and Chief Executive
Officer of Firstar (Since February 1991)
John A. Becker..................................... 54 President and Chief Operating Officer of
Firstar (Since January 1990)
Chris M. Bauer..................................... 48 Senior Executive Vice President of Firstar
(Since January 1996)
Richard W. Schoenke................................ 53 Senior Executive Vice President of Firstar
(Since January 1996)
Steven R. Parish................................... 39 Executive Vice President of Firstar (Since
April 1996)
Jay B. Williams.................................... 45 President of Firstar Bank Illinois (Since
January 1995)
Michael J. Schmitz................................. 62 Executive Vice President of Firstar (Since
September 1990)
Jon H. Stowe....................................... 52 Executive Vice President of Firstar (Since
January 1995)
Dennis R. Fredrickson.............................. 52 Senior Vice President of Firstar (Since
October 1988)
Larry A. Greves.................................... 49 Senior Vice President of Firstar (Since
January 1992)
John R. Heistad.................................... 50 Senior Vice President and Chief Credit
Officer of Firstar (Since January 1992)
Howard H. Hopwood III.............................. 51 Senior Vice President and General Counsel of
Firstar (Since January 1986)
Ronald E. Roder.................................... 48 Senior Vice President of Firstar Bank
Milwaukee (Since December 1988)
Jeffrey B. Weeden.................................. 40 Senior Vice President--Finance and Treasurer
and Chief Financial Officer of Firstar
(Since April 1996)
</TABLE>
4
<PAGE> 6
ITEM 2. PROPERTIES
On December 31, 1996, Firstar had 243 banking locations, of which 165 were
owned and 78 were leased. All of these offices are considered by management to
be well maintained and adequate for the purpose intended. See Note 6 of the
Notes to Consolidated Financial Statements included under Item 8 of this
document for further information on properties.
ITEM 3. LEGAL PROCEEDINGS
Firstar and its subsidiaries are subject to various legal actions and
proceedings in the normal course of business, some of which involve substantial
claims for compensatory or punitive damages. Although litigation is subject to
many uncertainties and the ultimate exposure with respect to these matters
cannot be ascertained, management does not believe that the final outcome will
have a material adverse effect on the financial condition of Firstar.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
See Item 6 of this document for information on stock price ranges and
dividends. The principal markets for the quotations of stock prices are the New
York Stock Exchange and Chicago Stock Exchange. There were 11,593 holders of
record of Firstar's $1.25 par value Common Stock on February 28, 1997.
5
<PAGE> 7
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years Ended December 31
----------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
(thousands of dollars, except per share)
<S> <C> <C> <C> <C> <C>
EARNINGS AND DIVIDENDS
Net interest revenue...................... $750,379 $725,947 $698,838 $659,939 $626,371
Provision for loan losses................. 42,647 36,756 23,891 29,090 50,733
Other operating revenue................... 440,452 392,197 370,619 392,918 347,936
Other operating expense................... 773,637 734,122 706,185 689,274 655,444
Net income................................ 250,177 228,913 226,673 227,938 185,999
Per common share:
Net income.............................. 1.68 1.50 1.49 1.50 1.25
Dividends............................... .74 .66 .58 .50 .40
Stockholders' equity.................... 11.26 10.31 9.73 8.89 7.91
Average common shares (000's)............. 148,061 151,432 150,391 148,262 143,983
- ------------------------------------------
PERFORMANCE RATIOS
Return on average assets.................. 1.31% 1.26% 1.37% 1.49% 1.29%
Return on average common equity........... 15.95 15.11 15.96 17.81 16.65
Equity to assets.......................... 8.62 7.95 8.41 8.28 7.94
Total risk-based capital.................. 13.47 12.45 13.18 13.17 13.10
Net loan charge-offs as a percentage of
average loans........................... .30 .27 .25 .25 .40
Nonperforming assets as a percentage of
loans and foreclosed assets............. .72 .77 .69 .81 1.17
Net interest margin....................... 4.51 4.55 4.89 5.04 5.11
Efficiency ratio*......................... 58.18 61.43 61.75 63.53 65.13
Fee revenue as a percentage of average
assets.................................. 2.30 2.18 2.26 2.56 2.39
- ------------------------------------------
(millions of dollars)
BALANCE SHEET AT DECEMBER 31
Total assets.............................. $ 19,767 $ 19,168 $ 17,994 $ 16,412 $ 15,561
Securities................................ 4,217 4,475 3,974 3,360 3,279
Loans:
Commercial loans........................ 7,312 6,966 6,710 5,996 5,472
Consumer loans.......................... 3,224 2,944 2,813 2,561 2,229
Consumer mortgage loans................. 2,660 2,723 2,383 2,268 2,115
Total loans.......................... 13,196 12,633 11,906 10,825 9,816
Earning assets............................ 17,626 17,233 16,293 14,551 13,617
Deposits:
Core deposits........................... 14,369 13,403 12,818 12,689 12,311
Other deposits.......................... 845 909 591 444 445
Total deposits....................... 15,214 14,312 13,409 13,133 12,756
Short-term borrowed funds................. 1,869 2,303 2,196 1,178 900
Long-term debt............................ 547 734 574 486 426
Trust capital securities.................. 150
Stockholders' equity...................... 1,704 1,525 1,513 1,359 1,237
- ------------------------------------------
STOCK PRICE INFORMATION
High............................................... $ 26 7/8 $ 20 1/2 $ 17 11/16 $ 18 5/8 $ 15 15/16
Low................................................ 18 5/16 13 1/8 12 9/16 14 11/16 11 9/16
Close.............................................. 26 1/4 19 13/16 13 7/16 15 3/8 15 3/4
- ---------------------------------------------------
</TABLE>
* The calculation excludes nonrecurring items in 1996, 1995 and 1994.
All share and per share amounts have been adjusted to reflect the two-for-one
stock split completed in February 1997.
6
<PAGE> 8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING INFORMATION
This review contains forward looking statements concerning Firstar's
business results that are based on estimates. Actual results could differ
materially due to factors such as changes in economic conditions, compression of
net interest revenue due to unanticipated declines in net interest margins and
outstanding loan balances, unanticipated delays in cost reduction and revenue
enhancements, and the ability of the company to attract and retain qualified
personnel. Therefore, there can be no assurances that actual results will
correspond to these forward-looking statements.
HIGHLIGHTS
Firstar recorded net income in 1996 of $250.2 million, a 9.3% increase over
the $228.9 million earned in 1995. On a per common share basis, 1996 net income
increased to $1.68 from $1.50 earned in 1995, representing a 12.0% increase. In
1994, net income was $226.7 million, or $1.49 per common share.
Return on average common equity was 15.95% in 1996 compared with 15.11% in
1995 and 15.96% in 1994. Return on average assets for 1996 was 1.31% compared
with 1.26% in 1995 and 1.37% in 1994.
Earnings during the past three years included unusual expenses which
lowered each year's reported net income. In 1996, Firstar incurred total net
special charges of $33.4 million after tax, or $.23 per share. A corporate wide
restructuring program was announced in early 1996 and a charge of $53.3 million
pre-tax, or $.22 per share, was taken to cover implementation costs. Also
included in 1996 was the Savings Association Insurance Fund charge of $.03 per
share. A gain of $.02 per share from the favorable settlement of prior years tax
items was also realized in 1996. During 1995 charges were taken in connection
with four completed bank acquisitions. These expenses totaled $43.0 million
pre-tax and reduced net income by $.18 per share. During 1994, a $22 million
pre-tax charge was recorded for a check kiting fraud which reduced net income by
$.09 per share.
Exclusive of these items, operating earnings per share would have shown
sound growth of 13.7% in 1996 and 6.3% in 1995. Return on average common equity
absent these charges would have been 18.09% in 1996 compared with 16.95% in 1995
and 16.90% in 1994.
Major factors affecting underlying earning trends during the past three
years were:
- Net interest revenue, on a taxable equivalent basis, increased by 3.3% in
1996 following a similar increase of 3.5% during 1995. Increased average
earning asset balances during these periods contributed to higher net
interest revenue.
- Net interest margins were further compressed, with the 1996 margin at
4.51% compared with 4.55% in 1995 and 4.89% in 1994.
- Growth in major fee revenue businesses continued, with trust and
investment management fees up over 10% in both 1996 and 1995. Credit card
revenue was up 12.6% in 1996 and 11.2% in 1995. Overall, fee revenue grew
by 10.7% in 1996 and 5.8% in 1995.
- Increased credit card charge-off levels have been reflected in the higher
provision for loan losses taken in 1996.
- Operating expenses before special charges increased by only .2% during
1996 reflecting both cost reductions from the restructuring program and
reduced FDIC insurance partially offset by expenses added through bank
acquisitions completed in 1996.
Total nonperforming assets were $95.0 million at the end of the year, a
decrease of $2.9 million from the prior year end. Nonperforming assets now
represent .72% of total loans and foreclosed assets compared with .77% a year
earlier.
7
<PAGE> 9
Stockholders' equity stood at $1.7 billion at the end of 1996. Market
capitalization was $3.9 billion, an increase of 36% from a year earlier. Capital
strength, by all measures, remains strong.
NET INTEREST REVENUE
Net interest revenue, which comprises interest and loan-related fees less
interest expense, is the principal source of earnings for Firstar. Net interest
revenue is affected by a number of factors including the level, pricing and
maturity of earning assets and interest-bearing liabilities, interest rate
fluctuations and asset quality. The net interest margin is net interest revenue
expressed as a percentage of average earning assets. To permit comparisons, net
interest revenue and margins in the accompanying discussion and tables have been
adjusted to show tax-exempt income, such as interest on municipal securities and
loans, on a taxable-equivalent basis. Table 1 shows the components of net
interest revenue, net income and net interest margin for the last three years.
TABLE 1
CONDENSED INCOME STATEMENTS -- TAXABLE-EQUIVALENT BASIS
<TABLE>
<CAPTION>
Change from Prior Year
--------------------------------------
1996 vs 1995 1995 vs 1994
---------------- ----------------
1996 1995 1994 Amount Percent Amount Percent
-------- -------- -------- ------ ------- ------ -------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest revenue..................... $1,383.1 $1,347.8 $1,119.7 $35.3 2.6% $228.1 20.4%
Taxable-equivalent adjustment........ 33.9 33.4 35.0 0.5 1.5 (1.6) (4.6)
-------- -------- -------- ----- ------
Interest
revenue--taxable-equivalent...... 1,417.0 1,381.2 1,154.7 35.8 2.6 226.5 19.6
Interest expense..................... 632.7 621.8 420.9 10.9 1.8 200.9 47.7
-------- -------- -------- ----- ------
Net interest revenue --
taxable-equivalent............... 784.3 759.4 733.8 24.9 3.3 25.6 3.5
Provision for loan losses............ 42.6 36.8 23.9 5.8 15.8 12.9 54.0
Other operating revenue.............. 440.4 392.2 370.6 48.2 12.3 21.6 5.8
Other operating expense.............. 773.6 734.1 706.1 39.5 5.4 28.0 4.0
-------- -------- -------- ----- ------
Income before income taxes......... 408.5 380.7 374.4 27.8 7.3 6.3 1.7
Provision for income taxes........... 124.4 118.4 112.7 6.0 5.7
Taxable-equivalent adjustment........ 33.9 33.4 35.0 .5 (1.6)
-------- -------- -------- ----- ------
Net income......................... $ 250.2 $ 228.9 $ 226.7 $21.3 9.3 $ 2.2 1.0
======== ======== ======== ===== ======
Yield on earning assets.............. 8.14% 8.28% 7.69% (.14)% .59%
Cost of interest-bearing
liabilities........................ 4.48 4.59 3.51 (.11) 1.08
-------- -------- -------- ----- ------
Interest spread...................... 3.66 3.69 4.18 (.03) (.49)
Impact of interest-free funds........ .85 .86 .71 (.01) .15
-------- -------- -------- ----- ------
Net interest margin................ 4.51% 4.55% 4.89% (.04)% (.34)%
======== ======== ======== ===== ======
</TABLE>
During 1996, net interest revenue increased 3.3% to $784.3 million. This
follows a similar growth of 3.5% in 1995. The growth in both years benefited
from higher average earning asset balances. Average earning assets rose by 4.2%
during 1996, mostly attributable to assets acquired through bank acquisitions.
This compared to a 11.2% increase in average earning assets in 1995. This
positive impact was somewhat offset by a reduction in the net interest margin in
both years.
The net interest margin for 1996 was 4.51% compared with 4.55% in 1995 and
4.89% in 1994. The margin has been relatively stable during the past two years
with the margin generally trending upward on a quarterly basis during 1996.
Changes in overall interest rates during the past two years were moderate and
thus more predictable than was the case in 1994. During that year the prime rate
rose from 6.00% to 8.50% and together with other market rate swings reduced
Firstar's margin by .34% from 1994 to 1995.
The rates earned on average earning assets in 1996 declined by .14%, or 14
basis points, due primarily as a result of lower commercial loan rates. The
corresponding reduction in the cost of funds rate was 11 basis points, thus
reducing the net interest margin in 1996. The decline in the margin from 1994 to
1995 is seen in the 108 basis point increase in the rate paid on fund sources
which was matched by only a 59 basis point
8
<PAGE> 10
increase in the earning asset rate. Also there was a shift in the earning assets
mix in 1995 to securities which reduced the overall return on earning assets.
Benefiting the 1995 margin was, however, the 15 basis point increase
attributable to interest free funds supporting earning assets. The higher rate
environment places a higher value on these interest free funds.
Foregone interest on nonperforming loans and foreclosed assets reduced net
interest revenue by $4.9 million in 1996, $5.4 million in 1995 and $5.7 million
in 1994. This resulted in corresponding reductions in net interest margin of
.03% in each of the last three years. This nominal impact is a reflection of
Firstar's continued low level of nonperforming assets.
Table 2 shows the components of interest revenue and expense along with
changes related to volumes and rates. Total interest revenue increased by 2.6%
to $1.42 billion in 1996. This resulted from an increase of 4.2% in average
earning assets partially offset by the decline in the rate earned. Interest
income on loans rose by 2.9% due to loan balance increases attributable to bank
acquisitions partially offset by lower loan yields. Securities income rose with
the higher average balance levels. During 1995, total interest revenue increased
by 19.6% to $1.38 billion. This resulted from higher average earning assets, up
11.2%, and the increased yield on earning assets. Interest income on loans rose
by 18.1% due to both loan growth and higher rates. Securities income increased
with the higher average balance levels and interest rates.
TABLE 2
ANALYSIS OF INTEREST REVENUE AND EXPENSE
<TABLE>
<CAPTION>
1996 vs 1995 1995 vs 1994
---------------------------- ------------------------------
Interest Due to Due to
------------------------------------ Total ------------------ Total -------------------
1996 1995 1994 Change Volume Rate Change Volume Rate
---------- ---------- ---------- ------- ------- -------- -------- -------- --------
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits
with banks.............. $ 380 $ 967 $ 1,297 $ (587) $ (352) $ (235) $ (330) $ (537) $ 207
Federal funds sold and
resale agreements....... 4,916 10,534 9,645 (5,618) (4,806) (812) 889 (2,293) 3,182
Trading securities........ 392 968 1,560 (576) (231) (345) (592) (537) (55)
Securities................ 291,261 280,045 220,713 11,216 11,612 (396) 59,332 43,909 15,423
Commercial loans.......... 615,966 609,248 513,254 6,718 28,398 (21,680) 95,994 51,107 44,887
Consumer loans............ 295,508 278,236 241,152 17,272 18,350 (1,078) 37,084 20,020 17,064
Consumer mortgage loans... 208,570 201,256 167,087 7,314 8,392 (1,078) 34,169 21,057 13,112
---------- ---------- ---------- ------- --------
Total loans........... 1,120,044 1,088,740 921,493 31,304 55,019 (23,715) 167,247 92,193 75,054
---------- ---------- ---------- ------- --------
Total interest
revenue............. 1,416,993 1,381,254 1,154,708 35,739 57,967 (22,228) 226,546 135,202 91,344
Interest-bearing demand... 21,786 23,831 21,065 (2,045) (259) (1,786) 2,766 (892) 3,658
Money market accounts..... 102,927 85,231 57,274 17,696 18,708 (1,012) 27,957 2,433 25,524
Savings passbook.......... 40,034 44,509 43,887 (4,475) (3,334) (1,141) 622 (3,034) 3,656
Certificates of deposit... 300,806 291,135 199,743 9,671 8,286 1,385 91,392 43,131 48,261
---------- ---------- ---------- ------- --------
Total deposits........ 465,553 444,706 321,969 20,847 18,700 2,147 122,737 25,306 97,431
Short-term borrowed
funds................... 123,629 133,151 67,622 (9,522) 4,675 (14,197) 65,529 34,927 30,602
Long-term debt............ 43,523 43,982 31,315 (459) 2,073 (2,532) 12,667 8,736 3,931
---------- ---------- ---------- ------- --------
Total interest
expense............. 632,705 621,839 420,906 10,866 25,104 (14,238) 200,933 59,506 141,427
---------- ---------- ---------- ------- --------
Net interest
revenue............. $ 784,288 $ 759,415 $ 733,802 $24,873 31,969 (7,096) $ 25,613 84,110 (58,497)
========== ========== ========== ======= ========
</TABLE>
- ------------
Calculations are computed on a taxable-equivalent basis using a tax rate of 35%.
The change attributable to both volume and rate has been allocated
proportionately to the changes due to volume and rate.
Total interest expense increased by 1.7% in 1996 to $632.7 million.
Interest expense on deposits rose by 4.7% primarily due to an increase in money
market account balances, which were up 22.1% for the year. Interest cost of
borrowed funds declined in 1996 due to the lower rate paid for these funds.
Total interest expense increased by 47.7% in 1995, to $621.8 million. Interest
expense on deposits increased 38.1% in 1995 as interest rates were increased to
remain competitive in the market and maturing certificates of deposits repriced
at higher rates. Interest cost for short-term borrowed funds nearly doubled as
increased reliance was placed upon this higher cost funding source.
9
<PAGE> 11
OTHER OPERATING REVENUE
Total other operating revenue, excluding securities gains and losses,
increased by 10.7% to a level of $438.0 million in 1996. This compares with a
5.8% increase 1995. Firstar continues to emphasize growth in fee revenue.
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
revenues.
TABLE 3
ANALYSIS OF OTHER OPERATING REVENUE
<TABLE>
<CAPTION>
Years Ended December 31 1996 vs 1995 1995 vs 1994
-------------------------------- ------------------ ------------------
1996 1995 1994 Amount Percent Amount Percent
-------- -------- -------- ------- ------- ------- -------
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C>
Trust and investment
management fees.................. $145,690 $132,377 $120,349 $13,313 10.1% $12,028 10.0%
Service charges on deposit
accounts......................... 91,953 81,775 82,378 10,178 12.4 (603) (.7)
Credit card service revenue........ 69,945 62,106 55,867 7,839 12.6 6,239 11.2
Mortgage origination............... 26,065 15,848 17,374 10,217 64.5 (1,526) (8.8)
Mortgage servicing................. 23,035 22,631 18,105 404 1.8 4,526 25.0
-------- -------- -------- ------- -------
Mortgage banking revenue......... 49,100 38,479 35,479 10,621 27.6 3,000 8.5
Data processing fees............... 19,443 17,924 20,263 1,519 8.5 (2,339) (11.5)
Brokerage revenue.................. 13,093 10,874 9,505 2,219 20.4 1,369 14.4
Insurance revenue.................. 10,828 11,730 12,188 (902) (7.7) (458) (3.8)
International fees................. 5,811 5,999 5,878 (188) (3.1) 121 2.1
Electronic funds transfer fees..... 5,109 5,085 5,350 24 .5 (265) (5.0)
Safe deposit fees.................. 4,040 4,207 3,960 (167) (4.0) 247 6.2
Foreign exchange gains............. 2,272 2,426 2,063 (154) (6.3) 363 17.6
Municipal finance fees............. 747 936 991 (189) (20.2) (55) (5.5)
Other.............................. 19,967 21,775 19,792 (1,808) (8.3) 1,983 10.0
-------- -------- -------- ------- -------
Subtotal....................... 437,998 395,693 374,063 42,305 10.7 21,630 5.8
Trading securities gains........... 2,388 2,234 139 154 6.9 2,095
Securities gains (losses).......... 66 (5,730) (3,583) 5,796 (2,147) 59.9
-------- -------- -------- ------- -------
Total other operating
revenue...................... $440,452 $392,197 $370,619 $48,255 12.3 $21,578 5.8
======== ======== ======== ======= =======
</TABLE>
Other operating revenue now represents 36.0% of Firstar's revenue, an
increase from 34.4% in 1995 and 33.8% in 1994. An industry measure of fee
revenue prominence is the ratio of this revenue to average assets. During 1996
this ratio was 2.30% compared to 2.18% in 1995 and 2.26% in 1994. Firstar
continues to remain in the top quartile of its peer group by this measure of fee
revenue.
Trust and investment management fees are the single largest source of fee
revenue for the company, contributing $145.7 million, or approximately one-third
of total other operating revenue. Trust fees have risen by over 10% in both of
the past two years. The general rise in the market value of assets contributed
to the growth achieved in both years. In addition, expanded services are being
offered through Firstar's banking network and additional marketing efforts are
also being directed to institutional investors beyond the Midwest. Assets under
management increased by 22.2% during 1996 to a level of $22.1 billion which
follows the 19.8% increase during 1995. The mix of assets under management has
shifted somewhat to fixed income and money market funds where average fees are
lower than equity funds, thus limiting fee growth. Assets held in custody
accounts were $70.1 billion at year-end 1996, a 26.7% increase from last year.
Mutual fund services, where Firstar provides custody and accounting duties have
been expanding steadily. Firstar is now the sixth largest processor in the
country with over 240 mutual fund accounts.
10
<PAGE> 12
Revenue from service charges on deposit accounts rose by 12.4% to $92.0
million in 1996. This compares to a relatively level volume during the prior two
years. Factors contributing to this year's growth were increased commercial
analyzed service charges and revenue from newly acquired banks.
Credit card service revenues are the third largest source of fee revenue
and totaled $69.9 million in 1996. Credit service revenues increased by 12.6% in
1996 and 11.2% in 1995. The introduction of new credit card products, increased
merchant fee revenues and the repricing of service charges have all contributed
to this revenue growth. Firstar services 590,000 active card holders, has 34,000
merchant accounts and provides credit card programs to more than 800 financial
institutions. This customer base, which covers the upper Midwest and includes
Wisconsin, Iowa, Illinois, Minnesota, Upper Michigan, Nebraska, Montana and the
Dakotas, provides a market for the sale and expansion of other financial
products.
Revenue from mortgage banking activities rose 27.6% in 1996 to a level of
$49.1 million. This follows an 8.5% increase in 1995. Mortgage origination
revenues increased 64.5% during 1996 and totaled $26.1 million. Loan origination
volumes were $1.7 billion in 1996 compared to $1.4 billion in 1995 and $1.7
billion in 1994. Mortgage loan servicing revenue for 1996 was up 1.8% from last
year. Included in servicing revenue were gains on the sales of servicing rights
of $7.2 million in 1996, $7.1 million in 1995, and $3.6 million in 1994. Future
gains on sales of servicing rights are anticipated to decline as a result of the
adoption of SFAS No. 122 described below. These gains were primarily realized on
pre SFAS No. 122 servicing rights where there were no capitalized asset values.
Mortgage loans serviced for others were $3.1 billion at the end of 1996,
compared with $3.3 billion a year earlier.
Firstar adopted Financial Accounting Standards Board Statement No. 122,
"Accounting for Mortgage Servicing Rights" as of January 1, 1995. This statement
requires that separate assets be recognized for the rights to service mortgage
loans for others whether those servicing rights were purchased or related to
loans originated by the company. Firstar capitalized $17.5 million in originated
service rights in 1996 and $6.3 million in 1995. Further information on mortgage
servicing rights activities is included in Note 8 to the Consolidated Financial
Statements.
Data processing fee income increased by 8.5% in 1996 following an 11.5%
decline in the previous year. One-half of the increase for 1996 was attributable
to an early buyout by a customer who was acquired by another bank. 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 over the past several years.
Intense price competition has also occurred due to the shrinking market for
sales and has affected revenue levels through pricing changes and some loss of
customers. Fee revenue in this business should remain under pressure in coming
years.
Brokerage services increased by 20.4% during 1996 and 14.4% in 1995. This
encouraging growth in fee revenue was attributable to the general strength of
the market and more focused sales efforts.
Securities losses of $5.7 million and $3.6 million were realized in 1995
and 1994, respectively. These losses were generated by the partial liquidation
of merged banks' portfolios to bring them in line with Firstar's investment
policies. Trading securities gains have been level during the past two years.
The remaining sources of other operating revenue are derived from a wide
range of services and collectively totaled $48.8 million in 1996, $52.2 million
in 1995 and $50.2 million in 1994. A gain on the sale of a payroll processing
operation of $2.1 million was realized in 1995.
11
<PAGE> 13
OTHER OPERATING EXPENSES
Total operating expenses increased 5.4% to $773.6 million in 1996 compared
with an increase of 4.0% in 1995. If special charges are excluded from the
comparisons, 1996 operating expenses rose by .2% while 1995 expenses increased
by 3.9%. Additionally, expenses contributed by newly acquired banks added over
$20 million to total operating expenses in 1996. Information on the components
of other operating expense is shown in Table 4.
TABLE 4
ANALYSIS OF OTHER OPERATING EXPENSE
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31 1996 VS 1995 1995 VS 1994
------------------------------ ------------------ ------------------
1996 1995 1994 AMOUNT PERCENT AMOUNT PERCENT
-------- -------- -------- -------- ------- -------- -------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries.......................... $320,239 $323,163 $312,120 $ (2,924) (.9)% $ 11,043 3.5%
Employee benefits................. 71,277 72,198 68,841 (921) (1.3) 3,357 4.9
-------- -------- -------- -------- --------
Total personnel expense......... 391,516 395,361 380,961 (3,845) (1.0) 14,400 3.8
Equipment expense................. 65,615 58,700 54,556 6,915 11.8 4,144 7.6
Net occupancy expense............. 64,235 57,992 52,984 6,243 10.8 5,008 9.5
Business development.............. 27,540 29,413 26,602 (1,873) (6.4) 2,811 10.6
Stationery and supplies........... 24,696 21,284 18,087 3,412 16.0 3,197 17.7
Professional fees................. 22,244 20,491 17,937 1,753 8.6 2,554 14.2
Information processing expense.... 20,840 21,918 20,957 (1,078) (4.9) 961 4.6
Delivery.......................... 19,497 19,192 16,122 305 1.6 3,070 19.0
Amortization of intangibles....... 15,321 11,068 10,291 4,253 38.4 777 7.6
Processing and other losses....... 7,997 7,562 4,183 435 5.8 3,379 80.8
Wire communication................ 7,369 7,418 6,656 (49) (.7) 762 11.4
Employee education/recruiting..... 6,301 8,389 7,977 (2,088) (24.9) 412 5.2
Commissions and service fees...... 6,246 5,799 6,777 447 7.7 (978) (14.4)
Bank processing fees.............. 5,926 5,707 5,818 219 3.8 (111) (1.9)
Credit card assessment fees....... 5,890 5,011 4,209 879 17.5 802 19.1
Amortization of loan servicing
rights.......................... 2,573 1,641 1,455 932 56.8 186 12.8
Published information............. 2,296 2,277 2,144 19 0.8 133 6.2
F.D.I.C. insurance................ 2,282 16,531 28,361 (14,249) (86.2) (11,830) (41.7)
Insurance......................... 1,766 1,739 1,747 27 1.6 (8) (.5)
Net foreclosed assets expense
(income)........................ 349 (281) (553) 630 272
Other............................. 12,034 13,759 16,914 (1,725) (12.5) (3,155) (18.7)
-------- -------- -------- -------- --------
Subtotal........................ 712,533 710,971 684,185 1,562 0.2 26,786 3.9
Restructuring expense............. 53,267 23,151 30,116 130.1 23,151
SAIF assessments.................. 7,837 7,837
Check kiting loss................. 22,000 (22,000)
-------- -------- -------- -------- --------
Total other operating expense... $773,637 $734,122 $706,185 $ 39,515 5.4 $ 27,937 4.0
======== ======== ======== ======== ========
</TABLE>
Personnel costs, which include salaries and fringe benefits, are the
largest component of operating expenses, representing more than one-half of
operating costs. This expense declined by 1.0% in 1996 after increasing by 3.8%
during 1995. The corporate wide restructuring program has reduced full-time
equivalent staffing levels by 1,141 since the end of 1995 and by 1,400 since
September 30, 1995, the date a hiring freeze was put in place. New bank
acquisitions added 245 FTEs during 1996. Net of the impact of acquisitions and
increases in temporary help staffing in 1996, personnel expense has declined by
5.0% from the level experienced in 1995.
Equipment expense increased by 11.8% in 1996 compared with 7.6% in 1995.
Bank acquisitions contributed approximately one-quarter of the 1996 increase.
Additionally, Firstar continues to invest in upgraded data processing equipment,
ensuring that its data processing capabilities are up-to-date in order to
provide quality service in a cost effective manner. A new retail and teller data
platform is now installed at all Firstar locations.
12
<PAGE> 14
Net occupancy expense increased by 10.8% in 1996 compared with 9.5% in
1995. Bank acquisitions again were a factor, representing approximately
one-third of the 1996 increase. These comparisons were also affected by a
partial acceleration of a deferred gain on a building sale of $2.1 million in
1994.
FDIC insurance is an uncontrollable cost, with the premium established by
the federal regulatory agency. The FDIC sets varying premium amounts based upon
capitalization levels and soundness criteria. Firstar's capital strength has
permitted payments at the lowest rate levels since the inception of the current
system by the FDIC. The FDIC has substantially reduced premium requirements
during the past two years as can be seen in the $26 million reduction in expense
from 1994 to 1996. As part of the SAIF assessment and recapitalization of
deposit insurance funds, a new premium structure will be put in place for 1997.
The 1997 FDIC insurance expense should remain essentially level with the current
year's cost.
The amortization of intangibles includes amounts associated with goodwill
and core deposit intangibles. Expenses have increased during 1996 due to the
creation of additional intangible assets with the bank acquisitions completed
during the year.
All other operating expenses, excluding the special charges described
below, increased by 1.3% in 1996 and 9.1% in 1995.
During the past three years, special charges and credits were recorded that
effect comparability between periods. These items are detailed in Table 5.
TABLE 5
RESTRUCTURING COSTS AND OTHER NONRECURRING ITEMS
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------
1996 1995 1994
------- ------- -------
(thousands of dollars)
<S> <C> <C> <C>
Additional loan loss provisions............................. $ $13,612 $
Losses on sales of securities............................... 6,263
Restructuring expenses:
Employee severance........................................ 27,129 11,899
Facilities and equipment.................................. 3,908 4,801
Other..................................................... 22,230 6,451
------- ------- -------
53,267 23,151
SAIF assessment............................................. 7,837
Check kiting loss........................................... 22,000
------- ------- -------
Total pre-tax costs......................................... 61,104 43,026 22,000
Income tax benefit.......................................... 24,438 15,393 8,910
Prior years' tax settlements................................ 3,229
------- ------- -------
Total..................................................... $33,437 $27,633 $13,090
======= ======= =======
Per common share impact..................................... $ .23 $ .18 $ .09
</TABLE>
During 1996 Firstar recorded a $53.3 million charge in connection with
Firstar Forward, the corporate wide restructuring program which was announced by
the company in January 1996. This program is expected to add $140 million to
annualized pre-tax earnings when fully implemented by mid-1997. The charge
included severance accruals of $27.1 million associated with staff reductions of
approximately 1,500 people, fixed asset writedowns of $3.9 million, and other
project costs of $22.3 million. The total charge consists of $45.4 million in
anticipated cash expenditures and $7.9 million of non-cash items. Cash payments
have reduced this restructuring accrual to approximately $8.1 million as of
December 31, 1996.
The Savings Association Insurance Fund (SAIF) charge of $7.8 million was
recorded in 1996. This banking industry-wide SAIF assessment will recapitalize
the savings and loan deposit insurance fund and was
13
<PAGE> 15
based upon deposits that Firstar acquired through several savings and loan
acquisitions over the past four years. Also occurring in 1996 was an income tax
adjustment of $3.2 million from the favorable settlement of prior years' taxes.
During 1995 certain merger and restructuring charges were taken in
connection with four bank acquisitions. These charges totaled $43.0 million.
Acquisition related restructuring charges totaling $23.2 million are included in
other operating expenses. Included in these charges were $11.9 million of costs
associated with the severance of approximately 500 employees, $4.8 million
related with office closings and write-off of unusable equipment, $2.5 million
of professional fees and $3.9 million of other costs associated with mergers.
The restructuring charge of $23.2 million consisted of $17.3 million in
anticipated cash expenditures and $5.9 million on non-cash asset write-downs.
Cash payments have reduced the restructuring accrual to less than $1 million as
of December 31, 1996.
A $22 million check kiting loss that was recorded in 1994 involved two
affiliated commercial customers who conducted fraudulent check transactions.
A measure of the success in managing operating expense is expressed in the
ratio of expense to revenue and is referred to as the efficiency ratio. The
objective is to reduce this ratio through revenue growth, cost control or a
combination of both. Excluding the special items discussed above, this ratio was
58.2% in 1996, 61.4% in 1995 and 61.7% in 1994. Further reduction in this ratio
is expected in 1997 with the full implementation of the Firstar Forward
initiatives. Firstar's goal is for the efficiency ratio to be 55% or better for
1997. Impacting this ratio for 1997 will be the accounting treatment of the $150
million in Trust Capital Securities issued in December 1996. These securities
qualify as Tier I capital for regulatory purposes and are accounted for as
minority interest. Accordingly, the cash distributions on these securities will
be recorded as an other expense item in the company's income statement.
PROVISIONS FOR LOAN LOSSES
The provision for loan losses is used to cover actual loan losses and to
adjust the size of the reserve relative to the amount and quality of loans. In
determining the adequacy of the reserve, management considers the financial
strength of borrowers, loan collateral, current and anticipated economic
conditions and other factors. The 1996 provision for loan losses was $42.6
million, compared with $36.8 million in 1995 and $23.9 million in 1994. During
1995, additional loan loss provisions of $13.6 million were taken to increase
the newly acquired banks' loan loss reserve levels to conform with Firstar's
loan loss reserve policies. Exclusive of this factor, the loan loss provision
increased by $19.5 million in 1996. This year-to-year increase is attributable
to higher credit card losses as discussed later under "Credit Risk Management".
INCOME TAXES
Income tax expense was $124.4 million in 1996, compared to $118.4 million
in 1995 and $112.7 million in 1994. The effective tax rate was 33.2% in 1996,
34.1% in 1995 and 33.2% in 1994. The effective tax rate declined in 1996 due to
the favorable settlement of tax items from prior years. The effective tax rate
rose in 1995 as compared to 1994 due to a reduction in tax-exempt municipal
interest income, an increase in state tax expense and an increase in
nondeductible intangible amortization expense.
BALANCE SHEET ANALYSIS
Changes in the balance sheet of a financial institution reflect both the
forces of the marketplace and the company's response to these conditions.
Firstar's strategy in managing balance sheet growth is based upon the goals of
enhancing soundness, optimizing revenues and providing a broad range of services
for customers.
Total assets at the end of 1996 reached $19.8 billion, an increase of $599
million or 3.1% over a year earlier. Average total assets for 1996 were $19.2
billion, an increase of 5.2% over 1995.
Table 6 shows the geographic distribution of Firstar's banking assets.
Firstar has expanded beyond its Wisconsin base through select acquisitions.
Assets outside of Wisconsin now represent 46% of consolidated assets. Firstar's
acquisition activity focuses on attractive markets in the upper Midwest that
complement the
14
<PAGE> 16
existing Firstar banking network. The combination of internal growth and
acquisitions provides new opportunities to build and diversify Firstar's
earnings within an economically stable region.
TABLE 6
SUBSIDIARY ASSETS
<TABLE>
<CAPTION>
December 31
---------------------------------------------------------------
1996 1995 1994
------------------- ------------------- -------------------
Amount Percent Amount Percent Amount Percent
--------- ------- --------- ------- --------- -------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Bank groups:
Firstar Bank Milwaukee.............. $ 6,127.4 31.0% $ 6,166.2 32.2% $ 6,009.2 33.4%
Firstar Bank Wisconsin.............. 4,196.1 21.3 4,279.8 22.3 3,950.6 21.9
Firstar Bank Iowa................... 2,534.1 12.8 2,734.8 14.3 2,677.1 14.9
Firstar Bank F.S.B.................. 320.1 1.6
Firstar Bank Minnesota.............. 2,980.7 15.1 2,381.8 12.4 2,316.0 12.9
Firstar Bank Illinois............... 2,770.2 14.0 2,884.7 15.0 2,725.1 15.1
Firstar Metropolitan AZ............. 157.9 .8 130.0 .7 102.9 .6
Firstar Bank U.S.A.................. 456.3 2.3 431.7 2.3
--------- ----- --------- ----- --------- -----
Subtotal......................... 19,542.8 98.9 19,009.0 99.2 17,780.9 98.8
Trust and investment management
subsidiaries........................ 143.1 .7 82.2 .4 141.0 .8
Parent/other subsidiaries............. 81.5 .4 77.1 .4 72.3 .4
--------- ----- --------- ----- --------- -----
Total............................ $19,767.4 100.0% $19,168.3 100.0% $17,994.2 100.0%
========= ===== ========= ===== ========= =====
</TABLE>
- ------------
Assets have been adjusted for intercompany amounts.
Significant acquisition activity has occurred during the past two years.
Firstar completed three mergers in 1995 and two during 1996.
The acquisition of First Colonial Bankshares Corporation, a $1.8 billion
bank holding company with 30 offices in the Chicago area was completed on
January 31, 1995, and gives Firstar a $2.8 billion banking franchise with 40
offices in the Chicago area market.
In April 1995, the acquisition of Investors Bank Corp., a $1.1 billion
thrift with a large mortgage banking business in the Minneapolis/St. Paul market
was completed. This transaction substantially increased Firstar's mortgage
banking business.
In March 1995, the acquisition of First Moline Financial Corp. added $86
million in assets to Firstar Bank Iowa.
On January 26, 1996, the acquisition of Harvest Financial Corp., a $353
million thrift based in Dubuque, Iowa was completed.
The acquisition of American Bancorporation, Inc., a $1.2 billion bank
holding company in St. Paul, Minnesota, was completed in July 1996. This
acquisition added $700 million in assets to Firstar Bank Minnesota after the
sale of two of its banking subsidiaries and the liquidation of their securities
portfolio. Firstar Bank Minnesota is now a $3.0 billion banking operation with
31 offices in the Minneapolis/St. Paul market.
15
<PAGE> 17
LOANS AND INVESTMENTS
Earning assets, shown in Table 7, averaged $17.4 billion, an increase of
$709 million, or 4.2% over 1995. Most of this growth in earning assets was
attributable to assets obtained through bank acquisitions. Exclusive of this
factor, the earning asset growth rate was under 1%. Weakened commercial loan
volumes were experienced during most of 1996. Additionally, Firstar is adopting
a strategy of removing itself from lower yielding assets which have been funded
with purchased funds.
TABLE 7
AVERAGE EARNING ASSETS
<TABLE>
<CAPTION>
1996 1995 1994
-------------------- -------------------- --------------------
Amount Percent Amount Percent Amount Percent
--------- ------- --------- ------- --------- -------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Commercial and industrial.......... $ 3,228.9 18.6% $ 3,054.2 18.3% $ 2,742.1 18.3%
Commercial mortgage................ 2,941.9 16.9 2,817.9 16.9 2,591.4 17.2
Other commercial................... 992.8 5.7 966.2 5.8 909.7 6.1
--------- ----- --------- ----- --------- -----
Commercial loans.............. 7,163.6 41.2 6,838.3 41.0 6,243.2 41.6
Credit card........................ 615.9 3.5 554.7 3.3 510.5 3.4
Consumer mortgage.................. 2,727.5 15.7 2,617.8 15.7 2,336.3 15.6
Home equity........................ 1,013.1 5.8 859.5 5.2 692.2 4.6
Other consumer..................... 1,402.3 8.1 1,421.4 8.5 1,433.7 9.5
--------- ----- --------- ----- --------- -----
Consumer loans................ 5,758.8 33.1 5,453.4 32.7 4,972.7 33.1
--------- ----- --------- ----- --------- -----
Total loans................... 12,922.4 74.3 12,291.7 73.7 11,215.9 74.7
Securities held to maturity........ 2,323.1 13.3 3,927.7 23.5 3,214.7 21.4
Securities available for sale...... 2,046.4 11.7 267.6 1.6 311.9 2.1
Trading securities................. 10.1 .1 14.2 .1 22.1 .1
Interest-bearing deposits with
banks............................ 8.7 .1 15.7 .1 24.9 .2
Federal funds sold and resale
agreements....................... 88.3 .5 173.5 1.0 219.5 1.5
--------- ----- --------- ----- --------- -----
Total $17,399.0 100.0% $16,690.4 100.0% $15,009.0 100.0%
========= ===== ========= ===== ========= =====
</TABLE>
Loans, the largest category of earning assets, represented 74.3% of earning
assets as compared with 73.7% in 1995. On average, loans totaled $12.9 billion,
an increase of $631 million or 5.1% over 1995. This compares to the 9.6% growth
in average loans during 1995. Excluding the impact of acquisitions, average
loans rose by only .4% over 1995.
Commercial loans, which account for 55% of the loan portfolio, increased by
$325 million, or 4.8% on average, to $7.2 billion during 1996. Again excluding
acquisitions, commercial loan growth had been essentially flat during 1996. This
compares to the 9.5% growth seen in 1995. Commercial loan balances have declined
in four of the past five quarters on a quarter-to-quarter basis. This trend is
more evident in the Illinois and Minnesota markets where larger acquisitions
have occurred and some run-off in associated loan balances has been experienced.
Firstar expects that commercial loans will resume a growth rate consistent with
the overall growth rate of the markets served by the company in the next year.
Consumer loans, excluding residential mortgages, averaged $3.0 billion, an
increase of $196 million or 6.9% over 1995. Excluding loans from bank
acquisitions, consumer lending increased by 4.1% during 1996. Excluding
residential mortgages, consumer loans grew 7.6% in 1995. Good growth has
occurred in home equity loans and credit card loans in 1996, up 14.4% and 10.3%
respectively, excluding acquisition impacts. The annualized consumer loan growth
rate, excluding residential mortgages, has increased approximately 10% in each
of the last two quarters of 1996.
16
<PAGE> 18
Residential mortgage loans, exclusive of loans acquired through bank
acquisitions and loans held for sale, declined by $155 million or 6.2% on
average from 1995. The reduction was attributable to the normal loan
amortization and prepayments partially offset by the placement in the portfolio
of some shorter term variable rate mortgages. While Firstar is committed to its
mortgage lending programs and originated $1.7 billion of loans in 1996, its
strategy is to sell production into the secondary market or to private investors
when possible. This is an example of Firstar's goal to remove lower yielding
assets from its balance sheet mix.
The securities portfolio increased by $174 million, or 4.2% on average
during 1996 to a level of $4.4 billion. Tables 8 and 9 show the maturity range
and changing mix of the securities portfolio. The portfolio is classified into
two categories: securities held to maturity and securities available for sale.
Securities that the company has the positive intent and ability to hold to
maturity are carried at amortized cost. The designation of securities as
available for sale are carried at their fair values with unrealized gains and
losses recorded as a component of stockholders' equity. At year-end 1995,
Firstar classified an additional $1.8 billion of securities as available for
sale. While these securities are considered available for sale, it is not
anticipated that any disposition of these securities will occur in the near
term. The average maturity of the portfolio was 3.8 years at December 31, 1996.
Short-term investments, which include interest-bearing deposits with banks,
trading account securities, and federal funds sold and resale agreements,
averaged $107 million during 1996, a reduction of $96 million from 1995.
TABLE 8
MATURITY RANGE AND AVERAGE YIELD OF SECURITIES
<TABLE>
<CAPTION>
Due Within Total
One Year One to Five Years Five to Ten Years After Ten Years December 31, 1996
--------------- ----------------- ----------------- --------------- -----------------
Amount Rate Amount Rate Amount Rate Amount Rate Amount Rate
-------- ---- ---------- ---- --------- ----- -------- ---- ---------- ----
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Securities held to
maturity:
U.S. Treasury and
federal agencies...... $ 756 4.79% $ % $ % $ % $ 756 4.79%
Mortgage backed
obligations of federal
agencies.............. 166,800 7.39 471,275 7.35 299,657 7.24 154,796 6.50 1,092,528 7.21
State and political
subdivisions.......... 148,525 6.94 531,739 7.06 429,847 7.63 37,276 7.50 1,147,387 7.27
Corporate debt.......... 1,240 5.50 2,776 5.88 2,322 7.26 3,689 6.72 10,027 6.46
Other................... 78 5.50 78 5.50
-------- ---------- -------- -------- ----------
Total............... $317,399 7.17 $1,005,790 7.19 $731,826 7.47 $195,761 6.69 $2,250,776 7.24
======== ========== ======== ======== ==========
Securities available for
sale:
U.S. Treasury and
federal agencies...... $528,336 4.84% $1,093,809 6.64% $178,653 6.68% $ % $1,800,798 6.12%
Mortgage backed
obligations of federal
agencies.............. 1,812 6.07 1,050 6.14 431 5.62 5,188 5.19 8,481 5.52
State and political
subdivisions.......... 1,337 7.67 5,582 7.22 169 6.00 538 3.53 7,626 7.01
Other................... 38,370 5.24 38,370 5.24
-------- ---------- -------- -------- ----------
Total............... $569,855 4.88 $1,100,441 6.64 $179,253 6.68 $ 5,726 5.03 1,855,275 6.10
======== ========== ======== ========
Equity securities....... 111,315 7.27
----------
1,966,590 6.16
==========
</TABLE>
- ------------
Rates are calculated on a taxable-equivalent basis using a tax rate of 35%. The
maturity information on mortgage-backed obligations is based on anticipated
payments.
17
<PAGE> 19
TABLE 9
SECURITIES
<TABLE>
<CAPTION>
December 31
------------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Securities held to maturity:
U.S Treasury and federal agencies.......... $ 756 $ 2,146 $1,612,188 $1,510,216 $1,282,749
Mortgage backed obligations of federal
agencies................................. 1,092,528 1,266,458 867,990 361,784 514,455
State and political subdivisions........... 1,147,387 1,141,987 1,069,755 1,036,236 1,042,376
Corporate debt............................. 10,027 15,590 79,891 108,429 276,635
Equity securities.......................... 26,422
Other...................................... 78 849 1,139 1,118 136,675
---------- ---------- ---------- ---------- ----------
Total.................................. $2,250,776 $2,427,030 $3,630,963 $3,017,783 $3,279,312
========== ========== ========== ========== ==========
Securities available for sale:
U.S Treasury and federal agencies.......... $1,800,798 $1,917,725 $ 202,435 $ 79,200
Mortgage backed obligations of federal
agencies................................. 8,481 9,787 12,060 93,427
State and political subdivisions........... 7,626 7,831 7,720 33,231
Corporate debt............................. 1,196 504 3,587
Equity securities.......................... 111,315 92,767 57,621 32,122
Money market mutual funds.................. 38,370 18,542 62,313 100,402
---------- ---------- ---------- ----------
Total.................................. $1,966,590 $2,047,848 $ 342,653 $ 341,969
========== ========== ========== ==========
</TABLE>
FUND SOURCES
Average fund sources, consisting of deposits and borrowed funds, increased
by $903 million, or 5.5%, to $17.3 billion in 1996. Total deposits averaged
$14.3 billion, an increase of $794 million, or 5.9%. Bank acquisitions accounted
for about two-thirds of this increase in average deposits. Table 10 shows the
composition of Firstar's fund sources.
TABLE 10
AVERAGE FUND SOURCES
<TABLE>
<CAPTION>
1996 1995 1994
------------------- ------------------- -------------------
Amount Percent Amount Percent Amount Percent
--------- ------- --------- ------- --------- -------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Transaction accounts.................. $ 4,727.4 27.3% $ 4,399.0 26.8% $ 4,481.2 30.2%
Savings passbook...................... 1,599.1 9.3 1,731.3 10.6 1,854.9 12.4
Money market accounts................. 2,577.5 14.9 2,110.5 12.9 2,027.5 13.7
Certificates of deposit............... 4,519.9 26.1 4,384.0 26.7 3,882.3 26.2
--------- ----- --------- ----- --------- -----
Total core deposits.............. 13,423.9 77.6 12,624.8 77.0 12,245.9 82.5
Other deposits........................ 872.4 5.1 877.6 5.4 528.6 3.6
--------- ----- --------- ----- --------- -----
Total deposits................... 14,296.3 82.7 13,502.4 82.4 12,774.5 86.1
Short-term borrowed funds............. 2,357.8 13.6 2,275.8 13.9 1,591.3 10.7
Long-term debt........................ 637.4 3.7 610.9 3.7 477.4 3.2
--------- ----- --------- ----- --------- -----
Total............................ $17,291.5 100.0% $16,389.1 100.0% $14,843.2 100.0%
========= ===== ========= ===== ========= =====
</TABLE>
Core deposits, which include transaction accounts and other stable time
deposits, are Firstar's prime source of funding. These deposits averaged $13.4
billion in 1996, an increase of $799 million or 6.3%. Excluding bank
acquisitions, core deposits rose by 2.1% in 1996. Core deposits declined from
83% of fund sources in 1994 to 77% in 1995. During 1996 core deposit funding
stabilized and represented 78% of fund sources for the year. Increased
competition for consumer deposits and heightened consumer sensitivity to
interest rates have limited Firstar's core deposit growth.
18
<PAGE> 20
An increased reliance was placed on purchased fund sources during the last
two years to support earning asset growth. Total purchased funds averaged $3.9
billion an increase of $103 million, or 2.7%, over 1995. Purchased funds
represented 22% and 23% of total fund sources in 1996 and 1995, respectively.
Other time deposits, primarily certificates of deposit over $100,000, remained
approximately level at $872 million. Short-term borrowed funds were increased by
$82 million to an average level of $2.4 billion. Long-term debt was increased by
$27 million to an average level of $637 million. Continued reliance on these
alternative funding sources will be necessary into the future.
CREDIT RISK MANAGEMENT
Since the mid-1980's, credit management has been refined through procedural
and personnel changes. Emphasis on credit quality standards and diversification
of risk have been key strategies. The benefits of this program are seen in the
significant reductions in nonperforming assets and overall credit quality
achieved during the past several years. During this period nonperforming assets
as a percentage of loans and foreclosed assets have declined from over 3% in
1987 to .72% at the end of 1996.
Nonperforming assets consist of loans that are not accruing interest, loans
with renegotiated credit terms and collateral acquired in settlement of
nonperforming loans. The composition of these assets is shown in Table 11. These
nonperforming assets totaled $95.0 million at December 31, 1996 and represented
.72% of Firstar's $13.2 billion of loans and foreclosed assets. This is a $2.9
million decrease from a year earlier.
TABLE 11
NONPERFORMING ASSETS AND PAST DUE LOANS
<TABLE>
<CAPTION>
December 31
------------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- --------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans:
Commercial.................................. $35,757 $26,239 $29,710 $24,591 $ 31,265
Commercial mortgage......................... 30,128 46,959 28,993 30,963 27,379
Consumer.................................... 19,193 16,187 9,831 10,881 13,245
------- ------- ------- ------- --------
Total nonaccrual loans................... 85,078 89,385 68,534 66,435 71,889
Renegotiated loans:
Commercial.................................. 40 71 823 1,904
Commercial mortgage......................... 1,028 1,336 674 697 741
------- ------- ------- ------- --------
Total renegotiated loans................. 1,028 1,376 745 1,520 2,645
Foreclosed assets*............................ 8,926 7,141 13,282 19,881 40,571
------- ------- ------- ------- --------
Total nonperforming assets............... $95,032 $97,902 $82,561 $87,836 $115,105
======= ======= ======= ======= ========
Nonperforming assets as a percentage of:
Loans and foreclosed assets................. .72% .77% .69% .81% 1.17%
Total assets................................ .48 .51 .46 .54 .74
Loans past due 90 days:
Commercial.................................. $24,368 $21,039 $ 7,432 $ 7,453 $ 5,445
Commercial mortgage......................... 27,352 9,287 3,760 4,441 6,893
Consumer.................................... 22,938 19,084 15,709 13,758 13,286
------- ------- ------- ------- --------
Total loans past due 90 days............. $74,658 $49,410 $26,901 $25,652 $ 25,624
======= ======= ======= ======= ========
</TABLE>
- ------------
* Nonperforming loans which were included in foreclosed assets under "in
substance foreclosure" accounting rules was $10.5 million at December 31,
1992. Such "in substance foreclosed" loans were reclassified to loans in 1993.
19
<PAGE> 21
Commercial real estate related nonperforming assets totaled $40.1 million
at the end of 1996, a reduction of $15.4 million from a year earlier. These
nonperforming assets represented 1.34% of their respective loan category.
Firstar experienced an increase in real estate related nonperforming assets
several years ago, although to a much lesser extent than many other financial
institutions. These assets stood at $84.0 million at the end of 1991 and
represented 4.20% of their respective loan category. As can be seen in Table 11,
significant progress has been made in reducing this category of nonperforming
assets.
The remaining commercial loan portfolio had related nonperforming assets of
$35.8 and a ratio of .83% of outstanding loans compared to .64% a year earlier.
This increase can be attributable to a single credit placed into nonaccrual at
the end of 1996 rather than any fundamental change in asset quality trends of
Firstar's commercial customers.
Nonperforming consumer loans have increased over the last two years by $9.4
million to $19.2 million at the end of 1996. This represented .33% of consumer
loans at December 31, 1996 compared to .29% a year earlier and .19% at the end
of 1994. While consumer nonperforming loans remain at a minimal level, the
increase from year-to-year reflects the impact of consumers taking on increased
debt burdens in the past two years. The effect of this trend can also be seen in
the increased consumer loan charge-off levels of 1996.
Loans ninety days or more past due on December 31, 1996, totaled $74.7
million, compared with $49.4 million a year earlier. These loans are on a full
accrual basis and are judged by management to be collectible in full. In
addition, Firstar had $15 million of loans at December 31, 1996, on which
interest is accruing, but, because of existing economic conditions or
circumstances of the borrower, doubt exists as to the ability of the borrower to
comply with the present loan terms. While these loans are identified as
requiring additional monitoring, they do not necessarily represent future
nonperforming assets.
Additional indicators of asset quality can be found in the geographic
distribution, industry diversification and type of lending represented in the
loan portfolio. Credit policies have been changed over the past several years to
reduce vulnerability to potential adverse economic trends. Marketing efforts
have been directed to Firstar's primary market segments which are consumer,
small business and middle market customers in communities where Firstar banks
are located. This emphasis on smaller, locally based credits brings with it a
diversified group of customers without any significant industry concentration.
Firstar does not participate in any significant syndicated lending or highly
leveraged transactions.
20
<PAGE> 22
The reserve for loan losses is reviewed and adjusted quarterly, subject to
evaluation of economic conditions and expectations, historical experience and
risk ratings of individual loans. Table 12 shows the activity affecting the
reserve for loan losses for the last five years. The reserve totaled $213.1
million at the end of 1996, compared with $195.3 million a year earlier. At
December 31, 1996 the ratio of the reserve for loan losses to loans was 1.62%
and the coverage of nonperforming assets was 224%. This compares with a reserve
for loan losses to loans of 1.55% and to nonperforming assets of 199% a year
earlier.
TABLE 12
RESERVE FOR LOAN LOSSES
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Balance at beginning of year.............. $195,283 $190,552 $189,714 $183,251 $163,197
Loan charge-offs:
Commercial.............................. 13,328 13,417 21,300 15,090 21,461
Commercial mortgage..................... 3,696 7,246 3,374 4,611 6,488
Consumer................................ 13,099 13,915 8,040 6,763 7,782
Consumer mortgage....................... 2,814 1,671 766 1,301 1,894
Credit card............................. 30,271 16,614 14,248 15,073 17,852
-------- -------- -------- -------- --------
Total charge-offs.................... 63,208 52,863 47,728 42,838 55,477
Loan recoveries:
Commercial.............................. 7,773 7,470 7,886 7,194 7,602
Commercial mortgage..................... 3,287 1,782 2,764 2,587 3,508
Consumer................................ 6,098 4,864 4,190 3,539 3,599
Consumer mortgage....................... 1,907 434 741 291 399
Credit card............................. 5,385 5,423 4,380 4,121 3,557
-------- -------- -------- -------- --------
Total recoveries..................... 24,450 19,973 19,961 17,732 18,665
-------- -------- -------- -------- --------
Net loan charge-offs...................... 38,758 32,890 27,767 25,106 36,812
Provision for loan losses................. 42,647 36,756 23,891 29,090 50,733
Reserves of acquired banks................ 13,966 865 4,714 2,479 6,133
-------- -------- -------- -------- --------
Total balance at end of year......... $213,138 $195,283 $190,552 $189,714 $183,251
======== ======== ======== ======== ========
Reserve to year-end loans................. 1.62% 1.55% 1.60% 1.75% 1.87%
Net charge-offs to average loans:
Commercial.............................. .13% .15% .37% .26% *%
Commercial mortgage..................... .01 .19 .02 .09 *
Total commercial loans............... .08 .17 .22 .18 .33
Consumer................................ .50 .64 .27 .26 *
Consumer mortgage....................... .02 .04 .04 *
Credit card............................. 4.04 2.02 1.93 2.18 2.74
Total consumer loans................. .57 .39 .28 .34 .49
Total loans.......................... .30 .27 .25 .25 .40
</TABLE>
- ------------
* Comparable data not available
Total net charge-offs of $38.8 million represented .30% of average loans
during 1996, up slightly from the .27% level experienced in 1995.
As a regional financial institution, Firstar lends to a diversified group
of Midwestern borrowers and, to a much lesser degree, to national companies with
Midwest operations. Net charge-offs in this commercial segment of the portfolio
were $5.6 million, or .13% of average loans. This is a consistent with the $5.9
million of net charge-offs in 1995, representing .15% of loans. This relatively
low level of charge-offs reflects the general high quality of this portion of
the portfolio.
21
<PAGE> 23
Commercial mortgage loans net charge-offs were under one-half million
dollars in 1996 or only .01% of average commercial mortgage loans. This was a
reduction from the .19% level of the prior year. Increased recoveries of
previously charged-off loans were a factor. Future charge-off levels in this
area should track with the overall experience level of the other commercial
lending areas of the company.
Consumer lending includes loans to individuals in communities served by
Firstar's banks. These loans include both open-ended credit arrangements subject
to an overall limit per customer, such as credit card and home equity loans, and
closed-end loans subject to specific contractual payment schedules, such as
installment loans and residential mortgages. Consumer net charge-offs were $32.8
million in 1996, compared with $21.5 million in 1995 and $13.7 million in 1994.
The net charge-offs of .57% in 1996 compares with .39% and .28% in 1995 and
1994, respectively. Consumer delinquency rates and bankruptcies have increased
over the past several quarters as the economic cycle progresses. Increased
consumer charge-offs have been the result of this trend.
Credit card losses have increased from $9.9 million in 1994 to $24.9
million in 1996. The related charge-off rate has increased from 1.93% of
outstanding loans to 4.04% during the same time period. Charge-off levels in the
last quarter of 1996 were at an annualized rate of 5.11%. Additional credit
related measures have been taken which should reverse this trend. Credit card
charge-offs will most likely remain at the higher levels experienced in the
second half of 1996 during most of 1997 before beginning to decline.
Other consumer lending in the form of home equity loans and installment
debt has seen increased charge-off levels in the past two years, but at a
significantly lower rate than credit cards. These loss levels were at .50% of
outstanding loans in 1996 compared to .64% in 1995 and .27% in 1994. Losses on
consumer mortgages have been and should remain nominal.
LIQUIDITY AND INTEREST RATE RISK MANAGEMENT
Two objectives of Firstar's asset and liability management strategy include
the maintenance of appropriate liquidity and management of interest rate risk.
Liquidity management aligns sources and uses of funds to meet the cash flow
requirements of customers and Firstar. Interest rate risk management seeks to
generate growth in net interest revenue and manage exposure to risks associated
with interest rate movements and provide for acceptable and predictable results.
Although conceptually distinct, liquidity and interest rate sensitivity must be
managed together since action taken with respect to one often influences the
other.
Asset liquidity is generally provided by short-term investments such as
interest bearing deposits with other banks, federal funds sold and repurchase
agreements. These investments totaled $213 million at December 31, 1996.
Securities that have been designated as available for sale were $2.0 billion at
the end of 1996 and can be sold to meet liquidity needs. The remaining
securities portfolio, which is held to maturity, provides liquidity through
scheduled maturities and the ability to use these securities in repurchase
agreements.
22
<PAGE> 24
TABLE 13
COMPOSITION OF LOANS
<TABLE>
<CAPTION>
December 31
------------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Commercial and industrial...... $ 3,366,016 $ 3,078,148 $ 2,944,565 $ 2,641,967 $2,258,366
Commercial construction........ 418,040 387,378 329,717 262,476 290,889
Commercial mortgage............ 2,574,376 2,462,010 2,472,042 2,166,390 1,962,954
Other commercial............... 953,145 1,038,677 963,883 925,370 960,198
----------- ----------- ----------- ----------- ----------
Commercial loans............. 7,311,577 6,966,213 6,710,207 5,996,203 5,472,407
Credit card.................... 684,619 619,868 575,278 547,769 534,697
Consumer mortgage.............. 2,660,290 2,722,531 2,382,857 2,268,470 2,115,274
Home equity.................... 1,121,580 935,907 767,540 645,002 555,370
Other consumer................. 1,417,468 1,387,994 1,469,946 1,367,377 1,138,656
----------- ----------- ----------- ----------- ----------
Consumer loans............... 5,883,957 5,666,300 5,195,621 4,828,618 4,343,997
----------- ----------- ----------- ----------- ----------
Total loans.................. $13,195,534 $12,632,513 $11,905,828 $10,824,821 $9,816,404
=========== =========== =========== =========== ==========
</TABLE>
TABLE 14
MATURITY DISTRIBUTION OF LOANS
<TABLE>
<CAPTION>
Total
Due Within One to After December 31,
One Year Five Years Five Years 1996
---------- ---------- ---------- ------------
(thousands of dollars)
<S> <C> <C> <C> <C>
Commercial................................... $3,217,633 $3,178,616 $ 915,328 $ 7,311,577
Consumer..................................... 1,307,251 2,853,097 1,723,609 5,883,957
---------- ---------- ---------- -----------
Total................................... $4,524,884 $6,031,713 $2,638,937 $13,195,534
========== ========== ========== ===========
</TABLE>
- ------------
The maturity is based upon contractural terms, however, Firstar may extend the
maturity at prevailing rates and terms in the normal course of business.
Of the above loans due after one year, $4,449,119,000 have predetermined
interest rates and $4,221,531,000 have floating or adjustable interest rates.
TABLE 15
MATURITY RANGE OF TIME DEPOSITS
<TABLE>
<CAPTION>
Total
Due Within Three to Six to After December 31,
Three Months Six Months Twelve Months Twelve Months 1996
------------ ---------- ------------- ------------- ------------
(thousands of dollars)
<S> <C> <C> <C> <C> <C>
Certificates of deposit of
$100,000 or more............. $505,062 $202,738 $144,223 $134,722 $986,745
======== ======== ======== ======== ========
</TABLE>
The requirement of liquidity is diminished by the predominance of core
deposits, which account for 78% of Firstar's fund sources. Stable core deposits
do not require significant amounts of liquidity to meet the net withdrawal
demands of customers on a short or intermediate term basis. Other sources of
liquidity are short-term borrowed funds, Federal Home Loan Bank borrowings and
commercial time deposits which totaled $3.1 billion at the end of 1996.
Firstar's ability to refinance maturing amounts and, when necessary, increase
this funding base is a significant factor in its liquidity management.
23
<PAGE> 25
Additionally, Firstar has access to capital markets through the issuance of
debt or other securities. Long term debt was increased in 1995 with the issuance
of $100 million of five year notes. In December 1996, a $150 million issue of
Trust Capital Securities was completed. These securities were issued to fund
stock repurchases, repayment of outstanding indebtedness and for other corporate
purposes. Firstar also has in place a $125 million revolving credit facility.
The absolute level and volatility of interest rates can have a significant
impact on earnings. The objective of interest rate risk management is to
identify and manage the sensitivity of net interest revenue to changing interest
rates. Firstar uses computer simulation modeling as its primary method of
quantifying and evaluating interest rate risk. Simulation modeling is performed
at least quarterly and is used to quantify the impact on net interest revenue of
various assumptions about interest rate and balance sheet changes and the use of
off-balance sheet derivatives and financial instruments. The use of simulation
modeling also enables Firstar to develop and test alternative asset and
liability management strategies. Interest rate risk and the results of the
simulation modeling is reviewed quarterly by bank, regional and corporate
committees who assess the interest rate risk position and approve corresponding
strategies. The objective of Firstar's asset liability management policy is to
maintain adequate capital and liquidity and manage interest rate risk to produce
an acceptable level of net interest revenue. Firstar's guideline is to employ an
asset liability management strategy which limits the potential impact of
projected interest rate changes to 5% of net income over the subsequent four
quarters. In the most recent simulation, net interest revenue was forecast for
1997 under four interest rate scenarios. First, if current rates continued
unchanged with a prime rate of 8.25%, and then under most likely, high and low
interest rate scenarios in which prime rate changes to 7.25%, 9.75% and 6.25%
respectively, by the fourth quarter of 1997.
Compared to the current rate scenario, under these three other scenarios
net interest revenue in 1997 is simulated to change as follows: Under the most
likely and high scenarios, net interest revenue in 1997 is simulated to increase
by $8 million and $2 million, respectively. Under the low scenario, net interest
revenue is simulated to decline by $3 million. The result of these scenarios are
well within Firstar's 5% of net income risk policy.
The simulation model is supplemented with a tool used in the banking
industry for measurement of interest rate risk known as the gap analysis. This
measures the difference between assets and liabilities repricing or maturing
within specified time periods. The gap analysis does, however, have limitations
such as not reflecting the magnitude with which assets or liabilities may
reprice within a given interest rate scenario. A positive gap indicates that
there are more rate sensitive assets than rate sensitive liabilities repricing
within a given time frame. A positive gap would generally imply a favorable
impact on net income in periods of rising rates. Conversely, a negative gap
indicates a liability sensitive position. Table 16 shows Firstar's interest
sensitivity under a traditional gap approach.
24
<PAGE> 26
TABLE 16
ASSET AND LIABILITY INTEREST SENSITIVITY
<TABLE>
<CAPTION>
Non-Rate
1-30 31-90 91-180 181-366 Total Sensitive &
Days Days Days Days One Year Over 1 Year Total
------ ------ ------ ------- -------- ----------- -------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C> <C>
Loans............................ $5,429 $ 699 $ 822 $1,283 $8,233 $ 4,963 $13,196
Securities....................... 134 177 272 318 901 3,316 4,217
Interest-bearing deposits with
banks.......................... 6 6 6
Short-term investments........... 206 206 206
Other assets..................... 2,355 2,355
Less: Reserve for loan losses.... (213) (213)
------ ------ ------ ------ ------ ------- -------
Total assets................ 5,775 876 1,094 1,601 9,346 10,421 19,767
Non-interest-bearing demand
deposits....................... 300 300 3,581 3,881
Interest-bearing demand
accounts....................... 184 184 368 1,320 1,688
Savings Passbooks................ 166 166 332 1,186 1,518
Money market accounts............ 1,754 1,754 991 2,745
Less than one year
certificates................... 156 356 322 229 1,063 1,063
Other deposits................... 1,051 488 600 975 3,114 1,205 4,319
Borrowed funds................... 2,127 11 73 82 2,293 123 2,416
Other liabilities................ 283 283
Trust capital securities......... 150 150
Stockholders' equity............. 1,704 1,704
------ ------ ------ ------ ------ ------- -------
Total liabilities and
equity.................... 5,738 1,205 995 1,286 9,224 10,543 19,767
Interest sensitive gap........... 37 (329) 99 315 122 (122)
Interest rate swaps.............. (66) (6) (72)
------ ------ ------ ------ ------
Adjusted interest sensitive
gap............................ $ (29) $ (335) $ 99 $ 315 $ 50
====== ====== ====== ====== ======
Cumulative adjusted interest
sensitive gap.................. $ (29) $ (364) $ (265) $ 50
</TABLE>
Firstar seeks to manage interest rate risk by adjusting the pricing and
levels of assets and liabilities with the use of off-balance sheet derivative
financial instruments. Firstar enters into interest rate swaps, caps and floors
as part of this process. These derivative instruments synthetically alter the
repricing characteristics of designated assets and liabilities. Firstar's
off-balance sheet financial derivative portfolio has a notional amount of $787
million as of December 31, 1996. Additional information on derivative financial
instruments is included in Notes 18 and 19 to the Consolidated Financial
Statements.
Net cash flows on off-balance sheet derivative instruments used to manage
interest rate risk reduced net interest revenue by $1.5 million during 1996 and
$9.1 million during 1995. This compared with a contribution to net interest
revenue of $1.0 million during 1994. Expressed in terms of net interest margin,
the impact of the derivative portfolio reduced margin by .01% and .05% in 1996
and 1995, respectively, and increased margin by .01% in 1994.
25
<PAGE> 27
CAPITAL
Total stockholders' equity was $1.7 billion at the end of 1996.
Stockholders' equity was 8.62% of total assets at the end of 1996 compared to
7.95% a year earlier. The market price of a share of Firstar common stock closed
the year at $26.25, a 32% increase from a year earlier. Total market
capitalization at December 31, 1996 was nearly $4 billion.
Firstar's capital management plan strives to match longer term capital
needs with maintaining sound capital levels. It also seeks to provide to
shareholders a total return consistent with the best performing companies.
Firstar has taken actions with respect to this capital management strategy.
In December 1996 Firstar issued, through Firstar Capital Trust I, $150
million of Trust Capital Securities. These securities qualify as Tier I capital
and are mandatorily redeemable in 30 years. The capital securities are similar
to preferred stock but have the tax advantage of deductibility of the cash
distributions.
A two for one stock split was announced in January 1997 with the issuance
of the shares occurring February 15, 1997. This action recognizes the doubling
of the market price per share of Firstar stock over the past two years and
returns the price to an attractive per share level with wider appeal to
individual investors. All per share data included in these financial statements
have been restated to give effect to this stock split.
A major stock repurchase program was announced in January 1997. The program
will buy back and retire up to 12 million shares of common stock representing 8%
of shares outstanding. In addition, Firstar will repurchase common shares for
reissue to fund employee stock plans. Firstar has sought to manage capital
levels through stock repurchases. These shares have been either retired or
reserved for issuance in acquisitions or for employee stock plans. Previous
programs have resulted in the repurchase of 8.1 million shares in 1996 and 9.6
million shares in 1995 at a cost of $190 and $173 million in each respective
year. Of these shares, 5.3 million were retired, 8.6 million were reissued in
acquisitions, 3.1 million were reissued for employee stock plans, and 700
thousand were reissued in preferred stock conversions.
Dividends paid to common stockholders totaled $110.3 million, or $.74 per
share, a 12% increase over 1995. This represented a 44% payout of net income for
1996. It is Firstar's target to maintain a dividend payout level approximately
equal to the median of its peer group which approximates 35%.
Bank regulatory agencies have established capital adequacy standards which
are used extensively in their monitoring and control of the industry. These
standards relate capital to level of risk by assigning different weightings to
assets and certain off-balance sheet activity. Capital is measured by two
risk-based ratios: tier I capital and total capital, which includes tier II
capital. The rules require that companies have minimum ratios of 4% and 8% for
tier I and total capital, respectively. As of December 31, 1996, Firstar had
tier I capital of 11.67% and total capital of 13.47%, significantly exceeding
regulatory minimum standards. Firstar is considered "well capitalized" by its
regulatory agency. The components of these capital levels are shown in Table 17.
Additionally, a tier I leverage ratio is also used by bank regulators as
another measure of capital strength. This ratio compares tier I capital to total
reported assets reduced by goodwill. The regulatory minimum level of this ratio
is 3%, and it acts as a constraint on the degree to which a company can leverage
its equity base. Firstar's tier I leverage ratio was 8.55% at December 31, 1996.
It is Firstar's intent to manage its tier I leverage ratio at the top quartile
level of its peers which is currently approximately 8.00%.
26
<PAGE> 28
TABLE 17
CAPITAL COMPONENTS AND RATIOS
<TABLE>
<CAPTION>
December 31
-----------------------------------------------
1996 1995 1994
----------- ----------- -----------
(thousands of dollars)
<S> <C> <C> <C>
Risk-based capital:
Stockholders' equity............................ $ 1,704,047 $ 1,524,820 $ 1,512,685
Trust capital securities........................ 150,000
Adjustment for unrealized (gains) losses on
securities available for sale................ (19,191) (34,127) 1,054
Minority interest in subsidiaries............... 2,384 3,171 2,920
Less disallowed intangibles..................... (200,540) (107,298) (107,967)
----------- ----------- -----------
Total tier I capital......................... 1,636,700 1,386,566 1,408,692
Allowable reserve for loan losses............... 175,725 167,564 156,426
Allowable long-term debt........................ 75,668 111,336 79,705
----------- ----------- -----------
Total tier II capital........................ 251,393 278,900 236,131
----------- ----------- -----------
Total capital................................ $ 1,888,093 $ 1,665,466 $ 1,644,823
=========== =========== ===========
Risk-adjusted assets.............................. $14,020,587 $13,377,391 $12,479,987
Tier I capital to risk-adjusted assets............ 11.67% 10.36% 11.29%
Total capital to risk-adjusted assets............. 13.47 12.45 13.18
Tier I leverage ratio............................. 8.55 7.52 8.15
</TABLE>
NEW ACCOUNTING RULES
The Financial Accounting Standards Board issued Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of", which was effective in 1996. The statement requires that
long-lived assets and certain identifiable intangibles to be held and used by a
company be reviewed for impairment whenever events or circumstances indicate
that the carrying amount of an asset may not be recoverable. The adoption of
this statement did not have any significant impact on the results of operations.
The Financial Accounting Standards Board issued Statement No. 123,
"Accounting for Stock Based Compensation", which was effective in 1996. The
statement requires that a fair value based method be used to value employee
compensation plans that include stock based awards. The statement permits a
company to either recognize compensation expense under SFAS No. 123 or continue
to use the prior accounting rules which did not consider the market value of
stock in certain award plans. If adoption of the statement's fair value
procedures are not used in the computation of compensation expense in the income
statement, the company must disclose in a footnote to the financial statements
the pro-forma impact of adoption. Firstar did not adopt SFAS No. 123 for
purposes of calculating stock based compensation expense. The effect of adopting
this statement is discussed in Note 12 to the Consolidated Financial Statements.
The Financial Accounting Standards Board issued Statement No. 125
"Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities. The statement provides consistent standards for transfers and
servicing of financial assets and extinguishment of liabilities based upon a
control oriented approach. Certain portions of the statement are effective for
transactions occurring in 1997. Firstar does not expect that the adoption of
this statement will have any significant impact on its results of operations or
financial position.
