<PAGE> 1
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-09803
[LETTERHEAD OF TODAY'S BANCORP, INC.]
September 16, 1996
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of
TODAY'S BANCORP, INC. ("TODAY'S"), I cordially invite you to attend
a Special Meeting of Stockholders of TODAY'S to be held at 10:00 a.m.,
Central Time, on Monday, October 14, 1996, at the Best Western
Stephenson Hotel, 109 South Galena Avenue, Freeport, Illinois (the "Special
Meeting"). At this important meeting, you will be asked to consider and vote
upon the Agreement and Plan of Merger, dated March 19, 1996 (the "Merger
Agreement"), and each of the transactions contemplated thereby,
pursuant to which TODAY'S will be merged (the "Merger") with and
into a wholly owned subsidiary of Mercantile Bancorporation Inc.
("MBI"). Upon consummation of the Merger, each share of TODAY'S
common stock will be converted into the right to receive, and each
TODAY'S stockholder will have the opportunity to elect whether to
receive per share of TODAY'S common stock as consideration in the
Merger, one of the following: (i) cash equal to $30.79; (ii)
0.6923 of a share of MBI common stock; or (iii) cash equal to
$12.32 and 0.4154 of a share of MBI common stock, all as more fully
described in the accompanying Proxy Statement/Prospectus. In
certain circumstances, TODAY'S stockholders may receive Merger
consideration of a different type or in a different proportion than
they have elected to receive.
I have enclosed the following items relating to the
Special Meeting and the Merger:
1. A Proxy Statement/Prospectus;
2. A proxy card;
3. An election form and a certification regarding
certain tax matters;
4. A white pre-addressed return envelope to TODAY'S BANCORP,
INC. c/o ChaseMellon Shareholder Services, L.L.C. for the
proxy card; and
5. A blue pre-addressed return envelope to KeyCorp
Shareholder Services, Inc., the Exchange Agent, for
the election form and certification, if applicable.
The Proxy Statement/Prospectus and related proxy
materials set forth, or incorporate by reference, financial data
and other important information relating to TODAY'S and MBI and
describe the terms and conditions of the proposed Merger. The
Board of Directors requests that you carefully review these
materials before completing the enclosed proxy card and election
form or attending the Special Meeting.
THE BOARD OF DIRECTORS OF TODAY'S HAS CAREFULLY
CONSIDERED AND UNANIMOUSLY APPROVED THE TERMS OF THE MERGER
AGREEMENT. THE BOARD HAS DETERMINED THAT THE MERGER IS IN THE BEST
INTEREST OF TODAY'S AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS VOTE FOR THE PROPOSAL TO APPROVE AND ADOPT THE
---
MERGER AGREEMENT.
The investment banking firm of The Chicago Corporation
has issued its written opinion, dated as of the date of this
Proxy/Statement Prospectus, to your Board of Directors regarding
the fairness from a financial point of view of the consideration to
be paid by MBI pursuant to the Merger Agreement.
It is very important that your shares are represented at
the Special Meeting, whether or not you plan to attend in person.
The affirmative vote of persons holding at least two-thirds of the
outstanding TODAY'S common stock is required for the approval and
adoption of the Merger Agreement. A failure to vote for the approval
and adoption of the Merger Agreement will have the same effect as
a vote against the Merger Agreement. Therefore, I urge you to
execute, date and return the enclosed proxy card
<PAGE> 2
in the enclosed white, postage-paid envelope as soon as possible to
assure that your shares will be voted at the Special Meeting.
It is also very important that you return the enclosed
election form and, if applicable, the certification regarding tax
matters. Failure to return the election form and, if applicable,
the certification will result in a deemed election per share of
TODAY'S common stock of cash equal to $30.79. In addition, in
certain circumstances, failure to return the election form may
cause a stockholder to be treated differently than those
stockholders who have elected to receive cash equal to $30.79 by
returning the election form in a timely manner.
The Board of Directors and management of TODAY'S
appreciate your continued support and look forward to seeing you at
the Special Meeting. If you have any questions or require
assistance, please contact R. William Owen at (815) 235-8596.
Very truly yours,
/s/ Dan Heine
DAN HEINE
President and Chief Executive Officer
<PAGE> 3
TODAY'S BANCORP, INC.
50 WEST DOUGLAS STREET
FREEPORT, ILLINOIS 61032
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 14, 1996
TO THE STOCKHOLDERS OF TODAY'S:
Notice is hereby given that a Special Meeting of
Stockholders of TODAY'S BANCORP, INC., a Delaware corporation
("TODAY'S"), will be held at the Best Western Stephenson Hotel,
109 South Galena Avenue, Freeport, Illinois, on Monday, October 14, 1996, at
10:00 a.m., Central Time, for the following purposes:
(1) To consider and vote upon the approval and adoption
of the Agreement and Plan of Merger (the "Merger Agreement"), dated
March 19, 1996, and each of the transactions contemplated thereby,
pursuant to which TODAY'S will be merged (the "Merger") with and
into a wholly owned subsidiary of Mercantile Bancorporation Inc.
("MBI"), and the business and operations of TODAY'S will be
continued through such wholly owned subsidiary, and whereby, upon
consummation of the Merger, each share (other than shares as to
which a stockholder has perfected appraisal rights) of TODAY'S
common stock will be converted into the right to receive, and each
stockholder will have the opportunity to elect to receive per share
of TODAY'S common stock as consideration in the Merger, one of the
following: (i) cash equal to $30.79; (ii) 0.6923 of a share of MBI
common stock; or (iii) cash equal to $12.32 and 0.4154 of a share
of MBI common stock. In certain circumstances, TODAY'S
stockholders may receive Merger consideration of a different type
or in a different proportion than they have elected to receive.
(2) To transact such other business as may properly come
before the Special Meeting or any adjournments or postponements
thereof.
The record date for determining the stockholders entitled
to receive notice of, and to vote at, the Special Meeting or any
adjournments or postponements thereof has been fixed as of the
close of business on September 3, 1996.
In the event the Merger is approved and consummated, each
holder of TODAY'S common stock will have the right to dissent from
the Merger and demand payment of the fair value of his or her
shares. The right of a stockholder to receive such payment is
contingent upon strict compliance with the requirements of Section
262 of The General Corporation Law of the State of Delaware, the
full text of which is attached as Annex A to the accompanying Proxy
-------
Statement/Prospectus. For a summary of these requirements, see
"APPRAISAL RIGHTS OF STOCKHOLDERS OF TODAY'S" in the accompanying
Proxy Statement/Prospectus.
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING,
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN
IT TO TODAY'S BANCORP, INC. C/O CHASE MELLON SHAREHOLDER SERVICES,
L.L.C. IN THE ACCOMPANYING WHITE ENVELOPE.
By Order of the Board of Directors
/s/ Daniel M. Lashinski
DANIEL M. LASHINSKI
Secretary
Freeport, Illinois
September 16, 1996
<PAGE> 4
MERCANTILE BANCORPORATION INC.
PROSPECTUS
----------------
TODAY'S BANCORP, INC.
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 14, 1996
This Prospectus of Mercantile Bancorporation Inc. ("MBI")
relates to the issuance of up to 1,177,066 shares of common stock,
$5.00 par value (the "MBI Stock"), and attached preferred share
purchase rights (the "MBI Rights"), of MBI (the MBI Stock and MBI
Rights are collectively referred to herein as the "MBI Common
Stock"), to be issued to the stockholders of TODAY'S BANCORP, INC.,
a Delaware corporation ("TODAY'S"), upon consummation of the
proposed merger (the "Merger") of TODAY'S with and into a wholly
owned subsidiary of MBI ("Merger Sub"). Upon receipt of the
requisite stockholder and regulatory approvals, the Merger will be
consummated in accordance with the terms and conditions of the
Agreement and Plan of Merger (the "Merger Agreement"), dated March
19, 1996, by and among MBI, Merger Sub and TODAY'S. This
Prospectus also serves as the Proxy Statement for TODAY'S in
connection with the Special Meeting of Stockholders of TODAY'S (the
"Special Meeting"), which will be held on October 14, 1996, at
the time and place and for the purposes stated in the Notice of
Special Meeting of Stockholders accompanying this Proxy Statement/
Prospectus.
Pursuant to the Merger Agreement, MBI will issue up to an
aggregate of 1,177,066 shares of MBI Common Stock. Upon
consummation of the Merger, the business and operations of TODAY'S
will be continued through Merger Sub and each share (other than
shares as to which a stockholder has perfected appraisal rights) of
the common stock, $5.00 par value (the "TODAY'S Stock"), and
attached preferred share purchase rights (the "TODAY'S Rights"), of
TODAY'S (the TODAY'S Stock and the TODAY'S Rights are collectively
referred to herein as the "TODAY'S Common Stock") will be converted
into the right to receive, and each TODAY'S stockholder will have
the opportunity to elect whether to receive per share of TODAY'S
Common Stock as consideration in the Merger, one of the following:
(i) cash equal to $30.79 (the "Cash Distribution"); (ii) 0.6923 of
a share of MBI Common Stock (the "Stock Distribution"); or (iii)
cash equal to $12.32 and 0.4154 of a share of MBI Common Stock (the
"Combined Distribution") (the aggregate of all Cash Distributions,
Stock Distributions and Combined Distributions is sometimes
hereinafter referred to as the "Merger Consideration"), all as more
fully described in detail at pages 25 to 49 of this Proxy
Statement/Prospectus. In certain circumstances, TODAY'S
stockholders who have elected to receive the Cash Distribution, the
Combined Distribution or the Stock Distribution or who have been
deemed to have elected the Cash Distribution will receive Merger
Consideration of a different type or in a different proportion than
they have elected or have been deemed to have elected to receive.
See "TERMS OF THE PROPOSED MERGER - General Description of the
Merger." No fractional shares of MBI Common Stock will be issued
in the Merger, but cash will be paid in lieu of fractional shares.
See "TERMS OF THE PROPOSED MERGER - Fractional Shares."
The Merger is intended to qualify as a reorganization
under Section 368 of the Internal Revenue Code of 1986, as amended
(the "Code"), and is intended to achieve certain federal income tax
tax-deferral benefits for TODAY'S stockholders with respect to
shares of MBI Common Stock received in the Merger. See "SUMMARY
INFORMATION - Certain Federal Income Tax Consequences" and "CERTAIN
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER." Because a TODAY'S
stockholder who elects to receive the Stock Distribution may
nevertheless, under certain circumstances, receive a combination of
MBI Common Stock and cash, such stockholder may recognize taxable
income with respect to any such cash received. See "TERMS OF THE
PROPOSED MERGER - General Description of the Merger."
<PAGE> 5
MBI Common Stock is traded on the New York Stock Exchange
(the "NYSE") under the symbol "MTL" and TODAY'S Common Stock is
quoted on the Nasdaq National Market under the symbol "TDAY." On
September 11, 1996 the closing sale price for MBI Common Stock as
reported on the NYSE Composite Tape was $50 1/8 per share and the
closing sale price for TODAY'S Common Stock as reported by the
Nasdaq National Market was $32 1/2 per share.
This Proxy Statement/Prospectus, the Notice of Special
Meeting, the form of proxy and the election form were first mailed
to the stockholders of TODAY'S on or about September 16, 1996.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR ANY
STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE SHARES OF MBI COMMON STOCK OFFERED HEREBY ARE NOT
SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR
NON-BANK SUBSIDIARY AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE BANK INSURANCE FUND, THE SAVINGS
ASSOCIATION INSURANCE FUND OR ANY OTHER FEDERAL OR STATE
GOVERNMENTAL AGENCY.
All information contained in this Proxy
Statement/Prospectus with respect to MBI has been supplied by MBI
and all information with respect to TODAY'S has been supplied by
TODAY'S.
The date of this Proxy Statement/Prospectus is
September 16, 1996.
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<PAGE> 6
AVAILABLE INFORMATION
---------------------
Both MBI and TODAY'S are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance therewith, file with the
Commission reports, proxy statements and other information. Such
reports, proxy statements and other information filed with the
Commission by MBI and TODAY'S can be inspected and copied at the
public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's
regional offices located at Suite 1300, Seven World Trade Center,
New York, New York 10048 and Suite 1400, Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60661. MBI Common Stock is
listed on the NYSE, and such reports, proxy statements and other
information concerning MBI are available for inspection and copying
at the offices of the NYSE, 20 Broad Street, New York, New York
10005. TODAY'S Common Stock is quoted on the Nasdaq National
Market, and such reports, proxy statements and other information
concerning TODAY'S are available from TODAY'S, without charge, upon
written or oral request to Daniel M. Lashinski, 50 West Douglas
Street, Freeport, Illinois 61032, telephone (815) 235-8596.
This Proxy Statement/Prospectus does not contain all of
the information set forth in the Registration Statement on Form S-4
and exhibits thereto (the "Registration Statement") covering the
securities offered hereby which has been filed by MBI with the
Commission. As permitted by the rules and regulations of the
Commission, this Proxy Statement/Prospectus omits certain
information contained or incorporated by reference in the
Registration Statement. Statements contained in this Proxy
Statement/Prospectus provide a summary of the contents of any
contract or other document referenced herein but are not
necessarily complete and in each instance reference is made to the
copy of such contract or other document filed as an exhibit to the
Registration Statement. For such further information, reference is
made to the Registration Statement.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
-------------------------------------------------
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE
DOCUMENTS RELATING TO MBI AND TODAY'S WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS, EXCLUDING EXHIBITS
UNLESS SPECIFICALLY INCORPORATED THEREIN, ARE AVAILABLE, WITHOUT
CHARGE, TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER OF STOCK OF
TODAY'S TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED, UPON
WRITTEN OR ORAL REQUEST, IN THE CASE OF DOCUMENTS RELATING TO MBI,
TO JON W. BILSTROM, GENERAL COUNSEL AND SECRETARY, MERCANTILE
BANCORPORATION INC., P.O. BOX 524, ST. LOUIS, MISSOURI 63166-0524,
TELEPHONE (314) 425-2525 OR, IN THE CASE OF DOCUMENTS RELATING TO
TODAY'S, TO R. WILLIAM OWEN, EXECUTIVE VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER, TODAY'S BANCORP, INC., P.O. BOX 30, FREEPORT,
ILLINOIS, TELEPHONE (815) 235-8596. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS PRIOR TO THE SPECIAL MEETING, ANY REQUEST
SHOULD BE MADE BY OCTOBER 7, 1996.
The following documents filed with the Commission by MBI
under the Exchange Act are incorporated herein by reference:
(a) MBI's Annual Report on Form 10-K for the year ended
December 31, 1995.
(b) MBI's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1996 and June 30, 1996.
(c) MBI's Current Reports on Form 8-K dated January 16,
1996 and March 11, 1996.
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<PAGE> 7
(d) The description of the MBI Stock set forth in
Item 1 of MBI's Registration Statement on Form 8-A,
dated March 5, 1993, and any amendment or report
filed for the purpose of updating such description.
(e) The description of the MBI Rights set forth in Item
1 of MBI's Registration Statement on Form 8-A,
dated March 5, 1993, and any amendment or report
filed for the purpose of updating such description.
The following documents filed with the Commission by
TODAY'S under the Exchange Act are incorporated herein by
reference:
(a) TODAY'S Annual Report on Form 10-K for the year
ended December 31, 1995.
(b) TODAY'S Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1996 and June 30, 1996.
(c) TODAY'S Current Report on Form 8-K dated March 19,
1996.
(d) The description of the TODAY'S Stock set forth in
the TODAY'S Registration Statement on Form S-2,
dated July 28, 1989, and any amendment or report
filed for the purpose of updating such description.
(e) The description of the TODAY'S Rights set forth in
the TODAY'S Registration Statement on Form 8-A,
dated December 17, 1990, and any amendment or
report filed for the purpose of updating such
description.
Such incorporation by reference shall not be deemed to
incorporate by reference the information referred to in Item
402(a)(8) of Regulation S-K.
All documents filed by MBI and TODAY'S pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the
date hereof and until the date of the Special Meeting shall be
deemed to be incorporated by reference herein and made a part
hereof from the date any such document is filed. The information
relating to MBI and TODAY'S contained in this Proxy
Statement/Prospectus does not purport to be complete and should be
read together with the information in the documents incorporated by
reference herein. Any statement contained herein or in a document
incorporated herein by reference shall be deemed to be modified or
superseded for purposes hereof to the extent that a subsequent
statement contained herein or in any other subsequently filed
document incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute
a part hereof.
Any statements contained in this Proxy
Statement/Prospectus involving matters of opinion, whether or not
expressly so stated, are intended as such and not as
representations of fact.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT/
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
MBI OR TODAY'S. THIS PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY
ANY SECURITIES OTHER THAN THE SHARES OF MBI COMMON STOCK TO WHICH
IT RELATES OR AN OFFER TO ANY
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<PAGE> 8
PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER WOULD BE UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY
DISTRIBUTION OF SECURITIES PURSUANT HERETO SHALL IMPLY OR CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF MBI OR
TODAY'S OR ANY OF THEIR SUBSIDIARIES OR IN THE INFORMATION SET FORTH
HEREIN SUBSEQUENT TO THE DATE HEREOF.
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<TABLE>
TABLE OF CONTENTS
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<CAPTION>
Page
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<S> <C>
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . 3
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE. . . . . . . . 3
SUMMARY INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 8
Business of MBI . . . . . . . . . . . . . . . . . . . . . . 8
Business of TODAY'S . . . . . . . . . . . . . . . . . . . . 9
The Proposed Merger . . . . . . . . . . . . . . . . . . . . 9
Effect on Stock Option and Employee Benefit Plans . . . . . 13
Regulatory Approvals. . . . . . . . . . . . . . . . . . . . 14
Conditions to the Merger. . . . . . . . . . . . . . . . . . 14
Effective Time; Closing Date. . . . . . . . . . . . . . . . 14
Termination of the Merger Agreement . . . . . . . . . . . . 14
Other Agreements. . . . . . . . . . . . . . . . . . . . . . 15
Interests of Certain Persons in the Merger. . . . . . . . . 15
Special Meeting of TODAY'S Stockholders . . . . . . . . . . 16
Reasons for the Merger. . . . . . . . . . . . . . . . . . . 16
Opinion of Financial Advisor to TODAY'S . . . . . . . . . . 17
Fractional Shares . . . . . . . . . . . . . . . . . . . . . 17
Appraisal Rights. . . . . . . . . . . . . . . . . . . . . . 17
Waiver and Amendment. . . . . . . . . . . . . . . . . . . . 17
Certain Federal Income Tax Consequences . . . . . . . . . . 17
Accounting Treatment. . . . . . . . . . . . . . . . . . . . 18
Markets and Market Prices . . . . . . . . . . . . . . . . . 18
Comparative Unaudited Per Share Data. . . . . . . . . . . . 19
Summary Financial Data. . . . . . . . . . . . . . . . . . . 19
INFORMATION REGARDING SPECIAL MEETING. . . . . . . . . . . . . . 23
General . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Date, Time and Place. . . . . . . . . . . . . . . . . . . . 23
Record Date; Vote Required. . . . . . . . . . . . . . . . . 23
Voting and Revocation of Proxies. . . . . . . . . . . . . . 23
Solicitation of Proxies . . . . . . . . . . . . . . . . . . 24
TERMS OF THE PROPOSED MERGER . . . . . . . . . . . . . . . . . . 25
General Description of the Merger . . . . . . . . . . . . . 25
Other Agreements. . . . . . . . . . . . . . . . . . . . . . 29
Background of and Reasons for the Merger; Board
Recommendations . . . . . . . . . . . . . . . . . . . . . 31
Opinion of Financial Advisor to TODAY'S . . . . . . . . . . 35
Conditions to the Merger. . . . . . . . . . . . . . . . . . 39
Termination of the Merger Agreement . . . . . . . . . . . . 41
Indemnification . . . . . . . . . . . . . . . . . . . . . . 42
Effective Time; Closing Date. . . . . . . . . . . . . . . . 42
Surrender of TODAY'S Stock Certificates and Receipt of
MBI Common Stock and/or Cash. . . . . . . . . . . . . . . 42
Fractional Shares . . . . . . . . . . . . . . . . . . . . . 43
Regulatory Approvals. . . . . . . . . . . . . . . . . . . . 43
Business Pending the Merger . . . . . . . . . . . . . . . . 43
Waiver and Amendment. . . . . . . . . . . . . . . . . . . . 47
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<PAGE> 10
<CAPTION>
Page
----
<S> <C>
Accounting Treatment. . . . . . . . . . . . . . . . . . . . 47
Interests of Certain Persons in the Merger. . . . . . . . . 47
Effect on Stock Option and Employee Benefit Plans . . . . . 48
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. . . . . . 49
APPRAISAL RIGHTS OF STOCKHOLDERS OF TODAY'S. . . . . . . . . . . 53
PRO FORMA FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . 57
Comparative Unaudited Per Share Data. . . . . . . . . . . . 57
Pro Forma Combined Consolidated Financial Statements
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . 58
INFORMATION REGARDING MBI STOCK. . . . . . . . . . . . . . . . . 65
Description of MBI Common Stock and Attached Preferred
Share Purchase Rights . . . . . . . . . . . . . . . . . . 65
Restrictions on Resale of MBI Stock by Affiliates . . . . . 67
Comparison of the Rights of Shareholders of MBI and
Stockholders of TODAY'S . . . . . . . . . . . . . . . . . 67
SUPERVISION AND REGULATION . . . . . . . . . . . . . . . . . . . 71
General . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Certain Transactions with Affiliates. . . . . . . . . . . . 72
Payment of Dividends. . . . . . . . . . . . . . . . . . . . 72
Capital Adequacy. . . . . . . . . . . . . . . . . . . . . . 72
FDIC Insurance Assessments. . . . . . . . . . . . . . . . . 72
Proposals to Overhaul the Savings Association Industry. . . 73
Support of Subsidiary Banks . . . . . . . . . . . . . . . . 73
FIRREA and FDICIA . . . . . . . . . . . . . . . . . . . . . 74
Depositor Preference Statute. . . . . . . . . . . . . . . . 74
The Interstate Banking and Community Development
Legislation . . . . . . . . . . . . . . . . . . . . . . . 75
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . 75
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . 75
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . 76
SHAREHOLDER PROPOSALS. . . . . . . . . . . . . . . . . . . . . . 76
ANNEX A -- APPRAISAL RIGHTS PROVISIONS OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE . . . . . .A-1
ANNEX B -- OPINION OF THE CHICAGO CORPORATION . . . . . . . . .B-1
</TABLE>
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<PAGE> 11
SUMMARY INFORMATION
-------------------
THE FOLLOWING SUMMARY OF THE IMPORTANT TERMS OF THE PROPOSED
MERGER AND RELATED INFORMATION DISCUSSED ELSEWHERE IN THIS PROXY
STATEMENT/PROSPECTUS DOES NOT PURPORT TO BE COMPLETE AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE DETAILED
INFORMATION WHICH APPEARS ELSEWHERE IN THIS PROXY
STATEMENT/PROSPECTUS AND THE DOCUMENTS INCORPORATED BY REFERENCE
HEREIN. STOCKHOLDERS OF TODAY'S ARE URGED TO READ THIS PROXY
STATEMENT/PROSPECTUS IN ITS ENTIRETY. ALL MBI PER SHARE DATA
REFLECT A THREE-FOR-TWO STOCK SPLIT DISTRIBUTED IN THE FORM OF A
STOCK DIVIDEND ON APRIL 11, 1994.
BUSINESS OF MBI
MBI, a Missouri corporation, was organized in 1970 and is a
registered bank holding company under the federal Bank Holding
Company Act of 1956, as amended (the "BHCA"). MBI is also a
savings and loan holding company under the Home Owners' Loan Act of
1933, as amended (the "HOLA"). At June 30, 1996, MBI owned,
directly or indirectly, all of the capital stock of Mercantile Bank
of St. Louis National Association ("Mercantile Bank") and 61 other
commercial banks which operated from 435 banking offices and 400
Fingertip Banking automated teller machines located throughout
Missouri, Illinois, eastern Kansas, northern Arkansas and Iowa.
MBI's services concentrate in four major lines of business --
consumer, corporate, investment banking and trust services. MBI
also operates non-banking subsidiaries which provide related
financial services, including investment management, brokerage
services and asset-based lending. As of June 30, 1996, MBI had
62,673,041 shares of its Common Stock outstanding and reported, on
a restated consolidated basis, total assets of $18 billion, total
deposits of $14.3 billion, total loans and leases of $11.9 billion
and shareholders' equity of $1.6 billion.
On January 2, 1996, MBI completed the acquisitions of (i)
Hawkeye Bancorporation ("Hawkeye"), an Iowa corporation and
registered bank holding company under the BHCA, located in Des
Moines, Iowa, and (ii) First Sterling Bancorp, Inc. ("Sterling"),
an Illinois corporation and registered bank holding company under
the BHCA, located in Sterling, Illinois. These acquisitions were
accounted for under the pooling-of-interests method of accounting.
As of January 2, 1996, Hawkeye and Sterling reported total assets
of $2.0 billion and $168 million, respectively.
On February 9, 1996 and March 7, 1996, respectively, MBI
completed the acquisitions of (i) Security Bank of Conway, F.S.B.
("Conway"), a federal stock savings bank located in Conway,
Arkansas, and (ii) Metro Savings Bank, F.S.B. ("Metro"), a federal
stock savings bank located in Wood River, Illinois. These
acquisitions were accounted for under the purchase method of
accounting. As of February 9, 1996, Conway reported total assets
of $103 million. As of March 7, 1996, Metro reported total assets
of $81 million.
In connection with the acquisition of Hawkeye, MBI restated
its consolidated financial statements as of and for the years ended
December 31, 1995, 1994 and 1993. MBI filed supplemental financial
statements as of and for the years ended December 31, 1995, 1994
and 1993 in a Current Report on Form 8-K, dated March 11, 1996,
which has been incorporated by reference into this ProxyStatement/
Prospectus. Due to the immateriality of the financial condition
and results of operations of Sterling to that of MBI, the
supplemental consolidated financial statements of MBI do not
reflect the acquisition of Sterling.
On December 19, 1995, MBI entered into an agreement to acquire
Peoples State Bank ("Peoples"), a Kansas state-chartered bank,
located in Topeka, Kansas. As of June 30, 1996, Peoples
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<PAGE> 12
reported total assets of $94 million, total deposits of $74 million,
total loans and leases of $52 million and shareholders' equity of $8
million.
On July 9, 1996, MBI entered into an agreement to acquire
First Financial Corporation of America ("First Financial"), a
Missouri corporation, located in Salem, Missouri. As of June 30,
1996, First Financial reported, on a consolidated basis, total
assets of $88 million, total deposits of $76 million, total loans
and leases of $48 million and shareholders' equity of $10 million.
On August 22, 1996, MBI entered into an agreement to acquire Regional
Bancshares, Inc. ("Regional"), an Illinois corporation, located in
Alton, Illinois. As of June 30, 1996, Regional reported, on a consolidated
basis, total assets of $177 million, total deposits of $145 million, total
loans and leases of $99 million and shareholders' equity of $23 million.
MBI's principal executive offices are located at One
Mercantile Center, St. Louis, Missouri 63101 and its telephone
number is (314) 425-2525.
BUSINESS OF TODAY'S
TODAY'S, a Delaware corporation, was organized in 1977 and is
registered as a bank holding company under the BHCA. TODAY'S
currently owns all of the capital stock of: (i) TODAY'S BANK-East
("TODAY'S-East"), an Illinois state-chartered bank which owns and
operates two subsidiaries, TODAY'S MORTGAGE SOURCE and TODAY'S
FINANCIAL SERVICES, both of which are Illinois corporations; (ii)
TODAY'S BANK-West ("TODAY'S-West" and collectively with TODAY'S-
East, the "TODAY'S Banks"), an Illinois state-chartered bank; and
(iii) TODAY'S INSURANCE SOURCE AGENCY, LTD., an Illinois property
and casualty company, all of which operate from twelve locations in
northwestern Illinois. As of June 30, 1996, 2,751,198 shares of
TODAY'S Common Stock were issued and outstanding and stock options
to purchase 82,299 shares of TODAY'S Common Stock were outstanding.
As of June 30, 1996, TODAY'S reported, on a consolidated basis,
total assets of $510 million, total deposits of $438 million, total
loans and leases of $360 million and stockholders' equity of $48
million.
The principal executive offices of TODAY'S are located at 50
West Douglas Street, Freeport, Illinois 61032 and its telephone
number is (815) 235-8596.
THE PROPOSED MERGER
Subject to the satisfaction of the terms and conditions set
forth in the Merger Agreement, which are described below, TODAY'S
will be merged with and into Merger Sub. Upon consummation of the
Merger, the corporate existence of TODAY'S will terminate and
Merger Sub will continue as the surviving entity. Simultaneously
with the effectiveness of the Merger, and subject to elections of
stockholders and certain other adjustments intended to accommodate
the tax-deferred nature of the transaction for those stockholders
who receive solely shares of MBI Common Stock, each share of
TODAY'S Common Stock (other than shares as to which a TODAY'S
stockholder has perfected appraisal rights) will be converted into
the right to receive one of the following (i) the Cash Distribution
(cash equal to $30.79); (ii) the Stock Distribution (0.6923 of a
share of MBI Common Stock); or (iii) the Combined Distribution
(cash equal to $12.32 and 0.4154 of a share of MBI Common Stock).
Each TODAY'S stockholder will have the opportunity to elect
whether to receive per share of TODAY'S Common Stock as
consideration in the Merger: (i) the Cash Distribution (a "Cash
Election," in which case such stockholder's shares of TODAY'S
Common Stock shall be deemed
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<PAGE> 13
"Cash Election Shares"); (ii) the Stock Distribution (a "Stock Election," in
which case such stockholder's shares of TODAY'S Common Stock shall be deemed
"Stock Election Shares"); or (iii) the Combined Distribution (a "Combined
Election," in which case such stockholder's shares of TODAY'S Common Stock
shall be deemed "Combined Election Shares"). Enclosed with this Proxy
Statement/Prospectus is an election form (the "Election Form"), whereby each
TODAY'S stockholder may indicate a Cash Election, a Stock Election or a
Combined Election. In order for an Election Form to be effective, the Election
Form must be properly completed and duly executed by a TODAY'S stockholder and
returned to KeyCorp Shareholder Services, Inc. (the "Exchange Agent") by 5:00
p.m., Central Time, on the date of the Special Meeting (the "Election
Deadline"). TODAY'S STOCKHOLDERS ARE URGED TO CONSULT WITH THEIR OWN FINANCIAL
AND TAX ADVISORS PRIOR TO RETURNING THEIR ELECTION FORMS TO THE EXCHANGE AGENT
TO DETERMINE THE BEST ALTERNATIVE FOR THEM.
Following consummation of the Merger, the Exchange Agent will
distribute the applicable Merger Consideration in exchange for
shares of TODAY'S Common Stock. See "TERMS OF THE PROPOSED MERGER
- - Surrender of TODAY'S Stock Certificate and Receipt of MBI Common
Stock and/or Cash."
Each separate entry on the TODAY'S list of stockholders shall
be presumed to represent a separate and distinct holder of record
of TODAY'S Common Stock. Shares held of record by a bank, trust
company, broker, dealer or other recognized nominee shall be deemed
to be held by a single holder unless the nominee advises the
Exchange Agent otherwise, in which case each beneficial owner
represented by such nominee will be treated as a separate holder
and, either directly or through such nominee, may submit a separate
Election Form. An election pursuant to a previously submitted
Election Form may be revoked or changed by a holder or any other
person to whom the subject shares are subsequently transferred by
written notice by such holder or transferee to the Exchange Agent
at or prior to the Election Deadline. Any stockholder who fails to
deliver a properly completed and duly executed Election Form to the
Exchange Agent by the Election Deadline shall be deemed to have
made no election (a "No Election," in which case such holder's
shares shall be deemed to be "No Election Shares").
No Election Shares will be treated as Cash Election Shares for
purposes of determining the type and amount of Merger Consideration
payable to the holders of No Election Shares; provided, however,
that if the aggregate amount of cash payable to the holders of Cash
Election Shares is required to be reduced and replaced with shares
of MBI Common Stock, as described below, the cash payable to the
holders of No Election Shares will be reduced and replaced with shares
of MBI Common Stock before the cash payable to the holders of Cash
Election shares is so reduced and replaced. Shares of TODAY'S
Common Stock as to which a TODAY'S stockholder has perfected
appraisal rights (the "Dissenting Shares") under Section 262 of The
General Corporation Law of the State of Delaware (the "DGCL") will
also be treated as Cash Election Shares unless the aggregate amount
of cash payable to the holders of Cash Election Shares is reduced
and replaced with shares of MBI Common Stock, as described below,
in which case such Dissenting Shares will not be so reduced and
replaced. Shares of TODAY'S Common Stock that are subject to
outstanding options (the "Option Shares") under the 1989
Nonqualified Stock Option Plan of TODAY'S (the "Stock Option Plan")
will be treated as Stock Election Shares for purposes of
determining the type and amount of Merger Consideration payable to
the holders of Option Shares; provided, however, that if the
aggregate number of shares of MBI Common Stock payable to the
holders of Stock Election Shares is reduced and replaced with the
Cash Distribution, as described below, in no event will the shares
of MBI Common Stock payable to the holders of Option Shares be so
reduced and replaced with the Cash Distribution.
