AGREEMENT AND PLAN OF MERGER
by and between
MERCANTILE BANCORPORATION INC.
and
FIRSTAR CORPORATION
DATED AS OF APRIL 30, 1999
TABLE OF CONTENTS
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Page
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AGREEMENT AND PLAN OF MERGER
ARTICLE I
THE MERGER
1.1 The Merger 2
1.2 Effective Time 2
1.3 Effects of the Merger 2
1.4 Conversion of Mercantile Common Stock 2
1.5 Firstar Capital Stock 4
1.6 Options 4
1.7 Certificate of Incorporation 5
1.8 By-Laws 5
1.9 Tax and Accounting Consequences 5
1.10 Board of Directors; Management 5
1.11 Headquarters of Surviving Corporation 6
ARTICLE II
EXCHANGE OF SHARES
2.1 Firstar to Make Shares Available 6
2.2 Exchange of Shares 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FIRSTAR
3.1 Corporate Organization 8
3.2 Capitalization 9
3.3 Authority; No Violation 10
3.4 Consents and Approvals 11
3.5 Reports 11
3.6 Financial Statements 12
3.7 Broker's Fees 12
3.8 Absence of Certain Changes or Events 12
3.9 Legal Proceedings 13
3.10 Taxes and Tax Returns 13
3.11 Employee Benefit Plans 14
3.12 SEC Reports 16
3.13 Compliance with Applicable Law 16
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3.14 Certain Contracts 17
3.15 Agreements with Regulatory Agencies 17
3.16 Interest Rate Risk Management Instruments 18
3.17 Undisclosed Liabilities 18
3.18 Insurance 18
3.19 Environmental Liability 18
3.20 Charter Provisions; State Takeover Laws; Firstar Rights Agreement 19
3.21 Year 2000 19
3.22 Reorganization; Pooling of Interests 19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MERCANTILE
4.1 Corporate Organization 20
4.2 Capitalization 20
4.3 Authority; No Violation 21
4.4 Consents and Approvals 22
4.5 Reports 23
4.6 Financial Statements 23
4.7 Broker's Fees 24
4.8 Absence of Certain Changes or Events 24
4.9 Legal Proceedings 24
4.10 Taxes and Tax Returns 25
4.11 Employee Benefit Plans 26
4.12 SEC Reports 27
4.13 Compliance with Applicable Law 28
4.14 Certain Contracts 28
4.15 Agreements with Regulatory Agencies 29
4.16 Interest Rate Risk Management Instruments 29
4.17 Undisclosed Liabilities 29
4.18 Insurance 30
4.19 Environmental Liability 30
4.20 Charter Provisions; State Takeover Laws; Mercantile Rights Agreement 30
4.21 Year 2000 31
4.22 Reorganization; Pooling of Interests 31
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time 31
5.2 Forbearances 31
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters 34
6.2 Access to Information 35
6.3 Shareholders' Approvals 36
6.4 Legal Conditions to Merger 36
6.5 Affiliates; Publication of Combined Financial Results 37
6.6 Stock Exchange Listing 37
6.7 Employee Benefit Plans 37
6.8 Indemnification; Directors' and Officers' Insurance 38
6.9 Additional Agreements 39
6.10 Advice of Changes 39
6.11 Dividends 39
6.12 Exemption from Liability Under Section 16(b) 40
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger 40
7.2 Conditions to Obligations of Mercantile 41
7.3 Conditions to Obligations of Firstar 42
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination 43
8.2 Effect of Termination 43
8.3 Amendment 44
8.4 Extension; Waiver 44
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing 45
9.2 Nonsurvival of Representations, Warranties and Agreements 45
9.3 Expenses 45
9.4 Notices 45
9.5 Interpretation 46
9.6 Counterparts 46
9.7 Entire Agreement 46
9.8 Governing Law 46
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9.9 Publicity 46
9.10 Assignment; Third Party Beneficiaries 47
9.11 Certain Agreements of the Surviving Corporation 47
Exhibit A - Mercantile Option Agreement
Exhibit B - Firstar Option Agreement
Exhibit 6.5(a)(1) - Form of Affiliate Letter Addressed to Firstar
Exhibit 6.5(a)(2) - Form of Affiliate Letter Addressed to Mercantile
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INDEX OF DEFINED TERMS
Section Page No.