27
<PAGE> 29
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31 Average Balances
------------------------- -------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
(thousands of dollars)
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks................... $ 1,449,094 $ 1,310,746 $ 1,044,706 $ 895,767
Interest-bearing deposits with banks...... 6,349 5,467 8,743 15,668
Federal funds sold and resale
agreements.............................. 192,965 109,945 88,319 173,541
Trading securities........................ 13,489 10,029 10,140 14,243
Securities held to maturity............... 2,250,776 2,427,030 2,323,050 3,927,678
Securities available for sale............. 1,966,590 2,047,848 2,046,402 267,579
Loans..................................... 13,195,534 12,632,513 12,922,374 12,291,674
Reserve for loan losses................... (213,138) (195,283) (206,913) (197,181)
----------- ----------- ----------- -----------
Loans-net............................ 12,982,396 12,437,230 12,715,461 12,094,493
Bank premises and equipment............... 368,699 349,233 356,368 342,580
Customer acceptance liability............. 14,281 16,060 17,273 23,447
Other assets.............................. 522,781 454,712 548,367 460,404
----------- ----------- ----------- -----------
Total assets......................... $19,767,420 $19,168,300 $19,158,829 $18,215,400
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand.................................. $ 3,880,610 $ 3,461,462 $ 3,174,569 $ 2,827,623
Interest-bearing demand................. 1,687,885 1,602,350 1,552,786 1,571,378
Money market accounts................... 2,744,751 2,335,429 2,577,477 2,110,503
Savings passbook........................ 1,518,033 1,634,430 1,599,075 1,731,344
Certificates of deposit................. 5,382,918 5,277,975 5,392,430 5,261,589
----------- ----------- ----------- -----------
Total deposits....................... 15,214,197 14,311,646 14,296,337 13,502,437
Short-term borrowed funds................. 1,868,606 2,303,159 2,357,838 2,275,739
Long-term debt............................ 547,194 734,021 637,393 610,889
Bank acceptances outstanding.............. 14,281 16,060 17,273 23,447
Other liabilities......................... 269,095 278,594 270,951 277,495
----------- ----------- ----------- -----------
Total liabilities.................... 17,913,373 17,643,480 17,579,792 16,690,007
Trust capital securities.................. 150,000 3,689
Stockholders' equity:
Preferred stock......................... 11,344 15,344 12,662 20,572
Common stock............................ 94,266 94,266 94,266 96,090
Issued: 1996, 150,826,196 shares........
1995, 150,826,196 shares........
Capital surplus......................... 145,411 147,502 141,977 210,947
Retained earnings....................... 1,437,891 1,298,857 1,358,833 1,223,846
Treasury stock, at cost................. (4,056) (64,834) (49,339) (26,195)
Held: 1996, 490,396 shares..............
1995, 4,373,668 shares............
Restricted stock.......................... (442) (73) (875)
Unrealized gains on securities available
for sale................................ 19,191 34,127 17,022 1,008
----------- ----------- ----------- -----------
Total stockholders' equity........... 1,704,047 1,524,820 1,575,348 1,525,393
----------- ----------- ----------- -----------
Total liabilities and equity......... $19,767,420 $19,168,300 $19,158,829 $18,215,400
=========== =========== =========== ===========
</TABLE>
- ------------
The average balances are not covered by the Independent Auditors' Report.
See accompanying notes to consolidated financial statements.
28
<PAGE> 30
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended December 31
-----------------------------------------------
1996 1995 1994
------------- ------------- -------------
(thousands of dollars, except per share data)
<S> <C> <C> <C>
INTEREST REVENUE
Loans.................................................... $1,113,459 $1,081,685 $ 914,311
Securities:
Taxable................................................ 209,396 200,465 142,029
Nontaxable............................................. 54,589 53,329 51,251
---------- ---------- ----------
Total securities.................................... 263,985 253,794 193,280
Interest-bearing deposits with banks..................... 380 967 1,297
Federal funds sold and resale agreements................. 4,916 10,534 9,645
Trading securities....................................... 344 806 1,211
---------- ---------- ----------
Total interest revenue.............................. 1,383,084 1,347,786 1,119,744
INTEREST EXPENSE
Deposits:
Interest-bearing demand................................ 21,786 23,831 21,065
Money market accounts.................................. 102,927 85,231 57,274
Savings passbook....................................... 40,034 44,509 43,887
Certificates of deposit................................ 300,806 291,135 199,743
---------- ---------- ----------
Total deposits...................................... 465,553 444,706 321,969
Short-term borrowed funds................................ 123,629 133,151 67,622
Long-term debt........................................... 43,523 43,982 31,315
---------- ---------- ----------
Total interest expense.............................. 632,705 621,839 420,906
---------- ---------- ----------
NET INTEREST REVENUE..................................... 750,379 725,947 698,838
Provision for loan losses................................ 42,647 36,756 23,891
---------- ---------- ----------
NET INTEREST REVENUE AFTER LOAN LOSS PROVISION........... 707,732 689,191 674,947
OTHER OPERATING REVENUE
Trust and investment management fees..................... 145,690 132,377 120,349
Service charges on deposit accounts...................... 91,953 81,775 82,378
Credit card service revenue.............................. 69,945 62,106 55,867
Mortgage banking revenue................................. 49,100 38,479 35,479
Data processing fees..................................... 19,443 17,924 20,263
Securities gains (losses)................................ 66 (5,730) (3,583)
Other revenue............................................ 64,255 65,266 59,866
---------- ---------- ----------
Total other operating revenue....................... 440,452 392,197 370,619
OTHER OPERATING EXPENSE
Salaries................................................. 320,239 323,163 312,120
Employee benefits........................................ 71,277 72,198 68,841
Equipment expense........................................ 65,615 58,700 54,556
Net occupancy expense.................................... 64,235 57,992 52,984
Restructuring expense.................................... 53,267 23,151
Other expense............................................ 199,004 198,918 217,684
---------- ---------- ----------
Total other operating expense....................... 773,637 734,122 706,185
---------- ---------- ----------
INCOME BEFORE INCOME TAXES............................... 374,547 347,266 339,381
Provision for income taxes............................... 124,370 118,353 112,708
---------- ---------- ----------
NET INCOME............................................... $ 250,177 $ 228,913 $ 226,673
========== ========== ==========
Net income applicable to common stock.................... $ 249,310 $ 227,392 $ 224,450
PER COMMON SHARE
Net income............................................... $ 1.68 $ 1.50 $ 1.49
Dividends................................................ .74 .66 .58
</TABLE>
See accompanying notes to consolidated financial statements.
29
<PAGE> 31
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Net
Unrealized
Preferred Common Capital Retained Gain/ Restricted Treasury
Stock Stock Surplus Earnings (Loss) Stock Stock Total
--------- ------- -------- ---------- ---------- ---------- --------- ----------
(thousands of dollars, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993..... $28,916 $94,256 $209,234 $1,030,177 $ 1,100 $(1,335) $ (3,034) $1,359,314
Net income....................... 226,673 226,673
Cash dividends:
Common stock ($.58 per
share)....................... (75,081) (75,081)
Pooled affiliates.............. (9,707) (9,707)
Pooled affiliate converted 8,975
shares of preference stock into
179,182 shares of common
stock.......................... (1,937) 112 1,825 0
Pooled affiliates (185,286)
shares of net common stock
activity....................... (116) (5,494) (5,610)
Pooled affiliate change in
unrealized loss on securities
available for sale............. (1,166) (1,166)
Pooled affiliate granted 48,586
shares of restricted stock..... 30 533 (563) 0
Issued 3,603,082 shares of common
stock for bank acquisitions.... 2,078 22,735 4,551 29,364
Issued 170,768 shares of common
stock for employee benefit
plans.......................... 105 1,563 36 1,704
Purchased 748,616 shares of
treasury stock................. (12,222) (12,222)
Unrealized losses on securities
available for sale............. (988) (988)
Amortization/adjustment of
restricted stock............... (113) 224 111
Pooled affiliate
amortization/adjustment of
restricted stock............... 170 123 293
------- ------- -------- ---------- ------- ------- --------- ----------
BALANCE AT DECEMBER 31, 1994..... 26,979 96,465 230,453 1,172,062 (1,054) (1,551) (10,669) 1,512,685
Net income....................... 228,913 228,913
Cash dividends:
Preferred stock, series D
($35.00 per share)........... (1,247) (1,247)
Preferred stock ($.90 per
share)....................... (274) (274)
Common stock ($.66 per
share)....................... (99,838) (99,838)
Converted 8,087 shares of
preferred stock into 347,074
shares of common stock......... (4,044) 80 (123) 4,087 0
Redemption of 303,640 shares of
preferred stock................ (7,591) (759) (8,350)
Retired 5,251,398 shares of
common stock................... (3,283) (90,670) (93,953)
Issued 627,300 shares of common
stock for bank acquisitions.... 1,207 8,069 9,276
Issued 1,779,880 shares of common
stock for employee benefit
plans.......................... 689 5,057 12,509 18,255
Issued 503,804 shares of common
stock for note conversion...... 315 1,185 1,500
Purchased 4,313,196 shares of
treasury stock................. (78,830) (78,830)
Unrealized gains on securities
available for sale............. 35,181 35,181
Amortization/adjustment of
restricted stock............... 393 1,109 1,502
------- ------- -------- ---------- ------- ------- --------- ----------
BALANCE AT DECEMBER 31, 1995..... 15,344 94,266 147,502 1,298,857 34,127 (442) (64,834) 1,524,820
Net income....................... 250,177 250,177
Cash dividends:
Preferred stock, series D
($35.00 per share)........... (867) (867)
Common stock ($.74 per
share)....................... (110,276) (110,276)
Converted 8,000 shares of
preferred stock into 343,366
shares of common stock......... (4,000) (1,083) 5,083 0
Issued 9,781,096 shares of common
stock for bank acquisitions.... 4,787 215,019 219,806
Issued 1,854,724 shares of common
stock for employee benefit
plans.......................... (5,783) 30,984 25,201
Purchased 8,080,200 shares of
treasury stock................. (189,997) (189,997)
Unrealized gains on securities
available for sale............. (14,936) (14,936)
Amortization/adjustment of
restricted stock............... (12) 442 (311) 119
------- ------- -------- ---------- ------- ------- --------- ----------
BALANCE AT DECEMBER 31, 1996..... $11,344 $94,266 $145,411 $1,437,891 $19,191 $ 0 $ (4,056) $1,704,047
======= ======= ======== ========== ======= ======= ========= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
30
<PAGE> 32
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
(thousands of dollars)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.............................................. $ 250,177 $ 228,913 $ 226,673
Adjustments:
Provision for loan losses............................. 42,647 36,756 23,891
Depreciation, amortization and accretion.............. 70,647 50,520 44,211
Net (increase) decrease in trading securities......... (853) 19,021 (16,559)
Net decrease (increase) in loans held for resale...... 173,454 (278,563) 275,326
(Gain) loss on securities and other assets............ (1,325) 3,866 (9,164)
Deferred income taxes................................. (3,664) (335) 6,784
Decrease (increase) in other assets................... 60,443 6,321 25,684
(Decrease) increase in other liabilities.............. (25,740) (3,983) 30,045
Other -- net.......................................... (3,489) 3,044 (5,827)
----------- ----------- -----------
Net cash provided by operating activities........... 562,297 65,560 601,064
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in federal funds sold and resale
agreements............................................ (83,020) 241,359 (58,072)
Net (increase) decrease in interest-bearing deposits
with banks............................................ (882) 28,065 (25,166)
Sales of securities held to maturity.................... 17,541
Sales of securities available for sale.................. 253,438 270,984 131,801
Maturities of securities held to maturity............... 408,630 666,169 1,066,192
Maturities of securities available for sale............. 432,002 156,018
Purchases of securities held to maturity................ (224,488) (1,410,008) (1,662,474)
Purchases of securities available for sale.............. (371,728) (90,936) (6,539)
Net decrease (increase) in loans........................ 187,545 (521,197) (1,070,168)
Net cash from acquisitions.............................. 64,718 294 25,884
Proceeds from sales of foreclosed assets................ 8,226 12,074 18,243
Purchases of bank premises and equipment................ (57,773) (55,369) (58,735)
Proceeds from sales of bank premises and equipment...... 3,221 4,638 1,125
----------- ----------- -----------
Net cash provided (used) in investing activities.... 619,889 (680,368) (1,637,909)
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in deposits..................... (176,297) 828,503 (247,949)
Net (decrease) increase in short-term borrowed funds.... (508,659) 103,908 1,094,553
Repayment of long-term debt............................. (216,491) (25,127) (31,706)
Proceeds from long-term debt............................ 186,760 43,690
Proceeds from trust capital securities.................. 148,500
Cash dividends.......................................... (111,143) (101,359) (84,788)
Preferred stock redemption.............................. (8,350)
Common/treasury stock repurchases....................... (197,324) (165,456) (12,222)
Common/treasury stock issued............................ 17,576 14,561 (5,777)
----------- ----------- -----------
Net cash (used) provided by financing activities.... (1,043,838) 833,440 755,801
----------- ----------- -----------
Net Increase (Decrease) in Cash and Due from Banks...... 138,348 218,632 (281,044)
Cash and due from banks at beginning of year............ 1,310,746 1,092,114 1,373,158
----------- ----------- -----------
Cash and due from banks at end of year.................. $ 1,449,094 $ 1,310,746 $ 1,092,114
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest.............................................. $ 636,493 $ 600,006 $ 407,182
Income taxes.......................................... 116,052 116,443 113,463
Transfers to foreclosed assets from loans............... 8,345 9,166 10,708
Acquisitions:
Assets acquired....................................... 1,370,563 85,762 610,541
Cash paid for purchase of stock....................... $ (5,535) $ $ (29,101)
Cash acquired......................................... 70,253 294 54,985
----------- ----------- -----------
Net cash from acquisitions.......................... $ 64,718 $ 294 $ 25,884
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
31
<PAGE> 33
FIRSTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of business--Firstar Corporation is a registered bank holding
company providing financial services through 243 locations in Wisconsin,
Illinois, Minnesota, Iowa and Arizona. These banking activities include
accepting demand, time and savings deposits; making both secured and unsecured
business and personal loans; providing trust and investment management services
to individuals and corporate customers; providing correspondent banking services
to other financial institutions; conducting mortgage banking activities;
providing international banking services; conducting retail brokerage
operations; providing mutual fund custody services; and other related banking
activities.
Principles of presentation--The consolidated financial statements include
the accounts of Firstar and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation. Results of
operations of companies purchased are included from the date of acquisition.
Assets and liabilities of purchased companies are recorded at estimated fair
value at the date of acquisition. Financial statements have been restated to
include companies acquired under pooling of interests when material. Certain
prior year amounts have been reclassified to conform to current year
classifications. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Securities--Purchases of securities that are made with the positive intent
and ability to hold them to maturity are carried at cost, adjusted for
amortization of premium and accretion of discount using a level yield method.
Securities to be held for indefinite periods of time and not intended to be held
to maturity or on a long-term basis are classified as available for sale and
carried at market value. Valuation adjustments, net of deferred tax, are
recorded as a component of stockholders' equity. Securities held for indefinite
periods of time may include securities that management intends to use as part of
its asset/liability management strategy or have been acquired in business
acquisitions and are designated to be sold. Gains or losses on sales of
securities are computed on the basis of specific identification of the adjusted
cost of each security. Trading account securities are carried at market.
Valuation adjustments are included in other revenue in the consolidated
statements of income.
Loans--Loans, which include lease financing receivables, are stated at the
principal amount. Interest is accrued on all loans not discounted by applying
the interest rate to the amount outstanding. On discounted loans, income is
recognized on a basis which results in approximately level rates of return over
the term of the loans. Loan origination and commitment fees and certain direct
loan origination costs are being deferred where material and the net amount
amortized as an adjustment of the related loans' yield. These amounts are being
amortized over the contractual life of the related loans. Where it is not
reasonable to expect that income will be realized, accrual of income ceases and
these loans are placed on a "cash basis" for purposes of income recognition.
Loans upon which foreclosure action is commenced or for which borrowers have
begun bankruptcy proceedings are reviewed individually as to continuation of
interest accrual. Mortgage loans held for sale are carried at the lower of
aggregate cost or market, after consideration of related loan sale commitments.
Reserve for loan losses--The reserve for loan losses is maintained at a
level adequate to provide for potential loan losses through charges to operating
expense. The reserve is based upon a continuing review of loans which includes
consideration of actual net loan loss experience, changes in the size and
character of the loan portfolio, identification of problem situations which may
affect the borrowers' ability to repay, estimated value of underlying collateral
and evaluation of current economic conditions. With respect to loans which are
deemed impaired, the calculation of reserve levels is based upon the discounted
present value of expected cash
32
<PAGE> 34
flows received from the debtor or other measures of value such as market prices
or collateral values. Firstar considers all nonaccrual commercial loans to be
impaired. Loan losses are recognized through charges to the reserve. Installment
and credit card loan losses are charged to the reserve based upon fixed
delinquency periods. All other loans are evaluated individually and charged to
the reserve to the extent that outstanding principal balances are deemed
uncollectible. Any subsequent recoveries are added to the reserve.
Foreclosed assets--Foreclosed assets, the balance of which is included in
other assets, includes primarily properties acquired through loan foreclosure
proceedings or acceptance of deeds in lieu of foreclosure. These properties are
recorded at the lower of the carrying value of the related loans or the fair
market value of the foreclosed asset acquired less the estimated costs to sell
the foreclosed asset. Initial valuation adjustments, if any, are charged against
the reserve for loan losses. Subsequent reevaluations of the properties, which
indicate reduced value, are recognized through charges to operating expense.
Revenues and expenditures related to holding and operating these properties are
included in other operating expense.
Bank premises and equipment--Bank premises and equipment are stated at cost
less depreciation, which has been accumulated on the straight-line basis.
Maintenance and repairs are charged to expense and betterments are capitalized.
Intangible assets--Intangible assets, consisting of goodwill and core
deposit premium, are included in other assets in the balance sheet. Goodwill is
amortized over periods of fifteen to twenty years. Core deposit intangibles are
amortized over a life of up to ten years. Firstar periodically evaluates the
carrying value and remaining amortization period of all long lived assets
including intangible assets for impairment. Adjustments are recorded when the
benefit of the asset decreases due to disposition of branches or deposits
associated with the entity acquired in the purchase business combination.
Mortgage servicing rights--Mortgage servicing rights associated with loans
originated and sold, where servicing is retained, are capitalized and included
in other assets in the balance sheet. The value of these capitalized servicing
rights, along with purchased mortgage servicing rights, are amortized in
relation to the servicing revenue expected to be earned. The carrying value of
these rights are reviewed for impairment. For purposes of measuring impairment,
the rights are stratified into certain risk characteristics including underlying
loan type, note rate, prepayment trends and external market factors.
Stock based compensation plans--Firstar has various stock based
compensation plans that authorize the granting of stock options, restricted
stock, and other stock based awards to eligible employees. Firstar has elected
not to adopt the recognition provisions of SFAS No. 123, "Accounting for Stock
Based Compensation" which requires a fair-value based method of accounting for
stock options and equity awards and will continue to follow APB No. 25
"Accounting for Stock Issued & Employees" and related interpretations to account
for its stock based compensation plans.
Income taxes--Firstar and its subsidiaries file a consolidated federal
income tax return. Income taxes are accounted for using the asset and liability
method. Under this method, deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to differences between
the financial statement carrying amount of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates in effect for the year in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
Foreign currency transactions--Monetary assets and liabilities recorded in
foreign currencies are translated at the rate of exchange in effect at each
year-end. Income statement items are translated monthly using the average rate
for the month. Firstar enters into forward exchange contracts on behalf of its
customers and hedges its risk by entering into offsetting transactions with
other counterparties. The fair value of these transactions are included in other
assets and liabilities and the related gain or loss is recorded in other
revenue.
Derivative and other financial instruments--Firstar uses interest rate
swaps, caps and floors to manage its interest rate risks arising from recorded
financial assets and liabilities. These instruments are accounted for on an
accrual basis when the instrument can be demonstrated to effectively change the
cash flows of a designated asset or liability and such asset or liability
exposes Firstar to interest rate risk.
33
<PAGE> 35
Amounts to be paid or received under interest rate swaps, caps and floors
are recognized as interest income or expense of the related asset or liability.
Gains and losses on early termination of these instruments are deferred and
amortized as an adjustment to yield on the related asset or liability over the
shorter of the remaining contract life or the maturity of the related asset or
liability. If the related asset or liability is sold or otherwise liquidated,
the instrument is marked to market, with resultant gains and losses recognized
in other revenue. Interest rate swaps, caps and floors that do not meet this
criteria are carried at market value with changes therein recognized in other
revenue. Fees paid or received in connection with caps and floors are deferred
and amortized to income or expense over the life of the instrument.
Interest rate swaps, caps and floors entered into as an intermediary are
accounted for at market value. Realized gains and losses and changes in market
value are recognized in other operating revenue.
Cash and cash equivalents--For purposes of the consolidated statements of
cash flows, cash and cash equivalents are considered to include the balance
sheet caption cash and due from banks.
Income per common share--Net income per common share is based on the
weighted average number of shares of common stock outstanding during each year,
after giving effect to common stock splits and the amortization of restricted
stock. The weighted average shares were 148,061,302 in 1996, 151,432,454 in 1995
and 150,390,910 in 1994. For calculation purposes, earnings are reduced by
preferred stock dividends. Common stock equivalents are not significant in any
year presented.
NOTE 2. MERGERS AND ACQUISITIONS
The following table summarizes completed acquisitions:
<TABLE>
<CAPTION>
Total Method of
Name of Institution Assets Acquisition Date Consideration Accounting
------------------- ------ ---------------- ------------- ----------
(millions of dollars)
<S> <C> <C> <C> <C>
1996:
American Bancorporation, Inc.
St. Paul, MN....................... $1,187 July 1996 Cash $38.6 Purchase
8,000,000 shares
of common stock
Harvest Financial Corp.
Dubuque, IA........................ 353 January 1996 1,774,408 shares Purchase
of common stock
------
$1,553
======
1995:
Investors Bank Corp.
Wayzata, MN........................ $1,134 April 1995 6,013,846 shares Pooling of
of common stock interests
First Moline Financial Corp.
Moline, IL......................... 86 March 1995 627,300 shares Purchase
of common stock
First Colonial Bankshares Corporation
Chicago, IL........................ 1,780 January 1995 15,401,534 Pooling of
shares interests
of common stock
------
$3,000
======
1994:
First Southeast Banking Corp.
Lake Geneva, WI.................... $ 423 October 1994 3,603,154 shares Pooling of
of common stock interests
------
$ 423
======
</TABLE>
34
<PAGE> 36
NOTE 3. SECURITIES
The amortized cost and approximate market values of securities are as
follows:
<TABLE>
<CAPTION>
December 31, 1996
----------------------------------------------------
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
---------- ---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C>
Securities held to maturity:
U.S. Treasury and federal agencies............. $ 756 $ $ $ 756
Mortgage backed obligations of federal
agencies.................................... 1,092,528 28,511 (3,948) 1,117,091
State and political subdivisions............... 1,147,387 15,673 (3,544) 1,159,516
Corporate debt................................. 10,027 23 (43) 10,007
Other.......................................... 78 78
---------- ------- ------- ----------
Total....................................... $2,250,776 $44,207 $(7,535) $2,287,448
========== ======= ======= ==========
Securities available for sale:
U.S. Treasury and federal agencies............. $1,771,460 $32,950 $(3,612) $1,800,798
Mortgage backed obligations of federal
agencies.................................... 8,624 96 (239) 8,481
State and political subdivisions............... 7,601 55 (30) 7,626
Equity securities.............................. 111,315 111,315
Money market mutual funds...................... 38,370 38,370
---------- ------- ------- ----------
Total....................................... $1,937,370 $33,101 $(3,881) $1,966,590
========== ======= ======= ==========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
----------------------------------------------------
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
---------- ---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C>
Securities held to maturity:
U.S. Treasury and federal agencies............. $ 2,146 $ 5 $ (5) $ 2,146
Mortgage backed obligations of federal
agencies.................................... 1,266,458 46,694 (192) 1,312,960
State and political subdivisions............... 1,141,987 21,988 (3,223) 1,160,752
Corporate debt................................. 15,590 85 (36) 15,639
Other.......................................... 849 849
---------- ------- ------- ----------
Total....................................... $2,427,030 $68,772 $(3,456) $2,492,346
========== ======= ======= ==========
Securities available for sale:
U.S. Treasury and federal agencies............. $1,862,825 $59,043 $(4,143) $1,917,725
Mortgage backed obligations of federal
agencies.................................... 9,891 131 (235) 9,787
State and political subdivisions............... 7,796 80 (45) 7,831
Corporate debt................................. 1,186 11 (1) 1,196
Equity securities.............................. 92,767 92,767
Money market mutual funds...................... 18,542 18,542
---------- ------- ------- ----------
Total....................................... $1,993,007 $59,265 $(4,424) $2,047,848
========== ======= ======= ==========
</TABLE>
Securities with an amortized cost of $1,786,351,000 were transferred into
available for sale from held to maturity on December 31, 1995. This was done in
accordance with Financial Accounting Standards Board implementation guidance
which permitted a one-term reassessment of securities classification under SFAS
No. 115.
35
<PAGE> 37
The amortized cost and approximate market value of securities at December
31, 1996, by contractual maturity, are shown below. Maturities of mortgage
backed obligations were estimated based on anticipated payments.
<TABLE>
<CAPTION>
Securities Securities
Held to Maturity Available for Sale
------------------------ ------------------------
Amortized Market Amortized Market
Cost Value Cost Value
---------- ---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C>
Due in one year or less....................... $ 317,399 $ 322,178 $ 570,986 $ 569,855
Due after one year through five years......... 1,005,790 1,022,696 1,074,544 1,100,441
Due after five years through ten years........ 731,826 745,729 174,583 179,253
Due after 10 years............................ 195,761 196,845 5,942 5,726
---------- ---------- ---------- ----------
$2,250,776 $2,287,448 1,826,055 1,855,275
========== ==========
Equity securities............................. 111,315 111,315
---------- ----------
Total.................................... $1,937,370 $1,966,590
========== ==========
</TABLE>
Gross gains of $67,000, $487,000 and $718,000 and gross losses of $1,000,
$6,217,000 and $4,301,000 were realized on securities sales in 1996, 1995 and
1994, respectively.
The amortized cost of securities pledged to secure public or trust
deposits, securities sold under repurchase agreements and for other purposes as
required or permitted by law was $1,927,236,000 at December 31, 1996 and
$1,823,494,000 at December 31, 1995.
NOTE 4. LOANS
The composition of loans, including lease financing receivables, is
summarized below. Loans are presented net of unearned discount which amounted to
$22,740,000 and $18,443,000 at December 31, 1996 and 1995, respectively.
Commercial loans pledged to secure public deposits were $184,333,000 on December
31, 1996 and $150,657,000 on December 31, 1995. Consumer mortgage loans held for
resale were $143,614,000 and $326,433,000 on December 31, 1996 and 1995,
respectively.
<TABLE>
<CAPTION>
December 31
--------------------------
1996 1995
----------- -----------
(thousands of dollars)
<S> <C> <C>
Commercial and industrial................................... $ 3,366,016 $ 3,078,148
Commercial construction..................................... 418,040 387,378
Commercial mortgage......................................... 2,574,376 2,462,010
Other commercial............................................ 953,145 1,038,677
----------- -----------
Commercial................................................ 7,311,577 6,966,213
Credit card................................................. 684,619 619,868
Consumer mortgage........................................... 2,660,290 2,722,531
Home equity................................................. 1,121,580 935,907
Other consumer.............................................. 1,417,468 1,387,994
----------- -----------
Consumer.................................................. 5,883,957 5,666,300
----------- -----------
Total.................................................. $13,195,534 $12,632,513
=========== ===========
</TABLE>
36
<PAGE> 38
Loans on which income is recognized only as cash payments are received or
is accrued at less than the original contract rate are summarized below.
<TABLE>
<CAPTION>
December 31
------------------------------------------
1996 1995 1994
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Commercial.............................................. $ 66,913 $ 74,574 $ 59,448
Consumer................................................ 19,193 16,187 9,831
-------- -------- --------
Total.............................................. $ 86,106 $ 90,761 $ 69,279
======== ======== ========
</TABLE>
The effect of nonperforming loans on interest revenue was as follows:
<TABLE>
<CAPTION>
Years Ended December 31
------------------------------------------
1996 1995 1994
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Interest at original contract rate...................... $ 9,236 $ 8,348 $ 8,229
Interest collected...................................... 4,474 3,768 3,844
-------- -------- --------
Net reduction of interest revenue.................. $ 4,762 $ 4,580 $ 4,385
======== ======== ========
</TABLE>
NOTE 5. RESERVE FOR LOAN LOSSES
An analysis of the reserve for loan losses is as follows:
<TABLE>
<CAPTION>
Years Ended December 31
------------------------------------------
1996 1995 1994
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Balance at beginning of year............................ $195,283 $190,552 $189,714
Provision for loan losses............................... 42,647 36,756 23,891
Loan recoveries......................................... 24,450 19,973 19,961
Loan charge-offs........................................ (63,208) (52,863) (47,728)
Reserves of acquired banks.............................. 13,966 865 4,714
-------- -------- --------
Balance at end of year.................................. $213,138 $195,283 $190,552
======== ======== ========
Charge-offs, net of recoveries, as a percentage of
average loans......................................... .30% .27% .25%
Reserve as a percentage of year-end loans............... 1.62 1.55 1.60
</TABLE>
A portion of the reserve for loan losses is allocated to loans deemed
impaired. All impaired loans are included in nonperforming assets. Information
on these loans and their related reserve for loan losses is as follows:
<TABLE>
<CAPTION>
December 31
-------------------------
1996 1995
-------- --------
(thousands of dollars)
<S> <C> <C>
Impaired loans:
With reserve allocation................................... $ 41,643 $ 43,851
Without reserve allocation................................ 24,242 29,347
-------- --------
Total.................................................. $ 65,885 $ 73,198
======== ========
Reserve allocated......................................... $ 4,914 $ 8,952
Average balance of impaired loans during year............. 69,783 67,271
Interest income recognized during year.................... 4,296 3,200
</TABLE>
37
<PAGE> 39
NOTE 6. BANK PREMISES AND EQUIPMENT
Bank premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
December 31
-----------------------
1996 1995
---------- ----------
(thousands of dollars)
<S> <C> <C>
Land........................................................ $ 45,991 $ 43,076
Bank premises............................................... 345,986 332,142
Equipment................................................... 311,979 285,605
--------- ---------
Subtotal.................................................. 703,956 660,823
Accumulated depreciation.................................... (335,257) (311,590)
--------- ---------
Total..................................................... $ 368,699 $ 349,233
========= =========
</TABLE>
Depreciation charged to other operating expense amounted to $46,791,000,
$42,684,000 and $40,003,000 in 1996, 1995 and 1994, respectively. Rental expense
for bank premises and equipment amounted to $36,662,000, $34,057,000 and
$35,804,000 in 1996, 1995 and 1994, respectively. Contingent rentals and
sublease rental income amounts were not significant.
Occupancy expense is net of amortization of a total of $68 million of
pre-tax deferred gain on a building sale which is being amortized through 1997,
at which time the related leaseback expires. This amortization was $6,240,000 in
1996, $6,240,000 in 1995 and $9,029,000 in 1994.
Firstar and its subsidiaries are obligated under noncancelable operating
leases for various bank premises and equipment. These leases expire
intermittently over the years through 2034. The minimum rental commitments under
noncancelable leases for the next five years are shown below:
<TABLE>
<CAPTION>
Period Amount
------ -------
(thousands of dollars)
<S> <C> <C>
Bank premises and equipment................................. 1997 $32,070
1998 28,218
1999 25,379
2000 24,192
2001 22,255
</TABLE>
NOTE 7. INTANGIBLE ASSETS
Intangible assets, net of accumulated amortization, are summarized as
follows:
<TABLE>
<CAPTION>
December 31
------------------------------------
1996 1995 1994
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Goodwill.................................................... $186,462 $107,298 $107,967
Core deposit intangibles.................................... 24,438 15,161 17,538
-------- -------- --------
Total..................................................... $210,900 $122,459 $125,505
======== ======== ========
Amortization of intangibles during year..................... $ 15,321 $ 11,068 $ 10,291
</TABLE>
38
<PAGE> 40
NOTE 8. MORTGAGE SERVICING RIGHTS
The fair value of capitalized mortgage servicing rights was $17.0 million
on December 31, 1996 and $12.7 million on December 31, 1995. Firstar serviced
$3,164 million and $3,267 million of mortgage loans for other investors as of
December 31, 1996 and 1995, respectively. Changes in capitalized mortgage
servicing rights are summarized as follows:
<TABLE>
<CAPTION>
Years Ended December 31
----------------------------
1996 1995 1994
-------- ------- -------
(thousands of dollars)
<S> <C> <C> <C>
Balance--beginning of year.................................. $ 9,538 $ 7,238 $ 6,810
Originated servicing rights capitalized..................... 15,356 6,308
Purchased servicing rights capitalized...................... 632 788 2,447
Excess servicing rights capitalized......................... 2,129 1,082
Amortization of servicing rights............................ (2,461) (1,641) (1,455)
Sales of servicing rights................................... (12,354) (3,155) (1,646)
Valuation allowance......................................... (112)
-------- ------- -------
Balance--end of year........................................ $ 12,728 $ 9,538 $ 7,238
======== ======= =======
</TABLE>
The Financial Accounting Standard Board issued Statement No. 125
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities" which is effective for transactions entered into after December
31, 1996. This statement supercedes the existing standards on accounting for
mortgage servicing rights and provides accounting and reporting standards for
transfers and servicing of all financial assets and extinguishments of
liabilities based upon consistent application of a financial components approach
that focuses on control. Firstar does not expect that the adoption of this
statement will have a significant effect on its result of operations or
financial position.
NOTE 9. SHORT-TERM BORROWED FUNDS
Short-term borrowed funds are summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
(thousands of dollars)
<S> <C> <C> <C>
Federal funds purchased and repurchase agreements:
At December 31......................................... $1,223,037 $1,980,442 $2,133,709
Average during year.................................... 1,902,766 1,994,281 1,530,644
Maximum month-end balance.............................. 2,110,250 2,407,507 2,133,709
Average rate at year-end............................... 5.66% 5.44% 5.59%
Average rate during year............................... 5.25 5.83 4.28
</TABLE>
Federal funds purchased, which totaled $627 million at December 31, 1996,
generally represent one-day borrowings obtained primarily from financial
institutions in Firstar's marketplace in conjunction with their customer
correspondent relationships with the subsidiary banks. Securities sold under
repurchase agreements, which totaled $596 million at December 31, 1996,
represent borrowings maturing within one year that are secured by U.S. Treasury
and federal agency securities. Other short-term borrowed funds comprise
primarily treasury, tax and loan notes and Federal Home Loan Bank notes. Firstar
additionally has a $125 million line of credit agreement in place which expires
in August 1999. The credit agreement has certain restrictive covenants and
requires payment of quarterly fees based upon both the commitment amount and
usage levels. $75 million in advances were outstanding under this line at the
end of 1996.
39
<PAGE> 41
NOTE 10. LONG-TERM DEBT
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
December 31
----------------------
1996 1995
-------- --------
(thousands of dollars)
<S> <C> <C>
Federal Home Loan Bank notes................................ $345,946 $486,760
7.15% subordinated notes.................................... 100,000 100,000
10.25% subordinated notes................................... 78,340 78,340
10% notes................................................... 43,910
Other debt.................................................. 22,908 25,011
-------- --------
Total..................................................... $547,194 $734,021
======== ========
</TABLE>
Notes payable to the Federal Home Loan Bank are collateralized by Federal
Home Loan Bank stock and first mortgage real estate loans. The notes mature from
1997 through 2011 and have a variable interest rate with an average of 5.67% as
of December 31, 1996.
Firstar issued $100,000,000 of 7.15% notes under an indenture dated as of
August 28, 1995. The notes, which are subordinated to all unsubordinated
indebtedness of Firstar for borrowed money, are unsecured and mature September
1, 2000. The notes may be redeemed on or after September 1, 1998. The indenture
contains a provision which restricts the disposition of or subjecting to lien
any common stock of certain subsidiaries.
Firstar issued $100,000,000 of 10 1/4% notes under an indenture dated as of
May 1, 1988. The notes, which are subordinated to all unsubordinated
indebtedness of Firstar for borrowed money, are unsecured and mature May 1,
1998. The indenture contains a provision which restricts the disposition of or
subjecting to lien any common stock of certain subsidiaries.
Firstar issued $50,000,000 of 10% notes under an indenture dated as of June
1, 1986. The notes were unsecured and matured June 1, 1996.
Other debt at December 31, 1996 includes loans sold under repurchase
agreements of $5,000,000, $10,000,000 and $5,000,000, which mature in 1998, 1999
and 2002, respectively, and bearing interest at a variable LIBOR based rate, and
capitalized lease obligations of $2,761,000.
Long-term debt has aggregate maturities for the five years 1997 through
2001 as follows: $190,212,000 in 1997, $105,693,000 in 1998, $12,313,000 in
1999, $229,837,000 in 2000 and $848,000 in 2001.
NOTE 11. STOCKHOLDERS' EQUITY AND TRUST CAPITAL SECURITIES
The authorized and outstanding shares of Firstar are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1996 1995
----------- -----------
<S> <C> <C>
Preferred stock, $1.00 par value
Authorized-series C....................................... 2,500,000 2,500,000
Preferred stock from acquired banks:
Series D
Authorized............................................. 40,250 40,250
Outstanding............................................ 22,688 30,688
Common stock, $1.25 par value:
Authorized................................................ 240,000,000 240,000,000
Outstanding (net of treasury stock)....................... 150,335,800 146,452,528
</TABLE>
Under the Firstar Shareholder Rights Plan each share of common stock
entitles its holder to one-quarter right. Under certain conditions, each right
entitles the holder to purchase one one-hundredth of a share of
40
<PAGE> 42
series C preferred stock at a price of $85, subject to adjustment. The rights
will only be exercisable if a person or group has acquired, or announced an
intention to acquire, 20% or more of the outstanding shares of Firstar common
stock. Under certain circumstances, including the existence of a 20% acquiring
party, each holder of a right, other than the acquiring party, will be entitled
to purchase at the exercise price Firstar common shares having a market value of
two times the exercise price. In the event of the acquisition of Firstar by
another company subsequent to a party acquiring 20% or more of Firstar common
stock, each holder of a right is entitled to receive the acquiring company's
common shares having a market value of two times the exercise price. The rights
may be redeemed at a price of $.01 per right prior to the existence of a 20%
acquiring party, and thereafter, may be exchanged for one common share per right
prior to the existence of a 50% acquiring party. The rights will expire on
January 19, 1999. The rights do not have voting or dividend rights and until
they become exercisable, have no dilutive effect on the earnings of Firstar.
Under the rights plan, the Board of Directors of Firstar may reduce the
thresholds applicable to the rights from 20% to not less than 10%.
Preferred shares, when issued, rank prior to common shares both as to
dividends and liquidation but have no general voting rights. The series C
preferred stock, none of which is outstanding, is entitled to 100 votes per
share and other rights such that the value of a one one-hundredth interest in a
series C preferred share should approximate the value of one common share.
On January 31, 1995, Firstar converted 38,775 shares of First Colonial
Bankshares Corporation series C preference stock, represented by 775,500
depository shares, into like shares of its series D preferred stock in
connection with the acquisition of First Colonial Bankshares Corporation. Each
share receives annual dividends of $35 and is convertible into 42.92 shares of
common stock. Shares may be redeemed after June 30, 1997 at $500 per share.
Dividends deducted from net income for purposes of determining net income
applicable to common stockholders were $867,000 in 1996, $1,521,000 in 1995 and
$2,223,000 in 1993.
A two-for-one stock split was completed on February 15, 1997 to common
stockholders. All common stock and per share data included in the consolidated
financial statements and in the notes to consolidated financial statements have
been retroactively adjusted to reflect the split.
On December 17, 1996, Firstar issued $150 million of trust capital
securities through Firstar Capital Trust I, a statutory business trust, of which
all common securities are owned by Firstar. The capital securities pay
cumulative cash distributions semiannually at an annual rate of 8.32%. The
securities are redeemable from December 23, 2006 until December 23, 2016 at a
declining rate of 104.16% to 100.0% of the principal amount. After December 23,
2016 they are redeemable at par until December 15, 2026 when redemption is
mandatory. Prior redemption is permitted under certain circumstances such as
changes in tax or regulatory capital rules. The proceeds of the capital
securities were invested by the Trust in junior subordinated debentures of
Firstar. Firstar guarantees the capital securities through the combined
operation of the debentures and other related documents. Firstar's obligations
under the guarantee are unsecured and subordinate to senior and subordinated
indebtedness of Firstar. The capital securities qualify as tier I capital for
regulatory capital purposes.
NOTE 12. STOCK BASED COMPENSATION PLANS
Firstar has two stock based compensation plans, a stock option plan and a
performance based stock plan.
Firstar's incentive stock plan provides for a maximum grant of 11.2 million
stock options, appreciation rights, and/or shares of stock. Stock options are
granted with an exercise price equal to the stock fair market value at the date
of grant. All stock options expire ten years and one month after the date of
grant and vest and become fully exercisable after a period from between one to
three years. At December 31, 1996, there were 5,290,000 additional shares
available for grant under the Plan.
Firstar in connection with bank acquisitions, converted existing options
for shares of the acquired banks into an equivalent number of options for shares
of Firstar common stock. As of December 31, 1996 these options totaled 796,904
with an exercise price of $2.38 to $11.81. No additional stock options will be
awarded under these plans.
41
<PAGE> 43
The following table summarizes option activity under these plans:
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED-AVERAGE
SHARES EXERCISE PRICE
---------- ----------------
<S> <C> <C>
Options outstanding at December 31, 1993.................... 5,621,744 $ 8.89
Granted..................................................... 1,098,516 12.78
Assumed through acquisitions................................ 55,664 6.27
Exercised................................................... (524,186) 4.25
Forfeited................................................... (93,410) 6.09
----------
Options outstanding at December 31, 1994.................... 6,158,328 10.00
Granted..................................................... 985,200 13.69
Assumed through acquisitions................................ 5,812 4.72
Exercised................................................... (1,524,979) 8.93
Forfeited................................................... (162,266) 12.88
Expired..................................................... (6,000) 15.84
----------
Options outstanding at December 31, 1995.................... 5,456,095 10.86
Granted..................................................... 1,021,400 20.12
Assumed through acquisitions................................ 69,904 6.36
Exercised................................................... (1,744,354) 8.98
Forfeited................................................... (290,336) 16.79
Expired..................................................... (25,444) 2.09
----------
Options outstanding at December 31, 1996.................... 4,487,258 13.30
==========
</TABLE>
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------------------- -------------------------------
WEIGHTED-AVG.
RANGE OF NUMBER REMAINING WEIGHTED-AVG. NUMBER WEIGHTED-AVG.
EXERCISE PRICES OUTSTANDING CONTRACT LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
--------------- ----------- ------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$2.38 to 3.46................. 104,127 1.54yr. $ 3.34 104,127 $ 3.34
$5.30 to 7.91................. 869,743 3.55 6.93 869,743 6.93
$8.09 to 11.83................ 545,738 2.25 9.91 545,738 9.91
$12.46 to 16.25............... 2,076,850 7.07 14.42 1,029,240 14.54
$20.00 to 22.75............... 890,800 9.19 20.12 45,200 20.00
--------- ---------
Options at December 31,
1996........................ 4,487,258 2,594,048
========= =========
</TABLE>
Firstar's performance based stock plan grants performance shares to key
executives. Estimated future payouts are predicated upon achievement of Firstar
return on equity goals in relation to peer group banking companies and the
market value of Firstar's common stock over a three year period. The grants are
designated in shares of stock and the participant is paid the value of the
earned shares one-half in cash and one-half in shares of Firstar's common stock
plus a dividend equivalent for the performance period. The maximum number of
performance shares awarded in 1996, 1995, and 1994 were 132,896, 178,030 and
141,646 respectively. The maximum number of common shares awardable under these
plans were 66,448 at $20.00 per share in 1996, 89,015 at $13.69 per share in
1995, and 70,823 at $15.44 per share in 1994. Compensation expense recorded
under this plan was $4,104,000 in 1996, $2,092,000 in 1995, and $749,000 in
1994.
For purposes of providing the pro-forma disclosures required under SFAS No.
123 "Accounting for Stock Based Compensation" the fair value of stock options
granted was estimated using the Black-Scholes option pricing model. The per
share weighted-average fair value of stock options granted during 1996 and 1995
was $4.78 and $3.27 on the date of grant with the following weighted-average
assumptions: 1996 -- expected dividend yield 3.4%, risk-free interest rate of
5.55%, an expected life of 7 years and expected volatility of 23%; 1995 --
expected dividend yield 4.4%, risk-free interest rate of 7.76%, an expected life
of 7 years and expected volatility of 22%.
Had compensation cost for Firstar's stock-based plans been determined in
accordance with SFAS No. 123, net income would have been $248.9 million in 1996
and $228.2 million in 1995. Earnings per common share would have been $1.67 in
1996 and $1.50 in 1995. This pro-forma net income reflects only
42
<PAGE> 44
awards granted in 1996 and 1995. Therefore, the full impact of calculating
compensation cost under SFAS No. 123 is not reflected in the pro-forma net
income amounts.
NOTE 13. OTHER OPERATING EXPENSE
A summary of other operating expense is as follows:
<TABLE>
<CAPTION>
Years ended December 31
------------------------------
1996 1995 1994
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Business development........................................ $ 27,540 $ 29,413 $ 26,602
Stationery and supplies..................................... 24,696 21,284 18,087
Professional fees........................................... 22,244 20,491 17,937
Information processing expense.............................. 20,840 21,918 20,957
Delivery.................................................... 19,497 19,192 16,122
Intangible amortization..................................... 15,321 11,068 10,291
F.D.I.C. insurance.......................................... 2,282 16,531 28,361
Net foreclosed assets expense (income)...................... 349 (281) (553)
SAIF assessments............................................ 7,837
Check kiting loss........................................... 22,000
Other....................................................... 58,398 59,302 57,880
-------- -------- --------
Total..................................................... $199,004 $198,918 $217,684
======== ======== ========
</TABLE>
NOTE 14. EMPLOYEE BENEFIT PLANS
Firstar and its subsidiaries have non-contributory defined benefit pension
plans covering substantially all employees. The benefits are based upon years of
service and the employee's compensation during the last five years of
employment. The funding policy is to contribute annually the minimum amount
necessary to satisfy federal minimum funding standards. Plan assets are
primarily invested in listed stocks and U.S. Treasury and federal agency
securities. The table below summarizes data relative to the plans.
<TABLE>
<CAPTION>
December 31
------------------------------
1996 1995 1994
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation................................. $228,417 $216,261 $175,537
Accumulated benefit obligation............................ 233,975 221,716 179,086
Projected benefit obligation.............................. 293,128 280,328 218,660
Plan assets at fair value................................... 291,462 237,195 195,436
Plan assets less than projected benefit obligation.......... (1,666) (43,133) (23,224)
Unrecognized prior service cost............................. (120) (1,791) (2,075)
Unrecognized net asset...................................... (3,446) (4,680) (5,914)
Unrecognized net loss....................................... 6,430 36,373 18,797
-------- -------- --------
Pension asset (liability).............................. $ 1,198 $(13,231) $(12,416)
======== ======== ========
Net pension expense comprised the following:
Service cost.............................................. $ 10,319 $ 7,526 $ 7,852
Interest cost on projected benefit obligation............. 20,443 18,863 16,355
Actual loss (return) on plan assets....................... (31,086) (46,230) 8,725
Net amortization and deferral............................. (12,102) 28,519 (26,755)
-------- -------- --------
Net pension expense.................................... $ 12,426 $ 8,678 $ 6,177
======== ======== ========
Assumptions used in actuarial values:
Discount rate............................................. 7.75% 7.50% 8.50%
Rates of increase in compensation levels.................. 5.50 5.50 5.50
Expected rate of return on plan assets.................... 9.00 9.00 9.00
</TABLE>
43
<PAGE> 45
Firstar also has unfunded pension plans covering certain employees.
Interest rates used in calculating the actuarial values are essentially the same
as in the previously described plans. The table below summarizes data relative
to the plans.
<TABLE>
<CAPTION>
December 31
------------------------------
1996 1995 1994
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Projected benefit obligation................................ $(19,681) $(12,497) $(12,238)
Unrecognized prior service cost............................. 2,365 2,572 2,779
Unrecognized transition obligation.......................... 104 146 189
Unrecognized net loss....................................... 3,885 2,068 2,641
-------- -------- --------
Pension liability...................................... $(13,327) $ (7,711) $ (6,629)
======== ======== ========
Net pension expense comprised the following:
Service cost.............................................. $ 478 $ 294 $ 436
Interest cost on projected benefit obligation............. 1,200 835 916
Net amortization and deferral............................. 451 260 416
-------- -------- --------
Net pension expense.................................... $ 2,129 $ 1,389 $ 1,768
======== ======== ========
</TABLE>
Firstar has profit sharing plans under which eligible employees can
participate by contributing a portion of their salary for investment in one or
more trust funds. Contributions are made to the account of each participant
based upon profitability or at the discretion of the board of directors. Amounts
expensed in connection with this plan were $7,013,000 in 1996, $11,370,000 in
1995, and $11,804,000 in 1994.
In addition to pension benefits, certain health care benefits are made
available to active and retired employees. The table below summarizes data
relative to this benefit program. The program is unfunded and the transition
obligation is being amortized over 20 years.
<TABLE>
<CAPTION>
December 31
------------------------------
1996 1995 1994
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Accumulated postretirement benefit obligation:
Retirees.................................................. $(31,178) $(40,893) $(41,029)
Fully eligible active plan participants................... (5,716) (6,478) (7,340)
Other active plan participants............................ (11,552) (12,641) (13,290)
-------- -------- --------
Total.................................................. (48,446) (60,012) (61,659)
Unrecognized transition obligation.......................... 42,590 50,194 53,146
Unrecognized net (gain) loss................................ (20,661) (7,528) (4,872)
-------- -------- --------
Postretirement benefit liability....................... $(26,517) $(17,346) $(13,385)
======== ======== ========
Net postretirement benefit expense comprised the following:
Service cost.............................................. $ 963 $ 787 $ 1,220
Interest cost............................................. 4,401 3,753 4,721
Net amortization and deferral............................. 2,354 2,093 2,953
Plan curtailment.......................................... 2,181
-------- -------- --------
Net postretirement benefit expense..................... $ 9,899 $ 6,633 $ 8,894
======== ======== ========
</TABLE>
For measurement purposes, a 9.5% annual rate of increase in the per capita
cost of covered health care benefits was assumed, decreasing to 5.5% by 2004 and
remaining at that level thereafter. The health care cost trend rate assumption
has an effect on the amounts reported. To illustrate, increasing the assumed
health care cost trend rates by one percentage point in each year would increase
the accumulated postretirement accumulated benefit obligation by $3,100,000 and
the aggregate of the service and interest cost components of net periodic
postretirement benefit cost by $223,000. The discount rate used in determining
the accumulated postretirement benefit obligation was 7.75%, 7.50% and 8.50% at
December 31, 1996, 1995 and 1994, respectively.
44
<PAGE> 46
NOTE 15. INCOME TAXES
The taxes applicable to income before income taxes were as follows:
<TABLE>
<CAPTION>
Years Ended December 31
------------------------------
1996 1995 1994
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Current income taxes:
Federal................................................... $106,880 $ 95,797 $ 87,136
State and other........................................... 21,154 22,891 18,788
-------- -------- --------
Subtotal............................................... 128,034 118,688 105,924
Deferred income taxes:
Federal................................................... (2,389) 510 6,126
State and other........................................... (1,275) (845) 658
-------- -------- --------
Subtotal............................................... (3,664) (335) 6,784
Provision for income taxes............................. $124,370 $118,353 $112,708
======== ======== ========
</TABLE>
Exercised stock options produced tax benefits of $7,848,000 in 1996,
$3,785,000 in 1995 and $541,000 in 1994 which were allocated directly to
stockholders' equity. Also, the sale of subsidiaries which were acquired in a
purchase business combination produced tax expense of $4,832,000 in 1996 which
was allocated directly to goodwill.
The actual provision for income taxes differed from the amount computed by
applying the federal statutory rate of 35% to income before income taxes as
shown below:
<TABLE>
<CAPTION>
Years Ended December 31
------------------------------
1996 1995 1994
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Tax expense at statutory rate............................... $131,091 $121,543 $118,783
Increase (reduction) in taxes resulting from:
Tax-exempt income......................................... (20,471) (20,456) (21,095)
State and local taxes--net of federal income tax
benefit................................................ 12,921 14,330 12,640
Amortization of nondeductible intangibles................. 3,988 2,748 2,558
Favorable settlement of prior years' taxes................ (3,229)
Other--net................................................ 70 188 (178)
-------- -------- --------
Provision for income taxes............................. $124,370 $118,353 $112,708
======== ======== ========
</TABLE>
The significant components of deferred income tax expense attributable to
income from continuing operations are as follows:
<TABLE>
<CAPTION>
Years Ended December 31
------------------------------
1996 1995 1994
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Deferred tax expense (exclusive of the effects of other
components listed below).................................. $ (4,557) $ 98 $ 6,254
Change in beginning of year valuation allowance due to
effective tax planning strategies......................... (176) (1,008) (105)
Change in valuation allowance due to creation/utilization
of net operating losses................................... 1,069 575 635
-------- -------- --------
Total.................................................. $ (3,664) $ (335) $ 6,784
======== ======== ========
</TABLE>
45
<PAGE> 47
The significant components of the net deferred tax asset were as follows:
<TABLE>
<CAPTION>
Years Ended December 31
------------------------------
1996 1995 1994
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Deferred tax liabilities:
Equipment leased to customers............................. $(18,010) $(13,860) $(14,180)
Acquired assets accounted for as a purchase............... (11,335) (9,491) (10,922)
Securities available for sale............................. (10,019) (20,164)
Bank premises and equipment............................... (9,995) (11,120) (12,383)
Deferred tax assets:
Reserve for loan losses................................... 85,857 78,176 76,664
Deferred compensation..................................... 15,177 8,889 7,104
Pension and post-retirement benefits...................... 14,818 11,463 11,570
State and federal net operating loss carryforwards........ 12,424 11,378 10,335
Deferred gain on sale of building......................... 2,738 5,211 7,721
Securities available for sale............................. 636
Other--net................................................ 3,794 1,544 5,297
-------- -------- --------
Subtotal............................................... 85,449 62,026 81,842
Valuation allowance......................................... (11,504) (10,611) (11,044)
-------- -------- --------
Net deferred tax asset................................. $ 73,945 $ 51,415 $ 70,798
======== ======== ========
</TABLE>
The change in net deferred tax asset includes $10,145,000 of tax benefit in
1996, $20,800,000 of tax expense in 1995 and $1,369,000 of tax benefit in 1994
allocated directly to stockholders' equity for unrealized gains (losses) on
securities available for sale recorded in accordance with SFAS No. 115. Other
changes relate to acquisitions.
The valuation allowance was increased $893,000 in 1996, decreased $433,000
in 1995 and increased $530,000 in 1994. The valuation allowance has been
recognized primarily to offset deferred tax assets related to state net
operating loss carryforwards totaling approximately $228,157,000 which expire at
various times within the next 15 years.
The net deferred tax asset is included in other assets. Amounts originally
reported for 1995 have been reclassified to reflect actual tax return results.
NOTE 16. COMMITMENTS AND CONTINGENT LIABILITIES
Firstar has outstanding at any time a significant number of commitments to
extend credit to its customers. These commitments include revolving credit
agreements, term loan commitments, short-term borrowing agreements and standby
letters of credit. These commitments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amounts recognized in the
consolidated balance sheets.
Commitments to extend credit are agreements to lend to a customer as long
as there is not a violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements.
Credit card commitments are unsecured agreements to extend credit. Such
commitments are reviewed periodically, at which time the commitments may be
maintained, increased, decreased or canceled depending upon evaluation of the
customer's credit worthiness and other considerations.
Standby and commercial letters of credit are conditional commitments issued
by Firstar to guarantee the performance of a customer to a third party. Those
guarantees are primarily issued to support public and private borrowing
arrangements, including commercial paper, bond financing and similar
transactions.
46
<PAGE> 48
Firstar uses the same credit policies in making commitments and conditional
obligations as it does for on-balance sheet instruments. Firstar evaluates each
customer's credit worthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary upon extension of credit, is based on management's
credit evaluation of the party.
Firstar originates and sells residential mortgage loans as a part of
various mortgage-backed security programs sponsored by United States government
agencies or government-sponsored agencies, such as the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage Association and the
Government National Mortgage Association. These sales are often subject to
certain recourse provisions in the event of default by the borrower.
The following is a summary of such commitments at December 31, 1996 and
1995:
<TABLE>
<CAPTION>
December 31
----------------------
1996 1995
------- -------
(millions of dollars)
<S> <C> <C>
Commitments to extend credit................................ $6,044 $4,559
Credit card lines........................................... 2,470 2,098
Standby and commercial letters of credit.................... 550 445
Mortgage loans sold with recourse........................... 220 220
</TABLE>
Firstar and its subsidiaries are subject to various legal actions and
proceedings in the normal course of business, some of which involve substantial
claims for compensatory or punitive damages. Although litigation is subject to
many uncertainties and the ultimate exposure with respect to these matters
cannot be ascertained, management does not believe that the final outcome will
have a material adverse effect on the financial condition of Firstar.
NOTE 17. REGULATORY RESTRICTIONS AND CAPITAL RATIOS
Federal regulations require Firstar to maintain as reserves, minimum cash
balances based on deposit levels at subsidiary banks. Cash balances restricted
from usage due to these requirements were $60 million and $201 million at
December 31, 1996 and 1995, respectively. Firstar implemented a deposit sweep
program in 1996 which reduced reservable deposits.
Firstar's subsidiary banks are restricted by regulation as to the amount of
funds which can be transferred to the parent in the form of loans and dividends.
As of December 31, 1996, $173 million could be loaned to Firstar by the
subsidiary banks subject to strict collateral requirements, and $69 million
could be paid to Firstar by the subsidiary banks in the form of dividends. In
addition, each subsidiary bank could pay dividends to Firstar in an amount which
approximates Firstar's equity in their 1997 net income. The payment of dividends
by any subsidiary bank may also be affected by other factors beyond this
regulatory limitation, such as maintenance of adequate capital for each
subsidiary bank.
Firstar and its bank subsidiaries are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory--and possibly
additional discretionary--actions by regulators that, if undertaken, could have
a direct material effect on Firstar's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
Firstar must meet specific capital guidelines that involve quantitative measures
of assets, liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. Firstar's capital amounts and classification
are also subject to qualitative judgments by the regulators about components,
risk weightings, and other factors.
47
<PAGE> 49
Firstar and its subsidiaries listed below have met all capital requirements
necessary to be classified as "well capitalized" as of December 31, 1996 and
1995.
<TABLE>
<CAPTION>
To Be Well Capitalized
Minimum Capital Under Prompt Corrective
December 31, 1996 Requirement Action Provisions
------------------- ------------------ -----------------------
Amount Ratio Amount Ratio Amount Ratio
---------- ------ ---------- ----- ------------ --------
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to Risk Weighted Assets):
Consolidated................. $1,888,093 13.47% $1,121,647 8.00% $1,402,059 10.00%
Firstar Bank Milwaukee....... 569,904 11.19% 407,573 8.00% 509,466 10.00%
Firstar Bank Wisconsin....... 379,913 12.82% 237,135 8.00% 296,419 10.00%
Firstar Bank Minnesota....... 291,586 13.67% 170,702 8.00% 213,377 10.00%
Firstar Bank Iowa............ 244,750 12.64% 154,892 8.00% 193,615 10.00%
Firstar Bank Illinois........ 223,752 14.83% 120,731 8.00% 150,914 10.00%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated................. 1,636,700 11.67% 560,823 4.00% 841,235 6.00%
Firstar Bank Milwaukee....... 482,490 9.47% 203,786 4.00% 305,680 6.00%
Firstar Bank Wisconsin....... 340,363 11.48% 118,568 4.00% 177,852 6.00%
Firstar Bank Minnesota....... 264,821 12.41% 85,351 4.00% 128,026 6.00%
Firstar Bank Iowa............ 220,542 11.39% 77,446 4.00% 116,169 6.00%
Firstar Bank Illinois........ 204,796 13.57% 60,366 4.00% 90,548 6.00%
Tier 1 Leverage (to Average Assets):
Consolidated................. 1,636,700 8.55% 574,425 3.00% 957,375 5.00%
Firstar Bank Milwaukee....... 482,490 6.73% 215,038 3.00% 358,397 5.00%
Firstar Bank Wisconsin....... 340,363 8.10% 126,113 3.00% 210,188 5.00%
Firstar Bank Minnesota....... 264,821 9.22% 86,155 3.00% 143,592 5.00%
Firstar Bank Iowa............ 220,542 7.91% 83,617 3.00% 139,361 5.00%
Firstar Bank Illinois........ 204,796 7.46% 82,330 3.00% 137,216 5.00%
</TABLE>
<TABLE>
<CAPTION>
To Be Well Capitalized
Minimum Capital Under Prompt Corrective
December 31, 1995 Requirement Action Provisions
------------------- ------------------ -----------------------
Amount Ratio Amount Ratio Amount Ratio
---------- ------ ---------- ----- ------------ --------
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to Risk Weighted Assets):
Consolidated................. $1,665,466 12.45% $1,070,191 8.00% $1,337,739 10.00%
Firstar Bank Milwaukee....... 558,112 11.07% 403,302 8.00% 504,128 10.00%
Firstar Bank Wisconsin....... 380,178 13.14% 231,425 8.00% 289,282 10.00%
Firstar Bank Minnesota....... 203,902 13.82% 118,068 8.00% 147,585 10.00%
Firstar Bank Iowa............ 236,354 11.84% 159,748 8.00% 199,686 10.00%
Firstar Bank Illinois........ 261,266 16.20% 129,022 8.00% 161,278 10.00%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated................. 1,386,566 10.36% 535,096 4.00% 802,643 6.00%
Firstar Bank Milwaukee....... 470,050 9.32% 201,651 4.00% 302,477 6.00%
Firstar Bank Wisconsin....... 339,945 11.75% 115,713 4.00% 173,569 6.00%
Firstar Bank Minnesota....... 185,386 12.56% 59,034 4.00% 88,551 6.00%
Firstar Bank Iowa............ 211,348 10.58% 79,874 4.00% 119,811 6.00%
Firstar Bank Illinois........ 241,042 14.95% 64,511 4.00% 96,767 6.00%
Tier 1 Leverage (to Average Assets):
Consolidated................. 1,386,566 7.52% 553,405 3.00% 922,341 5.00%
Firstar Bank Milwaukee....... 470,050 7.13% 197,759 3.00% 329,598 5.00%
Firstar Bank Wisconsin....... 339,945 7.84% 130,081 3.00% 216,802 5.00%
Firstar Bank Minnesota....... 185,386 7.80% 71,302 3.00% 118,837 5.00%
Firstar Bank Iowa............ 211,348 7.41% 85,566 3.00% 142,610 5.00%
Firstar Bank Illinois........ 241,042 8.37% 86,395 3.00% 143,992 5.00%
</TABLE>
48
<PAGE> 50
NOTE 18. DERIVATIVE FINANCIAL INSTRUMENTS
Rate Risk Management
As part of its asset and liability management, Firstar uses various types
of interest rate contracts for the purpose of managing its interest rate risks.
The use of interest rate contracts enables Firstar to synthetically alter the
repricing characteristics of designated earning assets and interest-bearing
liabilities. The following tables summarize the notional amounts of interest
rate contracts at December 31, 1996, used by Firstar in its asset and liability
management process:
<TABLE>
<CAPTION>
Interest Rate Swaps
----------------------------------------
Receive Fixed Rate Total
------------------ Interest
Index Receive Periodic Caps and Rate
Amortizing Other Variable Caps Floors Contracts
---------- ----- -------- -------- -------- ---------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
December 31, 1994.......................... $ 295 $ 75 $ 76 $ 925 $ 381 $1,752
Additions................................ 5 400 405
Maturities............................... (26) (20) (44) (5) (80) (175)
Terminations............................. (920) (920)
----- ---- ---- ----- ----- ------
December 31, 1995.......................... 269 55 37 0 701 1,062
Additions................................ 25 25
Maturities............................... (162) (28) (110) (300)
----- ---- ---- ----- ----- ------
December 31, 1996.......................... $ 107 $ 27 $ 62 $ 0 $ 591 $ 787
===== ==== ==== ===== ===== ======
</TABLE>
Index amortizing interest rate swaps are used to convert variable rate
loans to a fixed rate basis. The amortizing feature of these swaps serves to
extend the maturity after a predetermined mandatory period if the three-month
LIBOR index rate is above a pre-established reference rate on a quarterly basis.
Additionally, the notional amount of the swaps is reduced on a quarterly basis
based upon pre-established rates.
Interest rate swaps used to convert variable rate loans to fixed rate loans
have a total notional value of $27 million. Other swaps totaling $62 million
were used to convert fixed rate loans and securities to a variable rate basis.
Interest rate swaps with periodic caps involve the exchange of LIBOR based
variable interest payments with one party receiving a fixed basis point shim
over the LIBOR index, subject to a 25 basis point cap in quarterly increases in
rates receivable by Firstar. In 1995, $700 million of these swaps were
terminated involving minimal cash settlements. Also in 1995, $220 million of
these swaps were marked to market and reclassified as trading derivatives.
Interest rate floors provide for the receipt of payments when the three
month LIBOR rate is below a predetermined interest rate floor. Firstar has
entered into $260 million of floors to manage interest rate risk on certain
variable rate loans and has entered into $331 million of floors to manage the
interest rate risk on money market fund deposits which have guaranteed minimum
interest rates.
Interest rate caps provide for the receipt of payments when the three-month
LIBOR rate exceeds predetermined interest rate caps. Firstar had entered into
$100 million in interest rate caps used to manage interest rate risk on variable
rate borrowed funds which matured during 1996.
49
<PAGE> 51
The maturity of derivative financial instruments as of December 31, 1996 is
as follows:
<TABLE>
<CAPTION>
Maturity Range of Derivative Financial Instruments
--------------------------------------------------------------------------------
Market
Weighted Value
Average Asset
1997 1998 1999 2000 Total Maturities (Liability)
----- ----- ----- ----- ----- ---------- -----------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest rate swaps
Receive variable................ $ 39 $ 10 $ 8 $ 5 $ 62 1.0 yr $(.6)
Average receive rate......... 5.53% 5.58% 5.59% 5.50% 5.54%
Average pay rate............. 7.10% 5.94% 8.59% 4.72% 6.91%
Receive fixed................... $ 15 $ 12 $ 27 .8 yrs .1
Average receive rate......... 8.15% 6.30% 7.32%
Average pay rate............. 5.56% 5.56% 5.56%
Receive fixed -- amortizing..... $ 56 $ 32 $ 19 $ 107 1.1 yrs (.5)
Average receive rate......... 4.90% 5.17% 5.45% 5.08%
Average pay rate............. 5.54% 5.50% 5.43% 5.09%
Interest rate floors.............. $ 50 $ 25 $ 211 $ 305 $ 591 2.7 yrs 2.4
Average floor rate.............. 4.70% 5.00% 5.09% 4.76% 4.89%
----- ----- ----- ----- ----- ----
Total...................... $ 160 $ 79 $ 238 $ 310 $ 787 2.3 yrs $1.4
===== ===== ===== ===== ===== ====
</TABLE>
- ------------
All interest rates represent rates in effect on December 31, 1996.
Index rate for interest rate caps/floors is three month LIBOR.
The notional values of derivative financial instruments represent the
amounts on which interest payments are exchanged between the counterparties.
Those notional values do not represent direct credit exposures. Firstar is
exposed to credit-related losses in the event of nonperformance by
counterparties to these instruments but does not expect any counterparty to fail
to meet their obligations. Where appropriate, Firstar requires collateral based
upon the positive market value of the exposure taking into account bi-lateral
netting agreements with certain counterparties. Based on market values,
Firstar's credit exposure was $2.6 million at December 31, 1996.
Firstar enters into both mandatory and optional commitments to sell groups
of residential mortgage loans that it originates or purchases as part of its
mortgage banking activities. Firstar commits to sell the loans at specified
prices in a future period typically within 90 days. The risk associated with
these commitments consists primarily of loans not closing in sufficient volumes
and at appropriate yields to meet the sale commitments. Firstar had contracts
totaling $173 million and $267 million on December 31, 1996 and 1995
respectively. Gains or losses on these contracts are included in the
determination of the market value of mortgages held for sale.
50
<PAGE> 52
Trading Activities
Firstar also acts as an intermediary for customers in their management of
interest rate and foreign currency rate risk. In this regard, Firstar will enter
into interest rate swaps, caps, floors and foreign exchange contracts with
customers to minimize their exposure to market risk. Firstar enters into
essentially offsetting transactions with other counterparties. Customer related
derivative activity, as well as derivative contracts not used to manage interest
rate risk on recorded assets and liabilities, is marked to market value. The
credit exposure at year-end of $6.1 million is represented by the fair value of
contracts with a positive value. Gross credit exposure amounts disregard the
value of any collateral. Revenue from this intermediary activity was $2.2
million and $3.0 million in 1996 and 1995, respectively.
Information on these transactions is shown below.
<TABLE>
<CAPTION>
1996 1995
----------------------------- -----------------------------
Estimated Estimated
Fair Value Fair Value
Notional ------------------ Notional ------------------
Amount Year-End Average Amount Year-End Average
-------- -------- ------- -------- -------- -------
(millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Interest rate swaps
In a receivable position............... $460 $3.4 $5.4 $719 $6.8 $4.2
In a payable position.................. 311 2.5 4.5 421 4.9 3.9
Interest rate caps/floors
Held................................... 77 1.2 1.5 130 1.4 1.9
Written................................ 77 1.2 1.5 130 1.4 1.9
Foreign exchange contracts
In a receivable position............... 49 1.5 1.6 45 4.9 3.9
In a payable position.................. 36 .9 .9 44 3.9 3.4
</TABLE>
NOTE 19. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments", requires that Firstar disclose estimated
fair values for its financial instruments. Fair value estimates were based on
relevant market data and information about the various financial instruments.
These estimates do not reflect any premium or discount that could result from
offering for sale at one time Firstar's entire holdings of a particular
financial instrument. Because no market exists for a significant portion of
Firstar's financial instruments, fair value estimates are based on judgments
regarding current economic conditions, risk characteristics of various financial
instruments, future expected loss experience, and other factors. These estimates
are subjective and involve uncertainties and matters of significant judgment and
therefore cannot be determined with precision. Changes in assumptions could
significantly affect the estimates.
Fair value estimates are based on existing on and off balance sheet
financial instruments without attempting to estimate the value of anticipated
future business and the value of assets and liabilities which are not considered
financial instruments. Significant assets that are not considered financial
instruments include goodwill, core deposit intangibles, certain customer
relationships and fixed assets. In addition, the tax ramifications related to
the realization of the unrealized gains and losses can have a significant effect
on fair value estimates and have not been considered.
Fair value estimates, methods and assumptions are set forth below for
Firstar's financial instruments.
Cash and short-term investments--The carrying amounts for short-term
investments (which include interest-bearing deposits with banks, federal funds
sold and resale agreements) approximate fair value because they mature in 90
days or less and do not represent unanticipated credit concerns.
51
<PAGE> 53
Securities--Estimated fair value for securities is based on quoted market
prices. The fair value of certain small issues and municipal securities which
are not readily available through market quotations is assumed to equal carrying
value as these securities generally have short terms. These securities do not
represent a significant portion of the portfolio.
Loans--Fair values were estimated for loans with similar financial
characteristics. The commercial loan portfolio was separated into credit risk
categories by variable and fixed rate loans. The fair value of performing loans,
except for internally criticized commercial and lease financing loans, was
calculated by discounting cash flows using an estimated discount rate that
reflects current market rates, the type of loan, credit risk inherent in the
loan category and repricing characteristics. Fair value for criticized
commercial loans was calculated by reducing the carrying value by an amount that
reflects the estimated principal loss. This loss was based on internal credit
analysis of specific borrowers taking into consideration past loan loss
experience and trends in loan quality. For lease financing loans, carrying value
was considered to approximate fair value.
The fair value of credit card loans was estimated using the net present
value method. Credit card portfolios are not actively traded and the discount
rate used reflects an estimated rate of return based on the credit quality of
the portfolio. This estimate does not include the value that relates to
estimated cash flows from new loans generated from existing cardholders over the
remaining life of the portfolio. For residential mortgages, fair value was
estimated by discounting cash flows adjusted for anticipated prepayments using
discount rates based on current market rates for similar loans.
Deposits--The fair value of deposits with no stated maturity, such as
interest bearing and non-interest bearing demand, savings and money market
accounts, is equal to the amount payable on demand. The fair value of
certificates of deposit is based on the discounted value of contractual cash
flows using current market rates for similar types of deposits.
Borrowed funds--The carrying value of short-term borrowed funds
approximates fair value as they are payable within three months or less. The
estimated fair value of long-term debt is based on broker quotations, when
available. Debt for which quoted prices were not available was valued using cash
flows discounted at a current market rate for similar types of debt.
Derivative financial instruments--The fair value of interest rate swap
agreements is based on the present value of the swap primarily using counter
party or third party dealer quotes. Fair values for caps and floors were
obtained using an option pricing model. These values represent the estimated
amount Firstar would receive or pay to terminate the contracts or agreements
taking into account current interest rates and market volatility. Prices
obtained from counter parties or pricing models are tested by obtaining third
party valuations. The fair value of commitments to extend credit and standby
letters of credit is not material and is not shown here.