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<PAGE> 14
Pursuant to the Merger Agreement, any holder of 1% or more of
TODAY'S Common Stock (determined as of the Closing Date) who has
not, at or before the Election Deadline, delivered to the Exchange
Agent a properly executed certification regarding certain tax
matters (which certification will be provided to the TODAY'S
stockholders with the Election Form) shall be deemed to have made
a timely election to receive the Cash Distribution, and all shares
of TODAY'S Common Stock held by such holder shall be deemed to be
Cash Election Shares for all purposes, including the event in which
the aggregate Cash Distribution payable to the holders of Cash
Election Shares is required to be reduced as described below.
A LESS-THAN-1% HOLDER WHO ACQUIRES ADDITIONAL SHARES OF TODAY'S
COMMON STOCK AFTER THE ELECTION DEADLINE AND THEREBY BECOMES A
HOLDER OF 1% OR MORE OF TODAY'S COMMON STOCK WILL ALSO BE DEEMED TO
HAVE MADE A TIMELY ELECTION TO RECEIVE THE CASH DISTRIBUTION AND
WILL BE PRECLUDED FROM RECEIVING THE STOCK DISTRIBUTION OR COMBINED
DISTRIBUTION UNLESS SUCH HOLDER, IN ANTICIPATION OF SUCH
ACQUISITION OF ADDITIONAL SHARES OF TODAY'S COMMON STOCK, HAS
DELIVERED TO THE EXCHANGE AGENT AT OR BEFORE THE ELECTION DEADLINE
A PROPERLY EXECUTED CERTIFICATION REGARDING CERTAIN TAX MATTERS.
The actual Merger Consideration paid to each TODAY'S
stockholder upon consummation of the Merger may differ in form or
proportion from the Merger Consideration elected by each such
stockholder pursuant to an Election Form in the event that (i) the
aggregate number of shares of MBI Common Stock issuable as Merger
Consideration on the basis of the stockholders' elections exceeds
1,177,066 (an "Over-Election") or (ii) the aggregate number of
shares of MBI Common Stock issuable as Merger Consideration on the
basis of the stockholders' elections is less than 1,177,066 and
---
would be insufficient to allow Thompson Coburn, counsel to MBI
("MBI Counsel"), to render an opinion (the "Tax Opinion") that the
Merger will qualify as a reorganization under Section 368 of the
Code for federal income tax purposes (an "Under-Election"). See
"CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER." In the
event of an Over-Election, the aggregate number of shares of MBI
Common Stock issuable as a portion of all Combined Distributions
(and, if necessary, in all Stock Distributions (other than with
respect to Option Shares)) will be reduced pro rata and the Cash
Distribution will be issued in lieu thereof, such that the
aggregate number of shares of MBI Common Stock issuable as Merger
Consideration in all Stock Distributions and Combined Distributions
equals 1,177,066. In the event of an Under-Election, the Cash
Distribution payable to the holders of No Election Shares (and, if
necessary, to the holders of, first, the Combined Election Shares
and, second, the Cash Election Shares) will be reduced pro rata and
the Stock Distribution will be issued in lieu thereof, such that
the aggregate number of shares of MBI Common Stock necessary for
MBI Counsel to render the Tax Opinion will be issued as Merger
Consideration. In all other cases, including the event that the
aggregate number of shares of MBI Common Stock issuable as Merger
Consideration on the basis of the stockholders' elections is less
than 1,177,066 but is sufficient to allow MBI Counsel to render the
Tax Opinion, the Merger Consideration paid to each TODAY'S
stockholder will be paid in the same form and proportion as such
stockholder has elected on an Election Form (or has been deemed to
have elected, in the case of No Election Shares or shares held by
certain holders of 1% or more of TODAY'S Common Stock). A more
detailed description of the process through which the Merger
Consideration will be determined and paid to the TODAY'S
stockholders, including the terms and conditions under which a
particular type of Merger Consideration elected by a TODAY'S
stockholder may be replaced by another type of Merger
Consideration, is set forth below.
In the event that the number of shares of MBI Common Stock
issuable as Merger Consideration to the holders of Stock Election
Shares and Combined Election Shares is less than 1,177,066, then:
(i) the Stock Election Shares will be converted into the
right to receive the Stock Distribution; and
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<PAGE> 15
(ii) the Cash Election Shares and the Combined Election
Shares will be converted into the right to receive the Cash
Distribution and the Combined Distribution, respectively;
provided, however, that in the event of an Under Election,
whereby the number of shares of MBI Common Stock issuable to
the holders of the Stock Election Shares and Combined Election
Shares is insufficient, in the opinion of MBI Counsel, to allow
MBI Counsel to render the Tax Opinion required by the Merger
Agreement (see "CERTAIN FEDERAL INCOME TAX CONSEQUENCES
OF THE MERGER"), then MBI Counsel will notify the Exchange
Agent (the "Notice") as soon as practicable on or after the
date of the consummation of the Merger (the "Closing Date") as
to the number of additional shares of MBI Common Stock that
will be required to be issued in the Merger in order to allow
MBI Counsel to render the Tax Opinion in its reasonable
judgment (the "Share Deficit"). Upon the receipt of the
Notice, the Exchange Agent shall:
(A) first, (x) reallocate the Merger Consideration
payable to each holder of No Election Shares on a pro
rata basis (based upon the ratio of No Election Shares
owned by each such holder to the total number of No
Election Shares), such that the holders of No Election
Shares receive an aggregate number of shares of MBI
Common Stock equal to the Share Deficit and (y) issue to
each such holder of No Election Shares the balance of the
Merger Consideration due to such holder, if any, by
subtracting the value of the shares of MBI Common Stock
received in the reallocation (using a deemed value of
$44.475 per share) from the product of the number of No
Election Shares held by such holder at the Effective Time
and $30.79;
(B) second, if the reallocation set forth in
paragraph (A) above does not result in the issuance of an
aggregate number of shares of MBI Common Stock equal to
the Share Deficit, (x) reallocate the Merger
Consideration payable to each holder of Combined Election
Shares on a pro rata basis (based upon the ratio of
Combined Election Shares owned by each such holder to the
total number of Combined Election Shares), such that the
holders of Combined Election Shares receive an additional
aggregate number of shares of MBI Common Stock equal to
the Share Deficit less the shares of MBI Common Stock
issuable pursuant to paragraph (A) above, and (y) issue
to each such holder of Combined Election Shares the
balance of the Merger Consideration, due to such holder,
if any, by subtracting the value of the sum of the shares
of MBI Common Stock received in the Combined Distribution
and the additional shares of MBI Common Stock received in
the reallocation (using in both cases a deemed value of
$44.475 per share) from the product of the number of
Combined Election Shares held by such holder at the
Effective Time and $30.79; and
(C) third, if the reallocations set forth in
paragraphs (A) and (B) above do not result in the
issuance of an aggregate number of shares of MBI Common
Stock equal to the Share Deficit, (x) reallocate the
Merger Consideration payable to each holder of Cash
Election Shares, other than holders of No Election Shares
and Dissenting Shares, on a pro rata basis (based upon
the ratio of Cash Election Shares, other than No Election
Shares and Dissenting Shares, owned by each such holder
to the total number of Cash Election Shares, other than
No Election Shares and Dissenting Shares), such that the
holders of such Cash Election Shares receive an aggregate
- 12 -
<PAGE> 16
number of shares of MBI Common Stock equal to the Share
Deficit less the shares of MBI Common Stock issued
pursuant to paragraphs (A) and (B) above, and (y) issue
to each such holder of Cash Election Shares, other than
holders of No Election Shares and Dissenting Shares, the
balance of the Merger Consideration due to such holder,
if any, by subtracting the value of the shares of MBI Common
Stock received in the reallocation (using a deemed value of
$44.475 per share) from the product of the number of Cash
Election Shares, other than No Election Shares and
Dissenting Shares, held by such holder and $30.79.
In the event of an Over-Election, whereby the number of
shares of MBI Common Stock issuable as Merger Consideration to the
holders of Stock Election Shares and Combined Election Shares is
greater than 1,177,066, then:
(i) all Cash Election Shares will be converted into the
right to receive the Cash Distribution; and
(ii) the Exchange Agent shall determine the number by
which the shares of MBI Common Stock issuable pursuant to the
Stock Distribution and the Combined Distribution exceeds
1,177,066 (the "Share Surplus") and shall:
(A) first, (x) reallocate the Merger Consideration
payable to each such holder of Combined Election Shares
on a pro rata basis (based upon the ratio of the number
of Combined Election Shares owned by each such holder to
the total number of Combined Election Shares), such that
the total number of shares of MBI Common Stock received
by the holders of Combined Election Shares is reduced by
the Share Surplus and (y) in lieu of the issuance of the
MBI Common Stock portion of the Combined Distribution for
each share of TODAY'S Common Stock, issue to each such
holder of Combined Election Shares the Cash Distribution;
and
(B) second, (x) if the reallocation set forth in
paragraph (A) above does not result in the elimination of
the Share Surplus, the Exchange Agent shall eliminate the
Share Surplus by reallocating the Merger Consideration
payable to each holder of Stock Election Shares, other
than Option Shares, on a pro rata basis (based upon the
ratio of the number of Stock Election Shares, other than
Option Shares, owned by each such holder to the total
number of Stock Election Shares, other than Option
Shares), such that the total number of shares of MBI
Common Stock received by the holders of Stock Election
Shares is reduced by the Share Surplus less the number of
shares reduced pursuant to paragraph (A) above, and (y)
in lieu of the issuance of the Stock Election for each
share of TODAY'S Common Stock, issue to each such holder
of Stock Election Shares the Cash Distribution.
EFFECT ON STOCK OPTION AND EMPLOYEE BENEFIT PLANS
Upon consummation of the Merger, MBI will assume the Stock
Option Plan, and all of the outstanding rights (whether or not then
exercisable) with respect to TODAY'S Common Stock pursuant to the
Stock Option Plan (collectively, the "TODAY'S Options") will be
converted into rights with respect to MBI Common Stock (the "Option
Conversion"). As a result of such assumption: (i) each outstanding
TODAY'S Option will be exercisable solely for shares of MBI Common
Stock; (ii)
- 13 -
<PAGE> 17
the number of shares of MBI Common Stock subject to the TODAY'S
Options will equal the number of Option Shares multiplied by the Stock
Distribution; and (iii) the per share exercise price for each TODAY'S
Option will be adjusted by dividing such exercise price by the Stock
Distribution.
In addition, upon consummation of the Merger, Merger Sub will
honor all severance and other compensation contracts and provisions
for vested benefits under the employee plans of TODAY'S and its
subsidiaries earned or accrued through the Effective Time (as
defined below). MBI will take such steps as are necessary to
integrate the former employees of TODAY'S and its subsidiaries into
MBI's employee benefit plans as soon as practicable after the
Effective Time. See "TERMS OF THE PROPOSED MERGER - Effect on
Stock Option and Employee Benefit Plans."
REGULATORY APPROVALS
The Merger is subject to the prior approval of the Board of
Governors of the Federal Reserve System (the "Federal Reserve
Board"), the Illinois Commissioner of Banks and Real Estate (the
"Illinois Commissioner") and any other bank regulatory authority
that may be necessary or appropriate (the Federal Reserve Board,
the Illinois Commissioner and any other bank regulatory agency that
may be necessary or appropriate are collectively referred to herein
as the "Regulatory Authorities" and, individually, as a "Regulatory
Authority"). MBI has filed the required applications for approval
with the Federal Reserve Board and will file the required application
with the Illinois Commissioner. In reviewing the Merger, the
Regulatory Authorities will consider various factors, including
possible anticompetitive effects of the Merger, and will examine
the financial and managerial resources and future prospects of the
combined organization. There can be no assurance that the
requisite regulatory approvals will be granted or as to the timing
of such approvals. See "TERMS OF THE PROPOSED MERGER - Regulatory
Approvals" and "SUPERVISION AND REGULATION."
CONDITIONS TO THE MERGER
The consummation of the Merger is subject to certain terms and
conditions, including the approval of the Merger Agreement by an
affirmative vote of the holders of at least two-thirds of the
outstanding shares of TODAY'S Common Stock, the receipt of the
requisite approvals from the Regulatory Authorities and the receipt
of the Tax Opinion. For a discussion of each of the conditions to
the Merger, see "TERMS OF THE PROPOSED MERGER - Conditions to the
Merger."
EFFECTIVE TIME; CLOSING DATE
Unless MBI, Merger Sub and TODAY'S otherwise agree in writing,
the Merger will become effective (the "Effective Time") upon later
of (i) the issuance of a certificate of merger by the Office of the
Secretary of State of the State of Missouri and (ii) the filing of
a certificate of merger with the Office of the Secretary of State
of the State of Delaware; provided, however, that the Effective
Time will occur no later than the first business day of the first
full calendar month commencing at least five business days after
the approval of the Merger Agreement by the stockholders of
TODAY'S, the approval of the Merger by the Regulatory Authorities
and the expiration of all waiting periods following such regulatory
approvals. The Closing Date shall occur upon the date that the
Effective Time occurs.
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement may be terminated at any time prior to
the Effective Time by the mutual consent of the parties or
unilaterally by either party upon the occurrence of certain events
- 14 -
<PAGE> 18
or if the Merger is not consummated by March 31, 1997. See "TERMS
OF THE PROPOSED MERGER - Conditions to the Merger" and
"- Termination of the Merger Agreement."
OTHER AGREEMENTS
In addition to and contemporaneously with the Merger
Agreement, MBI and TODAY'S executed a Stock Option Agreement (the
"Option Agreement") and MBI and each of the directors of TODAY'S
executed separate Voting Agreements (the "Voting Agreements"). The
following is a summary of the material terms of the Option
Agreement and the Voting Agreements.
OPTION AGREEMENT. Pursuant to the Option Agreement, TODAY'S
issued to MBI an option (the "Option") to purchase up to 483,771
shares of TODAY'S Common Stock at a price of $24.00 per share (the
"Option Price"). The Option is exercisable upon the occurrence of
certain events generally relating to the failure of TODAY'S to
consummate the Merger because of a material change or potential
material change in the ownership of TODAY'S, all as set forth in
the Option Agreement. None of such events has occurred as of the
date hereof. TODAY'S granted the Option as a condition of and in
consideration for MBI's entering into the Merger Agreement. The
Option is intended to increase the likelihood that the Merger will
be consummated in accordance with the terms of the Merger
Agreement. Consequently, the Option may have the effect of
discouraging a person who might now or prior to the consummation of
the Merger consider or propose the acquisition of TODAY'S (or a
significant interest in TODAY'S), even if such person were prepared
to pay a higher price per share for TODAY'S Common Stock than the
price per share implicit in the Merger Consideration. In the event
MBI acquires shares of TODAY'S Common Stock pursuant to the Option,
it could vote those shares in the election of TODAY'S directors and
other matters requiring a stockholder vote, thereby potentially
having a material impact on the outcome of such matters. For
additional information regarding the Option Agreement, see "TERMS
OF THE PROPOSED MERGER-Other Agreements-Option Agreement."
VOTING AGREEMENTS. Pursuant to the Voting Agreements, each of
the directors of TODAY'S agreed that he or she will vote all of the
shares of TODAY'S Common Stock then owned or subsequently acquired
and over which he or she has, or, prior to the Record Date (as
herein defined) acquires, voting control in favor of the approval
and adoption of the Merger Agreement at the Special Meeting. In
addition, until the earliest to occur of the Effective Time, the
termination of the Merger Agreement or the abandonment of the
Merger by mutual agreement of MBI and TODAY'S, each director
further agreed not to vote any such shares in favor of the approval
of any other agreement relating to the merger or sale of
substantially all of the assets of TODAY'S to a third party. Each
director also agreed not to transfer such shares of TODAY'S Common
Stock unless, prior to such transfer, the transferee executes an
agreement in substantially the same form as the Voting Agreement
and reasonably satisfactory to MBI. As of the Record Date, the
directors of TODAY'S owned beneficially an aggregate of 144,789
shares of TODAY'S Common Stock (excluding Option Shares), or
approximately 5.25% of the issued and outstanding shares. See
"TERMS OF THE PROPOSED MERGER - Other Agreements - Voting
Agreements."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Each of Dan Heine, President and Chief Executive Officer of
TODAY'S, and R. William Owen, Executive Vice President and Chief
Financial Officer of TODAY'S, is party to an employment agreement
with TODAY'S. Under each such employment agreement, if such
executive officer's employment is "terminated" by TODAY'S within
two years after a "change in control" other than for "cause" (all
terms as defined in the employment agreements), the executive
officer will be entitled to a severance payment equal to 250% of
the base salary, incentive compensation and bonus
- 15 -
<PAGE> 19
payments paid to such executive officer in the calendar year prior to
the year in which the change in control occurs, subject to reduction
to the extent any portion of the payment would constitute an "excess
parachute payment" under Section 280G of the Code.
In addition, each of Douglas L. Mitchell, C. Brad Zulke,
Douglas M. Cross and Jeffrey P. Mozena is party to a severance
agreement with TODAY'S. Under each such severance agreement, if
such executive officer's employment is "terminated" by TODAY'S or
the executive officer terminates his employment after the executive
officer's job duties and responsibilities are "substantially
reduced" other than for "cause" within twelve months of a "change
of control" (all terms as defined in the severance agreements), the
executive officer will be entitled to a severance payment equal to
100% of the base salary, incentive compensation and bonus payments
paid to the executive officer by TODAY'S in the calendar year prior
to the year in which the change of control occurs.
MBI has also agreed that any indemnification obligations of
TODAY'S in favor of the employees, agents, directors or officers
of TODAY'S existing on March 19, 1996 shall continue in effect
following the Merger. In addition, as of the Effective Time, MBI's
current insurance policy will provide coverage for "prior acts" of
the directors and officers of TODAY'S. See "TERMS OF THE PROPOSED
MERGER - Interests of Certain Persons in the Merger."
SPECIAL MEETING OF TODAY'S STOCKHOLDERS
The Special Meeting will be held on October 14, 1996, at
10:00 a.m. Central Time, at the Best Western Stephenson Hotel,
109 South Galena Avenue, Freeport, Illinois. TODAY'S stockholders owning at
least two-thirds of the outstanding shares of TODAY'S Common Stock must vote
to approve and adopt the Merger Agreement. Only holders of record of TODAY'S
Common Stock at the close of business on September 3, 1996 (the "Record Date")
will be entitled to notice of, and to vote at, the Special Meeting. At such
date, there were 2,758,853 shares of TODAY'S Common Stock outstanding.
As of the Record Date, directors and executive officers of
TODAY'S and their affiliates owned beneficially an aggregate of
200,979 shares of TODAY'S Common Stock (excluding Option
Shares), or approximately 7.28% of the shares entitled to vote at
the Special Meeting. Each of the directors of TODAY'S, pursuant to
the terms of his or her respective Voting Agreement, have committed
to vote his or her shares of TODAY'S Common Stock for the approval
of the Merger Agreement. As of the Record Date, such directors
owned beneficially an aggregate of 144,789, or approximately 5.25%,
of the issued and of TODAY'S Common Stock (excluding Option
Shares).
THE BOARD OF DIRECTORS OF TODAY'S HAS CAREFULLY CONSIDERED AND
UNANIMOUSLY APPROVED THE TERMS OF THE MERGER. THE BOARD HAS
DETERMINED THAT THE MERGER IS IN THE BEST INTEREST OF TODAY'S AND
ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT.
- ---
REASONS FOR THE MERGER
The TODAY'S Board of Directors believes the Merger will enable
TODAY'S to (i) enhance its competitiveness and its ability to serve
its depositors, customers and the communities in which it operates
while maintaining a community banking approach and (ii) offer to
the TODAY'S stockholders who receive MBI Common Stock as
consideration on the Merger certain tax deferral benefits along
with the prospect of higher dividends and a higher trading value.
MBI's Board of
- 16 -
<PAGE> 20
Directors believes that the Merger will enable MBI to (i) increase its
presence in northwestern Illinois through the acquisition of an
established banking organization and (ii) enhance its ability to
compete in the increasingly competitive banking and financial services
industry. See "TERMS OF THE PROPOSED MERGER - Background of and
Reasons for the Merger; Board Recommendations."
OPINION OF FINANCIAL ADVISOR TO TODAY'S
The Chicago Corporation ("TCC") has served as financial
advisor to TODAY'S and has rendered an opinion to the Board of
Directors of TODAY'S that the consideration to be received by the
TODAY'S stockholders in the Merger is fair to the TODAY'S
stockholders from a financial point of view (the "TCC Opinion").
A copy of the TCC Opinion is attached hereto as Annex B and should
-------
be read in its entirety with respect to the assumptions made, other
matters considered and limitations on the reviews undertaken. See
"TERMS OF THE PROPOSED MERGER - Opinion of Financial Advisor to
TODAY'S."
FRACTIONAL SHARES
No fractional shares of MBI Common Stock will be issued to the
stockholders of TODAY'S in connection with the Merger. Each holder
of TODAY'S Common Stock who otherwise would have been entitled to
receive a fraction of a share of MBI Common Stock shall receive in
lieu thereof cash, without interest, in an amount equal to the
holder's fractional share interest multiplied by the closing stock
price of MBI Common Stock on the NYSE Composite Tape as reported in
The Wall Street Journal on the Closing Date (the "MBI Stock
Price"). Cash received by TODAY'S stockholders in lieu of
fractional shares may give rise to taxable income. See "CERTAIN
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER."
APPRAISAL RIGHTS
Under DGCL each holder of TODAY'S Common Stock may, in lieu of
receiving the Merger Consideration, seek appraisal of the fair
value of his or her shares and, if the Merger is consummated,
receive payment of such fair value in cash by following certain
procedures set forth in Section 262 of the DGCL, the text of which
is attached hereto as Annex A. Failure to follow such procedures
-------
may result in a loss of such stockholder's appraisal rights. Any
TODAY'S stockholder returning a blank executed proxy card will be
deemed to have approved and adopted the Merger Agreement, thereby
waiving any such appraisal rights. See "APPRAISAL RIGHTS OF
STOCKHOLDERS OF TODAY'S."
WAIVER AND AMENDMENT
Any provision of the Merger Agreement, including, without
limitation, the conditions to the consummation of the Merger and
the restrictions described under the caption "TERMS OF THE PROPOSED
MERGER - Business Pending the Merger," may be (i) waived in writing
at any time by the party that is, or whose shareholders or
stockholders, as the case may be, are, entitled to the benefits
thereof or (ii) amended at any time by written agreement of the
parties approved by or on behalf of their respective Executive
Committee or Board of Directors, as the case may be, whether before
or after the approval of the Merger Agreement by the TODAY'S
stockholders at the Special Meeting; provided, however, that after
such approval, no such modification may (i) alter or change the
amount or kind of the Merger Consideration to be received by the
TODAY'S stockholders or (ii) adversely affect the tax treatment of
the TODAY'S stockholders.
- 17 -
<PAGE> 21
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
MBI Counsel has delivered the Tax Opinion to the effect that,
assuming the Merger occurs in accordance with the Merger Agreement
and conditioned on the accuracy of certain representations made by
MBI, TODAY'S and certain holders of TODAY'S Common Stock, the
Merger will constitute a "reorganization" for federal income tax
purposes and that, accordingly, no gain or loss will be recognized by
TODAY'S stockholders who exchange their shares of TODAY'S Common Stock
solely for shares of MBI Common Stock in the Merger. However, TODAY'S
stockholders who receive cash in exchange for TODAY'S Common Stock
(whether in lieu of fractional shares or as a Cash Distribution or
Combined Distribution) may recognize taxable income, but not in excess
of the amount of cash received. MBI Counsel has also delivered the
Tax Opinion to the effect that, assuming the Option Conversion occurs
in accordance with the Merger Agreement, holders of TODAY'S Options
will recognize no gain or loss as a result of the Option Conversion.
EACH TODAY'S STOCKHOLDER AND EACH HOLDER OF TODAY'S OPTIONS IS URGED
TO CONSULT HIS OR HER OWN TAX ADVISOR TO DETERMINE THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER TO SUCH STOCKHOLDER. See "CERTAIN
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER."
ACCOUNTING TREATMENT
The Merger will be accounted for under the purchase method of
accounting. See "TERMS OF THE PROPOSED MERGER - Accounting
Treatment."
MARKETS AND MARKET PRICES
MBI Common Stock is currently traded on the NYSE under the
symbol "MTL." The last sale price reported for MBI Common Stock on
March 19, 1996, the last trading date preceding the public
announcement of the Merger, was $45.25. TODAY'S Common Stock is
quoted on the Nasdaq National Market under the symbol "TDAY." The
last sale price reported for TODAY'S Common Stock on March 19,
1996, was $26.75.
The following table sets forth for the periods indicated the
high and low prices per share of MBI Common Stock and TODAY'S
Common Stock as reported on the NYSE and by the Nasdaq National
Market, respectively, along with the quarterly cash dividends per
share declared. The per share prices do not include adjustments
for retail mark-ups, mark-downs or commissions.
<TABLE>
<CAPTION>
MBI TODAY'S
--------------------------------- ---------------------------------
SALES PRICE CASH SALES PRICE CASH
------------------ DIVIDEND ----------------- DIVIDEND
HIGH LOW DECLARED HIGH LOW DECLARED
---- --- -------- ---- --- --------
<S> <C> <C> <C> <C> <C> <C>
1994
- ----
First Quarter $34.125 $29.875 $.28 $20.000 $17.000 $.125
Second Quarter 38.125 31.125 .28 19.250 17.000 .125
Third Quarter 39.250 34.875 .28 18.500 16.500 .125
Fourth Quarter 36.875 29.500 .28 18.250 16.000 .125
1995
- ----
First Quarter $37.250 $31.250 $.33 $17.500 $16.250 $.1250
Second Quarter 44.875 36.000 .33 17.250 17.000 .1375
Third Quarter 47.000 41.625 .33 21.000 17.000 .1375
Fourth Quarter 46.500 41.500 .33 24.250 20.000 .1375
1996
- ----
First Quarter $46.500 $41.500 $.41 $30.250 $22.000 $.1375
Second Quarter 47.875 43.500 .41 30.750 29.000 .1500
Third Quarter (through
September 10, 1996)<F1> 50.375 43.375 .41 32.500 29.250 .2838
<FN>
- -------------
<F1> For recent sale prices of MBI Common Stock and TODAY'S Common
Stock, see page 2 of this Proxy Statement/Prospectus.
</TABLE>
- 18 -
<PAGE> 22
COMPARATIVE UNAUDITED PER SHARE DATA
The following table sets forth for the periods indicated
selected historical per share data of MBI and TODAY'S and the
corresponding pro forma and pro forma equivalent per share amounts,
giving effect to the proposed Merger and the proposed acquisitions
of Peoples and First Financial. The data presented is based upon
the supplemental consolidated financial statements, consolidated
financial statements and related notes of MBI and the consolidated
financial statements and related notes of TODAY'S in documents
incorporated herein by reference and the pro forma combined
consolidated balance sheet and income statements, including the
notes thereto, appearing elsewhere herein. This information should
be read in conjunction with such historical and pro forma financial
statements and related notes thereto. The assumptions used in the
preparation of this table appear in the notes to the pro forma
financial information appearing elsewhere in this Proxy
Statement/Prospectus. See "PRO FORMA FINANCIAL INFORMATION - Notes
to Pro Forma Combined Consolidated Financial Statements." These
data are not necessarily indicative of the results of the future
operations of the combined organization or the actual results that
would have occurred if the proposed Merger or the proposed
acquisitions of Peoples and First Financial had been consummated
prior to the periods indicated.
<TABLE>
<CAPTION>
MBI/ MBI/
MBI/TODAY'S MBI/TODAY'S ALL ENTITIES ALL ENTITIES
MBI TODAY'S PRO FORMA PRO FORMA PRO FORMA PRO FORMA
REPORTED REPORTED COMBINED <F1> EQUIVALENT <F2> COMBINED <F3> EQUIVALENT <F2>
-------- -------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Book Value per Share:
June 30, 1996 $ 25.64 $ 17.40 $ 25.65 $ 17.76 $ 25.65 $ 17.76
December 31, 1995 26.04 16.96 26.05 18.03 26.05 18.03
Cash Dividends Declared per Share:
Six Months ended June 30, 1996 $ .82 $ .2875 $ .82 $ .57 $ .82 $ .57
Year ended December 31, 1995 1.32 .5375 1.32 .92 1.32 .91
Earnings per Share:
Six Months ended June 30, 1996 $ 1.10 $ .93 $ .99 $ .69 $ .99 $ .69
Year ended December 31, 1995 3.74 1.79 3.62 2.51 3.63 2.51
Market Price per Share:
At March 19, 1996 <F4> $ 45.25 $ 26.75 n/a n/a n/a n/a
At September 10, 1996 <F4> 50.25 32.50 n/a n/a n/a n/a
<FN>
- -----------------
<F1> Includes the effect of pro forma adjustments for TODAY'S, as
appropriate. See "PRO FORMA FINANCIAL INFORMATION - Notes to
Pro Forma Combined Consolidated Financial Statements."
<F2> Based on the pro forma combined per share amounts multiplied
by 0.6923, the Stock Distribution. Further explanation of
the assumptions used in the preparation of the pro forma
combined consolidated financial statements is included in the
notes to pro forma financial statements. See "PRO FORMA
FINANCIAL INFORMATION - Notes to Pro Forma Combined
Consolidated Financial Statements."
<F3> Includes the effect of pro forma adjustments for TODAY'S,
Peoples and First Financial, as appropriate. See "PRO FORMA
FINANCIAL INFORMATION - Notes to Pro Forma Combined
Consolidated Financial Statements." Due to the immateriality
of the financial condition and results of operations of Regional
to that of MBI, does not include the effect of pro forma adjustments
for Regional.
<F4> The market price per share of MBI and TODAY'S Common Stock
was determined as of the last trading day preceding the
public announcement of the proposed Merger and as of the
latest available date prior to the mailing of the Proxy
Statement/Prospectus, based on the last sale price as
reported on the NYSE Composite Tape and the Nasdaq National
Market, respectively.
</TABLE>
SUMMARY FINANCIAL DATA
The following table sets forth for the periods indicated
certain summary historical consolidated financial information for
MBI and TODAY'S. The balance sheet data and income statement data
of MBI included in the summary financial data as of and for the
five years ended December 31, 1995 are taken from the audited
supplemental consolidated financial statements of MBI as of the end
of and for each such year. The balance sheet data and income
statement data of TODAY'S included in the summary financial data as
of and for the five years ended December 31, 1995 are taken from
the audited consolidated
- 19 -
<PAGE> 23
financial statements of TODAY'S as of the end of and for each such
year. The balance sheet data and income statement data included in
the summary financial data as of and for the six months ended June 30,
1996 and 1995 are taken from the unaudited consolidated financial
statements and supplemental unaudited consolidated financial
statements of MBI and the unaudited consolidated financial statements
of TODAY'S as of and for the six months ended June 30, 1996 and 1995.
The data for each of the above periods include all adjustments which
are, in the opinion of the respective managements of MBI and TODAY'S,
necessary to present a fair statement of these periods and are of a
normal recurring nature. Results for the six months ended June 30,
1996 are not necessarily indicative of results for the entire year.
The following information should be read in conjunction with the
supplemental consolidated financial statements of MBI and the
consolidated financial statements of TODAY'S, and the related notes
thereto, included in documents incorporated herein by reference,
and in conjunction with the unaudited pro forma combined
consolidated financial information, including the notes thereto,
appearing elsewhere in this Proxy Statement/Prospectus. See
"INCORPORATION OF CERTAIN INFORMATION BY REFERENCE" and "PRO FORMA
FINANCIAL INFORMATION."
- 20 -
<PAGE> 24
<TABLE>
MERCANTILE BANCORPORATION INC.