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Agreement Recitals 1
BHC Act 3.1(a) 8
CERCLA 3.19 17
Certificate 1.4(b) 3
Closing 9.1 41
Closing Date 9.1 41
Code 1.6(b) 4
Confidentiality Agreement 6.2(b) 33
Derivative Instruments 3.16 16
Dissenting Shares 1.4(d) 3
DPC Shares 1.4(a) 2
DRIP Suspension Date 4.2(a) 19
Effective Time 1.2 2
ERISA 3.11(a) 13
Exchange Act 3.6 11
Exchange Agent 2.1 5
Exchange Fund 2.1 5
Exchange Ratio 1.4(a) 2
Federal Reserve Board 3.4 10
Firstar Recitals 1
Firstar 10-K 3.6 11
Firstar Articles 1.7 4
Firstar Benefit Plans 3.11(a) 13
Firstar Capital Stock 3.2(a) 8
Firstar Common Stock 1.4(a) 2
Firstar Contract 3.14(a) 16
Firstar Disclosure Schedule 3 7
Firstar DRIP 3.2(a) 8
Firstar ERISA Affiliate 3.11(a) 13
Firstar Option Agreement Recitals 1
Firstar Preferred Stock 3.2(a) 8
Firstar Regulatory Agreement 3.15 16
Firstar Reports 3.12(a) 15
Firstar Rights 3.2(a) 8
Firstar Rights Agreement 1.4(a) 3
Firstar Shareholder Rights 1.4(a) 3
Firstar Stock Plans 3.2(a) 8
GAAP 1.9 5
Governmental Entity 3.4 10
Indemnified Parties 6.8(a) 35
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Section Page No.
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IRS 3.10(a) 12
Joint Proxy Statement 3.4 10
Liens 3.2(b) 9
Material Adverse Effect 3.1(a) 8
MBCL 1.1(a) 1
Merger Recitals 1
Merger Consideration 1.1(b) 2
Missouri Articles 1.2 2
Missouri Secretary 1.2 2
Mercantile Recitals 1
Mercantile 10-K 4.6 21
Mercantile Articles 4.1(a) 18
Mercantile Benefit Plans 4.11(a) 24
Mercantile Capital Stock 4.2(a) 19
Mercantile Common Stock 1.4(a) 2
Mercantile Contract 4.14(a) 26
Mercantile Disclosure Schedule 4 18
Mercantile Employees 6.7(a) 35
Mercantile DRIP 4.2(a) 19
Mercantile ERISA Affiliate 4.11(a) 24
Mercantile Insiders 6.12 37
Mercantile Option Agreement Recitals 1
Mercantile Preferred Stock 4.2(a) 19
Mercantile Regulatory Agreement 4.15 27
Mercantile Reports 4.12(a) 25
Mercantile Rights 4.2(a) 19
Mercantile Rights Agreement 1.4(a) 3
Mercantile Shareholder Rights 1.4(a) 3
Mercantile Stock Plans 4.2(a) 19
New Benefit Plans 6.7(a) 35
Non-Subsidiary Affiliate 3.2(b) 9
NYSE 2.2(e) 7
OCC 3.5 10
Option Agreements Recitals 1
Regulatory Agencies 3.5 10
Requisite Regulatory Approvals 7.1(c) 37
S-4 3.4 10
SEC 3.4 10
Section 16 Information 6.12 37
Securities Act 3.12(a) 15
SRO 3.4 10
State Approvals 3.4 10
State Regulator 3.5 10
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Section Page No.
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Subsidiary 3.1(a) 8
Surviving Corporation Recitals 1
Tax 3.10(b) 13
Taxes 3.10(b) 13
Trust Account Shares 1.4(a) 2
WBCL 1.1(a) 1
Wisconsin Articles 1.2 2
Wisconsin Department 1.2 2
Year 2000 Issues 3.21 18
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 30, 1999 (this
"Agreement"), by and between FIRSTAR CORPORATION, a Wisconsin
corporation ("Firstar"), and MERCANTILE BANCORPORATION INC., a Missouri
corporation ("Mercantile").
W I T N E S S E T H :
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WHEREAS, the Boards of Directors of each of Firstar and Mercantile
have determined that it is in the best interests of their respective
companies and their shareholders to consummate the strategic business
combination transaction provided for herein in which Mercantile will,
subject to the terms and conditions set forth herein, merge with and
into Firstar (the "Merger"), so that Firstar is the surviving
corporation (hereinafter sometimes referred to in such capacity as the
"Surviving Corporation") in the Merger; and
WHEREAS, as a condition to, and immediately after, the execution
of this Agreement, and as a condition to the execution of the Firstar
Option Agreement, Mercantile and Firstar are entering into a stock
option agreement with Mercantile as issuer, and Firstar as grantee, of
the stock option contemplated thereby (the "Mercantile Option
Agreement") in the form attached hereto as Exhibit A; and
WHEREAS, as a condition to, and immediately after, the execution
of this Agreement, and as a condition to the execution of the Mercantile
Option Agreement, Mercantile and Firstar are entering into a Firstar
stock option agreement with Firstar as issuer, and Mercantile as
grantee, of the stock option contemplated thereby (the "Firstar Option
Agreement"; and together with the Mercantile Option Agreement, the
"Option Agreements") in the form attached hereto as Exhibit B; and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to
prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and
intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. (a) Subject to the terms and conditions of
this Agreement, in accordance with Business Corporation Law of the State
of Wisconsin (the "WBCL") and the General and Business Corporation Law
of the State of Missouri (the "MBCL"), at the Effective Time, Mercantile
shall merge with and into Firstar. Firstar shall be the Surviving
Corporation in the Merger, and shall continue its corporate existence
under the laws of the State of
Wisconsin. Upon consummation of the Merger, the separate corporate
existence of Mercantile shall terminate.