52
<PAGE> 54
The estimated fair value of Firstar's financial instruments is summarized
as follows:
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
------------------------ -------------------------
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
----------- ---------- ----------- -----------
(thousands of dollars)
<S> <C> <C> <C> <C>
Financial assets:
Cash and short-term investments.......... $ 1,648,408 $1,648,408 $ 1,426,158 $ 1,426,158
Trading securities....................... 13,489 13,489 10,029 10,029
Securities available for sale............ 1,966,590 1,966,590 2,047,848 2,047,848
Securities held to maturity.............. 2,250,776 2,287,448 2,427,030 2,492,346
Loans, net of allowance for loan
losses................................ 12,982,396 12,991,668 12,437,230 12,451,430
Financial liabilities:
Deposits:
Without stated maturities............. 9,831,279 9,831,279 9,033,671 9,033,671
With stated maturities................ 5,382,918 5,400,419 5,277,975 5,306,647
Short-term borrowed funds................ 1,868,606 1,868,606 2,303,159 2,303,159
Long-term debt........................... 547,194 551,879 734,021 745,825
Derivative financial instruments:
Asset and liability management:
Interest rate instruments
Asset............................... 2,561 8,255
Liability........................... 1,199 2,870
Trading activities:
Interest rate contracts
Asset............................... 4,589 4,589 8,234 8,234
Liability........................... 3,700 3,700 6,311 6,311
Foreign exchange contracts
Asset............................... 1,500 1,500 4,949 4,949
Liability........................... 900 900 3,899 3,899
</TABLE>
53
<PAGE> 55
NOTE 20. PARENT CORPORATION CONDENSED FINANCIAL STATEMENTS
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31
-----------------------
1996 1995
---------- ----------
(thousands of dollars)
<S> <C> <C> <C>
Assets:
Cash and due from banks................................... $ 80 $ 593
Short-term investments.................................... 161,150 46,400
Securities available for sale............................. 5,011 5,092
Commercial loans.......................................... 64 327
Loans to bank subsidiaries................................ 36,282 36,925
Loans to other subsidiaries............................... 188
Investment in bank subsidiaries........................... 1,905,505 1,659,511
Investment in other subsidiaries.......................... 25,381 16,547
Other assets.............................................. 8,124 8,942
---------- ----------
Total assets........................................... $2,141,597 $1,774,525
========== ==========
Liabilities and stockholders' equity:
Short-term borrowed funds................................. $ 75,000 $
Long-term debt............................................ 332,980 224,956
Other liabilities......................................... 29,570 24,749
Stockholders' equity...................................... 1,704,047 1,524,820
---------- ----------
Total liabilities and stockholders' equity............. $2,141,597 $1,774,525
========== ==========
</TABLE>
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended December 31
------------------------------
1996 1995 1994
-------- -------- --------
(thousands of dollars)
<S> <C> <C> <C>
Revenue:
Dividends from bank subsidiaries.......................... $219,714 $145,338 $119,920
Dividends from other subsidiaries......................... 6,000 6,000 4,000
Fees from subsidiaries.................................... 29,810 26,083 22,859
Investment and loan income................................ 5,362 5,423 4,897
Other revenue............................................. 1,546 121 1,201
-------- -------- --------
Total revenue.......................................... 262,432 182,965 152,877
Expense:
Interest.................................................. 23,760 15,501 12,748
Salaries and employee benefits............................ 20,336 18,795 16,003
Other expense............................................. 13,814 17,251 12,396
-------- -------- --------
Total expense.......................................... 57,910 51,547 41,147
Income before income taxes and equity in undistributed
income of subsidiaries.................................... 204,522 131,418 111,730
Provision for income tax expense (benefits)................. (7,096) (6,465) (5,413)
-------- -------- --------
Income before equity in undistributed income of
subsidiaries.............................................. 211,618 137,883 117,143
Equity in undistributed income of subsidiaries.............. 38,559 91,030 109,530
-------- -------- --------
Net income............................................. $250,177 $228,913 $226,673
======== ======== ========
</TABLE>
54
<PAGE> 56
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31
-----------------------------------
1996 1995 1994
--------- --------- ---------
(thousands of dollars)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................................... $ 250,177 $ 228,913 $ 226,673
Adjustments:
Equity in undistributed income of subsidiaries........ (38,559) (91,030) (109,530)
Depreciation, amortization and accretion.............. 789 553 813
Decrease (increase) in other assets................... 12,122 (2,585) (991)
Increase in other liabilities......................... 4,269 1,516 185
--------- --------- ---------
Net cash provided by operating activities........... 228,798 137,367 117,150
Cash flows from investing activities:
Net (increase) decrease in short-term investments........ (114,750) 24,550 (18,465)
Net (increase) in long-term investments.................. (5,011)
Net decrease in commercial loans......................... 263 98 270
Net decrease (increase) in loans to subsidiaries......... 831 1,645 (5,740)
Purchases of premises and equipment...................... (589) (1092) (1,031)
Capital contributions to subsidiaries.................... (5,028) (400) (5,950)
Net decrease (increase) in intercompany receivables...... (333) 6 622
Other net................................................ (248) 94 227
--------- --------- ---------
Net cash provided by (used in) investing
activities....................................... (119,854) 19,890 (30,067)
Cash flows from financing activities:
Repayment of long-term debt.............................. (46,616) (380)
Net proceeds from long-term debt......................... 153,050 99,360
Net proceeds from short-term debt........................ 75,000
Cash dividends........................................... (111,143) (101,359) (75,081)
Preferred stock redemption............................... (8,350)
Common stock transactions................................ (179,748) (146,985) (11,076)
--------- --------- ---------
Net cash used in financing activities............... (109,457) (157,334) (86,537)
--------- --------- ---------
Net (decrease) increase in cash and due from banks......... (513) (77) 546
Cash and due from banks at beginning of year............... 593 670 124
--------- --------- ---------
Cash and due from banks at end of year..................... $ 80 $ 593 $ 670
========= ========= =========
Supplemental disclosures of cash flow information:
Cash paid during the year for interest................... $ 23,757 $ 13,036 $ 12,753
</TABLE>
55
<PAGE> 57
KPMG Peat Marvick LLP logo
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Firstar Corporation:
We have audited the accompanying consolidated balance sheets of Firstar
Corporation and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the years in the three-year period ended December 31, 1996. These
consolidated financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Firstar Corporation
and subsidiaries at December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Milwaukee, Wisconsin
January 15, 1997
Except for the second to last
paragraph of Note 11
which is as of
February 15, 1997
56
<PAGE> 58
FIRSTAR CORPORATION AND SUBSIDIARIES
SUMMARY OF QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
<TABLE>
<CAPTION>
1996
-----------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- -------- -------- --------
(thousands of dollars, except per share)
<S> <C> <C> <C> <C>
Interest revenue.................................... $342,579 $340,901 $351,093 $348,511
Interest expense.................................... 158,243 156,636 161,152 156,674
-------- -------- -------- --------
Net interest revenue................................ 184,336 184,265 189,941 191,837
Provision for loan losses........................... 9,209 10,846 8,908 13,684
Other operating revenue............................. 105,055 106,223 113,351 115,823
Other operating expense............................. 227,922 169,530 187,012 189,173
-------- -------- -------- --------
Income before income taxes.......................... 52,260 110,112 107,372 104,803
Provision for income taxes.......................... 15,142 39,949 38,100 31,179
-------- -------- -------- --------
Net income.......................................... $ 37,118 $ 70,163 $ 69,272 $ 73,624
======== ======== ======== ========
Per common share:
Net income.......................................... $ .25 $ .48 $ .46 $ .49
Dividends........................................... .17 .19 .19 .19
Stock price ranges:
High.............................................. 22 15/16 24 7/8 24 9/16 26 7/8
Low............................................... 18 5/16 21 1/16 21 7/16 23 3/4
Close............................................. 22 3/8 23 1/16 24 1/8 26 1/4
</TABLE>
<TABLE>
<CAPTION>
1995
-----------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- -------- -------- --------
(thousands of dollars, except per share)
<S> <C> <C> <C> <C>
Interest revenue.................................... $322,277 $339,021 $339,477 $347,011
Interest expense.................................... 143,752 159,912 158,373 159,802
-------- -------- -------- --------
Net interest revenue................................ 178,525 179,109 181,104 187,209
Provision for loan losses........................... 13,136 9,987 5,778 7,855
Other operating revenue............................. 88,215 96,615 101,054 106,313
Other operating expense............................. 199,756 184,009 174,490 175,867
-------- -------- -------- --------
Income before income taxes.......................... 53,848 81,728 101,890 109,800
Provision for income taxes.......................... 17,563 27,946 34,813 38,031
-------- -------- -------- --------
Net income.......................................... $ 36,285 $ 53,782 $ 67,077 $ 71,769
======== ======== ======== ========
Per common share:
Net income.......................................... $ .24 $ .34 $ .44 $ .48
Dividends........................................... .15 .17 .17 .17
Stock price ranges:
High.............................................. 15 1/8 17 1/8 19 3/16 20 1/2
Low............................................... 13 1/8 14 1/8 16 1/4 17 1/16
Close............................................. 14 3/4 16 13/16 18 9/16 19 13/16
</TABLE>
57
<PAGE> 59
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND FINANCIAL RATIOS
<TABLE>
<CAPTION>
Years Ended December 31
--------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(thousands of dollars, except per share data)
<S> <C> <C> <C> <C> <C>
INTEREST REVENUE
Loans................................ $1,113,459 $1,081,685 $ 914,311 $ 824,082 $ 830,227
Securities........................... 263,985 253,794 193,280 195,391 216,674
Other................................ 5,640 12,307 12,153 8,581 17,341
---------- ---------- ---------- ---------- ----------
Total interest revenue............. 1,383,084 1,347,786 1,119,744 1,028,054 1,064,242
INTEREST EXPENSE
Deposits............................. 465,553 444,706 321,969 315,858 389,989
Short-term borrowed funds............ 123,629 133,151 67,622 25,189 25,452
Long-term debt....................... 43,523 43,982 31,315 27,068 22,430
---------- ---------- ---------- ---------- ----------
Total interest expense............. 632,705 621,839 420,906 368,115 437,871
---------- ---------- ---------- ---------- ----------
NET INTEREST REVENUE................. 750,379 725,947 698,838 659,939 626,371
Provision for loan losses............ 42,647 36,756 23,891 29,090 50,733
---------- ---------- ---------- ---------- ----------
NET INTEREST REVENUE AFTER LOAN LOSS
PROVISION.......................... 707,732 689,191 674,947 630,849 575,638
OTHER OPERATING REVENUE
Trust and investment management
fees............................... 145,690 132,377 120,349 112,521 98,296
Service charges on deposit
accounts........................... 91,953 81,775 82,378 83,060 75,273
Credit card service revenue.......... 69,945 62,106 55,867 53,728 51,867
Other................................ 132,864 115,939 112,025 143,609 122,500
---------- ---------- ---------- ---------- ----------
Total other operating revenue...... 440,452 392,197 370,619 392,918 347,936
OTHER OPERATING EXPENSE
Salaries and employee benefits....... 391,516 395,361 380,961 368,514 332,538
Equipment expense.................... 65,615 58,700 54,556 53,123 52,680
Net occupancy expense................ 64,235 57,992 52,984 58,328 53,514
Other................................ 252,271 222,069 217,684 209,309 216,712
---------- ---------- ---------- ---------- ----------
Total other operating expense... 773,637 734,122 706,185 689,274 655,444
---------- ---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES........... 374,547 347,266 339,381 334,493 268,130
Provision for income taxes........... 124,370 118,353 112,708 106,555 82,131
---------- ---------- ---------- ---------- ----------
NET INCOME........................... $ 250,177 $ 228,913 $ 226,673 $ 227,938 $ 185,999
========== ========== ========== ========== ==========
Per common share:
Net income......................... $ 1.68 $ 1.50 $ 1.49 $ 1.50 $ 1.25
Dividends.......................... .74 .66 .58 .50 .40
Return on average total assets....... 1.31% 1.26% 1.37% 1.49% 1.29%
Return on average common equity...... 15.95 15.11 15.96 17.81 16.65
Dividend payout ratio................ 44.05 44.00 36.02 31.75 30.53
Equity as a percentage of assets:
At year-end........................ 8.62 7.95 8.41 8.28 7.94
Average for the year............... 8.22 8.37 8.67 8.67 8.02
Full-time equivalent staff (at
year-end).......................... 8,367 9,263 9,895 9,831 9,349
Average common shares outstanding
(000's)............................ 148,061 151,432 150,391 148,262 143,983
</TABLE>
58
<PAGE> 60
FIRSTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEETS, NET INTEREST REVENUE AND RATE ANALYSIS
<TABLE>
<CAPTION>
1996 1995 1994
---------------------------------- ---------------------------------- ------------------------
Average Average Average Average Average
Balance Interest Rate Balance Interest Rate Balance Interest
----------- ---------- ------- ----------- ---------- ------- ----------- ----------
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing
deposits with banks... $ 8,743 $ 380 4.35% $ 15,668 $ 967 6.17% $ 24,843 $ 1,297
Federal funds sold and
resale agreements..... 88,319 4,916 5.57 173,541 10,534 6.07 219,521 9,645
Trading securities..... 10,140 392 3.87 14,243 968 6.80 22,123 1,560
Securities:
Taxable............... 3,243,188 209,408 6.46 3,125,536 200,484 6.41 2,452,243 145,358
Nontaxable............ 1,126,264 81,853 7.27 1,069,721 79,561 7.44 1,074,371 75,355
----------- ---------- ----------- ---------- ----------- ----------
Total securities.... 4,369,452 291,261 6.67 4,195,257 280,045 6.68 3,526,614 220,713
Loans:
Commercial............ 7,163,564 615,966 8.60 6,838,277 609,248 8.91 6,243,142 513,254
Consumer.............. 3,031,369 295,508 9.75 2,835,632 278,236 9.81 2,636,378 241,152
Consumer mortgage..... 2,727,441 208,570 7.65 2,617,765 201,256 7.69 2,336,342 167,087
----------- ---------- ----------- ---------- ----------- ----------
Total loans......... 12,922,374 1,120,044 8.67 12,291,674 1,088,740 8.86 11,215,862 921,493
----------- ---------- ----------- ---------- ----------- ----------
Interest earning
assets.............. 17,399,028 1,416,993 8.14 16,690,383 1,381,254 8.28 15,008,963 1,154,708
Reserve for loan
losses................ (206,913) (197,181) (191,441)
Cash and due from
banks................. 1,044,706 895,767 954,489
Other assets........... 922,008 826,431 773,024
----------- ----------- -----------
Total assets........ $19,158,829 $18,215,400 $16,545,035
=========== =========== ===========
LIABILITIES AND EQUITY
Interest-bearing
demand................ $ 1,552,786 $ 21,786 1.40% $ 1,571,378 $ 23,831 1.52% $ 1,643,922 $ 21,065
Money market
accounts.............. 2,577,477 102,927 3.99 2,110,503 85,231 4.04 2,027,485 57,274
Savings passbook....... 1,599,075 40,034 2.50 1,731,344 44,509 2.57 1,854,944 43,887
Certificates of
deposit............... 5,392,430 300,806 5.56 5,261,589 291,135 5.53 4,410,873 199,743
Short-term borrowed
funds................. 2,357,838 123,629 5.24 2,275,739 133,151 5.85 1,591,305 67,622
Long-term debt......... 637,393 43,523 6.83 610,889 43,982 7.20 477,405 31,315
----------- ---------- ----------- ---------- ----------- ----------
Interest-bearing
liabilities......... 14,116,999 632,705 4.48 13,561,442 621,839 4.59 12,005,934 420,906
Demand deposits........ 3,174,569 2,827,623 2,837,257
Other liabilities...... 288,224 300,942 268,098
Trust capital
securities............ 3,689
Stockholders' equity... 1,575,348 1,525,393 1,433,746
----------- ----------- -----------
Total liabilities
and equity........ $19,158,829 $18,215,400 $16,545,035
=========== =========== ===========
Net interest
revenue/margin........ $ 784,288 4.51% $ 759,415 4.55% $ 733,802
========== ========== ==========
<CAPTION>
1994 1993 1992
------- ---------------------------------- ----------------------------------
Average Average Average Average Average
Rate Balance Interest Rate Balance Interest Rate
------- ----------- ---------- ------- ----------- ---------- -------
(thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing
deposits with banks... 5.22% $ 64,832 $ 2,667 4.11% $ 137,383 $ 6,183 4.50%
Federal funds sold and
resale agreements..... 4.39 165,042 5,119 3.10 293,899 10,366 3.53
Trading securities..... 7.05 17,332 985 5.68 15,514 1,012 6.52
Securities:
Taxable............... 5.93 2,313,373 144,460 6.24 2,246,893 160,767 7.16
Nontaxable............ 7.01 1,064,975 78,460 7.37 1,025,034 83,947 8.19
----------- ---------- ----------- ----------
Total securities.... 6.26 3,378,348 222,920 6.60 3,271,927 244,714 7.48
Loans:
Commercial............ 8.22 5,637,854 432,271 7.67 5,163,260 428,892 8.31
Consumer.............. 9.15 4,472,934 396,560 8.87 4,044,256 407,639 10.08
Consumer mortgage..... 7.15 * * * * *
----------- ---------- ----------- ----------
Total loans......... 8.22 10,110,788 828,831 8.20 9,207,516 836,531 9.09
----------- ---------- ----------- ----------
Interest earning
assets.............. 7.69 13,736,342 1,060,522 7.72 12,926,239 1,098,806 8.50
Reserve for loan
losses................ (188,358) (174,007)
Cash and due from
banks................. 1,016,639 931,413
Other assets........... 744,283 745,211
----------- -----------
Total assets........ $15,308,906 $14,428,856
=========== ===========
LIABILITIES AND EQUITY
Interest-bearing
demand................ 1.28% $ 1,632,045 $ 29,366 1.80% $ 1,479,688 $ 39,872 2.69%
Money market
accounts.............. 2.82 1,960,086 49,583 2.53 1,928,842 61,727 3.20
Savings passbook....... 2.37 1,755,129 45,330 2.58 1,487,437 48,314 3.25
Certificates of
deposit............... 4.53 4,290,651 191,579 4.47 4,520,152 240,076 5.31
Short-term borrowed
funds................. 4.25 865,298 25,189 2.91 742,263 25,452 3.43
Long-term debt......... 6.56 421,537 27,068 6.42 296,730 22,430 7.56
----------- ---------- ----------- ----------
Interest-bearing
liabilities......... 3.51 10,924,746 368,115 3.37 10,455,112 437,671 4.19
Demand deposits........ 2,793,567 2,564,854
Other liabilities...... 263,080 252,286
Trust capital
securities............
Stockholders' equity... 1,327,513 1,156,604
----------- -----------
Total liabilities
and equity........ $15,308,906 $14,428,856
=========== ===========
Net interest
revenue/margin........ 4.89% $ 692,407 5.04% $ 660,935 5.11%
========== ==========
</TABLE>
- ------------
Interest and rates are calculated on a taxable equivalent basis, using a tax
rate of 35% in 1996, 1995, 1994 and 1993 and 34% in 1992. The rate calculations
include the effect of certain loans on which income is recognized only as cash
payments are received or is accrued at less than the original contract rate.
* Comparable data not available
59
<PAGE> 61
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Notice of the 1997 Annual Meeting and Proxy Statement filed pursuant to
Regulation 14A is incorporated herein by reference.
The executive officers of Firstar Corporation are listed under Item 1 of
this document.
ITEM 11. EXECUTIVE COMPENSATION
The Notice of the 1997 Annual Meeting and Proxy Statement filed pursuant to
Regulation 14A is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Notice of the 1997 Annual Meeting and Proxy Statement filed pursuant to
Regulation 14A is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Notice of the 1997 Annual Meeting and Proxy Statement filed pursuant to
Regulation 14A is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)1. FINANCIAL STATEMENTS
The following financial statements of Firstar Corporation are filed as a
part of this document under Item 8. Financial Statements and Supplementary Data.
Consolidated Balance Sheets as of December 31, 1996 and 1995
Consolidated Statements of Income for the Years Ended December 31,
1996, 1995 and 1994
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the Years Ended December 31,
1996, 1995 and 1994
Notes to Consolidated Financial Statements
Independent Auditors' Report
(A)2. FINANCIAL STATEMENT SCHEDULES
All financial statement schedules have been included in the consolidated
financial statements or are either not applicable or not significant.
60
<PAGE> 62
(a)3. EXHIBITS
<TABLE>
<S> <C>
3.1 Articles of incorporation of Firstar Corporation
3.2 By-Laws of Firstar Corporation
4.3 Indenture dated as of May 1, 1988 between Firstar
Corporation and Chemical Bank, as Trustee, relating to
10 1/4% Subordinated Notes due May 1, 1998 (incorporated by
reference to Exhibit 4(a) to Amendment No. 1 to Registration
No. 33-21527 of Firstar)
4.4 Shareholder Rights Plan of Firstar Corporation (incorporated
by reference to Exhibit 4 of Form 8-K dated January 19, 1989
of Firstar)
4.5 Indenture dated as of August 23, 1995 between Firstar
Corporation and Chemical Bank, as Trustee, relating to 7.15%
Subordinated Notes Due September 1, 2000 (incorporated by
reference to Exhibit 4(a) to Amendment No. 1 to Registration
No. 33-61633 of Firstar)
4.6 Credit Agreement dated as of April 22, 1996 between Firstar
Corporation and First National Bank of Chicago, as agent
4.9 Form of Amended and Restated Depository Agreement among
Firstar Corporation, Firstar Trust Company as depository,
and the holders from time-to-time of Depository Receipts
issued thereunder and the Form of Depository Receipt
(incorporated by reference to Exhibit 4(g) of Amendment No.
1 to Registration No. 33-57245 of Firstar)
4.10 Series A Capital Securities Guarantee Agreement dated as of
December 23, 1996 between Firstar Corporation and The Chase
Manhattan Bank, as Guarantee Trustee
4.11 Indenture dated as of December 23, 1996 between Firstar
Corporation and The Chase Manhattan Bank, as Debenture
Trustee, relating to 8.32% Series A Junior Subordinated
Deferrable Interest Debentures due December 15, 2026
10.3 Directors' Deferred Compensation Plan, as amended
(incorporated by reference to Exhibit 10.3 of the Annual
Report Form 10-K of Firstar for the year ended December 31,
1988)
10.4* Key Executive Employment and Severance Agreement, as amended
(incorporated by reference to Exhibit 10.4 of the Form 10-Q
of Firstar for the quarter ended September 30, 1993)
10.5 First Colonial Bankshares Corporation 1988 Stock Option
Plan, as amended, assumed by Firstar (incorporated by
reference to Exhibits 4.1 to 4.10 of Registration No.
33-57521 of Firstar)
10.6 Investors Bank Corp. Stock Option Plan as amended assumed by
Firstar (incorporated by reference to Exhibits 4.1 and 4.2
of Registration No. 33-58915 of Firstar)
10.7* 1988 Incentive Stock Plan, as amended (incorporated by
reference to Exhibit A of the Notice of the 1994 Annual
Meeting and Proxy Statement of Firstar)
10.8* Annual Executive Incentive Plan, as amended (incorporated by
reference to Exhibit B of the Notice of the 1994 Annual
Meeting and Proxy Statement of Firstar)
10.10 Form of Indemnity Agreement between Firstar Corporation and
its directors (incorporated by reference to Exhibit 10 of
the Quarterly Report on Form 10-Q of Firstar for the quarter
ended September 30, 1988)
21. Subsidiaries of Firstar Corporation
23. Consent of Independent Auditors
24. Powers of Attorney
27. Financial Data Schedule
</TABLE>
- ------------
* Executive Compensation Plans
A copy of the exhibits listed herein can be obtained by writing to Mr.
Jeffrey B. Weeden, Senior Vice President-Finance and Treasurer, Firstar
Corporation, P.O. Box 532, Milwaukee, Wisconsin 53201.
(b) Firstar filed a Form 8-K dated December 17, 1996 which announced a $150
million common stock repurchase program and the issuance of $150 million in
Trust Capital Securities.
61
<PAGE> 63
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
ROGER FITZSIMONDS
--------------------------------------
Roger L. Fitzsimonds
March 13, 1997 Chairman and Chief Executive Officer
Pursuant to the requirement of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
<TABLE>
<S> <C>
ROGER FITZSIMONDS March 13, 1997
- ------------------------------------------------------
Roger L. Fitzsimonds
Chairman and Chief Executive Officer and director
JOHN A. BECKER March 13, 1997
- ------------------------------------------------------
John A. Becker
President, Chief Operating Officer and director
JEFFREY B. WEEDEN March 13, 1997
- ------------------------------------------------------
Jeffrey B. Weeden
Senior Vice President-Finance and Treasurer
(principal finance and accounting officer)
DIRECTORS
Michael E. Batten*
Robert C. Buchanan*
George M. Chester, Jr.*
Roger H. Derusha*
James L. Forbes*
Holmes Foster*
Jerry M. Hiegel*
Joe F. Hladky*
C. Paul Johnson
James H. Keyes*
Sheldon B. Lubar*
Daniel F. McKeithan, Jr.*
George W. Mead II*
Guy A. Osborn*
Judith D. Pyle*
Clifford V. Smith, Jr.*
William W. Wirtz*
*By William J. Schulz March 13, 1997
--------------------------------------------------
William J. Schulz
Attorney-in-Fact
</TABLE>
62
<PAGE> 1
EXHIBIT 3.1
FIRSTAR CORPORATION
RESTATED ARTICLES OF INCORPORATION
This Corporation, being organized under the laws of Wisconsin and being
subject to the provisions of Chapter 180 of the Wisconsin Statutes, hereby
amends its restated articles of incorporation in their entirety and as so
amended adopts the following Restated Articles of Incorporation, which
supersede and take the place of its heretofore existing restated articles of
incorporation and all amendments thereto:
ARTICLE I
NAME
The name of the Corporation is "FIRSTAR CORPORATION".
ARTICLE II
PURPOSE
The purposes for which the Corporation is organized are to engage in any
lawful activity within the purposes for which corporations may be organized
under the Wisconsin Business Corporation Law (Chapter 180, Wisconsin Statutes);
provided, however, that the Corporation shall not engage in any activities
prohibited by the Bank Holding Company Act of 1956, as amended.
ARTICLE III
CAPITAL STOCK
(1) The number of shares of which the Corporation shall have
authority to issue is 122,500,000, divided into the following
classes:
(a) 120,000,000 shares of the par value of
$1.25 each, designated as "Common Stock"; and
-1-
<PAGE> 2
(b) 2,500,000 shares of the par value of $1.00
each, designated as "Preferred Stock".
(2) The Preferred Stock may be issued from time to time in one or
more series, with such designations, preferences, limitations, and
relative rights as shall be stated and expressed in the resolution
or resolutions providing for the issuance of such series and adopted
by the board of directors pursuant to the authority given as
provided by the Wisconsin Business Corporation Law and not
inconsistent with the provisions hereof. All shares of Preferred
Stock shall be identical except as to the following relative rights
and preferences, in respect of any or all of which there may be
variations between different series as fixed and determined by the
board of directors in the resolution or resolutions providing for
the issuance of such series: (a) rate of dividend; (b) price at and
terms and conditions on which shares may be redeemed; (c) amount
payable upon shares in event of voluntary or involuntary
liquidation; (d) sinking fund provisions for the redemption or
purchase of shares; (e) terms and conditions on which shares may be
converted; if the shares of any series are issued with the privilege
of conversion; and (f) voting rights, if any.
(3) The holders of Preferred Stock shall be entitled to receive,
if and when declared by the board of directors out of the funds of
the Corporation legally available therefor, dividends at, but not
exceeding, the rate established by the board of directors in the
resolution or resolutions providing for the issuance of any series
of Preferred Stock, and such dividends shall be paid or set apart
before any dividends (other than dividends payable in Common Stock
of the Corporation) shall be paid upon or set apart for the Common
Stock. The dividends on the Preferred Stock shall be cumulative, so
if at any time the full amount of dividends accrued and in arrears
on the Preferred Stock shall not be paid, the deficiency (without
interest) shall be payable before any dividends shall be paid upon
or set apart on the Common Stock. Dividends on the Preferred Stock
shall accrue and be cumulative from the date of issue and shall be
without priority as between series. Any dividends paid upon the
Preferred Stock in an amount less than full cumulative dividends
accrued and in arrears upon all Preferred Stock shall, if more than
one series be outstanding, be distributed among the different series
in proportion to the aggregate amounts which would be distributed to
the Preferred Stock of each series if full cumulative dividends were
declared and paid thereon. Whenever all dividends accrued and in
arrears on the Preferred Stock shall have been declared and shall
have been paid or set apart, the board of directors may declare
dividends on
-2-
<PAGE> 3
the Common Stock out of the funds of the Corporation legally
available therefor.
(4) In the event of the liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of
Preferred Stock, shall be entitled to receive the fixed liquidation
amount per share, plus accrued dividends, all as provided in the
resolution or resolutions adopted by the board of directors
providing for the issuance of any series of Preferred Stock, and no
more, before any amount shall be paid to the holders of Common
Stock. As used in this paragraph "accrued dividends" means, in
respect to each share of Preferred Stock, an amount equal to the
fixed dividend rate per annum for each share (without interest
thereon), from the date from which dividends commence to accrue in
respect of such share to the date as of which the computation is to
be made, less the aggregate amount (without interest thereon) of all
dividends therefore paid or declared and set aside for payment in
respect thereof. If, upon any such voluntary or involuntary
liquidation, the assets of the Corporation shall be insufficient to
permit payment to the holders of Preferred Stock of the full
preferential amounts aforesaid, then the entire assets of the
Corporation available for distribution to shareholders shall be
distributed ratably among the holders of Preferred Stock in
proportion to the full preferential amounts to which they are
respectively entitled. The holders of Preferred Stock shall not
otherwise be entitled to participate in any distribution of assets
of the Corporation which assets shall be divided and distributed
among the holders of Common Stock according to their respective
rights and preferences. No consolidation or merger of the
Corporation with or into another corporation or corporations and no
sale by the Corporation of all or substantially all of its assets
shall be deemed a liquidation or winding up of the Corporation
within the meaning of this paragraph.
(5) The holders of Preferred Stock shall have only such voting
rights as shall be stated in the resolution or resolutions of the
board of directors providing for the issuance of any series of
Preferred Stock.
(6) The Common Stock shall be junior to the Preferred Stock and
shall be subject to all the rights and preferences of the Preferred
Stock.
(7) No holder of any shares of the Corporation shall have any
preemptive right to acquire any unissued shares of this Corporation,
now or hereafter authorized, or other securities whether or not
convertible into shares of the Corporation or carrying a right to
subscribe to or acquire such shares.
-3-
<PAGE> 4
(8) The Corporation is authorized by action of the board of
directors without further consent of shareholders to purchase, take,
receive or otherwise acquire shares of the Corporation, subject only
to the provisions of Sections 180.385(1)(a) and (b) of the Wisconsin
Statutes.
(9) The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the owner thereof for all
purposes, and shall not be bound to recognize any equitable or other
claim to or interest in any such share or shares on the part of any
other person, whether or not it shall have express or other notice
thereof.
ARTICLE IV
BOARD OF DIRECTORS
(1) Subject to the terms of any series of Preferred Stock as may
be issued from time to time pursuant to the provisions of Section
(2) of Article III, as such terms are stated and expressed in the
resolution or resolutions of the board of directors providing for
the issuance of such Preferred Stock,
(a) The board of directors shall consist of such
number of directors as is fixed from time to time by a
majority of the board of directors in the manner provided in
the By-Laws.
(b) The number of directors may be increased or
decreased from time to time by a majority of the board of
directors in the manner provided in the By-Laws, but no
decrease shall have the effect of shortening the term of any
incumbent director.
(2) The board of directors shall be divided into three (3)
classes, as nearly equal in number as possible, as shall be provided
in the By-Laws.
(3) Subject to the terms of any series of Preferred Stock as may
be issued from time to time pursuant to the provisions of Section
(2) of Article III, as such terms are stated and expressed in the
resolution or resolutions of the board of directors providing for
the issuance of such Preferred Stock,
(a) Any vacancy occurring in the board of directors
resulting from death, resignation, removal, disqualification
or any other cause, including a vacancy created by an increase
in the number of directors, may be filled only by the
affirmative
-4-
<PAGE> 5
vote of not less than a majority of the directors then in
office, although less than a quorum.
(b) If there shall be no directors then in office, the
shareholders shall be entitled to fill the vacancies on the
board of directors.
(c) Directors appointed to newly created directorships resulting
from any increase in the authorized number of directors or to
fill any vacancies in the board of directors resulting from
death, resignation, removal, disqualification or any other
cause shall hold office for a term expiring at the next annual
meeting of shareholders at which the term of the class to which
they have been appointed expires.
(4) Subject to the terms of any series of Preferred Stock as may
be issued from time to time pursuant to the provisions of Section
(2) of Article III, as such terms are stated and expressed in the
resolution or resolutions of the board of directors providing for
the issuance of such Preferred Stock, a director may be removed from
office only by the affirmative vote of not less than 75% of the
outstanding shares entitled to vote for the election of such
director, voting together as a single class, taken at a special
meeting of shareholders called for that purpose.
(5) Notwithstanding the provisions of Article VI, the affirmative
vote of not less than 75% of the outstanding shares entitled to vote
generally for the election of directors, voting together as a single
class, shall be required to amend or repeal this Article IV, or to
adopt any provision of the Restated Articles of Incorporation or
By-Laws inconsistent with the purpose or intent of this Article IV.
ARTICLE V
REGISTERED OFFICE AND AGENT
At the time of adoption of these Restated Articles of Incorporation the
address of the registered office of the Corporation is 777 East Wisconsin
Avenue, Milwaukee, Wisconsin 53202, and the name of the registered agent at
that address is Howard H. Dahms.*
*The registered agent, effective July 1, 1983, is William J. Schulz.
-5-
<PAGE> 6
ARTICLE VI
ELECTION OF MAJORITY AFFIRMATIVE VOTING REQUIREMENTS
The Corporation expressly elects the majority affirmative voting
requirements pursuant to Subsection 180.25(2) of the Wisconsin Business
Corporation Law (or any successor provision to such subsection) with respect to
all subjects referenced in such subsection (or such successor provision, as the
case may be).
-6-
<PAGE> 7
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF
SERIES C PREFERRED STOCK
Pursuant to Section 180.12(4) of the Wisconsin Business Corporation Law,
We, Roger L. Fitzsimonds and William J. Schulz, President and Chief
Operating Officer, and Secretary, respectively, of Firstar Corporation, a
corporation organized and existing under the Wisconsin Business Corporation
Law, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Restated Articles of Incorporation of the Corporation, as amended, the
Board of Directors on January 19, 1989 adopted the following resolution
creating a series of 600,000 shares of Preferred Stock, par value $1.00 per
share, designated as Series C Preferred Stock:
NOW, THEREFORE, BE IT RESOLVED, That pursuant to the authority vested in
the Board of Directors of this Corporation in accordance with the provisions of
its Restated Articles of Incorporation, as amended, a series of Preferred
Stock, par value $1.00 per share, of the Corporation be and it hereby is
created, and that the designation and amount and relative rights, limitations
and preferences thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series C Preferred Stock"; the number of shares constituting
such series shall be Six Hundred Thousand (600,000). Such number of shares may
be increased or decreased by resolution of the Board of Directors; provided,
that no decrease shall reduce the number of shares of Series C Preferred Stock
to a number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights
or warrants or upon the conversion of any outstanding securities issued by the
Corporation into Series C Preferred Stock.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series C Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the
first business days of January, April, July and October in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or
<PAGE> 8
fraction of a share of Series C Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject
to the provision for adjustment hereinafter set forth, 100 times the aggregate
per share amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all noncash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock, $1.25 par value per share, of the Corporation (the "Common
Stock") since the immediately preceding Quarterly Dividend Payment Date, or,
with respect to the first Quarterly Payment Date, since the first issuance of
any share or fraction of a share of Series C Preferred Stock. In the event the
corporation shall at any time after January l9, 1989 (the "Rights Declaration
Date") (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the amount to which holders of shares of Series C Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock that are outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series
C Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Series C Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series C Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series C Preferred Stock,
unless the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless the date
of issue is a Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of shares of Series C Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of
-2-
<PAGE> 9
which events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series C Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series C Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 30 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of shares of Series C Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series C Preferred Stock shall entitle the holder thereof to 100 votes
on all matters submitted to a vote of the shareholders of the Corporation. In
the event the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the number of
shares of Common Stock that are outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other resolution of the
Board of Directors creating a series of Preferred Stock or any similar stock,
or by law, the holders of shares of Series C Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters
submitted to a vote of shareholders of the Corporation.
(C) Except as set forth herein, holders of Series C Preferred Stock shall
have no special voting rights and their consent shall not be required (except
to the extent they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
-3-
<PAGE> 10
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series C Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series C Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series C Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series C Preferred
Stock, except dividends paid ratably on the Series C Preferred Stock and
all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series C Preferred
Stock, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares
of any stock of the Corporation ranking junior to or on a parity with
(both as to dividends or upon dissolution, liquidation or winding up) the
Series C Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series C Preferred Stock, or any shares of stock ranking on a parity with
the Series C Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates
and other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
-4-
<PAGE> 11
(B) The Corporation shall not permit any corporation of which an amount of
voting securities sufficient to elect at least a majority of the directors of
such corporation is beneficially owned, directly or indirectly, by the
Corporation or otherwise controlled by the Corporation to purchase or otherwise
acquire for consideration any shares of stock of the Corporation unless the
Corporation could, under paragraph (A) of this Section 4, purchase or otherwise
acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series C Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock, par value $1.00 per share, and may be reissued as part of a
new series of Preferred Stock, par value $1.00 per share, to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series C Preferred Stock unless, prior thereto, the holders of shares of Series
C Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that the holders of shares of
Series C Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate amount to be distributed per share to holders of shares
of Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with
the Series C Preferred Stock, except distributions made ratably on the Series C
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount
to which holders of shares of Series C Preferred Stack were entitled
immediately
-5-
<PAGE> 12
prior to such event under the proviso in clause (1) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series C Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series C Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock that are outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series C Preferred Stock shall not
be redeemable.
Section 9. Fractional Shares. Series C Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series C Preferred Stock.
-6-
<PAGE> 13
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and
to affirm the foregoing as true this 30th day of January, 1989.
[Corporate Seal] -----------------------------
President and Chief Operating
Officer
Attest:
William J. Schulz
------------------
Secretary
This document was drafted by Harry V. Carlson, Foley & Lardner, 777 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202, and should be recorded in the
Office of the Register of Deeds of Milwaukee County, Wisconsin, the County in
which the registered office of Firstar Corporation is located.
-7-
<PAGE> 14
STATE OF WISCONSIN ARTICLES OF AMENDMENT
FILED relating to
JAN 31 1995 SERIES D CONVERTIBLE PREFERRED STOCK
DOUGLAS LA FOLLETTE of
SECRETARY OF STATE FIRSTAR CORPORATION
--------------------------------------------
Pursuant to Sections 180.0602 and 180.1002
of the Wisconsin Business Corporation Law
---------------------------------------------
I, William J. Schulz, Senior Vice President and Deputy General Counsel of
Firstar Corporation, a corporation organized and existing under the Wisconsin
Business Corporation Law (the "Corporation"), in accordance with the provisions
of Sections 180.0602 and 180.1002 thereof, DO HEREBY CERTIFY THAT:
A. Pursuant to the authority conferred upon the Board of Directors by the
Restated Articles of Incorporation, as amended, of the Corporation and in
accordance with Sections 180.0602 and 180.1002 of the Wisconsin Business
Corporation Law, the Board of Directors of the Corporation adopted a resolution
on July 29, 1994, but which was not effective until the date hereof, creating a
series of shares of Preferred Stock, $1.00 par value, of the Corporation,
designated as Series D Convertible Preferred Stock.
B. Such resolution of the Board of Directors of the Corporation creating
the series designated as Series D Convertible Preferred Stock provides that
said series shall have such designation and number of shares and such
preferences, limitations and relative rights as are set forth in the paragraphs
below:
Series D Convertible Preferred Stock
1. Designation and Amount. The shares of such series shall be
designated "Series D Convertible Preferred Stock" and the number of shares
constituting such series shall be limited to 38,775. The liquidation value
shall be $500 per share.
2. Dividends.
(a) The holders of shares of Series D Convertible Preferred Stock
shall be entitled to receive, out of the assets of the Corporation legally
available therefor and as and if declared by the Board of Directors, cash
dividends at the rate of $35 per share per annum, payable quarterly on
the last day of the months of March, June, September and December in each
year, commencing March 31, 1995. Each such dividend shall be paid to the
holders of record of shares of Series D Convertible Preferred Stock on
the applicable record date, not exceeding 30 days preceding the payment
date thereof, as shall be fixed by the Board of Directors. Dividends on
account of arrears for any past dividend periods may be declared and paid
at any time, without reference to any regular dividend payment date, to
holders of record on such date as may be fixed by the Board of Directors,
which shall not exceed 45 days preceding such dividend payment date. Such
dividends shall be cumulative (whether or not in any quarterly dividend
period there
<PAGE> 15
shall be funds of the Corporation legally available for the payment of
such dividends), commencing on the date of original issuance.
(b) No full dividends shall be declared or paid or set apart for
payment on any class or series of stock of the Corporation ranking, as to
dividends, on a parity with the Series D Convertible Preferred Stock for
any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for such payment on the Series D
Convertible Preferred Stock for all dividend payment periods terminating
on or prior to the date of payment of such full cumulative dividends. When
dividends are not paid in full, as aforesaid, upon the shares of the
Series D Convertible Preferred Stock and any class or series of stock of
the Corporation ranking on a parity as to dividends with the Series D
Convertible Preferred Stock, all dividends declared upon shares of the
Series D Convertible Preferred Stock and any class or series of stock of
the Corporation ranking on a parity as to dividends with the Series D
Convertible Preferred Stock shall be declared pro rata so that the amount
of dividends declared per share on the Series D Convertible Preferred
Stock and such other stock shall in all cases bear to each other the same
ratio that accrued dividends per share on the shares of the Series D
Convertible Preferred Stock and such other stock bear to each other.
Holders of shares of the Series D Convertible Preferred Stock shall not
be entitled to any dividend, whether payable in cash, property or stock,
in excess of full cumulative dividends, as herein provided, on the Series
D Convertible Preferred Stock. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments
on the Series D Convertible Preferred Stock which may be in arrears.
(c) So long as any shares of the Series D Convertible Preferred
Stock are outstanding, no dividend (other than a dividend in Common Stock,
par value $1.25 per share, of the Corporation ("Common Stock") or in any
other class or series of stock of the Corporation ranking junior to the
Series D Convertible Preferred Stock as to dividends and upon liquidation
and other than as provided in paragraph (b) of this Section 2) shall be
declared or paid or set aside for payment or other distribution declared
or made upon the Common Stock or upon any other class or series of stock
of the Corporation ranking junior to or on a parity with the Series D
Convertible Preferred Stock as to dividends or upon liquidation, nor shall
any Common Stock or any class or series of stock of the Corporation
ranking junior to or on a parity with the Series D Convertible Preferred
Stock as to dividends or upon liquidation be redeemed, purchased or
otherwise acquired for any consideration by the Corporation (except by
conversion into or exchange for stock of the Corporation ranking junior to
the Series D Convertible Preferred Stock as to dividends and upon
liquidation) unless, in each case, the full cumulative dividends on all
outstanding shares of the Series D Convertible Preferred Stock shall have
been paid for all past dividend payment periods.
3. Conversion. Each holder of shares of Series D Convertible
Preferred Stock shall have the right, at his option, to convert all or
any part of such shares into shares of Common Stock of the Corporation at
any time on and subject to the following terms and conditions:
-2-
<PAGE> 16
(a) The shares of Series D Convertible Preferred Stock shall be
convertible at the office of the transfer agent for such series (the
"Transfer Agent"), and at such other place or places, if any, as the
Board of Directors of the Corporation may designate, into fully paid and
nonassessable (except as otherwise provided by the Wisconsin Business
Corporation Law) shares (calculated as to each conversion to the nearest
1/100th of a share) of Common Stock. The number of shares of Common Stock
issuable upon conversion of each share of Series D Convertible Preferred
Stock shall be equal to $500 divided by the conversion price in effect at
the time of conversion determined as hereinafter provided. The price at
which shares of Common Stock shall be delivered upon conversion (herein
called the "conversion price") shall be initially $23.30 per share of
Common Stock; provided, however, that such conversion price shall be
subject to adjustment from time to time in certain instances as
hereinafter provided. No payment or adjustment shall be made in respect of
dividends on Common Stock or Series D Convertible Preferred Stock upon
conversion of shares of Series D Convertible Preferred Stock. Shares of
Series D Convertible Preferred Stock surrendered for conversion after the
record date next preceding a dividend payment date for the Series D
Convertible Preferred Stock and before the dividend payment date must be
accompanied by payment of an amount equal to the dividend thereon which is
to be paid on such dividend payment date (unless the shares of Series D
Convertible Preferred Stock surrendered for conversion have been called
for redemption prior to such dividend payment date). If the Corporation
calls for redemption any shares of Series D Convertible Preferred Stock
such right of conversion shall cease and terminate, as to the shares
designated for redemption, at the close of business on the redemption
date, unless the Corporation defaults in the payment of the redemption
price. No fractional shares of Common Stock will be issued, and a cash
payment will be made in lieu of any fractional share in an amount equal to
the same fraction of the last sale price of the Common Stock (determined
as provided in sub-paragraph (c) (iv) of this Section 3) at the close of
business on the business day which next precedes the day of conversion.
(b) Before any holder of shares of Series D Convertible Preferred
Stock shall be entitled to convert the same into Common Stock, he shall
surrender the certificate or certificates therefor, duly endorsed to the
Corporation or in blank, at the office of the Transfer Agent for such
series or at such other place or places, if any, as the Board of Directors
of the Corporation has designated, and shall give written notice to the
Corporation at said office or place that he elects to convert the same and
shall state in writing therein the name or names (with addresses) in which
he wishes the certificate or certificates for Common Stock to be issued.
The Corporation will, as soon as practicable thereafter, issue and deliver
at said office or place to such holder of shares of Series D Convertible
Preferred Stock or to his nominee or nominees, certificates for the number
of full shares of Common Stock to which he shall be entitled as aforesaid,
together with cash in lieu of any fraction of a share. Shares of Series D
Convertible Preferred Stock shall be deemed to have been converted as of
the close of business on the date of the surrender of such shares for
conversion as provided above, and the person or persons entitled to
receive the Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such Common Stock as
of the close of business on such date.
-3-
<PAGE> 17
(c) The conversion price in effect at any time shall be subject to
adjustment as follows:
(i) In case the Corporation shall (A) declare and pay a dividend on
its Common Stock in shares of its capital stock, (B) subdivide its
outstanding shares of Common Stock, (C) combine its outstanding shares of
Common Stock into a smaller number of shares, or (D) issue by
reclassification of its Common Stock (including any such reclassification
in connection with a consolidation or merger in which the Corporation is
the continuing corporation) any shares of its capital stock, the
conversion price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the holder of
any share of Series D Convertible Preferred Stock surrendered for
conversion after such time shall be entitled to receive the kind and
amount of shares which he would have owned or have been entitled to
receive had such share of Series D Convertible Preferred Stock been
converted immediately prior to such time. Such adjustment shall be made
successively whenever any event listed above shall occur.
(ii) In case the Corporation shall issue rights or warrants to all
holders of its Common Stock entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the Current Market
Price (as defined below in paragraph (iv) of this Section 3(c)), on the
date fixed for the determination of shareholders entitled to receive such
rights or warrants the conversion price shall be reduced by multiplying
the conversion price by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding at the close of business on
the date fixed for such determination plus the number of shares of Common
Stock which the aggregate of the offering price of the total number of
shares of Common Stock so offered for subscription or purchase would
purchase at such Current Market Price and the denominator shall be the
number of shares of Common Stock outstanding at the close of business on
the date fixed for such determination plus the number of shares of Common
Stock so offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day following
the date fixed for such determination; provided, however, in the event
that all the shares of Common Stock offered for subscription or purchase
are not delivered upon the exercise of such rights or warrants, upon the
expiration of such rights or warrants the conversion rate shall be
readjusted to the conversion rate which would have been in effect had the
numerator and the denominator of the foregoing fraction and the resulting
adjustment been made based upon the number of shares of Common Stock
actually delivered upon the exercise of such rights or warrants rather
than upon the number of shares of Common Stock offered for subscription or
purchase, such adjustment to become effective immediately after the
opening of business on the day following the expiration of such rights or
warrants. For the purposes of this paragraph (ii), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Corporation but shall include shares issuable in respect
of scrip certificates issued in lieu of fractions of shares of Common
Stock.
(iii) In case the Corporation shall distribute to all holders of its
Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Corporation is the continuing
corporation) evidences of its
-4-
<PAGE> 18
indebtedness or assets (excluding dividends or other distributions paid
out of earned surplus) or subscription rights or warrants excluding those
referred to in paragraph (ii) above), the conversion price shall be
adjusted so that the same shall equal the price determined by multiplying
the conversion price in effect immediately prior to the close of business
on the date fixed for the determination of shareholders entitled to
receive such distribution by a fraction of which the numerator shall be
the Current Market Price per share of the Common Stock on the date fixed
for such determination less the then fair market value (as determined by
the Board of Directors, whose determination shall be conclusive and
described in a resolution filed with the Transfer Agent for such series)
of the portion of the assets or evidences of indebtedness so distributed
applicable to one share of Common Stock and the denominator shall be such
Current Market Price per share of the Common Stock, such adjustment to
become effective immediately prior to the opening of business on the day
following the date fixed for the determination of shareholders entitled
to receive such distribution. Such adjustment shall be made successively
whenever any such distribution is made and shall become effective
retroactively after such record date.
(iv) For the purpose of any computation under paragraphs (ii) and
(iii) above, the "Current Market Price" on any date shall be deemed to be
the average of the daily closing prices per share of Common Stock for 30
consecutive business days selected by the Corporation commencing 45
business days before such date. The closing price for each day shall be
the last sale price regular way or, in case no such sale takes place on
such day, the average of the closing bid and asked prices regular way,
in either case on the New York Stock Exchange, or, if the Common Stock is
not listed or admitted to trading on such Exchange, on the principal
national securities exchange or national market system on which the
Common Stock is listed or admitted to trading, or if it is not listed or
admitted to trading on any national securities exchange or national
market system, the average of the closing bid and asked prices as
furnished by any member of the National Association of Securities
Dealers, Inc. selected from time to time by the Corporation for that
purpose.
(v) All calculations under this Section 3(c) shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case may
be.
(vi) In case of any consolidation or merger of the Corporation with
or into any other corporation (other than a consolidation or merger in
which the Corporation is the continuing corporation), or in case of any
sale or transfer of all or substantially all of the assets of the
Corporation, the holder of each share of Series D Convertible Preferred
Stock shall, after such consolidation, merger, sale or transfer, have the
right to convert such share of Series D Convertible Preferred Stock into
the kind and amount of shares of stock and other securities and property
which such holder would have been entitled to receive upon such
consolidation, merger, sale or transfer if he had held the Common Stock
issuable upon the conversion of such share of Series D Convertible
Preferred Stock immediately prior to such consolidation, merger, sale or
transfer. In any such event, effective provision shall be made, in the
articles or certificate of incorporation of the resulting or surviving
corporation or other corporation issuing or delivering such shares, other
securities, cash or other property or otherwise, so that the provisions
set forth herein for the protection of the conversion rights of the
-5-
<PAGE> 19
Series D Convertible Preferred Stock shall thereafter be applicable, as
nearly as reasonably may be, to any such other shares of stock and other
securities, cash and other property deliverable upon conversion of the
Series D Convertible Preferred Stock remaining outstanding or other
convertible stock or securities received by the holders in place thereof;
and any such resulting or surviving corporation or other corporation
issuing or delivering such shares, other securities, cash or other
property shall expressly assume the obligation to deliver, upon the
exercise of the conversion privilege, such shares, securities, cash or
other property as the holders of the Series D Convertible Preferred Stock
remaining outstanding, or other convertible stock or securities received
by the holders in place thereof, shall be entitled to receive, pursuant to
the provisions hereof, and to make provision for the protection of the
conversion rights as above provided.
(vii) In the event that at any time, as a result of an
adjustment made pursuant to paragraph (i) above, the holder of any share
of Series D Convertible Preferred Stock thereafter surrendered for
conversion shall become entitled to receive any securities other
than shares of Common Stock, thereafter the amount of such other
securities so receivable upon conversion of any share of Series D
Convertible Preferred Stock shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in paragraph (i) to
(vi), inclusive, above, and the provisions of this Section 3(c) with
respect to the Common Stock shall apply on like terms to any such other
securities.
(viii) No adjustment in the conversion price shall be required
unless such adjustment would require a change of at least 1% in such
price; provided, however, that any adjustments which by reason of this
paragraph (viii) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
(d) Whenever the conversion price is adjusted as herein provided:
(i) the Corporation shall promptly file with the Transfer
Agent for such series a certificate of the Treasurer of the Corporation
setting forth the adjusted conversion price and showing in reasonable
detail the facts upon which such adjustment is based, including a
statement of the consideration received or to be received by the
Corporation for any shares of Common Stock issued or deemed to have been
issued; and
(ii) a notice stating that the conversion price has been
adjusted and setting forth the adjusted conversion price shall forthwith
be required, and as soon as practicable after it is required, such notice
shall be mailed by the Corporation to the holders of record of Series D
Convertible Preferred Stock; provided, however, that if within ten days
after the mailing of such notice, an additional notice is required, such
additional notice shall be deemed to be required pursuant to this
paragraph (ii) as of the opening of business on the tenth day after such
mailing and shall set forth the conversion price as adjusted at such
opening of business, and upon the mailing of such additional notice no
other notice need be given of any adjustment in the conversion price
occurring at or prior to such opening of business and after the time that
the next preceding notice given by mailing became required.
-6-
<PAGE> 20
(e) In case:
(i) the Corporation shall authorize the distribution to all holders
of its Common Stock of evidences of its indebtedness or assets (other
than dividends or other distributions paid out of earned surplus); or
(ii) the Corporation shall authorize the granting to the holders of
its Common Stock of rights to subscribe for or purchase any shares of
capital stock of any class or of any other rights; or
(iii) of any reclassification of the Common Stock of the Corporation
(other than a subdivision or combination of its outstanding shares of
Common Stock), or of any consolidation or merger to which the Corporation
is a party and for which approval of any shareholders of the Corporation
is required, or of the sale or transfer of all or substantially all of the
assets of the company; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then, in each case, the Corporation shall cause to be filed with the
Transfer Agent for the Series D Convertible Preferred Stock and shall
cause to be mailed, first class postage prepaid, to the holders of record
of the outstanding shares of Series D Convertible Preferred Stock at
least 10 days prior to the applicable record date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the
purpose of such distribution or rights, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be
entitled to such distribution or rights are to be determined, or (y) the
date on which such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding
up.
(f) The Corporation shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued Common
Stock, solely for the purpose of effecting the conversion of the shares of
Series D Convertible Preferred Stock, the full number of shares of Common
Stock then issuable upon the conversion of all outstanding shares of
Series D Convertible Preferred Stock. For the purpose of this Section 3(f)
the full number of shares of Common Stock issuable upon the conversion of
all outstanding shares of Series D Convertible Preferred Stock shall be
computed as if at the time of computation of such number of shares of
Common Stock all outstanding shares of Series D Convertible Preferred
Stock were held by a single holder. The Corporation shall from time to
time, in accordance with the Wisconsin Business Corporation Law, increase
the authorized amount of its Common Stock if at any time the authorized
amount of its Common Stock remaining unissued shall not be sufficient to
permit the conversion of all shares of Series D Convertible Preferred
Stock at the time outstanding. If any shares of Common Stock required to
be reserved for issuance upon conversion of shares of Series D Convertible
Preferred Stock hereunder require
-7-
<PAGE> 21
registration with or approval of any governmental authority under any
Federal or State law before such shares may be issued upon such
conversion, the Corporation will in good faith and as expeditiously as
possible endeavor to cause such shares to be so registered or approved.
(g) The Corporation will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion
of shares of Series D Convertible Preferred Stock pursuant hereto. The
Corporation shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue or transfer and
delivery of shares of Common Stock in a name other than that in which the
shares of Series D Convertible Preferred Stock so converted were
registered, and no such issue or delivery shall be made unless and until
the person requesting such issue has paid to the Corporation the amount of
any such tax or has established to the satisfaction of the Corporation
that such tax has been paid.
(h) Before taking any action which would cause an adjustment
reducing the conversion price below the then par value of the Common
Stock, the Corporation will take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and nonassessable (except as
otherwise provided by the Wisconsin Business Corporation Law) shares of
Common Stock at the conversion price as so adjusted.
4. Liquidation Rights.
(a) Upon the voluntary dissolution, liquidation or winding-up of the
Corporation, the holders of the shares of Series D Convertible Preferred
Stock then outstanding shall be entitled to receive out of the assets of
the Corporation (whether representing capital or surplus), before any
payment or distribution shall be made on the Common Stock or any other
class or series of stock of the Corporation ranking junior to the Series
D Convertible Preferred Stock as to dividends or as to distribution upon
liquidation, dissolution or winding-up, cash in an amount of $500 per
share, plus an amount equal to all dividends cumulated and unpaid thereon,
to the date of final distribution to the holders of the Series D
Convertible Preferred Stock.
(b) Upon the involuntary dissolution, liquidation or winding-up of
the Corporation, the holders of the shares of the Series D Convertible
Preferred Stock then outstanding shall be entitled to receive out of the
assets of the Corporation (whether representing capital or surplus),
before any payment or distribution shall be made on the Common Stock or
any other class or series of stock of the Corporation ranking junior to
the Series D Convertible Preferred Stock as to dividends or as to
distribution upon liquidation dissolution or winding-up, cash in the
amount equal to $500 per share, plus an amount equal to all dividends
cumulated and unpaid thereon, to the date of final distribution to the
holders of the Series D Convertible Preferred Stock.
(c) After the payment to the holders of the shares of the Series D
Convertible Preferred Stock of the full preferential amounts provided for
in this Section 4, the holders of the Series D Convertible Preferred
Stock as such shall have no right or claim to any of the remaining assets
of the Corporation.
-8-
<PAGE> 22
(d) In the event the assets of the Corporation available for
distribution to the holders of shares of the Series D Convertible
Preferred Stock upon any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, shall be insufficient
to pay in full all amounts to which such holders are entitled pursuant to
paragraph (a) or (b) of this Section 4, no distribution shall be made on
account of any shares of any class or series of stock of the Corporation
ranking on a parity with the shares of the Series D Convertible Preferred
Stock upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares
of the Series D Convertible Preferred Stock, ratably, in proportion to
the full distributable amounts to which such holders and the holders of
all such parity shares are respectively entitled upon such dissolution,
liquidation or winding up.
(e) Upon the dissolution, liquidation or winding up of the
Corporation, the holders of shares of the Series D Convertible Preferred
Stock then outstanding shall be entitled to be paid out of the assets of
the Corporation available for distribution to its stockholders all amounts
to which such holders are entitled pursuant to paragraph (a) or (b) of
this Section 4 before any payment shall be made to the holders of any
class or series of stock of the Corporation ranking junior upon
liquidation to the Series D Convertible Preferred Stock.
(f) Upon the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, cumulated dividends shall not include
fractional periods between records dates.
5. Optional Redemption. The shares of Series D Convertible Preferred
Stock are not redeemable prior to June 30, 1997. Thereafter the shares of
Series D Convertible Preferred Stock are redeemable in whole at any time
or in part from time to time at the option of the Corporation at a
redemption price of $500 per share, plus an amount equal to any arrearage
in dividends thereon. In the case of a redemption in part of the shares of
Series D Convertible Preferred Stock, the shares to be redeemed shall be
selected pro rata or by lot or in such other manner as the Board of
Directors may determine.
Notice of redemption shall be mailed at least 30 days but not more
than 60 days before the redemption date to each holder of record of shares
of Series D Convertible Preferred Stock to be redeemed at the address
shown on the stock books of the Corporation (but no failure to mail such
notice or any defect therein or in the mailing thereof shall affect the
validity of the proceedings for such redemption except as to the holder to
whom the Corporation has failed to mail such notice or except as to the
holder whose notice was defective). On and after the redemption date,
dividends shall cease to accumulate on shares of Series D Convertible
Preferred Stock called for redemption (unless the Corporation defaults in
the payment of the redemption price).
6. Voting Rights.
(a) Holders of shares of Series D Convertible Preferred Stock shall
not be entitled to vote on any matter, except as otherwise provided by law
or by the Restated Articles of Incorporation, as amended, and except that:
-9-
<PAGE> 23
(i) The affirmative vote of the holders of a majority of the
outstanding shares of Series D Convertible Preferred Stock, voting
separately as a single class, shall be required to amend the Restated
Articles of Incorporation of the Corporation to create or authorize, or
increase the authorized amount of, any class or series of stock ranking
prior to the Series D Convertible Preferred Stock in respect of dividends
or distribution of assets on liquidation, dissolution or winding up of the
Corporation or otherwise alter or abolish the liquidation preferences or
any other preferential right of the Series D Convertible Preferred Stock,
alter or abolish the conversion rights of the Series D Convertible
Preferred Stock, reduce the redemption price or otherwise alter any
redemption rights of the Series D Convertible Preferred Stock, alter or
abolish any right of the Series D Convertible Preferred Stock to receive
dividends, or exclude or limit the voting rights as to these matters.
(ii) If at any time the Corporation falls in arrears in the payment
of dividends on the Series D Convertible Preferred Stock in an aggregate
amount at least equal to the full accrued dividends for six (6) quarterly
dividend periods (a "voting event"), the number of directors of the
Corporation shall be increased by two and the holders of the Series D
Convertible Preferred Stock, voting separately as a single class, shall
have the right to elect two directors to fill the positions so created.
Until such voting event shall have been terminated by payment of all
dividends for all past dividend periods, any director who has been so
elected by the holders of Series D Convertible Preferred Stock may be
removed at any time, either with or without cause, only by the affirmative
vote of the holders of a majority of the votes entitled to be cast for the
election of any such director at a special meeting of such holders called
for that purpose, and any vacancy thereby created may only be filled by
the vote of such holders. If and when such voting event shall have been
terminated, the holders of Series D Convertible Preferred Stock shall be
divested of the foregoing special voting rights, subject to revesting upon
the further occurrence of a voting event. Upon termination of such voting
event, the terms of office of all persons who may have been elected
directors by vote of the holders of Series D Convertible Preferred Stock
pursuant to the foregoing special voting rights shall immediately
terminate. Upon the occurrence of a voting event, the Corporation shall
immediately call special meeting of the holders of Series D Convertible
Preferred Stock entitled to vote upon the occurrence of such voting event
by mailing, by first-class mail, postage prepaid, to each holder of record
of such shares, at such holder's address as the same appears on the books
of the Corporation, a notice of special meeting to be held not
less than 20 days nor more than 60 days after the date such notice is
given. If the Corporation does not call such special meeting, such
special meeting may be called by any holder or holders of 10 percent or
more of such class, on like notice. The record date for determining the
holders entitled to notice of and to vote at such meeting shall be the
business day immediately preceding the day on which such notice is
mailed. The holders of the Series D Convertible Preferred Stock, at the
time entitled to cast one-third of the votes entitled to be cast for the
election of directors at such special meeting, present in person or by
proxy, shall constitute a quorum for the election of directors at such
special meeting. At any such meeting or adjournment thereof in the
absence of a quorum, subject to the provisions of any applicable law, the
holders of a majority of the shares of Series D Convertible Preferred
Stock, present in person or by proxy at such meeting, shall have the
power to adjourn the meeting for the election of such directors
without notice, other than an announcement at the meeting, until a quorum
is present.
-10-
<PAGE> 24
If such voting event shall have been terminated after the notice of a
special meeting provided for in this paragraph has been given but before
such special meeting shall have been held, the Corporation shall, as soon
as practicable after such termination, mail notice of such termination to
the holders of the Series D Convertible Preferred Stock that would have
been entitled to vote at such special meeting.
(b) The foregoing voting provisions shall not apply if, at or prior
to the time when the act with respect to which such voting would otherwise
be required shall be effected, all outstanding Series D Convertible
Preferred Stock shall have been (i) redeemed or called for redemption and
sufficient funds shall have been deposited, in trust, to effect such
redemption in accordance with the provisions hereof, or (ii) purchased or
otherwise acquired by the Corporation and cancelled, or converted into
Common Stock of the Corporation.
7. Rank. The Series D Convertible Preferred Stock shall, as to
dividends and distributions upon liquidation, dissolution (whether
voluntary or involuntary) or winding up of the Corporation:
(a) rank in parity with any class or series of Preferred Stock of the
Corporation, without preference or priority as among holders of such stock
and the Series D Convertible Preferred Stock; and
(b) have preference and priority in ranking to the Common Stock and
any other class or series of common stock of the Corporation.
* * *
C. None of the shares of Series D Convertible Preferred Stock have
been issued.
D. The amendment creating the Series D Convertible Preferred Stock
was adopted by the Board of Directors of the Corporation in accordance
with section 180.1002 of the Wisconsin Business Corporation Law and
shareholder action was not required.
These Articles of Amendment shall be effective as of 3:29 P.M. on
the date hereof.
IN WITNESS WHEREOF, the undersigned has executed and subscribed these
Articles of Amendment on behalf of the Corporation and does affirm the
foregoing as true this 31st day of January, 1995.
STATE OF WISCONSIN William J. Schulz
FILED By:------------------------
JAN 31 1995 William J. Schulz
DOUGLAS LA FOLLETTE Senior Vice President and Deputy
SECRETARY OF STATE General Counsel
---------------
This instrument was drafted by, and should be returned to, William J.
Schulz, Senior Vice President and Deputy General Counsel, Firstar
Corporation, 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
-11-
<PAGE> 25
RECEIVED - DEPT OF ARTICLES OF AMENDMENT STATE OF WISCONSIN
FINANCIAL INSTITUTIONS TO FILED
STATE OF WISCONSIN RESTATED ARTICLES OF INCORPORATION JAN 21 1997
OF DEPARTMENT OF
97 JAN 17 P4:09 FIRSTAR CORPORATION FINANCIAL INSTITUTIONS
-----------------------------------
Pursuant to Section 180.1002
of the
Wisconsin Business Corporation Law
-----------------------------------
I, William J. Schulz, Senior Vice President and Secretary of Firstar
Corporation, a corporation organized and existing under the Wisconsin Business
Corporation Law (the "Corporation"), in accordance with the provisions of
Section 180.1002 thereof, DO HEREBY CERTIFY THAT:
1. Pursuant to Subsection (6) of Section 180.1002 of the Wisconsin
Business Corporation Law, at a meeting of the Board of Directors of the
Corporation, which was duly called and at which a quorum was present and acting
throughout, the Board of Directors adopted a resolution on January 16, 1997,
but which was not effective until the date hereof, to effect a change of each
share, whether issued or unissued, of the Corporation's Common Stock into two
shares of Common Stock by amending Section (1) of Article III of the
Corporation's Restated Articles of Incorporation (the "Amendment") to read as
follows:
"(1) The number of shares of which the Corporation shall have
authority to issue is 242,500,000, divided into the following
classes:
(a) 240,000,000 shares of the par value of $1.25 each, designated
as "Common Stock"; and
(b) 2,500,000 shares of the par value of $1.00 each, designated
as "Preferred Stock."
On the effective date of this Amendment, each share of Common Stock,
$1.25 par value, of the Corporation outstanding or held in treasury
immediately prior to the effective time of this Amendment, shall be
changed into two shares of said Common Stock, $1.25 par value.
One-half of the total issue of Common Stock, $1.25 par value,
resulting from such change initially shall be evidenced by the
outstanding stock certificates (until such time as they may be
exchanged by the holders thereof) and the additional one-half of the
total issue of Common Stock, $1.25 par value, shall be evidenced by
certificates in the $1.25 par value form which shall be distributed
to
<PAGE> 26
persons who are at the close of business on the effective date of
this Amendment the holders of record of Common Stock."
2. The Amendment was adopted by the Board of Directors of the Corporation
in accordance with Section 180.1002 of the Wisconsin Business Corporation Law
and shareholder action was not required.
These Articles of Amendment shall be effective as of the close of business
on January 27, 1997.
The distribution to the holders of Common Stock of record at the close of
business on the effective date of the Amendment of certificates evidencing the
additional number of shares resulting from the Amendment shall be made on or as
soon as practicable after February 15, 1997.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment on behalf of the Corporation and does hereby affirm the foregoing as
true this 17th day of January, 1997.
By: William J. Schulz
----------------------
William J. Schulz,
Senior Vice President and Secretary
- -----------
This instrument was drafted by, and should be returned to, William J.
Schulz, Senior Vice President and Secretary, Firstar Corporation, 777 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202.
STATE OF WISCONSIN
FILED
JAN 21 1997
DEPARTMENT OF
FINANCIAL INSTITUTIONS
2
<PAGE> 1
EXHIBIT 3.2
FIRSTAR CORPORATION
BY - LAWS
(As amended to April 1, 1997)
<PAGE> 2
ARTICLE I
OFFICES
Amended: 4/18/74
Section 1.01. Principal Office. The principal office of the Corporation in the
State of Wisconsin shall be located at 777 East Wisconsin Avenue, Milwaukee,
Wisconsin. The Corporation may have such other offices, either within or
without the State of Wisconsin, as the board of directors may designate or as
the business of the Corporation may require from time to time.
Section 1.02. Registered Office. The registered office of the Corporation
required by the Wisconsin Business Corporation Law to be maintained in the
State of Wisconsin shall be the same as the principal office, except as the
board of directors may change the address of the registered office from time to
time.
ARTICLE II
Restated: 1/23/92
SHAREHOLDERS
Section 2.01. Annual Meeting.
(a) The annual meeting of the shareholders of the Corporation (the "Annual
Meeting") shall be held on the third Thursday in the month of April in each
year (or on such other day as may be fixed by the board of directors) at such
time and place as may be designated by the board of directors or, in the
absence of designation by the board of directors, then by the chairman of the
board or the president, for the purpose of transacting only such business as is
properly brought before the Annual Meeting in accordance with this Section
2.01. If the day fixed for the Annual Meeting shall be a legal holiday in the
State of Wisconsin, then such meeting shall be held on the next succeeding
Business Day (as hereinafter defined). In fixing a meeting date for any Annual
Meeting, the board of directors may consider such factors as it deems relevant
within the good faith exercise of its business judgment.
(b) The proposal of business to be considered by the shareholders and, subject
to the terms of any series of the Preferred Stock as may be issued by the
Corporation from time to time (as such terms are stated and expressed in the
resolution or resolutions of the board of directors providing for the issuance
of such Preferred Stock), nominations of persons for election to the board of
directors of the Corporation may be made at an Annual Meeting only (i) pursuant
to the Corporation's notice of meeting, (ii) by or at the direction of the
board of directors (or, in the case of nominations, by the committee on
directors of the board of directors or, if such committee does not exist, any
other committee of the board of directors serving a similar function) or (iii)
by any shareholder of the Corporation who is a shareholder of record at the
time of the giving of the notice provided for in this Section 2.01, who is
entitled to vote at the Annual Meeting and who complies with the notice
procedures set forth in this Section 2.01.
(c) For nominations or other business to be properly brought before an Annual
Meeting by a shareholder pursuant to clause (iii) of paragraph (b) of this
Section 2.01, the shareholder must have given timely notice thereof in writing
to the secretary of the Corporation. To be timely, a
1
<PAGE> 3
shareholder's notice must be received by the secretary of the Corporation at
the principal executive offices of the Corporation not later than 50 days in
advance of the third Thursday in the month of April next succeeding the last
Annual Meeting held; provided, however, that if the Annual Meeting is held
earlier than the third Thursday in the month of April, to be timely, a
shareholder's notice must be so received not later than the close of business
on the later of (x) the date 50 days prior to the earlier date of the Annual
Meeting and (y) the date 10 Business Days (as defined below) after the first
public announcement of the earlier date of such Annual Meeting. Such
shareholder's notice shall be signed by the shareholder of record who intends
to make the nomination or introduce the other business (or his or her duly
authorized proxy or other representative), shall bear the date of signature of
such shareholder (or proxy or other representative) and shall set forth:
(i) the name and address, as they appear on the Corporation's books, of
such shareholder and the beneficial owner or owners, if any, on whose behalf
the nomination or proposal is made;
(ii) the class and number of shares of the Corporation which are
beneficially owned by such shareholder and any such beneficial owner or owners;
(iii) a representation that such shareholder is a holder of record of
shares of the Corporation entitled to vote at such Annual Meeting and intends
to appear in person or by proxy at such Annual Meeting to make the nomination
or introduce the other business specified in such shareholder's notice;
(iv) in the case of any proposed nomination for election or re-election as
a director, (A) the name and residence address of the person or persons to be
nominated, (B) a description of all arrangements or understandings between such
shareholder, any such beneficial owner or owners and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination is to be made by such shareholder, (C) such other information
regarding each nominee proposed by such shareholder as would be required to be
disclosed in solicitations of proxies for elections of directors, or would be
otherwise required to be disclosed, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
including any information that would be required to be included in a proxy
statement filed pursuant to Regulation 14A had the nominee been nominated by
the board of directors and (D) the written consent of each nominee to be named
in a proxy statement and to serve as a director of the Corporation if so
elected; and
(v) in the case of any other business that such shareholder proposes to
bring before the meeting, (A) a brief description of the business desired to be
brought before such Annual Meeting and, if such business includes a proposal to
amend these by-laws, the language of the proposed amendment, (B) such
shareholder's and any such beneficial owner's or owners' reasons for conducting
such business at such Annual Meeting and (C) and material interest in such
business of such shareholder and any such beneficial owner or owners.
(d) Only persons who are nominated in accordance with the procedures set forth
in this Section 2.01 shall be eligible to be elected as directors by
shareholder vote at an Annual Meeting. Only such business shall be conducted at
an Annual Meeting as shall have been brought before such Annual Meeting in
accordance with the procedures set forth in this Section 2.01. If the chairman
of the
2
<PAGE> 4
Annual Meeting shall determine that a nomination or any business proposed to be
brought before the meeting was not properly made or brought in accordance with
the procedures set forth in this Section 2.01, then the chairman shall so
declare to the meeting and such nomination or business shall not be considered.
(e) For purposes of Section 2.01 and Section 2.02 of these by-laws, "public
announcement" shall mean disclosure in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15 (d) of the Exchange Act or in a press release reported by the Dow
Jones News Service, Reuters Economic Services, Associated Press, United Press
International or comparable national news service. For purposes of these
by-laws, "Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in the State of Wisconsin are authorized or
obligated by law or executive order to close.
(f) Notwithstanding the foregoing provisions of this Section 2.01, a
shareholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations promulgated thereunder with respect to the
matters set forth in this Section 2.01. Nothing in this Section 2.01 shall be
deemed to limit the Corporation's obligation to include shareholder proposals
in its proxy statement if such inclusion is required by Rule 14a-8 under the
Exchange Act.
(g) In the event of failure, through oversight or otherwise, to hold the Annual
Meeting in any year on the date herein provided, a subsequent deferred Annual
Meeting upon due notice may be held in lieu thereof and any election had or
business done at such Annual Meeting shall be as valid and effectual as if had
or done at the Annual Meeting of the date herein provided.
Section 2.02. Special Meetings.
(a) A special meeting of the shareholders of the Corporation (a "Special
Meeting") may be called only by (i) the chairman of the board, (ii) the
president or (iii) a majority of the board of directors then in office, and
shall be called by the chairman of the board or the president upon the demand,
in accordance with this Section 2.02, of the holders of record of shares of the
Corporation representing at least 10% of all the votes entitled to be cast on
any issue proposed to be considered at the Special Meeting.
(b) In order that the Corporation may determine the shareholders entitled to
demand a Special Meeting, the board of directors may fix a record date to
determine the shareholders entitled to make such a demand (the "Demand Record
Date"). The Demand Record Date shall not precede the date upon which the
resolution fixing the Demand Record Date is adopted by the board of directors
and shall not be more than 10 days after the date upon which the resolution
fixing the Demand Record Date is adopted by the board of directors. Any
shareholder or record seeking to have shareholders demand a Special Meeting
shall, by sending written notice to the secretary of the Corporation by hand or
by certified or registered mail, return receipt requested, request the board of
directors to fix a Demand Record Date. The board of directors shall promptly,
but in all events within 10 days after the date on which a valid request to fix
a Demand Record Date is received by the secretary of the Corporation, adopt a
resolution fixing the Demand Record Date and shall make a public announcement
of such Demand Record Date. If no Demand Record has been fixed by the board of
directors within 10 days after the date on which such valid request is received
by the secretary, the Demand Record Date shall be the 10th day after the first
date on which a valid written request to set a
3
<PAGE> 5
Demand Record Date is received by the secretary. To be valid, such written
request shall set forth the purpose or purposes for which the Special Meeting
is to be held, shall be signed by one or more shareholders of record (or their
duly authorized proxies or other representative), shall bear the date of
signature of each such shareholder (or proxy or other representative) and shall
set forth all information about each such shareholder and about the beneficial
owner or owners, if any, on whose behalf the request is made that would be
required to be set forth in a shareholder's notice described in paragraph (c)
of Section 2.01 of these by-laws.
(c) In order for a shareholder or shareholders to demand a Special Meeting, a
written demand or demands for a Special Meeting by the holders of record as of
the Demand Record Date of shares of the Corporation representing at least 10%
of all the votes entitled to be cast on each issue proposed to be considered at
the Special Meeting must be delivered to the Corporation on or after the Demand
Record Date. To be valid, each written demand by a shareholder for a Special
Meeting shall set forth the specific purpose or purposes for which the Special
Meeting is to be held (which purpose or purposes shall be limited to the
purpose or purposes set forth in the written request to set a Demand Record
Date, received by the secretary pursuant to paragraph (b) of this Section
2.02), shall be signed by one or more persons who as of the Demand Record Date
are shareholders of record (or their duly authorized proxies or other
representatives), and shall set forth the name and address, as they appear in
the Corporation's books, of each shareholder signing such demand and the class
and number of shares of the Corporation which are owned of recorded and
beneficially by each such shareholder, shall be sent to the secretary by hand
or by certified or registered mail, return receipt requested, and must be
received by the secretary within 70 days after the Demand Record Date.