SUMMARY FINANCIAL DATA
<CAPTION>
As of or for the
Six Months Ended As of or for the
June 30 Year Ended December 31
------------------- --------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
PER COMMON SHARE DATA
Net income<F1> $ 1.10 $ 1.86 $ 3.74 $ 3.19 $ 2.79 $ 2.40 $ 2.34
Dividends declared .82 .66 1.32 1.12 .99 .93 .93
Book value at period end 25.64 24.49 26.04 23.32 21.59 19.44 18.12
Average common shares
outstanding (thousands) 62,916 60,722 61,884 59,757 58,751 55,050 47,159
EARNINGS (THOUSANDS)
Interest income $655,572 $633,296 $1,293,944 $1,118,069 $1,094,611 $1,139,807 $1,156,821
Interest expense 309,114 295,986 620,534 450,950 444,573 549,642 668,578
-------- -------- ---------- ---------- ---------- ---------- ----------
Net interest income 346,458 337,310 673,410 667,119 650,038 590,165 488,243
Provision for possible
loan losses 43,806 20,673 36,530 43,265 64,302 79,551 64,028
Other income 137,441 127,611 273,653 236,561 245,589 224,456 195,237
Other expense 326,094 271,214 553,748 555,176 570,182 529,645 486,490
Income taxes 44,358 59,714 124,109 113,165 96,074 69,681 28,418
-------- -------- ---------- ---------- ---------- ---------- ----------
Net income $ 69,641 $113,320 $ 232,676 $ 192,074 $ 165,069 $ 135,744 $ 104,544
======== ======== ========== ========== ========== ========== ==========
ENDING BALANCE SHEET (MILLIONS)
Total assets $ 18,038 $ 17,274 $ 17,928 $ 16,724 $ 16,293 $ 16,033 $ 14,045
Earning assets 16,651 16,039 16,264 15,427 14,980 14,678 12,854
Investment securities 4,429 4,199 4,211 4,280 4,670 4,632 3,412
Loans and leases,
net of unearned income 11,948 11,378 11,731 10,904 9,809 9,570 8,809
Deposits 14,333 13,052 13,714 12,865 13,243 13,260 11,685
Long-term debt 312 320 325 330 316 336 238
Shareholders' equity 1,607 1,500 1,640 1,409 1,295 1,143 939
Reserve for possible loan losses 206 201 202 216 206 199 176
SELECTED RATIOS
Return on average assets .77% 1.32% 1.33% 1.17% 1.03% .89% .78%
Return on average equity 8.48 15.50 15.14 14.06 13.46 12.76 11.81
Net interest rate margin 4.29 4.38 4.28 4.53 4.52 4.33 4.12
Equity to assets 8.91 8.68 9.15 8.42 7.95 7.13 6.68
Reserve for possible loan
losses to:
Outstanding loans 1.72 1.77 1.72 1.98 2.10 2.08 2.00
Non-performing loans 322.71 431.32 245.18 583.17 290.02 154.17 109.79
Dividend payout ratio 74.55 35.48 35.29 35.11 35.48 38.75 39.74
<FN>
- ---------------------------------
<F1> Based on weighted average common shares outstanding
</TABLE>
- 21 -
<PAGE> 25
<TABLE>
TODAY'S BANCORP, INC.
SUMMARY FINANCIAL DATA
<CAPTION>
As of or for the
Six Months Ended As of or for the
June 30 Year Ended December 31
------------------- ----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA <F1>
Net income <F2> $ .93 $ .79 $ 1.79 $ 1.37 $ 1.65 $ 1.39 $ 1.29
Dividends declared .2875 .2625 .5375 .5000 .4400 .3917 .3667
Book value at period end 17.40 16.12 16.96 15.09 14.73 13.43 12.48
Average common shares outstanding 2,751 2,732 2,743 2,705 2,653 2,647 2,620
(thousands)
EARNINGS (THOUSANDS)<F3><F4>
Interest income $ 19,395 $ 19,083 $ 39,180 $ 31,132 $ 26,829 $ 26,937 $ 30,103
Interest expense 9,792 9,513 19,775 14,176 12,518 13,851 16,757
-------- -------- -------- -------- -------- -------- --------
Net interest income 9,603 9,570 19,405 16,956 14,311 13,086 13,346
Provision for possible loan losses 560 330 960 502 360 462 510
Other income 2,399 2,541 4,981 4,370 7,296 5,605 3,752
Other expense 7,485 8,523 15,960 15,463 14,923 12,962 11,722
Income taxes 1,391 1,118 2,587 1,682 1,973 1,605 1,493
-------- -------- -------- -------- -------- -------- --------
Net income $ 2,566 $ 2,140 $ 4,879 $ 3,679 $ 4,351 $ 3,662 $ 3,373
======== ======== ======== ======== ======== ======== ========
ENDING BALANCE SHEET (THOUSANDS)<F3><F4>
Total assets $509,538 $508,103 $518,484 $489,366 $417,335 $382,336 $357,190
Investment and mortgage-backed
securities 102,710 111,183 110,970 105,891 102,742 115,760 99,710
Loans and leases,
net of unearned income 360,390 357,262 363,534 332,070 281,709 220,631 206,234
Borrowings and advances
from Federal Home Loan Bank 11,397 16,297 13,497 13,797 20,000 4,033 2,333
Stockholders' equity 47,867 44,043 46,514 40,832 39,074 35,450 32,706
Reserve for possible loan losses 3,538 3,032 3,289 3,144 2,737 2,515 2,547
SELECTED RATIOS
Return on average assets 1.01% .87% .97% .84% 1.11% 1.01% .97%
Return on average equity 10.80 10.20 11.15 9.23 11.74 10.74 10.70
Net interest rate margin 4.14 4.29 4.26 4.35 4.10 3.40 3.58
Equity to assets 9.39 8.55 8.67 9.09 9.47 9.41 8.99
Reserve for possible loan losses to:
Outstanding loans .98 .85 .90 .95 .97 1.14 1.24
Non-performing loans 253.98 90.97 179.33 129.92 153.68 101.82 89.81
Dividend payout ratio 30.79 33.27 30.03 36.50 26.67 28.25 28.50
<FN>
- -----------------
<F1> Prior year per share statistics were adjusted to give
retroactive effect to the three-for-two stock split in
February 1993.
<F2> Based on weighted average common shares outstanding.
<F3> Results of operations and assets of Tri-State Bank & Trust
Company are included since October 1994.
<F4> Results of operations and assets of Whaples & Farmers State
Bank of Neponset are included through divestiture in March 1992.
</TABLE>
- 22 -
<PAGE> 26
INFORMATION REGARDING SPECIAL MEETING
-------------------------------------
GENERAL
This Proxy Statement/Prospectus is being furnished to
holders of TODAY'S Common Stock in connection with the
solicitation of proxies by the Board of Directors of TODAY'S for
use at the Special Meeting and any adjournments or postponements
thereof at which the stockholders of TODAY'S will consider and
vote upon a proposal to approve the Merger Agreement and each of
the transactions contemplated thereby and any other business
which may properly be brought before the Special Meeting or any
adjournments or postponements thereof. Each copy of this Proxy
Statement/Prospectus is accompanied by a Notice of Special
Meeting of Stockholders, a proxy card, an Election Form and
related instructions, a certification regarding certain tax
matters, a white, self-addressed return envelope to TODAY'S BANCORP, INC.
c/o ChaseMellon Shareholder Services, L.L.C. ("ChaseMellon") for the proxy
card and a blue, self-addressed return envelope to the Exchange Agent
for the Election Form and the tax certification. These materials
are being first mailed to stockholders of TODAY'S on
September 16, 1996.
This Proxy Statement/Prospectus is also furnished by
MBI to each holder of TODAY'S Common Stock as a prospectus in
connection with the issuance by MBI of shares of MBI Common Stock
upon the consummation of the Merger.
DATE, TIME AND PLACE
The Special Meeting will be held at the Best Western
Stephenson Hotel, 109 South Galena Avenue, Freeport, Illinois on
Monday, October 14, 1996, at 10:00 a.m., Central Time.
RECORD DATE; VOTE REQUIRED
On the Record Date, there were 2,758,853 shares of
TODAY'S Common Stock outstanding and entitled to vote at the
Special Meeting. Each such share is entitled to one vote on each
matter properly brought before the Special Meeting. The
affirmative vote of the holders of at least two-thirds of the
outstanding shares of TODAY'S Common Stock is required to approve
the Merger Agreement.
As of the Record Date, directors and executive officers
of TODAY'S and their affiliates owned beneficially an aggregate
of 200,979 shares of TODAY'S Common Stock (excluding Option
Shares), or approximately 7.28% of the outstanding shares of
TODAY'S Common Stock entitled to vote at the Special Meeting.
Each of the directors of TODAY'S, pursuant to the terms of his or
her respective Voting Agreement, has committed to vote his or her
shares of TODAY'S Common Stock for the approval of the Merger
Agreement. As of the Record Date, the directors of TODAY'S owned
beneficially an aggregate of 144,789 shares of TODAY'S Common
Stock (excluding Option Shares), or approximately 5.25% of the
issued and outstanding shares.
VOTING AND REVOCATION OF PROXIES
Shares of TODAY'S Common Stock which are represented by
a properly executed proxy card received prior to the vote at the
Special Meeting will be voted at such Special Meeting in the
manner directed on the proxy card, unless such proxy designation
is revoked in the manner set forth herein in advance of the vote
at the Special Meeting. ANY TODAY'S STOCKHOLDER RETURNING AN
EXECUTED PROXY CARD WHICH DOES NOT PROVIDE INSTRUCTIONS TO VOTE
AGAINST THE APPROVAL AND ADOPTION OF THE MERGER
- 23 -
<PAGE> 27
AGREEMENT WILL BE DEEMED TO HAVE APPROVED THE MERGER AGREEMENT. Failure
to return a properly executed proxy card or to vote in person at the
Special Meeting will have the practical effect of a vote against
the approval of the Merger Agreement.
Shares subject to abstentions will be treated as shares
that are present and voting at the Special Meeting for purposes
of determining the presence of a quorum and as voted for the
purposes of determining the base number of shares voting on the
proposal. Such shares will, therefore, have the effect of votes
against the approval of the Merger Agreement. Broker "non-votes"
(i.e., proxies from brokers or nominees indicating that such
persons have not received instructions from the beneficial owners
or other persons entitled to vote shares with respect to which
such brokers or nominees do not have discretionary power to vote)
will be considered as present for purposes of determining the
presence of a quorum but will not be considered as voting at the
Special Meeting. Broker non-votes, therefore, will also have the
effect of votes against the approval and adoption of the Merger
Agreement.
Any stockholder of TODAY'S giving a proxy may revoke it
at any time prior to the vote at the Special Meeting.
Stockholders of TODAY'S wishing to revoke a proxy prior to the
vote may do so by delivering to the Secretary of TODAY'S at 50
West Douglas Street, Freeport, Illinois 61032, at or before the
Special Meeting, a written notice of revocation bearing a later
date than the proxy or a later dated proxy relating to the same
shares, or by attending the Special Meeting and voting the same
shares in person. Attendance at the Special Meeting will not in
itself constitute the revocation of a proxy.
The Board of Directors of TODAY'S is not currently
aware of any business to be brought before the Special Meeting
other than that described herein. If, however, other matters are
properly brought before such Special Meeting, or any adjournments
or postponements thereof, the persons appointed as proxies will
have discretionary authority to vote the shares represented by
duly executed proxies in accordance with their discretion and
judgment as to the best interest of TODAY'S.
SOLICITATION OF PROXIES
TODAY'S will bear its own costs of soliciting proxies,
except that MBI will pay printing and mailing expenses and
registration fees incurred in connection with preparing this
Proxy Statement/Prospectus. Proxies will initially be solicited
by mail, but directors, officers and selected other employees of
TODAY'S may also solicit proxies in person or by telephone.
Directors, executive officers and any other employees of TODAY'S
who solicit proxies will not be specially compensated for such
services. Brokerage houses, nominees, fiduciaries and other
custodians will be requested to forward proxy materials to
beneficial owners and will be reimbursed for their reasonable
expenses incurred in sending proxy materials to beneficial
owners. TODAY'S has engaged Morrow & Co., Inc. ("Morrow") to
assist TODAY'S in distributing proxy materials and contacting
record and beneficial owners of TODAY'S Common Stock. TODAY'S has
agreed to pay Morrow approximately $5,500 plus out-of-pocket
expenses for its services to be rendered on behalf of TODAY'S. In addition,
TODAY'S has engaged ChaseMellon to serve as inspector and count proxies
received from the stockholders of TODAY'S. TODAY'S has agreed to pay
ChaseMellon approximately $5,000 plus out-of-pocket expenses for its services.
HOLDERS OF TODAY'S COMMON STOCK ARE REQUESTED TO
COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED WHITE POSTAGE-PREPAID ENVELOPE.
- 24 -
<PAGE> 28
TERMS OF THE PROPOSED MERGER
----------------------------
THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS AND
CONDITIONS OF THE MERGER AGREEMENT, WHICH DOCUMENT IS
INCORPORATED BY REFERENCE HEREIN. THIS SUMMARY IS QUALIFIED IN
ITS ENTIRETY BY THE FULL TEXT OF THE MERGER AGREEMENT. MBI, UPON
WRITTEN OR ORAL REQUEST, WILL FURNISH A COPY OF THE MERGER
AGREEMENT, WITHOUT CHARGE, TO ANY PERSON WHO RECEIVES A COPY OF
THIS PROXY STATEMENT/PROSPECTUS. SUCH REQUESTS SHOULD BE
DIRECTED TO JON W. BILSTROM, GENERAL COUNSEL AND SECRETARY,
MERCANTILE BANCORPORATION INC., P.O. BOX 524, ST. LOUIS, MISSOURI
63166-0524, TELEPHONE (314) 425-2525.
GENERAL DESCRIPTION OF THE MERGER
Subject to the satisfaction of the terms and conditions
set forth in the Merger Agreement, which are described below,
TODAY'S will be merged with and into Merger Sub. Upon
consummation of the Merger, TODAY'S corporate existence will
terminate and Merger Sub will continue as the surviving entity.
At the Effective Time, and subject to the elections of
the TODAY'S stockholders and other adjustments intended to
accommodate the tax-deferred nature of the transaction under the
federal income tax laws for those TODAY'S stockholders who
receive solely shares of MBI Common Stock, each share of TODAY'S
Common Stock will be converted into the right to receive one of
the following: (i) cash equal to $30.79; (ii) 0.6923 of a share
of MBI Common Stock; or (iii) both an amount in cash equal to
$12.32 and 0.4154 of a share of MBI Common Stock. Accordingly,
each TODAY'S stockholder will have the opportunity to elect
whether to receive as consideration in the Merger the Cash
Distribution, the Stock Distribution or the Combined
Distribution. Enclosed with this Proxy Statement/Prospectus is
an Election Form whereby TODAY'S stockholders may indicate their
election. In order for an Election Form to be effective, the
Election Form must be properly completed and duly executed by a
TODAY'S stockholder and returned to the Exchange Agent by the
Election Deadline. TODAY'S STOCKHOLDERS ARE URGED TO CONSULT
WITH THEIR OWN FINANCIAL AND TAX ADVISORS PRIOR TO RETURNING
THEIR ELECTION FORMS TO THE EXCHANGE AGENT TO DETERMINE THE BEST
ALTERNATIVE FOR THEM.
Each separate entry on the TODAY'S list of stockholders
shall be presumed to represent a separate and distinct holder of
record of TODAY'S Common Stock. Shares held of record by a bank,
trust company, broker, dealer or other recognized nominee shall
be deemed to be held by a single holder unless the nominee
advises the Exchange Agent in writing otherwise, in which case,
each beneficial owner will be treated as a separate holder and,
either directly or through such nominee, may submit a separate
Election Form. Any election may be revoked or changed by the
person submitting an Election Form or any other person to whom
the subject shares are subsequently transferred by written notice
to the Exchange Agent by such holder or transferee, if such
notice is received by the Exchange Agent by the Election
Deadline. Any stockholder who fails to deliver a properly
completed and duly executed Election Form to the Exchange Agent
by the Election Deadline shall be deemed to have made a No
Election and such holder's shares shall be deemed to be No
Election Shares.
No Election Shares will be treated as Cash Election
Shares for purposes of determining the type and amount of Merger
Consideration payable to the holders of No Election Shares;
provided, however, that if the aggregate amount of cash payable
to the holders of Cash Election Shares is required to be reduced
and replaced with shares of MBI Common Stock, as described below,
the cash payable to the holders of No Election Shares will be
reduced and replaced with shares of MBI Common Stock before the cash
payable to the holders of Cash Election Shares is so reduced and
replaced. Dissenting Shares
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<PAGE> 29
will also be treated as Cash Election Shares, unless the aggregate
amount of cash payable to the holders of Cash Election Shares is
reduced and replaced with shares of MBI Common Stock, as described
below, in which case such Dissenting Shares will not be so reduced and
replaced. Option Shares will be treated as Stock Election Shares for
purposes of determining the type and amount of Merger Consideration
payable to the holders of Option Shares; provided, however, that if
the aggregate number of shares of MBI Common Stock payable to the
holders of Stock Election Shares is reduced and replaced with the Cash
Distribution, as described below, in no event will the shares of MBI
Common Stock payable to the holders of Option Shares be so reduced and
replaced with the Cash Distribution.
Pursuant to the Merger Agreement, any holder of 1% or
more of TODAY'S Common Stock (determined as of the Closing Date)
who has not, at or before the Election Deadline, delivered to the
Exchange Agent a properly executed certification regarding
certain tax matters (which certification will be provided to the
TODAY'S stockholders with the Election Form) shall be deemed to
have made a timely election to receive the Cash Distribution, and
all shares of TODAY'S Common Stock held by such holder shall be
deemed to be Cash Election Shares for all purposes, including the
replacement of the cash payable to such holders of Cash Election
Shares with shares of MBI Common Stock, in the event that the
aggregate Cash Distribution payable to the holders of Cash
Election Shares is required to be reduced as described below. A
LESS-THAN-1% HOLDER WHO ACQUIRES ADDITIONAL SHARES OF TODAY'S
COMMON STOCK AFTER THE ELECTION DEADLINE AND THEREBY BECOMES A
HOLDER OF 1% OR MORE OF TODAY'S COMMON STOCK WILL ALSO BE DEEMED
TO HAVE MADE A TIMELY ELECTION TO RECEIVE THE CASH DISTRIBUTION
AND WILL BE PRECLUDED FROM RECEIVING THE STOCK DISTRIBUTION OR
COMBINED DISTRIBUTION UNLESS SUCH HOLDER, IN ANTICIPATION OF SUCH
ACQUISITION OF ADDITIONAL SHARES OF TODAY'S COMMON STOCK, HAS
DELIVERED TO THE EXCHANGE AGENT AT OR BEFORE THE ELECTION
DEADLINE A PROPERLY EXECUTED CERTIFICATION REGARDING CERTAIN TAX
MATTERS.
The actual Merger Consideration paid to each TODAY'S
stockholder upon consummation of the Merger may differ in form or
proportion from the Merger Consideration elected by each such
stockholder pursuant to an Election Form in the event of either:
(i) an Over-Election, whereby the aggregate number of shares of
MBI Common Stock issuable as Merger Consideration pursuant to the
stockholders' elections exceeds 1,177,066; or (ii) an Under-
Election, whereby the aggregate number of shares of MBI Common
Stock issuable as Merger Consideration pursuant to the
stockholders' elections is less than 1,177,066 and would be
insufficient to allow MBI Counsel to render an opinion that the
Merger will qualify as a reorganization under Section 368 of the
Code for federal income tax purposes. See "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER." In the event of an Over-
Election, the aggregate number of shares of MBI Common Stock
issuable as a portion of all Combined Distributions (and, if
necessary, in all Stock Distributions (other than with respect to
Option Shares)) will be reduced pro rata and the Cash
Distribution will be issued in lieu thereof, such that the
aggregate number of shares of MBI Common Stock issuable as Merger
Consideration in all Stock Distributions and Combined
Distributions equals 1,177,066. In the event of an Under-
Election, the Cash Distribution payable to the holders of No
Election Shares (and, if necessary, to the holders of, first, the
Combined Election Shares and, second, the Cash Election Shares
(other than Dissenting Shares)) will be reduced pro rata and the
Stock Distribution will be issued in lieu thereof, such that the
aggregate number of shares of MBI Common Stock necessary for MBI
Counsel to render the Tax Opinion will be issued as Merger
Consideration. In all other cases, the Merger Consideration paid
to each TODAY'S stockholder will be in the same form and
proportion as such stockholder has elected on an Election Form
(or has been deemed to have elected in the case of No Election
Shares or shares held by certain holders of 1% or more of TODAY'S
Common Stock). A more detailed description of the process
through which the Merger Consideration will be determined and
paid to the TODAY'S stockholders, including the terms and
conditions under which a particular type of Merger Consideration
elected by a TODAY'S stockholder may be replaced by another type
of Merger Consideration, is set forth below.
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<PAGE> 30
In the event that the number of shares of MBI Common
Stock issuable as Merger Consideration to the holders of Stock
Election Shares and Combined Election Shares is less than
1,177,066, then:
(i) the Stock Election Shares will be converted
into the right to receive the Stock Distribution; and
(ii) the Cash Election Shares and the Combined
Election Shares will be converted into the right to
receive the Cash Distribution and the Combined
Distribution, respectively; provided, however, that in
the event of an Under-Election, whereby the number of
shares of MBI Common Stock issuable to the holders of
the Stock Election Shares and Combined Election Shares
is insufficient, in the opinion of MBI Counsel, to
allow MBI Counsel to render the Tax Opinion (see
"CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE
MERGER"), then MBI Counsel will provide the Notice to
the Exchange Agent as soon as practicable on or after
the Closing Date as to the number of additional shares
of MBI Common Stock that will be required to be issued
in the Merger in order to allow MBI Counsel to render
the Tax Opinion in its reasonable judgment. Upon the
receipt of the Notice, the Exchange Agent shall:
(A) first, (x) reallocate the Merger
Consideration payable to each holder of No
Election Shares on a pro rata basis (based upon
the ratio of No Election Shares owned by each
holder to the total number of No Election Shares)
such that the holders of No Election Shares
receive an aggregate number of shares of MBI
Common Stock equal to the Share Deficit, and (y)
issue to each such holder of No Election Shares
the balance of the Merger Consideration due to
such holder, if any, by subtracting the value of
the shares of MBI Common Stock received in the
reallocation (using a deemed value of $44.475 per
share) from the product of the number of No
Election Shares held by such holder at the
Effective Time and $30.79;
(B) second, if the reallocation set forth in
paragraph (A) above does not result in the
issuance of an aggregate number of Shares of MBI
Common Stock equal to the Share Deficit, (x)
reallocate the Merger Consideration payable to
each holder of Combined Election Shares on a pro
rata basis (based upon the ratio of Combined
Election Shares owned by each such holder to the
total number of Combined Election Shares), such
that the holders of Combined Election Shares
receive an aggregate number of shares of MBI
Common Stock equal to the Share Deficit, less the
shares of MBI Common Stock issuable pursuant to
paragraph (A) above, and (y) issue to each such
holder of Combined Election Shares the balance of
the Merger Consideration, due to such holder, if
any, by subtracting the value of the sum of the
shares of MBI Common Stock received in the
Combined Distribution and the additional shares of
MBI Common Stock received in the reallocation
(using in both cases a deemed value of $44.475 per
share) from the product of the number of Combined
Election Shares held by such holder at the
Effective Time and $30.79; and
(C) third, if the reallocations set forth in
paragraphs (A) and (B) above do not result in the
issuance of an aggregate number of shares of MBI
Common Stock equal to the Share Deficit, (x)
reallocate the Merger Consideration payable to
each holder of Cash Election Shares, other than
holders
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<PAGE> 31
of No Election Shares and Dissenting Shares, on a pro
rata basis (based upon the ratio of Cash Election
Shares, other than No Election Shares and Dissenting
Shares, owned by each such holder to the total number
of Cash Election Shares, other than No Election Shares
and Dissenting Shares), such that the holders of such
Cash Election Shares receive an aggregate number of
shares of MBI Common Stock equal to the Share Deficit
less the shares of MBI Common Stock issued pursuant to
paragraphs (A) and (B) above, and (y) issue to each
such holder of Cash Election Shares, other than holders
of No Election Shares and Dissenting Shares, the
balance of the Merger Consideration due to such holder,
if any, by subtracting the value of the shares of MBI
Common Stock received in the reallocation (using a
deemed value of $44.475 per share) from the product of the
number of Cash Election Shares, other than No Election
Shares and Dissenting Shares, held by such holder and
$30.79.
In the event of an Over-Election, whereby the number of
shares of MBI Common Stock issuable as Merger Consideration to the holders
of Stock Election Shares and Combined Election Shares is greater than
1,177,066, then:
(i) all Cash Election Shares will be converted into the
right to receive the Cash Distribution; and
(ii) the Exchange Agent will determine the number by which
the shares of MBI Common Stock issuable pursuant to the Stock
Distribution and the Combined Distribution exceeds 1,177,066 and
will:
(A) first, (x) reallocate the Merger Consideration
payable to each such holder of Combined Election Shares on a
pro rata basis (based upon the ratio of the number of
Combined Election Shares owned by each such holder to the
total number of Combined Election Shares), such that the
total number of shares of MBI Common Stock received by the
holders of Combined Election Shares is reduced by the Share
Surplus, and (y) in lieu of the issuance of the Combined
Distribution for each share of TODAY'S Common Stock, issue
to each such holder of Combined Election Shares the
Cash Distribution; and
(B) second, (x) if the reallocation set forth in
paragraph (A) above does not result in the elimination of
the Share Surplus, the Exchange Agent shall eliminate the
Share Surplus by reallocating the Merger Consideration
payable to each holder of Stock Election Shares, other than
Option Shares, on a pro rata basis (based upon the ratio of
the number of Stock Election Shares, other than Option
Shares, owned by each such holder to the total number of
Stock Election Shares, other than Option Shares), such that
the total number of shares of MBI Common Stock received by
the holders of Stock Election Shares is reduced by the Share
Surplus less the number of shares reduced pursuant to
paragraph (A) above, and (y) in lieu of the issuance of the
Stock Election for each share of TODAY'S Common Stock,
issue to each such holder of Stock Election Shares the Cash
Distribution.
The amount and nature of the Merger Consideration was established
through arm's-length negotiations between MBI and TODAY'S and reflects the
balancing of a number of countervailing
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<PAGE> 32
factors. The total amount of the Merger Consideration reflects a
price both parties concluded was appropriate. See "- Background
of and Reasons for the Merger; Board Recommendations."
NO ASSURANCE CAN BE GIVEN THAT THE CURRENT FAIR MARKET
VALUE OF MBI COMMON STOCK WILL BE EQUIVALENT TO THE FAIR MARKET
VALUE OF MBI COMMON STOCK ON THE DATE SUCH STOCK IS RECEIVED BY A
TODAY'S STOCKHOLDER OR AT ANY OTHER TIME. THE FAIR MARKET VALUE
OF MBI COMMON STOCK AT THE TIME IT IS RECEIVED BY A TODAY'S
STOCKHOLDER MAY BE GREATER OR LESS THAN THE CURRENT FAIR MARKET
VALUE OF MBI COMMON STOCK DUE TO NUMEROUS MARKET FACTORS.
As soon as practicable following the Closing Date, the
Exchange Agent will mail to each TODAY'S stockholder a notice of
consummation of the Merger and a form of letter of transmittal,
together with instructions and a return envelope to facilitate
the exchange of such holder's certificate(s) formerly
representing TODAY'S Common Stock for such holder's portion of
the Merger Consideration. Each such stockholder will be required
to submit to the Exchange Agent a properly executed letter of
transmittal and surrender to the Exchange Agent the stock
certificate(s) formerly representing the shares of TODAY'S Common
Stock held by such stockholder in order to receive the cash
and/or a certificate representing the MBI Common Stock to which
such stockholder is entitled as Merger Consideration. No
interest will be accrued or paid with respect to the cash
component of the Merger Consideration. No dividends or other
distributions declared after the Effective Time will be paid to a
former TODAY'S stockholder with respect to the MBI Common Stock
issuable as Merger Consideration until such stockholder's letter
of transmittal and stock certificates, or documentation
reasonably acceptable to the Exchange Agent in lieu of lost or
destroyed certificates formerly representing TODAY'S Common
Stock, are delivered to the Exchange Agent. Upon such delivery,
all such dividends or other distributions declared after the
Effective Time with respect to MBI Common Stock will be remitted
to such stockholders (without interest and less any taxes that
may have been imposed thereon). See "- Surrender of TODAY'S
Stock Certificates and Receipt of MBI Common Stock and/or Cash."
No fractional shares of MBI Common Stock will be issued in the
Merger, but cash, calculated by multiplying the holder's
fractional share interest by the MBI Stock Price, will be paid in
lieu of fractional shares. See "- Fractional Shares." The
shares of MBI Common Stock issued as Merger Consideration will be
freely transferable except by certain stockholders of TODAY'S who
are deemed to be "affiliates" of TODAY'S. The shares of MBI
Common Stock issued as the Stock Distribution or as a portion of
the Combined Distribution to such affiliates will be restricted
in their transferability in accordance with the rules and
regulations promulgated by the Commission. See "INFORMATION
REGARDING MBI STOCK - Restrictions on Resale of MBI Stock by
Affiliates."
OTHER AGREEMENTS
In addition to and contemporaneously with the Merger
Agreement, MBI and TODAY'S executed the Option Agreement and MBI
and each of the directors of TODAY'S executed separate Voting
Agreements. The following is a summary of the material terms of
the Option Agreement and the Voting Agreements:
OPTION AGREEMENT. Under the terms of the Option
Agreement, TODAY'S issued to MBI an option to purchase up to
483,771 shares of TODAY'S Common Stock at a price per share equal
to $24.00. The Option was granted by TODAY'S as a condition of
and in consideration for MBI's entering into the Merger
Agreement. THE FOLLOWING DESCRIPTION DOES NOT PURPORT TO BE
COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
OPTION AGREEMENT, WHICH IS ATTACHED AS AN EXHIBIT TO THE
REGISTRATION STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE.
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<PAGE> 33
The Option is intended to increase the likelihood that
the Merger will be consummated in accordance with the terms of
the Merger Agreement. The occurrence of certain events described
below could cause the Option to become exercisable and thereby
significantly increase the cost of the acquisition of TODAY'S.
Consequently, the Option may (i) have the effect of discouraging
a person who might now or prior to the consummation of the Merger
consider or propose the acquisition of TODAY'S (or a significant
interest in TODAY'S), even if such a person were prepared to pay
a higher price per share for TODAY'S Common Stock than the price
per share implicit in the Merger Consideration, (ii) result in
the proposal by a potential acquiror of a lower per share price
than such acquiror might otherwise have been willing to pay or
(iii) prevent a potential acquiror from accounting for the
acquisition of TODAY'S through the pooling-of-interests method
for a period of two years and thereby discourage or preclude the
acquisition of TODAY'S.
As of the Record Date, the maximum number of shares
issuable pursuant to the Option (the "MBI Option Shares")
represented 14.92% of the issued and outstanding shares of
TODAY'S Common Stock after giving effect to the exercise of the
Option. The Option exercise price is $24.00 per share. In the
event MBI acquires the MBI Option Shares, MBI could vote such
shares in the election of TODAY'S directors and other matters
requiring a stockholder vote, thereby potentially having a
material impact on the outcome of such matters.
If not then in material breach of the Merger Agreement,
MBI may exercise the Option, in whole or in part, at any time or
from time to time if a Purchase Event (as defined below) has
occurred; provided, however, that: (i) to the extent the Option
has not been exercised, it will terminate and be of no further
force and effect upon the earlier to occur of (A) the Effective
Time and (B) the termination of the Merger Agreement in
accordance with its terms, provided that in the case of certain
terminations of the Merger Agreement, as specified in the Option
Agreement, the Option will not terminate until the date that is
twelve months following such termination; (ii) if the Option
cannot be exercised on such day because of any injunction, order
or similar restraint issued by a court of competent jurisdiction,
the Option will expire on the thirtieth business day after such
injunction, order or restraint has been dissolved or when such
injunction, order or restraint has become permanent and is no
longer subject to appeal, as the case may be; and (iii) any such
exercise will be subject to compliance with applicable law,
including the BHCA.
A "Purchase Event" means any of the following events:
(i) TODAY'S or any of its subsidiaries, without having received
prior written consent from MBI, has entered into, authorized,
recommended, proposed or publicly announced its intention to
enter into, authorize, recommend or propose an agreement,
arrangement or understanding with any person (other than MBI or
any of its subsidiaries) to (A) effect a merger, consolidation or
similar transaction involving TODAY'S or any of its subsidiaries,
(B) purchase, lease or otherwise acquire 15% or more of the
assets of TODAY'S or any of its subsidiaries or (C) purchase or
otherwise acquire (including by way of merger, consolidation,
share exchange or similar transaction) beneficial ownership of
securities representing 15% or more of the voting power of
TODAY'S or any of its subsidiaries; (ii) any person (other than
MBI or any subsidiary of MBI, or TODAY'S or any subsidiary of
TODAY'S in a fiduciary capacity) has acquired beneficial
ownership or the right to acquire beneficial ownership of 15% or
more of the voting power of TODAY'S; or (iii) the holders of
TODAY'S Common Stock have not approved the Merger Agreement at
the Special Meeting, the Special Meeting has not been held or is
cancelled prior to termination of the Merger Agreement in
accordance with its terms or the TODAY'S Board of Directors has
withdrawn or modified in a manner adverse to MBI the
recommendation of TODAY'S Board of Directors with respect to the
Merger Agreement, in each case after an Extension Event.
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<PAGE> 34
An "Extension Event" means any of the following events: (i)
a Purchase Event; (ii) any person (other than MBI or any of its
subsidiaries) has "commenced" (as such term is defined in Rule
14d-2 under the Exchange Act) or has filed a registration
statement under the Securities Act with respect to a tender offer
or exchange offer to purchase shares of TODAY'S Common Stock such
that, upon consummation of such offer, such person would have
beneficial ownership or the right to acquire beneficial ownership
of 15% or more of the voting power of TODAY'S; or (iii) any
person (other than MBI or any subsidiary of MBI, or TODAY'S or
any subsidiary of TODAY'S in a fiduciary capacity) has publicly
announced its willingness, a proposal or an intention to make a
proposal, (x) to make an offer described in clause (ii) above or
(y) to engage in a transaction described in clause (i) above.