(b) Firstar and Mercantile may, upon mutual agreement, at
any time change the method of effecting the combination of Mercantile
and Firstar (including without limitation the provisions of this Article
I) if and to the extent they deem such change to be desirable, including
without limitation to provide for a merger of either party with a
wholly-owned subsidiary of the other; provided, however, that no
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such change shall (A) alter or change the amount of consideration to be
provided to holders of Mercantile Common Stock as provided for in this
Agreement (the "Merger Consideration"), (B) adversely affect the tax
treatment of shareholders as a result of receiving the Merger
Consideration or (C) materially impede or delay consummation of the
transactions contemplated by this Agreement.
1.2 Effective Time. The Merger shall become effective as set
forth in articles of merger (the "Wisconsin Articles") that shall be
filed with the Wisconsin Department of Financial Institutions (the
"Wisconsin Department"), and in the articles of merger (the "Missouri
Articles") that shall be filed with the Secretary of State of the State
of Missouri (the "Missouri Secretary"), in each case on the Closing
Date. The term "Effective Time" shall be the date and time when the
Merger becomes effective, as set forth in the Wisconsin Articles and the
Missouri Articles.
1.3 Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in the WBCL and the MBCL.
1.4 Conversion of Mercantile Common Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of
Mercantile, Firstar or the holder of any of the following securities:
(a) Subject to Section 2.2(e), each share of the common stock,
par value $0.01 per share, of Mercantile (together with the Mercantile
Shareholder Right attached thereto, the "Mercantile Common Stock")
issued and outstanding immediately prior to the Effective Time, except
for Dissenting Shares (as defined herein) and shares of Mercantile
Common Stock owned, directly or indirectly, by Mercantile or Firstar or
any of their respective wholly-owned Subsidiaries (other than (A) shares
of Mercantile Common Stock held, directly or indirectly, in trust
accounts, managed accounts and the like, or otherwise held in a
fiduciary capacity, that are beneficially owned by third parties (any
such shares, whether held directly or indirectly by Mercantile or
Firstar, as the case may be, being referred to herein as "Trust Account
Shares") and (B) any shares of Mercantile Common Stock held by
Mercantile or Firstar or any of their respective Subsidiaries in respect
of a debt previously contracted (any such shares of Mercantile Common
Stock, and shares of Firstar Common Stock that are similarly held,
whether held directly or indirectly by Mercantile or Firstar, being
referred to herein as "DPC Shares")) shall be converted into the right
to receive 2.091 shares (the "Exchange Ratio") of the common stock, par
value $0.01 per share, of Firstar (together with the Firstar Shareholder
Rights attached thereto, the "Firstar Common Stock"), together with the
same number of Firstar Shareholder Rights attached thereto.
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As used herein, (i) "Mercantile Shareholder Rights" shall mean the
preferred share purchase rights issued to the holders of Mercantile
Common Stock pursuant to the Rights Agreement, dated as of May 20, 1998
(as such may be amended, supplemented, restated or replaced from time to
time), between Mercantile and Harris Trust and Savings Bank (the
"Mercantile Rights Agreement"), and (ii) "Firstar Shareholder Rights"
shall mean the preferred share purchase rights issued to the holders
Firstar Common Stock pursuant to the Rights Agreement, dated as of
November 20, 1998 (as such may be amended, supplemented, restated or
replaced from time to time), between Firstar and Firstar Bank Milwaukee,
N.A. (the "Firstar Rights Agreement").
(b) All of the shares of Mercantile Common Stock converted into
the right to receive Firstar Common Stock pursuant to this Article I
shall no longer be outstanding and shall automatically be cancelled and
shall cease to exist as of the Effective Time, and each certificate
previously representing any such shares of Mercantile Common Stock (each
a "Certificate") shall thereafter represent only the right to receive
(i) a certificate representing the number of whole shares of Firstar
Common Stock and (ii) cash in lieu of fractional shares into which the
shares of Mercantile Common Stock represented by such Certificate have
been converted pursuant to this Section 1.4 and Section 2.2(e).
Certificates previously representing shares of Mercantile Common Stock
shall be exchanged for certificates representing whole shares of Firstar
Common Stock and cash in lieu of fractional shares issued in
consideration therefor upon the surrender of such Certificates in
accordance with Section 2.2, without any interest thereon. If, prior to
the Effective Time and as permitted by this Agreement, the outstanding
shares of Firstar Common Stock or Mercantile Common Stock shall have
been increased, decreased, changed into or exchanged for a different
number or kind of shares or securities as a result of a reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse
stock split, or other similar change in capitalization, an appropriate
and proportionate adjustment shall be made to the Exchange Ratio.