(d) The Corporation shall not be required to call a Special Meeting upon
shareholder demand unless, in addition to the documents required by paragraph
(c) of this Section 2.02, the secretary receives a written agreement signed by
each Soliciting Shareholder (as defined herein) pursuant to which each
Soliciting Shareholder, jointly and severally, agrees to pay the Corporation's
costs of holding the Special Meeting, including the costs of preparing and
mailing proxy materials for the Corporation's own solicitation, provided that
if each of the resolutions introduced by a Soliciting Shareholder at such
meeting is adopted, then the Soliciting Shareholders shall not be required to
pay such costs. For purposes of this paragraph (d), the following terms shall
have the meanings set forth below:
(i) "Affiliate" of any Person shall mean any Person controlling,
controlled by or under common control with such first Person.
(ii) "Participant" shall have the meaning assigned to such term in Rule
14a-11 promulgated under the Exchange Act.
(iii) "Person" shall mean any individual, firm, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
(iv) "Proxy" shall have the meaning assigned to such term in Rule 14a-1
promulgated under the Exchange Act.
(v) "Solicitation" shall have the meaning assigned to such term in Rule
14a-1 promulgated under the Exchange Act.
4
<PAGE> 6
(vi) "Soliciting Shareholder" shall mean, with respect to any Special
Meeting demanded by a shareholder or shareholders, any of the following
Persons:
(A) if the number of shareholders signing the demand or demands
for a meeting delivered to the Corporation pursuant to paragraph (c) of this
Section 2.02 is ten or fewer, each shareholder signing any such demand;
(B) if the number of shareholders signing the demand or demands
for a meeting delivered to the Corporation pursuant to paragraph (c) of this
Section 2.02 is more than ten, each Person who either (I) was a Participant in
any Solicitation of such demand or demands or (II) at the time of the delivery
to the Corporation of the documents described in paragraph (c) of this Section
2.02, had engaged or intended to engage in any Solicitation of Proxies for use
at such Special Meeting (other than a Solicitation of Proxies on behalf of the
Corporation); or
(C) any affiliate of a Soliciting Shareholder, if a majority of the
directors then in office determines, reasonably and in good faith, that such
Affiliate should be required to sign the written notice described in paragraph
(c) of this Section 2.02 and/or the written agreement described in this
paragraph (d) in order to prevent the purposes of this Section 2.02 from being
evaded.
(e) Except as provided in the following sentence, any Special Meeting shall be
held at such hour and day as may be designated by, or designated in the manner
provided by, whichever of the chairman of the board, the president or the board
of directors shall have called such meeting. In the case of any Special Meeting
called by the chairman of the board or the president upon the demand of
shareholders (a "Demand Special Meeting"), such meeting shall be at such hour
and day as may be designated by the board of directors; provided, however, that
the date of any Demand Special Meeting shall be not more than 70 days after the
Meeting Record Date (as defined in Section 2.05 of these by-laws); and provided
further that if the directors then in office fail to designate an hour and date
for a Demand Special Meeting within 10 days after the date that valid written
demands for such Demand Special Meeting by the holders of record as of the
Demand Record Date of shares representing at least 10% of all the votes
entitled to be cast on any issue proposed to be considered at the Special
Meeting are received by the Corporation (the "Delivery Date"), then such
meeting shall be held at 2:00 P.M. (local time) on the 100th day after the
Delivery Date or, if such 100th day is not a Business Day, on the first
Business Day preceding such 100th day. In fixing a meeting date for any Special
Meeting, the chairman of the board, the president or the board of directors may
consider such factors as they deem relevant within the good faith exercise of
their business judgment, including, without limitation, the nature of the
action proposed to be taken, the facts and circumstances surrounding any demand
for such meeting, and any plan of the board of directors to call an Annual
Meeting or a Special Meeting for the conduct of related business.
(f) The Corporation may engage nationally recognized independent inspectors of
elections to act as an agent of the Corporation for the purpose of promptly
performing a ministerial review of the validity of any purported written demand
or demands for a Special Meeting received by the secretary. For the purpose of
permitting the inspectors to perform such review, no purported demand shall be
deemed to have been received by the Corporation until the earlier of (i) five
Business Days following receipt by the secretary of such purported demand and
(ii) such date as the independent inspectors certify to the
5
<PAGE> 7
Corporation that the valid demands received by the secretary represent at least
10% of all the votes entitled to be cast on each issue proposed to be
considered at the Special Meeting. Nothing contained in this paragraph shall in
any way be construed to suggest or imply that the board of directors or any
shareholder shall not be entitled to contest the validity of any demand,
whether during or after such five Business Day period, or to take any other
action (including, without limitation, the commencement, prosecution or defense
of any litigation with respect thereto).
(g) Only such business shall be conducted at a Special Meeting as shall have
been described in the notice of meeting sent to shareholders pursuant to
Section 2.04 of these by-laws. Subject to the terms of any series of Preferred
Stock as may be issued by the Corporation from time to time (as such terms are
stated and expressed in the resolution or resolutions of the board of directors
providing for the issuance of such Preferred Stock), nominations of persons for
election to the board of directors to fill any vacancy on the board of
directors may be made at a Special Meeting called in accordance with this
Section 2.02 for the purpose of electing directors as provided in Section 3.03
of these by-laws (i) by or at the direction of the board of directors, (ii) by
the committee on directors of the board of directors (or, if such committee
does not exist, any other committee of the board of directors serving a similar
function) or (iii) by any shareholder of the Corporation who (A) is a
shareholder of record at the time of giving of such notice of meeting, (B) is
entitled to vote at such Special Meeting and (C) complies with the notice
procedures set forth in this Section 2.02. Any shareholder desiring to nominate
persons for election to the board of directors at such a Special Meeting shall
cause a written notice to be received by the secretary of the Corporation at
the principal executive offices of the Corporation not later than the close of
business on the later of (x) the date 50 days prior to such Special Meeting and
(y) the date 10 Business Days after the first public announcement of such
Special Meeting and of the nominees proposed by the board of directors to be
elected at such Special Meeting. Such written notice shall be signed by the
shareholder of record who intends to make the nomination (or his or her duly
authorized proxy or other representative), shall bear the date of signature of
such shareholder (or proxy or other representative) and shall set forth: (A)
the name and address, as they appear on the Corporation's books, of such
shareholder and the beneficial owner or owners, if any, on whose behalf the
nomination is made; (B) the class and number of shares of the Corporation which
are beneficially owned by such shareholder and any such beneficial owner or
owners; (C) a representation that such shareholder is a holder of record of
shares of the Corporation entitled to vote at such Special Meeting and intends
to appear in person or by proxy at such Special Meeting to make the nomination
specified in the notice; (D) the name and residence address of the person or
persons to be nominated; (E) a description of all arrangements or
understandings between such shareholder, any such beneficial owner or owners
and each nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination is to be made by such shareholder;
(F) such other information regarding each nominee proposed by such shareholder
as would be required to be disclosed in solicitations of proxies for elections
or directors, or would be otherwise required to be disclosed, in each case
pursuant to Regulation 14A under the Exchange Act, including any information
that would be required to be included in a proxy statement filed pursuant to
Regulation 14A had the nominee been nominated by the board of directors; and
(G) the written consent of each nominee to be named in a proxy statement and to
serve as a director of the Corporation if so elected.
(b) Only persons who are nominated in accordance with the procedures set forth
in this Section 2.02 shall be eligible to be elected as directors by
shareholder vote at a Special Meeting. Only such
6
<PAGE> 8
business shall be conducted at a Special Meeting as shall have been brought
before such meeting in accordance with the procedures set forth in this Section
2.02. If the chairman of the meeting shall determine that a nomination or any
business proposed to be brought before the Special Meeting was not properly
made or brought in accordance with the procedures set forth in this Section
2.02, then the chairman shall so declare to the meeting and such nomination or
business shall not be considered.
(i) Notwithstanding the foregoing provisions of this Section 2.02, a
shareholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations promulgated thereunder with respect to the
matters set forth in this Section 2.02. Nothing in this Section 2.02 shall be
deemed to limit the Corporation's obligation to include shareholder proposals
in its proxy statement if such inclusion is required by Rule 14a-8 under the
Exchange Act.
Section 2.03. Place of Meeting. The board of directors (or, in the absence of
designation by the board of directors, then the officer calling a meeting) may
designate any place within the State of Wisconsin as the place of meeting for
any Annual Meeting, and Special Meeting or any postponement thereof. If no
designation is made, the place of the meeting shall be at the address of the
registered office of the Corporation in the State of Wisconsin. The room
location for initially convening any meeting at the address of the registered
office, if not designated by the board of directors, may be fixed by the
secretary and shall be set forth in the notice of meeting. Any adjourned
meeting may be reconvened at any place designated by vote of the board of
directors or by the chairman of the board or the president.
Section 2.04. Notice of Meeting. The Corporation shall send written notice
stating the place, day and hour of any Annual Meeting or Special Meeting not
less than 10 days nor more than 70 days before the date of such meeting either
personally or by mail to each shareholder of record entitled to vote at such
meeting and to other shareholders of record as may be required by the Wisconsin
Business Corporation Law or the Restated Articles of Incorporation. In the
event of any Demand Special Meeting, such notice of meeting shall be sent not
more than 30 days after the Delivery Date (as defined in Section 2.02 (e) of
these by-laws). If mailed, such notice of meeting shall be addressed to each
shareholder at his or her address as it appears on the stock record books of
the Corporation. Unless otherwise required by law or the Restated Articles of
Incorporation, a notice of an Annual Meeting need not include a description of
the purpose or purposes for which the meeting is called. In the case of any
Special Meeting, the notice of meeting shall describe any business that the
board of directors shall have theretofore determined to bring before the
meeting, and in the case of a Demand Special Meeting, the notice of meeting
shall also describe any business set forth in the statement of purpose of the
demands received by the Corporation in accordance with Section 2.02 of these
by-laws. If an Annual Meeting or Special Meeting is adjourned to a different
date, time or place, the Corporation shall not be required to give notice of
the new date, time or place if the new date, time or place is announced at the
meeting before adjournment; provided, however, that if a new Meeting Record
Date for an adjourned meeting is or must be fixed, the Corporation shall give
notice of the adjourned meeting to persons who are shareholders as of the new
Meeting Record Date. A shareholder's attendance at a meeting, in person or by
proxy, waives objection to the following: (A) lack of notice or defective
notice of the meeting, unless the shareholder at the beginning of the meeting
or promptly upon arrival objects to holding the meeting or transacting business
at the meeting; and (B) consideration of a particular matter at the meeting
that is not within the purpose
7
<PAGE> 9
described in the meeting notice, unless the shareholder objects to considering
the matter when it is presented.
Section 2.05. Fixing of Record Date. The board of directors may fix, or provide
the manner of fixing, a future date not less than 10 days nor more than 70 days
prior to the date of any Annual Meeting or Special Meeting as the record date
for the determination of shareholders entitled to notice of, or to vote at,
such meeting (the "Meeting Record Date"). In the case of any Demand Special
Meeting, (i) the Meeting Record Date shall be not later than the 30th day after
the Delivery Date and (ii) if the board of directors fails to fix the Meeting
Record Date within 30 days after the Delivery Date, then the close of business
on such 30th day shall be the Meeting Record Date. The shareholders of record
on the Meeting Record Date shall be the shareholders entitled to notice of and
to vote at the meeting. Except as provided by the Wisconsin Business
Corporation Law for a court-ordered adjournment, a determination of
shareholders entitled to notice of or to vote at any Annual Meeting or Special
Meeting is effective for any postponement or adjournment of such meeting unless
the board of directors fixes a new Meeting Record Date, which it shall do if
the meeting is postponed or adjourned to a date more than 120 days after the
date fixed for the original meeting. The board of directors may also fix a
future date as the record date for the purpose of determining shareholders
entitled to take any other action or determining shareholders for any other
purpose.
Section 2.06. Voting Lists. After a Meeting Record Date has been fixed, the
Corporation shall prepare a list of names of all of the shareholders entitled
to notice of the meeting. The list shall be arranged by class or series of
shares, if any, and show the address of and number of shares held by each
shareholder. Such list shall be available for inspection by any shareholder,
beginning two business days after notice of the meeting is given for which the
list was prepared and continuing to the date of the meeting, at the
Corporation's principal office or at a place identified in the meeting notice
in the city where the meeting will be held. The Corporation shall make the
shareholders' list available at the meeting and any shareholder or his or her
agent or attorney may inspect the list at any time during the meeting or any
adjournment thereof. Refusal or failure to prepare or make available the
shareholders' list shall not affect the validity of any action taken at a
meeting of shareholders.
Section 2.07. Quorum and Voting Requirements; Postponements; Adjournments.
(a) Shares entitled to vote as a separate voting group may take action on a
matter at any Annual Meeting or Special Meeting only if a quorum of those shares
exists with respect to that matter. If the Corporation has only one class of
stock outstanding, such class shall constitute a separate voting group for
purposes of this Section 2.07. Except as otherwise provided in the Restated
Articles of Incorporation or the Wisconsin Business Corporation Law, a majority
of the votes entitled to be cast on a matter shall constitute a quorum of the
voting group for action on that matter. Once a share is represented for any
purpose at any Annual Meeting or Special Meeting, other than for the purpose of
objecting to holding the meeting or transacting business at the meeting, it is
considered present for purposes of determining whether a quorum exists for the
remainder of the meeting and for any adjournment of that meeting unless a new
Meeting Record Date is or must be set for the adjourned meeting. If a quorum
exists, except in the case of the election of directors, action on a matter
shall be approved if the votes cast within the voting group favoring the action
exceed the votes cast opposing the action, unless the Restated Articles of
Incorporation, these by-laws, or the Wisconsin Business Corporation Law requires
a greater number of affirmative votes. Unless otherwise provided in the Restated
Articles of Incorporation, directors are elected by a plurality of the votes
cast by the shares
8
<PAGE> 10
entitled to vote in the election of directors at any Annual Meeting, or Special
Meeting called for the purpose of electing directors, at which a quorum is
present.
(b) The board of directors acting by resolution may postpone and reschedule any
previously scheduled Annual Meeting or Special Meeting; provided, however, that
a Demand Special Meeting shall not be postponed beyond the 100th day following
the Delivery Date. Any Annual Meeting or Special Meeting may be adjourned from
time to time, whether or not there is a quorum, (i) at any time, upon a
resolution of shareholders if the votes cast in favor of such resolution by the
holders of shares of each voting group entitled to vote on any matter
theretofore properly brought before the meeting exceed the number of votes cast
against such resolution by the holders of shares of each such voting group or
(ii) at any time prior to the transaction of any business at such meeting, by
the chairman of the board of the president or pursuant to resolution of the
board of directors. No notice of the time and place of adjourned meetings need
be given except as required by the Wisconsin Business Corporation Law. At any
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
Section 2.08. Proxies. At all meetings of shareholders, a shareholder entitled
to vote may vote his or her shares in person or by proxy. A shareholder may
appoint a proxy to vote or otherwise act for the shareholder by signing an
appointment form, either personally or by his or her attorney-in-fact. An
appointment of a proxy is effective when received by the secretary or other
officer or agent of the Corporation authorized to tabulate votes. An
appointment is valid for eleven months from the date of its signing unless a
different period is expressly provided in the appointment form.
Section 2.09. Voting of Shares.
(a) Each outstanding share, regardless of class, shall be entitled to one vote
upon each matter submitted to a vote at a meeting of shareholders, except to the
extent that the voting rights of the shares of any class or classes are
enlarged, limited, or denied by the Restated Articles of Incorporation of the
Corporation or by the Wisconsin Business Corporation Law.
(b) Shares held by another corporation, if a sufficient number of shares
entitled to elect a majority of the directors of such other corporation is held
directly or indirectly by the Corporation, shall not be entitled to vote at the
meeting, but shares held in a fiduciary capacity may be voted.
Section 2.10. Acceptance of Instruments Showing Shareholder Action. If the name
signed on a vote, waiver or proxy appointment corresponds to the name of a
shareholder, the Corporation, if acting in good faith, may accept the vote,
waiver or proxy appointment and give it effect as the act of a shareholder. If
the name signed on a vote, waiver or proxy appointment does not correspond to
the name of a shareholder, the Corporation, if acting in good faith, may accept
the vote, waiver or proxy appointment and give it effect as the act of the
shareholder if any of the following apply:
(a) The shareholder is an entity and the name signed purports to be that of an
officer or agent of the entity.
9
<PAGE> 11
(b) The name purports to be that of a personal representative, administrator,
executor, guardian or conservator representing the shareholder and, if the
Corporation requests, evidence of fiduciary status acceptable to the
Corporation is presented with respect to the vote, waiver or proxy appointment.
(c) The name signed purports to be that of a receiver or trustee in bankruptcy
of the shareholder and, if the Corporation requests, evidence of this status
acceptable to the Corporation is presented with respect to the vote, waiver or
proxy appointment.
(d) The name signed purports to be that of a pledgee, beneficial owner, or
attorney-in-fact of the shareholder and, if the Corporation requests, evidence
acceptable to the Corporation of the signatory's authority to sign for the
shareholder is presented with respect to the vote, waiver or proxy appointment.
(e) Two or more persons are the shareholders as co-tenants or fiduciaries and
the name signed purports to be the name of at least one of the co-owners and
the person signing appears to be acting on behalf of all co-owners.
The Corporation may reject a vote, waiver or proxy appointment if the secretary
or other officer or agent of the Corporation who is authorized to tabulate
votes, acting in good faith, has reasonable basis for doubt about the validity
of the signature on it or about the signatory's authority to sign for the
shareholder.
Section 2.11. Conduct of Meeting. The chairman of the board, and in his or her
absence, the president, and in his or her absence, any officer or director
designated by the chairman of the board, and in his or her absence or in the
absence of any such designation, a vice president in the order provided under
Section 4.07 of these by-laws, and in their absence, any person chosen by the
shareholders present shall call any Annual Meeting or Special Meeting to order
and shall act as chairman of the meeting, and secretary of the Corporation
shall act as secretary of all meetings of the shareholders, but in the absence
of the secretary, the chairman of the meeting may appoint any other person to
act as secretary of the meeting.
ARTICLE III
WORD OF DIRECTORS
Restated: 7/21/66; 4/20/67
Section 3.01. General Powers, Number and Qualifications.
Amended: 1/18/66; 1/22/76; 4/19/90; 7/19/90; 1/17/91; 7/18/91; 1/23/92;
4/22/93; 10/20/94; 1/19/95; 9/30/95; 4/1/96, 4/1/97
(a) All corporate powers of the Corporation shall be exercised by or under the
authority of, and the business affairs of the Corporation shall be managed under
the direction of, its board of directors. The number of directors of the
Corporation shall be seventeen (17). No person shall be eligible to be elected
or re-elected as a member of the board of directors if he or she shall have
attained seventy (70) years of age and any director who attains the age of
seventy (70) years shall resign from the
10
<PAGE> 12
board of directors as of the last day of the calendar quarter in which such
director's seventieth birthday falls. The board of directors shall be divided
into three (3) classes consisting of six (6) directors in Class I, six (6)
directors in Class II and five (5) directors in Class III. At each Annual
Meeting, the successors to the class of directors whose term expires at the
time of such meeting shall be elected to hold office until the third succeeding
Annual Meeting and until their successors have been elected and, if necessary,
qualified, or until there is a decrease in the number of directors which takes
effect after the expiration of his or her term.
(b) Subject to the terms of any series of Preferred Stock as may be issued by
the Corporation from time to time, as such terms are stated and expressed in
the resolution or resolutions of the board of directors providing for the
issuance of such Preferred Stock, the number of directors is subject to
increase or decrease at any time or from time to time by amending subsection
(a) of this by-law in the manner provided in Section 3.12 of these by-laws, but
no decrease shall have the effect of shortening the term of any incumbent
director. Any increase or decrease in the number of directors shall be
distributed over the three classes of directors in such manner after giving
effect to such increase or decrease the number of directors in each class is as
nearly equal as possible.
Amended: 4/19/90; 1/23/92
Section 3.02. Removal, Resignation. Subject to the terms of any series of
Preferred Stock as may be issued by the Corporation from time to time, as such
terms are stated and expressed in the resolution or resolutions of the board of
directors providing for the issuance of such Preferred Stock, a director may be
removed from office by the affirmative vote of not less than 75 % of the shares
entitled to vote for the election of such director, voting together as a single
class, taken at a Special Meeting called for that purpose. A director may resign
at any time by delivering his or her written resignation to the board of
directors, to the chairman of the board, to the president or to the secretary of
the Corporation. A director's resignation is effective when the notice is
delivered unless the notice specifies a later effective date.
Amended: 4/19/90; 1/23/92
Section 3.03. Vacancies. Subject to the terms of any series of Preferred Stock
as may be issued by the Corporation from time to time, as such terms are stated
and expressed in the resolution or resolutions of the board of directors
providing for the issuance of such Preferred Stock, (a) any vacancy occurring in
the board of directors, including a vacancy created by an increase in the number
of directors may be filled only by the affirmative vote of a majority of the
directors then in office, although less than a quorum; (b) if there shall be no
directors then in office, the shareholders shall be entitled to fill the
vacancies on the board of directors; and (c) directors appointed to newly
created directorships resulting from any increase in the authorized number of
directors or to fill any vacancies in the board of directors resulting from
death, resignation, removal, disqualification or any other cause shall hold
office for a term expiring at the next annual meeting of shareholders at which
the term of the class to which they have been appointed expires. If the vacant
office was held by a director elected by a voting group of shareholders, then
only the holders of shares of that voting group may vote to fill the vacancy if
it is filled by the shareholders, and only the remaining directors elected by
that voting group may vote to fill the vacancy if it is filled by the directors.
A vacancy that will occur at a specific later date, because of a resignation
effective at a later date or otherwise, may be filled before the vacancy occurs,
but the new director may not take office until the vacancy occurs.
11
<PAGE> 13
Amended: 10/19/72
Section 3.04. Regular Meetings. The board of directors may provide, by
resolution, the time and place within the State of Wisconsin for the holding of
regular meetings without other notice than such resolution.
Amended: 1/20/77; 1/23/92
Section 3.05. Special Meetings. Special meetings of the board of directors may
be called by or at the request of the chairman of the board, the president,
secretary, or any ten (10) of the directors. The person or persons authorized
to call special meetings may fix any place, either within or without the State
of Wisconsin, as the place for holding any special meeting called by them.
Amended: 7/17/86; 1/23/92
Section 3.06. Notice. Notice of any special meeting and of any regular meeting
(except as provided in Section 3.04) shall be given either (a) not later than
three (3) days prior thereto by mailing written notice to such director at his
or her business address or (b) not later than two (2) days prior thereto by
sending written notice by private carrier that guarantees delivery on the next
day to such director at his or her business address, and (c) not later than the
day prior thereto by written or oral notice given by other means to each
director either personally or to his or her business address. Whenever any
notice whatever is required to be given to any director under the Restated
Articles of Incorporation or by-laws, or any provision of law, a waiver thereof
in writing signed at any time, whether before or after the time of meeting, by
the director entitled to such notice, and retained by the Corporation shall be
deemed equivalent to the giving of such notice. The attendance of a director at
or participation in a meeting shall constitute a waiver of notice of such
meeting unless the director at the beginning of the meeting or promptly upon his
or her arrival objects to holding the meeting or transacting business at the
meeting and does not thereafter vote for or assent to action taken at the
meeting. Neither the business to be transacted at nor the purpose of any regular
or special meeting of the board of directors need be specified in the notice or
waiver of notice of such meeting.
Amended: 1/23/92
Section 3.07. Quorum. One-third of the number of directors fixed by Section
3.01 shall constitute a quorum for the transaction of business at any meeting.
If a quorum is present when a vote is taken, the affirmative vote of a majority
of directors present shall be the act of the board of directors, unless the act
of a greater number is required by law, by the Restated Articles of
Incorporation or these by-laws.
Amended: 1/23/92
Section 3.08. Compensation. The board of directors, irrespective of any personal
interest of any of its members, may establish compensation of all directors for
services to the Corporation as directors, officers or otherwise, or may delegate
such authority to an appropriate committee. The board of directors also shall
have authority to provide for or to delegate authority to an appropriate
committee to provide for reasonable pensions, disability or death benefits, and
other benefits or payments to directors, officers and employees and to their
estates, families, dependents, or beneficiaries, on account of prior services
rendered by such directors, officers and employees to the Corporation.
12
<PAGE> 14
Amended: 1/23/92
Section 3.09. Informal Action. Any action required or permitted by the Restated
Articles of Incorporation or by-laws or any provision of the Wisconsin
Business Corporation Law to be taken by the board of directors or a committee
thereof at a meeting or by resolution may be taken without a meeting if the
action is taken by all members of the board of directors or of the committee.
The action shall be evidenced by one or more written consents describing the
action taken, signed by each director or committee member and retained by the
Corporation. Such action shall be effective when the last director or committee
member signs the consent, unless the consent specifies a different effective
date.
Amended: 7/17/86; 1/23/92
Section 3.10. Committees. The board of directors by resolution approved by a
majority of all directors then in office may designate one or more committees,
including an executive committee, each committee to consist of two (2) or more
directors elected by the board of directors, which to the extent provided in
said resolution as initially adopted, and as thereafter amended by further
resolution adopted by a like vote, shall have and may exercise when the board of
directors is not in session, the authority of the board of directors in the
management of the business and affairs of the Corporation, except that a
committee may not do any of the following: (a) authorize distributions; (b)
approve or propose to shareholders action that the Wisconsin Business
Corporation Law requires to be approved by shareholders; (c) fill vacancies on
the board of directors or, unless the board of directors provides by resolution
that vacancies on a committee shall be filled by the affirmative vote of the
remaining committee members, on any board committee; (d) amend the Corporation's
Restated Articles of Incorporation; (e) adopt, amend or repeal these by-laws;
(f) approve a plan of merger not requiring shareholder approval; (g) authorize
or approve reacquisition of shares, except according to a formula or method
prescribed by the board of directors; and (h) authorize or approve the issuance
or sale or contract for sale of shares, or determine the designation and
relative rights, preferences and limitations of a class or series of shares,
except that the board of directors may authorize a committee to do so within
limits prescribed by the board of directors. Unless otherwise provided by the
board of directors in creating the committee, a committee may employ counsel,
accountants and other consultants to assist it in the exercise of its authority.
The board of directors may elect one or more of its members as alternate members
of any such committee who may take the place of any absent member or members at
any meeting of such committee, upon request of the chairman of such meeting.
Subject to any provision of law and these by-laws, each such committee shall fix
its own rules governing the conduct of its activities and shall make such
reports to the board of directors of its activities as the board of directors
may request. Notice of any meeting of committee shall be given either (i) as
provided Section 3.06 or (ii) as provided by rules fixed by such committee.
Except as otherwise provided by the Wisconsin Business Corporation Law or by the
Restated Articles of Incorporation or by these by-laws, (1) a quorum of any
committee of the board of directors having at least four members shall consist
of one-third of the number of directors appointed to serve on the committee and
(2) a quorum of any committee of the board of directors having three or two
members shall consist of a majority of the number of members appointed to serve
on the committee.
Adopted: 1/18/90
Restated: 1/23/92
Section 3.11. Nominations. Nominations for the election of directors at any
Annual Meeting or any Special Meeting may be made only in accordance with
Sections 2.01 and 2.02 of these by-laws.
13
<PAGE> 15
Adopted: 4/19/90
Section 3.12. Amendments. Notwithstanding the provisions of Article IX of these
by-laws, Sections 3.01, 3.02, 3.03 and 3.12 of these by-laws have been
adopted by the shareholders of the Corporation and may be amended only by (a)
the affirmative vote of not less than a majority of the board of directors or
(b) the affirmative vote of not less than 75 % of the outstanding shares
entitled to vote generally for the election of directors, voting together as a
single class.
Adopted: 7/19/90
Amended: 1/23/92
Section 3.13. Telephonic and Electronic. (a) Notwithstanding any place specified
in any notice of a regular or special meeting of the board of directors as
provided in Sections 3.04 and 3.05 of these by-laws, or in any notice of any
meeting of a committee of the board of directors in accordance with Section 3.10
of the by-laws, any or all directors may participate in a regular or special
meeting or in a committee meeting of the board of directors by, or may conduct
the meeting through the use of, any means of communication by which (i) all
participating directors may simultaneously hear each other during the meeting or
(ii) all communication during the meeting is immediately transmitted to each
participating director, and each participating director is able to immediately
send messages to all other participating directors.
(b) If any meeting is conducted through the use of any means described in
paragraph (a) above, all participating directors shall be informed that a
meeting is taking place at which official business may be transacted. A
director participating in a meeting by any means described in paragraph (a)
above is deemed to be present in person at the meeting. If requested by a
director, minutes of the meeting shall be prepared and distributed to each
director.
Adopted: 1/23/92
Section 3.14. Presumption of Assent. A director who is present and is announced
as present at a meeting of the board of directors or any committee thereof when
corporate action is taken assents to the action taken unless any of the
following occurs: (a) the director objects at the beginning of the meeting or
promptly upon his or her arrival to holding the meeting or transacting business
at the meeting; (b) the director dissents or abstains from an action taken and
minutes of the meeting are prepared that show the director's dissent or
abstention from the action taken; (c) the director delivers written notice of
his or her dissent or abstention to the presiding officer of the meeting before
its adjournment or to the Corporation immediately after adjournment of the
meeting; or (d) the director dissents or abstains from an action taken, minutes
of the meeting are prepared that fail to show the director's dissent or
abstention from the action taken, and the director delivers to the Corporation a
written notice of that failure promptly after receiving the minutes. Such right
of dissent or abstention shall not apply to a director who votes in favor of the
action taken.
14
<PAGE> 16
ARTICLE IV
Restated: 1/20/77
OFFICERS
Amended: 4/17/86; 1/23/92
Section 4.01. Number. The principal officers of the Corporation shall be a
president, one or more vice presidents, a secretary, and a treasurer, each of
whom shall be elected by the board of directors. Such other officers, including
a chairman of the board of directors, and assistant officers as may be deemed
necessary may be elected or appointed by the board of directors. The chairman of
the board of directors, if one is elected, shall be chosen by the board of
directors from among its membership, but the remaining officers may or may not
be directors. Any two or more offices may be held by the same person. Except to
the extent such power is limited by the board of directors, any officer
authorized by these by-laws or the board of directors to appoint officers may
appoint one or more other officers or assistant officers, and any officer making
such an appointment shall report the appointment to the board of directors at
its next regular meeting.
Amended: 1/23/92
Section 4.02. Election and Term of Office. The officers of the Corporation to be
elected by the board of directors shall be elected annually at the first meeting
of the board of directors held after each Annual Meeting. The board of directors
may elect additional officers at any time during the year. Each officer shall
hold office until his or her successor shall have been duly elected or until his
or her prior death, resignation, or removal. The board of directors may remove
any officer and, unless restricted by the board of directors or these by-laws,
an officer may remove any officer or assistant officer appointed by that
officer, at any time, with or without cause and notwithstanding the contract
rights, if any, of the officer removed. The appointment of an officer does not
of itself create contract rights. An officer may resign at any time by
delivering notice to the Corporation. The resignation shall be effective when
the notice is delivered, unless the notice specifies a later effective date and
the Corporation accepts the later effective date.
Amended: 1/23/92
Section 4.03. Vacancy. A vacancy in any principal office because of death,
resignation, removal or otherwise may be filled by the board of directors for
the unexpired portion of the term. If a resignation of an officer is effective
at a later date as contemplated by Section 4.02 hereof, the board of directors
may fill the pending vacancy before the effective date if the board of
directors provides that the successor may not take office until the effective
date.
Amended: 1/23/92
Section 4.04. Chief Executive Officer. The president shall be the chief
executive officer of the Corporation unless the board of directors shall have
chosen a chairman of the board of directors and designated such chairman of the
board of directors as chief executive officer. Subject to the control of the
board of directors, the chief executive officer shall in general supervise and
control all of the business and affairs of the Corporation. The chief executive
officer shall preside at all meetings of the shareholders and of the board of
directors. The chief executive officer shall have authority, subject to such
rules as may be prescribed by the board of directors, to appoint such agents,
employees and, in accordance with Section 4.01 of these by-laws, other officers
of the Corporation as he or she shall deem necessary, to prescribe their powers,
duties and compensation, and to delegate authority to
15
<PAGE> 17
them. Such agents, employees and officers shall hold office at the discretion
of the chief executive officer. The chief executive officer shall have
authority to sign, execute and acknowledge, on behalf of the Corporation, all
deeds, mortgages, bonds, stock certificates, contracts, leases, reports, and
all other documents or instruments necessary or proper to be executed in the
course of the Corporation's regular business, or which shall be authorized by
resolution of the board of directors; and except as otherwise provided by law
or the board of directors, he or she may authorize the president, any vice
president or other officer or agent of the Corporation to sign, execute and
acknowledge such documents or instruments in his or her place and stead. In
general, he or she shall perform all duties incident to the chief executive
officer of the Corporation and such other duties as may be prescribed by the
board of directors from time to time.
Section 4.05. Chairman of the Board of Directors. The chairman of the board of
directors, if one be chosen by the board of directors, shall perform all duties
incident to the office of the chairman of the board and such other duties as
may be prescribed by the board of directors.
Section 4.06. President. The president shall perform all duties incident to the
office of the president and such other duties as may be prescribed by the board
of directors from time to time; provided, however, that should the board of
directors elect a chairman of the board of directors any or all of the powers
customarily incidental to the office of president may be assigned by the board
of directors to such chairman of the board of directors. If the chairman of the
board of directors is designated as the chief executive officer, the president
shall be the chief administrative officer of the Corporation. Unless the board
of directors otherwise provides, in the absence of the chairman of the board of
directors or in the event of his or her inability or refusal to act, or in the
event of a vacancy in the office of the chairman of the board of directors, the
president shall perform the duties of the chairman of the board, and when so
acting shall have all the powers of and be subject to all the restrictions upon
the chairman of the board of directors. The president may sign with the
secretary or any other proper officer of the Corporation thereunto authorized
by the board of directors certificates for shares of the Corporation, any
deeds, mortgages, bonds, contracts, or other instruments which the board of
directors has authorized to be executed, except in case where the signing and
execution thereof shall be expressly delegated by the board of directors or by
these by-laws to some other officer or agent of the Corporation, or shall be
required by law to be otherwise signed or executed.
Amended: 1/23/92
Section 4.07. Vice Presidents. In the absence of the president, or in the event
of his or her death, inability, or refusal to act, or in the event for any
reason it shall be impracticable for the president to act personally, the vice
presidents (in descending order of classes of vice presidents and, within any
class, by the order of election to such class, unless otherwise provided by the
board of directors) shall perform the duties of the president, and when so
acting, shall have all the power of and be subject to all the restrictions upon
the president. Each vice president shall perform such other duties and have such
authority as from time to time may be assigned to him or her by the chairman of
the board of directors, the president or by the board of directors. The
execution of any instrument of the Corporation by any vice president shall be
conclusive evidence, as to third-parties, of his or her authority to act in the
stead of the chairman of the board of directors or the president.
16
<PAGE> 18
Amended: 1/23/92
Section 4.08. Secretary. The secretary shall: (a) keep as permanent records of
the Corporation any of the following that has been prepared: the minutes of the
shareholders' and of the board of directors' meetings; records of actions taken
by the board of directors without a meeting; and records of actions taken by a
committee of the board of directors in place of the board of directors and on
behalf of the Corporation; (b) see that all notices are duly given in accordance
with these by-laws or as required by law; (c) be custodian of the corporate
records and of the seal of the Corporation and see that the seal of the
Corporation is affixed to all documents the execution of which on behalf of the
Corporation under its seal is duly authorized; (d) maintain or cause an
authorized agent to maintain a record of the shareholders of the Corporation, in
a form that permits preparation of a list of the names and addresses of all
shareholders, by class or series of shares and showing the number and the class
or series of shares held by each shareholder; (e) have general charge of the
stock transfer books of the Corporation; (f) tabulate, or cause an authorized
agent to tabulate, votes cast at meetings of shareholders; and (g) in general
perform all duties incident to the office of secretary and have such other
duties and exercise such authority as from time to time may be delegated or
assigned to him or her by the chairman of the board of directors, the president
or by the board of directors.
Section 4.09. Treasurer. The treasurer shall: (a) have charge and custody of
all funds and securities of the Corporation; (b) pay such dividends as may be
declared from time to time by the board of directors; (c) keep or arrange for
the keeping of correct books of account and exhibit said books and accounts at
the offices of the Corporation at any reasonable time when called upon to do so
by the board of directors, and furnish statements when required by the chairman
of the board of directors, the president or by the board of directors; and (d)
in general perform all of the duties incident to the office of treasurer, and
have such other duties and exercise such other authority as from time to time
may be designated or assigned to him by the chairman of the board of directors,
the president or by the board of directors.
Amended: 1/23/92
Section 4.10. Assistants and Acting Officers. The board of directors and any
officer authorized by the board of directors or these by-laws shall have the
power to appoint any person to act as assistant to any officer or as agent for
the Corporation in his or her stead, and such assistant or acting officer or
other agent so appointed by the board of directors or any such officer shall
have the power to perform all the duties of the office to which he or she is so
appointed to be assistant or as to which he or she is so appointed to act,
subject to such limitations as the board of directors or the appointing officer
shall prescribe.
ARTICLE V
CONTRACTS, LOANS, CHECKS, DEPOSITS
AND ASSIGNMENTS OF SECURITIES
Section 5.01. Contracts. The board of directors may authorize any officer or
officers, agent or agents, to enter any contract or execute or deliver any
instrument in the name of and on behalf of the Corporation, and such
authorization may be general or confined to specific instances.
17
<PAGE> 19
Section 5.02. Loans. No loans shall be contracted on behalf of the Corporation
and no evidences of indebtedness shall be issued in its name unless authorized
by or under the authority of a resolution of the board of directors. Such
authorization may be general or confined to specific instances.
Section 5.03. Checks, Drafts, etc. All checks, drafts, or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name
of the Corporation shall be signed by such officer or officers, agent or
agents, and in such manner as shall from time to time be determined by or under
the authority of a resolution of the board of directors.
Section 5.04. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies, or other depositories as may be selected by or under
the authority of a resolution of the board of directors.
Amended: 1/20/77
Section 5.05. Assignment of Securities. The chairman of the board of directors,
the president or a vice president together with the treasurer or secretary, are
authorized and empowered to sell, assign, pledge or hypothecate any and all
shares of stock and all securities or interest in stock or securities owned or
held by the Corporation at any time, including deposit certificates for stock
or securities and warrants or rights which entitle the holder thereof to
subscribe for shares of stock, and to make and execute to the purchaser or
purchasers, pledgee or pledgees, on behalf and in the name of the Corporation,
any assignment of stock certificates or securities owned or held by the
Corporation, including any deposit certificates for stock or securities and any
certificates representing any right to subscribe for shares of stock.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Amended: 1/23/92
Section 6.01. Certificates for Shares. Certificates representing shares of the
Corporation shall be in such form as shall be determined by the board of
directors. Such certificates shall be signed by the chairman of the board, the
president or a vice president and by the secretary or an assistant
secretary. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be cancelled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and cancelled, except that in case
of a lost, destroyed or mutilated certificate, a new one may be issued therefor
upon such terms and indemnity to the Corporation as may be satisfactory to the
secretary.
Amended: 1/23/92
Section 6.02. Facsimile Signatures and Seal. The seal of the Corporation on any
certificates for shares may be a facsimile. The signatures of the chairman of
the board, president or vice president and the secretary or assistant secretary
upon a certificate may be facsimiles if the certificate is countersigned
18
<PAGE> 20
by a transfer agent, or registered by a registrar, other than the Corporation
itself or an employee of the Corporation. In case any officer has signed or
whose facsimile signature has been placed upon such certificate shall have
ceased to be such officer before such certificate is issued, it may be issued
by the Corporation with the same effect as if he were such officer at the date
of its issue.
Amended: 10/21/71
Section 6.03. Transfer of Shares. Transfer of shares of the Corporation shall be
made by the holder of record thereof or by his or her legal representative, who
shall, if so required, furnish proper evidence of incumbency or appointment and
of authority to transfer, or by his or her attorney thereunto authorized by
power of attorney duly executed and filed with the secretary or transfer agent
of the Corporation, and on surrender for cancellation of the certification for
such shares. The person in whose name shares stand shall be deemed by the
Corporation to be the owner thereof for all purposes.
Section 6.04. Stock Regulations. The board of directors shall have the power
and authority to make all such further rules and regulations not inconsistent
with the statutes of the State of Wisconsin as it may deem expedient concerning
the issue, transfer and registration of certificates representing shares of the
Corporation.
Adopted: 1/23/92
Section 6.05. Uncertificated Shares. The board of directors may authorize the
issuance of any shares of any of the Corporation's classes or series without
certificates. The authorization does not affect shares already represented by
certificates until the certificates are surrendered to the Corporation.
Adopted: 1/23/92
Section 6.06. No Nominee Procedures. The Corporation has not established, and
nothing in these by-laws shall be deemed to establish, any procedure by which a
beneficial owner of the Corporation's shares that are registered in the name of
a nominee is recognized by the Corporation as the shareholder under Section
180.0723 of the Wisconsin Business Corporation Law.
ARTICLE VII
CORPORATE SEAL. NOTICES
Section 7.01. Seal. The board of directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name of the
Corporation and the words "Corporate Seal."
Adopted: 1/23/92
Section 7.02. Notices. Except as otherwise required by law or these by-laws, any
notice required to be given by these by-laws may be given orally or in writing
and notice may be communicated in person, by telephone, telegraph, teletype,
facsimile or other form of wire or wireless communication, or by mail or private
carrier. Except where these by-laws require a notice to be delivered to or
received by a recipient, written notice to be given by these by-laws is
effective at the earliest of the following: (a) when received, (b) if
communicated by mail, when deposited in the United States mail, if mailed
postpaid and correctly addressed, (c) if communicated by private carrier, when
delivered to
19
<PAGE> 21
the carrier and (d) if communicated by telegraph, when the telegram is
delivered to the telegraph company. Oral notice is effective when communicated.
ARTICLE VIII
INDEMNIFICATION
Amended: (stat. ref.) 1/23/92
Section 8.01. Certain Definitions. All capitalized terms used in this Article
VIII and not otherwise hereinafter defined in this Section 8.01 shall have the
meaning set forth in Section 180.0850 of the Statute. The following capitalized
terms (including any plural forms thereof) used in this Article VIII shall be
defined as follows:
(a) "Affiliate" shall include, without limitation, any corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise
that directly or indirectly through one or more intermediaries, controls is
controlled by, or is under common control with, the Corporation.
(b) "Authority" shall mean the entity selected by the Director or Officer to
determine his or her right to indemnification pursuant to Section 8.04.
(c) "Board" shall mean the entire then elected and serving board of directors
of the Corporation, including all members thereof who are Parties to the
subject Proceeding or any related Proceeding.
(d) "Breach of Duty" shall mean the Director or Officer breached or failed to
perform his or her duties to the Corporation and his or her breach of or
failure to perform those duties is determined, in accordance with Section 8.04,
to constitute misconduct under Section 180.0851 (2) (a) 1, 2, 3 or 4 of the
Statute.
(e) "Controlled Banking Subsidiary" shall mean any subsidiary of the
Corporation, at least 80% of the outstanding voting stock of which is owned
directly or indirectly by the Corporation, chartered as a bank or trust company
under federal or state law.
(f) "Corporation" as used herein and as defined in the Statute and incorporated
by reference into the definitions of certain other capitalized terms used
herein, shall mean this Corporation, including, without limitation, any
successor corporation or entity to this Corporation by way of merger,
consolidation or acquisition of all or substantially all of the capital stock
or assets of this Corporation.
(g) "Director or Officer" shall have the meaning set forth in the Statute;
provided, that, for purposes of this Article VIII, it shall be conclusively
presumed that any Director or Officer serving as a director, officer, partner,
trustee, member of any governing or decision-making committee, employee or
agent of an Affiliate shall be so serving at the request of the Corporation.
(b) "Disinterested Quorum" shall mean a quorum of the Board who are not Parties
to the subject Proceeding or any related Proceeding.
20
<PAGE> 22
(i) "Party" shall have the meaning set forth in the Statute; provided, that,
for purposes of this Article VIII, the term "Party" shall also include any
Director or Officer who is or was a witness in a Proceeding at a time when he
or she has not otherwise been formally named a Party thereto
(j) "Proceeding" shall have the meaning set forth in the Statute; provided,
that, in accordance with Section 180.0859 of the Statute and for purposes of
this Article VIII, the term "Proceeding" shall also include all Proceedings (i)
brought under (in whole or in part) the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, their respective state
counterparts, and/or any rule or regulation promulgated under any of the
foregoing; (ii) brought before an Authority or otherwise to enforce rights
hereunder; (iii) any appeal from a Proceeding; and (iv) any Proceeding in which
the Director or Officer is a plaintiff or petitioner because he or she is a
Director or Officer; provided, however, that any such Proceeding under this
subsection (iv) must be authorized by a majority vote of a Disinterested
Quorum.
(k) "Statute" shall mean Sections 180.0850 through 180.0859, inclusive, of the
Wisconsin Business Corporation Law, Chapter 180 of the Wisconsin Statutes, as
the same shall then be in effect, including any amendments thereto, but, in the
case of any such amendment, only to the extent such amendment permits or
requires the Corporation to provide broader indemnification rights than the
Statute permitted or required the Corporation to provide prior to such
amendment.
Section 8.02. Mandatory Indemnification. To the fullest extent permitted or
required by the Statute, the Corporation shall indemnify a Director or Officer
against all Liabilities incurred by or on behalf of such Director or Officer in
connection with a Proceeding in which the Director or Officer is a Party
because he or she is or was a Director or Officer.
Section 8.03. Procedural Requirements.
(a) A Director or Officer who seeks indemnification under Section 8.02 shall
make a written request therefor to the Corporation. Subject to Section 8.03(b),
within sixty days of the Corporation's receipt of such request, the
Corporation shall pay or reimburse the Director or Officer for the entire
amount of Liabilities incurred by the Director or Officer in connection with
the subject Proceeding (net of any Expenses previously advanced pursuant to
Section 8.05).
(b) No indemnification shall be required to be paid by the Corporation pursuant
to Section 8.02 if, within such sixty-day period, (i) a Disinterested Quorum,
by a majority vote thereof, determines that the Director or Officer requesting
indemnification engaged in misconduct constituting a Breach of Duty or (ii) a
Disinterested Quorum cannot be obtained.
(c) In either case of nonpayment pursuant to Section 8.03(b), the Board shall
immediately authorize by resolution that an Authority, as provided in Section
8.04, determine whether the Director's or Officer's conduct constituted a
Breach of Duty and, therefore, whether indemnification should be denied
hereunder.
(d) (i) If the Board does not authorize an Authority to determine the
Director's or Officer's right to indemnification hereunder within such
sixty-day period and/or (ii) if indemnification of the requested amount of
Liabilities is paid by the Corporation, then it shall be conclusively presumed
for all purposes that a Disinterested Quorum has affirmatively determined that
the Director or Officer did not
21
<PAGE> 23
engage in misconduct constituting a Breach of Duty and, in the case of
subsection (i) above (but not subsection (ii)), indemnification by the
Corporation of the requested amount of Liabilities shall be paid to the
Director or Officer immediately.
Amended: (stat. ref.) 1/23/92
Section 8.04. Determination of Indemnification.
(a) If the Board authorizes an Authority to determine a Director's or Officer's
right to indemnification pursuant to Section 8.03, then the Director or Officer
requesting indemnification shall have the absolute discretionary authority to
select one of the following as such Authority:
(i) An independent legal counsel; provided, that such counsel shall be
mutually selected by such Director or Officer and by a majority vote of a
Disinterested Quorum or, if a Disinterested Quorum cannot be obtained, then by
a majority vote of the Board;
(ii) A panel of three arbitrators selected from the panels of arbitrators
of the American Arbitration Association in Milwaukee, Wisconsin; provided, that
(A) one arbitrator shall be selected by such Director or Officer, the second
arbitrator shall be selected by a majority vote of a Disinterested Quorum or,
if a Disinterested Quorum cannot be obtained, then by a majority vote of the
Board, and the third arbitrator shall be selected by the two previously
selected arbitrators, and (B) in all other respects, such panel shall be
governed by the American Arbitration Association's then existing Commercial
Arbitration Rules; or
(iii) A court pursuant to and in accordance with Section 180.0854 of the
Statute.
(b) In any such determination by the selected Authority there shall exist a
rebuttable presumption that the Director's or Officer's conduct did not
constitute a Breach of Duty and that indemnification against the requested
amount of Liabilities is required. The burden of rebutting such a presumption
by clear and convincing evidence shall be on the Corporation or such other
party asserting that such indemnification should not be allowed.
(c) The Authority shall make its determination within sixty days of being
selected and shall submit a written opinion of its conclusion simultaneously to
both the Corporation and the Director or Officer.
(d) If the Authority determines that indemnification is required hereunder, the
Corporation shall pay the entire requested amount of Liabilities (net of any
Expenses previously advanced pursuant to Section 8.05), including interest
thereon at a reasonable rate, as determined by the Authority, within ten days
of receipt of the Authority's opinion; provided, that, if it is determined by
the Authority that a Director or Officer is entitled to indemnification against
Liabilities incurred in connection with some claims, issues or matters, but not
as to other claims, issues or matters, involved in the subject Proceeding, the
Corporation shall be required to pay (as set forth above) only the amount of
such requested Liabilities as the Authority shall deem appropriate in light of
all of the circumstances of such Proceeding.
(e) The determination by the Authority that indemnification is required
hereunder shall be binding upon the Corporation regardless of any prior
determination that the Director or Officer engaged in a Breach of Duty.
22
<PAGE> 24
(f) All expenses incurred in the determination process under this Section 8.04
by either the Corporation or the Director or Officer, including, without
limitation, all Expenses of the selected Authority, shall be paid by the
Corporation.
Section 8.05. Mandatory Allowance of Expenses.
(a) The Corporation shall pay or reimburse from time to time or at any time,
within ten days after the receipt of the Director's or Officer's written
request therefor, the reasonable Expenses of the Director or Officer as
such Expenses are incurred; provided, the following conditions are satisfied:
(i) The Director or Officer furnishes to the Corporation an executed
written certificate affirming his or her good faith belief that he or she has
not engaged in misconduct which constitutes a Breach of Duty; and
(ii) The Director or Officer furnishes to the Corporation an unsecured
executed written agreement to repay any advances made under this Section 8.05
if it is ultimately determined by an Authority that he or she is not entitled
to be indemnified by the Corporation for such Expenses pursuant to Section
8.04.
(b) If the Director or Officer must repay any previously advanced Expenses
pursuant to this Section 8.05, such Director or Officer shall not be required
to pay interest on such amounts.
Amended: 1/23/92
Section 8.06. Indemnification and Allowance of Expenses of Certain Others.
(a) The Corporation shall indemnify a director or officer of any Controlled
Banking Subsidiary (who is not otherwise serving as a Director or Officer)
against all Liabilities, and shall advance the reasonable Expenses, incurred by
such director or officer in a Proceeding, but only to the extent such Proceeding
is based on acts or omissions alleged to have occurred after the Controlled
Banking Subsidiary has become a subsidiary of the Corporation to the same extent
hereunder as if such director or officer incurred such Liabilities because he or
she was a Director or Officer, if such director or officer is a Party thereto
because he or she is or was a director or officer of the Banking Subsidiary.
(b) The Board may, in its sole and absolute discretion as it deems appropriate,
pursuant to a majority vote thereof, indemnify a director or officer of an
Affiliate (who is not otherwise serving as a Director or Officer or a director
or officer of a Controlled Banking Subsidiary) against all Liabilities, and
shall advance the reasonable Expenses, incurred by such director or officer in
a Proceeding to the same extent hereunder as if such director or officer
incurred such Liabilities because he or she was a Director or Officer, if such
director or officer is a Party thereto because he or she is or was a director
or officer of the Affiliate.
(c) The Board may, in its sole and absolute discretion it deems appropriate,
pursuant to a majority vote thereof, indemnify against Liabilities incurred by,
and/or provide for the advance of reasonable Expenses of, an employee or
authorized agent of the Corporation acting within the scope of his or her
duties as such and who is not otherwise a Director or Officer. Notwithstanding
the foregoing, the Corporation shall indemnify an employee who is not a
Director or Officer of the Corporation, to the
23
<PAGE> 25
extent that he or she has been successful on the merits or otherwise in defense
of a proceeding, for all reasonable expenses incurred in the proceeding if the
employee was a party because he or she was an employee of the Corporation.
Section 8.07. Insurance. The Corporation may purchase and maintain insurance on
behalf of a Director or Officer or any individual who is or was an employee or
authorized agent of the Corporation against any Liability asserted against or
incurred by such individual in his or her capacity as such or arising from his
or her status as such, regardless of whether the Corporation is required or
permitted to indemnify against any such Liability under this Article VIII.
Section 8.08. Notice to the Corporation. A Director or Officer shall promptly
notify the Corporation in writing when he or she has actual knowledge of a
Proceeding which may result in a claim of indemnification against Liabilities
or allowance of Expenses hereunder, but the failure to do so shall not relieve
the Corporation of any Liability to the Director or Officer hereunder unless
the Corporation shall have been irreparably prejudiced by such failure (as
determined by an Authority selected pursuant to Section 8.04 (a)).
Section 8.09. Severability. If any provision of this Article VIII shall be
deemed invalid or inoperative, or if a court of competent jurisdiction
determines that any of the provisions of this Article VIII contravene public
policy, this Article VIII shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any such
provisions which are invalid or inoperative or which contravene public policy
shall be deemed, without further action or deed by or on behalf of the
Corporation, to be modified, amended and/or limited, but only to the extent
necessary to render the same valid and enforceable; it being understood that it
is the Corporation's intention to provide the Directors and Officers with the
broadest possible protection against personal liability allowable under the
Statute.
Section 8.10. Nonexclusivity of Article VIII. The rights of a Director or
Officer (or any other person) granted hereunder shall not be deemed exclusive
of any other rights to indemnification against Liabilities or allowance of
Expenses which the Director or Officer (or such other person) may be entitled
to under any written agreement, Board resolution, vote of stockholders of the
Corporation or otherwise, including, without limitation, under the Statute.
Nothing contained in this Article VIII shall be deemed to limit the
Corporation's obligations to indemnify against Liabilities or allow Expenses to
a Director or Officer under the Statute.
Section 8.11. Amendment.
(a) This Article VIII may only be altered, amended or repealed by the
affirmative vote of a majority of the shareholders of the Corporation
represented at a meeting at which a quorum is present and entitled to vote;
provided, however, that the Board may alter or amend this Article VIII
without such shareholder approval if any such alteration or amendment is (i)
made in order to conform to any amendment or revision of the Wisconsin Business
Corporation Law, including, without limitation, the Statute, which (x) expands
or permits the expansion of a Director's or Officer's right to indemnification
thereunder; (y) limits or eliminates, or permits the limitation or elimination,
of the liability of a Director or Officer; or (z) is otherwise beneficial to
the Directors and Officers or (ii) an alteration or amendment which is
otherwise deemed by the Board to be an immaterial modification.
24
<PAGE> 26
(b) This Article VIII shall be deemed to be a contract between the Corporation
and each Director and Officer and any repeal or other limitation of this
Article VIII or any repeal or limitation of the Statute or any other applicable
law shall not limit any rights of indemnification against Liabilities or
allowance of Expenses then existing or arising out of events, acts or omissions
occurring prior to such repeal or limitation, including, without limitation,
the right to indemnification against Liabilities or allowance of Expenses for
Proceedings commenced after such repeal or limitation to enforce this Article
VIII with regard to acts, omissions or events arising prior to such repeal or
limitation.
ARTICLE IX
Restated: 4/20/72
AMENDMENTS
Amended: 1/23/92
Section 9.01. By Shareholders. These by-laws may be altered, amended or repealed
and new by-laws may be adopted by the shareholders by affirmative vote of not
less than a majority of the shares present or represented at any Annual Meeting
or Special Meeting at which a quorum is in attendance.
Amended: 1/23/92
Section 9.02. By Directors. These by-laws may be altered, amended or repealed,
and new by-laws may be adopted by the board of directors by affirmative vote of
a majority of the number of directors present at any meeting at which a quorum
is in attendance, but any by-law so adopted may be subsequently altered, amended
or repealed by the shareholders. Any by-law adopted, altered or amended by
shareholders may be subsequently altered, amended or repealed by the board of
directors unless such by-law as adopted, altered or amended by shareholders
expressly denies such authority to the board of directors.
25
<PAGE> 1
[EXECUTION COPY]
FOUR YEAR FACILITY CREDIT AGREEMENT
dated as of
April 22, 1996
among
FIRSTAR CORPORATION
THE LENDERS NAMED HEREIN
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
CHEMICAL BANK
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Co-Agents
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1. Description of Facility . . . . . . . . . . . . . . . . . . . . . . . 13
2.2. Availability of Facility . . . . . . . . . . . . . . . . . . . . . . 13
2.3. Committed Advances. . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.3.1. Commitment . . . . . . . . . . . . . . . . . . . . . . . 13
2.3.2. Ratable Loans; Types
of Advances. . . . . . . . . . . . . . . . . . . . . . . 13
2.3.3. Minimum Amount of Each
Committed Advance. . . . . . . . . . . . . . . . . . . . 14
2.3.4. Applicable Margin. . . . . . . . . . . . . . . . . . . . 14
2.3.5. Method of Selecting Types and Interest
Periods for New Committed Advances . . . . . . . . . . . 15
2.3.6. Conversion and Continuation of
Outstanding Committed Advances . . . . . . . . . . . . . 15
2.4. Competitive Bid Advances . . . . . . . . . . . . . . . . . . . . . . 16
2.4.1. Competitive Bid Option; Repayment of
Competitive Bid Advances . . . . . . . . . . . . . . . . 16
2.4.2. Competitive Bid Quote Request. . . . . . . . . . . . . . 16
2.4.3. Invitation for Competitive Bid Quotes. . . . . . . . . . 17
2.4.4. Submission and Contents of
Competitive Bid Quotes . . . . . . . . . . . . . . . . . 17
2.4.5. Notice to Borrower . . . . . . . . . . . . . . . . . . . 19
2.4.6. Acceptance and Notice by Borrower. . . . . . . . . . . . 19
2.4.7. Allocation by the Agent . . . . . . . . . . . . . . . . 20
2.4.8. Administration Fee . . . . . . . . . . . . . . . . . . . 20
2.5. Method of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.6. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.6.1. Facility Fee . . . . . . . . . . . . . . . . . . . . . . 21
2.6.2. Usage Fee . . . . . . . . . . . . . . . . . . . . . . . 21
2.6.3. Agent's Fees . . . . . . . . . . . . . . . . . . . . . . 21
2.7. Reductions in Aggregate Commitment;
Principal Payments . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.7.1. Reductions in Aggregate Commitment . . . . . . . . . . . 21
2.7.2. Principal Payments . . . . . . . . . . . . . . . . . . . 21
2.8. Changes in Interest Rate, etc. . . . . . . . . . . . . . . . . . . . 22
2.9. Rates Applicable After Default . . . . . . . . . . . . . . . . . . . 22
2.10. Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.11. Notes; Telephonic Notices . . . . . . . . . . . . . . . . . . . . . . 23
2.12. Interest Payment Dates; Interest and Fee Basis . . . . . . . . . . . 23
2.13. Notification of Advances, Interest
Rates, Prepayments and Commitment Reductions . . . . . . . . . . . . 24
2.14. Lending Installations . . . . . . . . . . . . . . . . . . . . . . . . 24
2.15. Non-Receipt of Funds by the Agent . . . . . . . . . . . . . . . . . . 24
2.16. Withholding Tax Exemption . . . . . . . . . . . . . . . . . . . . . . 24
2.17. Extension of Termination Date . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
Page i
<PAGE> 3
<TABLE>
<S> <C>
2.17.1. Extension Procedures . . . . . . . . . . . . 25
2.17.2. Termination of Lenders . . . . . . . . . . . 25
2.17.3. Successor Lenders. . . . . . . . . . . . . . 26
3.1. Yield Protection . . . . . . . . . . . . . . . . . . 27
3.2. Changes in Capital Adequacy Regulations . . . . . . 28
3.3. Availability of Types of Advances . . . . . . . . . 28
3.4. Funding Indemnification . . . . . . . . . . . . . . 28
3.5. Lender Statements; Survival of Indemnity . . . . . . 29
ARTICLE IV CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 29
4.1. Initial Advance . . . . . . . . . . . . . . . . . . 29
4.2. Each Advance . . . . . . . . . . . . . . . . . . . . 30
ARTICLE V REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 31
5.1. Corporate Existence and Standing . . . . . . . . . . 31
5.2. Authorization and Validity . . . . . . . . . . . . . 31
5.3. No Conflict; Government Consent . . . . . . . . . . 31
5.4. Financial Statements . . . . . . . . . . . . . . . . 32
5.5. Material Adverse Change . . . . . . . . . . . . . . 32
5.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . 32
5.7. Litigation and Contingent Obligations . . . . . . . 32
5.8. Subsidiaries . . . . . . . . . . . . . . . . . . . . 33
5.9. ERISA . . . . . . . . . . . . . . . . . . . . . . . 33
5.10. Accuracy of Information . . . . . . . . . . . . . . 33
5.11. Regulation U . . . . . . . . . . . . . . . . . . . . 33
5.12. Material Agreements . . . . . . . . . . . . . . . . 33
5.13. Compliance With Laws . . . . . . . . . . . . . . . . 33
5.14. Ownership of Properties . . . . . . . . . . . . . . 34
5.15. Investment Company Act . . . . . . . . . . . . . . . 34
5.16. Public Utility Holding Company Act . . . . . . . . . 34
ARTICLE VI COVENANTS . . . . . . . . . . . . . . . . . . . . 34
6.1. Financial Reporting . . . . . . . . . . . . . . . . 34
6.2. Use of Proceeds . . . . . . . . . . . . . . . . . . 37
6.3. Notice of Default . . . . . . . . . . . . . . . . . 37
6.4. Conduct of Business . . . . . . . . . . . . . . . . 38
6.5. Taxes . . . . . . . . . . . . . . . . . . . . . . . 38
6.6. Insurance . . . . . . . . . . . . . . . . . . . . . 38
6.7. Compliance with Laws . . . . . . . . . . . . . . . . 38
6.8. Maintenance of Properties . . . . . . . . . . . . . 38
6.9. Inspection . . . . . . . . . . . . . . . . . . . . . 38
6.10. Merger . . . . . . . . . . . . . . . . . . . . . . . 39
6.11. Sale of Assets . . . . . . . . . . . . . . . . . . . 39
6.12. Acquisitions . . . . . . . . . . . . . . . . . . . . 39
6.13. Liens . . . . . . . . . . . . . . . . . . . . . . . 40
6.14. Capitalization . . . . . . . . . . . . . . . . . . . 42
</TABLE>
Page ii
<PAGE> 4
<TABLE>
<S> <C>
6.15. Consolidated Non-Performing Assets
to Total Equity Capital . . . . . . . . . . . . . . . 42
6.16. Debt to Total Equity Capital. . . . . . . . . . . . . 42
ARTICLE VII DEFAULTS. . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS
AND REMEDIES . . . . . . . . . . . . . . . . . . 45
8.1. Acceleration . . . . . . . . . . . . . . . . . . . . 45
8.2. Amendments . . . . . . . . . . . . . . . . . . . . . 45
8.3. Preservation of Rights . . . . . . . . . . . . . . . 46
ARTICLE IX GENERAL PROVISIONS . . . . . . . . . . . . . . . . 46
9.1. Survival of Representations . . . . . . . . . . . . . 46
9.2. Governmental Regulation . . . . . . . . . . . . . . . 46
9.3. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 47
9.4. Headings . . . . . . . . . . . . . . . . . . . . . . 47
9.5. Entire Agreement . . . . . . . . . . . . . . . . . . 47
9.6. Several Obligations; Benefits
of this Agreement . . . . . . . . . . . . . . . . . . 47
9.7. Expenses; Indemnification . . . . . . . . . . . . . . 47
9.8. Numbers of Documents . . . . . . . . . . . . . . . . 48
9.9. Accounting . . . . . . . . . . . . . . . . . . . . . 48
9.10. Severability of Provisions . . . . . . . . . . . . . 48
9.11. Nonliability of Lenders . . . . . . . . . . . . . . . 48
9.12. CHOICE OF LAW . . . . . . . . . . . . . . . . . . . . 48
9.13. CONSENT TO JURISDICTION . . . . . . . . . . . . . . . 48
9.14. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . 49
9.15. Confidentiality . . . . . . . . . . . . . . . . . . . 49
ARTICLE X THE AGENT . . . . . . . . . . . . . . . . . . . . . 49
10.1. Appointment . . . . . . . . . . . . . . . . . . . . . 49
10.2. Powers. . . . . . . . . . . . . . . . . . . . . . . . 49
10.3. General Immunity. . . . . . . . . . . . . . . . . . . 50
10.4. No Responsibility for Loans, Recitals, etc. . . . . . 50
10.5. Action on Instructions of Lenders . . . . . . . . . . 50
10.6. Employment of Agents and Counsel . . . . . . . . . . 50
10.7. Reliance on Documents, Counsel. . . . . . . . . . . . 51
10.8. Agent's Reimbursement and Indemnification . . . . . . 51
10.9. Rights as a Lender. . . . . . . . . . . . . . . . . . 51
10.10. Lender Credit Decision. . . . . . . . . . . . . . . . 51
10.11. Successor Agent . . . . . . . . . . . . . . . . . . . 52
10.12. Co-Agents . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
Page iii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE XI SETOFF; RATABLE PAYMENTS . . . . . . . . . . . 53
11.1. Setoff . . . . . . . . . . . . . . . . . . . . . 53
11.2. Ratable Payments . . . . . . . . . . . . . . . . 53
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS;
PARTICIPATIONS . . . . . . . . . . . . . . . . 53
12.1. Successors and Assigns . . . . . . . . . . . . . 53
12.2. Participations . . . . . . . . . . . . . . . . . 54
12.2.1. Permitted Participants; Effect . . . . 54
12.2.2. Voting Rights. . . . . . . . . . . . . 54
12.2.3. Benefit of Setoff. . . . . . . . . . . 54
12.3. Assignments. . . . . . . . . . . . . . . . . . . 55
12.3.1. Permitted Assignments. . . . . . . . . 55
12.3.2. Effect; Effective Date . . . . . . . . 55
12.4. Dissemination of Information . . . . . . . . . . 56
12.5. Tax Treatment. . . . . . . . . . . . . . . . . . 56
ARTICLE XIII NOTICES. . . . . . . . . . . . . . . . . . . . 56
13.1. Giving Notice. . . . . . . . . . . . . . . . . . 56
13.2. Change of Address. . . . . . . . . . . . . . . . 56
ARTICLE XIV COUNTERPARTS . . . . . . . . . . . . . . . . . 56
</TABLE>
Page iv
<PAGE> 6
FOUR YEAR FACILITY CREDIT AGREEMENT
This Four Year Facility Credit Agreement, dated as of April 22, 1996, is
among Firstar Corporation, the Lenders, Bank of America National Trust and
Savings Association, Chemical Bank and Morgan Guaranty Trust Company of New
York, as Co-Agents and The First National Bank of Chicago, as Agent. The
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Absolute Rate" means, with respect to a Loan made by a given Lender for
the relevant Absolute Rate Interest Period, the rate of interest per annum
(rounded to the nearest 1/100 of 1%) offered by such Lender and accepted by the
Borrower pursuant to Section 2.4.6.
"Absolute Rate Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Absolute Rate
Interest Period.
"Absolute Rate Auction" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to Section 2.4.
"Absolute Rate Interest Period" means, with respect to an Absolute Rate
Advance or an Absolute Rate Loan, a period of not less than 7 and not more than
180 days commencing on a Business Day selected by the Borrower pursuant to this
Agreement, but in no event extending beyond the Termination Date. If such
Absolute Rate Interest Period would end on a day which is not a Business Day,
such Absolute Rate Interest Period shall end on the next succeeding Business
Day.
"Absolute Rate Loan" means a Loan which bears interest at an Absolute
Rate.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or division thereof,
whether through purchase of assets, merger or otherwise or (ii) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series of transactions) at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for the election
of directors (other than securities having such power only by reason of the
happening of a contingency) or a majority (by percentage or voting power) of
the outstanding ownership interests of a partnership, association, joint
venture or similar business organization.
<PAGE> 7
"Adequately Capitalized" means "adequately capitalized" for purposes of 12
U.S.C. 1831(o) and any rules and regulations issued thereunder (including,
without limitation, 12 C.F.R. 565.4), as amended, supplemented or otherwise
modified from time to time.
"Advance" means a borrowing hereunder consisting of the aggregate amount
of the several Loans made by some or all of the Lenders to the Borrower of the
same Type (or on the same interest basis in the case of Competitive Bid
Advances) and, in the case of Fixed Rate Advances, for the same Interest Period
and includes both a Committed Advance and a Competitive Bid Advance.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agent" means The First National Bank of Chicago in its capacity as agent
for the Lenders pursuant to Article X, and not in its individual capacity as a
Lender, and any successor Agent appointed pursuant to Article X.
"Aggregate Commitment" means the aggregate of the Commitments of all the
Lenders, as reduced from time to time pursuant to the terms hereof.
"Agreement" means this Four Year Facility Credit Agreement, as it may be
amended or modified and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
that used in preparing the financial statements referred to in Section 5.4.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Corporate Base Rate for such day and (ii) the
sum of Federal Funds Effective Rate for such day plus 1/2% per annum.
"Applicable Margin" means, at any date of determination thereof with
respect to any Eurodollar Committed Advance and the facility fees payable
pursuant to Section 2.6.1, the respective rates per annum for such Eurodollar
Committed Advance and facility fees calculated in accordance with the terms of
Section 2.3.4.
"Article" means an article of this Agreement unless another document is
specifically referenced.
Page 2
<PAGE> 8
"Authorized Officer" means any of the Chairman of the Board, President, or
Senior Vice President - Finance and Treasurer of the Borrower, acting singly.
"Banking Subsidiary" means any insured depository institution (within the
meaning of 12 U.S.C. 1813(c), as amended, supplemented or otherwise modified
from time to time), which is controlled (within the meaning of 12 U.S.C. 1841,
as amended, supplemented or otherwise modified from time to time) by the
Borrower.
"Borrower" means Firstar Corporation, a Wisconsin corporation, and its
successors and assigns.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market and (ii)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago for the conduct of substantially all of their
commercial lending activities.
"Closing Date" means the date upon which all of the conditions set forth
in Section 4.1 have been satisfied or waived.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of such Lender to make
Loans not exceeding the amount set forth opposite its signature below or as set
forth in any Notice of Assignment relating to any assignment that has become
effective pursuant to Section 12.3.2, as such amount may be modified from time
to time pursuant to the terms hereof.
"Committed Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Committed Loans made by the Lenders to the
Borrower at the same time, of the same Type and, in the case of Eurodollar
Committed Advances, for the same Interest Period.
"Committed Borrowing Notice" is defined in Section 2.3.5.
"Committed Loan" means a Loan made by a Lender pursuant to Section 2.3.
Page 3
<PAGE> 9
"Committed Note" means a promissory note in substantially the form of
Exhibit "A-1" hereto, with appropriate insertions, duly executed and delivered
to the Agent by the Borrower for the account of a Lender and payable to the
order of such Lender in the amount of its Commitment, including any amendment,
modification, renewal or replacement of such promissory note.
"Competitive Bid Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Competitive Bid Loans made by some or all of
the Lenders to the Borrower at the same time, at the same interest basis, and
for the same Interest Period.
"Competitive Bid Acceptance Notice" is defined in Section 2.4.6.
"Competitive Bid Loan" means a Eurodollar Bid Rate Loan or an Absolute
Rate Loan, as the case may be.
"Competitive Bid Margin" means the margin above or below the applicable
Eurodollar Base Rate offered for a Eurodollar Bid Rate Loan, expressed as a
percentage (rounded to the nearest 1/100 of 1%) to be added or subtracted from
such Eurodollar Base Rate.
"Competitive Bid Note" means a promissory note in substantially the form
of Exhibit "A-2" hereto, with appropriate insertions, duly executed and
delivered to the Agent by the Borrower for the account of a Lender and payable
to the order of such Lender, including any amendment, modification, renewal or
replacement of such promissory note.
"Competitive Bid Quote" means a Competitive Bid Quote substantially in the
form of Exhibit "D" hereto completed and delivered by a Lender to the Agent in
accordance with Section 2.4.4.
"Competitive Bid Quote Request" means a Competitive Bid Quote Request
substantially in the form of Exhibit "B" hereto completed and delivered by the
Borrower to the Agent in accordance with Section 2.4.2.
"Consolidated Financial Statements" means the Consolidated Financial
Statements for Bank Holding Companies With Total Consolidated Assets of $150
Million or More, or With More Than One Subsidiary Bank--FR Y-9 C, as such
report may be amended or modified from time to time, and any similar report
required to be filed by the Borrower.
"Consolidated Reports of Condition and Income" means the Consolidated
Reports of Condition and Income for A Bank With Domestic and Foreign
Offices--FFIEC 031, Consolidated Reports of Condition and Income for A Bank
With Domestic Offices Only and
Page 4
<PAGE> 10
Total Assets of $300 Million or More--FFIEC 032, Consolidated Reports of
Condition and Income for A Bank With Domestic Offices Only and Total Assets of
$100 Million or More But Less Than $300 Million--FFIEC 033, and Consolidated
Reports of Condition and Income for A Bank With Domestic Offices Only and Total
Assets of Less Than $100 Million--FFIEC 034, as such reports may be amended or
modified from time to time, and any similar report required to be filed by any
Banking Subsidiary.
"Conversion/Continuation Notice" is defined in Section 2.3.6.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.
"Corporate Base Rate" means a rate per annum equal to the corporate base
rate of interest announced by First Chicago from time to time, changing when and
as said corporate base rate changes.
"Default" means an event described in Article VII.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Eurodollar Advance" means a Eurodollar Committed Advance or a Eurodollar
Bid Rate Advance, as applicable.
"Eurodollar Auction" means a solicitation of Competitive Bid Quotes
setting forth Competitive Bid Margins pursuant to Section 2.4.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the
relevant Eurodollar Interest Period, the rate determined by the Agent to be the
rate at which deposits in U.S. dollars are offered by First Chicago to
first-class banks in the London interbank market at approximately 11 a.m.
(London time) two Business Days prior to the first day of such Eurodollar
Interest Period, (i) in the case of a Eurodollar Committed Advance, in the
approximate amount of First Chicago's relevant Eurodollar Committed Loan, or
(ii) in the case of a Eurodollar Bid Rate Advance, in the approximate amount of
such Eurodollar Bid Rate Advance requested by the Borrower, and in each case
having a maturity approximately equal to such Interest Period.
"Eurodollar Bid Rate" means, with respect to a Eurodollar Bid Rate Loan
made by a given Lender for the relevant Eurodollar Interest Period, the sum of
(i) the quotient of (a) the Eurodollar Base Rate applicable to such Eurodollar
Interest Period, divided by
Page 5
<PAGE> 11
(b) one minus the Reserve Requirement (expressed as a decimal) applicable to
such Eurodollar Interest Period, plus (ii) the Competitive Bid Margin offered by
such Lender and accepted by the Borrower pursuant to Section 2.4.6.
"Eurodollar Bid Rate Advance" means a Competitive Bid Advance which bears
interest at a Eurodollar Bid Rate.
"Eurodollar Bid Rate Loan", means a Competitive Bid Loan which bears
interest at a Eurodollar Bid Rate.
"Eurodollar Committed Advance" means an Advance which bears interest at a
Eurodollar Rate requested by the Borrower pursuant to Section 2.3.
"Eurodollar Committed Loan" means a Loan which bears interest at a
Eurodollar Rate requested by the Borrower pursuant to Section 2.3.