Subject to regulatory approval, upon the occurrence of a
Purchase Event and until thirteen months thereafter, TODAY'S
shall be required, upon MBI's request, to repurchase any shares
of TODAY'S Common Stock purchased by MBI, at a price based on the
market price or the highest price per share at which a tender or
exchange offer has been made for shares of TODAY'S Common Stock
(the "Market Price"), or to purchase the Option for the amount by
which the Market Price exceeds the Option Price.
At the request of TODAY'S during the first six-month period
commencing thirteen months following the first occurrence of a
Purchase Event, TODAY'S may repurchase from MBI, and MBI shall
sell to TODAY'S, all (but not less than all) of the TODAY'S
Common Stock acquired by MBI pursuant to the Option at a price
per share equal to the greater of (i) the Market Price or (ii)
the sum of (A) the aggregate purchase price of such shares plus
(B) interest on the aggregate purchase price paid for such shares
from the date of purchase to the date of repurchase, less any
dividends received on such shares.
To the best of MBI's and TODAY'S knowledge, no Purchase
Event or Extension Event has occurred as of the date of this
Proxy Statement/Prospectus.
VOTING AGREEMENTS. Under the terms of the Voting
Agreements, each director of TODAY'S agreed that he or she will
vote all of the shares of TODAY'S Common Stock that he or she
then owns or subsequently acquires and over which he or she then
has, or prior to the Record Date acquires, voting control in
favor of the approval and adoption of the Merger Agreement at the
Special Meeting. In addition, until the earliest to occur of the
Effective Time, the termination of the Merger Agreement or the
abandonment of the Merger by the mutual agreement of TODAY'S and
MBI, each such director further agreed that he or she will not
vote any such shares in favor of the approval of any other
agreement relating to the merger or sale of substantially all the
assets of TODAY'S to any person other than MBI or its affiliates.
Each such director also agreed that he or she will not transfer
shares of TODAY'S Common Stock unless, prior to such transfer,
the transferee executes an agreement in substantially the same
form as the Voting Agreement and reasonably satisfactory to MBI.
As of the Record Date, the directors of TODAY'S owned
beneficially an aggregate of 144,789 shares of TODAY'S Common
Stock (excluding option shares), or approximately 5.25% of the
issued and outstanding shares.
BACKGROUND OF AND REASONS FOR THE MERGER; BOARD RECOMMENDATIONS
BACKGROUND OF THE MERGER. The Board of Directors of TODAY'S
(the "Board") has considered for some time the future role of
TODAY'S in the changing banking environment. The Board has
consulted with TCC on a number of occasions with regard to the
strategic alternatives of TODAY'S, including the acquisition of
other financial institutions by TODAY'S and a possible merger,
sale, consolidation or other business combination involving
TODAY'S. The Board consulted with TCC because TCC is a
nationally recognized investment banking firm regularly engaged,
with respect to banks
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<PAGE> 35
and bank holding companies, in the valuation of businesses and their
securities. The Board has considered such factors as a potential
increase in competition from bank and non-bank sources, the
prospects for future growth through mergers and acquisitions in
Illinois and other states as well as the ability of TODAY'S to
develop new products on a profitable basis. In light of the
foregoing, the Board concluded that affiliation of TODAY'S with a
major banking organization with substantial resources could possibly
be in the best interest of the stockholders, employees and
communities of TODAY'S.
At its September and October 1995 meetings, management
reviewed with the Board the various strategic alternatives for
TODAY'S, including the question of whether TODAY'S should
continue as an independent entity. Following the October 1995
Board meeting and pursuant to the Board's instructions,
management contacted four regional multibank holding companies to
determine if any of such companies would be interested in
affiliating with TODAY'S. No formal discussions or negotiations
with such companies were undertaken at this point.
At the regularly scheduled December 1995 Board meeting,
management and TCC advised the Board that two bank holding
companies, one of which was MBI, had orally indicated an interest
in exploring, on a preliminary basis, a possible affiliation with
TODAY'S and had given preliminary expressions of value.
Management and TCC advised the Board that both companies signed
confidentiality agreements with TODAY'S and that arrangements had
been made with the companies to share financial and other
information. The Board then reviewed the financial terms of each
company's indication of interest. Thereafter, pursuant to the
direction of the Board, management and TCC contacted both
companies to see if either was interested in increasing its
indication of interest.
At a special Board meeting in late December 1995, management
and TCC reported to the Board that both bank holding companies
had increased their indications of interest. The Board reviewed
the new indications of interest in detail. After considerable
discussion, management and the Board concluded that, in their
opinion, MBI's indication of interest provided the most value to
the stockholders of TODAY'S. The Board instructed management and
TCC to contact both companies to discuss their indications of
interest further. At a special Board meeting in early January
1996, TCC advised the Board that each company had indicated that
its respective indication of interest was final and that MBI's
indication of interest offered a comparatively superior value to
the stockholders of TODAY'S. The Board then instructed
management to proceed with the negotiation of a definitive
agreement with MBI.
At the February 1996 Board meeting, management and TCC
advised the Board that MBI had requested a change in the form of
consideration to be paid to the stockholders of TODAY'S. MBI had
originally offered to acquire TODAY'S in a stock-for-stock
exchange. MBI proposed to change the original offer such that
the stockholders of TODAY'S would receive the consideration in
the form of up to 60% MBI Common Stock with the balance in cash.
TCC also advised the Board that, as an additional inducement, MBI
would permit TODAY'S to increase its quarterly dividend from $.15
per share to approximately $.271 per share per quarter.
Management and TCC advised the Board that TODAY'S should continue
negotiating a definitive agreement with MBI. After considerable
discussion, the Board unanimously directed management to continue
negotiating a definitive agreement.
The terms of the Merger Agreement and Option Agreement were
considered by the Board at two special meetings held in early
March 1996 with the assistance of management, legal counsel and
TCC. Such agreements as revised were presented to the Board for
approval on March 19, 1996. At such meeting, legal counsel
advised the Board of the various issues that had been raised with
MBI during the course of the negotiations and reported the
outcome of such issues. In addition, TCC made a presentation
with respect to the financial aspects of the Merger and delivered
a written opinion (the "TCC Opinion")
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<PAGE> 36
that the Merger Consideration set forth in the Merger Agreement was
fair, from a financial point of view, to the stockholders of TODAY'S.
Following the receipt of the TCC Opinion, the Board unanimously
approved and authorized the execution of the Merger Agreement and
Option Agreement. Prior to the opening of business on March 20, 1996,
TODAY'S and MBI issued a joint press release announcing the execution
of the Merger Agreement.
TODAY'S REASONS AND BOARD RECOMMENDATION. With the
assistance of outside financial and legal advisors in evaluating
the current financial, legal and market conditions, the Board
decided to recommend the Merger. The terms of the Merger
Agreement, including the type and value of the Merger
Consideration, are a result of arm's-length negotiations between
the representatives of TODAY'S and MBI. In reaching its
conclusion to approve the Merger Agreement and the transactions
contemplated thereby, the Board considered the factors described
above and a number of additional factors, including the
following:
(1) The business, financial condition, results of
operations, management and prospects of TODAY'S as a stand
alone institution, including but not limited to the
potential growth, development, productivity and
profitability of TODAY'S and the business risks associated
therewith. In the opinion of the Board, a business
combination with a larger bank holding company such as MBI
will provide both greater short-term and long-term value to
TODAY'S stockholders than the other alternatives available.
Such a business combination will likely enhance the
competitiveness of TODAY'S and the ability of TODAY'S to
serve its depositors, customers and the communities in which
it operates. In the opinion of the Board, such increased
competitive advantage will result primarily from the ability
of TODAY'S to offer new and enhanced products and service
already developed and tested by MBI, the cost savings of
TODAY'S of combining operations and support functions and
the increased access to capital that MBI could provide to
TODAY'S. Such increased competitive advantage is reflected
in the value of the Merger Consideration to be received by
the TODAY'S stockholders.
(2) The current and prospective environment in which
TODAY'S operates, including national and local economic
conditions, the competitive environment for financial
institutions generally, the increased regulatory burden on
financial institutions generally and the trend towards
consolidation in the financial services industry,
particularly in the TODAY'S market areas. Recent changes in
state and federal banking laws have greatly enhanced
expansion opportunities; in addition, the financial services
industry has also increased competition for the products and
services offered by banks. Such increases in competition,
together with increased bank regulatory reporting and other
requirements, have made it more difficult for independent
community banks, such as the TODAY'S Banks, to compete with
the banking affiliates of much larger institutions with
respect to the range and cost of the products and services
offered by such affiliates.
(3) Information concerning the business, operations,
asset quality and prospects of MBI, including the
performance of MBI Common Stock.
(4) The relative financial strength of MBI.
(5) The written opinion of TCC that the Merger
Consideration was fair to holders of TODAY'S Common Stock
from a financial point of view.
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<PAGE> 37
(6) The financial and other significant terms of the
MBI proposal, including the fact that as a result of the
Merger, certain executive officers of TODAY'S may be
entitled to receive payments and benefits under various
existing employment agreements, the Stock Option Plan and
other agreements. See "- Interests of Certain Persons in
the Merger," and "- Effect on Stock Option and Employee
Benefit Plans."
(7) The review by the Board with its legal and
financial advisors of the provisions of the Merger
Agreement.
(8) The belief of the Board that the terms of the
Merger Agreement are attractive because they allow the
TODAY'S stockholders to receive a portion of the Merger
Consideration in MBI Common Stock, thus permitting such
stockholders both to defer any tax liability resulting from
any increase in the value of their investment which is
greater than the value of cash received and to become
stockholders in MBI, an institution with a history of strong
operations, management and earnings performance.
(9) The expectation that MBI will continue to provide
quality products and services to the communities and
customers served by TODAY'S.
(10) The compatibility of the respective business and
management philosophies of TODAY'S and MBI.
(11) The broader range of products and services, as
well as the greater convenience, which will be afforded to
the TODAY'S customers as a result of the Merger.
(12) The alternative strategic courses available to
TODAY'S, including remaining independent or seeking out
other potential acquirors.
(13) The Board also determined that the Merger offers
to those stockholders of TODAY'S who receive MBI Common
Stock as Merger Consideration the prospect of higher
dividends and a higher trading value due to the greater
liquidity and better prospects for future growth of MBI
Common Stock.
In reaching its determination to accept the Merger Agreement
proposed by MBI, the Board did not assign any relative or
specific weights to the foregoing factors, and individual
directors may have given different weights to different factors.
The importance of these factors relative to one another cannot
precisely be determined or stated herein and there can be no
assurance that the expected results or benefits of the proposed
Merger will actually occur.
In approving the Merger Agreement, the Board was aware that
(i) the Merger Agreement contains provisions prohibiting TODAY'S
from soliciting, facilitating or accepting other offers or
agreements to acquire TODAY'S and (ii) MBI would be able to
exercise the Option in certain circumstances generally relating
to a failure of TODAY'S to consummate the Merger because of a
material change or potential material change in the ownership of
TODAY'S. However, the Board was also aware that such terms were
specifically bargained for and insisted upon by MBI as
inducements to enter into the Merger Agreement, and that the
Merger Agreement expressly permits the Board to exercise its
fiduciary duties upon advice of counsel when recommending the
Merger Agreement to the TODAY'S stockholders (although, in such
circumstances, MBI might still be able to exercise its rights
under the Option Agreement).
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<PAGE> 38
THE BOARD BELIEVES THAT THE MERGER IS FAIR TO, AND IN THE
BEST INTERESTS OF, TODAY'S AND ITS STOCKHOLDERS. THE BOARD
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL
AND ADOPTION OF THE MERGER AGREEMENT.
MBI'S REASONS AND BOARD RECOMMENDATIONS. The Executive
Committee of the Board of Directors of MBI considered a number of
factors, including, among other things, the financial condition
of TODAY'S and projected synergies which MBI anticipates will
result from the Merger. The Executive Committee concluded that
the Merger presents an unique opportunity for MBI to increase its
presence in northwestern Illinois through the acquisition of an
established banking organization having significant operations in
the targeted area. MBI's decision to pursue discussions with
TODAY'S was primarily a result of MBI's assessment of the value
of TODAY'S banking franchise, its substantial asset base within
that area and the compatibility of the businesses of the two
banking organizations.
OPINION OF FINANCIAL ADVISOR TO TODAY'S
On December 19, 1995, the Board of Directors of TODAY'S
entered into an agreement with TCC pursuant to which TCC agreed
to provide financial advisory and investment banking services to
TODAY'S and the Board in connection with the possible acquisition
of TODAY'S. As part of TCC's engagement, TCC agreed, if
requested by the Board, to render an opinion as to the fairness,
from a financial point of view, of the consideration to be
received by the stockholders of TODAY'S in connection with any
such acquisition.
TCC delivered a written opinion to the Board on March 19,
1996 that, based upon and subject to the considerations set forth
in the written opinion, the consideration to be received by the
stockholders of TODAY'S in the Merger is fair, from a financial
point of view, to the TODAY'S stockholders. TCC has also
delivered the TCC Opinion, an updated written opinion to the
Board dated as of the date of this Proxy Statement/Prospectus.
The TCC Opinion is based upon a review of the financial and other
information reviewed by TCC in rendering the TCC Opinion on March
19, 1996, along with a review of the information set forth in
this Proxy Statement/Prospectus and the financial results for
TODAY'S and MBI since March 19, 1996. The full text of the TCC
Opinion, dated March 19, 1996, which sets forth assumptions made,
matters considered and limitations on the review undertaken, is
attached as Annex B to this Proxy Statement/Prospectus. The
-------
TODAY'S stockholders are urged to read the opinion in its
entirety.
During the course of its engagement, and as a basis for
arriving at the TCC Opinion, TCC reviewed and analyzed material
bearing upon the financial and operating condition of TODAY'S and
MBI and material prepared in connection with the Merger,
including, among other things, the following: (i) the Merger
Agreement; (ii) certain publicly-available information concerning
TODAY'S and MBI, including financial statements and reports of
condition and income for each of the three fiscal years ended
December 31, 1995, 1994 and 1993 and the six months ended June 30,
1996, as well as other internally generated TODAY's reports
relating to asset/liability management and asset quality;
(iii) the operating characteristics of certain other financial
institutions deemed relevant to the contemplated Merger; (iv) the
nature and terms of recent sale and merger transactions involving
banks and bank holding companies and other financial institutions
that TCC considered relevant; (v) historical and current market data
for TODAY'S Common Stock and MBI Common Stock and financial and
other information provided to TCC by management of TODAY'S and MBI;
and (vi) the Registration Statement and this Proxy
Statement/Prospectus. In addition, TCC conducted meetings with
members of senior management of TODAY'S and MBI for the purpose
of reviewing the future prospects of TODAY'S and MBI. TCC
evaluated the pro forma ownership of MBI Common Stock by TODAY'S
stockholders, relative to the
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<PAGE> 39
pro forma contribution of the assets, liabilities, equity and earnings
of TODAY'S to the pro forma company. TCC considered the process
undertaken to solicit indications of interest and the results of
discussions with prospective acquirors, including the indication of
interest received from the prospective acquiror other than MBI. TCC
also took into account its experience in other transactions, as well
as its knowledge of the banking industry and its general experience in
securities valuations.
In preparing the TCC Opinion, TCC assumed and relied upon
the accuracy and completeness of all financial and other
information reviewed by it for purposes of the TCC Opinion, and
did not independently verify such information or undertake an
independent evaluation or appraisal of the assets or liabilities
of TODAY'S or MBI, nor was it furnished with any such evaluation
or appraisal. TCC is not an expert in the evaluation of
allowances for loan losses and has not made an independent
evaluation of the adequacy of the allowance for loan losses of
TODAY'S or MBI, nor has it reviewed any individual credit files;
it assumed that the aggregate allowances for loan losses is
adequate to cover such losses. TCC assumed and relied upon the
senior managements of TODAY'S and MBI referred to above as to the
reasonableness and achievability of the financial and operating
forecasts and the assumptions and the bases thereto furnished by
TODAY'S and MBI. The TCC Opinion is necessarily based on
economic, market and other conditions as in effect on, and the
information made available to TCC as of the date of the TCC
Opinion.
THE TCC OPINION IS DIRECTED ONLY TO THE FINANCIAL
CONSIDERATION TO BE PAID TO THE TODAY'S STOCKHOLDERS AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY TODAY'S STOCKHOLDER AS TO HOW
EACH STOCKHOLDER SHOULD VOTE AT THE SPECIAL MEETING OR AS TO THE
ADVISABILITY OF RETAINING OR DISPOSING OF SHARES OF MBI COMMON
STOCK RECEIVED PURSUANT TO THE MERGER.
Generally, TCC's preparation of a fairness opinion involves
various determinations as to the most appropriate and relevant
methods of financial analysis and the application of those
methods to particular circumstances. Therefore, such an opinion
is not readily susceptible to summary description. Furthermore,
in arriving at the Opinion, TCC did not attribute any particular
weight to any analysis or factor considered by it, but rather
made qualitative judgments as to the significance and relevance
of each analysis and factor. Accordingly, TCC believes that its
analyses must be considered as a whole and that considering any
portions of such analyses and of the factors considered, without
considering all analyses and factors, could create a misleading
or incomplete view of the process underlying the Opinion. In its
analyses, TCC made assumptions with respect to industry
performance, general business and economic conditions and other
matters, many of which are beyond the control of TODAY'S. Any
estimates contained in these analyses are not necessarily
indicative of actual values or predictive of future results or
value, which may be significantly more or less favorable than as
set forth herein. In addition, analyses relating to the value of
businesses do not purport to be appraisals or to reflect the
prices at which businesses actually may be sold.
COMPARABLE COMPANY ANALYSIS. TCC compared selected
financial ratios for the twelve months ending December 31, 1995
and trading multiples as of March 15, 1996 for TODAY'S to those
of selected comparable companies which TCC deemed to be
reasonably similar to TODAY'S in size, financial character,
operating character, historical performance and/or geographic
market. The comparable companies, all of which are publicly-
traded commercial bank holding companies headquartered in the
Midwest with total assets in the approximate range of $300
million to $700 million, included: Ambanc Corporation; First Oak
Brook Bancshares; Shoreline Financial Corporation; Independent
Bank Corporation; Peoples Bancorp, Inc.; CoBancorp, Inc.;
Merchants Bancorp, Inc.; Southside Bancshares Corporation; First-
Knox Banc Corporation; Franklin Bank, N.A.; ANB Corporation;
BancFirst Ohio Corporation; Northern States Financial
Corporation; Peoples Bank Corporation
- 36 -
<PAGE> 40
of Indiana; Princeton National Bancorp; German American Bancorp;
Capital Bancorp, Ltd.; S.Y. Bancorp, Inc.; Belmont Bancorp; and
Indiana United Bancorp.
The analysis indicated that, as of March 15, 1996, TODAY'S
Common Stock sold at a price of: (i) 14.5x trailing twelve
months EPS through December 31, 1995, compared to a median of
12.8x for the comparable companies; (ii) 13.0x estimated 1996
EPS, compared to a median of 11.5x for the comparable companies;
(iii) 1.53x December 31, 1995 book value, compared to a median of
1.42x for the comparable companies; and (iv) 1.76x December 31,
1995 tangible book value, compared to 1.46x for the comparable
companies.
TCC also compared selected financial ratios for the twelve
months ending December 31, 1995 and trading multiples as of
March 15, 1996 for MBI to those of selected comparable companies
which TCC deemed to be reasonably similar to MBI in size,
financial character, operating character, historical performance
and/or geographic market. The comparable companies, all of which
are publicly-traded commercial bank holding companies
headquartered in the Midwest with total assets in the approximate
range of $10 billion to $100 billion, included: Banc One
Corporation; Norwest Corporation; KeyCorp; Boatmen's Bancshares,
Inc.; National City Corporation; Comerica Incorporated; First
Bank System, Inc.; First of America Corporation; Huntington
Bancshares, Inc.; Northern Trust Corporation; Firstar
Corporation; Fifth Third Bancorp; Marshall Ilsley Corporation;
and Old Kent Financial Corporation.
The analysis indicated that MBI Common Stock sold at a price
of: (i) 11.1x trailing twelve months EPS through December 31,
1995, compared to a median of 12.8x for the comparable companies;
(ii) 11.1x estimated 1996 EPS, compared to a median of 11.1x for
the comparable companies; (iii) 1.68x December 31, 1995 book
value, compared to a median of 1.93x for the comparable
companies; and (iv) 1.79x December 31, 1995 tangible book value,
compared to 2.17x for the comparable companies.
COMPARABLE TRANSACTION ANALYSIS. TCC reviewed two sets of
comparable merger and acquisition transactions based on publicly-
available data: (i) twenty-four mergers and acquisitions of
commercial banks and bank holding companies headquartered in the
Midwest in which total assets of the acquired company were in the
approximate range of $250 million to $1 billion ("Midwest
Transactions"); and (ii) nine mergers and acquisitions of
commercial banks and bank holding companies headquartered in
northwest Illinois ("Northwest Illinois Transactions"). The
Midwest Transactions included (the acquiror is the first name and
is underlined, followed by the seller): Fort Wayne National
-------------------
Corporation, Valley Financial Services; Union Planters
- ----------- --------------
Corporation, Capital Bancorporation; National City Corporation,
- ----------- -------------------------
United Bancorp of Kentucky; Community First Bankshares, Inc.,
--------------------------------
Abbott Bank Group; Mercantile Bancorporation Inc., Central
------------------------------
Mortgage Bancshares, Inc.; Commerce Bancshares, Inc., Union
-------------------------
Bancshares; First Bank System, Inc., First Western Corporation;
-----------------------
Commerce Bancshares, Inc., Peoples Mid-Illinois Corporation;
- -------------------------
Citizens Banking Corporation, four Banc One Michigan banks; Old
- ---------------------------- ---
Kent Financial Corporation, First National Bank Corporation;
- --------------------------
FirsTier Financial Inc., Cornerstone Bank Group; KeyCorp, First
- ----------------------- -------
Citizens Bancorp of Indiana; Firstar Corporation, First Southeast
-------------------
Banking Corporation; First of America Bank Corporation, First
---------------------------------
Park Ridge Corporation; Old Kent Financial Corporation, EdgeMark
------------------------------
Financial Corporation; BanPonce Corporation, Pioneer Bancorp;
--------------------
Mercantile Bancorporation Inc., Metro Bancorporation; Banc One
- ------------------------------ --------
Corporation, First Financial Associates; UMB Financial
- ----------- -------------
Corporation, CNB Financial Corporation; Hawkeye Bancorporation,
- ----------- ----------------------
First Dubuque Corporation; Banc One Corporation, First Community
--------------------
Bancorp; Area Bancshares Corporation, Commonwealth Bancorp; Old
--------------------------- ---
National Bancorp, DCB Corporation; and Mercantile Bancorporation
- ---------------- -------------------------
Inc., MidAmerica Corporation. The Northwest Illinois
- ----
Transactions included (the acquiror is the first name and is
underlined, followed by the seller): AMCORE Financial, Inc., NBM
----------------------
Bancorp; AMCORE
------
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<PAGE> 41
Financial, Inc., NBA Holding Company; AMCORE Financial, Inc., First
- --------------- ----------------------
State Bancorp of Princeton; Banc One Corporation, First Community
--------------------
Bancorp; AMCORE Financial, Inc., Dixon Bancorp, Inc.; AMCORE
---------------------- ------
Financial, Inc., Central of Illinois, Inc.; First of America Bank
- --------------- ---------------------
Corporation, Quad Cities First Corporation; First of America Bank
- ----------- ---------------------
Corporation, Bancserve Group, Inc.; and AMCORE Financial, Inc.,
- ----------- ----------------------
Illinois National Bank & Trust.
For the Midwest Transactions, the offer value to last twelve
months EPS ranged from a low of 9.3x to a high of 23.8x with a
median of 15.5x; the offer value to book value ranged from 1.14x
to 2.51x with a median of 1.87x; the offer value to tangible book
value ranged from 1.35x to 2.68x with a median of 1.97x. For the
Northwest Illinois Transactions, the offer value to last twelve
months EPS ranged from a low of 7.5x to a high of 15.8x with a
median of 12.3x; the offer value to book value ranged from 1.25x
to 2.38x with a median of 1.54x; the offer value to tangible book
value ranged from 1.31x to 2.38x with a median of 1.63x.
The value of the Merger Consideration represented a multiple
of 17.9x trailing twelve months EPS through December 31, 1995;
the value of Merger Consideration to December 31, 1995 book value
represented a multiple of 1.88x; and the value of the Merger
Consideration to December 31, 1995 tangible book value
represented a multiple of 2.16x.
NET PRESENT VALUE ANALYSIS. TCC prepared a net present
value analysis which estimated future dividend streams that
TODAY'S could produce over the period from January 1, 1996
through December 31, 1999. These dividend streams were
discounted to a present value based on a discount rate of 14%.
TCC estimated the terminal multiple of TODAY'S common equity at
December 31, 1999 by applying multiples of 15.5x, 13.0x and 11.0x
1999 estimated earnings. The range of terminal multiples was
chosen based on past and current trading multiples of TODAY'S and
comparable institutions and past and current multiples of
comparable merger and acquisition transactions. The results of
this analysis indicated a range of theoretical values per fully-
diluted shares of TODAY'S between $19.93 and $27.07. The market
value of the Merger Consideration was $87.250 million, or $30.79
per fully-diluted share of TODAY'S Common Stock, based on a five
day average closing price of MBI Common Stock of $44.475 per
share, as reported on the NYSE Composite Tape for the consecutive
trading days of March 12, 1996 through March 18, 1996.
COMPARATIVE STOCKHOLDER RETURNS. TCC analyzed two sets of
theoretical returns to a TODAY'S stockholder: (i) the TODAY'S
stockholder receives 100% MBI Common Stock as Merger
Consideration; and (ii) the TODAY'S stockholder receives 60% MBI
Common Stock and 40% cash ($12.32 per share) as Merger
Consideration. The scenarios evaluated included TODAY'S
remaining independent, TODAY'S being acquired in 1999 and TODAY'S
being acquired by MBI in the proposed transaction. The analysis
indicated a return to stockholders of 11.78% for TODAY'S
remaining independent, 16.16% for TODAY'S merging in 1999, 20.91%
based on the acceptance of the MBI proposal with the TODAY'S
stockholder receiving 100% MBI Common Stock as Merger
Consideration and 20.55% based on the acceptance of the MBI
proposal with the TODAY'S stockholder receiving 60% MBI Common
Stock and 40% cash as Merger Consideration.
TCC also prepared an analysis of the possible pricing of a
merger transaction with certain other midwest-based bank holding
companies using estimated 1996 net income for TODAY'S, stock
prices of selected companies as of March 15, 1996, and assuming
no earnings-per-share dilution for the buyer. The holding
companies reviewed included: Banc One Corporation; Norwest
Corporation; First Bank System, Inc.; Boatmen's Bancshares, Inc.;
First of American Bank Corporation; Firstar Corporation; AMCORE
Financial, Inc.; First Midwest Bancorp, Inc.; Magna Group, Inc.;
Old Kent Financial Corporation; Comerica Incorporated; KeyCorp;
Merchants Bancorp, Inc.; and First Chicago
- 38 -
<PAGE> 42
NBD Corporation. Given the assumptions, the analysis indicated that
the range of prices per fully-diluted share of TODAY'S these companies
could pay ranged from a high of $24.52 per share to a low of $17.91
per share with a median price of $21.90 per share. While these
prices indicate the ability of an acquiror to pay a particular
price, based on the given assumptions, they do not reflect any
indications of interest or the willingness of an acquiror to pay
such a price.
The summary of TCC analysis set forth above is a fair
summary thereof but does not propose to be a complete description
of the presentations by TCC to the Board. TCC believes that its
analysis and the summary set forth above must be considered as a
whole and that selecting portions of analysis, without
considering all factors and analyses, could create an incomplete
view of the process by which a fairness opinion is rendered. In
connection with its analyses, TCC assumed that there would not be
any material adverse change in general economic, business, market
and/or regulatory conditions, all of which are beyond the control
of MBI and TODAY'S. The analyses performed by TCC are not
necessarily indicative of actual values of future results, which
may be significantly more or less favorable than suggested by
such analyses.
The Board retained TCC based upon its experience and
expertise with regard to the banking industry and merger and
acquisition transactions. TCC is an investment banking and
securities firm with membership on all principal U.S. securities
exchanges. As part of its investment banking services, TCC is
regularly engaged in the independent valuation of securities in
connection with negotiated underwritings, private placements,
merger and acquisition transactions and recapitalizations.
Pursuant to its engagement of TCC, TODAY'S agreed to pay TCC
a cash fee of approximately $788,000, payable on the Closing
Date, for advisory services rendered in connection with reaching
the Merger Agreement. TCC will also receive reimbursement for
certain out-of-pocket expenses, and TODAY'S has agreed to
indemnify TCC against certain liabilities, including liabilities
which may arise under the securities laws.
CONDITIONS TO THE MERGER
The respective obligations of MBI and TODAY'S to consummate
the Merger are subject to the satisfaction of certain mutual
conditions, including the following:
(1) The Merger Agreement must be approved by the
holders of at least two-thirds of the outstanding shares of
TODAY'S Common Stock at the Special Meeting.
(2) The Merger Agreement and the transactions
contemplated thereby must have been approved by the
Regulatory Authorities, and all waiting periods after such
approvals required by law or regulation must have been
satisfied.
(3) The Registration Statement of which this Proxy
Statement/Prospectus is a part must have been declared
effective and must not be subject to a stop order or any
threatened stop order.
(4) Neither TODAY'S, MBI nor Merger Sub may be subject
to any order, decree or injunction of a court or agency of
competent jurisdiction which enjoins or prohibits the
consummation of the Merger.
(5) Each of MBI, Merger Sub and TODAY'S must have
received from MBI Counsel an opinion (which opinion must not
have been withdrawn at or prior to the
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<PAGE> 43
Effective Time) reasonably satisfactory in form and substance to
it to the effect that, subject to certain exceptions and
assumptions: (a) the Merger will constitute a reorganization
within the meaning of Section 368 of the Code and no gain or loss
will be recognized by those stockholders of TODAY'S who receive
solely MBI Common Stock in exchange for TODAY'S Common Stock; (b)
holders of TODAY'S Common Stock who receive MBI Common Stock and
other property will recognize all gain realized, in accordance
with the provisions and limitations of Section 356 of the Code;
(c) the basis of such MBI Common Stock will equal the basis of
the TODAY'S Common Stock for which it is exchanged; (d) the
holding period of such MBI Common Stock will include the holding
period of the TODAY'S Common Stock for which it is exchanged; and
(e) the assumption of TODAY'S Options by MBI will not result in
the recognition of gain or loss to the holders of TODAY'S
Options.
The obligation of MBI and Merger Sub to consummate the
Merger is subject to the satisfaction by TODAY'S, unless waived
by MBI and Merger Sub, of certain other conditions, including the
following:
(1) The representations and warranties of TODAY'S made
in the Merger Agreement must be true and correct in all
material respects as of March 19, 1996 and as of the
Effective Time, except for (a) representations which are by
their provisions made as of a specific date,
(b) inaccuracies therein that are not of a magnitude as to
have a material adverse effect on TODAY'S and its
subsidiaries, taken as a whole, and (c) the effect of the
transactions contemplated by the Merger Agreement, and MBI
must have received an officers' certificate from TODAY'S to
that effect.
(2) All obligations required to be performed by
TODAY'S prior to the Effective Time must have been performed
in all material respects, and MBI must have received an
officers' certificate from TODAY'S to that effect.
(3) TODAY'S must have obtained any and all material
permits, authorizations, consents, waivers and approvals
required of TODAY'S for the lawful consummation of the
Merger.
(4) Since March 19, 1996, there must have been no
material adverse effect on the condition (financial or
otherwise), business or results of operations of TODAY'S and
its subsidiaries, taken as a whole, except as may have
resulted from, among other things, changes to laws and
regulations, generally accepted or regulatory accounting
principles, or interpretations thereof, or changes in other
matters affecting depository institutions generally, such as
changes in economic conditions or interest rates.
(5) Hinshaw & Culbertson, counsel to TODAY'S, must
have delivered to MBI an opinion regarding certain legal
matters.
The obligation of TODAY'S to consummate the Merger is
subject to the satisfaction, by MBI and Merger Sub, unless waived
by TODAY'S, of certain other conditions, including the following:
(1) The representations and warranties of MBI and
Merger Sub made in the Merger Agreement must be true and
correct in all material respects as of March 19, 1996 and as
of the Effective Time, except for (a) representations which
are by their provisions made as of a specific date,
(b) inaccuracies therein that are not of a magnitude as to
have
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<PAGE> 44
a material adverse effect on MBI and its subsidiaries,
taken as a whole, and (c) the effect of the transactions
contemplated by the Merger Agreement, and TODAY'S must have
received an officer's certificate from MBI to that effect.
(2) All obligations required to be performed by MBI
prior to or as of the Effective Time must have been
performed in all material respects, and TODAY'S must have
received an officers' certificate from MBI to that effect.