(c) At the Effective Time, all shares of Mercantile Common Stock
that are owned, directly or indirectly, by Mercantile or Firstar or any
of their respective wholly-owned Subsidiaries (other than Trust Account
Shares and DPC Shares) shall be cancelled and shall cease to exist and
no capital stock of Firstar or other consideration shall be delivered in
exchange therefor. All shares of Firstar Common Stock that are owned by
Mercantile or any of its wholly-owned Subsidiaries (other than Trust
Account Shares and DPC Shares) shall as of the Effective Time become
authorized but unissued shares of Firstar Common Stock.
(d) Notwithstanding anything in this Agreement to the contrary,
shares of Mercantile Common Stock that are outstanding immediately prior
to the Effective Time and with respect to which dissenters' rights shall
have been properly demanded in accordance with Section 455 of the MBCL
("Dissenting Shares") shall not be converted into the right to receive,
or be exchangeable for, Firstar Common Stock or cash in lieu of
fractional shares but, instead, the holders thereof shall be entitled to
payment of the appraised value of such Dissenting Shares in accordance
with the provisions of Section 455 of the MBCL; provided, however,
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that (i) if any holder of Dissenting Shares shall subsequently deliver a
written withdrawal of such holder's demand for appraisal of such shares,
or (ii) if any holder fails to establish such holder's entitlement to
dis-
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senters' rights as provided in Section 455 of the MBCL, such holder or
holders (as the case may be) shall forfeit the right to appraisal of
such shares of Mercantile Common Stock and each of such shares shall
thereupon be deemed to have been converted into the right to receive,
and to have become exchangeable for, as of the Effective Time, Firstar
Common Stock and/or cash in lieu of fractional shares, without any
interest thereon, as provided in Section 1.4(a) and Article II hereof.
1.5 Firstar Capital Stock. Except as otherwise provided in
Section 1.4(c), at and after the Effective Time, each share of Firstar
capital stock (including Firstar Common Stock) issued and outstanding
immediately prior to the Closing Date shall remain an issued and
outstanding share of capital stock of the Surviving Corporation and
shall not be affected by the Merger.
1.6 Options. (a) At the Effective Time, each option granted by
Mercantile to purchase shares of Mercantile Common Stock that is
outstanding and unexercised immediately prior thereto shall cease to
represent a right to acquire shares of Mercantile Common Stock and shall
be converted automatically into an option to purchase shares of Firstar
Common Stock in an amount and at an exercise price determined as
provided below (and otherwise subject to the terms of the Mercantile
Stock Plans and the agreements evidencing grants thereunder):
(i) The number of shares of Firstar Common Stock to be
subject to the new option shall be equal to the product of the
number of shares of Mercantile Common Stock subject to the
original option and the Exchange Ratio, provided that any
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fractional shares of Firstar Common Stock resulting from such
multiplication shall be rounded to the nearest whole share; and
(ii) The exercise price per share of Firstar Common Stock
under the new option shall be equal to the exercise price per
share of Mercantile Common Stock under the original option divided
by the Exchange Ratio, provided that such exercise price shall
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be rounded to the nearest whole cent.
(b) The adjustment provided herein with respect to any options
that are "incentive stock options" (as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code")) shall be and is
intended to be effected in a manner that is consistent with Section
424(a) of the Code. The duration and other terms of the new option shall
be the same as the original option, except that all references to
Mercantile shall be deemed to be references to Firstar.
1.7 Certificate of Incorporation. Subject to the terms and
conditions of this Agreement, at the Effective Time, the Articles of
Incorporation of Firstar, as the same may be amended as permitted hereby
at the Effective Time (the "Firstar Articles"), shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended in
accordance with applicable law, except that the first sentence of
Section 1 of Article III thereof shall state in its entirety:
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(1) The number of shares which the Corporation shall have
authority to issue is 1,610,000,000, divided into the
following classes:
(a) 1,600,000,000 shares of the par value of $.01
each, designated as "Common Stock"; and
(b) 10,000,000 shares of the par value of $1.00
each, designated as "Preferred Stock".
1.8 By-Laws. Subject to the terms and conditions of this
Agreement, at the Effective Time, the By-Laws of Firstar shall be the
By-Laws of the Surviving Corporation until thereafter amended in
accordance with applicable law.
1.9 Tax and Accounting Consequences. It is intended that the
Merger shall constitute a "reorganization" within the meaning of Section
368(a) of the Code, that this Agreement shall constitute a "plan of
reorganization" for the purposes of Sections 354 and 361 of the Code and
that the Merger shall be accounted for as a "pooling of interests" under
generally accepted accounting principles ("GAAP").
1.10 Board of Directors; Management. The directors and officers
of Firstar immediately prior to the Effective Time shall be the
directors and officers of the Surviving Corporation, each to hold office
in accordance with the Articles of Incorporation of the Surviving
Corporation until their respective successors are duly elected or
appointed and qualified.