"Eurodollar Interest Period" means, with respect to a Eurodollar Advance
or a Eurodollar Loan, a period of one, two, three or six months commencing on a
Business Day selected by the Borrower pursuant to this Agreement. Such
Eurodollar Interest Period shall end on (but exclude) the day which corresponds
numerically to such date one, two, three or six months thereafter, provided,
however, that if there is no such numerically corresponding day in such next,
second, third or sixth succeeding month, such Eurodollar Interest Period shall
end on the last Business Day of such next, second, third or sixth succeeding
month. If a Eurodollar Interest Period would otherwise end on a day which is
not a Business Day, such Eurodollar Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Eurodollar Interest Period
shall end on the immediately preceding Business Day. In no event shall any
Eurodollar Interest Period extend beyond the Termination Date.
"Eurodollar Loan" means a Eurodollar Committed Loan or a Eurodollar Bid
Rate Loan, as applicable.
"Eurodollar Rate" means, with respect to a Eurodollar Committed Advance or
a Eurodollar Committed Loan for the relevant Eurodollar Interest Period, the
sum of (i) the quotient of (a) the Eurodollar Base Rate applicable to such
Eurodollar Interest Period, divided by (b) one minus the Reserve Requirement
(expressed as a decimal) applicable to such Eurodollar Interest Period, plus
(ii) the Applicable Margin. The Eurodollar Rate shall be rounded to the next
higher multiple of 1/16 of 1% if the rate is not such a multiple.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on
Page 6
<PAGE> 12
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published for such day (or,
if such day is not a Business Day, for the immediately preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations at
approximately 10 a.m. (Chicago time) on such day on such transactions received
by the Agent from three Federal funds brokers of recognized standing selected
by the Agent in its sole discretion.
"First Chicago" means The First National Bank of Chicago in its individual
capacity, and its successors.
"Fixed Rate" means the Eurodollar Rate, the Eurodollar Bid Rate or the
Absolute Rate.
"Fixed Rate Advance" means an Advance which bears interest at a Fixed
Rate.
"Fixed Rate Loan" means a Loan which bears interest at a Fixed Rate.
"Floating Rate" means, for any day, a rate per annum equal to the
Alternate Base Rate for such day, changing when and as the Alternate Base Rate
changes.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the Floating
Rate.
"Indebtedness" means (i) total deposits, (ii) securities sold under
agreements to repurchase, (iii) borrowings with an original maturity of one
year or less, (iv) other borrowed funds with an original maturity of greater
than one year, (v) mandatory convertible securities, (vi) subordinated notes
and debentures, and (vii) other liabilities, in each case determined for the
Borrower only in a manner consistent with that used in preparing the Borrower's
December 31, 1995 Parent Company Only Financial Statements.
"Interest Period" means a Eurodollar Interest Period or an Absolute Rate
Interest Period.
"Invitation for Competitive Bid Quotes" means an Invitation for
Competitive Bid Quotes substantially in the form of Exhibit "C" hereto,
completed and delivered by the Agent to the Lenders in accordance with Section
2.4.3.
Page 7
<PAGE> 13
"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the Agent, any
office, branch, subsidiary or affiliate of such Lender or the Agent.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loan" means, with respect to a Lender, such Lender's portion of any
Advance.
"Loan Documents" means this Agreement and the Notes.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan Documents, or
(iii) the validity or enforceability of any of the Loan Documents or the rights
or remedies of the Agent or the Lenders thereunder.
"Material Banking Subsidiary" means, at any time, any one or more Banking
Subsidiaries having aggregate consolidated assets equal to or greater than 5%
of the consolidated assets of the Borrower and its Subsidiaries at such time.
"Moody's" means Moody's Investors Service Inc. or any successor
corporation thereto.
"Multiemployer Plant" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Non-Performing Assets" means the total of (i) Non-Performing Loans, (ii)
Other Real Estate Owned and (iii) without duplication for amounts included as
Other Real Estate Owned, property acquired pursuant to in substance
foreclosures.
Page 8
<PAGE> 14
"Non-Performing Loans" means (i) the total of loans which are placed on a
nonaccrual status, (ii) the total of loans which are past due 90 days or more
and are still accruing, and (iii) the total of loans and leases restructured
and in compliance with modified terms, in each case determined for the Borrower
and its Subsidiaries on a consolidated basis in a manner consistent with that
used in preparing the Borrower's December 31, 1995 Consolidated Financial
Statements.
"Notes" means, collectively, the Committed Notes and the Competitive Bid
Notes; and "Note" means any one of such Notes.
"Notice of Assignment" is defined in Section 12.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the
Lenders or to any Lender, the Agent or any indemnified party hereunder arising
under the Loan Documents.
"Other Real Estate Owned" means Other Real Estate Owned as defined in 12
C.F.R. Section 7.3025 (1989), as such regulation may be amended or supplemented
from time to time, determined for the Borrower and its Subsidiaries on a
consolidated basis in a manner consistent with that used in preparing the
Borrower's December 31, 1995 Consolidated Financial Statements.
"Parent Company Only Financial Statements" means the Parent Company Only
Financial Statements for Bank Holding Companies With Total Consolidated Assets
of $150 Million or More, or With More Than One Subsidiary Bank--FR Y-9 LP, as
such report may be amended or modified from time to time, and any similar
report required to be filed by the Borrower.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each March, June, September and
December.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Banking Subsidiary Indebtedness" means obligations incurred
by any Banking Subsidiary in the ordinary course of business in such
circumstances as may be incidental or usual in carrying on the banking or trust
business of a bank or trust company, including, without limitation, obligations
incurred in connection with (i) any deposits with or funds collected by such
Subsidiary, (ii) any banker's acceptance credit of such Subsidiary, (iii) any
check, note, certificate of deposit, instrument, money or Letter of Credit
issued by such Subsidiary, (iv) any check, note, certificate of deposit, money
order, traveler's check, draft or
Page 9
<PAGE> 15
bill of exchange issued, accepted or endorsed by such Subsidiary, (v) any
discount with, borrowing from, or other obligation to, any Federal Reserve Bank
or any Federal Home Loan Bank, (vi) any agreement made by such Subsidiary to
purchase or repurchase securities, loans or Federal funds or any interest or
participation in any thereof, (vii) any guarantee or similar obligation incurred
by such Subsidiary in the ordinary course of its banking or trust business,
(viii) any transaction in the nature of an extension of credit, whether in the
form of a commitment or otherwise, undertaken by such Subsidiary for the account
of a third party with the application of the same banking considerations and
legal lending limits that would be applicable if the transaction were a loan to
such party, (ix) any transaction in which such Subsidiary acts solely in the
fiduciary or agency capacity, (x) Rate Hedging Obligations incurred in the
ordinary course of business, and (xi) other short-term liabilities similar to
those enumerated in clauses (i) and (vi) above, including United States Treasury
tax and loan borrowings.
"Person" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, trust or other entity or organization, or
any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of
the Code as to which the Borrower or any member of the Controlled Group may
have any liability.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets
owned, leased or operated by such Person.
"Purchasers" is defined in Section 12.3.1.
Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
Page 10
<PAGE> 16
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or
other regulation or official interpretation of said Board of Governors relating
to reserve requirements applicable to member banks of the Federal Reserve
System.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by banks for the purpose of purchasing or carrying
margin stocks applicable to member banks of the Federal Reserve System.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, and excluding any event described in Section
4043(b)(3) of ERISA.
"Required Lenders" means Lenders in the aggregate having at least 66 2/3%
of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding at least 66 2/3% of the aggregate
unpaid principal amount of the outstanding Advances.
"Reserve Requirement" means, with respect to a Eurodollar Interest
Period, the maximum aggregate reserve requirement (including all basic,
supplemental, marginal and other reserves) which is imposed under Regulation D
on Eurocurrency liabilities.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"Standard & Poor's" means Standard & Poor's Ratings Services or any
successor corporation thereto.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or
more of its Subsidiaries or by such Person and one or more of its Subsidiaries,
or (ii) any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Notwithstanding the
foregoing, "Subsidiary" of the Borrower shall also mean any Banking
Subsidiary. Unless otherwise
Page 11
<PAGE> 17
expressly provided, all references herein to a "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of the Borrower
and its Subsidiaries, Property which (i) represents more than 10% of the
consolidated assets of the Borrower and its Subsidiaries as would be shown in
the consolidated financial statements of the Borrower and its Subsidiaries as
at the beginning of the twelve-month period ending with the month in which such
determination is made, or (ii) is responsible for more than 10% of the
consolidated net sales or of the consolidated net income of the Borrower and
its Subsidiaries as reflected in the financial statements referred to in clause
(i) above.
"Termination Date" means the earlier of (i) April 21, 2000 or such later
date as shall have been agreed to by the Lenders pursuant to Section 2.17, and
(ii) the date on which the Commitments shall have been reduced to zero or
terminated pursuant to Section 2.7.1 or 8.1.
"Thrift Financial Report" means the Thrift Financial Report, as such
report may be amended or modified from time to time, and any similar report
required to be filed by any Banking Subsidiary.
"Total Equity Capital" means total equity capital determined for the
Borrower and its Subsidiaries on a consolidated basis in a manner consistent
with that used in preparing the Borrower's December 31, 1995 Consolidated
Financial Statements.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance or Loan, its nature as an
Alternate Base Rate Advance or Loan, Eurodollar Committed Advance or Loan,
Eurodollar Bid Rate Advance or Loan or Absolute Rate Advance or Loan.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested nonforfeitable benefits under all Single Employer Plans
exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans.
"Unmatured Default" means an event which but for the lapse of
time or the giving of notice, or both, would constitute a Default.
"Well-Capitalized" means "well-capitalized" for purposes of 12 U.S.C.
1831(o) and any rules and regulations issued thereunder (including, without
limitation, 12 C.F.R. 565.4), as amended, supplemented or otherwise modified
from time to time.
"Wholly-Owned Subsidiary of a Person means (i) any Subsidiary all of
the outstanding voting securities of which shall at the time
Page 12
<PAGE> 18
be owned or controlled, directly or indirectly, by such Person or one or more
Wholly-Owned Subsidiaries of such Person, or by such Person and one or more
Wholly-Owned Subsidiaries of such Person, or (ii) any partnership, association,
joint venture or similar ordinary voting power of which shall at the time be so
owned or controlled.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1. Description of Facility. Upon the terms and subject to the conditions
set forth in this Agreement, the Lenders hereby grant to the Borrower a
revolving credit facility pursuant to which: (i) each Lender severally agrees
to make Committed Loans to the Borrower in accordance with Section 2.3; and
(ii) each Lender may, in its sole discretion, make bids to make Competitive Bid
Loans to the Borrower in accordance with Section 2.4; provided, however, that
in no event may the aggregate principal amount of all outstanding Advances
(including both Committed Advances and Competitive Bid Advances) exceed the
Aggregate Commitment.
2.2. Availability of Facility. Subject to all of the terms and conditions
of this Agreement, the facility is available from the Closing Date to the
Termination Date, and the Borrower may borrow, repay and reborrow at any time
prior to the Termination Date.
2.3. Committed Advances.
2.3.1. Commitment. From and including the Closing Date and prior to the
Termination Date, each Lender severally agrees, on the terms and conditions set
forth in this Agreement, to make Committed Loans to the Borrower from time to
time in amounts not to exceed in the aggregate at any one time outstanding the
amount of its commitment. The Commitments to lend hereunder shall expire on the
Termination Date.
2.3.2. Ratable Loans; Types of Advances. Each Committed Advance
hereunder shall consist of Loans made from the several Lenders ratably in
proportion to the ratio that their respective Commitments bear to the Aggregate
Commitment. The Committed Advances may be Floating Rate Advances or Eurodollar
Committed Advances, or a combination thereof, selected by the Borrower in
accordance with Sections 2.3.5 and 2.3.6. The Committed Advances shall be
evidenced by the Committed Notes.
Page 13
<PAGE> 19
2.3.3. Minimum Amount of Each Committed Advance. Each Committed Advance
shall be in the minimum amount of $5,000,000 (and in multiples of $500,000 in
excess thereof); provided, however, that any Floating Rate Advance may be
in the aggregate amount of the unused Aggregate Commitment.
2.3.4. Applicable Margin.
(i) The Applicable Margin for Eurodollar Committed Advances and for
facility fees payable pursuant to Section 2.6.1 hereunder, shall be subject to
adjustment (upwards or downwards, as appropriate) based on the Borrower's
Rating and shall be determined in accordance with the table set forth below.
The Applicable Margin shall be adjusted on the earlier of the date of
announcement or the date of publication by the respective rating agencies of a
change in the Rating or, in the absence of such announcement or publication, on
the effective date of such changed Rating (the "Adjustment Date"), and shall
apply to all outstanding Eurodollar Committed Advances and the facility fees
from and after such Adjustment Date to the next Adjustment Date. In the event
that the Borrower shall at any time cease to be rated by Standard & Poor's and
Moody's, the maximum Applicable Margin shall apply.
<TABLE>
<CAPTION>
Applicable Margin
(basis points per annum)
Eurodollar Committed
Rating Advances Facility Fees
--------- -------------------- -------------
<S> <C> <C>
Level I 20.00 b.p. 10.00 b.p.
Level II 25.00 b.p. 12.50 b.p.
Level III 30.00 b.p. 15.00 b.p.
Level IV 41.25 b.p. 18.75 b.p.
Level V 45.00 b.p. 25.00 b.p.
</TABLE>
(ii) For purposes of this Agreement, the Borrower's Rating shall be
determined in accordance with the following definitions:
"Level I" means the level applicable at any time when the Borrower's
Rating from Standard & Poor's is at least A or better or at least A2 or better
from Moody's.
"Level II" means the level applicable at any time when the Borrower's
Rating from Standard & Poor's is A- or A3 from Moody's.
"Level III" means the level applicable at any time when the Borrower's
Rating from Standard & Poor's is BBB+ or Baal from Moody's.
Page 14
<PAGE> 20
"Level IV" means the level applicable at any time when the Borrower's
Rating from Standard & Poor's is BBB or Baa2 from Moody's.
"Level V" means the level applicable at any time when the Borrower's
Rating from Standard & Poor's is BBB- or less or Baa3 or less from Moody's.
"Rating" means the rating assigned by Standard & Poor's or Moody's to
the Borrower's senior unsecured debt or if the Borrower ceases to have such
a rating, then the Rating shall be the Borrower's implied long-term senior
debt rating (i.e., the rating that is one rating level higher than the
rating assigned by Standard & Poor's or Moody's to the Borrower's publicly
issued subordinated debt). The Rating shall be based on the applicable
Level I, Level II, Level III, Level IV or Level V; provided, however, that
if (i) such rating is received from one such rating agency, then that
rating will be the Rating, (ii) such rating is received from both rating
agencies, then the higher rating will be the Rating, and (iii) if there is
a difference of two or more levels between such Ratings, then the Rating
which is one below the higher Rating will be the Rating.
2.3.5. Method of Selecting Types and Interest Periods for New
Committed Advances. The Borrower shall select the Type of Committed Advance, and
in the case of each Eurodollar Committed Advance the Eurodollar Interest Period
applicable thereto, for each such Committed Advance. The Borrower shall give the
Agent irrevocable notice (a "Committed Borrowing Notice") not later than 10:00
a.m. (Chicago time) on the Borrowing Date for each Floating Rate Advance and
three Business Days before the Borrowing Date for each Eurodollar Committed
Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such Committed
Advance,
(ii) the aggregate amount of such Committed Advance,
(iii) the Type of Committed Advance selected, and
(iv) in the case of each Eurodollar Committed Advance, the Eurodollar
Interest Period applicable thereto.
2.3.6. Conversion and Continuation of Outstanding Committed Advances.
Floating Rate Advances shall continue as Floating Rate Advances unless and until
such Floating Rate Advances are converted into Eurodollar Committed Advances.
Each Eurodollar Committed Advance shall continue as a Eurodollar Committed
Advance until the end of the then applicable Eurodollar Interest Period
therefor, at which time such Eurodollar Committed Advance shall be automatically
converted into a Floating Rate Advance unless such
Page 15
<PAGE> 21
Eurodollar Committed Advance is paid by the Borrower or the Borrower shall have
given the Agent a Conversion/Continuation Notice requesting that, at the end of
such Eurodollar Interest Period, such Eurodollar Committed Advance continue as
a Eurodollar Committed Advance for the same or another Eurodollar Interest
Period. Subject to the terms of Section 2.3.3, the Borrower may elect from time
to time to convert all or any part of an Floating Rate Advance into a
Eurodollar Committed Advance. The Borrower shall give the Agent irrevocable
notice (a "Conversion/Continuation Notice") of each conversion of Floating Rate
Advance or continuation of a Eurodollar Committed Advance not later than 10:00
a.m. (Chicago time) at least three Business Days prior to the date of the
requested conversion or continuation, specifying:
(i) the requested date, which shall be a Business Day, of such
conversion or continuation;
(ii) the aggregate amount and Type of the Committed Advance which is to be
converted or continued; and
(iii) the amount and Type(s) of Committed Advance(s) into which such
Committed Advance is to be converted or continued and, in the case of
a conversion into or continuation of a Eurodollar Committed Advance,
the duration of the Eurodollar Interest Period applicable thereto.
2.4. Competitive Bid Advances.
2.4.1. Competitive Bid Option; Repayment of Competitive Bid Advances.
In addition to Committed Advances pursuant to Section 2.3, but subject to all
of the terms and conditions of this Agreement (including, without
limitation, the limitation set forth in Section 2.1 as to the maximum aggregate
principal amount of all outstanding Advances hereunder), the Borrower may, as
set forth in this Section 2.4, request the Lenders, prior to the Termination
Date, to make offers to make Competitive Bid Advances to the Borrower. Each
Lender may, but shall have no obligation to, make such offers and the Borrower
may, but shall have no obligation to, accept any such offers in the manner set
forth in this Section 2.4. The Competitive Bid Advances shall be evidenced by
the Competitive Bid Notes. Each Competitive Bid Advance shall be repaid in full
by the Borrower on the last day of the Interest Period applicable thereto.
2.4.2. Competitive Bid Quote Request. When the Borrower wishes to
request offers to make Competitive Bid Loans under this Section 2.4, the
Borrower shall transmit to the Agent by telecopy a Competitive Bid Quote Request
so as to be received no later than (x) 10:00 a.m. (Chicago time) at least five
Business Days prior to the Borrowing Date proposed therein, in the case of a
Eurodollar Auction, or (y) 9:00 a.m. (Chicago time) at least one
Page 16
<PAGE> 22
Business Day prior to the Borrowing Date proposed therein, in the case of an
Absolute Rate Auction, specifying in accordance with all of the terms of this
Agreement:
(i) the proposed Borrowing Date, which shall be a Business Day, for the
proposed Competitive Bid Advance;
(ii) the aggregate principal amount of such Competitive Bid Advance;
(iii) whether the Competitive Bid Quotes requested are to set forth a
Competitive Bid Margin or an Absolute Rate, or both; and
(iv) the Interest Period applicable thereto.
The Borrower may request offers to make Competitive Bid Loans for more than one
Interest Period and for a Eurodollar Auction and an Absolute Rate Auction in a
single Competitive Bid Quote Request. No Competitive Bid Quote Request shall be
given within five Business Days (or upon reasonable prior notice to the
Lenders, such other number of days as the Borrower and the Agent may agree) of
any other Competitive Bid Quote Request. Each Competitive Bid Quote Request
shall be in a minimum amount of $5,000,000 (and in multiples of $500,000 in
excess thereof). A Competitive Bid Quote Request that does not conform
substantially to the format of Exhibit "B" hereto shall be rejected, and the
Agent shall promptly notify the Borrower of such rejection by telecopy.
2.4.3. Invitation for Competitive Bid Quotes. Promptly upon receipt of
a Competitive Bid Quote Request that is not rejected pursuant to Section 2.4.2,
the Agent shall send to each of the Lenders by telecopy an Invitation for
Competitive Bid Quotes which shall constitute an invitation by the Borrower to
each Lender to submit Competitive Bid Quotes offering to make the Competitive
Bid Loans to which such Competitive Bid Quote Request relates in accordance with
this Section 2.4.
2.4.4. Submission and Contents of Competitive Bid Quotes.
(a) Each Lender may, in its sole discretion, submit a Competitive Bid
Quote containing an offer or offers to make Competitive Bid Loans in
response to any Invitation for Competitive Bid Quotes. Each
Competitive Bid Quote must comply with the requirements of this
Section 2.4.4 and must be submitted to the Agent by telecopy at its
offices specified in or pursuant to Article XIII not later than (i)
(A) 12:45 p.m. (Chicago time) in the case of First Chicago and (B)
1:00 p.m. (Chicago time) in the case of each other Lender, at least
four Business Days prior to the proposed Borrowing Date in the case of
a
Page 17
<PAGE> 23
Eurodollar Auction, or (ii) (A) 8:45 a.m. (Chicago time) in the case
of First Chicago and (B) 9:00 a.m. (Chicago time) in the case of each
other Lender, on the proposed Borrowing Date in the case of an
Absolute Rate Auction (or, in either such case upon reasonable prior
notice to the Lenders, such other time and date as the Borrower and
the Agent may agree; provided that First Chicago shall always be
required to submit its Competitive Bid Quotes not less than fifteen
minutes prior to the other Lenders). Subject to Articles IV and VIII,
any Competitive Bid Quote so made shall be irrevocable except with the
written consent of the Agent given on the instructions of the
Borrower.
(b) Each Competitive Bid Quote shall in any case specify:
(i) the proposed Borrowing Date, which shall be the same as that
set forth in the applicable Invitation for Competitive Bid
Quotes;
(ii) the principal amount of the Competitive Bid Loan for which
each such offer is being made, (1) which principal amount
may be greater than, less than or equal to the Commitment of
the quoting Lender, but in no case greater than the
unutilized Aggregate Commitment, (2) which principal amount
must be at least $5,000,000 (and in multiples of $500,000 in
excess thereof) and (3) which principal amount may not
exceed the principal amount of Competitive Bid Loans for
which offers were requested;
(iii) in the case of a Eurodollar Auction, the Competitive Bid
Margin offered for each such Competitive Bid Loan;
(iv) the minimum or maximum amount, if any, of the Competitive
Bid Loan which may be accepted by the Borrower and/or the
limit, if any, as to the aggregate principal amount of the
Competitive Bid Loans from such Lender which may be accepted
by the Borrower;
(v) in the case of an Absolute Rate Auction, the Absolute Rate
offered for each such Competitive Bid Loan;
(vi) the applicable Interest Period; and
(vii) the identity of the quoting Lender.
Page 18
<PAGE> 24
(c) The Agent shall reject any Competitive Bid Quote that:
(i) is not substantially in the form of Exhibit "D" hereto or
does not specify all of the information required by Section
2.4.4(b):
(ii) contains qualifying, conditional or similar language, other
than any such language contained in Exhibit "D" hereto;
(iii) proposes terms other than or in addition to those set forth
in the applicable Invitation for Competitive Bid Quotes; or
(iv) arrives after the time set forth in Section 2.4.4(a).
(d) If any Competitive Bid Quote shall be rejected pursuant to Section
2.4.4(c), then the Agent shall notify the relevant Lender of such
rejection as soon as practicable.
2.4.5. Notice to Borrower. The Agent shall promptly notify the
Borrower of the terms (i) of any Competitive Bid Quote submitted by a Lender
that is in accordance with Section 2.4.4 and (ii) of any Competitive Bid Quote
that is in accordance with Section 2.4.4 and amends, modifies or is otherwise
inconsistent with a previous Competitive Bid Quote submitted by such Lender with
respect to the same Competitive Bid Quote Request. Any such subsequent
Competitive Bid Quote shall be disregarded by the Agent unless such subsequent
Competitive Bid Quote specifically states that it is submitted solely to correct
a manifest error in such former Competitive Bid Quote. The Agent's notice to the
Borrower shall specify the aggregate principal amount of Competitive Bid Loans
for which offers have been received for each Interest Period specified in the
related Competitive Bid Quote Request and the respective principal amounts and
Competitive Bid Margins or Absolute Rates, as the case may be, so offered.
2.4.6. Acceptance and Notice by Borrower. Subject to the receipt of
the notice from the Agent referred to in Section 2.4.5, not later than (i) 10:00
a.m. (Chicago time) at least three Business Days prior to the proposed
Borrowing Date, in the case of a Eurodollar Auction or (ii) 10:00 a.m. (Chicago
time) on the proposed Borrowing Date, in the case of an Absolute Rate Auction,
the Borrower shall notify the Agent of the Borrower's acceptance or rejection
of the offers so notified to it pursuant to Section. 2.4.5; provided, however,
that the failure by the Borrower to give such notice to the Agent shall be
deemed to be a rejection by the Borrower of all such offers. In the case of
acceptance, such notice (a "Competitive Bid Acceptance Notice") shall specify
the aggregate principal amount of offers for each Interest Period that
Page 19
<PAGE> 25
are accepted. The Borrower may accept or reject any Competitive Bid Quote in
whole or in part (subject to the terms of Section 2.4.4(b)(iv)); provided that:
(i) the aggregate principal amount of each Competitive Bid
Advance may not exceed the applicable amount set forth in
the related Competitive Bid Quote Request;
(ii) acceptance of offers may only be made on the basis of
ascending Competitive Bid Margins or Absolute Rates, as the
case may be; and
(iii) the Borrower may not accept any offer of the type described
in Section 2.4.4(c) or that otherwise fails to comply with
the requirements of this Agreement for the purpose of
obtaining a Competitive Bid Loan under this Agreement.
2.4.7. Allocation by the Agent. Subject to Section 2.4.6, if offers
are made by two or more Lenders with the same Competitive Bid Margins or
Absolute Rates, as the case may be, for a greater aggregate principal amount
than the amount in respect of which offers are permitted to be accepted for the
related Interest Period, the principal amount of Competitive Bid Loans in
respect of which such offers are accepted shall be allocated by the Agent among
such Lenders as nearly as possible (in such multiples as the Agent may deem
appropriate) in proportion to the aggregate principal amount of such offers;
provided, however, that no Lender shall be allocated a portion of any
Competitive Bid Advance which is less than the minimum amount which such Lender
has indicated that it is willing to accept. Allocations by the Agent of the
amounts of Competitive Bid Loans shall be conclusive in the absence of manifest
error. The Agent shall promptly, but in any event on the same Business Day in
the case of Eurodollar Bid Rate Advances, and by 11:00 a.m. (Chicago time) on
the same Business Day in the case of Absolute Rate Advances, notify each Lender
of its receipt of a Competitive Bid Acceptance Notice and the aggregate
principal amount of each Competitive Bid Advance allocated to each participating
Lender.
2.4.8. Administration Fee. The Borrower hereby agrees to pay to the
Agent, for its sole account, an administration fee of $1,000 per Competitive Bid
Quote Request transmitted by the Borrower to the Agent pursuant to Section
2.4.2. Such administration fee shall be payable in arrears on each Payment Date
and on the Termination Date for any period then ending for which such fee, if
any, shall not have been theretofore paid.
2.5. Method of Borrowing. Not later than 12:00 noon (Chicago time) on
each Borrowing Date, each Lender shall make available its Loan or Loans, if any,
in funds immediately available to the Agent, in Chicago, Illinois at its address
specified
Page 20
<PAGE> 26
pursuant to Article XIII. The Agent will make the funds so received from the
Lenders available to the Borrower at the Agent's aforesaid address.
Notwithstanding the foregoing provisions of this Section 2.5, to the extent
that a Loan made by a Lender matures on the Borrowing Date of a requested Loan,
such Lender shall apply the proceeds of the Loan it is then making to the
repayment of principal of the maturing Loan.
2.6. Fees. The Borrower agrees to pay the following fees:
2.6.1. Facility Fee. The Borrower agrees to pay to the Agent for the
account of each Lender, for the period from the Closing Date to and including
the Termination Date, a facility fee equal to the product of (i) such Lender's
Commitment (whether used or unused), and (ii) the amount (expressed in basis
points per annum) specified as the Applicable Margin for facility fees pursuant
to Section 2.3.4(i), payable on each Payment Date and on the Termination Date.
2.6.2. Usage Fee. In the event that during any calendar quarter, the
average daily principal amount of the Loans outstanding is greater than
$62,500,000, the Borrower agrees to pay to the Agent for the account of each
Lender a usage fee equal to 5 basis points per annum on the average daily
principal amount of the Committed Loans outstanding during such quarter, payable
on each Payment Date and on the Termination Date.
2.6.3. Agent's Fees. The Borrower agrees to pay to the Agent, for its
own account, the fees agreed to by the Borrower and the Agent pursuant to that
certain Letter Agreement dated February 16, 1996.
2.7. Reductions in Aggregate Commitment; Principal Payments.
2.7.1. Reductions in Aggregate Commitment. The Borrower may
permanently reduce the Aggregate Commitment in whole, or in part, ratably among
the Lenders in a minimum aggregate amount of $5,000,000 (and multiples of
$500,000 in excess thereof), upon at least three Business Days' written notice
to the Agent, which notice shall specify the amount of any such reduction;
provided, however, that the amount of the Aggregate Commitment may not be
reduced below the aggregate principal amount of the outstanding Advances.
2.7.2. Principal Payments.
(i) Optional Payments. The Borrower may from time to time pay, without
penalty or premium, all outstanding Floating Rate Advances, or, in a minimum
aggregate amount of $5,000,000 (and multiples of $500,000 in excess thereof),
any portion of the outstanding Floating Rate Advances upon one Business Days'
Page 21
<PAGE> 27
prior notice to the Agent. A Fixed Rate Advance may not be paid prior
to the last day of the applicable Interest Period.
(ii) Termination. Any outstanding Advances and all other unpaid
Obligations shall be paid in full by the Borrower on the Termination
Date.
2.8. Changes in Interest Rate. etc. Each Floating Rate Advance shall
bear interest on the outstanding principal amount thereof, for each day from and
including the date such Advance is made or is converted from a Eurodollar
Committed Advance into a Floating Rate Advance pursuant to Section 2.3.6 to but
excluding the date it becomes due or is converted into a Eurodollar Committed
Advance pursuant to Section 2.3.6 hereof, at a rate per annum equal to the
Floating Rate for such day. Changes in the rate of interest on that portion of
any Advance maintained as a Floating Rate Advance will take effect
simultaneously with each change in the Alternate Base Rate. Each Fixed Rate
Advance shall bear interest from and including the first day of the Interest
Period applicable thereto to (but not including) the last day of such Interest
Period at the interest rate determined as applicable to such Fixed Rate Advance.
No Interest Period may end after the Termination Date.
2.9. Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.3.5 or 2.3.6, during the continuance of a
Default or Unmatured Default, the Required Lenders may, at their option, by
notice to the Borrower (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2 requiring
unanimous consent of the Lenders to changes in interest rates), declare that no
Advance may be made as, converted into or continued as a Eurodollar Committed
Advance. During the continuance of a Default, the Required Lenders may, at their
option, by notice to the Borrower (which notice may be revoked at the option of
the Required Lenders notwithstanding any provision of Section 8.2 requiring
unanimous consent of the Lenders to changes in interest rates), declare that (i)
each Fixed Rate Advance shall bear interest for the remainder of the applicable
Interest Period at the rate otherwise applicable to such Interest Period plus 2%
per annum and (ii) each Floating Rate Advance shall bear interest at a rate per
annum equal to the Floating Rate plus 2% per annum.
2.10. Method of Payment. Subject to the last sentence of Section 2.5,
all payments of the Obligations hereunder shall be made, without setoff,
deduction, or counterclaim, in immediately available funds to the Agent at the
Agent's address specified pursuant to Article XIII, or at any other Lending
Installation of the Agent specified in writing by the Agent to the Borrower, by
noon (local time) on the date when due and shall be applied ratably by the Agent
among all Lenders in the case of fees and payments in respect of Committed
Advances and ratably among the applicable Lenders in respect of Competitive Bid
Advances. Each payment
Page 22
<PAGE> 28
delivered to the Agent for the account of any Lender shall be delivered
promptly by the Agent to such Lender in the same type of funds that the Agent
received at its address specified pursuant to Article XIII or at any Lending
Installation specified in a notice received by the Agent from such Lender. The
Agent is hereby authorized to charge the account of the Borrower maintained
with First Chicago for each payment of principal, interest and fees as it
becomes due hereunder.
2.11. Notes: Telephonic Notices. Each Lender is hereby authorized to
record the principal amount of each of its Loans and each repayment on the
schedule attached to its Notes; provided, however, that the failure to so record
shall not affect the Borrowers obligations under any Loan Document. The Borrower
hereby authorizes the Lenders and the Agent to extend, convert or continue
Advances, effect selections of Types of Advances, transfer funds and submit
Competitive Bid Quotes, in each case based on telephonic notices made by any
person or persons the Agent or any Lender in good faith believes to be acting on
behalf of the Borrower. The Borrower agrees to deliver promptly to the Agent a
written confirmation, if such confirmation is requested by the Agent or any
Lender, of each telephonic notice signed by an Authorized Officer. If the
written confirmation differs in any material respect from the action taken by
the Agent and the Lenders, the records of the Agent and the Lenders shall govern
absent manifest error.
2.12. Interest Payment Dates: Interest and Fee Basis. Interest accrued
on each Floating Rate Advance shall be payable on each Payment Date, commencing
with the first such date to occur after the date hereof, on any date on which
the Floating Rate Advance is prepaid, whether due to acceleration or otherwise,
and at maturity. Interest accrued on each Fixed Rate Advance shall be payable on
the last day of its applicable Interest Period, on any date on which the Fixed
Rate Advance is prepaid, whether due to acceleration or otherwise, and at
maturity. Interest accrued on each Fixed Rate Advance having an Interest Period
longer than three months shall also be payable on the last day of each
three-month interval (in the case of Eurodollar Committed Advances or Eurodollar
Bid Rate Advances) or 90-day interval (in the case of Absolute Rate Advances)
during such Interest Period. Interest and fees shall be calculated for actual
days elapsed on the basis of a 360-day year. Interest shall be payable for the
day an Advance is made but not for the day of any payment on the amount paid if
payment is received prior to noon (local time) at the place of payment. If any
payment of principal of or interest on an Advance shall become due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and, in the case of a principal payment, such extension of time
shall be included in computing interest in connection with such payment.
Page 23
<PAGE> 29
2.13. Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions. Promptly after receipt thereof, the Agent will notify
each Lender of the contents of each Aggregate Commitment reduction notice,
Committed Borrowing Notice, Competitive Bid Acceptance Notice,
Conversion/Continuation Notice, and repayment notice received by it hereunder.
The Agent will notify each Lender of the interest rate applicable to each Fixed
Rate Advance promptly upon determination of such interest rate and will give
each Lender prompt notice of each change in the Alternate Base Rate.
2.14. Lending Installations. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written or telex
notice to the Agent and the Borrower, designate a Lending Installation through
which Loans will be made by it and for whose account Loan payments are to be
made.
2.15. Non-Receipt of Funds by the Agent. Unless the Borrower or a
Lender, as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or (ii) in the case of the Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Agent, the recipient of such payment shall, on demand by the
Agent, repay to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to (i) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day or (ii) in the case of payment by the
Borrower, the interest rate applicable to the relevant Loan.
2.16. Withholding Tax Exemption. At least five Business Days prior to
the first date on which interest or fees are payable hereunder for the account
of any Lender, each Lender that is not incorporated under the laws of the United
States of America, or a state thereof, agrees that it will deliver to each of
the Borrower and the Agent two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 (or a successor form), certifying in either
case that such Lender is entitled to receive payments under this Agreement and
the Notes without deduction or withholding of any United States federal income
taxes. Each Lender which so delivers a Form 1001 or 4224 further undertakes to
deliver to each
Page 24
<PAGE> 30
of the Borrower and the Agent two additional copies of such form (or a
successor form) on or before the date that such form expires (currently, three
successive calendar years for Form 1001 and one calendar year for Form 4224) or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent forms so delivered by it, and such amendments thereto or extensions
or renewals thereof as may be reasonably requested by the Borrower or the Agent,
in each case certifying that such Lender is entitled to receive payments under
this Agreement and the Notes without deduction or withholding of any United
States federal income taxes, unless an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender advises the Borrower
and the Agent that it is not capable of receiving payments without any deduction
or withholding of United States federal income tax.
2.17. Extension of Termination Date.
2.17.1. Extension Procedures. The Commitment of each Lender, and
this Agreement as between such Lender and the Borrower, may be extended for one
period of one year upon mutual agreement of such Lender and the Borrower in the
manner provided in this Section 2.17, to the effect that the Termination Date
with respect to such Lender for all purposes under this Agreement and the Notes
shall be extended by one year to April 20, 2001. The request for such an
extension shall be made by the Borrower in writing and delivered to the Agent no
later than 60 days but not sooner than 90 days prior to the second anniversary
of this Agreement. Promptly following the Agent's receipt of any such request,
the Agent shall notify each Lender thereof. Each Lender may, in its sole
discretion, agree to such extension by giving written notice of such agreement
to the Agent and the Borrower within 30 days following the Borrower's request
for such extension (each Lender which so consents to a requested extension is
herein called a "Consenting Lender" and each Lender which does not so consent to
a requested extension is herein called a "Non-consenting Lender"). If any Lender
fails to respond to any such request, such Lender shall be deemed to be a
Non-consenting Lender. If Consenting Lenders hold 66 2/3% or more of the
Aggregate Commitment, then the Termination Date of each Consenting Lender shall
be so extended and the Termination Date of each Nonconsenting Lender, if any,
shall remain unchanged. If Consenting Lenders hold less than 66 2/3% of the
Aggregate commitment, then the termination date shall not be extended for any of
the Lenders.
2.17.2. Termination of Lenders. If there are any Non-consenting
Lenders pursuant to Section 2.17.1 and an extension has occurred for Consenting
Lenders, the Borrower may, at its option, terminate the Commitment of a
Non-consenting Lender and pay or
Page 25
<PAGE> 31
prepay all outstanding Loans of such Non-consenting Lender (each a "Terminated
Lender"). The Borrower shall, by giving written notice thereof to the Terminated
Lender and to the Agent, specify the proposed effective date of termination of
the Terminated Lender's Commitment (the "Lender Termination Date"), which date
shall not in any event be less than five nor more than thirty days following the
date of such notice of termination. The Borrower may not elect to terminate and
prepay any Lender under this Section 2.17.2 if a Default or Unmatured Default
exists. On the Lender Termination Date (i) the Borrower shall pay or prepay all
outstanding Loans of such Terminated Lender, together with accrued interest
thereon and all fees due such Terminated Lender under this Agreement, in each
case accrued through the Lender Termination Date, together with all amounts, if
any, payable under Section 3.4 in connection with prepayment of such Loans, and
(ii) the Terminated Lender shall have no further Commitment under this Agreement
and shall no longer be a "Lender" under this Agreement for any purpose except
insofar as it shall be entitled to any payment or indemnification, or be
obligated to make any indemnification, on account of any event which shall have
occurred, or any right or liability which shall have arisen, on or prior to the
date of repayment in full of such Loans. The termination of any Terminated
Lender's Commitment and the prepayment of a Terminated Lender's Loans pursuant
to this Section 2.17.2 shall not relieve or satisfy the obligations of the
Borrower to make any such prepayments free and clear of all taxes, to reimburse
such Terminated Lender for all increased costs pursuant to Section 3.4, or to
comply with all other terms and conditions of this Agreement (including, without
limitation, Section 9.7).
2.17.3. Successor Lenders. If, from time to time, any
Non-consenting Lender's Commitment is terminated pursuant to Section 2.17.2, the
Borrower may, at its option, specify one or more commercial banks (including any
Lender) (each a "Successor Lender"), each of which Successor Lenders (i) shall
be acceptable to the Agent, (ii) have a combined capital, surplus (or its
equivalent) and undivided profits in an amount not less than U.S. $250,000,000
(or its equivalent in another currency), and (iii) shall have agreed, in the
aggregate, to succeed to the entire Commitment of such Terminated Lender on the
applicable Lender Termination Date. Effective as of such Lender Termination
Date, the Borrower, the Agent and such Successor Lender shall enter into an
appropriate Assignment Agreement to so assign the entire Commitment of the
applicable Terminated Lender to the Successor Lender.
Page 26
<PAGE> 32
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. Yield Protection. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law), or any interpretation thereof, or the compliance
of any Lender therewith,
(i) subjects any Lender or any applicable Lending Installation
to any tax, duty, charge or withholding on or from payments
due from the Borrower (excluding federal taxation of the
overall net income of any Lender or applicable Lending
Installation, income taxes imposed on any Lender in the
jurisdiction in which such Lender's home office is located,
and the Illinois personal property replacement tax), or
changes the basis of taxation of payments to any Lender in
respect of its Loans or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender or any
applicable Lending Installation (other than reserves and
assessments taken into account in determining the interest
rate applicable to Fixed Rate Advances), or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending
Installation of making, funding or maintaining loans or
reduces any amount receivable by any Lender or any
applicable Lending Installation in connection with loans, or
requires any Lender or any applicable Lending Installation
to make any payment calculated by reference to the amount of
loans held or interest received by it, by an amount deemed
material by such Lender,
then, within 15 days of demand by such Lender pursuant to the written statement
required under Section 3.5, the Borrower shall pay such Lender that portion of
such increased expense incurred or reduction in an amount received which such
Lender determines is attributable to making, funding and maintaining its Loans
and its Commitment. Each Lender will notify the Borrower of any event occurring
after the date of this Agreement which will entitle such Lender to compensation
pursuant to this Section 3.1, as promptly as practicable after such Lender
obtains knowledge thereof and determines to request such compensation.
Page 27
<PAGE> 33
3.2. Changes in Capital Adequacy Regulations. If a Lender reasonably
determines the amount of capital required or expected to be maintained by such
Lender, any Lending Installation of such Lender or any corporation controlling
such Lender is increased as a result of a Change, then, within 15 days of demand
by such Lender pursuant to the written statement required under Section 3.5, the
Borrower shall pay such Lender the amount necessary to compensate for any
shortfall in the rate of return on the portion of such increased capital which
such Lender reasonably determines is attributable to this Agreement, its Loans
or its obligation to make Loans hereunder (after taking into account such
Lender's policies as to capital adequacy). "Change" means (i) any change after
the date of this Agreement in the Risk-Based Capital Guidelines, or (ii) any
adoption of or change in any other law, governmental or quasi-governmental rule,
regulation, policy, guideline, interpretation, or directive (whether or not
having the force of law) after the date of this Agreement which affects the
amount of capital required or expected to be maintained by any Lender or any
Lending Installation or any corporation controlling any Lender. "Risk-Based
Capital Guidelines" means (i) the risk-based capital guidelines in effect in the
United States on the date of this Agreement, including transition rules, and
(ii) the corresponding capital regulations promulgated by regulatory authorities
outside the United States implementing the July 1988 report of the Basle
Committee on Banking Regulation and Supervisory Practices Entitled
"International Convergence of Capital Measurements and Capital Standards,"
including transition rules, and any amendments to such regulations adopted prior
to the date of this Agreement. Each Lender will notify the Borrower of any event
occurring after the date of this Agreement which will entitle such Lender to
compensation pursuant to this Section 3.2, as promptly as practicable after such
Lender obtains knowledge thereof and determines to request such compensation.
3.3. Availability of Types of Advances. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders (or in the case of any
Competitive Bid Loan, the Lender making such Loan) determine that (i) deposits
of a type and maturity appropriate to match fund Fixed Rate Advances are not
available or (ii) the interest rate applicable to a Type of Advance does not
accurately reflect the cost of making or maintaining such Advance, then the
Agent shall suspend the availability of the affected Type of Advance and require
any Fixed Rate Advances of the affected Type to be repaid.
3.4. Funding Indemnification. If any payment of a Fixed Rate Advance occurs
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a Fixed Rate Advance is not
made, continued or converted on the date specified by the Borrower for
Page 28
<PAGE> 34
any reason other than default by the Lenders, the Borrower will indemnify each
Lender for any loss or cost incurred by it resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing deposits
acquired to fund or maintain the Fixed Rate Advance.
3.5. Lender Statements; Survival of Indemnity. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Fixed Rate Loans to reduce any liability of the Borrower to such
Lender under Sections 3.1 and 3.2 or to avoid the unavailability of a Type of
Advance under Section 3.3, so long as such designation is not disadvantageous to
such Lender. Each Lender shall deliver a written statement of such Lender as to
the amount due, if any, under Sections 3.1, 3.2 or 3.4. Such written statement
shall set forth in reasonable detail the calculations upon which such Lender
determined such amount and shall be final, conclusive and binding on the
Borrower in the absence of manifest error. Determination of amounts payable
under such Sections in connection with a Fixed Rate Loan shall be calculated as
though each Lender funded its Fixed Rate Loan through the purchase of a deposit
of the type and maturity corresponding to the deposit used as a reference in
determining the Fixed Rate applicable to such Loan, whether in fact that is the
case or not. Unless otherwise provided herein, the amount specified in the
written statement shall be payable on demand after receipt by the Borrower of
the written statement. The obligations of the Borrower under Sections 3.1, 3.2
and 3.4 shall survive payment of the Obligations and termination of this
Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Initial Advance.
4.1.1. The Lenders shall not be required to make the initial Advance
hereunder and this Agreement shall not become effective unless the Borrower has
furnished to the Agent with sufficient copies for the Lenders:
(i) Copies of the articles of incorporation of the Borrower, together with
all amendments, and a certificate of status, both certified by the
appropriate governmental officer in its jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or Assistant Secretary of the
Borrower, of its by-laws and of its Board of Directors' resolutions
(and resolutions of
Page 29
<PAGE> 35
other bodies, if any are deemed necessary by counsel for any Lender)
authorizing the execution of the Loan Documents.
(iii) An incumbency certificate, executed by the Secretary or Assistant
Secretary of the Borrower, which shall identify by name and title and
bear the signature of the officers of the Borrower authorized to sign
the Loan Documents and to make borrowings hereunder, upon which
certificate the Agent and the Lenders shall be entitled to rely until
informed of any change in writing by the Borrower.
(iv) A certificate, signed by the chief financial officer of the
Borrower, stating that on the initial Borrowing Date no Default or
Unmatured Default has occurred and is continuing.
(v) A written opinion of the Borrower's counsel, addressed to the Lenders
in substantially the form of Exhibit "E" hereto.
(vi) Notes payable to the order of each of the Lenders.
(vii) Written money transfer instructions, in substantially the form of
Exhibit "G" hereto, addressed to the Agent and signed by an
Authorized Officer, together with such other related money transfer
authorizations as the Agent may have reasonably requested.
(viii) Such other documents as any Lender or its counsel may have
reasonably requested.
4.1.2. The Lenders shall not be required to make the initial Advance
hereunder, unless prior to or concurrently with the making of the initial
Advance hereunder, the Credit Agreement, dated as of August 8, 1995, among the
Borrower, the lenders named therein and The First National Bank of Chicago, as
agent shall have been terminated and the Borrower shall have paid to the lenders
and the agent thereunder any and all unpaid principal of and accrued and unpaid
interest on the notes evidencing the obligations thereunder, and any and all
other obligations of the Borrower thereunder arising under or in connection with
such Credit Agreement.
4.2. Each Advance. No Lender shall be required to make any Advance (other
than a Committed Advance that, after giving effect thereto and to the
application of the proceeds thereof, does not increase the aggregate amount of
outstanding Committed Advances), unless on the applicable Borrowing Date:
(i) There exists no Default or Unmatured Default.
Page 30
<PAGE> 36
(ii) The representations and warranties contained in Article V are true
and correct as of such Borrowing Date except to the extent any such
representation or warranty is stated to relate solely to an earlier
date, in which case such representation or warranty shall be true and
correct on and as of such earlier date.
(iii) All legal matters incident to the making of such Advance shall be
satisfactory to the Lenders and their counsel.
Each Committed Borrowing Notice and Competitive Bid Quote Request with
respect to each such Advance shall constitute a representation and warranty by
the Borrower that the conditions contained in Sections 4.2(i) and (ii) have been
satisfied. Any Lender may require a duly completed compliance certificate in
substantially the form of Exhibit "F" hereto as a condition to making an
Advance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1. Corporate Existence and Standing. Each of the Borrower and its
Subsidiaries is a corporation or a national or state banking association duly
incorporated or organized, as applicable, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted, except where such failure to obtain all requisite authority would
not, with respect to any individual failure or any failures in the aggregate,
have a Material Adverse Effect.
5.2. Authorization and Validity. The Borrower has the corporate power and
authority and legal right to execute and deliver the Loan Documents and to
perform its obligations thereunder. The execution and delivery by the Borrower
of the Loan Documents and the performance of its obligations thereunder have
been duly authorized by proper corporate proceedings, and the Loan Documents
constitute legal, valid and binding obligations of the Borrower enforceable
against the Borrower in accordance with their terms, except as enforceability
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally.
5.3. No Conflict; Government Consent. Neither the execution and delivery by
the Borrower of the Loan Documents, nor
Page 31
<PAGE> 37
the consummation of the transactions therein contemplated, nor compliance with
the provisions thereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Borrower or any of its
Subsidiaries or the Borrower's or any Subsidiary's articles of incorporation or
by-laws or the provisions of any indenture, instrument or agreement to which the
Borrower or any of its Subsidiaries is a party or is subject, or by which it, or
its Property, is bound, or conflict with or constitute a default thereunder, or
result in the creation or imposition of any Lien in, of or on the Property of
the Borrower or a Subsidiary pursuant to the terms of any such indenture,
instrument or agreement. No order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, any
governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with the execution, delivery
and performance of, or the legality, validity, binding effect or enforceability
of, any of the Loan Documents.
5.4. Financial Statements. The December 31, 1995 consolidated financial
statements of the Borrower and its Subsidiaries heretofore delivered to the
Lenders were prepared in accordance with generally accepted accounting
principles in effect on the date such statements were prepared and fairly
present the consolidated financial condition and operations of the Borrower and
its Subsidiaries at such date and the consolidated results of their operations
for the period then ended.
5.5. Material Adverse Change. Since December 31, 1995 through and including
the Closing Date, there has been no change in the business, Property, prospects,
condition (financial or otherwise) or results of operations of the Borrower and
its Subsidiaries which could have a Material Adverse Effect.
5.6. Taxes. The Borrower and its Subsidiaries have filed all United States
federal tax returns and all other tax returns which are required to be filed and
have paid all taxes due pursuant to said returns or pursuant to any assessment
received by the Borrower or any of its Subsidiaries, except such taxes, if any,
as are being contested in good faith and as to which adequate reserves have been
provided. The United States income tax returns of the Borrower and its
Subsidiaries have been audited by the Internal Revenue Service through the
fiscal year ended December 31, 1991. No tax liens have been filed and no claims
are being asserted with respect to any such taxes. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of any
taxes or other governmental charges are adequate.
5.7. Litigation and Contingent Obligations. Except as set forth on Schedule
"1" hereto, there is no litigation, arbitration, governmental investigation,
proceeding or inquiry pending or, to the knowledge of any of their officers,
threatened
Page 32
<PAGE> 38
against or affecting the Borrower or any of its Subsidiaries which could have a
Material Adverse Effect. Other than any liability incident to such litigation,
arbitration or proceedings, the Borrower has no material contingent obligations
not provided for or disclosed in the financial statements referred to in Section
5.4.
5.8. Subsidiaries. Schedule "2" hereto contains an accurate list of all
of the existing Subsidiaries of the Borrower as of the date hereof, setting
forth their respective jurisdictions of incorporation and the percentage of
their respective capital stock owned by the Borrower or other Subsidiaries. All
of the issued and outstanding shares of capital stock of such Subsidiaries have
been duly authorized and issued and are fully paid and non-assessable, except as
provided in Wisconsin Business Corporation Law Section 130.0622(2)(b).
5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans do not
in the aggregate exceed $50,000,000. Each Plan complies in all material respects
with all applicable requirements of law and regulations and no Reportable Event
has occurred with respect to any Plan. Neither the Borrower nor any other member
of the Controlled Group has incurred or reasonably expects to incur any
liability under Title IV of ERISA with respect to any Plan (other than premiums
due under Section 4007 of ERISA).
5.10. Accuracy of Information. No information, exhibit or report furnished
by the Borrower or any of its Subsidiaries to the Agent or to any Lender in
connection with the negotiation of, or compliance with, the Loan Documents
contained any material misstatement of fact or omitted to state a material fact
or any fact necessary to make the statements contained therein not misleading.
5.11. Regulation U. Margin stock (as defined in Regulation U) constitutes
less than 25% of those assets of the Borrower and its Subsidiaries which are
subject to any limitation on sale, pledge, or other restriction hereunder.
5.12. Material Agreements. Neither the Borrower nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or other
corporate restriction which could have a Material Adverse Effect. Neither the
Borrower nor any subsidiary is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in (i)
any agreement to which it is a party, which default could have a Material
Adverse Effect or (ii) any agreement or instrument evidencing or governing
Indebtedness.
5.13. Compliance With Laws. The Borrower and its Subsidiaries have complied
with all applicable statutes, rules, regulations, orders and restrictions of any
domestic or foreign government or any instrumentality or agency thereof, having
Page 33
<PAGE> 39
jurisdiction over the conduct of their respective businesses or the ownership of
their respective Property, except where any individual noncompliance or any
noncompliance in the aggregate would not have a Material Adverse Effect. Neither
the Borrower nor any Subsidiary has received any notice to the effect that its
operations are not in material compliance with any of the requirements of
applicable federal, state and local environmental, health and safety statutes
and regulations or the subject of any federal or state investigation evaluating
whether any remedial action is needed to respond to a release of any toxic or
hazardous waste or substance into the environment, which non-compliance or
remedial action could have a Material Adverse Effect.
5.14. Ownership of Properties. On the date of this Agreement, the Borrower
and its Subsidiaries will have good title, free of all Liens other than those
permitted by Section 6.13, to all of the Property and assets reflected in the
financial statements as owned by it.
5.15. Investment Company Act. Neither the Borrower nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
5.16. Public Utility Holding Company Act. Neither the Borrower nor any
Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1. Financial Reporting. The Borrower will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance
with generally accepted accounting principles, and furnish to the Lenders:
(i) Within 90 days after the close of each of its fiscal years, an
unqualified audit report certified by independent certified public
accountants, acceptable to the Lenders, prepared in accordance with
Agreement Accounting Principles on a consolidated and consolidating
basis (consolidating statements need not be certified by such
accountants) for itself and the
Page 34
<PAGE> 40
Subsidiaries, including balance sheets as of the end of such period,
related profit and loss and reconciliation of surplus statements, and
a statement of cash flows, accompanied by (a) any management letter
prepared by said accountants, and (b) a certificate of said
accountants that, in the course of their examination necessary for
their certification of the foregoing, they have obtained no knowledge
of any Default or Unmatured Default, or if, in the opinion of such
accountants, any Default or Unmatured Default shall exist, stating the
nature and status thereof (for purposes of this Section 6.1(i), Form
10-K filed with the Securities and Exchange Commission and delivered
by the Borrower to the Lenders hereunder in respect of each such
fiscal year shall be deemed to satisfy the financial statements
required hereby).
(ii) Within 45 days after the close of the first three quarterly periods of
each of its fiscal years, for itself and the Subsidiaries,
consolidated and consolidating unaudited balance sheets as at the
close of each such period and consolidated and consolidating profit
and loss and reconciliation of surplus statements and a statement of
cash flows for the period from the beginning of such fiscal year to
the end of such quarter, all certified by its chief financial officer
(for purposes of this Section 6.1(ii), Form 10-Q filed with the
Securities and Exchange Commission and delivered to the Lenders
hereunder in respect of each such quarterly period shall be deemed to
satisfy the financial statements required hereby).
(iii) Together with the financial statements required hereunder, a
compliance certificate in substantially the form of Exhibit "F" hereto
signed by its chief financial officer showing the calculations
necessary to determine compliance with this Agreement and stating that
no Default or Unmatured Default exists, or if any Default or Unmatured
Default exists, stating the nature and status thereof.
(iv) Simultaneously with the preparation thereof, and not more than 45 days
after the close of each of the first three fiscal quarters of the
Borrower and not more than 90 days after the close of the last fiscal
quarter of the Borrower in each fiscal year (a) call reports for
Firstar Bank Milwaukee N.A. in the form delivered to the Federal
Reserve District Bank, the Comptroller of the Currency or The Federal
Deposit Insurance Corporation, as the case may be, such reports to
include the Consolidated Reports of
Page 35
<PAGE> 41
Condition and Income and all schedules thereto, and (b) the
Consolidated Financial Statements and the Parent Company Only
Financial Statements of the Borrower as at the end of such
quarter, each in the form delivered to the appropriate Federal
Reserve District Bank and each to include all schedules thereto.
(v) Within 270 days after the close of each fiscal year, a statement
of the Unfunded Liabilities of each Single Employer Plan,
certified by an actuary enrolled under ERISA.
(vi) As soon as possible and in any event within 10 days after the
Borrower knows that any Reportable Event has occurred with
respect to any Plan, a statement, signed by the chief financial
officer of the Borrower, describing said Reportable Event and the
action which the Borrower proposes to take with respect thereto.
(vii) As soon as possible and in any event within 10 days after receipt
by the Borrower, a copy of (a) any notice or claim to the effect
that the Borrower or any of its Subsidiaries is or may be liable
to any Person as a result of the release by the Borrower, any of
its Subsidiaries, or any other Person of any toxic or hazardous
waste or substance into the environment, and (b) any notice
alleging any violation of any federal, state or local
environmental, health or safety law or regulation by the Borrower
or any of its Subsidiaries, which, in either case, could have a
Material Adverse Effect.
(viii) Promptly upon the furnishing thereof to the shareholders of the
Borrower, copies of all financial statements, reports and proxy
statements so furnished.
(ix) Promptly upon the filing thereof (and in the case of any
registration statement, upon the effectiveness thereof), copies
of all registration statements (excluding S-8 registration
statements) and annual, quarterly, monthly or other regular
reports which the Borrower files with the Securities and Exchange
Commission (including, without limitation, reports on Forms 10-K,
10-Q and 8-K or their equivalents).
(x) Promptly after the Borrower's or any Subsidiary's receipt
thereof, unless disclosure is prohibited by the terms thereof and
after the Borrower or such Subsidiary has in good faith attempted
to obtain the consent of the relevant regulatory authority and
such authority will not consent to the disclosure thereof,
Page 36
<PAGE> 42
copies of any (i) notice of charges, (ii) notice of intent
to revoke deposit insurance, (iii) cease and desist order,
(iv) suspension or removal order, (v) memorandum of
understanding, (vi) assessment of civil money penalties,
(vii) directive relating to holding company activities
constituting a risk to any Bank Subsidiary, (viii)
directive, order or disapproval of any exception or
exemption request, plan or proposal related to capital
requirements, (ix) request that the Borrower guarantee any
capital restoration plan of any Banking Subsidiary, (x)
notification that any Bank Subsidiary is, or is to be
treated as if it were, not Well-Capitalized or Adequately
Capitalized; or (xi) request or directive from any
regulatory authority requiring any Banking Subsidiary to
submit a capital restoration plan or restricting the payment
of dividends by any Subsidiary to the Borrower or any other
Subsidiary.
(xi) Promptly after the later to occur of the creation of any new
Subsidiary and the consummation of any Acquisition (if
applicable), the Borrower shall furnish an updated schedule
of Subsidiaries to the Agent and the Lenders in the form of
Schedule "2" hereto, which schedule shall set forth the
respective jurisdictions of incorporation of the
Subsidiaries and the percentage of their respective capital
stock owned by the Borrower or other Subsidiaries.
(xii) Such other information (including non-financial information)
as the Agent or any Lender may from time to time reasonably
request.
6.2. Use of Proceeds. The Borrower will, and will cause each
Subsidiary to, use the proceeds of the Advances for general corporate purposes,
including, without limitation, working capital needs; the funding of investments
in, or extensions of credit to, Subsidiaries, Acquisitions (subject to clause
(y) of the next sentence) of other financial institutions or other businesses or
their assets; the reduction or repayment of outstanding Indebtedness; the
repurchase of outstanding equity securities of the Borrower; and pending such
uses, temporary investments in investment grade securities. The Borrower will
not, nor will it permit any Subsidiary to, use any of the proceeds of the
Advances (x) to purchase or carry any "margin stock's (as defined in Regulation
U) in violation of Regulation U, or (y) to make any Acquisition which has not
been approved by the board of directors of the entity being acquired.
6.3. Notice of Default. The Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Lenders of the occurrence of
any Default or Unmatured Default and
Page 37
<PAGE> 43
of any other development, financial or otherwise, which could have a Material
Adverse Effect.
6.4. Conduct of Business. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted or as permitted by its regulators and to do all things necessary to
remain duly incorporated, validly existing and in good standing as a domestic
corporation in its jurisdiction of incorporation and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted, except where such failure to obtain all requisite authority would
not, with respect to any individual failure or any failures in the aggregate,
have a Material Adverse Effect.
6.5. Taxes. The Borrower will, and will cause each Subsidiary to, pay
when due all taxes, assessments and governmental charges and levies upon it or
its income, profits or Property, except those which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves
have been set aside.
6.6. Insurance. The Borrower will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies insurance on
all their Property in such amounts and covering such risks as is consistent with
sound business practice, and the Borrower will furnish to any Lender upon
request full information as to the insurance carried.
6.7. Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject, except
where any individual noncompliance or any noncompliance in the aggregate would
not have a Material Adverse Effect.
6.8. Maintenance of Properties. The Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition, and make all necessary
and proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.
6.9. Inspection. The Borrower will, and will cause each Subsidiary to,
permit the Lenders, by their respective representatives and agents, and upon
five Business Days' written notice to the Agent, to inspect any of the Property,
corporate books and financial records of the Borrower and each Subsidiary, to
examine and make copies of the books of accounts and other financial records of
the Borrower and each Subsidiary, and to discuss the affairs, finances and
accounts of the Borrower and each
Page 38
<PAGE> 44
Subsidiary with, and to be advised as to the same by, their respective officers
at such reasonable times and intervals as the Lenders may designate; provided,
however, that, unless a Default or Unmatured Default has occurred and is
continuing, the Borrower shall not be required to discuss any matter if the
Borrower determines, in its reasonable judgment, that such discussion would
adversely affect the competitive position of the Borrower or any Subsidiary.
6.10. Merger. The Borrower will not, nor will it permit any Subsidiary
to, merge or consolidate with or into any other Person, except that:
(i) any Subsidiary may merge with the Borrower or a Wholly-Owned
Subsidiary provided that the Borrower or such Wholly-Owned
Subsidiary is the continuing or surviving corporation; or
(ii) the Borrower may merge with another Person; provided that (x) the
Borrower is the continuing or surviving corporation; and (y)
immediately after the consummation of the transaction, and after
giving effect thereto, no Default or Unmatured Default exists.
6.11. Sale of Assets. The Borrower will not, nor will it permit
any Subsidiary to, lease, sell or otherwise dispose of its Property, to any
other Person except for (i) sales of loans, sales of receivables in connection
with asset securitization financings and sales of other similar assets, in each
case in the ordinary course of business and (ii) leases, sales or other
dispositions of its Property that, together with all other Property of the
Borrower and its Subsidiaries previously leased, sold or disposed of (other than
as permitted in clause (i) of this Section 6.11) as permitted by this Section
during the twelve-month period ending with the month in which any such lease,
sale or other disposition occurs, do not constitute a Substantial Portion of the
Property of the Borrower and its Subsidiaries.
6.12. Acquisitions. If, at any time, any Material Banking
Subsidiary of the Borrower ceases to be Well-Capitalized, then the Borrower will
not, nor will it permit any Subsidiary to, make any Acquisition of any Person,
except:
(i) if such Acquisition is of a (w) bank holding company and one or
more banks, such bank holding company shall have a composite
BOPEC rating of 3 or better, (x) bank only, such bank shall have
a composite CAMEL rating of 3 or better, (y) savings and loan
association or a branch thereof, either (1) such savings and loan
association or branch thereof has a composite MACRO rating of 3
or better, or (2) such Acquisition is being made from the Federal
Deposit Insurance Corporation, the Resolution
Page 39
<PAGE> 45
Trust Corporation or any successor thereof and is being assisted
by any such regulatory agency; or
(ii) Acquisitions which do not satisfy the foregoing rating
requirements in an aggregate amount not to exceed 10% of the
consolidated assets of the Borrower and its Subsidiaries,
calculated during the twelve-month period ending with the month
in which any such Acquisition is consummated.
Notwithstanding the foregoing, immediately after the consummation of any
Acquisition by the Borrower or any Subsidiary, and after giving effect thereto,
no Default or Unmatured Default shall exist.
6.13. Liens. The Borrower will not, nor will it permit any Subsidiary
to, create, incur, or suffer to exist any Lien in, of or on the Property of the
Borrower or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or
levies on its Property if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings
and for which adequate reserves in accordance with generally
accepted principles of accounting shall have been set aside
on its books.
(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the
ordinary course of business which secure payment of
obligations not more than 60 days past due or which are
being contested in good faith by appropriate proceedings and
for which adequate reserves shall have been set aside on its
books.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions,
or other social security or retirement benefits, or similar
legislation.
(iv) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a
nature generally existing with respect to properties of a
similar character and which do not in any material way
affect the marketability of the same or interfere with the
use thereof in the business of the Borrower or the
Subsidiaries.
(v) Liens on Property of the Borrower and its Subsidiaries
(other than the capital stock of any Subsidiary) existing on
the date hereof and securing Indebtedness
Page 40
<PAGE> 46
in an aggregate principal amount not to exceed $10,000,000.
(vi) Liens granted by a Banking Subsidiary in the ordinary course
of its banking and trust business in connection with any
Permitted Banking Subsidiary Indebtedness.
(vii) Liens to secure public funds or other pledges of funds
required by law to secure deposits.
(viii) Repurchase agreements, reverse repurchase agreements and
other similar transactions entered into by any Banking
Subsidiary in the ordinary course of its banking or trust
business.
(ix) Liens granted by (1) any Subsidiary to the Borrower or any
other Subsidiary, or (2) the Borrower to any Subsidiary, in
each case as required pursuant to 12 U.S.C. 371c, as
amended, supplemented or otherwise modified from time to
time.
(x) Liens securing Indebtedness incurred after the date of this
Agreement to finance the cost of Acquisition, construction
or improvement of any Property useful and intended to be
used in carrying out the business of the Borrower or any
Subsidiary; provided, however, that (1) any such Lien shall
attach solely to the Property acquired, constructed or
improved or to substantially unimproved real property on
which real property so acquired, constructed or improved is
located, and (2) any such Lien attaches within 90 days of
the date such Property was acquired, constructed or
improved.
(xi) Liens on Property useful and intended to be used in carrying
out the business of the Borrower or any Subsidiary which
were existing at the time of Acquisition of such property,
or at the time of Acquisition by the Borrower or any
Subsidiary of any business entity then owning such Property;
provided, however, that (1) any such Lien was not incurred,
extended or renewed in the contemplation of or in connection
with such Acquisition by the Borrower or any Subsidiary, and
(2) any such Lien shall attach solely to the Property
acquired.
(xii) Extensions or renewals of Liens permitted by clauses (x) and
(xi) above; provided, however, that at the time of such
transaction and after giving effect thereto and to the
application of the proceeds thereof, (1) the aggregate
unpaid principal amount of Indebtedness of the Borrower and
its Subsidiaries
Page 41
<PAGE> 47
which is secured pursuant to this clause (xii) and clauses
(x) and (xi) above shall be no greater than the aggregate
unpaid principal amount of such Indebtedness secured
pursuant to such clauses immediately preceding such
transaction, and (2) any such Lien shall attach solely to
the Property which was subject thereto immediately preceding
such transaction.
(xiii) Liens securing Rate Hedging Obligations incurred by the
Borrower and any Subsidiary in the ordinary course of
business solely for asset/liability management purposes and
not for speculative purposes.
(xiv) Liens arising in the ordinary course of business on assets
sold in connection with the transactions permitted under
Section 6.11(i).
6.14. Capitalization. The Borrower will ensure that each Banking
Subsidiary will at all times be, and will at all times be treated by the
relevant regulatory authorities as if they were, Well-Capitalized or Adequately
Capitalized. The Borrower and its Banking Subsidiaries shall comply at all times
with any and all minimum risk-based capital guidelines, leverage measure capital
guidelines and any other capital guidelines now or hereafter published by any
federal or state regulatory authorities having jurisdiction over them.
6.15. Consolidated Non-Performing Assets to Total Equity Capital. The
Borrower will maintain as at the last day of each fiscal quarter a ratio of (i)
Non-Performing Assets to (ii) Total Equity Capital of not greater than 0.65 to
1.00.
6.16. Debt to Total Equity Capital. The Borrower will maintain as at
the last day of each fiscal quarter a ratio of (i) Indebtedness to (ii) total
equity capital (determined for the Borrower only in a manner consistent with
that used in preparing the Borrower's December 31, 1995 Parent Company Only
Financial Statements) which is less than 0.45 to 1.00.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1. Any representation or warranty made or deemed made by or on
behalf of the Borrower or any of its Subsidiaries to the Lenders or the Agent
under or in connection with this Agreement,
Page 42
<PAGE> 48
any Loan, or any certificate or information delivered in connection with this
Agreement or any other Loan Document shall be materially false on the date as
of which made or deemed made.
7.2. Nonpayment of principal of any Note when due, or nonpayment of
interest upon any Note or of any fee or other obligations under any of the Loan
Documents within five days after the same becomes due.
7.3. The breach by the Borrower of any of the terms or provisions of
Section 6.2 and Sections 6.10 through and including 6.16.
7.4. The breach by the Borrower (other than a breach which constitutes
a Default under Section 7.1, 7.2 or 7.3) of any of the terms or provisions of
this Agreement which is not remedied within thirty days after written notice
from the Agent or any Lender.
7.5. Failure of the Borrower or any of its Subsidiaries to pay any
Indebtedness in excess of $10,000,000 when due; or the default by the Borrower
or any of its Subsidiaries in the performance of any term, provision or
condition contained in any agreement under which any Indebtedness in excess of
$10,000,000 was created or is governed, or any other event shall occur or
condition exist, the effect of which is to cause, or to permit the holder or
holders of such Indebtedness to cause, such Indebtedness to become due prior to
its stated maturity; or any Indebtedness of the Borrower or any of its
Subsidiaries in excess of $10,000,000 shall be declared to be due and payable or
required to be prepaid (other than by a regularly scheduled payment) prior to
the stated maturity thereof; or the Borrower or any of its Subsidiaries shall
not pay, or admit in writing its inability to pay, its debts generally as they
become due.
7.6. The Borrower or any of its Subsidiaries shall (i) have an order
for relief entered with respect to it under the Federal bankruptcy laws as now
or hereafter in effect, (ii) make an assignment for the benefit of creditors,
(iii) apply for, seek, consent to, or acquiesce in, the appointment of a
receiver, custodian, trustee, examiner, liquidator or similar official for it or
any Substantial Portion of its Property, (iv) institute any proceeding seeking
an order for relief under the Federal bankruptcy laws as now or hereafter in
effect or seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, winding up, liquidation, reorganization, arrangement, adjustment or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors or fail to file an answer or other
pleading denying the material allegations of any such proceeding filed against
it, (v) take any corporate action to authorize or effect any of the foregoing
actions set forth in this
Page 43
<PAGE> 49
Section 7.6 or (vi) fail to contest in good faith any appointment or proceeding
described in Section 7.7.
7.7. Without the application, approval or consent of the Borrower or
any of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any of its Subsidiaries or any
Substantial Portion of its Property, or a proceeding described in Section
7.6(iv) shall be instituted against the Borrower or any of its Subsidiaries and
such appointment continues undischarged or such proceeding continues undismissed
or unstayed for a period of 30 consecutive days.
7.8. The Borrower or any of its Subsidiaries shall fail within 30 days
to pay, bond or otherwise discharge any judgment or order for the payment of
money in excess of $25,000,000, which is not stayed on appeal or otherwise being
appropriately contested in good faith.
7.9. The Unfunded Liabilities of all Single Employer Plans shall
exceed in the aggregate $50,000,000 or any Reportable Event shall occur in
connection with any Plan.
7.10. The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that it has incurred
withdrawal liability to such Multiemployer Plan in an amount which, when
aggregated with all other amounts required to be paid to Multiemployer Plans by
the Borrower or any other member of the Controlled Group as withdrawal liability
(determined as of the date of such notification), exceeds $10,000,000 or
requires payments exceeding $1,000,000 per annum.
7.11. The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, if as a result of such reorganization or
termination the aggregate annual contributions of the Borrower and the other
members of the Controlled Group (taken as a whole) to all Multiemployer Plans
which are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the
respective plan years of each such Multiemployer Plan immediately preceding the
plan year in which the reorganization or termination occurs by an amount
exceeding $1,000,000.
7.12. Any Banking Subsidiary shall cease to be insured under the
Federal Deposit Insurance Act and any rules and regulations issued thereunder,
as amended, supplemented or otherwise modified from time to time; or a cease and
desist order shall be issued against the Borrower or any Subsidiary pursuant to
12 U.S.C. 1818(b) or (c) or any similar applicable provision of state law and
any rules and regulations issued thereunder, as
Page 44
<PAGE> 50
amended, supplemented or otherwise modified from time to time; or there shall
occur, with respect to any Banking Subsidiary, any event which is grounds for
the required submission of a capital restoration plan under 12 U.S.C. Section
1831(o)(e)(2) and any rules and regulations issued thereunder, as amended,
supplemented or otherwise modified from time to time, or for seeking the
appointment of a receiver or conservator under 12 U.S.C. 1821(c) and any rules
and regulations issued thereunder, as amended, supplemented or otherwise
modified from time to time; or any conservator or receiver shall be appointed
for any Banking Subsidiary under any such provisions or any other state or
federal law.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration. If any Default described in Section 7.6 or 7.7
occurs with respect to the Borrower, the obligations of the Lenders to make
Loans hereunder shall automatically terminate and the Obligations shall
immediately become due and payable without any election or action on the part of
the Agent or any Lender. If any other Default occurs, the Required Lenders may
terminate or suspend the obligations of the Lenders to make Loans hereunder, or
declare the Obligations to be due and payable, or both, whereupon the
Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which the Borrower hereby
expressly waives.
If, within fourteen (14) days after acceleration of the maturity of
the Obligations or termination of the obligations of the Lenders to make Loans
hereunder as a result of any Default (other than any Default as described in
Section 7.6 or 7.7 with respect to the Borrower) and before any judgment or
decree for the payment of the Obligations due shall have been obtained or
entered, the Required Lenders (in their sole discretion) shall so direct, the
Agent shall, by notice to the Borrower, rescind and annul such acceleration
and/or termination.
8.2. Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that no such supplemental agreement shall,
without the consent of each Lender affected thereby:
Page 45
<PAGE> 51
(i) Extend the maturity of any Loan or Note or forgive all or any portion
of the principal amount thereof, or reduce the rate or extend the time
of payment of interest or fees thereon.
(ii) Reduce the percentage specified in the definition of Required Lenders.
(iii) Extend the Termination Date, or increase the amount of the Commitment
of any Lender hereunder, or permit the Borrower to assign its rights
or obligations under this Agreement.
(iv) Amend this Section 8.2.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of the fee required under Section 12.3.2 without obtaining the consent of any
other party to this Agreement.
8.3. Preservation of Rights. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents shall impair such right or
be construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan notwithstanding the existence of a Default or the inability of
the Borrower to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or the exercise
of any other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to Section 8.2, and then only
to the extent in such writing specifically set forth. All remedies contained in
the Loan Documents or by law afforded shall be cumulative and all shall be
available to the Agent and the Lenders until the Obligations have been paid in
full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations. All representations and warranties of the
Borrower contained in this Agreement shall survive delivery of the Notes and the
making of the Loans herein contemplated.
9.2. Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Borrower in violation of any
Page 46
<PAGE> 52
limitation or prohibition provided by any applicable statute or regulation.
9.3. Taxes. Any taxes (excluding federal income taxes on the overall net
income of any Lender, income taxes imposed on any Lender in the jurisdiction in
which such Lender's home office is located, and the Illinois personal property
replacement tax) or other similar assessments or charges made by any
governmental or revenue authority in respect of the Loan Documents shall be paid
by the Borrower, together with interest and penalties, if any.