(3) MBI and Merger Sub must have obtained any and all
material permits, authorizations, consents, waivers and
approvals required of MBI or Merger Sub for the lawful
consummation of the Merger.
(4) Since March 19, 1996, there must have been no
material adverse effect on the condition (financial or
otherwise), business or results of operations of MBI and its
subsidiaries, taken as a whole, except as may have resulted
from, among other things, changes to laws and regulations,
generally accepted or regulatory accounting principles, or
interpretations thereof, or changes in other matters
affecting depository institutions generally, such as changes
in economic conditions or interest rates.
(5) MBI Counsel must have delivered to TODAY'S an
opinion regarding certain legal matters.
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval by the
stockholders of TODAY'S, by mutual consent of the Executive
Committee of the Board of Directors of MBI and the Board of
Directors of TODAY'S or unilaterally by the Executive Committee
of the Board of Directors of MBI or the Board of Directors of
TODAY'S: (i) at any time after March 31, 1997, if the Merger has
not been consummated by such date (provided that the terminating
party is not then in material breach of any representation,
warranty, covenant or other agreement contained in the Merger
Agreement); (ii) if the Federal Reserve Board or any other
Regulatory Authority has denied the application to approve the
Merger and such denial has become final and nonappealable; (iii)
if the Merger Agreement is not approved by the holders of at
least two-thirds of the outstanding shares of TODAY'S Common
Stock at the Special Meeting; (iv) in the event of a material
volitional breach by a party of any representation, warranty or
agreement contained in the Merger Agreement, which breach is not
cured within 30 days after written notice thereof is given to the
breaching party or waived by the non-breaching party, or
unilaterally by the Executive Committee of the Board of Directors
of MBI in the event of an environmental report showing the cost
of taking all remedial or other corrective actions with respect
to real property of TODAY'S acquired after March 19, 1996 will
exceed $1,000,000 or that such cost can not be reasonably
estimated to be less. No assurance can be given that the Merger
will be consummated on or before March 31, 1997 or that MBI or
TODAY'S will not elect to terminate the Merger Agreement if the
Merger has not been consummated on or before such date.
In the event of the termination of the Merger Agreement, the
Merger Agreement shall become void and there shall be no
liability on the part of any party except, that: (i)
confidentiality and indemnification obligations shall survive
termination; (ii) MBI and Merger Sub shall pay all printing,
mailing and filing expenses with respect to the Registration
Statement, this Proxy Statement/Prospectus and the regulatory
applications; and (iii) in the case of termination due to
continued material breach after notice and opportunity to cure,
the breaching party shall not be relieved of liability to the
nonbreaching party arising from the willful nonperformance of any
covenant in the Merger Agreement. In addition,
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<PAGE> 45
as described above under "- Other Agreements - Option Agreement," in
the case of certain terminations of the Merger Agreement, the Option
Agreement will not terminate until the date that is twelve months
following such termination and, pursuant to the Option Agreement,
TODAY'S may be obligated to repurchase the Option and any MBI
Option Shares.
INDEMNIFICATION
TODAY'S, on the one hand, and MBI and Merger Sub, on the
other, have agreed to indemnify one other against any claims or
liabilities to which either such party may become subject under
federal or state securities laws or regulations, to the extent
that such claims or liabilities arise out of information
furnished to the party subject to such liability by the other
party or out of an omission by such other party to state a
necessary or material fact in the Registration Statement of which
this Proxy Statement/Prospectus is a part.
EFFECTIVE TIME; CLOSING DATE
Under the Merger Agreement, unless the parties otherwise
agree in writing, the Closing Date and the Effective Time will
occur on the date and at the time of the later of (i) the
issuance of a certificate of merger by the Office of the
Secretary of State of the State of Missouri and (ii) the filing
of a certificate of merger with the Office of the Secretary of
State of the State of Delaware; provided, however, that in no
event shall the Closing Date and Effective Time occur later than
the first business day of the first full calendar month
commencing at least five business days after the following events
occur: (i) the approval and adoption of the Merger Agreement by
the stockholders of TODAY'S; and (ii) the approval of the Merger
by the Regulatory Authorities and the expiration of all waiting
periods following such approvals.
SURRENDER OF TODAY'S STOCK CERTIFICATES AND RECEIPT OF MBI COMMON
STOCK AND/OR CASH
At the Effective Time of the Merger, each outstanding share
of TODAY'S Common Stock will be converted into the right to
receive the Stock Distribution, the Cash Distribution or the
Combined Distribution as shall be attributable to such share in
accordance with the elections and adjustments described above.
See "- General Description of the Merger."
As soon as practicable following the Closing Date, the
Exchange Agent will mail to each TODAY'S stockholder a notice of
consummation of the Merger and a form of letter of transmittal,
together with instructions and a return envelope to facilitate
the exchange of such holder's certificate(s) formerly
representing TODAY'S Common Stock for such holder's portion of
the Merger Consideration. Each holder of TODAY'S Common Stock,
upon submission to the Exchange Agent of a properly executed
letter of transmittal and surrender to the Exchange Agent of the
stock certificate(s) formerly representing shares of TODAY'S
Common Stock, will be entitled to receive the Stock Distribution,
the Combined Distribution or the Cash Distribution to which such
stockholder is entitled as Merger Consideration. No interest
will be accrued or paid with respect to the cash component of the
Merger Consideration. No dividends or other distributions
declared after the Effective Time will be paid to a former
TODAY'S stockholder with respect to the MBI Common Stock issuable
as Merger Consideration until such stockholder's letter of
transmittal and stock certificates, or documentation reasonably
acceptable to the Exchange Agent in lieu of lost or destroyed
certificates, formerly representing TODAY'S Common Stock, are
delivered to the Exchange Agent. Upon such delivery, all such
dividends or other distributions declared after the Effective
Time shall be remitted to such stockholders (without interest and
less any taxes that may have been imposed thereon). No
fractional shares of MBI Common Stock will be issued in the
Merger, but cash will be paid in lieu of fractional shares, such
cash being calculated by multiplying
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<PAGE> 46
the holder's fractional share interest by the MBI Stock Price. The
shares of MBI Common Stock issued as Merger Consideration will be
freely transferable, except by certain stockholders of TODAY'S who are
deemed to be "affiliates" of TODAY'S. The shares of MBI Common Stock
issued as the Stock Distribution to such affiliates will be restricted
in their transferability in accordance with the rules and regulations
promulgated by the Commission. See "INFORMATION REGARDING MBI STOCK -
Restrictions on Resale of MBI Stock by Affiliates."
After the Effective Time, there will be no further transfers
of TODAY'S stock certificates on the records of TODAY'S and, if
any such certificates are presented to MBI or the Exchange Agent
for transfer, they will be cancelled against delivery of the
Merger Consideration.
FRACTIONAL SHARES
No fractional shares of MBI Common Stock will be issued to
the stockholders of TODAY'S in connection with the Merger. Each
holder of TODAY'S Common Stock who otherwise would have been
entitled to receive a fraction of a share of MBI Common Stock
shall receive in lieu thereof cash, without interest, in an
amount equal to the holder's fractional share interest multiplied
by the MBI Stock Price. Cash received by TODAY'S stockholders in
lieu of fractional shares may give rise to taxable income. See
"CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER."
REGULATORY APPROVALS
In addition to the approval and adoption of the Merger
Agreement by the stockholders of TODAY'S, the obligations of the
parties to effect the Merger are subject to prior approval of the
Federal Reserve Board and the Illinois Commissioner. As a bank
holding company, MBI is subject to regulation under the BHCA.
The Merger is subject to prior approval by the Federal Reserve
Board under Section 4 of the BHCA. The Federal Reserve Board may
withhold such approval if, among other things, the Federal
Reserve Board determines that the effect of the Merger would be
to substantially lessen competition in the relevant markets. In
addition, the Federal Reserve Board will consider whether the
combined organization meets the requirements of the Community
Reinvestment Act of 1977, as amended, by assessing the involved
entities' respective records of meeting the credit needs of the
local communities in which they are chartered, consistent with
the safe and sound operation of such institutions. The Federal
Reserve Board must also examine the financial and managerial
resources and future prospects of the combined organization and
analyze the capital structure and soundness of the resulting
entity. The Federal Reserve Board has the authority to deny an
application if it concludes that the combined organization would
have inadequate capital.
Applications for such approvals have been filed with the
Federal Reserve Board and will be filed with the Illinois Commissioner. MBI
and TODAY'S are not aware of any governmental approvals or actions
that may be required for consummation of the Merger other than as
described above. Should any other approval or action be
required, it is presently contemplated that such approval or
action would be sought. There can be no assurance that any
necessary regulatory approvals or actions will be timely received
or taken, that no action will be brought challenging any such
approval or action or, if such a challenge is brought, as to the
result thereof, or that any such approval or action will not be
conditioned in a manner that would cause the parties to abandon
the Merger. See "SUPERVISION AND REGULATION."
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<PAGE> 47
BUSINESS PENDING THE MERGER
The Merger Agreement provides that, during the period from
March 19, 1996 to the Effective Time, TODAY'S will, and will
cause each of its subsidiaries to, conduct its business according
to the ordinary and usual course consistent with past practices
and use its best efforts to maintain and preserve its business
organization, employees and advantageous business relationships
and retain the services of its officers and key employees.
Furthermore, during the period from March 19, 1996 to the
Effective Time, except as provided in the Merger Agreement,
TODAY'S will not, and will not permit any of its subsidiaries to,
without the prior written consent of MBI and Merger Sub:
(1) declare, set aside or pay any dividends or other
distributions, directly or indirectly, in respect of its
capital stock (other than dividends from any of TODAY'S
subsidiaries to TODAY'S or to another of TODAY'S
subsidiaries), except that TODAY'S may declare and pay
regular quarterly cash dividends in amounts not to exceed
$0.15 per share on the TODAY'S Common Stock; provided,
however, that if the Effective Time shall not have occurred
on or before July 1, 1996, TODAY'S may declare, set aside or
pay a dividend for each quarter thereafter in which the MBI
Board of Directors declares a dividend on the shares of MBI
Common Stock (an "MBI Dividend") that equals the sum of
(i) the Stock Distribution and (ii) the amount per share of
the MBI Dividend; provided further, however, that no
dividend shall be paid to a TODAY'S stockholder for any
quarter in which such TODAY'S stockholder will be entitled
to receive a regular quarterly dividend on the shares of MBI
Common Stock to be issued in the Merger;
(2) enter into or amend any employment, severance or
similar agreement or arrangement with any director, officer
or employee, or materially modify any of the TODAY'S
employee plans or policies or grant any salary or wage
increase or materially increase any employee benefit
(including incentive or bonus payments), except for normal
individual increases in compensation to employees consistent
with past practice, as required by law or contract, or such
increases of which TODAY'S notifies MBI in writing and which
MBI does not disapprove within ten days of the receipt of
such notice;
(3) authorize, recommend, propose or announce an
intention to authorize, so recommend or propose, or enter
into an agreement in principle with respect to, any merger,
consolidation or business combination (other than the
Merger), any acquisition of a material amount of assets or
securities, any disposition of a material amount of assets
or securities or any relinquishment of any material contract
rights;
(4) propose or adopt any amendments to the Certificate
or Articles of Incorporation, as the case may be, or Charter
or By-Laws of TODAY'S or any subsidiary of TODAY'S, as the
case may be;
(5) issue, sell, grant, confer or award any shares of
capital stock or other equity securities (or rights or
options exercisable for, or securities convertible or
exchangeable into, capital stock or other equity securities)
("Equity Securities"), except with respect to the issuance
of TODAY'S Common Stock upon the exercise or
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<PAGE> 48
conversion of employee stock options, or effect any stock split
or otherwise change its capitalization as it existed on March
19, 1996;
(6) purchase, redeem, retire, repurchase or exchange,
or otherwise acquire or dispose of, directly or indirectly,
any shares of its capital stock or other Equity Securities,
whether pursuant to the terms of such capital stock or
Equity Securities or otherwise;
(7) (i) without first consulting with and obtaining
the written consent of MBI, cause or permit TODAY'S-West to
enter into, renew or increase any loan or credit commitment
(including stand-by letters of credit) to, or invest or
agree to invest in any person or entity or modify any of the
material provisions or renew or otherwise extend the maturity
date of any existing loan or credit commitment (collectively,
"Lend to") in an amount in excess of $400,000 or in any amount
which, when aggregated with any and all loans or credit
commitments of TODAY'S and its subsidiaries to such person or
entity, would be in excess of $400,000, or (ii) without first
consulting with and obtaining the written consent of MBI, cause
or permit TODAY'S-East to Lend to any person in an amount equal
to or in excess of (A) $150,000 or in any amount which, when
aggregated with any and all loans or credit commitments of
TODAY'S and its subsidiaries to such person or entity, would be
equal to or in excess of $150,000, if such loan or credit
commitment has a rating of "8" or "9" pursuant to the current
credit rating system of TODAY'S-East (the "Credit Rating
System"); (B) $400,000 or in any amount which, when aggregated
with any and all loans or credit commitments of TODAY'S and its
subsidiaries to such person or entity, would be equal to or in
excess of $400,000, if such loan or credit commitment has a
rating of "7" pursuant to the Credit Rating System; or (C)
$1,000,000 or in any amount which, when aggregated with any and
all loans or credit commitments of TODAY'S and its subsidiaries
to such person or entity, would be equal to or in excess of
$1,000,000, if such loan or credit commitment has a rating
of "1," "3," or "5" pursuant to the Credit Rating System;
provided, however, that TODAY'S or any of its subsidiaries
may make any such loan or credit commitment in the event
(A) TODAY'S or any of its subsidiaries has delivered to MBI
and Merger Sub or their designated representative a notice
of its intention to make such loan and such information as
MBI and Merger Sub or their designated representative may
reasonably require in respect thereof and (B) MBI and Merger
Sub or their designated representative shall not have
reasonably objected to such loan by giving written or
facsimile notice of such objection within two business days
following the delivery to MBI and Merger Sub or their
designated representative of such notice of intention and
information; provided further, however, that TODAY's and/or
any of its subsidiaries may honor any contractual obligation
in existence on March 19, 1996 and notwithstanding clauses
(i) and (ii), TODAY'S may without first consulting with MBI
or obtaining MBI's prior written consent, cause or permit
TODAY'S-West or TODAY'S-East to increase the aggregate
amount of any credit facilities theretofore established in
favor of any person or entity (each a "Pre-Existing
Facility"), provided that the aggregate amount of any and
all such increases shall not be in excess of the lesser of
10% of such Pre-Existing Facilities or $50,000;
(8) directly or indirectly, including through its
officers, directors, employees or other representatives:
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<PAGE> 49
(i) initiate, solicit or encourage any
discussions, inquiries or proposals with any third
party (other than MBI or Merger Sub) relating to the
disposition of any significant portion of the business
or assets of TODAY'S or any of its subsidiaries or the
acquisition of the Equity Securities of TODAY'S or any
of its subsidiaries or the merger of TODAY'S or any of
its subsidiaries with any person (other than MBI or
Merger Sub) or any similar transaction (each such
transaction being referred to herein as an "Acquisition
Transaction"); or
(ii) provide any third party with information or
assistance or negotiate with any third party with
respect to an Acquisition Transaction, and TODAY'S
shall promptly notify MBI and Merger Sub orally of all
the relevant details relating to all inquiries,
indications of interest and proposals which they may
receive with respect to any Acquisition Transaction;
(9) take any action that would (i) materially impede
or delay the consummation of the transactions contemplated
by the Merger Agreement or the ability of MBI and Merger Sub
or TODAY'S to obtain any approval of any Regulatory
Authority required for the transactions contemplated by the
Merger Agreement or to perform its covenants and agreements
under the Merger Agreement, or (ii) prevent or impede the
Merger from qualifying as a reorganization within the
meaning of Section 368 of the Code;
(10) other than in ordinary course of business
consistent with past practice, incur any indebtedness for
borrowed money or assume, guarantee, endorse or otherwise as
an accommodation become responsible or liable for the
obligations of any other individual, corporation or other
entity;
(11) materially restructure or change its investment
securities portfolio, through purchases, sales or otherwise,
or the manner in which the portfolio is classified or
reported, or execute individual investment transactions of
greater than $2,000,000 for U.S. Treasury or Federal Agency
Securities and $250,000 for all other investment
instruments;
(12) agree in writing or otherwise to take any of the
foregoing actions or engage in any activity, enter into any
transaction or intentionally take or omit to take any other
act which would make any of the representations and
warranties made by TODAY'S in the Merger Agreement untrue or
incorrect in any material respect if made anew after
engaging in such activity, entering into such transaction,
or taking or omitting such other act; or
(13) enter into, increase or renew any loan or credit
commitment (including standby letters of credit) to any
executive officer or director of TODAY'S or any of its
subsidiaries, any holder of 10% or more of the outstanding
shares of TODAY'S Common Stock, or any entity controlled,
directly or indirectly, by any of the foregoing or engage in
any transaction with any of the foregoing which is of the
type or nature sought to be regulated in 12 U.S.C. Section 371c
and 12 U.S.C. Section 371c-1, without first obtaining the prior
written consent of MBI and Merger Sub, which consent shall
not be unreasonably withheld.
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<PAGE> 50
The Merger Agreement also provides that, during the period
from March 19, 1996 to the Effective Time, MBI and Merger Sub
will not, and will not permit any of their respective
subsidiaries to, without the prior written consent of TODAY'S,
agree in writing or otherwise engage in any activity, enter into
any transaction or take or omit to take any other action:
(1) that would (i) materially impede or delay the
consummation of the transactions contemplated by the Merger
Agreement or the ability of MBI and Merger Sub or TODAY'S to
obtain any approval of any Regulatory Authority required for
the transactions contemplated by the Merger Agreement or to
perform their covenants and agreements under the Merger
Agreement, or (ii) prevent or impede the transactions
contemplated by the Merger Agreement from qualifying as a
reorganization within the meaning of Section 368 of the
Code; or
(2) that would make any of the representations and
warranties made by MBI and Merger Sub in the Merger
Agreement untrue or incorrect in any material respect if
made anew after engaging in such activity, entering into
such transaction or taking or omitting such other action.
WAIVER AND AMENDMENT
Any provision of the Merger Agreement, including, without
limitation, the conditions to the consummation of the Merger and
the restrictions described under "- Business Pending the Merger,"
may be (i) waived in writing at any time by the party that is, or
whose shareholders or stockholders, as the case may be, are,
entitled to the benefits thereof, or (ii) amended at any time by
written agreement of the parties approved by or on behalf of
their respective Boards of Directors or Executive Committee, as
the case may be, whether before or after the approval of the
Merger Agreement by the stockholders of TODAY'S at the Special
Meeting; provided, however, that after such approval, no such
modification may (i) alter or change the amount or form of the
Merger Consideration to be received by the stockholders of
TODAY'S or (ii) adversely affect the tax treatment of the TODAY'S
stockholders. See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF
THE MERGER."
ACCOUNTING TREATMENT
The Merger will be accounted for under the purchase method
of accounting. Accordingly, data regarding the financial
condition and results of operations of TODAY'S will be included
in MBI's consolidated financial statements on and after the
Closing Date.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
DAN HEINE AND R. WILLIAM OWEN. Each of Dan Heine, President
and Chief Executive Officer of TODAY'S, and R. William Owen,
Executive Vice President and Chief Financial Officer of TODAY'S,
is party to an employment agreement with TODAY'S. Under each
such employment agreement, if such executive officer is
terminated by TODAY'S within two years after a "change in
control" other than for "cause" (as defined below), the executive
officer will be entitled to a severance payment equal to 250% of
the base salary, incentive compensation and bonus payment paid to
such executive officer in the calendar year prior to the year in
which the change in control occurs, subject to reduction to the
maximum amount that can be paid such that no portion of such
payment would constitute an "excess parachute payment" under
Section 280G of the Code.
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<PAGE> 51
Under the terms of each employment agreement, a "change in
control" will be deemed to occur upon the following events: (a)
the direct or indirect acquisition of either: (i) 25% of the
outstanding voting securities of TODAY'S; or (ii) more than 10%
but less than 25% of the outstanding voting securities of
TODAY'S, if the Board of Directors of TODAY'S determines that a
change in control has occurred, by any person or persons acting
as a group; (b) the merger or consolidation of TODAY'S pursuant
to which TODAY'S is not the surviving corporation; (c) the merger
or consolidation of TODAY'S pursuant to which TODAY'S is the
surviving corporation but pursuant to which more than 50% of the
TODAY'S voting securities following such merger or consolidation
are held by a person or persons who were not stockholders of
TODAY'S during the two years preceding the announcement of such
merger or consolidation; (d) a change in the composition of the
Board of Directors of TODAY'S during any two consecutive years
such that the members of the Board of Directors sitting at the
beginning of such two-year period constitute less than a majority
of the Board at the end of such period, unless the newly elected
directors were nominated by at least two-thirds of the members of
the Board sitting at the beginning of the period; (e) the sale or
transfer by TODAY'S of all or substantially all of its assets; or
(f) the filing with the Federal Reserve Board of a change in
control notice with respect to TODAY'S.
Under the terms of each employment agreement, the executive
officer will be deemed to be "terminated" upon the occurrence of
one of the following events: (a) the termination by TODAY'S of
the executive officer's full-time employment under the employment
agreement for any reason other than "cause"; (b) the executive
officer's resignation upon his removal from his present position
with TODAY'S; (c) the executive officer's resignation following a
material change by TODAY'S in the executive officer's function,
duties or responsibilities, which change would cause the
executive officer's position with TODAY'S to become one of less
dignity, responsibility, importance or scope from his present
position with TODAY'S; (d) the involuntary transfer of the
executive officer outside of Freeport, Illinois; or (e) after a
change in control of TODAY'S, the giving of notice by TODAY'S to
the executive officer that the employment agreement will not be
automatically extended for each of the two full calendar years
following the year in which the change of control occurred.
"Cause" is defined in the employment agreements as: (y) personal
dishonesty, incompetence, willful misconduct, breach of fiduciary
duty involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule or regulation
(other than a law, rule or regulation relating to a traffic
violation or similar offense) or a final cease and desist order,
involving the executive officer; or (z) any material breach of
the employment agreement by the executive officer.
DOUGLAS L. MITCHELL, C. BRAD ZULKE, DOUGLAS M. CROSS AND
JEFFREY P. MOZENA. Each of Douglas L. Mitchell, C. Brad Zulke,
Douglas M. Cross and Jeffrey P. Mozena is also party to a
severance agreement with TODAY'S. Under each such severance
agreement, if such executive officer's employment is terminated
by TODAY'S or the executive officer terminates his employment
after the executive officer's job duties and responsibilities are
"substantially reduced" within twelve months of a "change of
control" and other than for "cause" (as defined below), the
executive officer will be entitled to a severance payment equal
to 100% of the base salary, incentive compensation and bonus
payments paid to the executive officer by TODAY'S in the calendar
year prior to the year in which the change of control occurs.
Under the terms of each severance agreement, a "change of
control" is defined in the same manner as described above with
respect to the employment agreements of Messrs. Heine and Owen.
The executive officer's duties will be deemed to be
"substantially reduced" upon the occurrence of one of the
following events: (a) a change in the executive officer's
supervisor from an officer of TODAY'S to a non-officer of
TODAY'S; (b) a 50% or greater reduction in the number of
subordinates reporting to the executive officer; (c) a loss of
one or more of the executive officer's principal job duties or
responsibilities; (d) a demotion in job title or reduction in
compensation (including bonuses) or benefits;
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<PAGE> 52
or (e) a demand by TODAY'S that the executive officer transfer to a
work location located more than fifty miles from the executive
officer's current work location. "Cause" is defined in the severance
agreements as personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving person profit, intentional failure
to perform stated duties, willful violation of any law, rule or
regulation (other than a law, rule or regulation relating to a traffic
violation or similar offense) or a final cease and desist order,
involving the executive officer.
Pursuant to the Merger Agreement, MBI has also agreed that
any outstanding indemnification obligations of TODAY'S existing
on March 19, 1996 in favor of the employees, agents, directors
or officers of TODAY'S shall continue in effect following the
Merger. In addition, beginning at the Effective Time, MBI's
current insurance policy will provide coverage for the "prior
acts" of the directors and officers of TODAY'S.
EFFECT ON STOCK OPTION AND EMPLOYEE BENEFIT PLANS
MBI has agreed to assume the Stock Option Plan and,
upon consummation of the Merger, all outstanding TODAY'S Options
will be converted into rights with respect to MBI Common Stock
(i.e., the Option Conversion). Beginning at the Effective Time,
(i) each TODAY'S Option assumed by MBI will be exercisable solely
for shares of MBI Common Stock, (ii) the number of shares of MBI
Common Stock subject to each TODAY'S Option will equal the number
of shares of TODAY'S Common Stock subject to the TODAY'S Options
multiplied by the Stock Distribution and (iii) the per share
exercise price for each TODAY'S Option will be adjusted by
dividing such price by the Stock Distribution, subject to
adjustment as appropriate to reflect any stock split, stock
dividend, capitalization or similar transaction subsequent to the
Effective Time. MBI has agreed, at and after the Effective Time,
to reserve sufficient shares of MBI Common Stock for issuance
with respect to the TODAY'S Options under the Stock Option Plan
to be assumed by MBI. MBI will also file with the Commission,
and obtain the effectiveness of, a registration statement with
respect to such options.
The Merger Agreement provides that Merger Sub will
honor all employment, severance and other compensation contracts
between TODAY'S or any of its subsidiaries and any current or
former director, officer, employee or agent thereof, along with
all provisions for vested benefits or other vested amounts earned
or accrued through the Effective Time under TODAY'S employee
plans. The TODAY'S employee plans will continue as plans of
Merger Sub until such time as the former employees of TODAY'S and
its subsidiaries are integrated into MBI's employee benefit plans
that are available to other employees of MBI and its
subsidiaries. MBI will take such steps as are necessary or
required to integrate the former employees of TODAY'S and its
subsidiaries into MBI's employee benefit plans available to other
employees of MBI and its subsidiaries as soon as practicable
after the Effective Time, with (i) full credit for prior service
with TODAY'S or any of its subsidiaries for purposes of vesting
and eligibility for participation (but not benefit accruals under
any defined benefit plan), and co-payments and deductibles, and
(ii) waiver of all waiting periods and pre-existing condition
exclusions or penalties.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
-----------------------------------------------------
The following discussion is based upon the Tax Opinion
and except as otherwise indicated, reflects such opinion. The
discussion is a general summary of the material United States
federal income tax ("federal income tax") consequences of the
Merger and the Option Conversion to certain TODAY'S stockholders
and option holders and does not purport to be a complete analysis
or listing of all potential tax considerations or consequences
relevant to a decision whether to vote for the approval of the
Merger. The discussion does not address all aspects of federal
income taxation that may be applicable to TODAY'S stockholders in
light of their status or personal investment circumstances, nor
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<PAGE> 53
does it address the federal income tax consequences of the Merger
that are applicable to TODAY'S stockholders subject to special
federal income tax treatment including (without limitation)
foreign persons, insurance companies, tax-exempt entities,
retirement plans, dealers in securities, persons who acquired
their TODAY'S Common Stock pursuant to the exercise of employee
stock options or otherwise as compensation, and persons who hold
their TODAY'S Common Stock as part of a "straddle," "hedge" or
"conversion transaction." In addition, the discussion does not
address the effect of any applicable state, local or foreign tax
laws, or the effect of any federal tax laws other than those
pertaining to the federal income tax. AS A RESULT, EACH TODAY'S
STOCKHOLDER AND EACH HOLDER OF TODAY'S OPTIONS IS URGED TO
CONSULT HIS OR HER OWN TAX ADVISOR TO DETERMINE THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER TO SUCH STOCKHOLDER. The discussion
assumes that shares of TODAY'S Common Stock are held as capital
assets (within the meaning of Section 1221 of the Code).
TODAY'S has received the Tax Opinion to the effect
that, assuming the Merger occurs in accordance with the Merger
Agreement, the Merger will constitute a "reorganization" for
federal income tax purposes under Section 368(a)(1) of the Code,
with the following federal income tax consequences:
(1) TODAY'S stockholders who receive solely
shares of MBI Common Stock in exchange for their
TODAY'S Common Stock pursuant to the Merger will
recognize no gain or loss, except with respect to cash
received in lieu of fractional shares, if any, as
discussed below.
(2) A TODAY'S stockholder who receives only cash
(i) in exchange for shares of TODAY'S Common Stock
pursuant to the Merger or (ii) as a result of the
exercise of appraisal rights, will realize gain or loss
for federal income tax purposes (determined separately
as to each block of TODAY'S Common Stock exchanged) in
an amount equal to the difference between (x) the
amount of cash received by such stockholder, and (y)
such stockholder's tax basis for the shares of TODAY'S
Common Stock surrendered in exchange therefor, provided
that the cash payment does not have the effect of the
distribution of a dividend. Any such gain or loss will
be recognized for federal income tax purposes and will
be treated as capital gain or loss. However, if the
cash payment does have the effect of the distribution
of a dividend, the amount of taxable income recognized
generally will equal the amount of cash received; such
income generally will be taxable as a dividend; and no
loss (or other recovery of such stockholder's tax basis
for the shares of TODAY'S Common Stock surrendered in
the exchange) generally will be recognized by such
stockholder. The determination of whether a cash
payment has the effect of the distribution of a
dividend will be made pursuant to the provisions and
limitations of Section 302 of the Code, taking into
account the constructive stock ownership rules of
Section 318 of the Code. See "- Impact of Section 302
of the Code," below.
(3) A TODAY'S stockholder who receives shares of
MBI Common Stock and cash in exchange for shares of
TODAY'S Common Stock in the Merger will realize gain
(determined separately as to each block of TODAY'S
Common Stock exchanged) if (i) the sum of the amount of
cash and the fair market value of the shares of MBI
Common Stock received by such stockholder exceeds (ii)
such stockholder's tax basis for the shares of TODAY'S
Common Stock surrendered in exchange therefor. The
amount of such gain that is recognized for federal
income tax purposes will be limited to the amount of
cash received. If the amount of cash received exceeds
the amount of gain realized, only the amount of gain
realized will be recognized for federal income tax
- 50 -
<PAGE> 54
purposes. Any such gain recognized will be taxable as
capital gain, provided that the cash payment does not
have the effect of the distribution of a dividend. Any
loss realized will not be recognized for federal income
tax purposes. Under section 356 of the Code, the
determination of whether a cash payment has the effect
of the distribution of a dividend generally will be
made in accordance with the provisions and limitations
of Section 302 of the Code, taking into account the
constructive stock ownership rules of Section 318 of
the Code. See "- Impact of Section 302 of the Code,"
below.
(4) The aggregate adjusted tax basis of the
shares of MBI Common Stock received by each TODAY'S
stockholder in the Merger (including any fractional
share of MBI Common Stock deemed to be received, as
described in paragraph 6 below), will be equal to the
aggregate adjusted tax basis of the shares of TODAY'S
Common Stock surrendered, decreased by the amount of
any cash received and increased by the amount of any
gain (or dividend) recognized.
(5) The holding period of the shares of MBI
Common Stock (including any fractional share of MBI
Common Stock deemed to be received, as described in
paragraph 6 below) will include the holding period of
the shares of TODAY'S Common Stock exchanged therefor.
(6) A TODAY'S stockholder who receives cash in
the Merger in lieu of a fractional share of MBI Common
Stock will be treated as if the fractional share had been
received in the Merger and then redeemed by MBI in
return for the cash. The receipt of such cash will
cause the recipient to recognize capital gain or loss
equal to the difference between the amount of cash
received and the portion of such holder's adjusted tax
basis in the shares of MBI Common Stock allocable to
the fractional share.
IMPACT OF SECTION 302 OF THE CODE. The determination
of whether a cash payment has the effect of the distribution of a
dividend generally will be made in accordance with the provisions
of Section 302 of the Code. A cash payment to a TODAY'S
stockholder will be considered not to have the effect of the
distribution of a dividend under Section 302 of the Code and such
stockholder will recognize capital gain or loss only if the cash
payment (i) results in a "complete redemption" of such
stockholder's actual and constructive stock interest, (ii)
results in a "substantially disproportionate" reduction in such
stockholder's actual and constructive stock interest or (iii) is
"not essentially equivalent to a dividend."
A cash payment will result in a "complete redemption"
of a stockholder's stock interest and such stockholder will
recognize capital gain or loss if such stockholder does not
actually or constructively own any stock after the receipt of the
cash payment. A reduction in a stockholder's stock interest will
be "substantially disproportionate" and such stockholder will
recognize capital gain or loss if (i) the percentage of
outstanding shares actually and constructively owned by such
stockholder after the receipt of the cash payment is less than
four-fifths (80%) of the percentage of outstanding shares
actually and constructively owned by such stockholder immediately
prior to the receipt of the cash payment. A cash payment will
qualify as "not essentially equivalent to a dividend" and a
stockholder will recognize capital gain or loss if it results in
a meaningful reduction in the percentage of outstanding shares
actually and constructively owned by such stockholder. No
specific tests apply to determine whether a reduction in a
stockholder's ownership interest is meaningful; rather, such
determination will be made based on all the facts and
circumstances applicable to such TODAY'S stockholder. No general
guidelines dictating the appropriate interpretation of facts and
circumstances have been announced by the courts or issued by the
Internal Revenue Service (the "Service"). However, the Service
has indicated in Revenue Ruling 76-385 that a minority
stockholder (i.e., a holder who exercises no control over
- 51 -
<PAGE> 55
corporate affairs and whose proportionate stock interest is
minimal in relation to the number of shares outstanding)
generally is treated as having had a "meaningful reduction" in
interest if a cash payment reduces such holder's actual and
constructive stock ownership to any extent.