1.11 Headquarters of Surviving Corporation. From and after the
Effective Time, the location of the headquarters and principal executive
offices of the Surviving Corporation shall be that of the headquarters
and principal executive offices of Firstar as of the date of this
Agreement.
ARTICLE II
EXCHANGE OF SHARES
2.1 Firstar to Make Shares Available. At or prior to the
Effective Time, Firstar shall deposit, or shall cause to be deposited,
with Firstar Bank Milwaukee, N.A., or another bank or trust company
reasonably acceptable to each of Mercantile and Firstar (the "Exchange
Agent"), for the benefit of the holders of Certificates, for exchange in
accordance with this Article II, certificates representing the shares of
Firstar Common Stock, and cash in lieu of any fractional shares (such
cash and certificates for shares of Firstar Common Stock, together with
any dividends or distributions with respect thereto, being hereinafter
referred to as the "Exchange Fund"), to be issued pursuant to Section
1.4 and paid pursuant to Section 2.2(a) in exchange for outstanding
shares of Mercantile Common Stock.
2.2 Exchange of Shares. (a) As soon as practicable after the
Effective Time, and in no event later than five business days
thereafter, the Exchange Agent shall mail to each holder of record of
one or more Certificates a letter of transmittal (which shall specify
that
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delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent) and instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing the shares of
Firstar Common Stock and any cash in lieu of fractional shares into
which the shares of Mercantile Common Stock represented by such
Certificate or Certificates shall have been converted pursuant to this
Agreement. Upon proper surrender of a Certificate or Certificates for
exchange and cancellation to the Exchange Agent, together with such
properly completed letter of transmittal, duly executed, the holder of
such Certificate or Certificates shall be entitled to receive in
exchange therefor, as applicable, (i) a certificate representing that
number of whole shares of Firstar Common Stock to which such holder of
Mercantile Common Stock shall have become entitled pursuant to the
provisions of Article I and (ii) a check representing the amount of any
cash in lieu of fractional shares that such holder has the right to
receive in respect of the Certificate or Certificates surrendered
pursuant to the provisions of this Article II, and the Certificate or
Certificates so surrendered shall forthwith be cancelled. No interest
will be paid or accrued on any cash in lieu of fractional shares or on
any unpaid dividends and distributions payable to holders of
Certificates.
(b) No dividends or other distributions declared with respect to
Firstar Common Stock shall be paid to the holder of any unsurrendered
Certificate until the holder thereof shall surrender such Certificate in
accordance with this Article II. After the surrender of a Certificate in
accordance with this Article II, the record holder thereof shall be
entitled to receive any such dividends or other distributions, without
any interest thereon, that theretofore had become payable with respect
to shares of Firstar Common Stock represented by such Certificate.
(c) If any certificate representing shares of Firstar Common
Stock is to be issued in a name other than that in which the Certificate
or Certificates surrendered in exchange therefor is or are registered,
it shall be a condition of the issuance thereof that the Certificate or
Certificates so surrendered shall be properly endorsed (or accompanied
by an appropriate instrument of transfer) and otherwise in proper form
for transfer, and that the person requesting such exchange shall pay to
the Exchange Agent in advance any transfer or other taxes required by
reason of the issuance of a certificate representing shares of Firstar
Common Stock in any name other than that of the registered holder of the
Certificate or Certificates surrendered, or required for any other
reason, or shall establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the
stock transfer books of Mercantile of the shares of Mercantile Common
Stock that were issued and outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented
for transfer to the Exchange Agent, they shall be cancelled and
exchanged for certificates representing shares of Firstar Common Stock
as provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein,
no certificates or scrip representing fractional shares of Firstar
Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution with respect to Firstar Common
Stock shall be payable on or with respect to any fractional share, and
such fractional share
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interests shall not entitle the owner thereof to vote or to any other
rights of a shareholder of Firstar. In lieu of the issuance of any such
fractional share, Firstar shall pay to each former shareholder of
Mercantile who otherwise would be entitled to receive such fractional
share an amount in cash determined by multiplying (i) the closing-sale
price of Firstar Common Stock on the New York Stock Exchange, Inc. (the
"NYSE") as reported by The Wall Street Journal for the trading day
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immediately preceding the date of the Effective Time by (ii) the
fraction of a share (rounded to the nearest thousandth when expressed in
decimal form) of Firstar Common Stock to which such holder would
otherwise be entitled to receive pursuant to Section 1.4.