9.4. Headings. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
9.5. Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Borrower, the Agent and the Lenders and supersede all
prior agreements and understandings among the Borrower, the Agent and the
Lenders relating to the subject matter thereof.
9.6. Several Obligations: Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any of
its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and assigns.
9.7. Expenses: Indemnification. Subject to the Letter Agreement, dated
February 16, 1996, between the Borrower and the Agent, the Borrower shall
reimburse the Agent for any costs, internal charges and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for the Agent, which
attorneys may be employees of the Agent) paid or incurred by the Agent in
connection with the preparation, negotiation, execution, delivery, review,
amendment, modification, and administration of the Loan Documents. The Borrower
also agrees to reimburse the Agent and the Lenders for any costs, internal
charges and out-of-pocket expenses (including attorneys' fees and time charges
of attorneys for the Agent and the Lenders, which attorneys may be employees of
the Agent or the Lenders) paid or incurred by the Agent or any Lender in
connection with the collection and enforcement of the Loan Documents. The
Borrower further agrees to indemnify the Agent and each Lender, its directors,
officers and employees (each an "Indemnified Party") against all losses, claims,
damages, penalties, judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor whether or not
the Agent or any Lender is a party thereto) which
Page 47
<PAGE> 53
any Indemnified Party may pay or incur arising out of or relating to this
Agreement, the other Loan Documents, the transactions contemplated hereby or the
direct or indirect application or proposed application of the proceeds of any
Loan hereunder, except that any such Indemnified Party shall not be indemnified
for any such losses, claims, damages, penalties, judgments, liabilities and
expenses to the extent that they arise from the gross negligence or willful
misconduct of such Indemnified Party. The obligations of the Borrower under this
Section shall survive the termination of this Agreement.
9.8. Numbers of Documents. All statements, notices, closing documents, and
requests hereunder shall be furnished to the Agent with sufficient counterparts
so that the Agent may furnish one to each of the Lenders.
9.9. Accounting. Except as provided to the contrary herein, all accounting
terms used herein shall be interpreted and all accounting determinations
hereunder shall be made in accordance with Agreement Accounting Principles;
provided, however, that compliance with Sections 6.15 and 6.16 shall be
interpreted and all determinations thereunder shall be made in accordance with
regulatory accounting principles as in effect from time to time, applied in a
manner consistent with that used in preparing the financial statements and
reports referred to in Section 6.1(iv) for the fiscal quarter ended December 31,
1995.
9.10. Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
9.11 Nonliability of Lenders. The relationship between the Borrower and
the Lenders and the Agent shall be solely that of borrower and lender. Neither
the Agent nor any Lender shall have any fiduciary responsibilities to the
Borrower. Neither the Agent nor any Lender undertakes any responsibility to the
Borrower to review or inform the Borrower of any matter in connection with any
phase of the Borrower's business or operations.
9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.13. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
Page 48
<PAGE> 54
STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY
LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY
LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
9.14. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER HEREBY
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
9.15. Confidentiality. Each Lender agrees to hold any confidential
information which it may receive from the Borrower pursuant to this Agreement in
confidence, except for disclosure (i) to other Lenders and their respective
Affiliates, (ii) to legal counsel, accountants, and other professional advisors
to that Lender or to a Transferee, (iii) to regulatory officials, (iv) to any
Person as requested pursuant to or as required by law, regulation, or legal
process, (v) to any Person in connection with any legal proceeding to which that
Lender is a party, and (vi) permitted by Section 12.4.
ARTICLE X
TEE AGENT
10.1. Appointment. The First National Bank of Chicago is hereby appointed
Agent hereunder and under each other Loan Document, and each of the Lenders
irrevocably authorizes the Agent to act as the Agent of such Lender. The Agent
agrees to act as such upon the express conditions contained in this Article X.
The Agent shall not have a fiduciary relationship in respect of the Borrower or
any Lender by reason of this Agreement.
10.2. Powers. The Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to the Agent by the terms of each
thereof, together with such powers
Page 49
<PAGE> 55
as are reasonably incidental thereto. The Agent shall have no implied duties to
the Lenders, or any obligation to the Lenders to take any action thereunder
except any action specifically provided by the Loan Documents to be taken by the
Agent.
10.3. General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower, the Lenders or
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except
for its or their own gross negligence or willful misconduct.
10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent nor any
of its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into, or verify (i) any statement, warranty or
representation made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obliger under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (iii) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered to the Agent; (iv) the validity,
effectiveness or genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith; or (v) the value, sufficiency,
creation, perfection or priority of any interest in any collateral security. The
Agent shall have no duty to disclose to the Lenders information that is not
required to be furnished by the Borrower to the Agent at such time, but is
voluntarily furnished by the Borrower to the Agent (either in its capacity as
Agent or in its individual capacity).
10.5. Action on Instructions of Lenders. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders and on all holders of
Notes. The Agent shall be fully justified in failing or refusing to take any
action hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action.
10.6. Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent
Page 50
<PAGE> 56
shall be entitled to advice of counsel concerning all matters pertaining to the
agency hereby created and its duties hereunder and under any other Loan
Document.
10.7. Reliance on Documents: Counsel. The Agent shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent
10.8. Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (i) for any amounts not reimbursed by the Borrower for which the
Agent is entitled to reimbursement by the Borrower under the Loan Documents,
(ii) for any other expenses incurred by the Agent on behalf of the Lenders, in
connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents and (iii) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of the Loan Documents or any other document delivered in connection therewith or
the transactions contemplated thereby, or the enforcement of any of the terms
thereof or of any such other documents, provided that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the Agent. The obligations of the Lenders under this
Section 10.8 shall survive payment of the Obligations and termination of this
Agreement.
10.9. Rights as a Lender. In the event the Agent is a Lender, the
Agent shall have the same rights and powers hereunder and under any other Loan
Document as any Lender and may exercise the same as though it were not the
Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a
Lender, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Subsidiaries in which the Borrower or such
Subsidiary is not restricted hereby from engaging with any other Person. The
Agent, in its individual capacity, is not obligated to remain a Lender.
10.10. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrower and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to
Page 51
<PAGE> 57
enter into this Agreement and the other Loan Documents. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Loan Documents.
10.11. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. Upon any such resignation, the Required Lenders shall have
the right to appoint, on behalf of the Borrower and the Lenders, a successor
Agent. If no successor Agent shall have been so appointed by the Required
Lenders within thirty days after the resigning Agent's giving notice of its
intention to resign, then the resigning Agent may appoint, on behalf of the
Borrower and the Lenders, a successor Agent. If the Agent has resigned and no
successor Agent has been appointed, the Lenders may perform all the duties of
the Agent hereunder and the Borrower shall make all payments in respect of the
Obligations to the applicable Lender and for all other purposes shall deal
directly with the Lenders. No successor Agent shall be deemed to be appointed
hereunder until such successor Agent has accepted the appointment. Any such
successor Agent shall be a commercial bank having capital and retained earnings
of at least $250,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
resigning Agent. Upon the effectiveness of the resignation of the Agent, the
resigning Agent shall be discharged from its duties and obligations hereunder
and under the Loan Documents. After the effectiveness of the resignation of an
Agent, the provisions of this Article X shall continue in effect for the benefit
of such Agent in respect of any actions taken or omitted to be taken by it while
it was acting as the Agent hereunder and under the other Loan Documents.
10.12. Co-Agents. None of the Lenders identified in this Agreement or
any other loan document as a "Co-Agent" shall have any right, power, obligation,
liability, responsibility or duty under this agreement or any other loan
document other than those applicable to all Lenders as such. Each Lender
acknowledges that it has not relied, and will not rely, on any of the Lenders so
identified in deciding to enter into this Agreement or any other Loan Document
or in taking or refraining from taking any action hereunder or thereunder or
pursuant hereto or thereto.
Page 52
<PAGE> 58
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff. In addition to, and without limitation of, any rights of
the Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default or Unmatured Default occurs, any and all deposits
(including all account balances, whether provisional or final and whether or not
collected or available) and any other Indebtedness at any time held or owing by
any Lender to or for the credit or account of the Borrower may be offset and
applied toward the payment of the Obligations owing to such Lender, whether or
not the Obligations, or any part hereof, shall then be due.
11.2. Ratable Payments. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant to
Sections 3.1, 3.2 or 3.4) in a greater proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in proportion to their Loans. In case any such payment is disturbed by legal
process, or otherwise, appropriate further adjustments shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that (i) the
Borrower shall not have the right to assign its rights or obligations under the
Loan Documents and (ii) any assignment by any Lender must be made in compliance
with Section 12.3. Notwithstanding clause (ii) of this Section, any Lender may
at any time, without the consent of the Borrower or the Agent, assign all or any
portion of its rights under this Agreement and its Notes to a Federal Reserve
Bank; provided, however, that no such assignment shall release the transferor
Lender from its obligations hereunder. The Agent may treat the payee of any Note
as the owner thereof for all purposes hereof unless and until such payee
complies with Section 12.3 in the case of an assignment
Page 53
<PAGE> 59
thereof or, in the case of any other transfer, a written notice of the transfer
is filed with the Agent. Any assignee or transferee of a Note agrees by
acceptance thereof to be bound by all the terms and provisions of the Loan
Documents. Any request, authority or consent of any Person, who at the time of
making such request or giving such authority or consent is the holder of any
Note, shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange therefor.
12.2. Participations.
12.2.1 Permitted Participants: Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law,
at any time sell to one or more banks or other entities
("Participants") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Commitment of such Lender or
any other interest of such Lender under the Loan Documents. In the
event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, such
Lender shall remain the holder of any such Note for all purposes under
the Loan Documents, all amounts payable by the Borrower under this
Agreement shall be determined as if such Lender had not sold such
participating interests, and the Borrower and the Agent shall continue
to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents.
12.2.2. Voting Rights. Each Lender shall retain the sole right
to approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other
than any amendment, modification or waiver with respect to any Loan or
Commitment in which such Participant has an interest which forgives
principal, interest or fees or reduces the interest rate or fees
payable with respect to any such loan or Commitment, postpones any
date fixed for any regularly-scheduled payment of principal of, or
interest or fees on, any such Loan or Commitment, releases any
guarantor of any such Loan or releases any substantial portion of
collateral, if any, securing any such Loan.
12.2.3. Benefit of Setoff. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in
Section 11.1 in respect of its participating interest in amounts owing
under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the
Loan Documents, provided that each Lender shall retain the right of
setoff provided in Section 11.1 with respect to the amount of
Page 54
<PAGE> 60
participating interests sold to each Participant. The Lenders agree to
share with each Participant, and each Participant, by exercising the
right of setoff provided in Section 11.1, agrees to share with each
Lender, any amount received pursuant to the exercise of its right of
setoff, such amounts to be shared in accordance with Section 11.2 as
if each Participant were a Lender.
12.3. Assignments.
12.3.1. Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any
time assign to one or more banks or other entities ("Purchasers") all
or any part of its rights and obligations under the Loan Documents.
Such assignment shall be substantially in the form of Exhibit "H"
hereto or in such other form as may be agreed to by the parties
thereto. The consent of the Borrower and the Agent, which consent in
each case shall not be unreasonably withheld, shall be required prior
to an assignment becoming effective with respect to a Purchaser which
is not a Lender or an Affiliate thereof; provided, however, that if a
Default has occurred and is continuing, the consent of the Borrower
shall not be required.
12.3.2. Effect; Effective Date. Upon (i) delivery to the Agent of
a notice of assignment, substantially in the form attached as Exhibit
"I" to Exhibit "H" hereto (a "Notice of Assignment"), together with
any consents required by Section 12.3.1, and (ii) payment of a $2,500
fee to the Agent for processing such assignment, such assignment shall
become effective on the effective date specified in such Notice of
Assignment. The Notice of Assignment shall contain a representation by
the Purchaser to the effect that none of the consideration used to
make the purchase of the Commitment and Loans under the applicable
assignment agreement are "plan assets" as defined under ERISA and
that the rights and interests of the Purchaser in and under the Loan
Documents will not be "plan assets" under ERISA. on and after the
effective date of such assignment, such purchaser shall for all
purposes be a lender party to this Agreement and any other Loan
Document executed by the Lenders and shall have all the rights and
obligations of a Lender under the Loan Documents, to the same extent
as if it were an original party hereto, and no further consent or
action by the Borrower, the Lenders or the Agent shall be required to
release the transferor Lender with respect to the percentage of the
Aggregate Commitment and Loans assigned to such Purchaser. Upon the
consummation of any assignment to a Purchaser pursuant to this Section
12.3.2, the transferor Lender, the Agent and the Borrower shall make
appropriate arrangements so that replacement Notes are issued to such
transferor Lender and new Notes or, as appropriate,
Page 55
<PAGE> 61
replacement Notes, are issued to such Purchaser, in each case in
principal amounts reflecting their Commitment, as adjusted pursuant to
such assignment.
12.4. Dissemination of Information. The Borrower authorizes
each Lender to disclose to any Participant or Purchaser, which, if required
pursuant to Section 12.3.1, the Borrower has consented to in accordance with the
terms thereof, or any other Person acquiring an interest in the Loan Documents
by operation of law (each a "'Transferee") and any prospective Transferee any
and all information in such Lender's possession concerning the creditworthiness
of the Borrower and its Subsidiaries; provided that each Transferee and
prospective Transferee agrees to be bound by Section 9.15 of this Agreement.
12.5. Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 2.16.
ARTICLE XIII
NOTICES
13.1. Giving Notice. Except as otherwise permitted by Section 2.11
with respect to borrowing notices, all notices and other communications provided
to any party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below its signature hereto or at such other address as may
be designated by such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by telex or facsimile, shall be deemed
given when transmitted (answerback confirmed in the case of telexes).
13.2. Change of Address. The Borrower, the Agent and any Lender may
each change the address for service of notice upon it by a notice in writing to
the other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Borrower, the
Agent and the Lenders and each party has notified the Agent by telex or
telephone, that it has taken such action.
Page 56
<PAGE> 62
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have
executed this Agreement as of the date first above written.
FIRSTAR CORPORATION
By: Jeffrey B. Weeden
--------------------------------
Jeffrey B. Weeden
Senior Vice President-
Finance and Treasurer
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Mr. Jeffrey B. Weeden
Senior Vice President-
Finance and Treasurer
Ph: 414-765-4768
Fx: 414-765-4349
Page 57
<PAGE> 63
Commitment
$22,222,222.22 THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By: R. C. English
------------------------------
Print Name: Robert C. English
----------------------
Title: Authorized Agent
---------------------------
One First National Plaza
Suite 0162
Chicago, Illinois 60670
Attention: Mr. Robert C. English
Ph: 312-732-1504
Fx: 312-732-6222
Page 58
<PAGE> 64
$19,444,444.44 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
Individually and as Co-Agent
By: Jennings F. Werner
--------------------------------
Print Name: Jennings F. Werner
------------------------
Title: Vice President
-----------------------------
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Mr. Jennings F. Werner
Vice President
Ph: 312-828-4682
Fx: 312-987-6982
Page 59
<PAGE> 65
$19,444,444.44 CHEMICAL BANK,
Individually and as Co-Agent
By: Roger A. Parker
-------------------------
Print Name: Roger A. Parker
-----------------
Title: Vice President
----------------------
270 Park Avenue
10th Floor
New York, New York 10017
Attention: Mr. Roger Parker
Ph: 212-270-3751
Fx: 212-270-1789
Page 60
<PAGE> 66
$19,444,444.44 MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
Individually and as Co-Agent
By: Andrew D. Brown
----------------------------
Print Name: Andrew Brown
--------------------
Title: Vice President
-------------------------
60 Wall Street
23rd Floor
New York, New York 10260
Attention: Mr. Henry Hsiao
Ph: 212-648-7077
Fx: 212-648-5548
Page 61
<PAGE> 67
$9,722,222.22 THE BANK OF NEW YORK
By: [sig]
-----------------------------
Print Name: [sig]
---------------------
Title: Vice President
--------------------------
Financial Institution Division
One Wall Street
17th Floor
New York, New York 10286
Attention: Mr. David G. Dobbins
Vice President
Ph: 212-635-7908
Fx: 212-809-9520
Page 62
<PAGE> 68
$9,722,222.22 DEUTSCHE BANK AG - NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
By Gayma Shivnarain
-------------------------------------
Print Name Gayma Z. Shivnarain
-----------------------------
Title: Vice President
---------------------------------
By: Robert M. Powers
------------------------------------
Print Name Robert M. Powers
------------------------------
Title: Associate
---------------------------------
31 West 52nd Street
23rd Floor
New York, New York 10019
Attention: Ms. Elizabeth Gutweniger
Ph: 212-474-7060
Fx: 212-474-8108
Page 63
<PAGE> 69
$9,722,222.22 MELLON BANK, N.A.
By: Michael Schuster
--------------------------------
Print Name: Michael Schuster
-------------------------
Title: Vice President
------------------------------
One Mellon Bank Center
Room 400
Pittsburgh, Pennsylvania 15258-0001
Attention: Mr. Michael Shuster
Vice President
Ph: 412-234-1699
Fx: 412-234-9047
Page 64
<PAGE> 70
$9,722,222.22 SUNTRUST BANK, ATLANTA
By: [sig]
--------------------------
Print Name: [sig]
------------------
Title: [sig]
-----------------------
MC:121-19TH Floor
25 Park Place, N.E.
Atlanta, GA 30303
Attention: Mr. Luther J. Glass
Senior Vice President
Ph: 404-588-7374
Fx: 404-581-1775
By: Chris Gruehn
--------------------------
Print Name: Chris Gruehn
------------------
Title: Vice President
-----------------------
Ph: 404-588-8329
Fx: 404-581-1775
Page 65
<PAGE> 71
$5,555,555.56 FLEET NATIONAL BANK
By: [sig]
------------------------
Print Name: [sig]
------------------------
Title: Vice President
------------------------
50 Kennedy Plaza
Providence, Rhode Island 02903
Attention: Ms. Julie A. Miller
Vice President
Ph: 401-278-5878
Fx: 401-278-3044
$125.000.000.00
Page 66
<PAGE> 72
EXHIBIT "A-1"
COMMITTED NOTE
$_________________ April 22, 1996
Firstar Corporation, a Wisconsin corporation (the "Borrower"), promises to
pay to the order of (the "Lender") the lesser of the principal
sum of Dollars or the aggregate unpaid principal amount of all
Committed Loans made by the Lender to the Borrower pursuant to Section 2.3 of
the Four Year Facility Credit Agreement (as the same may be amended,
supplemented or otherwise modified from time to time, the ''Agreement'')
hereinafter referred to, in immediately available funds at the main office of
The First National Bank of Chicago in Chicago, Illinois, as Agent, or as
otherwise directed by the Agent pursuant to the terms of the Agreement, together
with interest on the unpaid principal amount hereof at the rates and on the
dates set forth in the Agreement. The Borrower shall pay the principal of and
accrued and unpaid interest on all Committed Loans in full on the Termination
Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Committed Loan and the date and amount of each
principal payment hereunder, provided, however, that any failure to so record
shall not affect the Borrower's obligations under any Loan Document.
This Committed Note is one of the Notes issued pursuant to, and is entitled
to the benefits of, the Four Year Facility Credit Agreement, dated as of April
22, 1996, among the Borrower, Bank of America National Trust and Savings
Association, Chemical Bank and Morgan Guaranty Trust Company of New York, as
Co-Agents, The First National Bank of Chicago, individually and as Agent, and
the lenders named therein, including the Lender, to which Agreement, as it may
be amended from time to time, reference is hereby made for a statement of the
terms and conditions governing this Committed Note, including the terms and
conditions under which this committed note may be prepaid or its maturity date
accelerated. Capitalized terms used and not otherwise defined herein are used
with the meanings attributed to them in the Agreement.
FIRSTAR CORPORATION
By:_______________________________
Print Name:_______________________
Title:____________________________
Page 67
<PAGE> 73
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
COMMITTED NOTE OF FIRSTAR CORPORATION
DATED APRIL 22, 1996
Principal Maturity Principal
Amount of Interest Amount Unpaid
Date of Loan Period Paid Balance
- ---- --------- ----------- --------- -------
Page 68
<PAGE> 74
EXHIBIT "A-2"
COMPETITIVE BID NOTE
April 22, 1996
Firstar Corporation, a Wisconsin corporation (the "Borrower"), promises to
pay to the order of ___________ (the "Lender") the aggregate unpaid principal
amount of all Competitive Bid Loans made by the Lender to the Borrower
pursuant to Section 2.4 of the Four Year Facility Credit Agreement (as the same
may be amended, supplemented or otherwise modified from time to time, the
"Agreement") hereinafter referred to, in immediately available funds at the
main office of The First National Bank of Chicago in Chicago, Illinois, as
Agent, or as otherwise directed by the Agent pursuant to the terms of the
Agreement, together with interest on the unpaid principal amount hereof at the
rates and on the dates set forth in the Agreement. The Borrower shall pay each
Competitive Bid Loan in full on the last day of the Interest Period applicable
to such Competitive Bid Loan.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Competitive Bid Loan and the date and amount of
each principal payment hereunder, provided, however, that any failure to so
record shall not affect the Borrower's obligations under any Loan Document.
This Competitive Bid Note is one of the Notes issued pursuant to, and is
entitled to the benefits of, the Four Year Facility Credit Agreement, dated as
of April 22, 1996, among the Borrower, Bank of America National Trust and
Savings Association, Chemical Bank and Morgan Guaranty Trust Company of New
York, as Co-Agents, The First National Bank of Chicago, individually and as
Agent, and the lenders named therein, including the Lender, to which Agreement,
as it may be amended from time to time, reference is hereby made for a
statement of the terms and conditions governing this Competitive Bid Note,
including the terms and conditions under which this Competitive Bid Note may be
prepaid or its maturity date accelerated. Capitalized terms used herein and not
otherwise defined herein are used with the meanings attributed to them in the
Agreement.
FIRSTAR CORPORATION
By:____________________________
Print Name:____________________
Title:_________________________
Page 69
<PAGE> 75
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
COMMITTED NOTE OF FIRSTAR CORPORATION
DATED APRIL 22, 1996
Principal Maturity Principal
Amount of Interest Amount Unpaid
Date of Loan Period Paid Balance
- ---- --------- ----------- --------- -------
Page 70
<PAGE> 76
EXHIBIT "B"
COMPETITIVE BID QUOTE REQUEST
(Section 2.4.2)
____________, 19__
To: The First National Bank of Chicago,
as agent (the "Agent")
From: Firstar Corporation (the "Borrower")
Re: Four Year Facility Credit Agreement dated as of April 22,
1996 among the Borrower, the lenders from time to time
party thereto, Bank of America National Trust and
Savings Association, Chemical Bank and Morgan Guaranty
Trust Company of New York, as Co-Agents and The First
National Bank of Chicago, as Agent for such lenders (as
amended, supplemented or otherwise modified from time to
time through the date hereof, the "Agreement")
1. Capitalized terms used herein have the meanings assigned to them in
the Agreement.
2. We hereby give notice pursuant to Section 2.4.2 of the Agreement that
we request Competitive Bid Quotes for the following proposed Competitive Bid
Advance(s):
Borrowing Date: __________, 19__
Principal Amount(1) Interest Period(2)
3. Such Competitive Bid Quotes should offer [a Competitive Bid Margin] [an
Absolute Rate].
- ---------------
(1) Amount must be at least $5.000,000 (and multiples of $20,000 in
excess thereof).
(2) One, two, three, or six months (Eurodollar Auction) or at least 7
and not more than 180 days (Absolute Rate Auction), subject to the provisions
of the definitions of Eurodollar Interest Period and Absolute Rate Interest
Period.
Page 71
<PAGE> 77
4. Upon acceptance by the undersigned of any or all of the Competitive Bid
Advances offered by Lenders in response to this request, the undersigned shall
be deemed to affirm as of the Borrowing Date thereof the representations and
warranties made in Article IV of the Agreement.
FIRSTAR CORPORATION
By:___________________
Title:________________
Page 72
<PAGE> 78
EXHIBIT "C"
INVITATION FOR COMPETITIVE BID QUOTES
(Section 2.4.3)
___________, 19__
To: Each of the Lenders party to the Agreement referred to below
Re: Invitation for Competitive Bid Quotes to Firstar Corporation (the
"Borrower")
Pursuant to Section 2.4.3 of the Four Year Facility Credit Agreement dated
as of April 22, 1996 among the Borrower, the lenders from time to time party
thereto, Bank of America National Trust and Savings Association, Chemical Bank
and Morgan Guaranty Trust Company of New York, as Co-Agents and The First
National Bank of Chicago, as Agent for such lenders (as amended, supplemented
or otherwise modified from time to time through the date hereof, the
"Agreement"), we are pleased on behalf of the Borrower to invite you to submit
Competitive Bid Quotes to the Borrower for the following proposed Competitive
Bid Advance(s):
Borrowing Date: ___________, 19__
Principal Amount Interest Period
Such Competitive Bid Quotes should offer [a Competitive Bid Margin] [an
Absolute Rate]. Your Competitive Bid Quote must comply with Section 2.4.4 of
the Agreement and the foregoing. Capitalized terms used herein have the
meanings assigned to them in the Agreement.
Please respond to this invitation by no later than [1:00 p.m.] [9:00 a.m.]
(Chicago time) on __________, 19__.
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
By:_____________________________
Title:__________________________
Page 73
<PAGE> 79
EXHIBIT "D"
COMPETITIVE BID QUOTE
(Section 2.4.4)
_________, 19__
To: The First National Bank of Chicago, as Agent
Re: Competitive Bid Quote to Firstar Corporation (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_______, 19__, we hereby make the following Competitive Bid Quote pursuant to
Section 2.4.4 of the Agreement hereinafter referred to and on the following
terms:
1. Quoting Lender: ______________________________________________________
2. Person to contact at Quoting Lender: _________________________________
3. Borrowing Date: ______________________________________________________
4. We hereby offer to make Competitive Bid Loan(s) in the following
principal amounts, for the following Interest Periods and at the following
rates:
Principal Interest [Competitive [Absolute Minimum
Amount(2) Period(3) Bid Margin(4)] Rate (5)] Amount(6)
--------- --------- -------------- ---------- ---------
- -----------------------
(1)As specified in the related Invitation For Competitive Bid Quotes.
(2)Principal amount bid for each Interest Period may not exceed the
principal amount requested. Bids must be made for at least $5,000,000 (and
multiples of $500,000 in excess thereof).
(3)One, two, three or six months or at least 7 and not more than 180 days,
as specified in the related Invitation For Competitive Bid Quotes.
(4)Competitive Bid Margin over or under the Eurodollar Base Rate determined
for the applicable Interest Period. Specify percentage (rounded to the nearest
1/100 of 1%) and specify whether "PLUS" or "MINUS".
(5)Specify rate of interest per annum (rounded to the nearest 1/100 of 1%).
(6)Specify minimum or maximum amount, if any, which the Borrower may accept
(see Section 2.4.4(b)(iv)).
Page 74
<PAGE> 80
We understand and agree that the offer(s) set forth above, subject to the
satisfaction of the applicable conditions set forth in the Four Year Facility
Credit Agreement dated as of April 22, 1996 among the Borrower, the lenders
from time to time party thereto, Bank of America National Trust and Savings
Association, Chemical Bank and Morgan Guaranty Trust Company of New York, as
Co-Agents and The First National Bank of Chicago, as Agent for such lenders (as
amended, supplemented or otherwise modified from time to time through the date
hereof, the "Agreement"), irrevocably obligates us to make the Competitive Bid
Loan(s) for which any offer(s) are accepted, in whole or in part. Capitalized
terms used herein and not otherwise defined herein shall have their meanings as
defined in the Agreement.
Very truly yours,
[NAME OF LENDER]
By:______________________
Title:___________________
Page 75
<PAGE> 81
EXHIBIT "E"
FORM OF OPINION
April 22, 1996
To: The Agent and the Lenders who are parties
to the Credit Agreement described below.
Gentlemen/Ladies:
I am counsel for Firstar Corporation (the "Borrower"), and have represented
the Borrower in connection with its execution and delivery of a Four Year
Facility Credit Agreement among the Borrower, The First National Bank of
Chicago, individually and as Agent, Bank of America National Trust and Savings
Association, Chemical Bank and Morgan Guaranty Trust Company of New York, as
Co-Agents and the Lenders named therein, providing for Advances in an aggregate
principal amount not exceeding $125,000,000 at any one time outstanding and
dated as of April 22, 1996 (the "Agreement"). All capitalized terms used in
this opinion and not otherwise defined shall have the meanings attributed to
them in the Agreement.
I have examined the Borrower's articles of incorporation, by-laws,
resolutions, the Loan Documents and such other matters of fact and law which I
deem necessary in order to render this opinion. Based upon the foregoing, it is
my opinion that:
1. Each of the Borrower and its Subsidiaries is a corporation or a
national or state banking association duly incorporated or organized, as
applicable, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted, except where
such failure to obtain all requisite authority would not, with respect to any
individual failure or any failures in the aggregate, have a Material Adverse
Effect.
2. The execution and delivery of the Loan Documents by the Borrower and
the performance by the Borrower of the Obligations have been duly authorized by
all necessary corporate action and proceedings on the part of the Borrower and
will not:
(a) require any consent of the Borrower's shareholders;
(b) violate any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Borrower or any of its
Subsidiaries or the Borrower's or any Subsidiary's articles of
incorporation or by-laws or any
Page 76
<PAGE> 82
indenture, instrument or agreement binding upon the Borrower or any of its
Subsidiaries; or
(c) result in, or require, the creation or imposition of any Lien
pursuant to the provisions of any indenture, instrument or agreement
binding upon the Borrower or any of its Subsidiaries.
3. The Loan Documents have been duly executed and delivered by the
Borrower and constitute legal, valid and binding obligations of the Borrower
enforceable in accordance with their terms except to the extent the enforcement
thereof may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and subject also to the
availability of equitable remedies if equitable remedies are sought.
4. There is no litigation or proceeding against the Borrower or any of its
Subsidiaries which, if adversely determined, could have a Material Adverse
Effect.
5. No approval, authorization, consent, adjudication or order of any
governmental authority, which has not been obtained by the Borrower or any of
its Subsidiaries, is required to be obtained by the Borrower or any of its
Subsidiaries in connection with the execution and delivery of the Loan
Documents, the borrowings under the Agreement or in connection with the payment
by the Borrower of the Obligations.
This opinion may be relied upon by the Agent, the Lenders and their
participants, assignees and other transferees.
Very truly yours,
__________________
Page 77
<PAGE> 83
EXHIBIT "F"
COMPLIANCE CERTIFICATE
To: The Lenders who are parties to the
Credit Agreement described below.
This Compliance Certificate is furnished pursuant to that certain Four
Year Facility Credit Agreement dated as of April 22, 1996 (as amended,
modified, renewed or extended from time to time, the "Agreement") among Firstar
Corporation (the "Borrower"), the lenders party thereto, Bank of America
National Trust and Savings Association, Chemical Bank and Morgan Guaranty Trust
Company of New York, as Co-Agents and The First National Bank of Chicago, as
Agent for the Lenders. Unless otherwise defined herein, capitalized terms used
in this Compliance Certificate have the meanings ascribed thereto in the
Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _____________________________ of the Borrower;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Borrower and its Subsidiaries during the accounting
period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes a
Default or Unmatured Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and computations
evidencing the Borrower's compliance with certain covenants of the Agreement,
all of which data and computations are true, complete and correct.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
Page 78
<PAGE> 84
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this _____ day of__________ , 19___.
_____________
Page 79
<PAGE> 85
SCHEDULE I TO COMPLIANCE CERTIFICATE
Schedule of Compliance as of _________________________ with
Sections 6.15 and 6.16 of the Agreement
Section 6.15. Consolidated Non-Performing Assets to Total Equity Capital:
A. Consolidated Non-Performing Assets
1. Loans on nonaccrual status $__________
2. Loans 90 days or more past $__________
due and still accruing
3. Loans and leases restructured and
in compliance with modified terms $__________
4. Other Real Estate Owned $__________
5. Property acquired pursuant to
in substance foreclosures $__________
6. Total Consolidated Non-Performing
Assets (1 + 2 + 3 + 4 + 5) $__________
B. Total Equity Capital $__________
C. Ratio (A6/B) :1.00
----------
D. Maximum Permitted 0.65:1.00
----------
Section 6.16. Debt to Total Equity Capital:
A. Total Indebtedness (Borrower-only)
1. Total deposits $__________
2. Securities sold under agreements
to repurchase $__________
3. Borrowings with an original
maturity of one year or less $__________
4. Other borrowed funds with an
original maturity of greater
than one year $__________
5. Mandatory convertible securities $__________
6. Subordinated notes and debentures $__________
Page 80
<PAGE> 86
7. Other liabilities $
---------------------
8. Total debt (1 + 2 + 3 + 4 + 5 + 6 + 7) $
---------------------
B. Total equity capital (Borrower-only) $
---------------------
C. Ratio A/B :1.00
---------------------
D. Maximum Permitted 0.45:1.00
---------------------
Page 81
<PAGE> 87
EXHIBIT "G"
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
To: The First National Bank of Chicago, as Agent (the "Agent") under the
Credit Agreement Described Below.
Re: Four Year Facility Credit Agreement, dated as of April 22, 1996 (as the
same may be amended or modified, the "Credit Agreement"), among Firstar
Corporation (the "Borrower"), the Agent, Bank of America National Trust
and Savings Association, Chemical Bank and Morgan Guaranty Trust Company
of New York, as Co-Agents and the Lenders named therein. Capitalized terms
used and not otherwise defined herein shall have the meanings assigned
thereto in the Credit Agreement.
The Agent is specifically authorized and directed to act upon the following
standing money transfer instructions with respect to the proceeds of Advances or
other extensions of credit from time to time until receipt by the Agent of a
specific written revocation of such instructions by the Borrower; provided,
however, that the Agent may otherwise transfer funds as hereafter directed in
writing by the Borrower in accordance with Section 13.1 of the Credit Agreement
or based on any telephonic notice made in accordance with Section 2.11 of the
Credit Agreement.
Facility Identification Number(s)___________________________________________
Customer/Account Name_______________________________________________________
Transfer Funds To___________________________________________________________
___________________________________________________________
___________________________________________________________
___________________________________________________________
For Account No._____________________________________________________________
Reference/Attention To _____________________________________________________
Authorized Officer (Customer Representative) Date __________________________
________________________ ___________________________
(Please Print) Signature
Bank Officer Name Date ______________________
________________________ ___________________________
(Please Print) Signature
(Deliver Completed Form to Credit
Support Staff For Immediate Processing)
Page 82
<PAGE> 88
EXHIBIT "H"
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between (the
___________________________"Assignor") and ____________________________ (the
"Assignee') is dated as of _________________, 19__. The parties hereto agree as
follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement
(which, as it may be amended, modified, renewed or extended from time to time is
herein called the "Credit Agreement") described in Item 1 of Schedule 1
attached hereto ("Schedule 1"). Capitalized terms used herein and not otherwise
defined herein shall have the meanings attributed to them in the Credit
Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, an
interest in and to the Assignor's rights and obligations under the Credit
Agreement such that after giving effect to such assignment the Assignee shall
have purchased pursuant to this Assignment Agreement the percentage interest
specified in Item 3 of Schedule 1 of all outstanding rights and obligations
under the Credit Agreement relating to the facilities listed in Item 3 of
Schedule 1 and the other Loan Documents. The aggregate Commitment (or Loans, if
the applicable Commitment has been terminated) purchased by the Assignee
hereunder is set forth in Item 4 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
"Effective Date") shall be the later of the date specified in Item 5 of Schedule
1 or two Business Days (or such shorter period agreed to by the Agent) after a
Notice of Assignment substantially in the form of Exhibit "I" attached hereto
has been delivered to the Agent. Such Notice of Assignment must include any
consents required to be delivered to the Agent by Section [12.3.1] of the Credit
Agreement. In no event will the Effective Date occur if the payments required to
be made by the Assignee to the Assignor on the Effective Date under Sections 4
and 5 hereof are not made on the proposed Effective Date. The Assignor will
notify the Assignee of the proposed Effective Date no later than the Business
Day prior to the proposed Effective Date. As of the Effective Date, (i) the
Assignee shall have the rights and obligations of a Lender under the Loan
Documents with respect to the rights and obligations assigned to the Assignee
hereunder and (ii) the Assignor shall relinquish its rights and be released from
its corresponding obligations under the Loan Documents with respect to the
rights and obligations assigned to the Assignee hereunder.
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the Assignee
shall be entitled to receive from the Agent all payments of principal, interest
and fees with respect to the interest assigned hereby. The Assignee shall
advance funds directly to the Agent with respect to all Loans and reimbursement
payments made on or after the Effective Date with respect to the interest
assigned hereby. [In consideration for the sale and assignment
Page 83
<PAGE> 89
of Loans hereunder, (i) the Assignee shall pay the Assignor, on the Effective
Date, an amount equal to the principal amount of the portion of all Floating
Rate Loans assigned to the Assignee hereunder and (ii) with respect to each
Fixed Rate Loan made by the Assignor and assigned to the Assignee hereunder
which is outstanding on the Effective Date, (a) on the last day of the Interest
Period therefor or (b) on such earlier date agreed to by the Assignor and the
Assignee or (c) on the date on which any such Fixed Rate Loan either becomes due
(by acceleration or otherwise) or is prepaid (the date as described in the
foregoing clauses (a), (b) or (c) being hereinafter referred to as the "Payment
Date"), the Assignee shall pay the Assignor an amount equal to the principal
amount of the portion of such Fixed Rate Loan assigned to the Assignee which is
outstanding on the Payment Date. If the Assignor and the Assignee agree that the
Payment Date for such Fixed Rate Loan shall be the Effective Date, they shall
agree to the interest rate applicable to the portion of such Loan assigned
hereunder for the period from the Effective Date to the end of the existing
Interest Period applicable to such Fixed Rate Loan (the "Agreed Interest Rate")
and any interest received by the Assignee in excess of the Agreed Interest Rate
shall be remitted to the Assignor. In the event interest for the period from the
Effective Date to but not including the Payment Date is not paid by the Borrower
with respect to any Fixed Rate Loan sold by the Assignor to the Assignee
hereunder, the Assignee shall pay to the Assignor interest for such period on
the portion of such Fixed Rate Loan sold by the Assignor to the Assignee
hereunder at the applicable rate provided by the Credit Agreement. In the event
a prepayment of any Fixed Rate Loan which is existing on the Payment Date and
assigned by the Assignor to the Assignee hereunder occurs after the Payment Date
but before the end of the Interest Period applicable to such Fixed Rate Loan,
the Assignee shall remit to the Assignor the excess of the prepayment penalty
paid with respect to the portion of such Fixed Rate Loan assigned to the
Assignee hereunder over the amount which would have been paid if such prepayment
penalty was calculated based on the Agreed Interest Rate. The Assignee will also
promptly remit to the Assignor (i) any principal payments received from the
Agent with respect to Fixed Rate Loans prior to the Payment Date and (ii) any
amounts of interest on Loans and fees received from the Agent which relate to
the portion of the Loans assigned to the Assignee hereunder for periods prior to
the Effective Date, in the case of Floating Rate Loans or fees, or the Payment
Date, in the case of Fixed Rate Loans, and not previously paid by the Assignee
to the Assignor.] ******* In the event that either party hereto receives any
payment to which the other party hereto is entitled under this Assignment
Agreement, then the party receiving such amount shall promptly remit it to the
other party hereto.
5. FEES PAYABLE BY THE ASSIGNEE. The Assignee shall pay to the Assignor a
fee on each day on which a payment of interest or [commitment] fees is made
under the Credit Agreement with respect to the amounts assigned to the Assignee
hereunder (other than a payment of interest or facility fees for the period
prior to the Effective Date or, in the case of Fixed Rate Loans, the Payment
Date, which the Assignee is obligated to deliver to the Assignor pursuant to
Section 4 hereof). The amount of such fee shall be the difference between (i)
the interest or fee, as applicable, paid with respect
________________________
******* Each Assignor may insert its standard payment provisions in lieu of the
payment terms included in this Exhibit.
Page 84
<PAGE> 90
to the amounts assigned to the Assignee hereunder and (ii) the interest or fee,
as applicable, which would have been paid with respect to the amounts assigned
to the Assignee hereunder if each interest rate was _____ of 1% less than the
interest rate paid by the Borrower or if the facility fee was _____ of 1%
less than the facility fee paid by the Borrower, as applicable. In addition,
the Assignee agrees to pay ____% of the recordation fee required to be paid
to the Agent in connection with this Assignment Agreement.
6. REPRESENTATIONS OF THE ASSIGNOR: LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim created by the Assignor. It is
understood and agreed that the assignment and assumption hereunder are made
without recourse to the Assignor and that the Assignor makes no other
representation or warranty of any kind to the Assignee. Neither the Assignor nor
any of its officers, directors, employees, agents or attorneys shall be
responsible for (i) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectability of any Loan Document, including
without limitation, documents granting the Assignor and the other Lenders a
security interest in assets of the Borrower or any guarantor, (ii) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (iii) the financial condition or creditworthiness of the
Borrower or any guarantor, (iv) the performance of or compliance with any of the
terms or provisions of any of the Loan Documents, (v) inspecting any of the
Property, books or records of the Borrower, (vi) the validity, enforceability,
perfection, priority, condition, value or sufficiency of any collateral securing
or purporting to secure the Loans or (vii) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that it has
received a copy of the Credit Agreement, together with copies of the financial
statements requested by the Assignee and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment Agreement, (ii) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Lender and based on
such documents and information at it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Documents, (iii) appoints and authorizes the Agent to take such action
as agent on its behalf and to exercise such powers under the Loan Documents as
are delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto, (iv) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender, (v) agrees that
its payment instructions and notice instructions are as set forth in the
attachment to Schedule 1, (vi) confirms that none of the funds, monies, assets
or other consideration being used to make the purchase and assumption hereunder
are "plan assets" as defined under ERISA and that its rights, benefits and
interests in and under the Loan Documents will not be "plan assets" under
ERISA, [and (vii) attaches the forms prescribed by the Internal Revenue Service
of the United States certifying that the Assignee is entitled to receive
payments under the
Page 85
<PAGE> 91
Loan Documents without deduction or withholding of any United States federal
income taxes].*
8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the
Assignor in connection with or arising in any manner from the Assignee's
non-performance of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall
have the right pursuant to Section [12.3.1] of the Credit Agreement to assign
the rights which are assigned to the Assignee hereunder to any entity or
person, provided that (i) any such subsequent assignment does not violate any
of the terms and conditions of the Loan Documents or any law, rule, regulation,
order, writ, judgment, injunction or decree and that any consent required under
the terms of the Loan Documents has been obtained and (ii) unless the prior
written consent of the Assignor is obtained, the Assignee is not thereby
released from its obligations to the Assignor hereunder, if any remain
unsatisfied, including, without limitation, its obligations under [Sections 4,
5 and 8] hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the Aggregate
Commitment occurs between the date of this Assignment Agreement and the
Effective Date, the percentage interest specified in Item 3 of Schedule 1 shall
remain the same, but the dollar amount purchased shall be recalculated based on
the reduced Aggregate Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached Notice of
Assignment embody the entire agreement and understanding between the parties
hereto and supersede all prior agreements and understandings between the
parties hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Illinois.
13. NOTICES. Notices shall be given under this Assignment Agreement in the
manner set forth in the Credit Agreement. For the purpose hereof, the addresses
of the parties hereto (until notice of a change is delivered) shall be the
address set forth in the attachment to Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above
written.
[NAME OF ASSIGNOR]
_____________
* to be inserted if the Assignee is not incorporated under the laws of the
United States, or a state thereof.
Page 86
<PAGE> 92
By : _________________________
Title:________________________
_________________________
_________________________
[NAME OF ASSIGNEE]
By: _________________________
Title:_______________________
_________________________
_________________________
Page 87
<PAGE> 93
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement: Four Year Facility Credit
Agreement, dated as of April 22, 1996, among Firstar Corporation, the
Lenders, Bank of America National Trust and Savings Association,
Chemical Bank and Morgan Guaranty Trust Company of New York, as Co-
Agents and The First National Bank of Chicago, as Agent
2. Date of Assignment Agreement: ____________, 19__
3. Amounts (As of Date of Item 2 above):
Facility Facility Facility Facility
1* 2* *3 *4
________ ________ ________ ________
a. Total of Commitments
(Loans)** under
Credit Agreement $_____ $_____ $_____ $______
b. Assignee's Percentage
of each Facility purchased
under the Assignment
Agreement*** _____% _____% ______% ______%
c. Amount of Assigned Share in
each Facility purchased under
the Assignment
Agreement $_____ $_____ $_____ $______
4. Assignee's aggregate (Loan
Amount)** Commitment amount
purchased hereunder: $_____
5. Proposed Effective Date: ______
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: ________________________ By: ______________________
Title: _____________________ Title: ___________________
* Insert specific facility names per Credit Agreement
** If a Commitment has been terminated, insert outstanding Loans in
place of Commitment
*** Percentage taken to 10 decimal places
Page 88
<PAGE> 94
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which
must include notice address for the Assignor and the Assignee
Page 89
<PAGE> 95
EXHIBIT "I"
to Assignment Agreement
NOTICE
OF ASSIGNMENT
_____________, 19 __
To: [NAME OF BORROWER]*
______________
______________
[NAME OF AGENT]
______________
______________
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that Credit Agreement (the "Credit Agreement")
described in Item 1 of Schedule 1 attached hereto ("Schedule 1").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered to
****[the Borrower and]**** the Agent pursuant to Section 12.3.2 of the Credit
Agreement.
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of _____, 19 _ (the "Assignment"), pursuant to which, among
other things, the Assignor has sold, assigned, delegated and transferred to the
Assignee, and the Assignee has purchased, accepted and assumed from the
Assignor the percentage interest specified in Item 3 of Schedule 1 of all
outstandings, rights and obligations under the Credit Agreement relating to the
facilities listed in Item 3 of Schedule 1. The Effective Date of the Assignment
shall be the later of the date specified in Item 5 of Schedule 1 or two
Business Days (or such shorter period as agreed to by the Agent) after this
Notice of Assignment and any consents and fees required by Sections 12.3.1 and
12.3.2 of the Credit Agreement have been delivered to the Agent, provided that
the Effective Date shall not occur if any condition precedent agreed to by the
Assignor and the Assignee has not been satisfied.
- ------------------
*To be included only if consent must be obtained from the Borrower pursuant to
Section 12.3.1 of the Credit Agreement.
4. The Assignor and the Assignee hereby give to the Borrower and the
Agent notice of the assignment and delegation referred to herein. The
Page 90
<PAGE> 96
Assignor will confer with the Agent before the date specified in Item 5 of
Schedule 1 to determine if the Assignment Agreement will become effective on
such date pursuant to Section 3 hereof, and will confer with the Agent to
determine the Effective Date pursuant to Section 3 hereof if it occurs
thereafter. The Assignor shall notify the Agent if the Assignment Agreement
does not become effective on any proposed Effective Date as a result of the
failure to satisfy the conditions precedent agreed to by the Assignor and the
Assignee. At the request of the Agent, the Assignor will give the Agent written
confirmation of the satisfaction of the conditions precedent.
5. The Assignor or the Assignee shall pay to the Agent on or before the
Effective Date the processing fee of $2,500 required by Section 12.3.2 of the
Credit Agreement.
6. If Notes are outstanding on the Effective Date, the Assignor and the
Assignee request and direct that the Agent prepare and cause the Borrower to
execute and deliver new Notes or, as appropriate, replacements notes, to the
Assignor and the Assignee. The Assignor and, if applicable, the Assignee each
agree to deliver to the Agent the original Note received by it from the
Borrower upon its receipt of a new Note in the appropriate amount.
7. The Assignee advises the Agent that notice and payment instructions are
set forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the funds,
monies, assets or other consideration being used to make the purchase pursuant
to the Assignment are "plan assets" as defined under ERISA and that its rights,
benefits, and interests in and under the Loan Documents will not be "plan
assets" under ERISA.
9. The Assignee authorizes the Agent to act as its agent under the Loan
Documents in accordance with the terms thereof. The Assignee acknowledges that
the Agent has no duty to supply information with respect to the Borrower or the
Loan Documents to the Assignee until the Assignee becomes a party to the Credit
Agreement.*
- -----------------
*May be eliminated if Assignee is a party to the Credit Agreement prior to the
Effective Date.
Page 91
<PAGE> 97
NAME OF ASSIGNOR NAME OF ASSIGNEE
By:_____________________________ By:_____________________________
Title:__________________________ Title:__________________________
ACKNOWLEDGED [AND CONSENTED TO] ACKNOWLEDGED [AND CONSENTED TO]
BY [NAME OF AGENT] BY [NAME OF BORROWER]
By: ________________________ By: _________________________
Title: ________________________ Title: _________________________
[Attach photocopy of Schedule 1 to Assignment]
Page 92
<PAGE> 98
SCHEDULE "1"
LITIGATION
(See Section 5.7)
None.
Page 93
<PAGE> 99
Schedule 2 to Credit Agreement among Firstar Corporations The First National
Bank of Chicago as Agent ant Lenders named therein.
<TABLE>
<CAPTION>
Percentage Jurisdiction in which
Name of Subsidiary Ownership Incorporated or Organized
- ------------------ ---------- -------------------------
<S> <C> <C>
1 Firstar Bank Milwaukee, N.A. 100% United States
1 Firstar Bank Appleton 100% Wisconsin
1 Firstar Bank Fond du Lac, N.A. 100% United States
4 Firstar Bank, F.S.B. 100% United States
1 Firstar Bank Green Bay 100% Wisconsin
1 Firstar Bank Wisconsin 100% Wisconsin
1 Firstar Bank Oshkosh, N.A. 100% United States
1 Firstar Bank Sheboygan, N.A. 100% United States
1 Firstar Bank Wausau, N.A. 100% United States
4 Firstar Bank Iowa, N.A. 100% United States
4 Firstar Bank Burlington, N.A. 100% United States
2 Firstar Bank of Minnesota, N.A. 100% United States
1 Firstar Bank Illinois 100% Illinois
1 Firstar Credit Card Bank, N.A. 100% United States
1 FCSB Bank 100% Illinois
3 Firstar Metropolitan Bank & Trust 100% Arizona
6 Firstar Corporation of Wisconsin 100% Wisconsin
6 Firstar Corporation of Minnesota 100% Minnesota
6 Firstar Corporation of Arizona 100% Arizona
6 Firstar Corporation of Iowa 100% Iowa
1 Firstar Trust Company 99.95% Wisconsin
1 Firstar Trust Company of Florida, N.A. 100% United States
6 Firstar Investment Research & Management Company 100% Wisconsin
6 Firstar Insurance Services, Inc. 100% Wisconsin
5 Elan Investment Services, Inc. 100% Wisconsin
6 Elan Life Insurance Company, Inc. 79.00% Arizona
6 Elan Title Services. Inc. 100% Wisconsin
5 Firstar Community Investment Corporation 100% Wisconsin
</TABLE>
Page 94
<PAGE> 100
6 Firstar Development Corporation 100% Delaware
5 Firstar Leasing Services Corporation 100% Wisconsin
5 FM Properties of Wisconsin, Inc. 100% Wisconsin
5 CSFM Corporation 100% Wisconsin
5 Firstar Home Mortgage Corporation l00% Wisconsin
5 Firstar Information Services Corporation 100% Wisconsin
4 Banks of Iowa Capital Corporation 100% Iowa
5 DPC of Milwaukee, Inc. 100% Wisconsin
5 Mid States Financial Corp. 100% Illinois
1 First Colonial Mortgage Corporation 100% Illinois
Appleton Capital Corporation 100% Nevada
Fond du Lac Capital Corporation 100% Nevada
Green Bay Capital Corporation 100% Nevada
Milwaukee Capital Corporation 100% Nevada
Oshkosh Capital Corporation 100% Nevada
Sheboygan Capital Corporation 100% Nevada
Wisconsin Capital Corporation 100% Nevada
Notes
1 Subsidiary of Firstar Corporation of Wisconsin
2 Subsidiary of Firstar Corporation of Minnesota
3 Subsidiary of Firstar Corporation of Arizona
4 Subsidiary of Firstar Corporation of Iowa
5 Subsidiary of Firstar Bank Milwaukee, N.A.
6 Subsidiary of Firstar Corporation
All Capital Corporations are subsidiaries of their respective banks.
Page 95
<PAGE> 1
EXHIBIT 4.10
=======================================
SERIES A CAPITAL SECURITIES GUARANTEE AGREEMENT
Firstar Corporation
Dated as of December 23, 1996
=======================================
<PAGE> 2
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . 6
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . 6
SECTION 2.3 Reports by the Capital Securities Guarantee
Trustee. . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.4 Periodic Reports to Capital Securities
Guarantee Trustee. . . . . . . . . . . . . . . . . 7
SECTION 2.5 Evidence of Compliance with Conditions
Precedent. . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.6 Events of Default; Waiver. . . . . . . . . . . . . 7
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . 8
SECTION 2.8 Conflicting Interests. . . . . . . . . . . . . . . 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities
Guarantee Trustee . . . . . . . . . . . . . . . . 8
SECTION 3.2 Certain Rights of Capital Securities
Guarantee Trustee. . . . . . . . . . . . . . . . . 11
SECTION 3.3 Not Responsible for Recitals or Issuance
of Series A Capital Securities Guarantee . . . . . 13
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee;
Eligibility. . . . . . . . . . . . . . . . . . . . 13
SECTION 4.2 Appointment, Removal and Resignation of Capital
Securities Guarantee Trustee . . . . . . . . . . . 14
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee. . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.2 Waiver of Notice and Demand. . . . . . . . . . . . 15
SECTION 5.3 Obligations Not Affected . . . . . . . . . . . . . 15
SECTION 5.4 Rights of Holders. . . . . . . . . . . . . . . . . 16
SECTION 5.5 Guarantee of Payment . . . . . . . . . . . . . . . 17
<PAGE> 3
Page
----
SECTION 5.6 Subrogation . . . . . . . . . . . . . . . . . . 17
SECTION 5.7 Independent Obligations . . . . . . . . . . . . 17
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions. . . . . . . . . . . 18
SECTION 6.2 Ranking . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII
TERMINATION
SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . 19
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation . . . . . . . . . . . . . . . . . . 19
SECTION 8.2 Indemnification . . . . . . . . . . . . . . . . 20
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns. . . . . . . . . . . . . 20
SECTION 9.2 Amendments. . . . . . . . . . . . . . . . . . . 21
SECTION 9.3 Notices . . . . . . . . . . . . . . . . . . . . 21
SECTION 9.4 Exchange Offer. . . . . . . . . . . . . . . . . 22
SECTION 9.5 Benefit . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.6 Governing Law . . . . . . . . . . . . . . . . . 22
ii
<PAGE> 4
SERIES A CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Series A Capital Securities
Guarantee"), dated as of December [ ], 1996, is executed and delivered by
Firstar Corporation, a Wisconsin corporation (the "Guarantor"), and Chase
Manhattan Bank, a New York banking corporation, as trustee (the "Capital
Securities Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Series A Capital Securities (as defined
herein) of Firstar Capital Trust I, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of December [ ], 1996, among the trustees
of the Issuer, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof 150,000 capital securities, having an aggregate
liquidation amount of $150,000,000, such capital securities being designated the
[ ]% Series A Capital Securities (collectively the "Series A Capital
Securities") and, in connection with an Exchange Offer (as defined in the
Declaration) to execute and deliver the Series B Capital Securities Guarantee
(as defined in the Declaration) for the benefit of holders of the Series B
Capital Securities (as defined in the Declaration).
WHEREAS, as incentive for the Holders to purchase the Series A
Capital Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Series A Capital Securities Guarantee,
to pay to the Holders the Guarantee Payments (as defined below). The Guarantor
agrees to make certain other payments on the terms and conditions set forth
herein.
WHEREAS, the Guarantor is executing and delivering a guarantee
agreement (the "Common Securities Guarantee"), with substantially identical
terms to this Series A Capital Securities Guarantee, for the benefit of the
holders of the Common Securities (as defined herein), except that if an Event
of Default (as defined in the Declaration) has occurred and is continuing, the
rights of holders of the Common Securities to receive Guarantee Payments under
the Common Securities Guarantee are subordinated, to the extent and in the
manner set forth in the Common Securities Guarantee, to the rights of holders
of Series A Capital Securities and the Series B Capital Securities to receive
Guarantee Payments under this Series A Capital Securities Guarantee and the
Series B Capital Securities Guarantee, as the case may be.
NOW, THEREFORE, in consideration of the purchase by each
Holder, which purchase the Guarantor hereby acknowledges shall benefit the
Guarantor, the Guarantor executes and delivers
<PAGE> 5
this Series A Capital Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Series A Capital Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Series A Capital Securities
Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) Terms defined in the Declaration as at the date of execution of
this Series A Capital Securities Guarantee have the same
meaning when used in this Series A Capital Securities Guarantee
unless otherwise defined in this Series A Capital Securities
Guarantee;
(c) a term defined anywhere in this Series A Capital Securities
Guarantee has the same meaning throughout;
(d) all references to "the Series A Capital Securities Guarantee" or
"this Series A Capital Securities Guarantee" are to this Series A
Capital Securities Guarantee as modified, supplemented or
amended from time to time;
(e) all references in this Series A Capital Securities Guarantee to
Articles and Sections are to Articles and Sections of this Series
A Capital Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Series A Capital Securities Guaranteee, unless
otherwise defined in this Series A Capital Securities Guarantee or
unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
2
<PAGE> 6
"Business Day" means any day other than a Saturday or a Sunday, or a
day on which banking institutions in The City of New York or Milwaukee,
Wisconsin are authorized or required by law or executive order to close.
"Capital Securities Guarantee Trustee" means Chase Manhattan Bank, a
New York banking corporation, until a Successor Capital Securities Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Series A Capital Securities Guarantee and thereafter means each
such Successor Capital Securities Guarantee Trustee.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Capital Securities
Guarantee Trustee at which the corporate trust business of the Capital
Securities Guarantee Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Agreement is located
at 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53201.
"Covered Person" means any Holder or beneficial owner of Series A
Capital Securities.
"Debentures" means the series of subordinated debt securities of the
Guarantor designated the [ ]% Series A Junior Subordinated Deferrable Interest
Debentures due January 15, 2027 held by the Property Trustee (as defined in the
Declaration) of the Issuer.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Series A Capital Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Series A Capital Securities, to the
extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Series A Capital Securities to the extent the Issuer has funds on hand
legally available therefor at such time, (ii) the redemption price, including
all accumulated and unpaid Distributions to the date of redemption (the
"Redemption Price") to the extent the Issuer has funds on hand legally available
therefor at such time, with respect to any Series A Capital Securities called
for redemption by the Issuer; and (iii) upon a voluntary or involuntary
termination and liquidation of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for Series A Capital
Securities as provided in the Declaration), the lesser of (a) the aggregate of
the liquidation amount and all
3
<PAGE> 7
accumulated and unpaid Distributions on the Series A Capital Securities
to the date of payment, to the extent the Issuer has funds on hand legally
available therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer. If an
Event of Default has occurred and is continuing, no Guarantee Payments under
the Common Securities Guarantee with respect to the Common Securities or any
guarantee payment under any Other Common Securities Guarantees shall be made
until the Holders shall be paid in full the Guarantee Payments to which they
are entitled under this Series A Capital Securities Guarantee.
"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Series A Capital Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Series A Capital
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Capital Securities Guarantee Trustee,
any Affiliate of the Capital Securities Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Capital Securities Guarantee Trustee.
"Indenture" means the Indenture dated as of December [ ], 1996, among
the Guarantor (the "Debenture Issuer") and Chase Manhattan Bank, as trustee,
pursuant to which the Debentures are to be issued to the Property Trustee of
the Issuer.
"Majority in liquidation amount of the Series A Capital Securities"
means, except as provided by the Trust Indenture Act, a vote by the Holder(s),
voting separately as a class, of more that 50% of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accumulated and unpaid Distributions to the date
upon which the voting percentages are determined) of all Series A Capital
Securities.
"Officers' Certificate" means, with respect to any person, a
certificate signed by the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President, the Comptroller, the Secretary or an
Assistant Secretary, the Secretary or an Assistant Secretary of the Guarantor.
Any Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Series A Capital Securities Guarantee shall
include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
4
<PAGE> 8
(b) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(c) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the same meaning as
"Other Guarantees" in the Common Securities Guarantee.
"Other Debentures" means all junior subordinated debentures issued by
the Guarantor from time to time and sold to trusts to be established by the
Guarantor (if any), in each case similar to the Issuer.
"Other Guarantees" means all guarantees to be issued by the Guarantor
with respect to capital securities (if any) similar to the Series A Capital
Securities issued by other trusts to be established by the Guarantor (if any),
in each case similar to the Issuer.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of December [ ], 1996, by and among the Guarantor, the
Issuer and the Initial Purchasers named therein as such agreement may be
amended, modified or supplemented from time to time.
"Responsible Officer" means, with respect to the Capital Securities
Guarantee Trustee, and officer within the [Corporate Trust Office] of the
Capital Securities Guarantee Trustee, including any vice president, any
assistant vice president, any assistant secretary, the treasurer, any
assistant treasurer of other officer of the [Corporate Trust Office] of the
Capital Securities Guarantee Trustee customarily performing functions similar
to those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Successor Capital Securities Guarantee Trustee" means a successor
Capital Securities Guarantee Trustee possessing the
5
<PAGE> 9
qualifications to act as Capital Securities Guarantee Trustee under Section
4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trust Securities" means the Common Securities and the Series A Capital
Securities and Series B Capital Securities, collectively.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Series A Capital Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Series A Capital Securities Guarantee and shall, to the extent applicable, be
governed by such provisions; and
(b) if and to the extent that any provision of this Series A
Capital Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Capital Securities Guarantee
Trustee (unless the Capital Securities Guarantee Trustee is otherwise the
registrar of the Capital Securities) with a list, in such form as the Capital
Securities Guarantee Trustee may reasonably require, of the names and addresses
of the Holders ("List of Holders") as of such date, (i) within one Business Day
after June 1 and December 1 of each year, and (ii) at any other time within 30
days of receipt by the Guarantor of a written request for a List of Holders as
of a date no more that 14 days before such List of Holders is given to the
Capital Securities Guarantee Trustee provided, that the Guarantor shall not be
obligated to provide such List of Holders at any time the List of Holders does
not differ from the most recent List of Holders given to the Capital Securities
Guarantee Trustee by the Guarantor. The Capital Securities Guarantee Trustee
may destroy any List of Holders previously given to it on receipt of a new List
of Holders.
(b) The Capital Securities Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
6
<PAGE> 10
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee
Within 60 days after December 15 of each year, commencing December 15,
1997, the Capital Securities Guarantee Trustee shall provide to the Holders
such reports as are required by Section 313 of the Trust Indenture Act, if any,
in the form and in the manner provided by Section 313 of the Trust Indenture
Act. The Capital Securities Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Capital Securities Guarantee Trustee
The Guarantor shall provide to the Capital Securities Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act. Delivery of such reports, information and documents to
the Capital Securities Guarantee Trustee is for informational purposes only and
the Capital Securities Guarantee Trustee's receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Guarantor's compliance with any of
its covenants hereunder (as to which the Capital Securities Guarantee Trustee
is entitled to rely exclusively on Officers' Certificates).
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Securities Guarantee
Trustee such evidence of compliance with any conditions precedent, if any,
provided for in this Series A Capital Securities Guarantee that relate to any
of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c) (1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Series A Capital
Securities may, by vote, on behalf of all the Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default
shall cease to exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Series A Capital
Securities Guarantee, but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
7
<PAGE> 11
SECTION 2.7 Event of Default; Notice
(a) The Capital Securities Guarantee Trustee shall, within 90 days
after the occurrence of a default with respect to this Capital Securities
Guarantee, mail by first class postage prepaid, to all Holders, notices of all
defaults actually known to a Responsible Officer of the Capital Securities
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice, provided, that, except in the case of default in the payment of
any Guarantee Payment, the Capital Securities Guarantee Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee, or a trust committee of directors and/or Responsible
Officers of the Capital Securities Guarantee Trustee in good faith determines
that the withholding of such notice is in the interests of the holders of the
Series A Capital Securities.
(b) The Capital Securities Guarantee Trustee shall not be deemed to
have knowledge of any Event of Default unless the Capital Securities Guarantee
Trustee shall have received written notice, or a Responsible Officer of the
Capital Securities Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge, of such Event of Default.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Series A Capital Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee
(a) This Series A Capital Securities Guarantee shall be held by the
Capital Securities Guarantee Trustee for the benefit of the Holders, and the
Capital Securities Guarantee Trustee shall not transfer this Series A Capital
Securities Guarantee to any Person except a Holder exercising his or her rights
pursuant to Section 5.4(b) or to a Successor Capital Securities Guarantee
Trustee on acceptance by such Successor Capital Securities Guarantee Trustee of
its appointment to act as Successor Capital Securities Guarantee Trustee. The
right, title and interest of the Capital Securities Guarantee Trustee shall
automatically vest in any Successor Capital Securities Guarantee Trustee, and
such vesting and succession of title shall be effective whether or not
8
<PAGE> 12
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Securities Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of
the Capital Securities Guarantee Trustee has occurred and is continuing, the
Capital Securities Guarantee Trustee shall enforce this Series A Capital
Securities Guarantee for the benefit of the Holders.
(c) The Capital Securities Guarantee Trustee, before the occurrence of
any Event of Default and after the curing of all Events of Default that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Series A Capital Securities Guarantee, and no implied
covenants shall be read into this Series A Capital Securities Guarantee against
the Capital Securities Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Capital Securities Guarantee
Trustee, the Capital Securities Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Series A Capital Securities Guarantee,
and use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.
(d) No provision of this Series A Capital Securities Guarantee shall
be construed to relieve the Capital Securities Guarantee Trustee from liability
for its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Capital Securities
Guarantee Trustee shall be determined solely by the express provisions
of this Series A Capital Securities Guarantee, and the Capital
Securities Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Series A Capital Securities Guarantee, and no implied
covenants or obligations shall be read into this Series A Capital
Securities Guarantee against the Capital Securities Guarantee Trustee;
and
(B) in the absence of bad faith on the part of the Capital
Securities Guarantee Trustee, the Capital Securities Guarantee Trustee
may conclusively rely, as to the truth of the statements and the
correctness of
9
<PAGE> 13
the opinions expressed therein, upon any certificates or
opinions furnished to the Capital Securities Guarantee Trustee
and conforming to the requirements of this Series A Capital
Securities Guarantee; but in the case of any such certificates
or opinions that by any provision hereof are specifically
required to be furnished to the Capital Securities Guarantee
Trustee, the Capital Securities Guarantee Trustee shall be
under a duty to examine the same to determine whether or not
they conform to the requirements of this Series A Capital
Securities Guarantee;
(ii) the Capital Securities Guarantee Trustee shall not be
liable for any error of judgment made in good faith by a Responsible
Officer of the Capital Securities Guarantee Trustee, unless it shall be
proved that the Capital Securities Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
(iii) the Capital Securities Guarantee Trustee shall not be
liable with respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the Holders of a
Majority in liquidation amount of the Series A Capital Securities
relating to the time, method and place of conducting any proceeding for
any remedy available to the Capital Securities Guarantee Trustee, or
exercising any trust or power conferred upon the Capital Securities
Guarantee Trustee under this Series A Capital Securities Guarantee; and
(iv) no provision of this Series A Capital Securities
Guarantee shall require the Capital Securities Guarantee Trustee to
expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of
any of its rights or powers, if the Capital Securities Guarantee
Trustee shall have reasonable grounds for believing that the repayment
of such funds or liability is not reasonably assured to it under the
terms of this Series A Capital Securities Guarantee or indemnity,
reasonably satisfactory to the capital Securities guarantee Trustee,
against such risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Capital Securities Guarantee
Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Capital Securities Guarantee Trustee may conclusively
rely, and shall be fully protected in acting or refraining from acting,
upon any resolution, certificate, statement, instrument, opinion,
report, notice, request,
10
<PAGE> 14
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this Series
A Capital Securities Guarantee may be sufficiently evidenced by an Officers'
Certificate.
(iii) Whenever, in the administration of this Series A Capital
Securities Guarantee, the Capital Securities Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking, suffering or
omitting any action hereunder, the Capital Securities guarantee Trustee (unless
other evidence is herein specifically prescribed) may, in the absence of bad
faith on its part, request and conclusively rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly delivered by the
Guarantor.
(iv) The Capital Securities Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Capital Securities Guarantee Trustee may consult with counsel
of its selection, and the advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with such advice or opinion. Such counsel may be counsel to
the Guarantor or any of its Affiliates and may include any of its employees.
The Capital Securities Guarantee Trustee shall have the right at any time to
seek instructions concerning the administration of this Series A Capital
Securities Guarantee from any court of competent jurisdiction.
(vi) The Capital Securities Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this Series
A Capital Securities Guarantee at the request or direction of any Holder,
unless such Holder shall have provided to the Capital Securities Guarantee
Trustee such security and indemnity, reasonably satisfactory to the Capital
Securities Guarantee Trustee, against the costs, expenses (including attorneys'
fees and expenses and the expenses of the Capital Securities Guarantee
Trustee's agents, nominees or custodians) and liabilities that might be
incurred by it in complying with such request or direction, including such
reasonable advances as may be requested by the Capital Securities Guarantee
Trustee; provided that, nothing contained in this Section 3.2(a) (vi)
11
<PAGE> 15
shall be taken to relieve the Capital Securities Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights and
powers vested in it by this Series A Capital Securities Guarantee.
(vii) The Capital Securities Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Capital Securities Guarantee
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.
(viii) The Capital Securities Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly or
by or through agents, nominees, custodians or attorneys, and the Capital
Securities Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
(ix) Any action taken by the Capital Securities Guarantee Trustee or
its agents hereunder shall bind the Holders, and the signature of the Capital
Securities guarantee Trustee or its agents alone shall be sufficient and
effective to perform any such action. No third party shall be required to
inquire as to the authority of the Capital Securities Guarantee Trustee to so
act or as to its compliance with any of the terms and provisions of this Series
A Capital Securities Guarantee, both of which shall be conclusively evidenced
by the Capital Securities Guarantee Trustee's or its agent's taking such
action.
(x) Whenever in the administration of this Series A Capital
Securities Guarantee the Capital Securities Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy or right
or taking any other action hereunder, the Capital Securities Guarantee Trustee
(i) may request instructions form the Holders of a Majority in liquidation
amount of the Series A Capital Securities, (ii) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received, and (iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(xi) The Capital Securities Guarantee Trustee shall not be liable for
any action taken, suffered, or omitted to be taken by it in good faith, without
negligence, and reasonably believed by it to be authorized or within the dis-
12
<PAGE> 16
cretion or rights or powers conferred upon it by this Series A Capital
Securities Guarantee.
(b) No provision of this Series A Capital Securities Guarantee
shall be deemed to impose any duty or obligation on the Capital Securities
Guarantee Trustee to perform any act or acts or exercise any right, power, duty
or obligation conferred or imposed on it in any jurisdiction in which it shall
be illegal, or in which the Capital Securities Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Capital Securities Guarantee
Trustee shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Series A
Capital Securities Guarantee
The recitals contained in this Series A Capital Securities
Guarantee shall be taken as the statements of the Guarantor, and the Capital
Securities Guarantee Trustee does not assume any responsibility for their
correctness. The Capital Securities Guarantee Trustee makes no representation
as to the validity or sufficiency of this Series A Capital Securities
Guarantee.
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Securities Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof or
of the District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.1(a) (ii), the
combined capital and surplus of such corporation shall be
13
<PAGE> 17
deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Capital Securities Guarantee Trustee
shall cease to be eligible to so act under Section 4.1(a), the Capital
Securities Guarantee Trustee shall immediately resign in the manner and with
the effect set out in Section 4.2(c).
(c) If the Capital Securities Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Capital Securities Guarantee Trustee and Guarantor
shall in all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Capital
Securities Guarantee Trustee
(a) Subject to Section 4.2(b), the Capital Securities
Guarantee Trustee may be appointed or removed without cause at any time by the
Guarantor except during an Event of Default.
(b) The Capital Securities Guarantee Trustee shall not be
removed in accordance with Section 4.2(a) until a Successor Capital Securities
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Capital Securities Guarantee
Trustee and delivered to the Guarantor.
(c) The Capital Securities Guarantee Trustee shall hold
office until a Successor Capital Securities Guarantee Trustee shall have been
appointed or until its removal or resignation. The Capital Securities
Guarantee Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing executed by the Capital Securities
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Capital Securities Guarantee Trustee has been
appointed and has accepted such appointment by instrument in writing executed
by such Successor Capital Securities Guarantee Trustee and delivered to the
Guarantor and the resigning Capital Securities Guarantee Trustee.
(d) If no Successor Capital Securities Guarantee Trustee
shall have been appointed and accepted appointment as provided in this Section
4.2 within 60 days after delivery of an instrument of removal or resignation,
the Capital Securities Guarantee Trustee resigning or being removed may
petition any court of competent jurisdiction for appointment of a Successor
Capital Securities Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Capital Securities Guarantee Trustee.
14
<PAGE> 18
(e) No Capital Securities Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Capital Securities Guarantee Trustee.
(f) Upon termination of this Series A Capital Securities Guarantee or
removal or resignation of the Capital Securities Guarantee Trustee pursuant to
this Section 4.2, the Guarantor shall pay to the Capital Securities Guarantee
Trustee all amounts due to the Capital Securities Guarantee Trustee accrued to
the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of
set-off or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Series A
Capital Securities Guarantee and of any liability to which its applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Series A Capital Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Series A Capital Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under
15
<PAGE> 19
the terms of the Series A Capital Securities or the extension of time for the
performance of any other obligation under, arising out of, or in connection
with, the Series A Capital Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Series A
Capital Securities, or any action on the part of the Issuer granting indulgence
or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer or
any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Series A Capital Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred;
(g) the consummation of the Exchange Offer; or
(h) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor with
respect to the Guarantee Payments shall be absolute and unconditional under any
and all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the
Series A Capital Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Capital Securities
Guarantee Trustee in respect of this Series A Capital Securities Guarantee or
exercising any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Series A Capital Securities Guarantee.
16
<PAGE> 20
(b) If the Capital Securities Guarantee Trustee fails to
enforce such Series A Capital Securities Guarantee, any Holder may institute a
legal proceeding directly against the Guarantor to enforce the Capital
Securities Guarantee Trustee's rights under this Series A Capital Securities
Guarantee, without first instituting a legal proceeding against the Issuer, the
Capital Securities Guarantee Trustee or any other person or entity. The
Guarantor waives any right or remedy to require that any action be brought
first against the Issuer or any other person or entity before proceeding
directly against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Series A Capital Securities Guarantee creates a guarantee
of payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to such Holders by
the Guarantor under this Series A Capital Securities Guarantee; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any right that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Series A Capital
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Series A Capital Securities Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the holders and to pay over
such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Series A
Capital Securities, and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this
Series A Capital Securities Guarantee notwithstanding the occurrence of any
event referred to in subsections (a) through (h), inclusive, of Section 5.3
hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Capital Securities remain outstanding, the
Guarantor shall not (i) declare or pay any dividends or
17
<PAGE> 21
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Guarantor's capital stock (which includes common
and preferred stock) or (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities of the
Guarantor (including any Other Debentures) that rank pari passu with or junior
in right of payment to the Debentures or (iii) make any guarantee payments with
respect to any guarantee by the Guarantor of any securities of any subsidiary
of the Guarantor (including Other Guarantees) if such guarantee ranks pari
passu or junior in right of payment to the Debentures (other than (a)
dividends or distributions in shares of, or options, warrants, rights to
subscribe for or purchase shares of, common stock of the Guarantor, (b) any
declaration of a dividend in connection with the implementation of a
stockholder's rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Capital Securities Guarantee, (d) as a direct result of,
and only to the extent required in order to avoid the issuance of fractional
shares of capital stock following, a reclassification of the Guarantor's
capital stock or the exchange or the conversion of one class or series of the
Guarantor's capital stock for another class or series of the Guarantor's
capital stock, (e) the purchase of fractional interests in shares of the
Guarantor's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, and (f)
purchases of common stock related to the issuance of common stock or rights
under any of the Guarantor's benefit plans for its directors, officers or
employees of any of the Guarantor's dividend reinvestment plans) if at such
time (i) there shall have occurred any event of which the Guarantor has actual
knowledge that (a) is, or with the giving of notice or the lapse of time, or
both, would be an Event of Default and (b) in respect of which the Guarantor
shall not have taken reasonable steps to cure, (ii) if such Debentures are held
by the Property Trustee, the Guarantor shall be in default with respect to its
payment of any obligations under this Series A Capital Securities Guarantee or
(iii) the Guarantor shall have given notice of its election of the exercise of
its right to extend the interest payment period pursuant to Section 16.01 of
the Indenture and any such extension shall be continuing.