With regard to TODAY'S stockholders who receive MBI
Common Stock and cash in the Merger, the determination of whether
a cash payment has the effect of a distribution of a dividend
will be made as if the TODAY'S Common Stock exchanged for cash in
the Merger had instead been exchanged in the Merger for shares of
MBI Common Stock followed immediately by a redemption of such
shares by MBI for the cash payment (a "deemed MBI redemption").
Under this analysis, the determination of whether a cash payment
qualifies as a substantially disproportionate reduction of
interest or is not essentially equivalent to a dividend will be
made by comparing (i) the stockholder's actual and constructive
stock interest in MBI before the deemed MBI redemption
(determined as if such stockholder had received solely MBI Common
Stock in the Merger) with (ii) such stockholder's actual and
constructive stock interest in MBI after the deemed MBI
redemption.
With regard to TODAY'S stockholders who receive only
cash (i) in exchange for shares of TODAY'S Common Stock pursuant
to the Merger or (ii) as a result of the exercise of appraisal
rights, MBI's Counsel has noted in its opinion that many tax
practitioners believe that the determination of whether a cash
payment has the effect of a distribution of a dividend should be
made in accordance with the deemed MBI redemption analysis
discussed above; i.e., as if the TODAY'S Common Stock exchanged
for cash in the Merger had instead been exchanged in the Merger
for shares of MBI Common Stock followed immediately by a
redemption of such shares by MBI for the cash payment. However,
under the traditional analysis, which apparently continues to be used
by the Service, Section 302 of the Code will apply as though
the cash payment were made by TODAY'S in a hypothetical
redemption of TODAY'S Common Stock immediately prior to, and in a
transaction separate from, the Merger (a "deemed TODAY'S
redemption"). Accordingly, under the traditional analysis, the
determination of whether a cash payment results in a complete
redemption of interest, qualifies as a substantially
disproportionate reduction of interest or is not essentially
equivalent to a dividend will be made by comparing (x) the
stockholder's actual and constructive stock interest in TODAY'S
before the deemed TODAY'S redemption, with (y) such stockholder's
actual and constructive stock interest in TODAY'S after the
deemed TODAY'S redemption (but before the Merger). The law is
unclear regarding whether the approach of the Service is correct,
and MBI's Counsel has rendered no opinion on the correctness of
the Service's approach. MBI's Counsel has noted in its opinion
that because the traditional analysis, as applied by the Service,
is more likely to result in dividend treatment than the deemed
MBI redemption analysis, each TODAY'S stockholder who receives
solely cash in exchange for all of the TODAY'S Common Stock he or
she actually owns should discuss with his or her tax advisor
which analysis is applicable.
The determination of ownership for purposes of the
three foregoing tests will be made by taking into account both
shares owned actually by such stockholder and shares owned
constructively by such stockholder pursuant to Section 318 of the
Code. Under Section 318 of the Code, a stockholder will be
deemed to own stock that is actually or constructively owned by
certain members of his or her family (spouse, children,
grandchildren and parents) and other related parties including,
for example, certain entities in which such stockholder has a
direct or indirect interest (including partnerships, estates,
trusts and corporations), as well as shares of stock that such
stockholder (or a related person) has the right to acquire upon
exercise of an option or conversion right. Section 302(c)(2) of
the Code provides certain exceptions to the family attribution
rules for the purpose of determining whether a complete
redemption of a stockholder's interest has occurred for purposes
of Section 302 of the Code. These exceptions apply only to
TODAY'S stockholders who receive, in the Merger, solely cash in
return for the TODAY'S Common Stock they actually own.
- 52 -
<PAGE> 56
BECAUSE THE DETERMINATION OF WHETHER A PAYMENT WILL BE
TREATED AS HAVING THE EFFECT OF THE DISTRIBUTION OF A DIVIDEND
WILL GENERALLY DEPEND UPON THE FACTS AND CIRCUMSTANCES OF EACH
TODAY'S STOCKHOLDER, TODAY'S STOCKHOLDERS ARE STRONGLY ADVISED TO
CONSULT THEIR OWN TAX ADVISORS REGARDING THE TAX TREATMENT OF
CASH RECEIVED IN THE MERGER.
Each TODAY'S stockholder's ability to elect the type of
consideration he or she receives pursuant to the Merger affords
each such stockholder the opportunity to select that type of
consideration which will best serve his or her personal tax and
financial planning needs. However, each TODAY'S stockholder
should be aware that his or her ability to satisfy (or,
alternatively, fail to satisfy) any of the foregoing tests and
thereby avoid (or, alternatively, obtain) dividend treatment may
be affected by (i) the type of consideration received by related
parties in respect of shares that such stockholder is deemed to
own pursuant to Section 318 of the Code, and by (ii) any
redesignation of the stockholder's election by the Exchange Agent,
without regard to whether such stockholder made a Stock Election,
Cash Election or a Combined Election, or, instead, made a No
Election. See "TERMS OF THE PROPOSED MERGER - General Description
of the Merger."
TODAY'S has received the Tax Opinion also to the effect
that, assuming the Option Conversion occurs in accordance with the
Merger Agreement, holders of TODAY'S Options will recognize no gain
or loss as a result of the Option Conversion. EACH HOLDER OF TODAY'S
OPTIONS IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR TO DETERMINE
THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH OPTION HOLDER.
The Tax Opinion is subject to the conditions and
customary assumptions that are stated therein and relies upon
various representations made by MBI, TODAY'S, and certain
stockholders of TODAY'S. If any of these representations or
assumptions is inaccurate, the tax consequences of the Merger
could differ from those described herein. The Tax Opinion is
also based upon the Code, regulations proposed or promulgated
thereunder, judicial precedent relating thereto, and current
administrative rulings and practice, all of which are subject to
change. Any such change, which may or may not be retroactive,
could alter the tax consequences discussed herein. The Tax
Opinion is available without charge upon written request to Jon
W. Bilstrom, General Counsel and Secretary, Mercantile
Bancorporation Inc., P.O. Box 524, St. Louis, Missouri 63166-
0524. The receipt of the Tax Opinion again as of the Closing
Date is a condition to the consummation of the Merger. An
opinion of counsel, unlike a private letter ruling from the
Service, has no binding effect on the Service. The Service could
take a position contrary to the Tax Opinion and, if the matter
were litigated, a court may reach a decision contrary to the Tax
Opinion. Neither MBI nor TODAY'S has requested an advance ruling
as to the federal income tax consequences of the Merger, and the
Service is not expected to issue such a ruling.
THE FOREGOING IS A GENERAL DISCUSSION OF THE MATERIAL
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO CERTAIN TODAY'S
STOCKHOLDERS AND DOES NOT TAKE INTO ACCOUNT THE PARTICULAR FACTS
AND CIRCUMSTANCES OF EACH TODAY'S STOCKHOLDER'S OR OPTION
HOLDER'S TAX STATUS AND ATTRIBUTES. AS A RESULT, THE FEDERAL
INCOME TAX CONSEQUENCES ADDRESSED IN THE FOREGOING DISCUSSION MAY
NOT APPLY TO EACH TODAY'S STOCKHOLDER OR OPTION HOLDER.
ACCORDINGLY, EACH TODAY'S STOCKHOLDER AND EACH OPTION HOLDER
SHOULD CONSULT HIS OR HER OWN TAX ADVISOR REGARDING THE SPECIFIC
TAX CONSEQUENCES OF THE MERGER, INCLUDING THE APPLICATION AND
EFFECT OF FEDERAL, STATE, LOCAL AND OTHER TAX LAWS AND THE
POSSIBLE EFFECTS OF CHANGES IN FEDERAL AND OTHER TAX LAWS.
- 53 -
<PAGE> 57
APPRAISAL RIGHTS OF STOCKHOLDERS OF TODAY'S
-------------------------------------------
Each stockholder of TODAY'S has the right to demand the
appraised value of his or her shares of TODAY'S Common Stock in
cash if the stockholder follows the procedures set forth under
Section 262 of the DGCL.
Under the DGCL, a stockholder of TODAY'S may demand an
appraisal of the fair value (as determined pursuant to Section
262 of the DGCL) of his or her shares of TODAY'S Common Stock and
payment of such fair value to the stockholder in cash if the
Merger is consummated. Merger Sub, as the surviving corporation,
will pay to such stockholder the fair value of such stockholder's
shares of TODAY'S Common Stock if such TODAY'S stockholder (a)
files with TODAY'S, prior to the vote at the Special Meeting, a
written demand for an appraisal of the fair value of his or her
shares; (b) does not vote in favor of the Merger; (c) continues
to hold his or her shares through the Effective Time; and (d)
---
does not withdraw the demand for appraisal within a period of 60
days after the Closing Date. Such demand shall be sufficient if
it reasonably informs TODAY'S of the identity of the stockholder
and that the stockholder intends thereby to demand an appraisal
of his or her shares. A VOTE AGAINST THE APPROVAL AND ADOPTION
OF THE MERGER AGREEMENT WILL NOT, BY ITSELF, BE REGARDED AS A
WRITTEN OBJECTION FOR PURPOSES OF ASSERTING APPRAISAL RIGHTS. A
VOTE IN FAVOR OF THE APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT WILL CONSTITUTE A WAIVER OF A STOCKHOLDER'S APPRAISAL
RIGHTS.
All written demands for appraisal should be addressed
to: TODAY'S BANCORP, INC., 50 West Douglas Street, Freeport,
Illinois 61032, Attention: Dan Heine, before the taking of the
vote concerning the Merger Agreement at the Special Meeting, and
should be executed by, or on behalf of, the holder of record.
To be effective, a demand for appraisal must be
executed by or for the stockholder of record who held such shares
on the date of making such demand, and who continuously holds
such shares through the Effective Time, fully and correctly, as
such stockholder's name appears on his or her stock
certificate(s) and cannot be made by the beneficial owner if he
or she does not also hold the shares of record. The beneficial holder
must, in such case, have the registered owner submit the required
demand in respect of such shares.
If TODAY'S Common Stock is owned of record in a
fiduciary capacity, as by a trustee, guardian or custodian,
execution of a demand for appraisal should be made in such
capacity. If TODAY'S Common Stock is owned of record by more
than one person, as in a joint tenancy or tenancy in common, such
demand must be executed by or for all joint owners. An
authorized agent, including one of two or more joint owners may
execute the demand for appraisal for a stockholder of record;
however, the agent must identify the record owner or owners and
expressly disclose the fact that, in executing the demand, he or
she is acting as agent for the record owner. A record owner,
such as a broker, who holds TODAY'S Common Stock as nominee for
others may exercise his or her right of appraisal with respect to
the shares held for one or more beneficial owners, while not
exercising such right for other beneficial owners. In such case,
the written demand should set forth the number of shares as to
which the record owner dissents. Where no number of shares is
expressly mentioned, the demand will be presumed to cover all
shares of TODAY'S Common Stock in the name of such record owner.
If at any time within the 60-day period after the
Effective Time, a stockholder of TODAY'S withdraws his or her
demand for appraisal, then he or she will be deemed to have
accepted the terms offered pursuant to the Merger. After the 60-
day withdrawal period, a TODAY'S stockholder
- 54 -
<PAGE> 58
may withdraw only with the consent of Merger Sub. Within 10 days
after the Effective Time, Merger Sub (as the surviving corporation in
the Merger) must give written notice that the Merger has become
effective to each stockholder who so filed a written demand for
appraisal and who did not vote in favor of the Merger Agreement.
Within 120 days after the Effective Time, any stockholder of
TODAY'S who has validly perfected appraisal rights shall be
entitled, upon written request, to receive from Merger Sub a
statement setting forth the aggregate number of shares of TODAY'S
Common Stock not voted in favor of the Merger with respect to
which demands for appraisal have been received and the aggregate
number of holders of such shares. Merger Sub shall respond to
such request within 10 days after receipt or within 10 days after
the date of the Special Meeting, whichever is later. Within 120
days after the Effective Time, Merger Sub or any such stockholder
seeking appraisal may file a petition in the Delaware Court of
Chancery demanding a determination of the value of the TODAY'S
Common Stock held by all stockholders seeking appraisal. The
DGCL contemplates a single proceeding in the Delaware Court of
Chancery that will apply to all stockholders of TODAY'S who have
perfected their appraisal rights, whether or not such
stockholders have individually filed a petition seeking appraisal
with the Court of Chancery. If neither Merger Sub nor any of the
stockholders of TODAY'S who have perfected their appraisal rights
have filed a petition in the Court Chancery within the 120-day
period following the Effective Time, such appraisal rights will
be waived, and the stockholders will be entitled to receive, upon
surrender of the certificates evidencing their shares of TODAY'S
Common Stock, the amount of cash equal to that paid to the Cash
Election Shares in the Merger (i.e., $30.79 per share of TODAY'S
Common Stock), subject to the adjustments as provided in the
Merger Agreement. Merger Sub has no present intention to file
such a petition with the Delaware Court of Chancery.
If a petition for appraisal is filed by a stockholder,
a copy of the petition shall be served on Merger Sub, which then
will have 20 days after such service to file with the Register of
the Delaware Court of Chancery a verified list of TODAY'S
stockholders who have perfected appraisal rights but have not yet
reached agreement as to value with Merger Sub. If the petition
is filed by Merger Sub, such verified list must accompany the
filing. The Register, if so ordered by the Court, will give
notice of the time and place fixed for hearing of the petition,
by registered or certified mail, to Merger Sub and each
stockholder named on the verified list. Such notice shall also
be published at least one week prior to the hearing in one or
more newspapers of general circulation in Wilmington, Delaware
and in such other publications as directed by the Court.
The Court of Chancery shall conduct a hearing on the
petition for appraisal at which the Court will determine the
stockholders of TODAY'S who have properly perfected appraisal
rights with respect to their shares and may require such
stockholders to submit the certificates evidencing their TODAY'S
Common Stock to the Register of the Court for notation of the
pendency of the appraisal proceeding thereon. Failure to comply
with such direction may result in dismissal of the proceeding as
to such non-complying stockholder. After determining the
stockholders entitled to appraisal, the Court, after taking into
account all relevant factors, will appraise the shares,
determining their fair value exclusive of any element of value
arising from the accomplishment or expectation of the Merger,
together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. Upon application of
either MBI or any of the stockholders entitled to appraisal, the
Court may permit discovery or other pretrial proceedings and may
proceed to trial prior to a final determination of the
stockholders entitled to appraisal. Any stockholder whose name
appears on the verified list submitted by Merger Sub may
participate in the appraisal proceedings until it is finally
determined by the Court that such stockholder is not entitled to
appraisal rights. The judgment shall be payable only upon and
simultaneously with the surrender to Merger Sub of the
certificate(s) representing such shares of TODAY'S Common Stock.
Upon payment of the judgment, the stockholder who sought
appraisal shall cease to have any interest in such shares or in
TODAY'S and will have no right to receive dividends in such stock
or exercise other rights of stock ownership.
- 55 -
<PAGE> 59
Section 262 provides fair value is to be "exclusive of
any element of value arising from the accomplishment or
expectation of the merger." The Delaware Supreme Court has
construed Section 262 to mean that "elements of future value,
including the nature of the enterprise, which are known or
susceptible of proof as of the date of the merger and are not the
product of speculation, may be considered." Stockholders who are
considering seeking an appraisal should bear in mind that the
fair value of their shares of TODAY'S Common Stock determined
under Section 262 could be more than, the same as or less than
the consideration they are to receive pursuant to the Merger
Agreement if they do not seek appraisal of their shares of
TODAY'S Common Stock, and that an opinion of an investment
banking firm as to fairness is not an opinion as to fair value
under Section 262.
Costs of the appraisal proceeding may be assessed
against the parties thereto (i.e., Merger Sub and the
stockholders participating in the appraisal proceeding) by the
Court as the Court deems equitable in the circumstances. Upon
the application of any stockholder, the Court may determine the
amount of interest, if any, to be paid upon the value of the
stock of stockholders entitled thereto. Upon application of a
stockholder, the Court may order all or a portion of the expenses
incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorneys'
fees and the fees and expenses of experts, to be charged pro rata
against the value of all shares entitled to appraisal. Any
stockholder who has demanded appraisal rights will not, after the
Effective Time, be entitled to vote the stock subject to such
demand for any purpose or to receive payment of dividends or any
other distribution with respect to such shares (other than
dividends or distributions, if any, payable to holders of record
as of a record date prior to the Effective Time) or to receive
the payment of the consideration provided for in the Merger
Agreement. However, if no petition for an appraisal is filed
within 120 days after the Effective Time or if such stockholder
delivers to Merger Sub a written withdrawal of his demand for an
appraisal and an acceptance of the Merger, either within 60 days
after the Effective Time or thereafter with the written approval
of Merger Sub, then the right of such stockholder to an appraisal
will cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery will be dismissed as to any
stockholder without the approval of the Court, and such approval
may be conditioned upon such terms as the Court deems just.
FAILURE TO COMPLY STRICTLY WITH THESE PROCEDURES WILL
CAUSE THE STOCKHOLDER TO LOSE HIS OR HER APPRAISAL RIGHTS.
CONSEQUENTLY, ANY STOCKHOLDER WHO DESIRES TO EXERCISE HIS OR HER
APPRAISAL RIGHTS IS URGED TO CONSULT A LEGAL ADVISOR BEFORE
ATTEMPTING TO EXERCISE SUCH RIGHTS.
THE PRECEDING DISCUSSION IS A SUMMARY OF THE PROVISIONS
REGARDING APPRAISAL RIGHTS UNDER THE DGCL AND IS QUALIFIED IN ITS
ENTIRETY BY THE TEXT OF SECTION 262 OF THE DGCL WHICH IS ATTACHED
HERETO AS ANNEX A. TODAY'S STOCKHOLDERS WHO ARE INTERESTED IN
-------
PERFECTING APPRAISAL RIGHTS PURSUANT TO THE DGCL IN CONNECTION
WITH THE MERGER SHOULD CONSULT WITH THEIR COUNSEL FOR ADVICE AS
TO THE PROCEDURES REQUIRED TO BE FOLLOWED.
- 56 -
<PAGE> 60
PRO FORMA FINANCIAL INFORMATION
-------------------------------
COMPARATIVE UNAUDITED PER SHARE DATA
The following table sets forth for the periods
indicated selected historical per share data of MBI and TODAY'S
and the corresponding pro forma and pro forma equivalent per
share amounts giving effect to the proposed Merger and the
proposed acquisitions of Peoples and First Financial. The data
presented is based upon the supplemental consolidated financial
statements, consolidated financial statements and related notes
of MBI and the consolidated financial statements and related
notes of TODAY'S included in documents incorporated herein by
reference, and the pro forma combined consolidated balance sheet
and income statements, including the notes thereto, appearing
elsewhere herein. This information should be read in conjunction
with such historical and pro forma financial statements and
related notes thereto. The assumptions used in the preparation
of this table appear in the notes to the pro forma financial
information appearing elsewhere in this Proxy
Statement/Prospectus. See "- Notes to Pro Forma Combined
Consolidated Financial Statements." These data are not
necessarily indicative of the results of the future operations of
the combined organization or the actual results that would have
occurred if the proposed Merger or the proposed acquisitions of
Peoples and First Financial had been consummated prior to the
periods indicated.
<TABLE>
<CAPTION>
MBI/ MBI/
MBI/TODAY'S MBI/TODAY'S All Entities All Entities
MBI TODAY'S Pro Forma Pro Forma Pro Forma Pro Forma
Reported Reported Combined <F1> Equivalent <F2> Combined <F3> Equivalent <F2>
-------- -------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Book Value per Share:
June 30, 1996 $ 25.64 $ 17.40 $ 25.65 $ 17.76 $ 25.65 $ 17.76
December 31, 1995 26.04 16.96 26.05 18.03 26.05 18.03
Cash Dividends Declared per Share:
Six months ended June 30, 1996 $ .82 $ .2875 $ .82 $ .57 $ .82 $ .57
Year ended December 31, 1995 1.32 .5375 1.32 .92 1.32 .91
Earnings per Share:
Six months ended June 30, 1996 $ 1.10 $ .93 $ .99 $ .69 $ .99 $ .69
Year ended December 31, 1995 3.74 1.79 3.62 2.51 3.63 2.51
Market Price per Share:
At March 19, 1996 <F4> $ 45.25 $ 26.75 n/a n/a n/a n/a
At September 10, 1996 <F4> 50.25 32.50 n/a n/a n/a n/a
<FN>
- -------------
<F1> Includes the effect of pro forma adjustments for TODAY'S, as
appropriate. See "- Notes to Pro Forma Combined Consolidated
Financial Statements."
<F2> Based on the pro forma combined per share amounts multiplied by
0.6923, the Stock Distribution. Further explanation of the
assumptions used in the preparation of the pro forma combined
consolidated financial statements is included in the notes to pro
forma financial statements. See "- Notes to Pro Forma Combined
Consolidated Financial Statements."
<F3> Includes the effect of pro forma adjustments for TODAY'S, Peoples
and First Financial, as appropriate. See "- Notes to Pro Forma
Combined Consolidated Financial Statements." Due to the immateriality
of the financial condition and results of operations of Regional to
that of MBI, does not include the effect of pro forma adjustments
for Regional.
<F4> The market price per share of MBI and TODAY'S Common Stock was
determined as of the last trading day preceding the public
announcement of the proposed Merger and as of the latest available
date prior to the mailing of the Proxy Statement/Prospectus, based
on the last sale prices as reported on the NYSE Composite Tape and
the Nasdaq National Market, respectively.
</TABLE>
- 57 -
<PAGE> 61
PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following unaudited pro forma combined consolidated
balance sheet gives effect to the proposed Merger and the proposed
acquisitions of Peoples and First Financial as if each of the
acquisitions were consummated on June 30, 1996.
The following pro forma combined consolidated income
statements for the six months ended June 30, 1996 and the year ended
December 31, 1995 set forth the results of operations of MBI combined
with the results of operations of TODAY'S, Peoples and First Financial
as if the proposed Merger and the proposed acquisitions of Peoples and
First Financial had occurred as of the first day of the period
presented.
The unaudited pro forma combined consolidated financial
statements should be read in conjunction with the accompanying Notes to
the Pro Forma Combined Consolidated Financial Statements and with the
historical financial statements of MBI and TODAY'S. These pro forma
combined consolidated financial statements may not be indicative of the
results of operations that actually would have occurred if the proposed
Merger or the proposed acquisitions of Peoples and First Financial had
been consummated on the dates assumed above or of the results of
operations that may be achieved in the future. Due to the immateriality
of the financial condition and results of operations of Regional to
MBI, the pro forma combined consolidated financial statements do not
give effect to the proposed acquisition of Regional.
- 58 -
<PAGE> 62
<TABLE>
MERCANTILE BANCORPORATION INC.
PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET
June 30, 1996
(Thousands)
(Unaudited)
<CAPTION>
MBI,
TODAY'S All Entities
Pro Forma Peoples, Pro Forma
TODAY'S Combined First First Financial Combined
MBI<F1> TODAY'S Adjustments<F2> Consolidated Peoples Financial Adjustments<F2> Consolidated
------- -------- --------------- ------------ ------- --------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 840,848 $ 15,435 $(52,379)<F3> $ 769,904 $ 3,179 $ 3,845 $(14,507)<F3> $ 747,570
(34,000)<F4> (11,516)<F3>
(3,335)<F8>
Due from banks-interest
bearing 64,857 338 65,195 29 -- 65,224
Federal funds sold and
repurchase agreements 209,502 9,980 219,482 -- 150 219,632
Investments in debt and
equity securities
Trading 255 -- 255 -- -- 255
Available-for-sale 4,428,289 75,070 4,503,359 36,076 33,101 4,572,536
Held-to-maturity -- 27,640 27,640 -- -- 27,640
----------- -------- -------- ----------- ------- ------- -------- -----------
Total 4,428,544 102,710 -- 4,531,254 36,076 33,101 -- 4,600,431
Loans and leases 11,947,615 360,390 12,308,005 51,900 47,521 12,407,426
Reserve for possible
loan losses (205,687) (3,538) (209,225) (717) (660) (210,602)
----------- -------- -------- ----------- ------- ------- -------- -----------
Net Loans and Leases 11,741,928 356,852 -- 12,098,780 51,183 46,861 -- 12,196,824
Other assets 752,150 24,223 47,867 <F4> 815,768 3,916 3,551 8,074 <F6> 834,164
(47,867)<F5> (8,074)<F7>
39,395 <F10> 6,392 <F10>
10,443 <F8>
(10,443)<F9>
4,537 <F10>
----------- -------- -------- ----------- ------- ------- -------- -----------
Total Assets $18,037,829 $509,538 $(46,984) $18,500,383 $94,383 $87,508 $(18,429) $18,663,845
=========== ======== ======== =========== ======= ======= ======== ===========
</TABLE>
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<PAGE> 63
<TABLE>
MERCANTILE BANCORPORATION INC.
PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET
June 30, 1996
(Thousands)
(Unaudited)
<CAPTION>
MBI,
TODAY'S Peoples, All Entities
Pro Forma First Pro Forma
TODAY'S Combined First Financial Combined
MBI<F1> TODAY'S Adjustments Consolidated Peoples Financial Adjustments Consolidated
------- ------- ----------- ------------ ------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES
Deposits
Non-interest bearing $ 2,567,425 $ 43,788 $ $ 2,611,213 $ 9,342 $ 7,494 $ $ 2,628,049
Interest bearing 11,668,483 393,871 12,062,354 64,897 68,211 12,195,462
Foreign 97,362 97,362 -- -- 97,362
----------- -------- -------- ----------- ------- ------- -------- -----------
Total Deposits 14,333,270 437,659 -- 14,770,929 74,239 75,505 -- 14,920,873
Federal funds purchased
and repurchase agreements 1,108,416 9,022 1,117,438 11,590 720 1,129,748
Other short-term and long-term
borrowings 750,326 11,397 761,723 -- -- 761,723
Other liabilities 239,012 3,593 242,605 480 640 243,725
----------- -------- -------- ----------- ------- ------- -------- -----------
Total Liabilities 16,431,024 461,671 -- 16,892,695 86,309 77,065 -- 17,056,069
SHAREHOLDERS' EQUITY
Preferred stock -- -- -- -- -- --
Common stock 316,394 13,756 (13,756)<F5> 316,394 2,250 8 (2,250)<F7> 316,394
(8)<F9>
Capital surplus 233,725 6,461 883 <F4> 234,608 2,250 771 (41)<F6> 234,696
(6,461)<F5> (2,250)<F7>
129 <F8>
(771)<F9>
Retained earnings 1,083,683 27,650 (27,650)<F5> 1,083,683 3,574 9,664 (3,574)<F7> 1,083,683
(9,664)<F9>
Treasury stock (26,997) -- (52,379)<F3> (26,997) -- -- (14,507)<F3> (26,997)
52,379 <F4> 14,507 <F6>
(11,516)<F3>
11,516 <F8>
----------- -------- -------- ----------- ------- ------- -------- -----------
Total Shareholders' Equity 1,606,805 47,867 (46,984) 1,607,688 8,074 10,443 (18,429) 1,607,776
----------- -------- -------- ----------- ------- ------- -------- -----------
Total Liabilities and
Shareholders' Equity $18,037,829 $509,538 $(46,984) $18,500,383 $94,383 $87,508 $(18,429) $18,663,845
=========== ======== ======== =========== ======= ======= ======== ===========
See Notes to Pro Forma Combined Consolidated Financial Statements.
</TABLE>
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<PAGE> 64
<TABLE>
MERCANTILE BANCORPORATION INC.
PRO FORMA COMBINED CONSOLIDATED INCOME STATEMENT
For the Six Months Ended June 30, 1996
(Thousands except per share data)
(Unaudited)
<CAPTION>
MBI,
TODAY'S All Entities
Pro Forma Peoples, Pro Forma
TODAY'S Combined First First Financial Combined
MBI<F1> TODAY'S Adjustments<F2> Consolidated Peoples Financial Adjustments<F2> Consolidated
------- ------- --------------- ------------ ------- --------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Income $ 655,572 $ 19,395 $ (2,159) $ 672,808 $3,580 $3,228 $ (363) $ 678,882
Interest Expense 309,114 9,792 318,906 1,839 1,429 322,174
----------- ---------- -------- ----------- ------ ------ ------- -----------
Net Interest Income 346,458 9,603 (2,159) 353,902 1,741 1,799 (734) 356,708
Provision for Possible Loan
Losses 43,806 560 2,300 46,666 -- 12 46,678
----------- ---------- -------- ----------- ------ ------ ------- -----------
Net Interest Income
after Provision for
Possible Loan Losses 302,652 9,043 (4,459) 307,236 1,741 1,787 (734) 310,030
Other Income
Trust 40,103 915 41,018 -- -- 41,018
Service charges 39,177 869 40,046 210 144 40,400
Credit card fees 9,579 -- 9,579 -- -- 9,579
Securities gains (losses) (2,858) 6 (2,852) -- -- (2,852)
Other 51,440 609 52,049 167 71 52,287
----------- ---------- -------- ----------- ------ ------ ------- -----------
Total Other Income 137,441 2,399 -- 139,840 377 215 -- 140,432
Other Expense
Salaries and employee
benefits 157,992 3,750 161,742 589 766 163,097
Net occupancy and equipment 43,073 1,351 44,424 191 84 44,699
Other 125,029 2,384 1,313 136,426 500 348 213 137,638
7,700 151
----------- ---------- -------- ----------- ------ ------ ------- -----------
Total Other Expense 326,094 7,485 9,013 342,592 1,280 1,198 364 345,434
----------- ---------- -------- ----------- ------ ------ ------- -----------
Income Before Income Taxes 113,999 3,957 (13,472) 104,484 838 804 (1,098) 105,011
Income Taxes 44,358 1,391 (3,915) 41,834 290 278 (131) 42,137
(134)
----------- ---------- -------- ----------- ------ ------ ------- -----------
Net Income $ 69,641 $ 2,566 $ (9,557) $ 62,650 $ 548 $ 526 $ (833) $ 62,891
=========== ========== ======== =========== ====== ====== ======= ===========
Per Share Data
Average Common Shares
Outstanding 62,916,388 62,916,388 62,916,388
Net Income $1.10 $.99 $.99
See Notes to Pro Forma Combined Consolidated Financial Statements.
</TABLE>
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<PAGE> 65
<TABLE>
MERCANTILE BANCORPORATION INC.
PRO FORMA COMBINED CONSOLIDATED INCOME STATEMENT
For the Year Ended December 31, 1995
(Thousands except per share data)
(Unaudited)
<CAPTION>
MBI,
TODAY'S All Entities
Pro Forma Peoples, Pro Forma
TODAY'S Combined First First Financial Combined
MBI<F1> TODAY'S Adjustments<F2> Consolidated Peoples Financial Adjustments<F2> Consolidated
------- ------- --------------- ------------ ------- --------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Income $ 1,293,944 $ 39,180 $ (4,318) $ 1,328,806 $7,086 $6,103 $ (725) $ 1,340,527
(743)
Interest Expense 620,534 19,775 640,309 3,517 2,693 646,519
----------- ---------- -------- ----------- ------ ------ ------- -----------
Net Interest Income 673,410 19,405 (4,318) 688,497 3,569 3,410 (1,468) 694,008
Provision for Possible Loan
Losses 36,530 960 2,300 39,790 45 -- 39,835
----------- ---------- -------- ----------- ------ ------ ------- -----------
Net Interest Income after
Provision for
Possible Loan Losses 636,880 18,445 (6,618) 648,707 3,524 3,410 (1,468) 654,173
Other Income
Trust 70,751 1,624 72,375 -- -- 72,375
Service charges 75,408 1,655 77,063 452 264 77,779
Credit card fees 19,690 -- 19,690 -- -- 19,690
Securities gains (losses) 4,042 62 4,104 (14) (37) 4,053
Other 103,762 1,640 105,402 143 484 106,029
----------- ---------- -------- ----------- ------ ------ ------- -----------
Total Other Income 273,653 4,981 -- 278,634 581 711 -- 279,926
Other Expense
Salaries and employee
benefits 298,625 7,318 305,943 1,148 1,569 308,660
Net occupancy and equipment 82,674 3,863 86,537 576 191 87,304
Other 172,449 4,779 2,626 187,554 590 933 426 189,805
7,700 302
----------- ---------- -------- ----------- ------ ------ ------- -----------
Total Other Expense 553,748 15,960 10,326 580,034 2,314 2,693 728 585,769
----------- ---------- -------- ----------- ------ ------ ------- -----------
Income Before Income Taxes 356,785 7,466 (16,944) 347,307 1,791 1,428 (2,196) 348,330
Income Taxes 124,109 2,587 (4,692) 122,004 628 430 (261) 122,534
(267)
----------- ---------- -------- ----------- ------ ------ ------- -----------
Net Income $ 232,676 $ 4,879 $(12,252) $ 225,303 $1,163 $ 998 $(1,668) $ 225,796
=========== ========== ======== =========== ====== ====== ======= ===========
Per Share Data
Average Common Shares
Outstanding 61,883,723 61,883,723 61,883,723
Net Income $3.74 $3.62 $3.63
See Notes to Pro Forma Combined Consolidated Financial Statements.