(f) Any portion of the Exchange Fund that remains unclaimed by
the shareholders of Mercantile for 12 months after the Effective Time
shall be paid to Firstar. Any former shareholders of Mercantile who have
not theretofore complied with this Article II shall thereafter look only
to Firstar for payment of the shares of Firstar Common Stock, cash in
lieu of any fractional shares and any unpaid dividends and distributions
on the Firstar Common Stock deliverable in respect of each share of
Mercantile Common Stock, as the case may be, such shareholder holds as
determined pursuant to this Agreement, in each case, without any
interest thereon. Notwithstanding the foregoing, none of Mercantile,
Firstar, the Exchange Agent or any other person shall be liable to any
former holder of shares of Mercantile Common Stock for any amount
delivered in good faith to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if
reasonably required by Firstar, the posting by such person of a bond in
such amount as Firstar may determine is reasonably necessary as
indemnity against any claim that may be made against it with respect to
such Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Certificate the shares of Firstar Common Stock
and any cash in lieu of fractional shares deliverable in respect thereof
pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FIRSTAR
Except as disclosed in the Firstar disclosure schedule delivered
to Mercantile concurrently herewith (the "Firstar Disclosure Schedule")
Firstar hereby represents and warrants to Mercantile as follows:
3.1 Corporate Organization. (a) Firstar is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Wisconsin. Firstar has the corporate power and authority to own
or lease all of its properties and assets and to carry on its business
as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified would
not, either individually or in the
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aggregate, have a Material Adverse Effect on Firstar. As used in this
Agreement, the term "Material Adverse Effect" means, with respect to
Mercantile, Firstar or the Surviving Corporation, as the case may be, a
material adverse effect on (i) the business, operations, results of
operations or financial condition of such party and its Subsidiaries
taken as a whole or (ii) the ability of such party to timely consummate
the transactions contemplated hereby. As used in this Agreement, the
word "Subsidiary", when used with respect to any party, means any bank,
corporation, partnership, limited liability company, or other
organization, whether incorporated or unincorporated, that is
consolidated with such party for financial reporting purposes. Firstar
is duly registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended (the "BHC Act").
(b) Each Firstar Subsidiary (i) is duly organized and validly
existing under the laws of its jurisdiction of organization, (ii) is
duly qualified to do business and in good standing in all jurisdictions
(whether federal, state, local or foreign) where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and in which the failure to be so qualified would have a
Material Adverse Effect on Firstar and (iii) has all requisite corporate
power and authority to own or lease its properties and assets and to
carry on its business as now conducted.
3.2 Capitalization. (a) The authorized capital stock of
Firstar consists of (i) 800,000,000 shares of Firstar Common Stock, of
which, as of March 31, 1999, 661,214,244 shares were issued and
outstanding and 2,887,734 shares were held in treasury, (ii) 10,000,000
shares of preferred stock, par value $1.00 per share (the "Firstar
Preferred Stock" and, together with the Firstar Common Stock, the
"Firstar Capital Stock"), of which, as of the date hereof, no shares are
issued and outstanding. All of the issued and outstanding shares of
Firstar Common Stock have been duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. As of the date of
this Agreement, except pursuant to the terms of (i) the Firstar Option
Agreement, (ii) options and stock issued pursuant to employee and
director stock plans of Firstar in effect as of the date hereof (the
"Firstar Stock Plans") and (iii) the Firstar Rights Agreement, Firstar
does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character
calling for the purchase or issuance of any shares of Firstar Capital
Stock or any other equity securities of Firstar or any securities
representing the right to purchase or otherwise receive any shares of
Firstar Capital Stock (collectively, including the items contemplated by
clauses (i) through (iii) of this sentence, the "Firstar Rights"). As of
March 31, 1999, no shares of Firstar Capital Stock were reserved for
issuance, except for 65,460,211 shares of Firstar Common Stock reserved
for issuance upon exercise of the Firstar Option Agreement, no shares of
Firstar Common Stock reserved for issuance in connection with the
Firstar Dividend Reinvestment Plan (the "Firstar DRIP"), 25,897,722
shares of Firstar Common Stock reserved for issuance upon the exercise
of stock options pursuant to the Firstar Stock Plans and 2,300,000
shares of Series A Junior Participating Preferred Stock reserved for
issuance in connection with the Firstar Rights Agreement. Since March
31, 1999, Firstar has not issued any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital
stock, other than as would be permitted by Section 5.2 hereof and
pursuant to the Firstar Option Agreement.
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(b) Firstar owns, directly or indirectly, all of the issued and
outstanding shares of capital stock or other equity ownership interests
of each of the Firstar Subsidiaries, free and clear of any liens,
pledges, charges, encumbrances and security interests whatsoever
("Liens"), and all of such shares or equity ownership interests are duly
authorized and validly issued and are fully paid, nonassessable (subject
to 12 U.S.C. Section 55) and free of preemptive rights, with no personal
liability attaching to the ownership thereof. No Firstar Subsidiary has
or is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity security of
such Subsidiary or any securities representing the right to purchase or
otherwise receive any shares of capital stock or any other equity
security of such Subsidiary. Section 3.2(b) of the Firstar Disclosure
Schedule sets forth a list of the material investments of Firstar in
corporations, joint ventures, partnerships, limited liability companies
and other entities other than its Subsidiaries (each, a "Non-Subsidiary
Affiliate").