SECTION 6.2 Ranking
This Series A Capital Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to Senior Indebtedness (as defined in the Indenture), to the
same extent and in the same manner that the Debentures are subordinated to
Senior Indebtedness pursuant to the Indenture, it being understood that the
terms of Article XV of the Indenture shall apply to the obligations of the
Guarantor under this Series A Capital Securi-
18
<PAGE> 22
ties Guarantee as if (x) such Article XV were set forth herein in full and (y)
such obligations were substituted for the term "Securities" appearing in such
Article XV, (ii) pari passu with the Debentures [and with the most senior
preferred or preference stock now or hereafter issued by the Guarantor] and
with any Other Guarantee (as defined herein) [and any Other Common Securities
Guarantee and any guarantee now or hereafter entered into by the Guarantor in
respect of any preferred or preference stock of any Affiliate of the Guarantor,
and (iii) senior to the Guarantor's common stock].
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Series A Capital Securities Guarantee shall terminate (i) upon
full payment of the Redemption Price (as defined in the Declaration) of all
Series A Capital Securities, or (ii) upon liquidation of the Issuer, the full
payment of the amounts payable in accordance with the Declaration or the
distribution of the Debentures to the Holders of all of the Series A Capital
Securities. Notwithstanding the foregoing, this Series A Capital Securities
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must restore payment of any sums paid under the
Series A Capital Securities or under this Series A Capital Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith in accordance with this
Series A Capital Securities Guarantee and in a manner that such Indemnified
Person reasonably believed to be within the scope of the authority conferred on
such Indemnified Person by this Series A Capital Securities Guarantee or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person
19
<PAGE> 23
reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of
the Guarantor, including information, opinions, reports or statements as to the
value and amount of the assets, liabilities, profits, losses, or any other
facts pertinent to the existence and amount of assets from which Distributions
to Holders might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of
this Series A Capital Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Series A Capital
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not materially adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Series A Capital Securities Guarantee may only be amended with
the prior approval of the Holders of a Majority in liquidation amount of the
Securities (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined). The provisions of Section
12.2 of the Declaration with respect to meetings of Holders apply to the giving
of such approval.
SECTION 9.3 Notices
All notices provided for in this Series A Capital Securities Guarantee
shall be in writing, duly signed by the
20
<PAGE> 24
party giving such notice, and shall be delivered, telecopied or mailed by first
class mail, as follows:
(a) If given to the Issuer, in care of the Administrative Trustee
at the Issuer's mailing address set forth below (or such other address as the
Issuer may give notice of to the Holders):
Firstar Capital Trust I
c/o Firstar Corporation
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53201
Attention: Chief Financial Officer
Telecopy: [ ]
(b) If given to the Capital Securities Guarantee Trustee, at the
Capital Securities Guarantee Trustee's mailing address set forth below (or such
other address as the Capital Securities Guarantee Trustee may give notice of to
the Holders):
Chase Manhattan Bank
[
]
Attention: [ ]
Telecopy: [ ]
(c) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Series A Capital Securities):
Firstar Corporation
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53201
Attention: Chief Financial Officer
Telecopy: [ ]
(d) If given to any Holder of Series A Capital Securities, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
21
<PAGE> 25
SECTION 9.4 Exchange Offer
In the event an Exchange Offer Registration Statement (as defined in
the Registration Rights Agreement) becomes effective and the Issuer issues any
Series B Capital Securities in the Exchange Offer, the Guarantor will enter
into a new capital securities guarantee agreement, in substantially the same
form as this Series A Capital Securities Guarantee, with respect to the Series
B Capital Securities.
SECTION 9.5 Benefit
This Series A Capital Securities Guarantee is solely for the benefit of
the Holders and, subject to Section 3.1(a), is not separately transferable from
the Series A Capital Securities.
SECTION 9.6 Governing Law
THIS SERIES A CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
22
<PAGE> 26
THIS SERIES A CAPITAL SECURITIES GUARANTEE is executed as of the day
and year first above written.
FIRSTAR CORPORATION, as Guarantor
By:
----------------------------------
Name:
Title:
CHASE MANHATTAN BANK, as Capital
Securities Guarantee Trustee
By:
----------------------------------
Name:
Title:
23
<PAGE> 27
EXHIBIT 4.11
FIRSTAR CORPORATION
______________________________
______________________________
INDENTURE
DATED AS OF DECEMBER 23, 1996
______________________________
THE CHASE MANHATTAN BANK
AS TRUSTEE
______________________________
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
______________________________________________________________
<PAGE> 28
TIE-SHEET
of provisions of Trust Indenture Act of 1939 with Indenture dated as of
December 23, 1996 between Firstar Corporation and Chase Manhattan Bank, as
Trustee:
<TABLE>
<CAPTION>
ACT SECTION INDENTURE SECTION
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
310(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
310(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10, 6.11
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
311(a) and (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.01, 4.02(a)
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02
312(b) and (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
313(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
313(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
313(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
313(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(c)(1) and (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
314(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
315(a)(c) and (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.08
315(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.09
316(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.07
316(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
316(a) last sentence . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.09
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.02
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.05
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.08
</TABLE>
- ---------------
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
<PAGE> 29
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . 1
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
Additional Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Adjusted Treasury Rate . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Allocable Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Bankruptcy Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Capital Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Capital Securities Guarantee . . . . . . . . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Common Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Common Securities Guarantee . . . . . . . . . . . . . . . . . . . . . . . 4
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Company Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Comparable Treasury Issue . . . . . . . . . . . . . . . . . . . . . . . . 4
Comparable Treasury Price . . . . . . . . . . . . . . . . . . . . . . . . 5
Compounded Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Deferred Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Definitive Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Dissolution Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Extended Interest Payment Period . . . . . . . . . . . . . . . . . . . . 6
Federal Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Firstar Capital Trust . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Indebtedness for Money Borrowed . . . . . . . . . . . . . . . . . . . . . 6
Indebtedness Ranking Junior to the Securities . . . . . . . . . . . . . . 6
</TABLE>
- -------------
* THIS TABLE OF CONTENTS SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE A
PART OF THE INDENTURE.
i
<PAGE> 30
<TABLE>
<CAPTION>
<S> <C>
Indebtedness Ranking on a Parity with the Securities . . . . . . . . . . . . . . . 7
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Initial Optional Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . 7
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Issue Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Non Book-Entry Capital Securities . . . . . . . . . . . . . . . . . . . . . . . . . 7
Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Optional Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Other Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Other Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Predecessor Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Principal Office of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Quotation Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Reference Treasury Dealer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Reference Treasury Dealer Quotations . . . . . . . . . . . . . . . . . . . . . . . 9
Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Regulatory Capital Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Restricted Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Rule 144A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Securityholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
holder of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Security Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Series A Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Series B Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Special Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Special Event Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Tax Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Trust Indenture Act of 1939 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Trust Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE II
SECURITIES . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
ii
<PAGE> 1
EXHIBIT 4.11
FIRSTAR CORPORATION
______________________________
______________________________
INDENTURE
DATED AS OF DECEMBER 23, 1996
______________________________
THE CHASE MANHATTAN BANK
AS TRUSTEE
______________________________
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
______________________________________________________________
<PAGE> 2
TIE-SHEET
of provisions of Trust Indenture Act of 1939 with Indenture dated as of
December 23, 1996 between Firstar Corporation and Chase Manhattan Bank, as
Trustee:
<TABLE>
<CAPTION>
ACT SECTION INDENTURE SECTION
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
310(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
310(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10, 6.11
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
311(a) and (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.01, 4.02(a)
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02
312(b) and (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
313(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
313(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
313(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
313(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(c)(1) and (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
314(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
315(a)(c) and (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.08
315(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.09
316(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.07
316(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
316(a) last sentence . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.09
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.02
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.05
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.08
</TABLE>
- ---------------
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
<PAGE> 3
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . 1
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
Additional Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Adjusted Treasury Rate . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Allocable Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Bankruptcy Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Capital Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Capital Securities Guarantee . . . . . . . . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Common Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Common Securities Guarantee . . . . . . . . . . . . . . . . . . . . . . . 4
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Company Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Comparable Treasury Issue . . . . . . . . . . . . . . . . . . . . . . . . 4
Comparable Treasury Price . . . . . . . . . . . . . . . . . . . . . . . . 5
Compounded Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Deferred Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Definitive Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Dissolution Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Extended Interest Payment Period . . . . . . . . . . . . . . . . . . . . 6
Federal Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Firstar Capital Trust . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Indebtedness for Money Borrowed . . . . . . . . . . . . . . . . . . . . . 6
Indebtedness Ranking Junior to the Securities . . . . . . . . . . . . . . 6
</TABLE>
- -------------
* THIS TABLE OF CONTENTS SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE A
PART OF THE INDENTURE.
i
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
Indebtedness Ranking on a Parity with the Securities . . . . . . . . . . . . . . . 7
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Initial Optional Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . 7
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Issue Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Non Book-Entry Capital Securities . . . . . . . . . . . . . . . . . . . . . . . . . 7
Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Optional Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Other Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Other Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Predecessor Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Principal Office of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Quotation Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Reference Treasury Dealer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Reference Treasury Dealer Quotations . . . . . . . . . . . . . . . . . . . . . . . 9
Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Regulatory Capital Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Restricted Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Rule 144A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Securityholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
holder of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Security Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Series A Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Series B Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Special Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Special Event Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Tax Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Trust Indenture Act of 1939 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Trust Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE II
SECURITIES . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C>
SECTION 2.01. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.02. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.03. Form and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.04. Legends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.05. Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.06 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.07. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.08. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.09. [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.10. Temporary Securities. . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.13. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.01. Payment of Principal, Premium and Interest . . . . . . . . . . . . . . 22
SECTION 3.02. Offices for Notices and Payments, etc. . . . . . . . . . . . . . . . . 22
SECTION 3.03. Appointments to Fill Vacancies in Trustee's Office . . . . . . . . . . 23
SECTION 3.04. Provision as to Paying Agent . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.05. Certificate to Trustee . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.06. Compliance with Consolidation Provisions . . . . . . . . . . . . . . . 25
SECTION 3.07. Limitation on Dividends . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.08. Covenants as to Firstar Capital Trust . . . . . . . . . . . . . . . . 26
SECTION 3.09. Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.10. Payment Upon Resignation or Removal . . . . . . . . . . . . . . . . . 27
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE . . . . . . . . . . . . . . . . . . 27
SECTION 4.01. Securityholders' Lists . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.02. Preservation and Disclosure of Lists . . . . . . . . . . . . . . . . . 28
SECTION 4.03. Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.04. Reports by the Trustee . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT . . . . . . . . . . . . . . . . . . . 31
SECTION 5.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.02. Payment of Securities on Default; Suit Therefor . . . . . . . . . . . 34
SECTION 5.03. Application of Moneys Collected by Trustee . . . . . . . . . . . . . . 36
</TABLE>
iii
<PAGE> 6
<TABLE>
<S> <C>
SECTION 5.04. Proceedings by Securityholders . . . . . . . . . . . . . . . . . . 36
SECTION 5.05. Proceedings by Trustee . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.06. Remedies Cumulative and Continuing . . . . . . . . . . . . . . . . 38
SECTION 5.07. Direction of Proceedings and Waiver of Defaults by
Majority of Securityholders . . . . . . . . . . . . . . . . . . . 38
SECTION 5.08. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.09. Undertaking to Pay Costs . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VI
CONCERNING THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.01. Duties and Responsibilities of Trustee . . . . . . . . . . . . . 40
SECTION 6.02. Reliance on Documents, Opinions, etc. . . . . . . . . . . . . . 41
SECTION 6.03. No Responsibility for Recitals, etc. . . . . . . . . . . . . . . 43
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents,
Transfer Agents or Registrar May Own Securities . . . . . . . . . 43
SECTION 6.05. Moneys to be Held in Trust . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.06. Compensation and Expenses of Trustee . . . . . . . . . . . . . . . 44
SECTION 6.07. Officers' Certificate as Evidence . . . . . . . . . . . . . . . . 45
SECTION 6.08. Conflicting Interest of Trustee . . . . . . . . . . . . . . . . . 45
SECTION 6.09. Eligibility of Trustee . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 6.10. Resignation or Removal of Trustee . . . . . . . . . . . . . . . . 46
SECTION 6.11. Acceptance by Successor Trustee . . . . . . . . . . . . . . . . . 47
SECTION 6.12. Succession by Merger, etc. . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.13. Limitation on Rights of Trustee as a Creditor . . . . . . . . . . 49
SECTION 6.14. Authenticating Agents . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VII
CONCERNING THE SECURITYHOLDERS . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.01. Action by Securityholders . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.02. Proof of Execution by Securityholders . . . . . . . . . . . . . . 51
SECTION 7.03. Who Are Deemed Absolute Owners . . . . . . . . . . . . . . . . . . 51
SECTION 7.04. Securities Owned by Company Deemed Not Outstanding . . . . . . . . 52
SECTION 7.05. Revocation of Consents; Future Holders Bound . . . . . . . . . . . 52
ARTICLE VIII
SECURITYHOLDERS' MEETINGS . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.01. Purposes of Meetings . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.02. Call of Meetings by Trustee . . . . . . . . . . . . . . . . . . . 53
SECTION 8.03. Call of Meetings by Company or Securityholders . . . . . . . . . . 54
SECTION 8.04. Qualifications for Voting . . . . . . . . . . . . . . . . . . . . 54
</TABLE>
iv
<PAGE> 7
<TABLE>
<S> <C>
SECTION 8.05. Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.06. Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE IX
AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.01. Without Consent of Securityholders . . . . . . . . . . . . . . . . . . 56
SECTION 9.02. With Consent of Securityholders . . . . . . . . . . . . . . . . . . . 58
SECTION 9.03. Compliance with Trust Indenture Act;
Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . 59
SECTION 9.04. Notation on Securities . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to be Furnished Trustee . . . . . . . . . . . . . . . . . . 60
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE . . . . . . . . . . . . 60
SECTION 10.01. Company May Consolidate, etc., on Certain Terms . . . . . . . . . . . 60
SECTION 10.02. Successor Corporation to be Substituted for Company . . . . . . . . . 61
SECTION 10.03. Opinion of Counsel to be Given Trustee . . . . . . . . . . . . . . . . 62
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE . . . . . . . . . . . . . . . . . 62
SECTION 11.01. Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 11.02. Deposited Moneys and U.S. Government Obligations
to be Held in Trust by Trustee . . . . . . . . . . . . . . . . . . . . 63
SECTION 11.03. Paying Agent to Repay Moneys Held . . . . . . . . . . . . . . . . . . 63
SECTION 11.04. Return of Unclaimed Moneys . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 11.05. Defeasance Upon Deposit of Moneys or
U.S. Government Obligations. . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 12.01. Indenture and Securities Solely
Corporate Obligations . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE XIII
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 13.01. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
</TABLE>
v
<PAGE> 8
<TABLE>
<S> <C>
SECTION 13.02. Official Acts by Successor Corporation . . . . . . . . . . . . . . 66
SECTION 13.03. Surrender of Company Powers . . . . . . . . . . . . . . . . . . . 66
SECTION 13.04. Addresses for Notices, etc. . . . . . . . . . . . . . . . . . . . 66
SECTION 13.05. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 13.06. Evidence of Compliance with Conditions Precedent . . . . . . . . . 67
SECTION 13.07. Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 13.08. Trust Indenture Act to Control . . . . . . . . . . . . . . . . . . 68
SECTION 13.09. Table of Contents, Headings, etc . . . . . . . . . . . . . . . . . 68
SECTION 13.10. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . 68
SECTION 13.11. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 13.12. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 13.13. Acknowledgement of Rights . . . . . . . . . . . . . . . . . . . . 69
ARTICLE XIV
REDEMPTION OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 14.01. Special Event Redemption . . . . . . . . . . . . . . . . . . . . . 69
SECTION 14.02. Optional Redemption by Company . . . . . . . . . . . . . . . . . . 70
SECTION 14.03. No Sinking Fund . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 14.04. Notice of Redemption; Selection of Securities . . . . . . . . . . 71
SECTION 14.05. Payment of Securities Called for Redemption . . . . . . . . . . . 72
ARTICLE XV
SUBORDINATION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 15.01. Agreement to Subordinate . . . . . . . . . . . . . . . . . . . . . 73
SECTION 15.02. Default on Senior Indebtedness . . . . . . . . . . . . . . . . . . 73
SECTION 15.03. Liquidation; Dissolution; Bankruptcy . . . . . . . . . . . . . . . 74
SECTION 15.04. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 15.05. Trustee to Effectuate Subordination . . . . . . . . . . . . . . . 76
SECTION 15.06. Notice by the Company . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 15.07. Rights of the Trustee; Holders of Senior Indebtedness . . . . . . 78
SECTION 15.08. Subordination May Not Be Impaired . . . . . . . . . . . . . . . . 78
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD . . . . . . . . . . . . . . . . . . 79
SECTION 16.01. Extension of Interest Payment Period . . . . . . . . . . . . . . . 79
SECTION 16.02. Notice of Extension . . . . . . . . . . . . . . . . . . . . . . . 80
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
Testimonium
</TABLE>
vi
<PAGE> 9
Signatures
Acknowledgements
vii
<PAGE> 10
THIS INDENTURE, dated as of December 23, 1996, between Firstar
Corporation, a Wisconsin corporation (hereinafter sometimes called the
"Company"), and The Chase Manhattan Bank, a New York banking corporation, as
trustee (hereinafter sometimes called the "Trustee"),
W I T N E S S E T H :
In consideration of the premises, and the purchase of the
Securities by the holders thereof, the Company covenants and agrees with the
Trustee for the equal and proportionate benefit of the respective holders from
time to time of the Securities, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
The terms defined in this Section 1.01 (except as herein
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture shall have the respective meanings specified in this
Section 1.01. All other terms used in this Indenture which are defined in the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), or which
are by reference therein defined in the Securities Act, shall (except as herein
otherwise expressly provided or unless the context otherwise requires) have the
meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of this Indenture as originally
executed. The following terms have the meanings given to them in the
Declaration: (i) Clearing Agency; (ii) Delaware Trustee; (iii) Property
Trustee; (iv) Administrative Trustees; (v) Direct Action; (vi) Purchase
Agreement; (vii) Distributions; (viii) Series A Capital Securities; and (ix)
Series B Capital Securities. All accounting terms used herein and not
expressly defined shall have the meanings assigned to such terms in accordance
with generally accepted accounting principles and the term "generally accepted
accounting principles" means such accounting principles as are generally
accepted at the time of any computation. The words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other subdivision.
Headings are used for convenience of reference only and do not affect
interpretation. The singular includes the plural and vice versa.
"Additional Interest" shall have the meaning set forth in
Section 2.06(c).
"Adjusted Treasury Rate" means, with respect to any
<PAGE> 11
redemption date, the rate per annum equal to (i) the yield, under the heading
which represents the average for the immediately prior week, appearing in the
most recently published statistical release designated "H.15 (519)" or any
successor publication which is published weekly by the Federal Reserve and
which establishes yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury Constant Maturities,"
for the maturity corresponding to the Initial Optional Redemption Date (if no
maturity is within three months before or after the Initial Optional Redemption
Date, yields for the two published maturities most closely corresponding to the
Initial Optional Redemption Date shall be interpolated, and the Adjusted
Treasury Rate shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month) or (ii) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue (expressed as a percentage
of its principal amount) equal to the Comparable Treasury Price for such
redemption date plus, in each case, (a) 1.35% if such redemption date occurs on
or prior to December 31, 1997, and (b) .50% in all other cases.
"Affiliate" means, with respect to a specified Person, (a) any
Person directly or indirectly owning, controlling or holding the power to vote
10% or more of the outstanding voting securities or other ownership interests
of the specified Person, (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person, (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person, (d) a partnership in which the specified Person is a
general partner, (e) any officer or director of the specified Person, and (f)
if the specified Person is an individual, any entity of which the specified
Person is an officer, director or general partner.
"Allocable Amounts," when used with respect to any Senior
Indebtedness, means all amounts due or to become due on such Senior
Indebtedness less, if applicable, any amount which would have been paid to, and
retained by, the holders of such Senior Indebtedness (whether as a result of
the receipt of payments by the holders of such Senior Indebtedness from the
Company or any other obligor thereon or from any holders of, or trustee in
respect of, other indebtedness that is subordinate and junior in right of
payment to such Senior Indebtedness pursuant to any provision of such
indebtedness for the payment over of amounts received on account of such
indebtedness to the holders of such Senior Indebtedness or otherwise) but for
the fact that
2
<PAGE> 12
such Senior Indebtedness is subordinate or junior in right of payment to (or
subject to a requirement that amounts received on such Senior Indebtedness be
paid over to obligees on) trade accounts payable or accrued liabilities arising
in the ordinary course of business.
"Authenticating Agent" shall mean any agent or agents of the
Trustee which at the time shall be appointed and acting pursuant to Section
6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any
similar federal or state law for the relief of debtors.
"Board of Directors" shall mean either the Board of Directors
of the Company or any duly authorized committee of that board.
"Board Resolution" shall mean a copy of a resolution certified
by the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
"Business Day" shall mean, with respect to any series of
Securities, any day other than a Saturday or a Sunday or a day on which banking
institutions in The City of New York or Milwaukee, Wisconsin are authorized or
required by law or executive order to close.
"Capital Securities" shall mean undivided beneficial interests
in the assets of Firstar Capital Trust which rank pari passu with the Common
Securities issued by Firstar Capital Trust; provided, however, that if an Event
of Default has occurred and is continuing, no payments in respect of
Distributions on, or payments upon liquidation, redemption or otherwise with
respect to, the Common Securities shall be made until the holders of the
Capital Securities shall be paid in full the Distributions and the liquidation,
redemption and other payments to which they are entitled. References to
"Capital Securities" shall include collectively any Series A Capital Securities
and Series B Capital Securities.
"Capital Securities Guarantee" shall mean any guarantee that
the Company may enter into with The Chase Manhattan Bank or other Persons that
operates directly or indirectly for the benefit of holders of Capital
Securities of Firstar Capital Trust and shall include a Series A Capital
Securities Guarantee and a Series B Capital Securities Guarantee with respect
to the Series A Capital Securities and the Series B Capital Securities,
respectively.
3
<PAGE> 13
"Commission" shall mean the Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act,
or if at any time after the execution of this Indenture such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Common Securities" shall mean undivided beneficial interests
in the assets of Firstar Capital Trust which rank pari passu with Capital
Securities issued by Firstar Capital Trust; provided, however, that if an Event
of Default has occurred and is continuing, no payments in respect of
Distributions on, or payments upon liquidation, redemption or otherwise with
respect to, the Common Securities shall be made until the holders of the
Capital Securities shall be paid in full the Distributions and the liquidation,
redemption and other payments to which they are entitled.
"Common Securities Guarantee" shall mean any guarantee that
the Company may enter into with any Person or Persons that operates directly or
indirectly for the benefit of holders of Common Securities of Firstar Capital
Trust.
"Common Stock" shall mean the Common Stock, par value $1.25
per share, of the Company or any other class of stock resulting from changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
"Company" shall mean Firstar Corporation, a Wisconsin
corporation, and, subject to the provisions of Article X, shall include its
successors and assigns.
"Company Request" or "Company Order" shall mean a written
request or order signed in the name of the Company by the Chairman, the Chief
Executive Officer, the President, a Vice Chairman, a Vice President, the
Comptroller, the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.
"Comparable Treasury Issue" means the United States Treasury
security selected by the Quotation Agent as having a maturity date
corresponding to the Initial Optional Redemption Date that would be utilized,
at the time of selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities with a maturity date
corresponding to the Initial Optional Redemption Date. If no United States
Treasury security has a maturity date which is within three months before or
after the Initial Optional Redemption Date, the two most closely corresponding
United States Treasury securities shall be used as the Comparable Treasury
Issue, and the Adjusted Treasury Rate shall be interpolated or extrapolated
4
<PAGE> 14
on a straight-line basis, rounding to the nearest month.
"Comparable Treasury Price" means, with respect to any
redemption date pursuant to Section 14.01, (i) the average of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) on the third Business Day preceding such
redemption date, as set forth in the daily statistical release (or any
successor release) published by the Federal Reserve Bank of New York and
designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or
(ii) if such release (or any successor release) is not published or does not
contain such prices on such Business Day, (A) the average of five Reference
Treasury Dealer Quotations for such redemption date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or (B) if the
Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Compounded Interest" shall have the meaning set forth in
Section 16.01.
"Custodian" shall mean any receiver, trustee, assignee,
liquidator, or similar official under any Bankruptcy Law.
"Declaration" means the Amended and Restated Declaration of
Trust of Firstar Capital Trust, dated as of the Issue Date.
"Default" means any event, act or condition that with notice
or lapse of time, or both, would constitute an Event of Default.
"Deferred Interest" shall have the meaning set forth in
Section 16.01.
"Definitive Securities" shall mean those securities issued in
fully registered certificated form not otherwise in global form.
"Depositary" shall mean, with respect to Securities of any
series, for which the Company shall determine that such Securities will be
issued as a Global Security, The Depository Trust Company, New York, New York,
another clearing agency, or any successor registered as a clearing agency under
the Exchange Act or other applicable statute or regulation, which, in each
case, shall be designated by the Company pursuant to Section 2.05(d).
"Dissolution Event" means the liquidation of the Trust
pursuant to the Declaration, and the distribution of the Securities held by the
Property Trustee to the holders of the Trust
5
<PAGE> 15
Securities issued by the Trust pro rata in accordance with the Declaration.
"Event of Default" shall mean any event specified in Section
5.01, continued for the period of time, if any, and after the giving of the
notice, if any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exchange Offer" means the offer that may be made pursuant to
the Registration Rights Agreement (i) by the Company to exchange Series B
Securities for Series A Securities and to exchange a Series B Capital
Securities Guarantee for a Series A Capital Securities Guarantee and (ii) by
Firstar Capital Trust to exchange Series B Capital Securities for Series A
Capital Securities.
"Extended Interest Payment Period" shall have the meaning set
forth in Section 16.01.
"Federal Reserve" shall mean the Board of Governors of the
Federal Reserve System.
"Firstar Capital Trust" shall mean Firstar Capital Trust I, a
Delaware business trust created for the purpose of issuing its undivided
beneficial interests in connection with the issuance of Securities under this
Indenture.
"Global Security" means, with respect to the Securities, a
Security executed by the Company and delivered by the Trustee to the Depositary
or pursuant to the Depositary's instruction, all in accordance with the
Indenture, which shall be registered in the name of the Depositary or its
nominee.
"Indebtedness for Money Borrowed" shall mean (i) any
obligation of, or any obligation guaranteed by, the Company for the repayment
of borrowed money, whether or not evidenced by bonds, debentures, notes or
other written instruments and any deferred obligation for the payment of the
purchase price of property or assets acquired other than in the ordinary course
of business, and (ii) all indebtedness of the Company for claims in respect of
derivative products such as interest and foreign exchange rate contracts,
commodity contracts and similar arrangements, whether outstanding on the date
of execution of the Indenture or thereafter created, assumed or incurred. For
purposes of this definition, "claim" shall have the meaning assigned in Section
101(5) of the Bankruptcy Code of 1978, as amended and in effect on the date of
the execution of this Indenture.
"Indebtedness Ranking Junior to the Securities" shall
6
<PAGE> 16
mean any Indebtedness for Money Borrowed, whether outstanding on the date of
execution of this Indenture or hereafter created, assumed or incurred, which
specifically by its terms ranks junior to and not equally with or prior to the
Securities (and any other Indebtedness Ranking on a Parity with the Securities)
in right of payment upon the happening of any dissolution or winding up or
liquidation or reorganization of the Company. The securing of any Indebtedness
for Money Borrowed of the Company, otherwise constituting Indebtedness Ranking
Junior to the Securities, shall not be deemed to prevent such Indebtedness for
Money Borrowed from constituting Indebtedness Ranking Junior to the Securities.
"Indebtedness Ranking on a Parity with the Securities" shall
mean Indebtedness for Money Borrowed, whether outstanding on the date of
execution of this Indenture or hereafter created, assumed or incurred, which
specifically by its terms ranks equally with and not prior to the Securities in
the right of payment upon the happening of any dissolution or winding up or
liquidation or reorganization of the Company. The securing of any Indebtedness
for Money Borrowed of the Company, otherwise constituting Indebtedness Ranking
on a Parity with the Securities, shall not be deemed to prevent such
Indebtedness for Money Borrowed from constituting Indebtedness Ranking on a
Parity with the Securities.
"Indenture" shall mean this instrument as originally executed
or, if amended as herein provided, as so amended.
"Initial Optional Redemption Date" means December 23, 2006.
"Interest Payment Date" shall have the meaning set forth in
Section 2.06.
"Issue Date" means December 23, 1996.
"Liquidated Damages" shall have the meaning set forth in the
Registration Rights Agreement.
"Maturity Date" shall mean December 15, 2026.
"Mortgage" shall mean and include any mortgage, pledge, lien,
security interest, conditional sale or other title retention agreement or other
similar encumbrance.
"Non Book-Entry Capital Securities" shall have the meaning set
forth in Section 2.05.
"Officers" shall mean any of the Chairman, a Vice Chairman,
the Chief Executive Officer, the President, a Vice President, the Comptroller,
the Group Director, the Secretary or
7
<PAGE> 17
an Assistant Secretary of the Company.
"Officers' Certificate" shall mean a certificate signed by two Officers and
delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may be an employee of the Company, and who shall be acceptable to the
Trustee.
"Optional Redemption Price" shall have the meaning set forth
in Section 14.02.
"Other Debentures" means all junior subordinated debentures
issued by the Company from time to time and sold to trusts to be established by
the Company (if any), in each case similar to the Trust.
"Other Guarantees" means all guarantees issued by the Company
with respect to capital securities (if any) and issued to other trusts
established by the Company (if any), in each case similar to the Trust.
The term "outstanding" when used with reference to Securities,
shall, subject to the provisions of Section 7.04, mean, as of any particular
time, all Securities authenticated and delivered by the Trustee or the
Authenticating Agent under this Indenture, except
(a) Securities theretofore cancelled by the Trustee or
the Authenticating Agent or delivered to the Trustee
for cancellation;
(b) Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount
shall have been deposited in trust with the Trustee
or with any paying agent (other than the Company) or
shall have been set aside and segregated in trust by
the Company (if the Company shall act as its own
paying agent); provided that, if such Securities, or
portions thereof, are to be redeemed prior to
maturity thereof, notice of such redemption shall
have been given as in Article XIV provided or
provision satisfactory to the Trustee shall have been
made for giving such notice; and
(c) Securities in lieu of or in substitution for which
other Securities shall have been authenticated and
delivered pursuant to the terms of Section 2.08
unless proof satisfactory to the Company and the
Trustee is presented that any such Securities are
held by bona fide holders in due course.
8
<PAGE> 18
"Person" shall mean any individual, corporation, estate,
partnership, joint venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt and as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 2.08 in lieu
of a lost, destroyed or stolen Security shall be deemed to evidence the same
debt as the lost, destroyed or stolen Security.
"Principal Office of the Trustee", or other similar term,
shall mean the office of the Trustee, at which at any particular time its
corporate trust business shall be principally administered.
"Purchase Agreement" shall mean the Purchase Agreement dated
December 17, 1996 among the Company, Firstar Capital Trust and the initial
purchasers named therein.
"Property Trustee" shall have the same meaning as set forth in
the Declaration.
"Quotation Agent" means the Reference Treasury Dealer
appointed by the Company.
"Redemption Price" means the Special Event Redemption Price or
the Optional Redemption Price, as the context requires.
"Reference Treasury Dealer" means (i) Merrill Lynch Government
Securities, Inc. and its successors; provided, however, that if the foregoing
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer, and (ii) any other Primary Treasury Dealer selected by
the Trustee after consultation with the Company.
"Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any redemption date pursuant to Section
14.01, the average, as determined by the Trustee, of the bid and asked prices
for the Comparable Treasury Issue (expressed in each case as a percentage of
its principal amount) quoted in writing to the Trustee by such Reference
Treasury Dealer at 5:00 p.m. New York City time on the third Business Day
preceding such redemption date.
9
<PAGE> 19
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Issue Date, by and among the Company, the Trust and
the Initial Purchasers named therein as such agreement may be amended, modified
or supplemented from time to time.
"Regulatory Capital Event" means that the Company shall have
received an opinion of independent bank regulatory counsel experienced in such
matters to the effect that, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any rules, guidelines or policies of the
Federal Reserve or (b) any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or such pronouncement or decision is announced on or after
the Issue Date, the Capital Securities do not constitute, or within 90 days of
the date thereof, will not constitute, Tier I Capital (or its then equivalent);
provided, however, that a Regulatory Capital Event shall not occur by reason of
the use of the proceeds of the Securities in the manner contemplated by the
Offering Memorandum dated December 17, 1996 relating to the Capital Securities.
"Responsible Officer", when used with respect to the Trustee,
shall mean the chairman or any vice chairman of the board of directors, the
chairman or any vice chairman of the executive committee of the board of
directors, the chairman of the trust committee, the president, any vice
president, the cashier, any assistant cashier, the secretary, any assistant
secretary, the treasurer, any assistant treasurer or senior trust officer, any
trust officer or assistant trust officer, the controller or any assistant
controller or any other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Security" shall mean Securities that bear or are
required to bear the Securities Act legends set forth in Exhibit A hereto.
"Rule 144A" means Rule 144A under the Securities Act, as such
Rule may be amended from time to time, or under any similar rule or regulation
hereafter adopted by the Commission.
"Securities" means, collectively, the Series A Securities and
the Series B Securities.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
10
<PAGE> 20
"Securityholder", "holder of Securities", or other similar
terms, shall mean any person in whose name at the time a particular Security is
registered on the register kept by the Company or the Trustee for that purpose
in accordance with the terms hereof.
"Security Register" shall mean (i) prior to a Dissolution
Event, the list of holders provided to the Trustee pursuant to Section 4.01,
and (ii) following a Dissolution Event, any security register maintained by a
security registrar for the Securities appointed by the Company following the
execution of a supplemental indenture providing for transfer procedures as
provided for in Section 2.07(a).
"Senior Indebtedness" shall mean all Indebtedness for Money
Borrowed, whether outstanding on the date of execution of this Indenture or
thereafter created, assumed or incurred, except Indebtedness Ranking on a
Parity with the Securities or Indebtedness Ranking Junior to the Securities,
and any deferrals, renewals or extensions of such Senior Indebtedness.
"Series A Securities" means the Company's 8.32% Series A
Junior Subordinated Deferrable Interest Debentures due December 15, 2026, as
authenticated and issued under this Indenture.
"Series B Securities" means the Company's Series B 8.32%
Junior Subordinated Deferrable Interest Debentures due December 15, 2026, as
authenticated and issued under this Indenture.
"Special Event" means a Tax Event or a Regulatory Capital
Event, as the case may be.
"Special Event Redemption Price" shall mean, with respect to
any redemption of the Securities pursuant to Section 14.01 hereof, an amount in
cash equal to the greater of (i) 100% of the principal amount to be redeemed or
(ii) the sum, as determined by a Quotation Agent, of the present values of the
principal amount and premium payable with respect to an optional redemption
pursuant to Section 14.02 on the Initial Optional Redemption Date, together
with scheduled payments of interest on the Securities from the redemption date
to and including the Initial Optional Redemption Date, discounted to the
redemption date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate, plus, in each case, any
accrued and unpaid interest thereon, including Compounded Interest and
Additional Interest, if any, to the date of such redemption.
11
<PAGE> 21
"Subsidiary" shall mean with respect to any Person, (i) any
corporation at least a majority of whose outstanding voting stock is owned,
directly or indirectly, by such Person or by one or more of its Subsidiaries,
or by such Person and one or more of its Subsidiaries, (ii) any general
partnership, joint venture or similar entity, at least a majority of whose
outstanding partnership or similar interests shall at the time be owned by such
Person, or by one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries and (iii) any limited partnership of which such Person
or any of its Subsidiaries is a general partner. For the purposes of this
definition, "voting stock" means shares, interests, participations or other
equivalents in the equity interest (however designated) in such Person having
ordinary voting power for the election of a majority of the directors (or the
equivalent) of such Person, other than shares, interests, participations or
other equivalents having such power only by reason of the occurrence of a
contingency.
"Tax Event" shall mean the receipt by Firstar Capital Trust
and the Company of an opinion of a nationally recognized tax counsel
experienced in such matters to the effect that, as a result of any amendment
to, or change (including any announced prospective change) in, the laws or any
regulations thereunder of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the Issue Date, there is
more than an insubstantial risk that (i) Firstar Capital Trust is, or will be
within 90 days of the date of such opinion, subject to United States Federal
income tax with respect to income received or accrued on the Securities, (ii)
interest payable by the Company on the Securities is not, or within 90 days of
the date of such opinion, will not be, deductible by the Company, in whole or
in part, for United States federal income tax purposes, or (iii) Firstar
Capital Trust is, or will be within 90 days of the date of such opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
"Trustee" shall mean the Person identified as "Trustee" in the
first paragraph hereof, and, subject to the provisions of Article VI hereof,
shall also include its successors and assigns as Trustee hereunder. The term
"Trustee" as used with respect to a particular series of the Securities shall
mean the trustee with respect to that series.
"Trust Indenture Act of 1939" shall mean the Trust Indenture
Act of 1939 as in force at the date of execution of this Indenture, except as
provided in Section 9.03.
12
<PAGE> 22
"Trust Securities" shall mean the Capital Securities and the
Common Securities, collectively.
"U.S. Government Obligations" shall mean securities that are
(i) direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (ii) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality of the United
States of America the payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case under clauses (i) or (ii) are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a
bank or trust company as custodian with respect to any such U.S. Government
Obligation or a specific payment of interest on or principal of any such U.S.
Government Obligation held by such custodian for the account of the holder of a
depository receipt, provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of interest on or
principal of the U.S. Government Obligation evidenced by such depository
receipt.
ARTICLE II
SECURITIES
SECTION 2.01. Forms Generally.
The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A, the terms of which are
incorporated in and made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject or usage. Each Security shall be
dated the date of its authentication. The Securities shall be issued in
denominations of $1,000 and integral multiples thereof.
SECTION 2.02. Execution and Authentication.
Two Officers shall sign the Securities for the Company by
manual or facsimile signature in the manner set forth in Exhibit A. If an
Officer whose signature is on a Security no longer holds that office at the
time the Security is authenticated, the Security shall nevertheless be valid.
A Security shall not be valid until authenticated by the
manual signature of an authorized officer of the Trustee. The signature of the
Trustee shall be conclusive evidence that
13
<PAGE> 23
the Security has been authenticated under this Indenture. The form of
Trustee's certificate of authentication to be borne by the Securities shall be
substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a Company Order, authenticate for
original issue up to, and the aggregate principal amount of Securities
outstanding at any time may not exceed the sum of $154,640,000 aggregate
principal amount of the Securities, except as provided in Sections 2.07, 2.08,
2.10 and 14.05. The series of Securities to be initially issued hereunder
shall be the Series A Securities.
SECTION 2.03. Form and Payment.
Except as provided in Section 2.05, the Securities shall be
issued in fully registered certificated form without interest coupons.
Principal of, premium, if any, and interest on the Securities issued in
certificated form will be payable, the transfer of such Securities will be
registrable and such Securities will be exchangeable for Securities bearing
identical terms and provisions at the office or agency of the Company
maintained for such purpose under Section 3.02; provided, however, that payment
of interest with respect to the Securities may be made at the option of the
Company (i) by check mailed to the holder at such address as shall appear in
the Security Register or (ii) by transfer to an account maintained by the
Person entitled thereto, provided that proper transfer instructions have been
received in writing by the relevant record date. Notwithstanding the
foregoing, so long as the holder of any Securities is the Property Trustee, the
payment of the principal of, premium, if any, and interest (including
Compounded Interest and Additional Interest, if any) on such Securities held by
the Property Trustee will be made at such place and to such account as may be
designated by the Property Trustee.
SECTION 2.04. Legends.
(a) Except as permitted by subsection (b) of this Section
2.04 or as otherwise determined by the Company in accordance with applicable
law, each Security shall bear the applicable legends relating to restrictions
on transfer pursuant to the securities laws in substantially the form set forth
on Exhibit A hereto.
(b) The Company shall issue and the Trustee shall
authenticate Series B Securities in exchange for Series A Securities accepted
for exchange in the Exchange Offer, which Series B Securities shall not bear
the legends required by subsection (a) above, in each case unless the holder of
such Series A Securities is either (A) a broker-dealer who purchased such
Series A Securi-
14
<PAGE> 24
ties directly from the Company for resale pursuant to Rule 144A or any other
available exemption under the Securities Act, (B) a Person participating in the
distribution of the Series A Securities or (C) a Person who is an affiliate (as
defined in Rule 144 under the Securities Act) of the Company.
SECTION 2.05. Global Security.
(a) In connection with a Dissolution Event,
(i) if any Capital Securities are held in
book-entry form, the related Definitive Securities shall be presented
to the Trustee (if an arrangement with the Depositary has been
maintained) by the Property Trustee in exchange for one or more Global
Securities (as may be required pursuant to Section 2.07) in an
aggregate principal amount equal to the aggregate principal amount of
all outstanding Securities, to be registered in the name of the
Depositary, or its nominee, and delivered by the Trustee to the
Depositary for crediting to the accounts of its participants pursuant
to the instructions of the Administrative Trustees; the Company upon
any such presentation shall execute one or more Global Securities in
such aggregate principal amount and deliver the same to the Trustee
for authentication and delivery in accordance with this Indenture; and
payments on the Securities issued as a Global Security will be made to
the Depositary; and
(ii) if any Capital Securities are held in
certificated form, the related Definitive Securities may be presented
to the Trustee by the Property Trustee and any Capital Security
certificate which represents Capital Securities other than Capital
Securities in book-entry form ("Non Book-Entry Capital Securities")
will be deemed to represent beneficial interests in Securities
presented to the Trustee by the Property Trustee having an aggregate
principal amount equal to the aggregate liquidation amount of the Non
Book-Entry Capital Securities until such Capital Security certificates
are presented to the Security Registrar for transfer or reissuance, at
which time such Capital Security certificates will be cancelled and a
Security, registered in the name of the holder of the Capital Security
certificate or the transferee of the holder of such Capital Security
certificate, as the case may be, with an aggregate principal amount
equal to the aggregate liquidation amount of the Capital Security
certificate cancelled, will be executed by the Company and delivered
to the Trustee for authentication and delivery in accordance with the
Indenture. Upon the issuance of such Securities, Securities with an
equivalent aggregate principal amount that were presented by the
Property Trustee to the Trustee will be deemed to
15
<PAGE> 25
have been cancelled.
(b) The Global Securities shall represent the aggregate
amount of outstanding Securities from time to time endorsed thereon; provided,
that the aggregate amount of outstanding Securities represented thereby may
from time to time be reduced or increased, as appropriate, to reflect exchanges
and redemptions. Any endorsement of a Global Security to reflect the amount of
any increase or decrease in the amount of outstanding Securities represented
thereby shall be made by the Trustee, in accordance with instructions given by
the Company as required by this Section 2.05.
(c) The Global Securities may be transferred, in whole
but not in part, only to the Depositary, another nominee of the Depositary, or
to a successor Depositary selected or approved by the Company or to a nominee
of such successor Depositary.
(d) If at any time the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary or the Depositary has
ceased to be a clearing agency registered under the Exchange Act, and a
successor Depositary is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such condition, as the case
may be, the Company will execute, and the Trustee, upon written notice from the
Company, will authenticate and make available for delivery the Definitive
Securities, in authorized denominations, and in an aggregate principal amount
equal to the principal amount of the Global Security in exchange for such
Global Security. If there is an Event of Default, the Depositary shall have
the right to exchange the Global Securities for Definitive Securities. In
addition, the Company may at any time determine that the Securities shall no
longer be represented by a Global Security. In the event of such an Event of
Default or such a determination, the Company shall execute, and subject to
Section 2.07, the Trustee, upon receipt of an Officers' Certificate evidencing
such determination by the Company, will authenticate and make available for
delivery the Definitive Securities, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Security
in exchange for such Global Security. Upon the exchange of the Global Security
for such Definitive Securities, in authorized denominations, the Global
Security shall be cancelled by the Trustee. Such Definitive Securities issued
in exchange for the Global Security shall be registered in such names and in
such authorized denominations as the Depositary, pursuant to instructions from
its direct or indirect participants or otherwise, shall instruct the Trustee.
The Trustee shall deliver such Definitive Securities to the Depositary for
delivery to the Persons in whose names such Definitive Securities are so
registered.
16
<PAGE> 26
SECTION 2.06 Interest.
(a) Each Security will bear interest at the rate of
8.32% per annum (the "Coupon Rate") from the most recent date to which interest
has been paid or duly provided for or, if no interest has been paid or duly
provided for, from the Issue Date, until the principal thereof becomes due and
payable, and at the Coupon Rate on any overdue principal (and premium, if any)
and (to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest, compounded
semi-annually, payable (subject to the provisions of Article XVI) semi-annually
in arrears on June 15 and December 15 of each year (each, an "Interest Payment
Date") commencing on June 15, 1997, to the Person in whose name such Security
or any predecessor Security is registered, at the close of business on the
regular record date for such interest installment, which shall be the first day
of the month in which the relevant Interest Payment Date falls.
(b) Interest will be computed on the basis of a 360-day
year consisting of twelve 30-day months and, for any period of less than a full
calendar month, the number of days lapsed in such month. In the event that any
Interest Payment Date falls on a day that is not a Business Day, then payment
of interest payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of any
such delay), with the same force and effect as if made on such date.
(c) During such time as the Property Trustee is the
holder of any Securities, the Company shall pay any additional amounts on the
Securities as may be necessary in order that the amount of Distributions then
due and payable by the Firstar Capital Trust on the outstanding Securities
shall not be reduced as a result of any additional taxes, duties and other
governmental charges to which the Firstar Capital Trust has become subject as a
result of a Tax Event ("Additional Interest").
17
<PAGE> 27
SECTION 2.07. Transfer and Exchange.
(a) Transfer Restrictions. The Series A Securities, and
those Series B Securities with respect to which any Person described in Section
2.04(b)(A), (B) or (C) is the beneficial owner, may not be transferred except
in compliance with the legend contained in Exhibit A unless otherwise
determined by the Company in accordance with applicable law. Upon any
distribution of the Securities following a Dissolution Event, the Company and
the Trustee shall enter into a supplemental indenture pursuant to Section 9.01
to provide for the transfer restrictions and procedures with respect to the
Securities substantially similar to those contained in the Declaration to the
extent applicable in the circumstances existing at such time.
(b) General Provisions Relating to Transfers and Exchanges.
Upon surrender for registration of transfer of any Security at the office or
agency of the Company maintained for the purpose pursuant to Section 3.02, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
the same series, of any authorized denominations and of a like aggregate
principal amount.
At the option of the holder, Securities of any series may be
exchanged for other Securities of the same series, of any authorized
denominations and of a like aggregate principal amount, upon surrender of the
Securities to be exchanged at such office or agency. Whenever any Securities
are so surrendered for exchange, the Company shall execute, and the Trustee
shall authenticate and deliver, the Securities which the holder making the
exchange is entitled to receive.
Every Security presented or surrendered for registration of
transfer or exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security registrar duly executed, by the
holder thereof or his attorney duly authorized in writing.
All Definitive Securities and Global Securities issued upon
any registration of transfer or exchange of Definitive Securities or Global
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Definitive
Securities or Global Securities surrendered upon such registration of transfer
or exchange.
No service charge shall be made to a holder for any
registration of transfer or exchange, but the Company may require
18
<PAGE> 28
payment of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith.
The Company shall not be required to (i) issue, register the
transfer of or exchange Securities during a period beginning at the opening of
business 15 days before the day of mailing of a notice of redemption or any
notice of selection of Securities for redemption under Article XIV hereof and
ending at the close of business on the day of such mailing; or (ii) register
the transfer of or exchange any Security so selected for redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in part.
(c) Exchange of Series A Securities for Series B Securities.
The Series A Securities may be exchanged for Series B Securities pursuant to
the terms of the Exchange Offer. The Trustee shall make the exchange as
follows:
The Company shall present the Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Securities, the
transactions contemplated by the Exchange Offer have
been consummated; and
(B) the principal amount of Series A Securities properly
tendered in the Exchange Offer that are represented
by a Global Security and the principal amount of
Series A Securities properly tendered in the Exchange
Offer that are represented by Definitive Securities,
the name of each holder of such Definitive
Securities, the principal amount properly tendered in
the Exchange Offer by each such holder and the name
and address to which Definitive Securities for Series
B Securities shall be registered and sent for each
such holder.
The Trustee, upon receipt of (i) such Officers' Certificate,
(ii) an Opinion of Counsel (x) to the effect that the Series B Securities have
been registered under Section 5 of the Securities Act and the Indenture has
been qualified under the Trust Indenture Act and (y) with respect to the
matters set forth in Section 3(p) of the Registration Rights Agreement and
(iii) a Company Order, shall authenticate (A) a Global Security for Series B
Securities in aggregate principal amount equal to the aggregate principal
amount of Series A Securities represented by a Global Security indicated in
such Officers' Certificate as having been properly tendered and (B) Definitive
Securities representing Series B Securities registered in the names of, and in
the principal amounts indicated in, such Officers' Certificate.
19
<PAGE> 29
If the principal amount of the Global Security for the Series
B Securities is less than the principal amount of the Global Security for the
Series A Securities, the Trustee shall make an endorsement on such Global
Security for Series A Securities indicating a reduction in the principal amount
represented thereby.
The Trustee shall deliver such Definitive Securities for
Series B Securities to the holders thereof as indicated in such Officers'
Certificate.
SECTION 2.08. Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and the
Trustee shall authenticate a replacement Security if the Trustee's requirements
for replacements of Securities are met. An indemnity bond must be supplied by
the holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any agent thereof or any authenticating agent
from any loss that any of them may suffer if a Security is replaced. The
Company or the Trustee may charge for its expenses in replacing a Security.
Every replacement Security is an obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement of mutilated, destroyed, lost or stolen Securities.
SECTION 2.09. [Intentionally Omitted]
SECTION 2.10. Temporary Securities.
Pending the preparation of definitive Securities, the Company
may execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities that are printed, lithographed,
typewritten, mimeographed or otherwise reproduced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu
of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities
may determine, as conclusively evidenced by their execution of such Securities.
20
<PAGE> 30
If temporary Securities are issued, the Company shall cause
definitive Securities to be prepared without unreasonable delay. The
definitive Securities shall be printed, lithographed or engraved, or provided
by any combination thereof, or in any other manner permitted by the rules and
regulations of any applicable securities exchange, all as determined by the
officers executing such definitive Securities. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency maintained by the Company for such purpose pursuant to Section 3.02
hereof, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Securities, the Company shall execute, and the Trustee
shall authenticate and make available for delivery, in exchange therefor the
same aggregate principal amount of definitive Securities of authorized
denominations. Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities.
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Trustee and no one else shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall retain or dispose of cancelled Securities in accordance
with its normal practices (subject to the record retention requirement of the
Exchange Act) unless the Company directs them to be returned to it. The
Company may not issue new Securities to replace Securities that have been
redeemed or paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. Defaulted Interest.
Any interest on any Security that is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the holder
on the relevant regular record date by virtue of having been such holder; and
such Defaulted Interest shall be paid by the Company, at its election, as
provided in clause (a) or clause (b) below:
(a) The Company may make payment of any Defaulted Interest on
Securities to the Persons in whose names such Securities (or their
respective Predecessor Securities) are registered at the close of
business on a special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner: the Company
shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each such Security and the date of the
proposed payment, and at the same time the Company shall
21
<PAGE> 31
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a special record date for the
payment of such Defaulted Interest which shall not be more than 15 nor less
than 10 days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such special record date and,
in the name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the special record date
therefor to be mailed, first class postage prepaid, to each Securityholder at
his or her address as it appears in the Security Register, not less than 10
days prior to such special record date. Notice of the proposed payment of such
Defaulted Interest and the special record date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in whose names
such Securities (or their respective Predecessor Securities) are registered on
such special record date and shall be no longer payable pursuant to the
following clause (b).
(b) The Company may make payment of any Defaulted Interest on
any Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may
be listed, and upon such notice as may be required by such exchange,
if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
SECTION 2.13. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers
in notices of redemption as a convenience to Securityholders; provided that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any notice
of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP numbers.
22
<PAGE> 32
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of the
holders of the Securities that it will duly and punctually pay or cause to be
paid the principal of and premium, if any, and interest on the Securities at
the place, at the respective times and in the manner provided herein. Except
as provided in Section 2.03, each installment of interest on the Securities may
be paid by mailing checks for such interest payable to the order of the holder
of Security entitled thereto as they appear in the Security Register. The
Company further covenants to pay any and all amounts including, without
limitation, Liquidated Damages, if any, on the dates and in the manner required
under the Registration Rights Agreement.
SECTION 3.02. Offices for Notices and Payments, etc.
So long as any of the Securities remain outstanding, the
Company will maintain in the Borough of Manhattan, The City of New York, an
office or agency where the Securities may be presented for payment, an office
or agency where the Securities may be presented for registration of transfer
and for exchange as in this Indenture provided and an office or agency where
notices and demands to or upon the Company in respect of the Securities or of
this Indenture may be served. The Company will give to the Trustee written
notice of the location of any such office or agency and of any change of
location thereof. Until otherwise designated from time to time by the Company
in a notice to the Trustee, any such office or agency for all of the above
purposes shall be the Principal Office of the Trustee. In case the Company
shall fail to maintain any such office or agency in the Borough of Manhattan,
The City of New York, or shall fail to give such notice of the location or of
any change in the location thereof, presentations and demands may be made and
notices may be served at the Principal Office of the Trustee.
In addition to any such office or agency, the Company may from
time to time designate one or more offices or agencies outside the Borough of
Manhattan, The City of New York, where the Securities may be presented for
payment, registration of transfer and for exchange in the manner provided in
this Indenture, and the Company may from time to time rescind such designation,
as the Company may deem desirable or expedient; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain any such office or agency in the Borough of Manhattan,
The City of New York, for
23
<PAGE> 33
the purposes above mentioned. The Company will give to the Trustee prompt
written notice of any such designation or rescission thereof.
SECTION 3.03. Appointments to Fill Vacancies in Trustee's
Office.
The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 6.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 3.04. Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other than the Trustee
with respect to the Securities, it will cause such paying agent to
execute and deliver to the Trustee an instrument in which such
agent shall agree with the Trustee, subject to the provision of
this Section 3.04,
(1) that it will hold all sums held by it as such agent for
the payment of the principal of and premium, if any, or
interest on the Securities (whether such sums have been
paid to it by the Company or by any other obligor on the
Securities of such series) in trust for the benefit of
the holders of the Securities;
(2) that it will give the Trustee notice of any failure by
the Company (or by any other obligor on the Securities)
to make any payment of the principal of and premium or
interest on the Securities when the same shall be due and
payable; and
(3) that it will at any time during the continuance of any
such failure, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held in trust by
it as such paying agent.
(b) If the Company shall act as its own paying agent, it will, on or
before each due date of the principal of and premium, if any, or
interest on the Securities, set aside, segregate and hold in trust
for the benefit of the holders of the Securities a sum sufficient
to pay such principal, premium or interest so becoming due and
will notify the Trustee of any failure to take such action and of
any failure by the Company (or by any other obli-
24
<PAGE> 34
gor under the Securities) to make any payment of the
principal of and premium, if any, or interest on the
Securities when the same shall become due and payable.
(c) Anything in this Section 3.04 to the contrary
notwithstanding, the Company may, at any time, for
the purpose of obtaining a satisfaction and discharge
with respect to the Securities hereunder, or for any
other reason, pay or cause to be paid to the Trustee
all sums held in trust for any such series by the
Trustee or any paying agent hereunder, as required by
this Section 3.04, such sums to be held by the
Trustee upon the trusts herein contained.
(d) Anything in this Section 3.04 to the contrary
notwithstanding, the agreement to hold sums in trust
as provided in this Section 3.04 is subject to
Sections 11.03 and 11.04.
SECTION 3.05. Certificate to Trustee.
The Company will deliver to the Trustee on or before 120 days
after the end of each fiscal year in each year, commencing with the first
fiscal year ending after the date hereof, so long as Securities are outstanding
hereunder, an Officers' Certificate, one of the signers of which shall be the
principal executive, principal financial or principal accounting officer of the
Company stating that in the course of the performance by the signers of their
duties as officers of the Company they would normally have knowledge of any
default by the Company in the performance of any covenants contained herein,
stating whether or not they have knowledge of any such default and, if so,
specifying each such default of which the signers have knowledge and the nature
thereof.
SECTION 3.06. Compliance with Consolidation Provisions.
The Company will not, while any of the Securities remain
outstanding, consolidate with, or merge into, or merge into itself, or sell or
convey all or substantially all of its property to any other Person unless the
provisions of Article X hereof are complied with.
SECTION 3.07. Limitation on Dividends.
The Company will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital
25
<PAGE> 35
stock (which includes common and preferred stock) or (ii) make any payment of
principal, interest or premium, if any, on or repay or repurchase or redeem any
debt securities of the Company (including any Other Debentures) that rank pari
passu with or junior in right of payment to the Securities or (iii) make any
guarantee payments with respect to any guarantee by the Company of any
securities of any Subsidiary of the Company (including Other Guarantees) if
such guarantee ranks pari passu or junior in right of payment to the Securities
(other than (a) dividends or distributions in shares of, or options, warrants
or rights to subscribe for or purchase shares of, Common Stock of the Company;
(b) any declaration of a dividend in connection with the implementation of a
stockholder's rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto;
(c) payments under the Capital Securities Guarantee; (d) as a direct result of,
and only to the extent required in order to avoid the issuance of fractional
shares of capital stock following a reclassi- fication of the Company's capital
stock or the exchange or the conversion of one class or series of the Company's
capital stock for another class or series of the Company's capital stock; (e)
the purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged; and (f) purchases of Common Stock
related to the issuance of Common Stock or rights under any of the Company's
benefit plans for its directors, officers or employees or any of the Company's
dividend reinvestment plans) if at such time (i) an Event of Default shall have
occurred and be continuing, (ii) there shall have occurred any event of which
the Company has actual knowledge that (a) is, or with the giving of notice or
the lapse of time, or both, would constitute an Event of Default and (b) in
respect of which the Company shall not have taken reasonable steps to cure,
(iii) if the Securities are held by the Property Trustee, the Company shall be
in default with respect to its payment obligations under the Capital Securities
Guarantee or (iv) the Company shall have given notice of its election of the
exercise of its right to extend the interest payment period pursuant to Section
16.01 and any such extension shall be continuing.
26
<PAGE> 36
SECTION 3.08. Covenants as to Firstar Capital Trust.
In the event Securities are issued to Firstar Capital Trust or
a trustee of such trust in connection with the issuance of Trust Securities by
Firstar Capital Trust, for so long as such Trust Securities remain outstanding,
the Company will (i) maintain 100% direct ownership of the Common Securities of
Firstar Capital Trust; provided, however, that any successor of the Company,
permitted pursuant to Article X, may succeed to the Company's ownership of such
Common Securities, (ii) use its reasonable efforts to cause Firstar Capital
Trust (a) to remain a business trust, except in connection with a distribution
of Securities, the redemption of all of the Trust Securities of Firstar Capital
Trust or certain mergers, consolidations or amalgamations, each as permitted by
the Declaration of Firstar Capital Trust, and (b) to otherwise continue to be
treated as a grantor trust and not an association taxable as a corporation for
United States federal income tax purposes and (iii) to use its reasonable
efforts to cause each holder of Trust Securities to be treated as owning an
individual beneficial interest in the Securities.
SECTION 3.09. Payment of Expenses.
In connection with the offering, sale and issuance of the
Securities to the Firstar Capital Trust and in connection with the sale of the
Trust Securities by the Firstar Capital Trust, the Company, in its capacity as
borrower with respect to the Securities, shall:
(a) pay all costs and expenses relating to the offering,
sale and issuance of the Securities, including commissions to the initial
purchasers payable pursuant to the Purchase Agreement, fees and expenses in
connection with any exchange offer or other action to be taken pursuant to the
Registration Rights Agreement and compensation of the Trustee in accordance
with the provisions of Section 6.06;
(b) pay all costs and expenses of the Firstar Capital
Trust (including, but not limited to, costs and expenses relating to the
organization of the Firstar Capital Trust, the offering, sale and issuance of
the Trust Securities (including commissions to the initial purchasers in
connection therewith), the fees and expenses of the Property Trustee and the
Delaware Trustee, the costs and expenses relating to the operation of the
Firstar Capital Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and other
telecommunications
27
<PAGE> 37
expenses and costs and expenses incurred in connection with the acquisition,
financing, and disposition of assets of the Firstar Capital Trust;
(c) be primarily and fully liable for any indemnification
obligations arising with respect to the Declaration;
(d) pay any and all taxes (other than United States
withholding taxes attributable to the Firstar Capital Trust or its assets) and
all liabilities, costs and expenses with respect to such taxes of the Firstar
Capital Trust; and
(e) pay all other fees, expenses, debts and obligations
(other than payments of principal of, premium, if any, or interest on the Trust
Securities) related to Firstar Capital Trust.
SECTION 3.10. Payment Upon Resignation or Removal.
Upon termination of this Indenture or the removal or
resignation of the Trustee, unless otherwise stated, the Company shall pay to
the Trustee all amounts accrued and owing to the date of such termination,
removal or resignation. Upon termination of the Declaration or the removal or
resignation of the Delaware Trustee or the Property Trustee, as the case may
be, pursuant to Section 5.7 of the Declaration, the Company shall pay to the
Delaware Trustee or the Property Trustee, as the case may be, all amounts
accrued and owing to the date of such termination, removal or resignation.
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists.
The Company covenants and agrees that it will furnish or cause
to be furnished to the Trustee:
(a) on a semi-annual basis on each regular record date
for the Securities, a list, in such form as the
Trustee may reasonably require, of the names and
addresses of the Securityholders as of such record
date; and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the
Company, of any such request, a list of similar
form and content as of a date not more than 15
28
<PAGE> 38
days prior to the time such list is furnished,
except that, no such lists need be furnished so long as the
Trustee is in possession thereof by reason of its acting as
Security registrar.
SECTION 4.02. Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form as
is reasonably practicable, all information as to the
names and addresses of the holders of the Securities
(1) contained in the most recent list furnished to it
as provided in Section 4.01 or (2) received by it in
the capacity of Securities registrar (if so acting)
hereunder. The Trustee may destroy any list
furnished to it as provided in Section 4.01 upon
receipt of a new list so furnished.
(b) In case three or more holders of Securities
(hereinafter referred to as "applicants") apply in
writing to the Trustee and furnish to the Trustee
reasonable proof that each such applicant has owned a
Security for a period of at least six months
preceding the date of such application, and such
application states that the applicants desire to
communicate with other holders of Securities or with
holders of all Securities with respect to their
rights under this Indenture and is accompanied by a
copy of the form of proxy or other communication
which such applicants propose to transmit, then the
Trustee shall within 5 Business Days after the
receipt of such application, at its election, either:
(1) afford such applicants access to the information
preserved at the time by the Trustee in accordance
with the provisions of subsection (a) of this Section
4.02, or
(2) inform such applicants as to the approximate number
of holders of all Securities, whose names and
addresses appear in the information preserved at the
time by the Trustee in accordance with the provisions
of subsection (a) of this Section 4.02, and as to the
approximate cost of mailing to such Securityholders
the form of proxy or other commu- nication, if any,
specified in such application.
If the Trustee shall elect not to afford such
applicants access to such information, the Trustee
29
<PAGE> 39
shall, upon the written request of such applicants,
mail to each Securityholder whose name and address
appear in the information preserved at the time by the
Trustee in accordance with the provisions of
subsection (a) of this Section 4.02 a copy of the form
of proxy or other communication which is specified in
such request with reasonable promptness after a tender
to the Trustee of the material to be mailed and of
payment, or provision for the payment, of the
reasonable expenses of mailing, unless within five
days after such tender, the Trustee shall mail to such
applicants and file with the Commission, together with
a copy of the material to be mailed, a written
statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best
interests of the holders of Securities of such series
or all Securities, as the case may be, or would be in
violation of applicable law. Such written statement
shall specify the basis of such opinion. If the
Commission, after opportunity for a hearing upon the
objections specified in the written statement so
filed, shall enter an order refusing to sustain any of
such objections or if, after the entry of an order
sustaining one or more of such objections, the
Commission shall find, after notice and opportunity
for hearing, that all the objections so sustained have
been met and shall enter an order so declaring, the
Trustee shall mail copies of such material to all such
Securityholders with reasonable promptness after the
entry of such order and the renewal of such tender;
otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their
application.
(c) Each and every holder of Securities, by receiving and
holding the same, agrees with the Company and the
Trustee that neither the Company nor the Trustee nor
any paying agent shall be held accountable by reason
of the disclosure of any such information as to the
names and addresses of the holders of Securities in
accordance with the provisions of subsection (b) of
this Section 4.02, regardless of the source from
which such information was derived, and that the
Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under
said subsection (b).
30
<PAGE> 40
SECTION 4.03. Reports by Company.
(a) The Company covenants and agrees to file with the
Trustee, within 15 days after the date on which the
Company is required to file the same with the
Commission, copies of the annual reports and of the
information, documents and other reports (or copies
of such portions of any of the foregoing as said
Commission may from time to time by rules and
regulations prescribe) which the Company may be
required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act; or,
if the Company is not required to file information,
documents or reports pursuant to either of such
sections, then to file with the Trustee and the
Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such
of the supplementary and periodic information,
documents and reports which may be required pursuant
to Section 13 of the Exchange Act in respect of a
security listed and registered on a national
securities exchange as may be prescribed from time to
time in such rules and regulations.
(b) The Company covenants and agrees to file with the
Trustee and the Commission, in accordance with the
rules and regulations prescribed from time to time by
said Commission, such additional information,
documents and reports with respect to compliance by
the Company with the conditions and covenants
provided for in this Indenture as may be required
from time to time by such rules and regulations.
(c) The Company covenants and agrees to transmit by mail
to all holders of Securities, as the names and
addresses of such holders appear upon the Security
Register, within 30 days after the filing thereof
with the Trustee, such summaries of any information,
documents and reports required to be filed by the
Company pursuant to subsections (a) and (b) of this
Section 4.03 as may be required by rules and
regulations prescribed from time to time by the
Commission.
(d) Delivery of such reports, information and documents
to the Trustee is for informational purposes only and
the Trustee's receipt of such shall not constitute
constructive notice of any information contained
therein or determinable from information
31
<PAGE> 41
contained therein, including the Company's
compliance with any of its covenants hereunder (as
to which the Trustee is entitled to rely exclusively
on Officers' Certificates).
(e) So long as is required for an offer or sale of the
Securities to qualify for an exemption under Rule
144A under the Securities Act, the Company shall,
upon request, provide the information required by
clause (d)(4) thereunder to each Holder and to each
beneficial owner and prospective purchaser of
Securities identified by any holder of Restricted
Securities, unless such information is furnished to
the Commission pursuant to Section 13 or 15(d) of the
Exchange Act.
SECTION 4.04. Reports by the Trustee.
(a) The Trustee shall transmit to Securityholders such
reports concerning the Trustee and its actions under
this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner
provided pursuant thereto. If required by Section
313(a) of the Trust Indenture Act, the Trustee shall,
within sixty days after each November 15 following
the date of this Indenture, commencing November 15,
1997, deliver to Securityholders a brief report,
dated as of such November 15, which complies with the
provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the
Trustee with each stock exchange, if any, upon which
the Securities are listed, with the Commission and
with the Company. The Company will promptly notify
the Trustee when the Securities are listed on any
stock exchange.
32
<PAGE> 42
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.01. Events of Default.
One or more of the following events of default shall
constitute an Event of Default hereunder (whatever the reason for such Event of
Default and whether it shall be voluntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any
Security or any Other Debentures when it becomes due
and payable, and continuance of such default for a
period of 30 days; provided, however, that a valid
extension of an interest payment period by the
Company in accordance with the terms hereof shall not
constitute a default in the payment of interest for
this purpose; or
(b) default in the payment of all or any part of the
principal of (or premium, if any, on) any Security or
any Other Debentures as and when the same shall
become due and payable either at maturity, upon
redemption, by declaration or otherwise; or
(c) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture
(other than a covenant or warranty a default in whose
performance or whose breach is elsewhere in this
Section specifically dealt with), and continuance of
such default or breach for a period of 90 days after
there has been given, by registered or certified
mail, to the Company by the Trustee or to the Company
and the Trustee by the holders of at least 25% in
aggregate principal amount of the outstanding
Securities a written notice specifying such default
or breach and re- quiring it to be remedied and
stating that such notice is a "Notice of Default"
hereunder; or
(d) a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the
Company in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a
33
<PAGE> 43
receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Company or
for any substantial part of its property, or
ordering the winding-up or liquidation of its
affairs and such decree or order shall remain
unstayed and in effect for a period of 90
consecutive days; or
(e) the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, shall consent to the
entry of an order for relief in an involuntary case
under any such law, or shall consent to the
appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the
Company or of any substantial part of
its property, or shall make any general assignment
for the benefit of creditors, or shall fail generally
to pay its debts as they become due.
If an Event of Default with respect to Securities at the time
outstanding occurs and is continuing, then in every such case the Trustee or
the holders of not less than 25% in aggregate principal amount of the
Securities then outstanding may declare the principal amount of all Securities
to be due and payable immediately, by a notice in writing to the Company (and
to the Trustee if given by the holders of the outstanding Securities), and upon
any such declaration the same shall become immediately due and payable.
The foregoing provisions, however, are subject to the
condition that if, at any time after the principal of the Securities shall have
been so declared due and payable, and before any judgment or decree for the
payment of the moneys due shall have been obtained or entered as hereinafter
provided, (i) the Company shall pay or shall deposit with the Trustee a sum
sufficient to pay (A) all matured installments of interest upon all the
Securities and the principal of and premium, if any, on any and all Securities
which shall have become due otherwise than by acceleration (with interest upon
such principal and premium, if any, and, to the extent that payment of such
interest is enforceable under applicable law, on overdue installments of
interest, at the same rate as the rate of interest specified in the Securities
to the date of such payment or deposit) and (B) such amount as shall be
sufficient to cover reasonable compensation to the Trustee and each predecessor
Trustee, their respective agents, attorneys and counsel, and all other expenses
and liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee except as a result of negligence or bad faith, and (ii) any
and all Events of Default under the Indenture, other than the non-payment
34
<PAGE> 44
of the principal of the Securities which shall have become due solely by such
declaration of acceleration, shall have been cured, waived or otherwise
remedied as provided herein, then, in every such case, the holders of a
majority in aggregate principal amount of the Securities then outstanding, by
written notice to the Company and to the Trustee, may rescind and annul such
declaration and its consequences, but no such waiver or rescission and
annulment shall extend to or shall affect any subsequent default or shall
impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such
case the Company, the Trustee and the holders of the Securities shall be
restored respectively to their several positions and rights hereunder, and all
rights, remedies and powers of the Company, the Trustee and the holders of the
Securities shall continue as though no such proceeding had been taken.
SECTION 5.02. Payment of Securities on Default; Suit
Therefor.
The Company covenants that (a) in case default shall be made
in the payment of any installment of interest upon any of the Securities as and
when the same shall become due and payable, and such default shall have
continued for a period of 30 days, or (b) in case default shall be made in the
payment of the principal of or premium, if any, on any of the Securities as and
when the same shall have become due and payable, whether at maturity of the
Securities or upon redemption or by declaration or otherwise, then, upon demand
of the Trustee, the Company will pay to the Trustee, for the benefit of the
holders of the Securities, the whole amount that then shall have become due and
payable on all such Securities for principal and premium, if any, or interest,
or both, as the case may be, with interest upon the overdue principal and
premium, if any, and (to the extent that payment of such interest is
enforceable under applicable law and, if the Securities are held by Firstar
Capital Trust or a trustee of such trust, without duplication of any other
amounts paid by Firstar Capital Trust or a trustee in respect thereof) upon the
overdue installments of interest at the rate borne by the Securities; and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including a reasonable compensation to the Trustee,
its agents, attorneys and counsel, and any expenses or liabilities incurred by
the Trustee hereunder other than through its negligence or bad faith.
In case the Company shall fail forthwith to pay such amounts
upon such demand, the Trustee, in its own name and as
35
<PAGE> 45
trustee of an express trust, shall be entitled and empowered to institute any
actions or proceedings at law or in equity for the collection of the sums so
due and unpaid, and may prosecute any such action or proceeding to judgment or
final decree, and may enforce any such judgment or final decree against the
Company or any other obligor on the Securities and collect in the manner
provided by law out of the property of the Company or any other obligor on the
Securities wherever situated the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy
or for the reorganization of the Company or any other obligor on the Securities
under Title 11, United States Code, or any other applicable law, or in case a
receiver or trustee shall have been appointed for the property of the Company
or such other obligor, or in the case of any other similar judicial proceedings
relative to the Company or other obligor upon the Securities, or to the
creditors or property of the Company or such other obligor, the Trustee,
irrespective of whether the principal of the Securities shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand pursuant to the provisions of
this Section 5.02, shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount of principal and interest owing and unpaid in respect of the Securities
and, in case of any judicial proceedings, to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for reasonable compensation to the
Trustee and each predecessor Trustee, and their respective agents, attorneys
and counsel, and for reimbursement of all expenses and liabilities incurred,
and all advances made, by the Trustee and each predecessor Trustee, except as a
result of negligence or bad faith) and of the Securityholders allowed in such
judicial proceedings relative to the Company or any other obligor on the
Securities, or to the creditors or property of the Company or such other
obligor, unless prohibited by applicable law and regulations, to vote on behalf
of the holders of the Securities in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other bankruptcy or
insolvency proceedings or person performing similar functions in comparable
proceedings, and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of its charges and expenses; and any receiver, assignee or trustee in
bankruptcy or reorganization is hereby authorized by each of the
Securityholders to make such payments to the Trustee, and, in the event that
the Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee such amounts as shall be sufficient to
cover reasonable compensation to the Trustee, each predecessor
36
<PAGE> 46
Trustee and their respective agents, attorneys and counsel, and all other
expenses and liabilities incurred, and all advances made, by the Trustee and
each predecessor Trustee except as a result of negligence or bad faith.
Nothing herein contained shall be construed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any holder thereof or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding.
All rights of action and of asserting claims under this
Indenture, or under any of the Securities, may be enforced by the Trustee
without the possession of any of the Securities, or the production thereof on
any trial or other proceeding relative thereto, and any such suit or proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the holders of the Securities.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party) the Trustee shall be held to represent all
the holders of the Securities, and it shall not be necessary to make any
holders of the Securities parties to any such proceedings.
SECTION 5.03. Application of Moneys Collected by Trustee.