</TABLE>
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<PAGE> 66
MERCANTILE BANCORPORATION INC.
NOTES TO PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
<F1> Represents MBI restated historical consolidated financial
statements reflecting the acquisition of Hawkeye,
effective January 2, 1996. Such acquisition was accounted
for as a pooling-of-interests. The acquisition of
Sterling was also accounted for as a pooling-of-interests;
however, due to the immateriality of the financial
condition and results of operations of Sterling to that of
MBI, MBI did not restate its historical financial
statements to reflect the acquisition of Sterling.
Sterling, along with Conway and Metro, is included in
these pro forma financial statements only from its
acquisition date forward. The full impact of these
acquisitions is immaterial to the pro forma combined
financial statements.
<F2> The acquisitions of TODAY'S, Peoples and First Financial
will be accounted for as purchase transactions. Purchase
price adjustments offset each other or are immaterial.
Included herein are the amortization of goodwill over a
15-year period (see footnote 10 below) and the lost
interest income on the cash consideration (for TODAY'S and
First Financial) and stock buybacks. Also included for
TODAY'S is $10,000,000 that MBI expects to record upon
closing to conform TODAY'S accounting and credit policies
to those of MBI, of which $2,300,000 is provision for
possible loan losses and $7,700,000 is other expense.
Goodwill is considered non-deductible and a lower tax rate
is used on the conforming charges since some portion of
those will be non-deductible. The balance sheet impact of
goodwill amortization, lost interest income and the
conforming charges is ignored due to immateriality.
<F3> In connection with the proposed acquisitions, MBI may
repurchase up to 1,761,849 shares of MBI Common Stock in
the open market. Assumed price is $44.50 per share.
<F4> Purchase entry of TODAY'S with assumed consideration
consisting of 1,177,066 reissued treasury shares at $45.25
per share, plus $34,000,000 in cash. The closing price
for MBI Common Stock on March 19, 1996 (the date of
execution of the definitive Merger Agreement) was $45.25.
<F5> Elimination of MBI's investment in TODAY'S.
<F6> Purchase entry of Peoples with assumed consideration of
$14,466,000, consisting of 326,000 reissued treasury
shares at $44.375 per share, the closing price for MBI
Common Stock on December 19, 1995 (the date of execution
of the definitive reorganization agreement between MBI and
Peoples Bank).
<F7> Elimination of MBI's investment in Peoples.
<F8> Purchase entry of First Financial with assumed
consideration consisting of 258,783 reissued treasury
shares at $45.00 per share, plus $3,335,000 in cash. The
closing price for MBI Common Stock on July 9, 1996 (the
date of execution of the definitive merger agreement
between MBI and First Financial) was $45.00.
<F9> Elimination of MBI's investment in First Financial.
<F10> The pro forma excess of cost over fair value of net assets
acquired was $39,395,000, $6,392,000 and $4,537,000 as of
June 30, 1996 for TODAY'S, Peoples and First Financial,
respectively.
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<PAGE> 67
INFORMATION REGARDING MBI STOCK
-------------------------------
DESCRIPTION OF MBI COMMON STOCK AND ATTACHED PREFERRED SHARE
PURCHASE RIGHTS
GENERAL. MBI has authorized 5,000,000 shares of MBI
Preferred Stock, no par value, and 100,000,000 shares of MBI
Common Stock, $5.00 par value. At June 30, 1996, MBI had no
shares of MBI Preferred Stock issued and outstanding and
62,673,041 shares of MBI Common Stock outstanding. Under
Missouri law, MBI's Board of Directors may generally approve the
issuance of authorized shares of Preferred Stock and Common Stock
without shareholder approval.
MBI's Board of Directors is also authorized to fix the
number of shares and determine the designation of any series of
Preferred Stock and to determine or alter the rights,
preferences, privileges and restrictions granted to or imposed
upon any series of MBI Preferred Stock. Except for the
designation and reservation of Series A Junior Participating
Preferred Stock pursuant to MBI's Preferred Share Purchase Rights
Plan described below, MBI's Board of Directors has not acted to
designate or issue any shares of MBI Preferred Stock. The
existence of a substantial number of unissued and unreserved
shares of MBI Common Stock and undesignated shares of MBI
Preferred Stock may enable the Board of Directors to issue shares
to such persons and in such manner as may be deemed to have an
anti-takeover effect.
The following summary of the terms of MBI's Capital
Stock does not purport to be complete and is qualified in its
entirety by reference to the applicable provisions of MBI's
Restated Articles of Incorporation and By-Laws and Missouri law.
DIVIDENDS. The holders of MBI Common Stock are
entitled to share ratably in dividends when, as and if declared
by the Board of Directors from funds legally available therefor,
after full cumulative dividends have been paid or declared, and
funds sufficient for the payment thereof set apart, on all series
of MBI Preferred Stock ranking superior as to dividends to MBI
Common Stock.
The Board of Directors of MBI intends to maintain its
present policy of paying quarterly cash dividends on MBI Common
Stock, when justified by the financial condition of MBI and its
subsidiaries. The declaration and amount of future dividends
will depend on circumstances existing at the time, including
MBI's earnings, financial condition and capital requirements as
well as regulatory limitations, note and indenture provisions and
such other factors as the Board of Directors may deem relevant.
The payment of dividends to MBI by subsidiary banks is subject to
extensive regulation by various state and federal regulatory
agencies. See "SUPERVISION AND REGULATION."
VOTING RIGHTS. Each holder of MBI Common Stock has one
vote for each share held on matters presented for consideration
by the shareholders, except that, in the election of directors,
each shareholder has cumulative voting rights which entitle each
such shareholder to the number of votes which equals the number
of shares held by the shareholder multiplied by the number of
directors to be elected. All such votes may be cast for one
candidate for election as a director or may be distributed among
two or more candidates.
PREEMPTIVE RIGHTS. The holders of MBI Common Stock
have no preemptive right to acquire any additional unissued
shares or treasury shares of MBI.
LIQUIDATION RIGHTS. In the event of liquidation,
dissolution or winding up of MBI, whether voluntary or involuntary,
the holders of MBI Common Stock will be entitled to share ratably in
any of its assets or funds that are available for distribution to
its shareholders after the satisfaction of its
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<PAGE> 68
liabilities (or after adequate provision is made therefor)
and after preferences on any outstanding MBI Preferred Stock.
ASSESSMENT AND REDEMPTION. Shares of MBI Common Stock
are and will be, when issued, fully paid and nonassessable. Such
shares do not have any redemption provisions.
PREFERRED SHARE PURCHASE RIGHTS PLAN. One preferred
share purchase right is attached to each share of MBI Common
Stock. The MBI Rights trade automatically with shares of MBI
Common Stock, and become exercisable and will trade separately
from the MBI Common Stock on the tenth day after public
announcement that a person or group has acquired, or has the
right to acquire, beneficial ownership of 20% or more of the
outstanding shares of MBI Common Stock, or upon commencement or
announcement of intent to make a tender offer for 20% or more of
the outstanding shares of MBI Common Stock, in either case
without prior written consent of the Board. When exercisable,
each MBI Right will entitle the holder to buy 1/100 of a share of
MBI Series A Junior Participating Preferred Stock at an exercise
price of $100 per MBI Right. In the event a person or group
acquires beneficial ownership of 20% or more of MBI Common Stock,
holders of MBI Rights (other than the acquiring person or group)
may purchase MBI Common Stock having a market value of twice the
then current exercise price of each MBI Right. If MBI is
acquired by any person or group after the Rights become
exercisable, each MBI Right will entitle its holder to purchase
stock of the acquiring company having a market value of twice the
current exercise price of each MBI Right. The MBI Rights are
designed to protect the interests of MBI and its shareholders
against coercive takeover tactics. The purpose of the MBI Rights
is to encourage potential acquirors to negotiate with MBI's Board
of Directors prior to attempting a takeover and to give the Board
leverage in negotiating on behalf of all shareholders the terms
of any proposed takeover. The MBI Rights may deter certain
takeover proposals. The MBI Rights, which can be redeemed by
MBI's Board of Directors in certain circumstances, expire by
their terms on June 3, 1998.
CLASSIFICATION OF BOARD OF DIRECTORS. The Board of
Directors of MBI is divided into three classes, and the
directors are elected by classes to three-year terms, so that one
of the three classes of the directors of MBI will be elected at
each annual meeting of the shareholders. While this provision
promotes stability and continuity of the Board of Directors,
classification of the Board of Directors may also have the effect
of decreasing the number of directors that could otherwise be
elected at each annual meeting of shareholders by a person who
obtains a controlling interest in the MBI Common Stock and
thereby could impede a change in control of MBI. Because fewer
directors will be elected at each annual meeting, such
classification also will reduce the effectiveness of cumulative
voting as a means of establishing or increasing minority
representation on the Board of Directors.
OTHER MATTERS. MBI's Restated Articles of
Incorporation and By-Laws also contain provisions which: (i)
require the affirmative vote of holders of at least 75% of the
voting power of all of the shares of outstanding capital stock of
MBI entitled to vote in the election of directors to remove a
director or directors without cause; (ii) require the affirmative
vote of the holders of at least 75% of the voting power of all
shares of the outstanding capital stock of MBI to approve certain
"business combinations" with "interested parties" unless at least
two-thirds of the Board of Directors first approves such business
combinations; and (iii) require an affirmative vote of at least
75% of the voting power of all shares of the outstanding capital
stock of MBI for the amendment, alteration, change or repeal of
any of the above provisions unless at least two-thirds of the
Board of Directors first approves such an amendment, alteration,
change or repeal. Such provisions may be deemed to have an anti-
takeover effect.
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<PAGE> 69
RESTRICTIONS ON RESALE OF MBI STOCK BY AFFILIATES
Under Rule 145 of the Securities Act, certain persons
who receive MBI Common Stock pursuant to the Merger and who are
deemed to be "affiliates" of TODAY'S will be limited in their
right to resell the stock so received. The term "affiliate" is
defined to include any person who, directly or indirectly,
controls, or is controlled by, or is under common control with
TODAY'S at the time the Merger is submitted to a vote of the
shareholders of TODAY'S. Each affiliate of TODAY'S (generally
each director or executive officer of TODAY'S and each
stockholder who beneficially owns a substantial number of
outstanding shares of TODAY'S Common Stock) who desires to resell
the MBI Common Stock received in the Merger must sell such stock
either pursuant to an effective Registration Statement or in
accordance with an applicable exemption, such as the applicable
provisions of Rule 145(d) under the Securities Act.
Rule 145(d) provides that persons deemed to be
affiliates may resell their stock received in the Merger pursuant
to certain of the requirements of Rule 144 under the Securities
Act if such stock is sold within the first two years after the
receipt thereof. After two years, if such person is not an
affiliate of MBI and if MBI is current with respect to its
required public filings, a former affiliate of TODAY'S may freely
resell the stock received in the Merger without limitation.
After three years from the issuance of the stock, if such person
is not an affiliate of MBI at the time of sale and for at least
three months prior to such sale, such person may freely resell
such stock, without limitation, regardless of the status of MBI's
required public filings. The shares of MBI Common Stock to be
received by affiliates of TODAY'S in the Merger will be legended
as to the restrictions imposed upon resale of such stock.
COMPARISON OF THE RIGHTS OF SHAREHOLDERS OF MBI AND STOCKHOLDERS
OF TODAY'S
MBI is incorporated under the laws of the State of
Missouri. TODAY'S is organized under the laws of the State of
Delaware. The rights of MBI's shareholders are governed by MBI's
Restated Articles of Incorporation and By-Laws and the Missouri
Act. The rights of TODAY'S stockholders are governed by the
Certificate of Incorporation and By-Laws of TODAY'S and by the
DGCL. The rights of TODAY'S stockholders who receive shares of
MBI Common Stock in the Merger will thereafter be governed by
MBI's Restated Articles of Incorporation and By-Laws and by the
Missouri Act. The material rights of such stockholders, and,
where applicable, the differences between the rights of MBI
shareholders and TODAY'S stockholders, are summarized below. The
summary is qualified in its entirety by reference to the Missouri
Act, the DGCL, the Restated Articles of Incorporation and the By-
Laws of MBI and the Certificate of Incorporation and By-laws of
TODAY'S.
PREFERRED SHARE PURCHASE RIGHTS PLAN. As described
above under "Description of MBI Common Stock and Attached
Preferred Share Purchase Rights - Preferred Share Purchase Rights
Plan," MBI Common Stock has attached Rights, which may deter
certain takeover proposals. TODAY'S also has a similar preferred
share purchase rights plan (the "TODAY'S Rights Plan"), pursuant
to which one preferred share purchase right is attached to each
share of TODAY'S Common Stock. Under the TODAY'S Rights Plan,
the triggering beneficial ownership of shares of TODAY'S Common
Stock is 15%, rather than 20%. Each TODAY'S Right carries an
exercise price of $50, as compared to $100 for MBI Rights, and
entitles the holder to buy 1/100 of a share of TODAY'S Series A
Preferred Stock. The TODAY'S Rights can also be redeemed by the
TODAY'S Board of Directors in certain circumstances and expire by
their terms on December 12, 2000.
SUPERMAJORITY PROVISIONS. MBI's Restated Articles of
Incorporation and By-Laws contain provisions requiring a
supermajority vote of the shareholders of MBI to approve certain
proposals. Under both MBI's Restated Articles and By-Laws,
removal by the shareholders of the entire Board of Directors
- 66 -
<PAGE> 70
or any individual director from office without cause requires the
affirmative vote of not less than 75% of the total votes entitled
to be voted at a meeting of shareholders called for the election
of directors. Amendment by the shareholders of MBI's Restated
Articles or By-Laws relating to (i) the number or qualification
of directors; (ii) the classification of the Board of Directors;
(iii) the filling of vacancies on the Board of Directors; or (iv)
the removal of directors, requires the affirmative vote of not
less than 75% of the total votes of MBI's then outstanding shares
of capital stock entitled to vote, voting together as a single
class, unless such amendment has previously been expressly
approved by at least two-thirds of the Board of Directors. The
Restated Articles of MBI additionally provide that, in addition
to any shareholder vote required under the Missouri Act, the
affirmative vote of the holders of not less than 75% of the total
votes to which all of the then outstanding shares of capital
stock of MBI are entitled, voting together as a single class (the
"Voting Stock"), shall be required for the approval of any
Business Combination. A "Business Combination" is defined
generally to include sales, exchanges, leases, transfers or other
dispositions of assets, mergers or consolidations, issuances of
securities, liquidations or dissolutions of MBI,
reclassifications of securities or recapitalizations of MBI,
involving MBI on the one hand, and an Interested Shareholder or
an affiliate of an Interested Shareholder (as defined in MBI's
Restated Articles) on the other hand. If, however, at least two-
thirds of the Board of Directors of MBI approve the Business
Combination, such Business Combination shall require only the
vote of shareholders as provided by Missouri law or otherwise.
The amendment of the provisions of MBI's Restated Articles
relating to the approval of Business Combinations requires the
affirmative vote of the holders of at least 75% of the Voting
Stock unless such amendment has previously been approved by at
least two-thirds of the Board of Directors. To the extent that a
potential acquiror's strategy depends on the passage of proposals
which require a supermajority vote of MBI's shareholders, such
provisions requiring a supermajority vote may have the effect of
discouraging takeover attempts that do not have Board approval by
making passage of such proposals more difficult.
The Certificate of Incorporation and By-Laws of TODAY'S
also contain provisions requiring a supermajority vote of the
Shareholders to approve certain proposals. Under the By-Laws of
TODAY'S, amendments to the By-Laws concerning the number and term
of directors require the affirmative vote of not less than two-
thirds of the total shares entitled to vote in elections of
directors. Under the Certificate of Incorporation of TODAY'S,
amendments to the Certificate of Incorporation, other than with
respect to the number of shares of Common Stock issuable by
TODAY'S, also require a two-thirds supermajority vote. In
addition, approval of a merger or consolidation (other than with
or into a corporation of which at least 80% is owned by TODAY'S),
the sale of substantially all of the assets of TODAY'S or the
dissolution of TODAY'S requires a two-thirds supermajority vote.
VOTING FOR DIRECTORS. MBI's By-Laws provide for
cumulative voting in the election of directors. Cumulative
voting entitles each shareholder to cast an aggregate number of
votes equal to the number of voting shares held, multiplied by
the number of directors to be elected. Each shareholder may cast
all such votes for one nominee or distribute them among two or
more nominees, thus permitting holders of less than a majority of
the outstanding shares of voting stock to achieve board
representation. The Certification of Incorporation and By-Laws
of TODAY'S do not provide for cumulative voting. In contrast to
cumulative voting, under non-cumulative voting, the holders of a
majority of outstanding shares of voting stock may elect the
entire Board of Directors, thereby precluding the election of any
directors by the holders of less than a majority of the
outstanding shares of voting stock.
CLASSIFIED BOARD. As described under "Description of
MBI Common Stock and Attached Preferred Share Purchase Rights -
Classification of Board of Directors," the Board of Directors of
MBI is divided into three classes of directors, with each class
being elected to a staggered three-year term. By reducing the
number of directors to be elected in any given year, the
existence of a classified Board
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<PAGE> 71
diminishes the benefits of the cumulative voting rights to minority
shareholders. TODAY'S also has a classified Board of Directors with
three classes of directors.
ACTION BY SHAREHOLDERS OR STOCKHOLDERS WITHOUT A
MEETING. Under the Missouri Act and the DGCL, written action of
stockholders is permitted unless the Articles or Certificate of
Incorporation or By-Laws of the corporation provide otherwise.
MBI's By-Laws provide that any action required to be taken at a
meeting of the shareholders, or any action which may be taken
without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by all of the shareholders. The
Certificate of Incorporation and By-Laws of TODAY'S provide that
any action of the stockholders or the Board of Directors or any
committee thereof may be taken upon either the written consent of
the required number of stockholders or all of the members of the
Board of Directors or any committee thereof, as the case may be.
ANTI-TAKEOVER STATUTES. The Missouri Act contains
certain provisions applicable to Missouri corporations such as
MBI which may be deemed to have an anti-takeover effect. Such
provisions include Missouri's business combination statute and
the control share acquisition statute.
The Missouri business combination statute protects
domestic corporations after hostile takeovers by prohibiting
certain transactions once an acquiror has gained control. The
statute restricts certain "Business Combinations" between a
corporation and an "Interested Shareholder" or affiliates of the
Interested Shareholder for a period of five years unless certain
conditions are met. A "Business Combination" includes a merger
or consolidation, certain sales, leases, exchanges, pledges and
similar dispositions of corporate assets or stock and certain
reclassifications and recapitalizations. An "Interested
Shareholder" includes any person or entity which beneficially
owns or controls 20% or more of the outstanding voting shares of
the corporation.
During the initial five-year restricted period, no
Business Combination may occur unless such Business Combination
or the transaction in which an Interested Shareholder becomes
"interested" is approved by the board of directors of the
corporation. Business Combinations may occur during such five-
year period if: (i) prior to the stock acquisition by the
Interested Shareholder, the board of directors approves the
transaction in which the Interested Shareholder became an
Interested Shareholder or approves the Business Combination in
question; (ii) the holders of a majority of the outstanding
voting stock, other than stock owned by the Interested
Shareholder, approve the Business Combination; or (iii) the
Business Combination satisfies certain detailed fairness and
procedural requirements.
The Missouri Act exempts from its provisions:
(i) corporations not having a class of voting stock registered
under Section 12 of the Exchange Act; (ii) corporations which
adopt provisions in their articles of incorporation or bylaws
expressly electing not to be covered by the statute; and
(iii) certain circumstances in which a shareholder inadvertently
becomes an Interested Shareholder. MBI's Restated Articles of
Incorporation and By-Laws do not "opt out" of the Missouri
business combination statute.
The Missouri Act also contains a "Control Share
Acquisition Statute" which provides that an "Acquiring Person"
who after any acquisition of shares of a publicly traded
corporation has the voting power, when added to all shares of the
same corporation previously owned or controlled by the Acquiring
Person, to exercise or direct the exercise of: (i) 20% but less
than 33-1/3%, (ii) 33-1/3% or more but less than a majority or (iii) a
majority, of the voting power of outstanding stock of such
corporation, must obtain shareholder approval for the purchase of
the "Control Shares." If approval is not given, the Acquiring
Person's shares lose the right to vote. The statute prohibits an
Acquiring Person from voting its shares unless certain disclosure
requirements are met and the retention or restoration of voting
rights
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is approved by both: (i) a majority of the outstanding voting stock,
and (ii) a majority of the outstanding voting stock after exclusion of
"Interested Shares." Interested Shares are defined as shares owned by
the Acquiring Person, by directors who are also employees, and by
officers of the corporation. Shareholders are given dissenters' rights
with respect to the vote on Control Share Acquisitions and may demand
payment of the fair value of their shares.
A number of acquisitions of shares are deemed not to
constitute Control Share Acquisitions, including good faith
gifts, transfers pursuant to wills, purchases pursuant to an
issuance by the corporation, mergers involving the corporation
which satisfy the other requirements of the Missouri Act,
transactions with a person who owned a majority of the voting
power of the corporation within the prior year, or purchases from
a person who has previously satisfied the provisions of the
Control Share Acquisition Statute so long as the transaction does
not result in the purchasing party having voting power after the
purchase in a percentage range (such ranges are as set forth in
the immediately preceding paragraph) beyond the range for which
the selling party previously satisfied the provisions of the
statute. Additionally, a corporation may exempt itself from
application of the statute by inserting a provision in its
articles of incorporation or bylaws expressly electing not to be
covered by the statute. MBI's Restated Articles of Incorporation
and By-Laws do not "opt out" of the Control Share Acquisition
Statute.
The DGCL applicable to TODAY'S contains a business
combination statute similar to that contained in the Missouri
Act. Like the Missouri business combination statute, the
Delaware business combination statute generally prohibits a
domestic corporation from engaging in mergers or other business
combinations with Interested Persons (as defined in the DGCL) for
a statutory time period. The prohibition can be avoided if the
business combination is approved by the board of directors prior
to the date on which the Interested Person acquires the requisite
percentage of stock. The Missouri Act imposes a longer
prohibition period on transactions with Interested Persons (five
years) than the DGCL (three years), thereby potentially
increasing the period during which a hostile takeover may be
frustrated. In addition, the DGCL, unlike its Missouri
counterpart, does not apply if the Interested Person obtains at
least 85% of the corporation's voting stock upon consummation of
the transactions which resulted in the stockholder becoming an
Interested Person. Thus, a person acquiring at least 85% of the
corporation's voting stock could circumvent the defensive
provisions of the DGCL while being unable to do so under the
Missouri Act. The DGCL does not contain a control share
acquisition statute similar to that contained in the Missouri
Act.
DISSENTERS' RIGHTS. Under Section 351.455 of the
Missouri Act, a shareholder of any corporation which is a party
to a merger or consolidation, or which sells all or substantially
all of its assets, has the right to dissent from such corporate
action and to demand payment of the value of such shares. Under
the DGCL, stockholders of TODAY'S are entitled to appraisal
rights upon the consolidation or merger of TODAY'S which are
similar but not identical to those under the Missouri Act.
Specifically, the dissenters' rights provisions of the Missouri
Act do not have an exception from the dissenters' rights
provisions in circumstances in which the shareholder seeking to
exercise such rights owns shares in a widely held, publicly
traded corporation and is to receive, or continue to hold after
the transaction under which such shareholder is seeking to
exercise dissenters' rights, shares of a widely held, publicly
traded corporation. In addition, the procedures and the filing
deadlines applicable to dissenters' rights under the Missouri Act
are somewhat different than those applicable in appraisal rights
proceedings under the DGCL.
SHAREHOLDERS' AND STOCKHOLDERS' RIGHT TO INSPECT.
Under the DGCL, any stockholder may inspect the corporation's
stock ledger, stockholder list and other books and records for
any proper purpose. A "proper purpose" is defined as a purpose
reasonably related to such person's interest as a stockholder.
The DGCL specifically provides that a stockholder may appoint an
agent for the purpose
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of examining the stock ledger, list of stockholders or other books and
records of the corporation. A stockholder may apply to the Delaware
Court of Chancery to compel inspection in the event the stockholder's
request to examine the books and records is refused. In general, the
stockholder has the burden of proving an improper purpose where a
stockholder requests to examine the stockholder ledger or stockholder
list. The right of stockholders to inspect under the Missouri Act is
generally similar to that of stockholders under the DGCL. Neither the
Missouri Act nor Missouri case law, however, provides any specific
guidance as to whether a shareholder may appoint an agent for the
purpose of examining books and records or the extent to which a
shareholder must have a "proper purpose." Accordingly, in comparison
with the DGCL, in a given situation a Missouri shareholder may be
provided with less guidance as to the scope of his or her ability to
inspect the books and records of the corporation.
SIZE OF BOARD OF DIRECTORS. As permitted under the
Missouri Act, the number of directors on the Board of Directors
of MBI is set forth in MBI's By-Laws, which provide that the
number of directors may be fixed from time to time at not less
than 12 nor more than 24 by an amendment of the By-Laws or by a
resolution of the Board of Directors, in either case, adopted by
the vote or consent of at least two-thirds of the number of
directors then authorized under the By-Laws. Similarly to the
Missouri Act, the DGCL provides that a corporation may fix the
number of directors in its Certificate of Incorporation or By-
Laws. The number of directors on the Board of Directors of
TODAY'S is set forth in the Certificate of Incorporation of
TODAY'S, which provides that the number of directors may be fixed
from time to time at not less than 7 by a resolution of the Board
of Directors.
SUPERVISION AND REGULATION
--------------------------
GENERAL
As a bank holding company, MBI is subject to regulation
under the BHCA and its examination and reporting requirements.
Under the BHCA, a bank holding company may not directly or
indirectly acquire the ownership or control of more than 5% of
the voting shares or substantially all of the assets of any
company, including a bank or savings and loan association,
without the prior approval of the Federal Reserve Board. In
addition, bank holding companies are generally prohibited under
the BHCA from engaging in nonbanking activities, subject to
certain exceptions.
As a savings and loan holding company, MBI is also
subject to regulatory oversight by the Office of Thrift
Supervision (the "OTS"). As such, MBI is required to register
and file reports with the OTS and is subject to regulation by the
OTS. In addition, the OTS has enforcement authority over MBI
which permits the OTS to restrict or prohibit activities that are
determined to be a serious risk to its subsidiary savings
association.
MBI and its subsidiaries are subject to supervision and
examination by applicable federal and state banking agencies.
The earnings of MBI's subsidiaries, and therefore the earnings of
MBI, are affected by general economic conditions, management
policies and the legislative and governmental actions of various
regulatory authorities, including the Federal Reserve Board, the
OTS, the FDIC, the Office of the Comptroller of the Currency (the
"Comptroller") and various state financial institution regulatory
agencies. In addition, there are numerous governmental
requirements and regulations that affect the activities of MBI
and its subsidiaries.
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CERTAIN TRANSACTIONS WITH AFFILIATES
There are various legal restrictions on the extent to
which a bank holding company and certain of its nonbank
subsidiaries can borrow or otherwise obtain credit from its bank
subsidiaries. In general, these restrictions require that any
such extensions of credit must be on non-preferential terms and
secured by designated amounts of specified collateral and be
limited, as to any one of the holding company or such nonbank
subsidiaries, to 10% of the lending bank's capital stock and
surplus, and as to the holding company and all such nonbank
subsidiaries in the aggregate, to 20% of such capital stock and
surplus.
PAYMENT OF DIVIDENDS
MBI is a legal entity separate and distinct from its
wholly owned financial institutions and other subsidiaries. The
principal source of MBI's revenues is dividends from its
financial institution subsidiaries. Various federal and state
statutory provisions limit the amount of dividends the affiliate
financial institutions can pay to MBI without regulatory
approval. The approval of the appropriate federal or state bank
regulatory agencies is required for any dividend if the total of
all dividends declared by the bank in any calendar year would
exceed the total of the institutions net profits, as defined by
regulatory agencies, for such year combined with its retained net
profits for the preceding two years. In addition, a national
bank or a state member bank may not pay a dividend in an amount
greater than its net profits then on hand. The payment of
dividends by any financial institution subsidiary may also be
affected by other factors, such as the maintenance of adequate
capital.
CAPITAL ADEQUACY
The Federal Reserve Board has issued standards for
measuring capital adequacy for bank holding companies. These
standards are designed to provide risk-responsive capital
guidelines and to incorporate a consistent framework for use by
financial institutions operating in major international financial
markets. The banking regulators have issued standards for banks
that are similar to, but not identical with, the standards for
bank holding companies.
In general, the risk-related standards require
financial institutions and financial institution holding
companies to maintain capital levels based on "risk adjusted"
assets, so that categories of assets with potentially higher
credit risk will require more capital backing than categories
with lower credit risk. In addition, financial institutions and
financial institution holding companies are required to maintain
capital to support off-balance sheet activities such as loan
commitments.
FDIC INSURANCE ASSESSMENTS
The subsidiary depository institutions of MBI are
subject to FDIC deposit insurance assessments. The FDIC has
adopted a risk-based premium schedule. Each financial institution
is assigned to one of three capital groups--well capitalized,
adequately capitalized or undercapitalized--and further assigned
to one of three subgroups within a capital group, on the basis of
supervisory evaluations by the institution's primary federal and,
if applicable, state supervisors, and on the basis of other
information relevant to the institution's financial condition and
the risk posed to the applicable insurance fund. The actual
assessment rate applicable to a particular institution will,
therefore, depend in part upon the risk assessment classification
so assigned to the institution by the FDIC. See "- FIRREA and
FDICIA."
The Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA"), adopted in August 1989 to
provide for the resolution of insolvent savings associations,
required the FDIC
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to establish separate deposit insurance funds -- the Bank Insurance
Fund ("BIF") for banks and the Savings Association Insurance Fund
("SAIF") for savings associations. FIRREA also required the FDIC to
set deposit insurance assessments at such levels as would cause BIF
and SAIF to reach their "designated reserve ratios" of 1.25 percent
of the deposits insured by them within a reasonable period of time.
Due to low costs of resolving bank insolvencies in the last few
years, BIF reached its designated reserve ratio in May 1995. As a
result, effective January 1, 1996, the FDIC eliminated deposit
insurance assessments (except for the minimum $2,000 payment
required by law) for banks that are well capitalized and well
managed and reduced the deposit insurance assessments for all
other banks.
The balance in SAIF is not expected to reach the
designated reserve ratio until about the year 2002, as FIRREA
provides that a significant portion of the costs of resolving
past insolvencies of savings associations must be paid from this
source. Currently, SAIF-member institutions pay deposit insurance
premiums based on a schedule of from $.23 to $.31 per $100.00 of
deposits. Accordingly, it is likely that the SAIF rates will be
substantially higher than the BIF rates in the future. MBI,
which has acquired substantial amounts of SAIF-insured deposits
during the years from 1989 to the present, is required to pay
SAIF deposit insurance premiums on these SAIF-insured deposits.
Bills have been proposed by the U. S. Congress to recapitalize
the SAIF through a one-time special assessment of approximately
85 basis points on the amount of deposits held by the
institution. If such special assessment occurs, it is expected
that the deposit premiums paid by SAIF-member institutions would
be reduced to approximately $.04 for every $100.00 of deposits
and would have the effect of immediately reducing the capital of
SAIF-member institutions by the amount of the fee. MBI cannot
predict whether the special assessment proposal will be enacted,
or, if enacted, the amount of any one-time fee, or whether
ongoing SAIF premiums will be reduced to a level equal to that of
BIF premiums. If the one-time assessment is not enacted, it is
presently expected that the SAIF deposit premiums will continue
at their present rate.
PROPOSALS TO OVERHAUL THE SAVINGS ASSOCIATION INDUSTRY
Proposals recently have been introduced in the U.S.
Congress that, if adopted, would overhaul the savings association
industry. The most significant of these proposals would
recapitalize the SAIF through a one-time special assessment (see
"- FDIC Insurance Assessments"), spread the Financing Corp., or
FICO, Bond obligation across the BIF and SAIF, merge the
Comptroller and the OTS, abolish the federal savings association
charter, require federal thrifts to convert to commercial banks
and merge the SAIF and the BIF. MBI cannot predict whether these
or any other legislative proposals will be enacted, or, if
enacted, the final form of the law.
SUPPORT OF SUBSIDIARY BANKS
Under Federal Reserve Board policy, MBI is expected to
act as a source of financial strength to each subsidiary bank and
to commit resources to support each of the subsidiaries in
circumstances where it might not choose to do so absent such a
policy. This support may be required at times when MBI may not
find itself able to provide it. In addition, any capital loans
by MBI to any of its subsidiaries would also be subordinate in
right of payment to deposits and certain other indebtedness of
such subsidiary.