3.3 Authority; No Violation. (a) Firstar has full corporate
power and authority to execute and deliver this Agreement and each of
the Option Agreements and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the
Option Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly and validly approved by the Board of
Directors of Firstar. The Board of Directors of Firstar has directed
that this Agreement and the transactions contemplated hereby be
submitted to Firstar's shareholders for approval at a meeting of such
shareholders and, except for the approval of this Agreement and the
transactions contemplated hereby by the affirmative vote of the holders
of a majority of the outstanding shares of Firstar Common Stock entitled
to vote thereon, no corporate proceedings on the part of Firstar are
necessary to approve this Agreement and the Option Agreements and to
consummate the transactions contemplated hereby and thereby. This
Agreement and each of the Option Agreements have been duly and validly
executed and delivered by Firstar and (assuming due authorization,
execution and delivery by Mercantile) constitute valid and binding
obligations of Firstar, enforceable against Firstar in accordance with
their terms (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of
creditors generally and the availability of equitable remedies).
(b) Neither the execution and delivery of this Agreement and the
Option Agreements by Firstar nor the consummation by Firstar of the
transactions contemplated hereby or thereby, nor compliance by Firstar
with any of the terms or provisions hereof or thereof, will (i) violate
any provision of the Firstar Articles or By-Laws or (ii) assuming that
the consents and approvals referred to in Section 3.4 are duly obtained,
(x) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to Firstar, any of its
Subsidiaries or Non-Subsidiary Affiliates or any of their respective
properties or assets or (y) violate, conflict with, result in a breach
of any provision of or the loss of any benefit under, constitute a
default (or an event that, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required
by, or result in the creation of any Lien upon any of the respective
properties or assets of Firstar, any of its Subsidiaries or Non-
Subsidiary Affiliates under, any of the terms, conditions or provisions
of any note, bond, mortgage, inden-
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ture, deed of trust, license, lease, agreement or other instrument or
obligation to which Firstar, any of its Subsidiaries or its Non-
Subsidiary Affiliates is a party, or by which they or any of their
respective properties or assets may be bound or affected, except (in the
case of clause (y) above) for such violations, conflicts, breaches or
defaults that, either individually or in the aggregate, will not have a
Material Adverse Effect on Firstar.
3.4 Consents and Approvals. Except for (i) the filing of
applications and notices, as applicable, with the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board") under the BHC
Act and the Federal Reserve Act, as amended, and approval of such
applications and notices, (ii) the filing of any required applications
or notices with any state or foreign agencies and approval of such
applications and notices (the "State Approvals"), (iii) the filing with
the Securities and Exchange Commission (the "SEC") of a joint proxy
statement in definitive form relating to the meetings of Mercantile's
and Firstar's shareholders to be held in connection with this Agreement
and the transactions contemplated hereby (the "Joint Proxy Statement"),
and of the registration statement on Form S-4 (the "S-4") in which the
Joint Proxy Statement will be included as a prospectus, (iv) the filing
of the Wisconsin Articles with the Wisconsin Department pursuant to the
WBCL, (v) the filing of the Missouri Articles with the Missouri
Secretary pursuant to the MBCL, (vi) any consents, authorizations,
approvals, filings or exemptions in connection with compliance with the
applicable provisions of federal and state securities laws relating to
the regulation of broker-dealers, investment advisers or transfer
agents, and federal commodities laws relating to the regulation of
futures commission merchants and the rules and regulations thereunder
and of any applicable industry self-regulatory organization ("SRO"), and
the rules of the NYSE, or that are required under consumer finance,
mortgage banking and other similar laws and (vii) such filings and
approvals as are required to be made or obtained under the securities or
"Blue Sky" laws of various states in connection with the issuance of the
shares of Firstar Common Stock pursuant to this Agreement, no consents
or approvals of or filings or registrations with any court,
administrative agency or commission or other governmental authority or
instrumentality (each a "Governmental Entity") are necessary in
connection with (A) the execution and delivery by Firstar of this
Agreement and the Option Agreements and (B) the consummation by Firstar
of the transactions contemplated hereby and thereby.
3.5 Reports. Firstar and each of its Subsidiaries have timely
filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were
required to file since January 1, 1997 with (i) the Federal Reserve
Board, (ii) the Federal Deposit Insurance Corporation, (iii) any state
regulatory authority (each a "State Regulator"), (iv) the Office of the
Comptroller of the Currency (the "OCC"), (v) the SEC and (vi) any SRO
(collectively "Regulatory Agencies"), and all other reports and
statements required to be filed by them since January 1, 1997,
including, without limitation, any report or statement required to be
filed pursuant to the laws, rules or regulations of the United States,
any state, or any Regulatory Agency, and have paid all fees and
assessments due and payable in connection therewith, except where the
failure to file such report, registration or statement or to pay such
fees and assessments, either individually or in the aggregate, will not
have a Material Adverse Effect on Firstar. Except for normal
examinations conducted by a Regulatory Agency in the ordinary course of
the business of Firstar and its Subsidiaries, no
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Regulatory Agency has initiated any proceeding or, to the best knowledge
of Firstar, investigation into the business or operations of Firstar or
any of its Subsidiaries since January 1, 1997, except where such
proceedings or investigation will not, either individually or in the
aggregate, have a Material Adverse Effect on Firstar. There is no
unresolved violation, criticism, or exception by any Regulatory Agency
with respect to any report or statement relating to any examinations of
Firstar or any of its Subsidiaries that, in the reasonable judgment of
Firstar, will, either individually or in the aggregate, have a Material
Adverse Effect on Firstar.