Any moneys collected by the Trustee shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such moneys, upon presentation of the Securities in respect of which moneys
have been collected, and stamping thereon the payment, if only partially paid,
and upon surrender thereof if fully paid:
First: To the payment of costs and expenses of collection
applicable to the Securities and reasonable compensation to the Trustee, its
agents, attorneys and counsel, and of all other expenses and liabilities
incurred, and all advances made, by the Trustee except as a result of its
negligence or bad faith;
Second: To the payment of all Senior Indebtedness of the
Company if and to the extent required by Article XV;
Third: To the payment of the amounts then due and unpaid upon
Securities for principal of (and premium, if any) and interest on the
Securities, in respect of which or for the
37
<PAGE> 47
benefit of which money has been collected, ratably, without preference of
priority of any kind, according to the amounts due on such Securities for
principal (and premium, if any) and interest, respectively; and
Fourth: To the Company.
SECTION 5.04. Proceedings by Securityholders.
No holder of any Security shall have any right by virtue of or
by availing of any provision of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Indenture
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee
written notice of an Event of Default and of the continuance thereof with
respect to the Securities specifying such Event of Default, as hereinbefore
provided, and unless also the holders of not less than 25% in aggregate
principal amount of the Securities then outstanding shall have made written
request upon the Trustee to institute such action, suit or proceeding in its
own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for 60 days
after its receipt of such notice, request and offer of indemnity shall have
failed to institute any such action, suit or proceeding, it being understood
and intended, and being expressly covenanted by the taker and holder of every
Security with every other taker and holder and the Trustee, that no one or more
holders of Securities shall have any right in any manner whatever by virtue of
or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of any other holder of Securities, or to obtain or seek to
obtain priority over or preference to any other such holder, or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal, ratable and common benefit of all holders of Securities.
Notwithstanding any other provisions in this Indenture,
however, the right of any holder of any Security to receive payment of the
principal of (premium, if any) and interest on such Security, on or after the
same shall have become due and payable, or to institute suit for the
enforcement of any such payment, shall not be impaired or affected without the
consent of such holder and by accepting a Security hereunder it is expressly
understood, intended and covenanted by the taker and holder of every Security
with every other such taker and holder and the Trustee, that no one or more
holders of Securities shall have any right in any manner whatsoever by virtue
or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of the holders of any other Securities, or to obtain or
38
<PAGE> 48
seek to obtain priority over or preference to any other such holder, or to
enforce any right under this Indenture, except in the manner herein provided
and for the equal, ratable and common benefit of all holders of Securities.
For the protection and enforcement of the provisions of this Section, each and
every Securityholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
The Company and the Trustee acknowledge that pursuant to the
Declaration, the holders of Capital Securities are entitled, in the
circumstances and subject to the limitations set forth therein, to commence a
Direct Action with respect to any Event of Default under this Indenture and the
Securities.
SECTION 5.05. Proceedings by Trustee.
In case an Event of Default occurs with respect to Securities
and is continuing, the Trustee may in its discretion proceed to protect and
enforce the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
of such rights, either by suit in equity or by action at law or by proceeding
in bankruptcy or otherwise, whether for the specific enforcement of any
covenant or agreement contained in this Indenture or in aid of the exercise of
any power granted in this Indenture, or to enforce any other legal or equitable
right vested in the Trustee by this Indenture or by law.
SECTION 5.06. Remedies Cumulative and Continuing.
Except as provided in the last paragraph of Section 2.08, all
powers and remedies given by this Article V to the Trustee or to the
Securityholders shall, to the extent permitted by law, be deemed cumulative and
not exclusive of any other powers and remedies available to the Trustee or the
holders of the Securities, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in this
Indenture or otherwise established with respect to the Securities, and no delay
or omission of the Trustee or of any holder of any of the Securities to
exercise any right or power accruing upon any Event of Default occurring and
continuing as aforesaid shall impair any such right or power, or shall be
construed to be a waiver of any such default or an acquiescence therein; and,
subject to the provisions of Section 5.04, every power and remedy given by this
Article V or by law to the Trustee or to the Securityholders may be exercised
from time to time, and as often as shall be deemed expedient, by the Trustee or
by the Securityholders.
SECTION 5.07. Direction of Proceedings and Waiver of
Defaults by Majority of Securityholders.
39
<PAGE> 49
The holders of a majority in aggregate principal amount of the
Securities at the time outstanding shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee; provided,
however, that (subject to the provisions of Section 6.01) the Trustee shall
have the right to decline to follow any such direction if the Trustee shall
determine that the action so directed would be unjustly prejudicial to the
holders not taking part in such direction or if the Trustee being advised by
counsel determines that the action or proceeding so directed may not lawfully
be taken or if the Trustee in good faith by its board of directors or trustees,
executive committee, or a trust committee of directors or trustees and/or
Responsible Officers shall determine that the action or proceedings so directed
would involve the Trustee in personal liability. Prior to any declaration
accelerating the maturity of the Securities, the holders of a majority in
aggregate principal amount of the Securities at the time outstanding may on
behalf of the holders of all of the Securities waive any past default or Event
of Default and its consequences except a default (a) in the payment of
principal of or premium, if any, or interest on any of the Securities or (b) in
respect of covenants or provisions hereof which cannot be modified or amended
without the consent of the holder of each Security affected; provided, however,
that if the Securities are held by the Property Trustee, such waiver or
modification to such waiver shall not be effective until the holders of a
majority in aggregate liquidation amount of Trust Securities shall have
consented to such waiver or modification to such waiver; provided further, that
if the consent of the holder of each outstanding Security is required, such
waiver shall not be effective until each holder of the Trust Securities shall
have consented to such waiver. Upon any such waiver, the default covered
thereby shall be deemed to be cured for all purposes of this Indenture and the
Company, the Trustee and the holders of the Securities shall be restored to
their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon. Whenever any default or Event of Default hereunder shall have been
waived as permitted by this Section 5.07, said default or Event of Default
shall for all purposes of the Securities and this Indenture be deemed to have
been cured and to be not continuing.
40
<PAGE> 50
SECTION 5.08. Notice of Defaults.
The Trustee shall, within 90 days after the occurrence of a
default with respect to the Securities mail to all Securityholders, as the
names and addresses of such holders appear upon the Security register, notice
of all defaults known to the Trustee, unless such defaults shall have been
cured before the giving of such notice (the term "defaults" for the purpose of
this Section 5.08 being hereby defined to be the events specified in clauses
(a), (b), (c), (d) and (e) of Section 5.01, not including periods of grace, if
any, provided for therein, and irrespective of the giving of written notice
specified in clause (c) of Section 5.01); and provided that, except in the case
of default in the payment of the principal of or premium, if any, or interest
on any of the Securities, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee, or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the interests of the
Securityholders; and provided further, that in the case of any default of the
character specified in Section 5.01(c) no such notice to Securityholders shall
be given until at least 60 days after the occurrence thereof but shall be given
within 90 days after such occurrence.
SECTION 5.09. Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for
any action taken or omitted by it as Trustee, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section 5.09 shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Securityholder,
or group of Securityholders, holding in the aggregate more than 10% in
aggregate principal amount of the Securities outstanding, or to any suit
instituted by any Securityholder for the enforcement of the payment of the
principal of (or premium, if any) or interest on any Security against the
Company on or after the same shall have become due and payable.
41
<PAGE> 51
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee.
With respect to the holders of the Securities issued hereunder, the
Trustee, prior to the occurrence of an Event of Default and after the curing or
waiving of all Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Indenture. In case an Event of Default has occurred (which has not been cured or
waived) the Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default which may have
occurred
(1) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this
Indenture, and the Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture; but, in the case of any such certificates or
opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or
not they conform to the requirements of this Inden-
42
<PAGE> 52
ture;
(b) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer or Officers of the
Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith, in accordance with
the direction of the Securityholders pursuant to Section 5.07,
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this
Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured to it under the
terms of this Indenture or adequate indemnity against such risk is not
reasonably assured to it.
SECTION 6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, bond, note, debenture or other paper or document believed
by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein may be sufficiently evidenced by an Officers' Certificate
(unless other evidence in respect thereof be herein specifically
prescribed); and any Board Resolution may be evidenced to the
Trustee by a copy thereof certified by the Secretary or an
Assistant Secretary of the Company;
(c) the Trustee may consult with counsel of its selection and any
advice or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered omitted by
43
<PAGE> 53
it hereunder in good faith and in accordance with such advice or
Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request,
order or direction of any of the Securityholders, pursuant to the
provisions of this Indenture, unless such Securityholders shall
have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred
therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this
Indenture; nothing contained herein shall, however, relieve the
Trustee of the obligation, upon the occurrence of an Event of
Default (that has not been cured or waived), to exercise such of
the rights and powers vested in it by this Indenture, and to use
the same degree of care and skill in their exercise, as a prudent
man would exercise or use under the circumstances in the conduct
of his own affairs;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond, debenture, coupon or other paper or
document, unless requested in writing to do so by the holders of
a majority in aggregate principal amount of the outstanding
Securities; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the
terms of this Indenture, the Trustee may require reasonable
indemnity against such expense or liability as a condition to so
proceeding; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through
agents (including any Authenticating Agent) or attorneys, and the
Trustee shall not be responsible for any misconduct or negligence
on the part of any such agent
44
<PAGE> 54
or attorney appointed by it with due care.
SECTION 6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Securities (except in the
certificate of authentication of the Trustee or the Authenticating Agent) shall
be taken as the statements of the Company and the Trustee and the Authenticating
Agent assume no responsibility for the correctness of the same. The Trustee and
the Authenticating Agent make no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee and the
Authenticating Agent shall not be accountable for the use or application by the
Company of any Securities or the proceeds of any Securities authenticated and
delivered by the Trustee or the Authenticating Agent in conformity with the
provisions of this Indenture. The Trustee shall not be charged with knowledge
of any default or Event of Default under Section 5.01(a) or (b) relating to
Other Debentures unless (i) a Responsible Officer of the Trustee assigned to its
Principal Office shall have actual knowledge thereof or (ii) the Company, any
Securityholder or the holder of any Other Debenture shall have given the Trustee
written notice thereof in accordance with Section 13.04.
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer
Agents or Registrar May Own Securities.
The Trustee or any Authenticating Agent or any paying agent or any
transfer agent or any Security registrar, in its individual or any other
capacity, may become the owner or pledgee of Securities with the same rights it
would have if it were not Trustee, Authenticating Agent, paying agent, transfer
agent or Security registrar.
SECTION 6.05. Moneys to be Held in Trust.
Subject to the provisions of Section 11.04, all moneys received by the
Trustee or any paying agent shall, until used or applied as herein provided, be
held in trust for the purpose for which they were received, but need not be
segregated from other funds except to the extent required by law. The Trustee
and any paying agent shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed in writing with the Company.
So long as no Event of Default shall have occurred and be continuing, all
interest allowed on any such moneys shall be paid from time to time upon the
written order of the Company, signed by the Chairman of the Board of Directors,
the President or a Vice President or the Treasurer or an Assistant Treasurer of
the Company.
45
<PAGE> 55
SECTION 6.06. Compensation and Expenses of Trustee.
The Company, as borrower, covenants and agrees to pay to the Trustee
from time to time, and the Trustee shall be entitled to, such compensation as
shall be agreed to in writing between the Company and the Trustee (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust), and the Company will pay or reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its
negligence or bad faith. The Company also covenants to indemnify each of the
Trustee or any predecessor Trustee (and its officers, agents, directors and
employees) for, and to hold it harmless against, any and all loss, damage,
claim, liability or expense including taxes (other than taxes based on the
income of the Trustee) incurred without negligence or bad faith on the part of
the Trustee and arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim of liability in the premises. The obligations of the
Company under this Section 6.06 to compensate and indemnify the Trustee and to
pay or reimburse the Trustee for expenses, disbursements and advances shall
constitute additional indebtedness hereunder. Such additional indebtedness
shall be secured by a lien prior to that of the Securities upon all property and
funds held or collected by the Trustee as such, except funds held in trust for
the benefit of the holders of particular Securities.
Without prejudice to any other rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.01(d) or Section
5.01(e), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
46
<PAGE> 56
SECTION 6.07. Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.01 and 6.02, whenever in
the administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
omitting any action hereunder, such matter (unless other evidence in respect
thereof is herein specifically prescribed) may, in the absence of negligence or
bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee, and such
certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken or omitted by
it under the provisions of this Indenture upon the faith thereof.
SECTION 6.08. Conflicting Interest of Trustee.
If the Trustee has or shall acquire any "conflicting interest" within
the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the
Company shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act, subject to the penultimate paragraph thereof.
SECTION 6.09. Eligibility of Trustee.
The Trustee hereunder shall at all times be a corporation organized
and doing business under the laws of the United States of America or any state
or territory thereof or of the District of Columbia or a corporation or other
Person permitted to act as trustee by the Commission authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000) and subject to supervision or
examination by federal, state, territorial, or District of Columbia authority.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 6.09 the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
The Company may not, nor may any Person directly or indirectly
controlling, controlled by, or under common control with the Company, serve as
Trustee.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.09, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.10.
47
<PAGE> 57
SECTION 6.10. Resignation or Removal of Trustee.
(a) The Trustee, or any trustee or trustees hereafter appointed, may
at any time resign by giving written notice of such resignation
to the Company and by mailing notice thereof to the holders of
the Securities at their addresses as they shall appear on the
Security register. Upon receiving such notice of resignation, the
Company shall promptly appoint a successor trustee or trustees by
written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 60 days after the
mailing of such notice of resignation to the Securityholders, the
resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any
Securityholder who has been a bona fide holder of a Security for
at least six months may, subject to the provisions of Section
5.09, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur --
(1) the Trustee shall fail to comply with the provisions of
Section 6.08 after written request therefor by the Company
or by any Securityholder who has been a bona fide holder of
a Security or Securities for at least six months, or
(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 6.09 and shall fail to resign
after written request therefor by the Company or by any such
Securityholder, or
(3) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of
its property or affairs for the
48
<PAGE> 58
purpose of rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove the Trustee and
appoint a successor trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee, or, subject to the
provisions of Section 5.09, any Securityholder who has been a
bona fide holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Securities at the time outstanding may at any time remove the
Trustee and nominate a successor trustee, which shall be deemed
appointed as successor trustee unless within 10 days after such
nomination the Company objects thereto or if no successor trustee
shall have been so appointed and shall have accepted appointment
within 30 days after such removal, in which case the Trustee so
removed or any Securityholder, upon the terms and conditions and
otherwise as in subsection (a) of this Section 6.10 provided, may
petition any court of competent jurisdiction for an appointment
of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this
Section 6.10 shall become effective upon acceptance of
appointment by the successor trustee as provided in Section 6.11.
SECTION 6.11. Acceptance by Successor Trustee.
Any successor trustee appointed as provided in Section 6.10 shall
execute, acknowledge and deliver to the Company and to its predecessor trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the retiring trustee shall become effective and such
successor trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as trustee herein; but,
nevertheless, on the written
49
<PAGE> 59
request of the Company or of the successor trustee, the trustee ceasing to act
shall, upon payment of any amounts then due it pursuant to the provisions of
Section 6.06, execute and deliver an instrument transferring to such successor
trustee all the rights and powers of the trustee so ceasing to act and shall
duly assign, transfer and deliver to such successor trustee all property and
money held by such retiring trustee thereunder. Upon request of any such
successor trustee, the Company shall execute any and all instruments in writing
for more fully and certainly vesting in and confirming to such successor trustee
all such rights and powers. Any trustee ceasing to act shall, nevertheless,
retain a lien upon all property or funds held or collected by such trustee to
secure any amounts then due it pursuant to the provisions of Section 6.06.
No successor trustee shall accept appointment as provided in this
Section 6.11 unless at the time of such acceptance such successor trustee shall
be qualified under the provisions of Section 6.08 and eligible under the
provisions of Section 6.09.
Upon acceptance of appointment by a successor trustee as provided in
this Section 6.11, the Company shall mail notice of the succession of such
trustee hereunder to the holders of Securities at their addresses as they shall
appear on the Security register. If the Company fails to mail such notice
within 10 days after the acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Company.
SECTION 6.12. Succession by Merger, etc.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder without
the execution or filing of any paper or any further act on the part of any of
the parties hereto.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any Securities shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor trustee; and in all such cases such certificates shall have the full
force which the
50
<PAGE> 60
Securities or this Indenture elsewhere provides that the certificate of the
Trustee shall have; provided, however, that the right to adopt the certificate
of authentication of any predecessor Trustee or authenticate Securities in the
name of any predecessor Trustee shall apply only to its successor or successors
by merger, conversion or consolidation.
SECTION 6.13. Limitation on Rights of Trustee as a Creditor.
The Trustee shall comply with Section 311(a) of the Trust Indenture
Act, excluding any creditor relationship described in Section 311(b) of the
Trust Indenture Act. A Trustee who has resigned or been removed shall be
subject to Section 311(a) of the Trust Indenture Act to the extent included
therein.
SECTION 6.14. Authenticating Agents.
There may be one or more Authenticating Agents appointed by the
Trustee upon the request of the Company with power to act on its behalf and
subject to its direction in the authentication and delivery of Securities issued
upon exchange or transfer thereof as fully to all intents and purposes as though
any such Authenticating Agent had been expressly authorized to authenticate and
deliver Securities; provided, that the Trustee shall have no liability to the
Company for any acts or omissions of the Authenticating Agent with respect to
the authentication and delivery of Securities. Any such Authenticating Agent
shall at all times be a corporation organized and doing business under the laws
of the United States or of any state or territory thereof or of the District of
Columbia authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of at least $5,000,000 and being subject to
supervision or examination by federal, state, territorial or District of
Columbia authority. If such corporation publishes reports of condition at least
annually pursuant to law or the requirements of such authority, then for the
purposes of this Section 6.14 the combined capital and surplus of such
corporation shall be deemed to be its com- bined capital and surplus as set
forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of any Authenticating Agent, shall be the successor
of such Authenticating Agent hereunder, if such
51
<PAGE> 61
successor corporation is otherwise eligible under this Section 6.14 without the
execution or filing of any paper or any further act on the part of the parties
hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any Authenticating Agent by giving written notice
of termination to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any Authenticating Agent shall cease to be eligible under this Section 6.14, the
Trustee may, and upon the request of the Company shall, promptly appoint a
successor Authenticating Agent eligible under this Section 6.14, shall give
written notice of such appointment to the Company and shall mail notice of such
appointment to all Securityholders as the names and addresses of such holders
appear on the Security Register. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all rights,
powers, duties and responsibilities of its predecessor hereunder, with like
effect as if originally named as Authenticating Agent herein.
The Company, as borrower, agrees to pay to any Authenticating Agent
from time to time reasonable compensation for its services. Any Authenticating
Agent shall have no responsibility or liability for any action taken by it as
such in accordance with the directions of the Trustee.
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.
Whenever in this Indenture it is provided that the holders of a
specified percentage in aggregate principal amount of the Securities may take
any action (including the making of any demand or request, the giving of any
notice, consent or waiver or the taking of any other action) the fact that at
the time of taking any such action the holders of such specified percentage have
joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by such Securityholders in person or by
agent or proxy appointed in writing, or (b) by the record of such holders of
Securities voting in favor thereof at any meeting of such Securityholders duly
called and held in accordance with the provisions of Article VIII, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of such Securityholders.
52
<PAGE> 62
If the Company shall solicit from the Securityholders any request,
demand, authorization, direction, notice, consent, waiver or other action, the
Company may, at its option, as evidenced by an Officers' Certificate, fix in
advance a record date for the determination of Securityholders entitled to give
such request, demand, authorization, direction, notice, consent, waiver or other
action or to revoke any such action, but the Company shall have no obligation to
do so. If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other action or revocation may be given
before or after the record date, but only the Securityholders of record at the
close of business on the record date shall be deemed to be Securityholders for
the purposes of determining whether Securityholders of the requisite proportion
of Outstanding Securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
action, and for that purpose the Outstanding Securities shall be computed as of
the record date; provided, however, that no such authorization, agreement or
consent by such Securityholders on the record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this Indenture
not later than six months after the record date.
SECTION 7.02. Proof of Execution by Securityholders.
Subject to the provisions of Section 6.01, 6.02 and 8.05, proof of the
execution of any instrument by a Securityholder or his agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee. The ownership of Securities shall be proved by the Security
Register or by a certificate of the Security registrar. The Trustee may require
such additional proof of any matter referred to in this Section as it shall deem
necessary.
The record of any Securityholders' meeting shall be proved in the
manner provided in Section 8.06.
53
<PAGE> 63
SECTION 7.03. Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any Security,
the Company, the Trustee, any Authenticating Agent, any paying agent, any
transfer agent and any Security registrar may deem the person in whose name such
Security shall be registered upon the Security Register to be, and may treat him
as, the absolute owner of such Security (whether or not such Security shall be
overdue) for the purpose of receiving payment of or on account of the principal
of and premium, if any, and (subject to Section 2.06) interest on such Security
and for all other purposes; and neither the Company nor the Trustee nor any
Authenticating Agent nor any paying agent nor any transfer agent nor any
Security registrar shall be affected by any notice to the contrary. All such
payments so made to any holder for the time being or upon his order shall be
valid, and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable upon any such Security.
SECTION 7.04. Securities Owned by Company Deemed Not Outstanding.
In determining whether the holders of the requisite aggregate
principal amount of Securities have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned by the Company or any
other obligor on the Securities or by any person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any other obligor on the Securities shall be disregarded and deemed
not to be outstanding for the purpose of any such determination; provided that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, consent or waiver, only Securities which the
Trustee actually knows are so owned shall be so disregarded. Securities so
owned which have been pledged in good faith may be regarded as outstanding for
the purposes of this Section 7.04 if the pledgee shall establish to the
satisfaction of the Trustee the pledgee's right to vote such Securities and that
the pledgee is not the Company or any such other obligor or person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company or any such other obligor. In the case of a dispute as
to such right, any decision by the Trustee taken upon the advice of counsel
shall be full protection to the Trustee.
SECTION 7.05. Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 7.01, of the taking of any
54
<PAGE> 64
action by the holders of the percentage in aggregate principal amount of the
Securities specified in this Indenture in connection with such action, any
holder of a Security (or any Security issued in whole or in part in exchange or
substitution therefor), subject to Section 7.01, the serial number of which is
shown by the evidence to be included in the Securities the holders of which have
consented to such action may, by filing written notice with the Trustee at its
principal office and upon proof of holding as provided in Section 7.02, revoke
such action so far as concerns such Security (or so far as concerns the
principal amount represented by any exchanged or substituted Security). Except
as aforesaid any such action taken by the holder of any Security shall be
conclusive and binding upon such holder and upon all future holders and owners
of such Security, and of any Security issued in exchange or substitution
therefor, irrespective of whether or not any notation in regard thereto is made
upon such Security or any Security issued in exchange or substitution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.
A meeting of Securityholders may be called at any time and from time
to time pursuant to the provisions of this Article VIII for any of the following
purposes:
(a) to give any notice to the Company or to the Trustee, or to give
any directions to the Trustee, or to consent to the waiving of
any default hereunder and its consequences, or to take any other
action authorized to be taken by Securityholders pursuant to any
of the provisions of Article V;
(b) to remove the Trustee and nominate a successor trustee pursuant
to the provisions of Article VI;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.02;
or
(d) to take any other action authorized to be taken by or on behalf
of the holders of any specified aggregate principal amount of
such Securities under any other provision of this Indenture or
under applicable law.
SECTION 8.02. Call of Meetings by Trustee.
55
<PAGE> 65
The Trustee may at any time call a meeting of Securityholders to take
any action specified in Section 8.01, to be held at such time and at such place
in the Borough of Manhattan, The City of New York, as the Trustee shall
determine. Notice of every meeting of the Securityholders, setting forth the
time and the place of such meeting and in general terms the action proposed to
be taken at such meeting, shall be mailed to holders of Securities at their
addresses as they shall appear on the Securities Register. Such notice shall be
mailed not less than 20 nor more than 180 days prior to the date fixed for the
meeting.
SECTION 8.03. Call of Meetings by Company or Securityholders.
In case at any time the Company pursuant to a resolution of the Board
of Directors, or the holders of at least 10% in aggregate principal amount of
the Securities then outstanding, shall have requested the Trustee to call a
meeting of Securityholders, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee shall not
have mailed the notice of such meeting within 20 days after receipt of such
request, then the Company or such Securityholders may determine the time and the
place in said Borough of Manhattan for such meeting and may call such meeting to
take any action authorized in Section 8.01, by mailing notice thereof as
provided in Section 8.02.
SECTION 8.04. Qualifications for Voting.
To be entitled to vote at any meeting of Securityholders a person
shall (a) be a holder of one or more Securities or (b) a person appointed by an
instrument in writing as proxy by a holder of one or more Securities. The only
persons who shall be entitled to be present or to speak at any meeting of
Securityholders shall be the persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
SECTION 8.05. Regulations.
Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Securityholders, in regard to proof of the holding of Securities and of the
appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.
56
<PAGE> 66
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 8.03, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by majority vote of the meeting.
Subject to the provisions of Section 8.04, at any meeting each holder
of Securities or proxy therefor shall be entitled to one vote for each $1,000
principal amount of Securities held or represented by him; provided, however,
that no vote shall be cast or counted at any meeting in respect of any Security
challenged as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Securities held by him or instruments in writing as aforesaid duly
designating him as the person to vote on behalf of other Securityholders. Any
meeting of Securityholders duly called pursuant to the provisions of Section
8.02 or 8.03 may be adjourned from time to time by a majority of those present,
whether or not constituting a quorum, and the meeting may be held as so
adjourned without further notice.
The Persons entitled to vote a majority in principal amount of the
outstanding Securities shall constitute a quorum for a meeting of Holders of
Securities; provided, however, that if any action is to be taken at such meeting
with respect to a consent, waiver, request, demand, notice, authorization,
direction or other action which may be given by the holders of not less than a
specified percentage in principal amount of the outstanding Securities, the
Persons holding or representing such specified percentage in principal amount of
the outstanding Securities will constitute a quorum. In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting shall,
if convened at the request of holders of Securities, be dissolved. In any other
case the meeting may be adjourned for a period of not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10 days
as determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting. Notice of the reconvening of any adjourned meeting shall be
given as provided in Section 8.02, except that such notice need be given only
once not less than five days prior to the date on which the meeting is scheduled
to be reconvened. Notice of the reconvening of an adjourned meeting shall state
expressly the percentage, as provided above, of the principal amount of the
57
<PAGE> 67
outstanding Securities which shall constitute a quorum.
Except as limited by the first proviso to the first paragraph of
Section 9.02, any resolution presented to a meeting or adjourned meeting duly
reconvened at which a quorum is present as aforesaid may be adopted by the
affirmative vote of the holders of a majority in principal amount of the
outstanding Securities; provided, however, that, except as limited by the first
proviso to the first paragraph of Section 9.02, any resolution with respect to
any consent, waiver, request, demand, notice, authorization, direction or other
action which this Indenture expressly provides may be given by the holders of
not less than a specified percentage in principal amount of the outstanding
Securities may be adopted at a meeting or an adjourned meeting duly reconvened
and at which a quorum is present as aforesaid only by the affirmative vote of
the holders of not less than such specified percentage in principal amount of
the outstanding Securities.
Any resolution passed or decision taken at any meeting of Holders of
Securities duly held in accordance with this Section shall be binding on all the
Holders of Securities whether or not present or represented at the meeting.
SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting of holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of such holders or of their representatives by proxy and the serial
number or numbers of the Securities held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
triplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice was mailed as
provided in Section 8.02. The record shall show the serial numbers of the
Securities voting in favor of or against any resolution. The record shall be
signed and verified by the affidavits of the permanent chairman and secretary of
the meeting and one of the duplicates shall be delivered to the Company and the
other to the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting. The holders of the Series A Capital
Securities and the Series B Capital Securities shall vote for all purposes as a
single class.
58
<PAGE> 68
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
ARTICLE IX
AMENDMENTS
SECTION 9.01. Without Consent of Securityholders.
The Company and the Trustee may from time to time and at any time
amend the Indenture, without the consent of the Securityholders, for one or more
of the following purposes:
(a) to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by the
successor corporation of the covenants, agreements and
obligations of the Company pursuant to Article X hereof;
(b) to add to the covenants of the Company such further covenants,
restrictions or conditions for the protection of the
Securityholders as the Board of Directors and the Trustee shall
consider to be for the protection of the Securityholders, and to
make the occurrence, or the occurrence and continuance, of a
default in any of such additional covenants, restrictions or
conditions a default or an Event of Default permitting the
enforcement of all or any of the remedies provided in this
Indenture as herein set forth; provided, however, that in respect
of any such additional covenant, restriction or condition such
amendment may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed
in the case of other defaults) or may provide for an immediate
enforcement upon such default or may limit the remedies available
to the Trustee upon such default;
(c) to provide for the issuance under this Indenture of Securities
in coupon form (including Securities registrable as to principal
only) and to provide for exchangeability of such Securities with
the Securities issued hereunder in fully registered form and to
make all appropriate changes for such purpose;
(d) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supple-
59
<PAGE> 69
mental indenture which may be defective or inconsistent with any
other provision contained herein or in any supplemental
indenture, or to make such other provisions in regard to matters
or questions arising under this Indenture; provided that any such
action shall not materially adversely affect the interests of the
holders of the Securities;
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities;
(f) to make provision for transfer procedures, certification,
book-entry provisions, the form of restricted securities legends,
if any, to be placed on Securities, minimum denominations and all
other matters required pursuant to Section 2.07 or otherwise
necessary, desirable or appropriate in connection with the
issuance of Securities to holders of Capital Securities in the
event of a distribution of Securities by Firstar Capital Trust
following a Dissolution Event;
(g) to qualify or maintain qualification of this Indenture under the
Trust Indenture Act; or
(h) to make any change that does not adversely affect the rights of
any Securityholder in any material respect.
The Trustee is hereby authorized to join with the Company in the
execution of any supplemental indenture to effect such amendment, to make any
further appropriate agreements and stipulations which may be therein contained
and to accept the conveyance, transfer and assignment of any property
thereunder, but the Trustee shall not be obligated to, but may in its
discretion, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Any amendment to the Indenture authorized by the provisions of this
Section 9.01 may be executed by the Company and the Trustee without the consent
of the holders of any of the Securities at the time outstanding, notwithstanding
any of the provisions of Section 9.02.
60
<PAGE> 70
SECTION 9.02. With Consent of Securityholders.
With the consent (evidenced as provided in Section 7.01) of the
holders of a majority in aggregate principal amount of the Securities at the
time outstanding, the Company, when authorized by a Board Resolution, and the
Trustee may from time to time and at any time amend the Indenture for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of modifying in any manner the rights of
the holders of the Securities; provided, however, that no such amendment shall
without the consent of the holders of each Security then outstanding and
affected thereby (i) extend the Maturity Date of any Security, or reduce the
rate or extend the time of payment of interest thereon (except as contemplated
by Article XVI), or reduce the principal amount thereof, or reduce any amount
payable on redemption thereof, or make the principal thereof or any interest or
premium thereon payable in any coin or currency other than that provided in the
Securities, or impair or affect the right of any Securityholder to institute
suit for payment thereof, or (ii) reduce the aforesaid percentage of Securities
the holders of which are required to consent to any such amendment to the
Indenture, provided, however, that if the Securities are held by Firstar Capital
Trust, such amendment shall not be effective until the holders of a majority in
liquidation amount of Trust Securities shall have consented to such amendment;
provided, further, that if the consent of the holder of each outstanding
Security is required, such amendment shall not be effective until each holder of
the Trust Securities shall have consented to such amendment.
Upon the request of the Company accompanied by a copy of a resolution
of the Board of Directors certified by its Secretary or Assistant Secretary
authorizing the execution of any supplemental indenture affecting such
amendment, and upon the filing with the Trustee of evidence of the consent of
Securityholders as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall transmit by mail, first class postage prepaid, a notice, prepared by the
Company, setting forth in general terms the substance of such supplemental
indenture, to the Securityholders as their names and addresses appear upon the
Security Register. Any failure of the Trustee to mail such notice, or any
defect therein, shall not, however, in any way
61
<PAGE> 71
impair or affect the validity of any such supplemental indenture.
It shall not be necessary for the consent of the Securityholders under
this Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
SECTION 9.03. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures.
Any supplemental indenture executed pursuant to the provisions of this
Article IX shall comply with the Trust Indenture Act. Upon the execution of any
supplemental indenture pursuant to the provisions of this Article IX, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Securities shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
SECTION 9.04. Notation on Securities.
Securities authenticated and delivered after the execution of any
supplemental indenture affecting such series pursuant to the provisions of this
Article IX may bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company or the Trustee
shall so determine, new Securities so modified as to conform, in the opinion of
the Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may be prepared and executed by the
Company, authenticated by the Trustee or the Authenticating Agent and delivered
in exchange for the Securities then outstanding.
SECTION 9.05. Evidence of Compliance of Supplemental Indenture to be
Furnished Trustee.
The Trustee, subject to the provisions of Sections 6.01 and 6.02, may
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant hereto complies with
the requirements of this Article IX.
The Trustee may receive an Opinion of Counsel as conclusive evidence
that any supplemental indenture executed pursuant to this Article is authorized
or permitted by, and conforms to, the terms of this Article and that it is
proper for
62
<PAGE> 72
the Trustee under the provisions of this Article to join in the execution
thereof.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, etc., on Certain Terms.
Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Company with or into any other Person
(whether or not affiliated with the Company, as the case may be), or successive
consolidations or mergers in which the Company, or its successor or successors,
as the case may be, shall be a party or parties, or shall prevent any sale,
conveyance, transfer or lease of the property of the Company, or its successor
or successors, as the case may be, as an entirety, or substantially as an
entirety, to any other Person (whether or not affiliated with the Company, or
its successor or successors, as the case may be) authorized to acquire and
operate the same; provided, that (a) the Company is the surviving Person, or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, conveyance, transfer or lease of property is
made is a Person organized and existing under the laws of the United States or
any State thereof or the District of Columbia, and (b) upon any such
consolidation, merger, sale, conveyance, transfer or lease, the due and punctual
payment of the principal of (and premium, if any) and interest on the Securities
according to their tenor and the due and punctual performance and obser- vance
of all the covenants and conditions of this Indenture to be kept or performed by
the Company shall be expressly assumed, by supplemental indenture (which shall
conform to the provisions of the Trust Indenture Act, as then in effect)
satisfactory in form to the Trustee executed and delivered to the Trustee by the
Person formed by such consolidation, or into which the Company, shall have been
merged, or by the Person which shall have acquired such property, as the case
may be, (c) after giving effect to such consolidation, merger, sale, conveyance,
transfer or lease, no Default or Event of Default shall have occurred and be
continuing and (d) such consolidation, merger, sale, conveyance, transfer or
lease does not cause the Securities to be downgraded by a nationally recognized
statistical rating organization.
SECTION 10.02. Successor Corporation to be Substituted for Company.
In case of any such consolidation, merger, conveyance or transfer and
upon the assumption by the successor corporation,
63
<PAGE> 73
by supplemental indenture, executed and delivered to the Trustee and
satisfactory in form to the Trustee, of the due and punctual payment of the
principal of and premium, if any, and interest on all of the Securities and the
due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed or observed by the Company, such
successor Person shall succeed to and be substituted for the Company, with the
same effect as if it had been named herein as the party of the first part, and
the Company thereupon shall be relieved of any further liability or obligation
hereunder or upon the Securities. Such successor Person thereupon may cause to
be signed, and may issue either in its own name or in the name of Firstar
Corporation, any or all of the Securities issuable hereunder which theretofore
shall not have been signed by the Company and delivered to the Trustee or the
Authenticating Agent; and, upon the order of such successor Person instead of
the Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee or the Authenticating Agent shall authenticate
and deliver any Securities which previously shall have been signed and delivered
by the officers of the Company to the Trustee or the Authenticating Agent for
authentication, and any Securities which such successor Person thereafter shall
cause to be signed and delivered to the Trustee or the Authenticating Agent for
that purpose. All the Securities so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Securities theretofore or
thereafter issued in accordance with the terms of this Indenture as though all
of such Indentures had been issued at the date of the execution hereof.
SECTION 10.03. Opinion of Counsel to be Given Trustee.
The Trustee, subject to the provisions of Sections 6.01 and 6.02, may
receive an Opinion of Counsel as conclusive evidence that any consolidation,
merger, sale, conveyance, transfer or lease, and any assumption, permitted or
required by the terms of this Article X complies with the provisions of this
Article X.
64
<PAGE> 74
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture.
When (a) the Company shall deliver to the Trustee for cancellation all
Securities theretofore authenticated (other than any Securities which shall have
been destroyed, lost or stolen and which shall have been replaced or paid as
provided in Section 2.08) and not theretofore cancelled, or (b) all the
Securities not theretofore cancelled or delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to become
due and payable within one year or are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and the Company shall deposit with the Trustee, in trust, funds
sufficient to pay on the Maturity Date or upon redemption all of the Securities
(other than any Securities which shall have been destroyed, lost or stolen and
which shall have been replaced as provided in Section 2.08) not theretofore
cancelled or delivered to the Trustee for cancellation, including principal and
premium, if any, and interest due or to become due to the Maturity Date or
redemption date, as the case may be, but excluding, however, the amount of any
moneys for the payment of principal of or premium, if any, or interest on the
Securities (1) theretofore repaid to the Company in accordance with the
provisions of Section 11.04, or (2) paid to any State or to the District of
Columbia pursuant to its unclaimed property or similar laws, and if in either
case the Company shall also pay or cause to be paid all other sums payable
hereunder by the Company, then this Indenture shall cease to be of further
effect except for the provisions of Sections 2.02, 2.07, 2.08, 3.01, 3.02, 3.04,
6.06, 6.10 and 11.04 hereof, which shall survive until such Securities shall
mature and be paid. Thereafter, Sections 6.06, 6.10 and 11.04 shall survive,
and the Trustee, on demand of the Company accompanied by any Officers'
Certificate and an Opinion of Counsel and at the cost and expense of the
Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture, the Company, however, hereby agreeing to reimburse
the Trustee for any costs or expenses thereafter reasonably and properly
incurred by the Trustee in connection with this Indenture or the Securities.
SECTION 11.02. Deposited Moneys and U.S. Government Obligations to be
Held in Trust by Trustee.
Subject to the provisions of Section 11.04, all moneys
65
<PAGE> 75
and U.S. Government Obligations deposited with the Trustee pursuant to Sections
11.01 or 11.05 shall be held in trust and applied by it to the payment, either
directly or through any paying agent (including the Company if acting as its own
paying agent), to the holders of the particular Securities for the payment of
which such moneys or U.S. Government Obligations have been deposited with the
Trustee, of all sums due and to become due thereon for principal, premium, if
any, and interest.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 11.05 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the holders of outstanding Securities.
SECTION 11.03. Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all moneys then
held by any paying agent of the Securities (other than the Trustee) shall, upon
written demand of the Company, be repaid to it or paid to the Trustee, and
thereupon such paying agent shall be released from all further liability with
respect to such moneys.
SECTION 11.04. Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any paying agent
for payment of the principal of or premium, if any, or interest on Securities
and not applied but remaining unclaimed by the holders of Securities for two
years after the date upon which the principal of or premium, if any, or interest
on such Securities, as the case may be, shall have become due and payable, shall
be repaid to the Company by the Trustee or such paying agent on Company Request;
and the holder of any of the Securities shall thereafter look only to the
Company for any payment which such holder may be entitled to collect and all
liability of the Trustee or such paying agent with respect to such moneys shall
thereupon cease.
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S. Government
Obligations.
The Company shall be deemed to have been Discharged (as defined below)
from its obligations with respect to the Securities on the 91st day after the
conditions set forth below have been satisfied:
(1) The Company shall have deposited or caused to be deposited
irrevocably with the Trustee or the Defeasance Agent (as defined
below) as trust funds
66
<PAGE> 76
in trust, specifically pledged as security for, and dedicated
solely to, the benefit of the holders of the Securities (i) money
in an amount, or (ii) U.S. Government Obligations which through
the payment of interest and principal in respect thereof in
accordance with their terms will provide, not later than one day
before the due date of any payment, money in an amount, or (iii)
a combination of (i) and (ii), sufficient, in the opinion (with
respect to (ii) and (iii)) of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee and the Defeasance
Agent, if any, to pay and discharge each installment of principal
of and interest and premium, if any, on the outstanding
Securities on the dates such installments of principal, interest
or premium are due;
(2) if the Securities are then listed on any national securities
exchange, the Company shall have delivered to the Trustee and the
Defeasance Agent, if any, an Opinion of Counsel to the effect
that the exercise of the option under this Section 11.05 would
not cause such Securities to be delisted from such exchange;
(3) no Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such
deposit; and
(4) the Company shall have delivered to the Trustee and the
Defeasance Agent, if any, an Opinion of Counsel to the effect
that holders of the Securities will not recognize income, gain or
loss for United States federal income tax purposes as a result of
the exercise of the option under this Section 11.05 and will be
subject to United States federal income tax on the same amount
and in the same manner and at the same times as would have been
the case if such option had not been exercised, and such opinion
shall be based on a statute so providing or be accompanied by a
private letter ruling to that effect received from the United
States Internal Revenue Service or a revenue ruling pertaining to
a comparable form of transaction to that effect published by the
United States Internal Revenue Service.
"Discharged" means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by,
67
<PAGE> 77
and obligations under, the Securities and to have satisfied all the obligations
under this Indenture relating to the Securities (and the Trustee, at the expense
of the Company, shall execute proper instruments acknowledging the same), except
(A) the rights of holders of Securities to receive, from the trust fund
described in clause (1) above, payment of the principal of and the interest and
premium, if any, on the Securities when such payments are due; (B) the Company's
obligations with respect to the Securities under Sections 2.02, 2.07, 2.08,
3.02, 3.04, 6.10 and 11.04; and (C) the rights, powers, trusts, duties and
immunities of the Trustee hereunder.
"Defeasance Agent" means another financial institution which is
eligible to act as Trustee hereunder and which assumes all of the obligations of
the Trustee necessary to enable the Trustee to act under this Article. In the
event such a Defeasance Agent is appointed pursuant to this Section, the
following conditions shall apply:
(1) The Trustee shall have approval rights over the document
appointing such Defeasance Agent and the document setting forth
such Defeasance Agent's rights and responsibilities;
(2) The Defeasance Agent shall provide verification to the Trustee
acknowledging receipt of sufficient money and/or U. S. Government
Obligations to meet the applicable conditions set forth in this
Section 11.05.
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Securities Solely Corporate Obligations.
No recourse for the payment of the principal of or premium, if any, or
interest on any Security, or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in this Indenture, or in any Security, or because of the creation of
any indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor Person to the Company, either directly or through
the Company or any successor Person to the Company, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly
68
<PAGE> 78
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Securities.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors.
All the covenants, stipulations, promises and agreements in this
Indenture contained by the Company shall bind its successors and assigns whether
so expressed or not.
SECTION 13.02. Official Acts by Successor Corporation.
Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
like board, committee or officer of any corporation that shall at the time be
the lawful sole successor of the Company.
SECTION 13.03. Surrender of Company Powers.
The Company by instrument in writing executed by authority of 2/3
(two-thirds) of its Board of Directors and delivered to the Trustee may
surrender any of the powers reserved to the Company, and thereupon such power so
surrendered shall terminate both as to the Company, as the case may be, and as
to any successor Person.
SECTION 13.04. Addresses for Notices, etc.
Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the holders of
Securities on the Company may be given or served by being deposited postage
prepaid by registered or certified mail in a post office letter box addressed
(until another address is filed by the Company with the Trustee for the purpose)
to the Company, 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53201,
Attention: Howard Hopwood. Any notice, direction, request or demand by any
Securityholder to or upon the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, if given or made in writing at the office of
the Trustee, 450 W. 33rd Street, New York, NY 10001, Attention: Corporate
Trustee Administration Department (unless another address is provided by the
Trustee to the Company for the purpose).
69
<PAGE> 79
Any notice or communication to a Holder shall be mailed by first class
mail to his or her address shown on the register kept by the Registrar. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
SECTION 13.05. Governing Law.
This Indenture and each Security shall be deemed to be a contract made
under the laws of the State of New York, and for all purposes shall be governed
by and construed in accordance with the laws of said State, without regard to
conflicts of laws principles thereof.
SECTION 13.06. Evidence of Compliance with Conditions Precedent.
Upon any application or demand by the Company to the Trustee to take
any action under any of the provisions of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that in the opinion of
the signers all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture (except pursuant to Section 3.05) shall include
(1) a statement that the person making such certificate or opinion has read such
covenant or condition; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based; (3) a statement that, in the opinion of
such person, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (4) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.
SECTION 13.07. Business Days.
In any case where the date of payment of principal of or premium, if
any, or interest on the Securities will not be a Business Day, the payment of
such principal of or premium, if any, or interest on the Securities need not be
made on such date but may be made on the next succeeding Business Day, with the
same force and effect as if made on the date of payment and no interest shall
accrue for the period from and after such date.
70
<PAGE> 80
SECTION 13.08. Trust Indenture Act to Control.
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act of 1939, such imposed duties shall
control.
SECTION 13.09. Table of Contents, Headings, etc.
The table of contents and the titles and headings of the articles and
sections of this Indenture have been inserted for convenience of reference only,
are not to be considered a part hereof, and shall in no way modify or restrict
any of the terms or provisions hereof.
SECTION 13.10. Execution in Counterparts.
This Indenture may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute but
one and the same instrument.
SECTION 13.11. Separability.
In case any one or more of the provisions contained in this Indenture
or in the Securities shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Indenture or of the Securities,
but this Indenture and the Securities shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.
SECTION 13.12. Assignment.
The Company will have the right at all times to assign any of its
respective rights or obligations under this Indenture to a direct or indirect
wholly owned Subsidiary of the Company, provided that, in the event of any such
assignment, the Company will remain primarily liable for all its obligations.
Subject to the foregoing, the Indenture is binding upon and inures to the
benefit of the parties thereto and their respective successors and assigns.
This Indenture may not otherwise be assigned by the parties thereto.
SECTION 13.13. Acknowledgement of Rights.
The Company acknowledges that, with respect to any Securities held by
Firstar Capital Trust or a trustee of such trust, if the Property Trustee of
such Trust fails to enforce its rights under this Indenture as the holder of the
Securities held
71
<PAGE> 81
as the assets of Firstar Capital Trust any holder of Capital Securities may
institute legal proceedings directly against the Company to enforce such
Property Trustee's rights under this Indenture without first instituting any
legal proceedings against such Property Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
principal of or premium, if any, or interest on the Securities when due, the
Company acknowledges that a holder of Capital Securities may directly institute
a proceeding for enforcement of payment to such holder of the principal of or
premium, if any, or interest on the Securities having a principal amount equal
to the aggregate liquidation amount of the Capital Securities of such holder on
or after the respective due date specified in the Securities.
ARTICLE XIV
REDEMPTION OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND
SECTION 14.01. Special Event Redemption.
If a Special Event has occurred and is continuing then,
notwithstanding Section 14.02(a) but subject to Section 14.02(c), the Company
shall have the right at any time prior to the Initial Optional Redemption Date,
upon (i) not less than 45 days written notice to the Trustee, which notice shall
be accompanied by an Officers' Certificate certifying that a Special Event
entitling the Company to redeem the Securities pursuant to this Section, has
occurred and (ii) not less than 30 days nor more than 60 days written notice to
the Securityholders, to redeem the Securities, in whole (but not in part),
within 90 days following the occurrence of such Special Event at the Special
Event Redemption Price. Following a Special Event, the Company shall take such
action as is necessary to promptly determine the Special Event Redemption Price,
including without limitation the appointment by the Company of a Quotation
Agent. The Special Event Redemption Price shall be paid prior to 12:00 noon,
New York time, on the date of such redemption or such earlier time as the
Company determines, provided that the Company shall deposit with the Trustee an
amount sufficient to pay the Special Event Redemption Price by 10:00 a.m., New
York time, on the date such Special Event Prepayment Price is to be paid. The
Company shall provide the Trustee with written notice of the Special Event
Redemption Price promptly after the calculation thereof, which notice shall
include any calculation made by the Quotation Agent in connection with the
determination of the Special Event Redemption Price.
SECTION 14.02. Optional Redemption by Company.
72
<PAGE> 82
(a) Subject to the provisions of this Article XIV, the Company
shall have the right to redeem the Securities, in whole or in part, from time to
time, on or after Initial Optional Redemption Date at the optional redemption
prices set forth below (expressed as percentages of principal) plus accrued and
unpaid interest thereon (including Additional Interest and Compounded Interest,
if any) to the applicable date of redemption (the "Optional Redemption Price"):
if redeemed during the 12-month period beginning December 23 of the years
indicated below.
Year Percentage
2006 104.160%
2007 103.744%
2008 103.328%
2009 102.912%
2010 102.496%
2011 102.080%
2012 101.664%
2013 101.248%
2014 100.832%
2015 100.416%
2016 and thereafter 100.000%
If the Securities are only partially redeemed pursuant to this Section
14.02, the Securities will be redeemed pro rata or by lot or by any other method
utilized by the Trustee; provided, that if at the time of redemption the
Securities are registered as a Global Security, the Depositary shall determine,
in accordance with its procedures, the principal amount of such Securities held
for the account of its participants to be redeemed. The Optional Redemption
Price shall be paid prior to 12:00 noon, New York time, on the date of such
redemption or at such earlier time as the Company determines, provided that the
Company shall deposit with the Trustee an amount sufficient to pay the Optional
Redemption Price by 10:00 a.m., New York time, on the date such Optional
Redemption Price is to be paid.
(b) Notwithstanding the first sentence of Section 14.02, upon the
entry of an order for dissolution of the Firstar Capital Trust by a court of
competent jurisdiction, the Securities thereafter will be subject to optional
redemption, in whole only, but not in part, on or after January 15, 2007, at the
optional redemption prices set forth in Section 14.02 and otherwise in
accordance with this Article XIV.
(c) Any redemption of Securities pursuant to Section 14.01 or
Section 14.02 shall be subject to the receipt by the Company of any required
regulatory approval.
73
<PAGE> 83
SECTION 14.03. No Sinking Fund.
The Securities are not entitled to the benefit of any sinking fund.
SECTION 14.04. Notice of Redemption; Selection of Securities.
In case the Company shall desire to exercise the right to redeem all,
or, as the case may be, any part of the Securities in accordance with their
terms, it shall fix a date for redemption and shall mail a notice of such
redemption at least 30 and not more than 60 days prior to the date fixed for
redemption to the holders of Securities so to be redeemed as a whole or in part
at their last addresses as the same appear on the Security Register. Such
mailing shall be by first class mail. The notice if mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives such notice. In any case, failure to give such notice by
mail or any defect in the notice to the holder of any Security designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security.
Each such notice of redemption shall specify the CUSIP number of the
Securities to be redeemed, the date fixed for redemption, the redemption price
at which the Securities are to be redeemed (or the method by which such
redemption price is to be calculated), the place or places of payment, that
payment will be made upon presentation and surrender of the Securities, that
interest accrued to the date fixed for redemption will be paid as specified in
said notice, and that on and after said date interest thereon or on the portions
thereof to be redeemed will cease to accrue. If less than all the Securities
are to be redeemed the notice of redemption shall specify the numbers of the
Securities to be redeemed. In case any Security is to be redeemed in part only,
the notice of redemption shall state the portion of the principal amount thereof
to be redeemed and shall state that on and after the date fixed for redemption,
upon surrender of such Security, a new Security or Securities in principal
amount equal to the unredeemed portion thereof will be issued.
By 10:00 a.m. New York time on the redemption date specified in the
notice of redemption given as provided in this Section, the Company will deposit
with the Trustee or with one or more paying agents an amount of money sufficient
to redeem on the redemption date all the Securities so called for redemption at
the appropriate Redemption Price, together with accrued interest to the date
fixed for redemption.
74
<PAGE> 84
The Company will give the Trustee notice not less than 45 days
prior to the redemption date as to the aggregate principal amount of Securities
to be redeemed and the Trustee shall select, in such manner as in its sole
discretion it shall deem appropriate and fair, the Securities or portions
thereof (in integral multiples of $1,000, except as otherwise set forth in the
applicable form of Security) to be redeemed.
SECTION 14.05. Payment of Securities Called for Redemption.
If notice of redemption has been given as provided in Section
14.04, the Securities or portions of Securities with respect to which such
notice has been given shall become due and payable on the date and at the place
or places stated in such notice at the applicable Redemption Price, together
with interest accrued to the date fixed for redemption (subject to the rights
of holders of Securities on the close of business on a regular record date in
respect of an Interest Payment Date occurring on or prior to the redemption
date), and on and after said date (unless the Company shall default in the
payment of such Securities at the Redemption Price, together with interest
accrued to said date) interest on the Securities or portions of Securities so
called for redemption shall cease to accrue. On presentation and surrender of
such Securities at a place of payment specified in said notice, the said
Securities or the specified portions thereof shall be paid and redeemed by the
Company at the applicable Redemption Price, together with interest accrued
thereon to the date fixed for redemption (subject to the rights of holders of
Securities on the close of business on a regular record date in respect of an
Interest Payment Date occurring on or prior to the redemption date).
Upon presentation of any Security redeemed in part only, the
Company shall execute and the Trustee shall authenticate and make available for
delivery to the holder thereof, at the expense of the Company, a new Security
or Securities of authorized denominations, in principal amount equal to the
unredeemed portion of the Security so presented.
75
<PAGE> 85
ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01. Agreement to Subordinate.
The Company covenants and agrees, and each holder of
Securities issued hereunder likewise covenants and agrees, that the Securities
shall be issued subject to the provisions of this Article XV; and each holder
of a Security, whether upon original issue or upon transfer or assignment
thereof, accepts and agrees to be bound by such provisions.
The payment by the Company of the principal of, premium, if
any, and interest on all Securities issued hereunder shall, to the extent and
in the manner hereinafter set forth, be subordinated and junior in right of
payment to the prior payment in full of all Allocable Amounts with respect to
Senior Indebtedness, whether outstanding at the date of this Indenture or
thereafter incurred.
No provision of this Article XV shall prevent the occurrence
of any Default or Event of Default hereunder.
SECTION 15.02. Default on Senior Indebtedness.
In the event and during the continuation of any default by the
Company in the payment of principal, premium, interest or any other payment due
on any Senior Indebtedness, or in the event that the maturity of any Senior
Indebtedness has been accelerated because of a default, then, in either case,
no payment shall be made by the Company with respect to the principal
(including redemption payments) of or premium, if any, or interest on the
Securities.
In the event of the acceleration of the maturity of the
Securities, then no payment shall be made by the Company with respect to the
principal (including redemption payments) of or premium, if any, or interest on
the Securities until the holders of all Senior Indebtedness outstanding at the
time of such acceleration shall receive payment in full of all Allocable
Amounts due in respect of such Senior Indebtedness (including any amounts due
upon acceleration).
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee when such payment is prohibited by the
preceding paragraphs of this Section 15.02, such payment shall be held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness
76
<PAGE> 86
or their respective representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Senior Indebtedness may have been
issued, as their respective interests may appear, but only to the extent that
the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee in writing, within 90 days of
such payment of the Allocable Amounts then due and owing on such Senior
Indebtedness and only the Allocable Amounts specified in such notice to the
Trustee shall be paid to the holders of such Senior Indebtedness.
SECTION 15.03. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution or winding-up or liquidation or
reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all Allocable
Amounts due upon all Senior Indebtedness of the Company shall first be paid in
full, or payment thereof provided for in money in accordance with its terms,
before any payment is made by the Company on account of the principal (and
premium, if any) or interest on the Securities; and upon any such dissolution
or winding-up or liquidation or reorganization, any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, to which the Securityholders or the Trustee would
be entitled to receive from the Company, except for the provisions of this
Article XV, shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Securityholders or by the Trustee under the Indenture
if received by them or it, directly to the holders of Senior Indebtedness of
the Company (pro rata to such holders on the basis of the respective Allocable
Amounts of Senior Indebtedness held by such holders, as calculated by the
Company) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay all Allocable Amounts in respect of such
Senior Indebtedness in full, in money or money's worth, after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Securityholders
or to the Trustee.
In the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received by
the Trustee before all Allocable Amounts in respect of Senior Indebtedness is
paid in
77
<PAGE> 87
full, or provision is made for such payment in money in accordance with its
terms, such payment or distribution shall be held in trust for the benefit of
and shall be paid over or delivered to the holders of such Senior Indebtedness
or their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing such Senior
Indebtedness may have been issued, as their respective interests may appear, as
calculated by the Company, for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all Allocable
Amounts in respect of such Senior Indebtedness in full in money in accordance
with its terms, after giving effect to any concurrent payment or distribution
to or for the benefit of the holders of such Senior Indebtedness.
For purposes of this Article XV, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this
Article XV with respect to the Securities to the payment of Senior Indebtedness
that may at the time be outstanding, provided that (i) such Senior Indebtedness
is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of such
Senior Indebtedness are not, without the consent of such holders, altered by
such reorganization or readjustment. The consolidation of the Company with, or
the merger of the Company into, another Person or the liquidation or
dissolution of the Company following the sale, conveyance, transfer or lease of
its property as an entirety, or substantially as an entirety, to another Person
upon the terms and conditions provided for in Article X of this Indenture shall
not be deemed a dissolution, winding-up, liquidation or reorganization for the
purposes of this Section 15.03 if such other Person shall, as a part of such
consolidation, merger, sale, conveyance, transfer or lease, comply with the
conditions stated in Article X of this Indenture.
78
<PAGE> 88
SECTION 15.04. Subrogation.
Subject to the payment in full of all Allocable Amounts in
respect of Senior Indebtedness, the rights of the Securityholders shall be
subrogated to the rights of the holders of such Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company, as
the case may be, applicable to such Senior Indebtedness until the principal of
(and premium, if any) and interest on the Securities shall be paid in full;
and, for the purposes of such subrogation, no payments or distributions to the
holders of such Senior Indebtedness of any cash, property or securities to
which the Securityholders or the Trustee would be entitled except for the
provisions of this Article XV, and no payment over pursuant to the provisions
of this Article XV to or for the benefit of the holders of such Senior
Indebtedness by Securityholders or the Trustee, shall, as between the Company,
its creditors other than holders of Senior Indebtedness of the Company, and the
holders of the Securities, be deemed to be a payment by the Company to or on
account of such Senior Indebtedness. It is understood that the provisions of
this Article XV are and are intended solely for the purposes of defining the
relative rights of the holders of the Securities, on the one hand, and the
holders of such Senior Indebtedness on the other hand.
Nothing contained in this Article XV or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness of the
Company, and the holders of the Securities, the obligation of the Company,
which is absolute and unconditional, to pay to the holders of the Securities
the principal of (and premium, if any) and interest on the Securities as and
when the same shall become due and payable in accordance with their terms, or
is intended to or shall affect the relative rights of the holders of the
Securities and creditors of the Company, as the case may be, other than the
holders of Senior Indebtedness of the Company, as the case may be, nor shall
anything herein or therein prevent the Trustee or the holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under the Indenture, subject to the rights, if any, under this Article XV of
the holders of such Senior Indebtedness in respect of cash, property or
securities of the Company, as the case may be, received upon the exercise of
any such remedy.
SECTION 15.05. Trustee to Effectuate Subordination.
Each Securityholder by such Securityholder's acceptance
thereof authorizes and directs the Trustee on such Securityholder's behalf to
take such action as may be necessary
79
<PAGE> 89
or appropriate to effectuate the subordination provided in this Article XV and
appoints the Trustee such Securityholder's attorney-in-fact for any and all
such purposes.
SECTION 15.06. Notice by the Company.
The Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Company that would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article XV. Notwithstanding the
provisions of this Article XV or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment of monies to or by the Trustee in
respect of the Securities pursuant to the provisions of this Article XV, unless
and until a Responsible Officer of the Trustee assigned to its Principal Office
shall have received written notice thereof from the Company or a holder or
holders of Senior Indebtedness or from any trustee therefor; and before the
receipt of any such written notice, the Trustee, subject to the provisions of
Article VI of this Indenture, shall be entitled in all respects to assume that
no such facts exist; provided, however, that if the Trustee shall not have
received the notice provided for in this Section 15.06 at least two Business
Days prior to the date (i) upon which by the terms hereof any money may become
payable for any purpose (including, without limitation, the payment of the
principal of (or premium, if any) or interest on any Security), or (ii) moneys
and/or U.S. Government Obligations are deposited in trust pursuant to Article
XI then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such money and U.S. Government
Obligations and to apply the same to the purposes for which they were received,
and shall not be affected by any notice to the contrary that may be received by
it within two Business Days prior to such date.
The Trustee, subject to the provisions of Article VI of this
Indenture, shall be entitled to conclusively rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness of the Company (or a trustee or representative on behalf of such
holder) to establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee or representative on behalf of any such holder or
holders. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
such Senior Indebtedness to participate in any payment or distribution pursuant
to this Article XV, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled
to participate in such
80
<PAGE> 90
payment or distribution and any other facts pertinent to the rights of such
Person under this Article XV, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
Upon any payment or distribution of assets of the Company
referred to in this Article XV, the Trustee and the Securityholders shall be
entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, liquidating trustee,
custodian, receiver, assignee for the benefit of creditors, agent or other
person making such payment or distribution, delivered to the Trustee or to the
Securityholders, for the purpose of ascertaining the persons entitled to
participate in such payment or distribution, the holders of Senior Indebtedness
and other indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article XV.
SECTION 15.07. Rights of the Trustee; Holders of Senior
Indebtedness.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article XV in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article XV, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not
be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and,
subject to the provisions of Article VI of this Indenture, the Trustee shall
not be liable to any holder of Senior Indebtedness if it shall pay over or
deliver to Securityholders, the Company or any other Person money or assets to
which any holder of Senior Indebtedness shall be entitled by virtue of this
Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.06.
81
<PAGE> 91
SECTION 15.08. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof that any such holder may
have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Securityholders,
without incurring responsibility to the Securityholders and without impairing
or releasing the subordination provided in this Article XV or the obligations
hereunder of the holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
such Senior Indebtedness, or otherwise amend or supplement in any manner such
Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing such Senior Indebtedness; (iii) release any Person liable in any
manner for the collection of such Senior Indebtedness; and (iv) exercise or
refrain from exercising any rights against the Company and any other Person.
82
<PAGE> 92
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01. Extension of Interest Payment Period.
So long as no Event of Default has occurred and is continuing,
the Company shall have the right, at any time and from time to time during the
term of the Securities, to defer payments of interest by extending the interest
payment period of such Securities for a period not exceeding 10 consecutive
semi-annual periods, including the first such semi-annual period during such
extension period (the "Extended Interest Payment Period"), during which
Extended Interest Payment Period no interest shall be due and payable; provided
that no Extended Interest Payment Period shall end on a date other than an
Interest Payment Date or extend beyond the Maturity Date. To the extent
permitted by applicable law, interest, the payment of which has been deferred
because of the extension of the interest payment period pursuant to this
Section 16.01, will bear interest thereon at the Coupon Rate compounded
semi-annually for each semi-annual period of the Extended Interest Payment
Period ("Compounded Interest"). At the end of the Extended Interest Payment
Period, the Company shall pay all interest accrued and unpaid on the
Securities, including any Additional Interest and Compounded Interest
(together, "Deferred Interest") that shall be payable to the holders of the
Securities in whose names the Securities are registered in the Security
Register on the first record date preceding the end of the Extended Interest
Payment Period. Before the termination of any Extended Interest Payment
Period, the Company may further defer payments of interest by further extending
such period, provided that such period, together with all such previous and
further extensions within such Extended Interest Payment Period, shall not
exceed 10 consecutive semi-annual periods, including the first such semi-annual
period during such Extended Interest Payment Period, or extend beyond the
Maturity Date. Upon the termination of any Extended Interest Payment Period
and the payment of all Deferred Interest then due, the Company may commence a
new Extended Interest Payment Period, subject to the foregoing requirements.
No interest shall be due and payable during an Extended Interest Payment
Period, except at the end thereof, but the Company may prepay at any time all
or any portion of the interest accrued during an Extended Interest Payment
Period.
SECTION 16.02. Notice of Extension.
(a) If the Property Trustee is the only registered holder of
the Securities at the time the Company selects an Extended Interest Payment
Period, the Company shall give written
83
<PAGE> 93
notice to the Administrative Trustees, the Property Trustee and the Trustee of
its selection of such Extended Interest Payment Period five Business Days
before the earlier of (i) the next succeeding date on which Distributions on
the Trust Securities issued by Firstar Capital Trust are payable, or (ii) the
date Firstar Capital Trust is required to give notice of the record date, or
the date such Distributions are payable, to any national securities exchange or
to holders of the Capital Securities issued by Firstar Capital Trust, but in
any event at least five Business Days before such record date.
(b) If the Property Trustee is not the only holder of the
Securities at the time the Company selects an Extended Interest Payment Period,
the Company shall give the holders of the Securities and the Trustee written
notice of its selection of such Extended Interest Payment Period at least 10
Business Days before the earlier of (i) the next succeeding Interest Payment
Date, or (ii) the date the Company is required to give notice of the record or
payment date of such interest payment to any national securities exchange.
(c) The semi-annual period in which any notice is given
pursuant to paragraphs (a) or (b) of this Section 16.02 shall be counted as one
of the 10 semi-annual periods permitted in the maximum Extended Interest
Payment Period permitted under Section 16.01.
84
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Firstar Corporation has no parents. The following list shows the name of each
subsidiary of Firstar and the percentage of ownership as of January 1, 1997.
<TABLE>
<CAPTION>
Percentage Jurisdiction in which
Name of Subsidiary Ownership Incorporated or Organized
------------------ --------- -------------------------
<S> <C> <C>
1 Firstar Bank Milwaukee, N.A. 100% United States
4 Firstar Bank, F.S.B. 100% United States
1 Firstar Bank Wisconsin 100% Wisconsin
1 Firstar Bank Wausau, N.A. 100% United States
4 Firstar Bank Iowa, N.A. 100% United States
4 Firstar Bank Burlington, N.A. 100% United States
2 Firstar Bank of Minnesota, N.A. 100% United States
1 Firstar Bank Illinois 100% Illinois
1 Firstar Bank U.S.A., N.A. 100% United States
1 FCSB Bank 100% Illinois
3 Firstar Metropolitan Bank & Trust 100% Arizona
6 Firstar Corporation of Wisconsin 100% Wisconsin
6 Firstar Corporation of Minnesota 100% Minnesota
6 Firstar Corporation of Arizona 100% Arizona
6 Firstar Corporation of Iowa 100% Iowa
1 Firstar Trust Company 99.95% Wisconsin
1 Firstar Trust Company of Florida, N.A. 100% United States
6 Firstar Investment Research & Management Company 100% Wisconsin
6 Firstar Insurance Services, Inc. 100% Wisconsin
5 Elan Investment Services, Inc. 100% Wisconsin
6 Elan Life Insurance Company, Inc. 79.00% Arizona
6 Elan Title Services, Inc. 100% Wisconsin
5 Firstar Community Investment Corporation 100% Wisconsin
6 Firstar Development Corporation 100% Delaware
5 Firstar Leasing Services Corporation 100% Wisconsin
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
<S> <C> <C>
5 CSFM Corporation 100% Wisconsin
5 Firstar Home Mortgage Corporation 100% Wisconsin
5 Firstar Information Services Corporation 100% Wisconsin
4 Banks of Iowa Capital Corporation 100% Iowa
5 DPC of Milwaukee, Inc. 100% Wisconsin
5 Firstar Trade Services Corporation (not funded) 100% Wisconsin
5 Elan Credit Reporting Agency, Inc. 100% Wisconsin
7 Firstar Dubuque Investment Corporation 100% Iowa
5 Milwaukee REL Corporation 100% Wisconsin
8 Minocqua REL Corporation 100% Wisconsin
5 Milwaukee Capital Corporation 100% Nevada
8 Wisconsin Capital Corporation 100% Nevada
2 American Credit Corporation 100% Minnesota
</TABLE>
Notes
-----
1 Subsidiary of Firstar Corporation of Wisconsin
2 Subsidiary of Firstar Corporation of Minnesota
3 Subsidiary of Firstar Corporation of Arizona
4 Subsidiary of Firstar Corporation of Iowa
5 Subsidiary of Firstar Bank Milwaukee, N.A.
6 Subsidiary of Firstar Corporation
7 Subsidiary of Firstar Bank, F.S.B.
8 Subsidiary of Firstar Bank Wisconsin
9 Subsidiary of Firstar Bank of Minnesota, N.A.
<PAGE> 1
EXHIBIT 23
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
Firstar Corporation
We consent to incorporation by reference in the Registration Statements Nos
33-38830, 33-41030, 33-19830, 33-57523, 33-57521, 33-58559, 33-58913, 33-58915
and 33-59207 on Form S-8 of Firstar Corporation of our report dated January 15,
1997, relating to the consolidated balance sheets of Firstar Corporation and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the years
in the three-year period ended December 31, 1996, which report appears in the
December 31, 1996 annual report on Form 10-K of Firstar Corporation.
KPMG Peat Marwick
Milwaukee, Wisconsin
March 13, 1997
<PAGE> 1
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
Annual Report on Form 10-K
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter
referred to as the "Corporation"), will file with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1996; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER
L. FITZSIMONDS, JEFFREY B. WEEDEN AND WILLIAM J. SCHULZ, and each of them, his
or her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
this 26 day of February, 1997.
/s/ Michael E. Batten
---------------------
<PAGE> 2
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
Annual Report on Form 10-K
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter
referred to as the "Corporation"), will file with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1996; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER
L. FITZSIMONDS, JEFFREY B. WEEDEN AND WILLIAM J. SCHULZ, and each of them, his
or her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
this 12 day of February, 1997.
/s/ Robert L. Buchanan SEAL
------------------
<PAGE> 3
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
Annual Report on Form 10-K
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, an Annual Report on
Form 10-K for the fiscal year ended December 31, 1996; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, JEFFREY B. WEEDEN AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
28th day of January, 1997.
/s/ George M. Chester, Jr
-------------------------
<PAGE> 4
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
Annual Report on Form 10-K
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter
referred to as the "Corporation"), will file with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1996; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER
L. FITZSIMONDS, JEFFREY B. WEEDEN AND WILLIAM J. SCHULZ, and each of them, his
or her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
this 28th day of January, 1997.
/s/ Roger H. Derusha
-------------------
<PAGE> 5
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
Annual Report on Form 10-K
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter
referred to as the "Corporation"), will file with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1996; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER
L. FITZSIMONDS, JEFFREY B. WEEDEN AND WILLIAM J. SCHULZ, and each of them, his
or her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
this 27th day of January, 1997.
/s/ James L. Forbes
--------------------
<PAGE> 6
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
Annual Report on Form 10-K
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter
referred to as the "Corporation"), will file with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1996; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER
L. FITZSIMONDS, JEFFREY B. WEEDEN AND WILLIAM J. SCHULZ, and each of them, his
or her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
this 6th day of February, 1997.
/s/ Holmes Foster
------------------
<PAGE> 7
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
Annual Report on Form 10-K
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter
referred to as the "Corporation"), will file with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1996; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER
L. FITZSIMONDS, JEFFREY B. WEEDEN AND WILLIAM J. SCHULZ, and each of them, his
or her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
this 1 day of February, 1997.
/s/ Jerry M. Hiegel SEAL
---------------------
<PAGE> 8
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
Annual Report on Form 10-K
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, an Annual Report on
Form 10-K for the fiscal year ended December 31, 1996; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, JEFFREY B. WEEDEN AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
29th day of January, 1997.
/s/ Joe F. Hladley
---------------------
<PAGE> 9
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
Annual Report on Form 10-K
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, an Annual Report on
Form 10-K for the fiscal year ended December 31, 1996; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, JEFFREY B. WEEDEN AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
6th day of February, 1997.
/s/ James H. Keyes
------------------
<PAGE> 10
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
Annual Report on Form 10-K
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, an Annual Report on
Form 10-K for the fiscal year ended December 31, 1996; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, JEFFREY B. WEEDEN AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
____ day of _______________, 1997.
/s/ Sheldon B. Lubar
-------------------
<PAGE> 11
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
Annual Report on Form 10-K
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter
referred to as the "Corporation"), will file with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, an
Annual Report on Form 10-K for the fiscal year ended December 31, 1996; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSMONDS, JEFFERY B. WEEDEN AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney
this 31st day of January, 1997.
/s/ D. F. McKeithan Jr. SEAL
--------------------
<PAGE> 12
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
Annual Report on Form 10-K
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, an Annual Report on
Form 10-K for the fiscal year ended December 31, 1996; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, JEFFREY B. WEEDEN AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
27th day of January, 1997.
/s/ George W. Mead
---------------------
<PAGE> 13
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
Annual Report on Form 10-K
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, an Annual Report on
Form 10-K for the fiscal year ended December 31, 1996; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, JEFFREY B. WEEDEN AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
30th day of January, 1997.
/s/ Guy A. Osborn
---------------------
<PAGE> 14
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
Annual Report on Form 10-K
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, an Annual Report on
Form 10-K for the fiscal year ended December 31, 1996; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, JEFFREY B. WEEDEN AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
4th day of March, 1997.
/s/ Judith D. Pyle
---------------------
<PAGE> 15
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
Annual Report on Form 10-K
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, an Annual Report on
Form 10-K for the fiscal year ended December 31, 1996; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, JEFFREY B. WEEDEN AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
31 day of January, 1997.
/s/ Clifford V. Smith, Jr
-------------------------
<PAGE> 16
FIRSTAR CORPORATION
(Commission File No. 1-2981)
POWER OF ATTORNEY
Annual Report on Form 10-K
WHEREAS, FIRSTAR CORPORATION, a Wisconsin corporation (hereinafter referred
to as the "Corporation"), will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of 1934, an Annual Report on
Form 10-K for the fiscal year ended December 31, 1996; and
WHEREAS, the undersigned is or may hereafter be a director or executive
officer of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints ROGER L.
FITZSIMONDS, JEFFREY B. WEEDEN AND WILLIAM J. SCHULZ, and each of them, his or
her attorney, with full power to act for and in his or her name, place and
stead, to sign his or her name in such capacity to the Annual Report on Form
10-K, hereby ratifying and confirming all that said attorney may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
13th day of February, 1997.
/s/ William W. Wirtz
---------------------
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,449,094
<INT-BEARING-DEPOSITS> 6,349
<FED-FUNDS-SOLD> 192,965
<TRADING-ASSETS> 13,489
<INVESTMENTS-HELD-FOR-SALE> 1,966,590
<INVESTMENTS-CARRYING> 2,250,776
<INVESTMENTS-MARKET> 2,287,448
<LOANS> 13,195,634
<ALLOWANCE> 213,138
<TOTAL-ASSETS> 19,767,420
<DEPOSITS> 15,214,197
<SHORT-TERM> 1,868,606
<LIABILITIES-OTHER> 283,376
<LONG-TERM> 547,194
0
11,344
<COMMON> 94,266
<OTHER-SE> 1,598,437
<TOTAL-LIABILITIES-AND-EQUITY> 19,767,420
<INTEREST-LOAN> 1,113,459
<INTEREST-INVEST> 263,985
<INTEREST-OTHER> 5,640
<INTEREST-TOTAL> 1,383,084
<INTEREST-DEPOSIT> 465,553
<INTEREST-EXPENSE> 632,705
<INTEREST-INCOME-NET> 750,379
<LOAN-LOSSES> 42,647
<SECURITIES-GAINS> 66
<EXPENSE-OTHER> 773,637
<INCOME-PRETAX> 374,547
<INCOME-PRE-EXTRAORDINARY> 250,177
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 250,177
<EPS-PRIMARY> 1.68
<EPS-DILUTED> 1.68
<YIELD-ACTUAL> 8.14
<LOANS-NON> 85,078
<LOANS-PAST> 74,659
<LOANS-TROUBLED> 1,028
<LOANS-PROBLEM> 15,192
<ALLOWANCE-OPEN> 195,283
<CHARGE-OFFS> 63,208
<RECOVERIES> 24,450
<ALLOWANCE-CLOSE> 213,138
<ALLOWANCE-DOMESTIC> 212,657
<ALLOWANCE-FOREIGN> 481
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