Consistent with this policy regarding bank holding
companies serving as a source of financial strength for their
subsidiary banks, the Federal Reserve Board has stated that, as a
matter of prudent banking, a bank holding company generally
should not maintain a rate of cash dividends unless its net
income available to common shareholders has been sufficient to
fully fund the dividends and the
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prospective rate of earnings retention appears consistent with the
bank holding company's capital needs, asset quality and overall
financial condition.
FIRREA AND FDICIA
FIRREA contains a cross-guarantee provision which could
result in insured depository institutions owned by MBI being
assessed for losses incurred by the FDIC in connection with
assistance provided to, or the failure of, any other insured
depository institution owned by MBI. Under FIRREA, failure to
meet the capital guidelines could subject a banking institution
to a variety of enforcement remedies available to federal
regulatory authorities, including the termination of deposit
insurance by the FDIC.
The Federal Deposit Insurance Corporation Improvement
Act of 1991 ("FDICIA") made extensive changes to the federal
banking laws. FDICIA instituted certain changes to the
supervisory process, including provisions that mandate certain
regulatory agency actions against undercapitalized institutions
within specified time limits. FDICIA contains various other
provisions that may affect the operations of banks and savings
institutions.
The prompt corrective action provision of FDICIA
requires the federal banking regulators to assign each insured
institution to one of five capital categories ("well
capitalized," "adequately capitalized" or one of three
"undercapitalized" categories) and to take progressively more
restrictive actions based on the capital categorization, as
specified below. Under FDICIA, capital requirements would
include a leverage limit, a risk-based capital requirement and
any other measure of capital deemed appropriate by the federal
banking regulators for measuring the capital adequacy of an
insured depository institution. All institutions, regardless of
their capital levels, are restricted from making any capital
distribution or paying any management fees that would cause the
institution to fail to satisfy the minimum levels for any
relevant capital measure.
The FDIC and the Federal Reserve Board adopted capital-
related regulations under FDICIA. Under those regulations, a bank
will be well capitalized if it: (i) had a risk-based capital
ratio of 10% or greater; (ii) had a ratio of Tier 1 capital to
risk-adjusted assets of 6% or greater; (iii) had a ratio of Tier
1 capital to adjusted total assets of 5% or greater; and (iv) was
not subject to an order, written agreement, capital directive, or
prompt corrective action directive to meet and maintain a
specific capital level for any capital measure. An association
will be adequately capitalized if it was not "well capitalized"
and: (i) had a risk-based capital ratio of 8% or greater;
(ii) had a ratio of Tier 1 capital to risk-adjusted assets of 4%
or greater; and (iii) had a ratio of Tier 1 capital to adjusted
total assets of 4% or greater (except that certain associations
rated "Composite 1" under the federal banking agencies' CAMEL
rating system may be adequately capitalized if their ratios of
core capital to adjusted total assets were 3% or greater).
FDICIA also makes extensive changes in existing rules
regarding audits, examinations and accounting. It generally
requires annual on-site, full scope examinations by each bank's
primary federal regulator. It also imposes new responsibilities
on management, the independent audit committee and outside
accountants to develop or approve reports regarding the
effectiveness of internal controls, legal compliance and off-
balance sheet liabilities and assets.
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DEPOSITOR PREFERENCE STATUTE
Legislation enacted in August 1993 provides a
preference for deposits and certain claims for administrative
expenses and employee compensation against an insured depository
institution, in the liquidation or other resolution of such an
institution by any receiver. Such obligations would be afforded
priority over other general unsecured claims against such an
institution, including federal funds and letters of credit, as
well as any obligation to shareholders of such an institution in
their capacity as such.
THE INTERSTATE BANKING AND COMMUNITY DEVELOPMENT LEGISLATION
In September 1994, legislation was enacted that is
expected to have a significant effect in restructuring the
banking industry in the United States. The Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 ("Riegle-
Neal") facilitates the interstate expansion and consolidation of
banking organizations by permitting (i) bank holding companies
that are adequately capitalized and managed, one year after
enactment of the legislation, to acquire banks located in states
outside their home states regardless of whether such acquisitions
are authorized under the law of the host state, (ii) the
interstate merger of banks after June 1, 1997, subject to the
right of individual states to "opt in" or to "opt out" of this
authority before that date, (iii) banks to establish new branches
on an interstate basis provided that such action is specifically
authorized by the law of the host state, (iv) foreign banks to
establish, with approval of the regulators in the United States,
branches outside their home states to the same extent that
national or state banks located in the home state would be
authorized to do so, and (v) banks to receive deposits, renew
time deposits, close loans, service loans and receive payments on
loans and other obligations as agent for any bank or thrift
affiliate, whether the affiliate is located in the same state or
a different state. One effect of Riegle-Neal is to permit MBI to
acquire banks located in any state and to permit bank holding
companies located in any state to acquire banks and bank holding
companies in Missouri. Overall, Riegle-Neal is likely to have
the effects of increasing competition and promoting geographic
diversification in the banking industry.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
-----------------------------------------
KPMG Peat Marwick LLP served as MBI's independent
accountants for the year ended December 31, 1995 and continues to
serve in such capacity. Services provided in connection with the
audit function included examination of the annual consolidated
financial statements, review and consultation regarding filings
with the Securities and Exchange Commission and other regulatory
authorities and consultation on financial accounting and
reporting matters.
KPMG Peat Marwick LLP served as independent accountants
for TODAY'S for the year ended December 31, 1995 and continues to
serve in such capacity. Services provided in connection with the
audit function included examination of the annual consolidated
financial statements, review and consultation regarding filings
with the Securities and Exchange Commission and other regulatory
authorities and consultation on financial accounting and
reporting matters. KPMG Peat Marwick LLP intends to have a
representative present at the Special Meeting.
LEGAL MATTERS
-------------
Certain legal matters will be passed upon for MBI by
Thompson Coburn, St. Louis, Missouri and for TODAY'S by Hinshaw &
Culbertson, Chicago, Illinois.
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EXPERTS
-------
The consolidated financial statements of MBI as of
December 31, 1995, 1994 and 1993, and for each of the years in
the three-year period ended December 31, 1995, incorporated by
reference in MBI's Annual Report on Form 10-K, and the
supplemental consolidated financial statements of MBI as of
December 31, 1995, 1994 and 1993, and for each of the years in
the three-year period ended December 31, 1995, contained in MBI's
Current Report on Form 8-K dated March 11, 1996, have been
incorporated by reference herein in reliance upon the reports of
KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The consolidated financial statements of TODAY'S as of
December 31, 1995 and 1994 and for each of the years then ended,
incorporated by reference in TODAY'S Annual Report on Form 10-K,
have been incorporated by reference herein in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public
accountants, whose report is incorporated by reference herein,
and upon the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of TODAY'S for
the year ended December 31, 1993, incorporated by reference in
TODAY'S Annual Report on Form 10-K, have been incorporated by
reference herein in reliance upon the report of Coopers & Lybrand
LLP, independent certified public accountants, whose report is
incorporated by reference herein, and upon the authority of such
firm as experts in accounting and auditing.
OTHER MATTERS
-------------
The Board of Directors of TODAY'S, at the date hereof,
is not aware of any business to be presented at the Special
Meeting other than that referred to in the Notice of Special
Meeting and discussed herein. If any other matter should
properly come before the Special Meeting, the persons named as
proxies will have discretionary authority to vote the shares
represented by proxies in accordance with their discretion and
judgment as to the best interests of TODAY'S.
SHAREHOLDER PROPOSALS
---------------------
If the Merger Agreement is approved and adopted, the
other conditions to the Merger are satisfied and the Merger is
consummated, certain of the stockholders of TODAY'S will become
shareholders of MBI at the Effective Time. MBI shareholders may
submit to MBI proposals for formal consideration at the 1997
annual meeting of MBI's shareholders and inclusion in MBI's proxy
statement for such meeting. All such proposals to be considered
for inclusion in MBI's Proxy Statement and proxy for the 1997
annual meeting must be received in writing by the Corporate
Secretary at Mercantile Bancorporation Inc., P.O. Box 524,
St. Louis, Missouri 63166-0524 by November 22, 1996.
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ANNEX A
-------
The following is the text of the statutory appraisal right
as set forth in Section 262 of The General Corporation Law of the
State of Delaware:
Section 262. APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand
pursuant to subsection (d) of this section with respect to such
shares, who continuously holds such shares through the effective
date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in
writing pursuant to Section 228 of this title shall be entitled
to an appraisal by the Court of Chancery of the fair value of his
shares of stock under the circumstances described in subsections
(b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock
corporation and also a member of record of a non-stock
corporation; the words "stock" and "share" mean and include what
is ordinarily meant by those words and also membership or
membership interest of a member of a non-stock corporation; and
the words "depository receipt" mean a receipt or other instrument
issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation,
which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of
any class or series of stock of a constituent corporation in a
merger or consolidation to be effected pursuant to Sections 251
(other than a merger effected pursuant to subsection (g) of
Section 251), 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under
this section shall be available for the shares of any class or
series of stock, which stock, or depository receipts in respect
thereof, at the record date fixed to determine the stockholders
entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities
exchange or designated as a national market system on an
interdealer quotation system by the National Association of
Securities Dealers, Inc., or (ii) held of record by more than
2,000 holders; and further provided that no appraisal rights
shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for
its approval the vote of the holders of the surviving corporation
as provided in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the
shares of any class or series of stock of a constituent
corporation if the holders thereof are required by the terms of
an agreement of merger or consolidation pursuant to Sections 251,
252, 254, 257, 258 263 and 264 of this title to accept for such
stock anything except:
a. Shares of stock of the corporation surviving
or resulting from such merger or consolidation, or
depository receipts in respect thereof;
b. Shares of stock of any other corporation, or
depository receipts in respect thereof, which shares of
stock or depository receipts at the effective date of
the merger or consolidation will be either listed on a
national securities exchange or designated as a
national market system security on an interdealer
quotation system by the National Association of
Securities Dealers, Inc., or held of record by more
than 2,000 holders;
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c. Cash in lieu of fractional shares or
fractional depository receipts described in the
foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock,
depository receipts and cash in lieu of fractional
shares or fractional depository receipts described in
the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary
Delaware corporation party to a merger effected under Section 253
of this title is not owned by the parent corporation immediately
prior to the merger, appraisal rights shall be available for the
shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be
available for the shares of any class or series of its stock as a
result of an amendment to its certificate of incorporation, any
merger or consolidation in which the corporation is a constituent
corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains
such a provision, the procedures of this section, including those
set forth in subsections (d) and (e) of this section, shall apply
as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be
submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date
for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof
that appraisal rights are available for any or all of the shares
of the constituent corporations, and shall include in such notice
a copy of this section. Each stockholder electing to demand the
appraisal of his shares shall deliver to the corporation, before
the taking of the vote on the merger or consolidation, a written
demand for appraisal of his shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of his shares. A proxy or vote
against the merger or consolidation shall not constitute such a
demand. A stockholder electing to take such action must do so by
a separate written demand as herein provided. Within 10 days
after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder
of each constituent corporation who has complied with the
provisions of this subsection and has not voted in favor of or
consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved
pursuant to Section 228 or Section 253 of this title, the
surviving or resulting corporation, either before the effective
date of the merger or consolidation or within 10 days thereafter,
shall notify each of the stockholders entitled to appraisal
rights of the effective date of the merger or consolidation and
that appraisal rights are available for any or all of the shares
of the constituent corporation, and shall include in such notice
a copy of this section. The notice shall be sent by certified or
registered mail, return receipt requested, addressed to the
stockholder at his address as it appears on the records of the
corporation. Any stockholder entitled to appraisal rights may,
within 20 days after the date of mailing of the notice, demand in
writing from the surviving or resulting corporation the appraisal
of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and
that the stockholder intends thereby to demand the appraisal of
his shares.
(e) Within 120 days after the effective date of the merger
or consolidation, the surviving or resulting corporation or any
stockholder who has complied with subsections (a) and (d) hereof
and who
A-2
<PAGE> 81
is otherwise entitled to appraisal rights, may file a petition in the
Court of Chancery demanding a determination of the value of the stock
of all such stockholders. Notwithstanding the foregoing, at any time
within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw his
demand for appraisal and to accept the terms offered upon the merger
or consolidation. Within 120 days after the effective date of the
merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request,
shall be entitled to receive from the corporation surviving the merger
or resulting from the consolidation a statement setting forth the
aggregate number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal have
been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10
days after his written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration
of the period for delivery of demands for appraisal under subsection
(d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder,
service of a copy thereof shall be made upon the surviving or
resulting corporation, which shall within 20 days after such
service file in the office of the Register in Chancery in which
the petition was filed a duly verified list containing the names
and addresses of all stockholders who have demanded payment for
their shares and with whom agreements as to the value of their
shares have not been reached by the surviving or resulting
corporation. If the petition shall be filed by the surviving or
resulting corporation, the petition shall be accompanied by such
a duly verified list. The Register in Chancery, if so ordered by
the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the
surviving or resulting corporation and to the stockholders shown
on the list at the addresses therein stated. Such notice shall
also be given by one or more publications at least 1 week before
the day of the hearing, in a newspaper of general circulation
published in the City of Wilmington, Delaware or such publication
as the Court deems advisable. The forms of the notices by mail
and by publication shall be approved by the Court, and the costs
thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall
determine the stockholders who have complied with this section
and who have become entitled to appraisal rights. The Court may
require the stockholders who have demanded an appraisal for their
shares and who hold stock represented by certificates to submit
their certificates of stock to the Register in Chancery for
notation thereon of the pendency of the appraisal proceedings;
and if any stockholder fails to comply with such direction, the
Court may dismiss the proceedings as to such stockholder.
(h) After determining the stockholders entitled to an
appraisal, the Court shall appraise the shares, determining their
fair value exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation,
together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such
fair value, the Court shall take into account all relevant
factors. In determining the fair rate of interest, the Court may
consider all relevant factors, including the rate of interest
which the surviving or resulting corporation would have had to
pay to borrow money during the pendency of the proceeding. Upon
application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding,
the Court may, in its discretion, permit discovery or other
pretrial proceedings and may proceed to trial upon the appraisal
prior to the final determination of the stockholder entitled to
an appraisal. Any stockholder whose name appears on the list
filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is
finally determined that he is not entitled to appraisal rights
under this section.
A-3
<PAGE> 82
(i) The Court shall direct the payment of the fair value of
the shares, together with interest, if any, by the surviving or
resulting corporation to the stockholders entitled thereto. Interest
may be simple or compound, as the Court may direct. Payment shall be
so made to each such stockholder, in the case of holders of
uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of
the certificates representing such stock. The Court's decree may be
enforced as other decrees in the Court of Chancery may be enforced,
whether such surviving or resulting corporation be a corporation of
this State or of any other state.
(j) The costs of the proceeding may be determined by the
Court and taxed upon the parties as the Court deems equitable in
the circumstances. Upon application of a stockholder, the Court
may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the
value of all of the shares entitled to an appraisal.
(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded his appraisal
rights as provided in subsection (d) of this section shall be
entitled to vote such stock for any purpose or to receive payment
of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of
record at a date which is prior to the effective date of the
merger or consolidation); provided, however, that if no petition
for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall
deliver to the surviving or resulting corporation a written
withdrawal of his demand for an appraisal and an acceptance of
the merger or consolidation, either within 60 days after the
effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder
to an appraisal shall cease. Notwithstanding the foregoing, no
appraisal proceeding in the Court of Chancery shall be dismissed
as to any stockholder without the approval of the Court, and such
approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to
which the shares of such objecting stockholders would have been
converted had they assented to the merger or consolidation shall
have the status of authorized and unissued shares of the
surviving or resulting corporation.
A-4
<PAGE> 83
ANNEX B
-------
[Letterhead of The Chicago Corporation]
September 16, 1996
Board of Directors
TODAY'S BANCORP, INC.
P.O. Box 30
Freeport, Illinois 61032
Members of the Board:
You have requested our opinion as to the fairness of the merger
consideration (the "Merger Consideration"), from a financial
point of view, to the stockholders of TODAY'S BANCORP, INC.
("TODAY'S") with respect to the proposed acquisition of TODAY'S
by Mercantile Bancorporation Inc. ("Mercantile"). TODAY'S has
entered into an Agreement and Plan of Merger (the "Agreement"),
dated March 19, 1996, between TODAY'S, Mercantile and Mercantile
Bancorporation Incorporated of Illinois, a wholly owned
subsidiary of Mercantile. As set forth in the Agreement, subject
to a stockholder's election, for each share of TODAY'S common
stock, stockholders of TODAY'S will receive as Merger
Consideration one of the following: (i) cash equal to $30.79;
(ii) 0.6923 of a share of Mercantile common stock; or (iii) cash
equal to $12.32 and 0.4154 of a share of Mercantile common stock.
The Agreement sets forth stockholder election procedures.
During the course of our engagement, we have, among other things:
1) reviewed the Agreement, the Proxy Statement/Prospectus
and related documents, the audited financial statements
for TODAY'S and Mercantile for the three fiscal years
ended December 31, 1995 and the interim financial
statements through June 30, 1996 as provided to us, as
well as other internally generated TODAY'S reports
relating to asset/liability management, asset quality
and so forth;
2) reviewed and analyzed other material bearing upon the
financial and operating condition of Mercantile and
TODAY'S and material prepared in connection with the
proposed transaction;
3) reviewed the operating characteristics of certain other
financial institutions deemed relevant to the
contemplated transaction;
4) reviewed the nature and terms of recent sale and merger
transactions involving banks and bank holding companies
and other financial institutions that we consider
relevant;
5) reviewed historical and current market data for
Mercantile and TODAY'S common stock;
B-1
<PAGE> 84
- ------------, 1996
Board of Directors
TODAY'S BANCORP, INC.
Page 2
6) reviewed financial and other information provided to us
by the managements of Mercantile and TODAY'S;
7) conducted meetings with members of the senior
management of Mercantile and TODAY'S for the purpose of
reviewing the future prospects of Mercantile and
TODAY'S; and
8) evaluated the pro forma ownership of Mercantile common
stock by TODAY'S stockholders, relative to the pro
forma contribution of TODAY'S assets, liabilities,
equity and earnings to the pro forma company.
The Chicago Corporation, as part of its investment banking
business, is regularly engaged in the valuation of banks and bank
holding companies and thrifts and thrift holding companies in
connection with mergers and acquisitions as well as initial and
secondary offerings of securities and valuations for other
purposes. The Chicago Corporation is a member of all principal
U.S. Securities exchanges and in the conduct of our broker-dealer
activities may from time to time purchase securities from, and
sell securities to, TODAY'S and Mercantile and as a market maker
buy or sell the equity securities of TODAY'S for our own account
and for the accounts of customers. In rendering this fairness
opinion we have been retained by the Board of Directors of
TODAY'S and our opinion is directed to the Board of Directors.
The Chicago Corporation will receive a fee from TODAY'S for our
services.
In rendering this opinion, we have relied upon, without
independent verification, the accuracy and completeness of the
financial and other information and representations provided to
us by Mercantile and TODAY'S. We have relied upon the management
of TODAY'S and Mercantile as to the reasonableness and
achievability of the financial forecasts and projections (and the
assumptions and basis therefor) provided to us, and have assumed
that such forecasts and projections are the best available
estimates of management.
Based on the foregoing and our experience as investment bankers,
we are of the opinion that, as of the date hereof, the Merger
Consideration to be received by the stockholders of TODAY'S as
described in the Agreement, is fair from a financial point of
view.
Sincerely,
/s/ The Chicago Corporation
THE CHICAGO CORPORATION
B-2
<PAGE> 85
PROXY TODAY'S BANCORP, INC.
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 14, 1996
The undersigned stockholder(s) of TODAY'S BANCORP, INC. (the
"Company"), does hereby nominate, constitute and appoint
Ellen K. Poppen and Daniel M. Lashinski, or each of them (with
full power to act alone), true and lawful attorney(s), with full
powers of substitution, for the undersigned and in the name,
place and stead of the undersigned to vote all shares of common
stock, $5.00 par value, of the Company which the undersigned is
entitled to vote at the Special Meeting of Stockholders (the
"Meeting") to be held at the Best Western Stephenson Hotel, 109 South
Galena Avenue, Freeport, Illinois, on Monday, October 14, 1996 at 10:00 a.m.,
and at any and all adjournments and postponements thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE APPROVAL AND ADOPTION
OF THE MERGER AGREEMENT. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING,
THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT.
AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE MEETING.
/X/ FOLD AND DETACH HERE /X/
The Board of Directors recommends a vote "FOR" the approval and adoption
of the Merger Agreement.
Approval and adoption of the Agreement and Plan of
Merger, dated as of March 19, 1996 (the "Merger
Agreement"), and each of the transactions contemplated
thereby, pursuant to which the Company will be merged
with and into a wholly owned subsidiary of Mercantile
Bancorporation Inc. ("MBI") and whereby, upon
consummation of the merger, each share (other than
shares as to which a Company stockholder has perfected
appraisal rights) of Company common stock will be
converted into and each stockholder will have the
opportunity to elect to receive per share of Company
common stock as consideration in the merger: (i) cash
equal to $30.79, (ii) 0.6923 of a share of MBI common
stock or (iii) cash equal to $12.32 and 0.4154 of a
share of MBI common stock, all as determined by the
election procedures and exchange ratio set forth in
detail in the accompanying Proxy Statement/Prospectus,
and subject to certain adjustments as provided in the
Merger Agreement.
/ / for / / against / / abstain
<PAGE> 86
In their discretion, the proxies are authorized to vote on any
other business that may properly come before the Meeting or any
adjournment or postponement thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Meeting or at any adjournments or postponements thereof, and
after notification to the Secretary of the Company at the Meeting
of the Stockholder's decision to terminate this proxy, then the
power of such attorneys or proxies shall be deemed terminated and
of no further force and effect. This proxy may also be revoked
by filing a written notice of revocation with the Secretary of
the Company or by duly executing a proxy bearing a later date.
The undersigned acknowledges receipt, from the Company, prior to
the execution of this proxy, of notice of the Meeting and a Proxy
Statement/Prospectus dated September 16, 1996.
Dated: ----------------------------------------------------, 1996
- -----------------------------------------------------------------
Signature of Stockholder
- -----------------------------------------------------------------
Signature of Stockholder
Please sign exactly as your name(s) appear(s) to the left. When
signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If share are held
jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED WHITE, PRE-PAID AND PRE-ADDRESSED ENVELOPE.
/X/ FOLD AND DETACH HERE /X/
<PAGE> 87
TODAY'S BANCORP, INC.
SPECIAL MEETING OF STOCKHOLDERS
---------------------
---------------
OCTOBER 14, 1996
10:00 A.M.
BEST WESTERN STEPHENSON HOTEL
109 SOUTH GALENA AVENUE
FREEPORT, ILLINOIS 61032
ELECTION FORM FOR USE BY STOCKHOLDERS OF
TODAY'S BANCORP, INC.
KeyCorp Shareholder Services, Inc.
Reorganization Department
P.O. Box 6777
Cleveland, Ohio 44101-9388
Gentlemen:
Pursuant to the terms of the Agreement and Plan of Merger
(the "Merger Agreement") by and among TODAY'S BANCORP, INC.
("TODAY'S"), Mercantile Bancorporation Inc. ("MBI") and a wholly
owned subsidiary of MBI, the undersigned stockholder(s) of TODAY'S
elects the following alternative as to the category of
consideration that the undersigned elects to receive in conversion
of his or her shares of TODAY'S common stock upon consummation of
the merger:
[CHECK ONLY ONE OF THE BOXES TO INDICATE YOUR ELECTION]
/ / (i) STOCK ELECTION - 0.6923 of a share of MBI
common stock per share of TODAY's common
stock.
/ / (ii) CASH ELECTION - cash equal to $30.79 per share
of TODAY'S common stock.
/ / (iii) COMBINED ELECTION - cash equal to $12.32 and 0.4154 of a
share of MBI common stock per share of TODAY'S common
stock.
The undersigned acknowledges that the deadline for filing
this Election Form with KeyCorp Shareholder Services, Inc. is
5:00 p.m., Central Time, on October 14, 1996, the date of the
Special Meeting of Stockholders of TODAY'S called to consider and
vote upon the Merger Agreement. Any stockholder who fails to
deliver the Election Form to KeyCorp Shareholder Services, Inc. by
the deadline will be deemed to have elected the Cash Election but,
in certain circumstances, will be treated differently than other
stockholders who have made a Cash Election by filing this Election
Form. By executing an Election Form on which a Stock Election or
Combined Election is made without providing the accompanying
certification regarding certain tax matters, the undersigned
holder is certifying that such holder holds or will hold less
than 1% of the TODAY'S common stock (determined as of the date
of the consummation of the Merger). To the extent that KeyCorp
Shareholder Services, Inc. can determine from the record books
of TODAY'S that any holder of 1% or more of the TODAY'S common
stock (determined as of the date of consummation of the Merger)
has not delivered to KeyCorp Shareholder Services, Inc., on
or before 5:00 p.m., Central Time, on October 14, 1996, a
properly executed tax certification, then such holder shall be
deemed to have made a timely Cash Election. The undersigned further
acknowledges that the election to receive the indicated category of
consideration is subject to the limitations on the issuance of not
more than 1,177,066 shares of MBI Common Stock and not less than the
number of shares of MBI Common Stock necessary for the merger to
qualify as a tax-deferred reorganization for those stockholders who
receive shares of MBI Common Stock in exchange for their shares of
TODAY'S common stock. See the section of the accompanying Proxy
Statement/Prospectus entitled "TERMS OF THE PROPOSED MERGER -
General Description of the Merger" for a description of the
situations in which the Exchange Agent may be required to pay to the
TODAY'S stockholders consideration other than from the elected
category of consideration and the priorities governing such
adjustments.
Prior to 5:00 p.m., Central Time, on October 14,
1996, the undersigned may, at any time or from time to time, change
his or her election by giving written notice to KeyCorp Shareholder
Services, Inc.
Stockholders who have questions regarding the election
process, and/or the tax consequences associated with such election
process, should consult, at their own expense, their own tax, legal
and investment advisors.
Dated: ---------------, 1996 ---------------------------------------
Signature of Stockholder
---------------------------------------
Signature of Stockholder
(To be signed by the holder(s) of
record exactly as the name(s) of
such holder(s) appears on the stock
certificate. When signing as an
attorney, executor, administrator,
trustee or guardian, please give
full title. All joint owners must
sign.)
PLEASE RETURN TO KEYCORP SHAREHOLDER SERVICES, INC. USING THE
ENCLOSED BLUE, PRE-PAID AND PRE-ADDRESSED ENVELOPE.
<PAGE> 88
[Letterhead of TODAY'S BANCORP, INC.]
September 16, 1996
Dear Fellow Stockholder:
In connection with the acquisition (the "Merger") of
TODAY'S BANCORP, INC., a Delaware corporation ("TODAY'S"), by
Mercantile Bancorporation Inc., a Missouri corporation ("MBI"),
Thompson Coburn, counsel for MBI, has been requested to
deliver a legal opinion, based upon certain representations that it
receives from TODAY'S, MBI and holders of 1% or more of TODAY'S
common stock who make a valid election to receive shares of MBI
common stock as consideration in the Merger, to the effect that the
acquisition will constitute a tax-free reorganization for federal
income tax purposes with respect to shares of MBI common stock
received in the Merger. It is intended that TODAY'S stockholders
who exchange their shares of TODAY'S common stock solely for shares
of MBI common stock will not recognize any gain or loss for federal
income tax purposes. However, any cash received by a TODAY'S
stockholder in lieu of any fractional share interest or as cash
consideration may give rise to taxable income.
Attached is a copy of a certificate which addresses your
present plans and intentions concerning any MBI common stock you
may acquire as a result of the proposed transaction. EACH HOLDER
OF 1% OR MORE OF TODAY'S COMMON STOCK (DETERMINED AS OF THE CLOSING
DATE OF THE MERGER) WHO ELECTS TO RECEIVE SHARES OF MBI COMMON
STOCK IN EXCHANGE FOR HIS OR HER SHARES OF TODAY'S COMMON STOCK IN
THE MERGER MUST EXECUTE AND RETURN A PROPERLY EXECUTED CERTIFICATE,
----
ALONG WITH THE ELECTION FORM PROVIDED IN THE ACCOMPANYING PROXY
STATEMENT/PROSPECTUS, TO KEYCORP SHAREHOLDER SERVICES, INC., REORGANIZATION
DEPARTMENT, P.O. BOX 6777, CLEVELAND, OHIO 44101-9388, BY 5:00
P.M., CENTRAL TIME, ON OCTOBER 14, 1996 (THE "ELECTION
DEADLINE"). EACH HOLDER OF LESS THAN 1% OF TODAY'S COMMON STOCK
WHO ELECTS TO RECEIVE SHARES OF MBI COMMON STOCK IN THE MERGER BUT
WHO ACQUIRES ADDITIONAL SHARES OF TODAY'S COMMON STOCK AFTER THE
ELECTION DEADLINE, THEREBY BECOMING A HOLDER OF 1% OR MORE OF
TODAY'S COMMON STOCK, MUST ALSO EXECUTE AND RETURN A CERTIFICATE IN
ANTICIPATION OF SUCH ACQUISITION. THAT IS, WHETHER SHARES ARE
ACQUIRED BEFORE OR AFTER THE ELECTION DEADLINE, ANY HOLDER OF 1% OR
MORE OF TODAY'S COMMON STOCK WHO FAILS TO EXECUTE AND RETURN A
CERTIFICATE TO KEYCORP SHAREHOLDER BY THE ELECTION DEADLINE WILL BE
DEEMED TO HAVE MADE AN ELECTION TO RECEIVE THE CASH CONSIDERATION
IN THE MERGER. This certificate, which will be delivered to
Thompson Coburn by Keycorp Shareholder Services, Inc., will be
relied on by Thompson Coburn when it gives the legal opinion
described above. Please note that the third paragraph of the
certificate contains an agreement to notify Thompson Coburn if your
plans or intentions change after the certificate is executed.
Please read the certificate carefully. If you are able
truthfully to make the statements contained in the certificate,
please sign and date the certificate and return it to KeyCorp
Shareholder Services, Inc. by the Election Deadline.
If you have any questions regarding the enclosed
certificate, please do not hesitate to call me. However, due to
the individual nature of federal income tax consequences,
stockholders are urged to consult their own tax advisor to
determine the specific tax consequences of the proposed transaction
to them. More detailed information is provided in the accompanying
Proxy Statement/Prospectus.
Sincerely,
/s/ Dan Heine
DAN HEINE
President and Chief Executive Officer
<PAGE> 89
STOCKHOLDER CERTIFICATE
OF 1% OR MORE HOLDER OF
TODAY'S COMMON STOCK
--------------------
The undersigned stockholder of TODAY'S BANCORP, INC., a
Delaware corporation ("TODAY'S"), ------------------------------,
a holder of --------- shares of TODAY'S common stock, par value
$5.00 per share ("TODAY'S Common Stock"), HEREBY CERTIFIES
that (a) I am familiar with the terms and conditions of the
Agreement and Plan of Merger by and among Mercantile Bancorporation
Inc., a Missouri corporation ("MBI"), TODAY'S and a wholly owned
subsidiary of MBI ("Merger Sub"), dated March 19, 1996, and (b) I
am aware that (i) this Certificate will be relied on by Thompson
Coburn, counsel for MBI, in rendering its opinion to TODAY'S that
the merger of TODAY'S with and into Merger Sub (the "Merger") will
constitute a reorganization within the meaning of section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended, and
(ii) the representations and undertaking recited herein will
survive the Merger.
The undersigned HEREBY FURTHER CERTIFIES that the
undersigned has no plan, intention or arrangement (including any
option or pledge) to sell, exchange or otherwise dispose of any
shares of the MBI common stock, par value $5.00 per share ("MBI
Common Stock"), to be received as consideration in the Merger,
whether or not such shares of MBI Common Stock are received in
conjunction with a cash distribution, with the exception of any
fractional share of MBI Common Stock to be exchanged for cash
pursuant to the Merger.
The undersigned HEREBY AGREES to immediately communicate
in writing to Thompson Coburn at One Mercantile Center, Suite 3300,
St. Louis, Missouri 63101, to the attention of Charles H. Binger,
any information that could indicate (i) any of the foregoing
representations was inaccurate when made, or (ii) any of the
foregoing representations would be inaccurate if it were made
immediately before the Merger.
IN WITNESS WHEREOF, the undersigned has executed this
certificate, or caused this certificate to be executed by its duly
authorized representative, this ----- day of ---------------, 1996.
----------------------------------
Signature of Stockholder
----------------------------------
Signature of Stockholder
(To be signed by the holder(s) of
record exactly as the name(s)
of such holder(s) appears on the
stock certificate. When signing
as an attorney, executor,
administrator, trustee or guardian,
please give full title. All joint
owners must sign.)
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS CERTIFICATION ALONG WITH
THE ELECTION FORM IN THE ENCLOSED BLUE, PRE-PAID AND PRE-ADDRESSED
ENVELOPE.