3.6 Financial Statements. The consolidated balance sheets of
Firstar and its Subsidiaries as of December 31, for the fiscal years
1997 and 1998, and the related consolidated statements of income,
changes in shareholders' equity and cash flows for the fiscal years 1996
through 1998, inclusive, are reported in Firstar's Annual Report on Form
10-K for the fiscal year ended December 31, 1998 (the "Firstar 10-K")
filed with the SEC under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and are accompanied by the audit report of Arthur
Andersen LLP, independent public accountants with respect to Firstar.
The December 31, 1998 consolidated balance sheet of Firstar (including
the related notes, where applicable) fairly presents in all material
respects the consolidated financial position of Firstar and its
Subsidiaries as of the date thereof, and the other financial statements
referred to in this Section 3.6 (including the related notes, where
applicable) fairly present in all material respects the results of the
consolidated operations and changes in shareholders' equity and
consolidated financial position of Firstar and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set
forth; each of such statements (including the related notes, where
applicable) complies in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC
with respect thereto; and each of such statements (including the related
notes, where applicable) has been prepared in all material respects in
accordance with GAAP consistently applied during the periods involved,
except, in each case, as indicated in such statements or in the notes
thereto. The books and records of Firstar and its Subsidiaries have
been, and are being, maintained in all material respects in accordance
with GAAP and any other applicable legal and accounting requirements and
reflect only actual transactions.
3.7 Broker's Fees. Except for Credit Suisse First Boston
Corporation, none of Firstar nor any Firstar Subsidiary nor any of their
respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's
fees in connection with the Merger or related transactions contemplated
by this Agreement or the Option Agreements.
3.8 Absence of Certain Changes or Events. (a) Except as
publicly disclosed in Firstar Reports filed prior to the date hereof,
since December 31, 1998, no event or events have occurred that have had,
either individually or in the aggregate, a Material Adverse Effect on
Firstar.
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(b) Except as publicly disclosed in Firstar Reports filed prior
to the date hereof, since December 31, 1998, Firstar and its
Subsidiaries have carried on their respective businesses in all material
respects in the ordinary course.
(c) Since December 31, 1998, neither Firstar nor any of its
Subsidiaries has suffered any strike, work stoppage, slowdown, or other
labor disturbance that will, either individually or in the aggregate,
have a Material Adverse Effect on Firstar.
3.9 Legal Proceedings. (a) Neither Firstar nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best
of Firstar's knowledge, threatened, legal, administrative, arbitral or
other proceedings, claims, actions or governmental or regulatory
investigations of any nature against Firstar or any of its Subsidiaries
or challenging the validity or propriety of the transactions
contemplated by this Agreement or the Firstar Option Agreement as to
which, in any such case, there is a reasonable probability of an adverse
determination and that, if adversely determined, will, either
individually or in the aggregate, have a Material Adverse Effect on
Firstar.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction (other than those that apply to similarly
situated bank holding companies or banks) imposed upon Firstar, any of
its Subsidiaries or the assets of Firstar or any of its Subsidiaries
that has had, or will have, either individually or in the aggregate, a
Material Adverse Effect on Firstar or the Surviving Corporation.
3.10 Taxes and Tax Returns. (a) Each of Firstar and its
Subsidiaries has duly filed all federal, state, foreign and local
information returns and tax returns required to be filed by it on or
prior to the date hereof (all such returns being accurate and complete
in all material respects) and has duly paid or made provisions for the
payment of all Taxes and other governmental charges that have been
incurred or are due or claimed to be due from it by federal, state,
foreign or local taxing authorities on or prior to the date of this
Agreement (including, without limitation, if and to the extent
applicable, those due in respect of its properties, income, business,
capital stock, deposits, franchises, licenses, sales and payrolls) other
than (i) Taxes or other charges that are not yet delinquent or are being
contested in good faith and have not been finally determined, or (ii)
information returns, tax returns, Taxes or other governmental charges as
to which the failure to file, pay or make provision for will not, either
individually or in the aggregate, have a Material Adverse Effect on
Firstar. The federal and material state income tax returns of Firstar
and its Subsidiaries have been examined by the Internal Revenue Service
(the "IRS") or the relevant state taxing authorities, as the case may
be, for all years to and including 1993 and any liability with respect
thereto has been satisfied or any liability with respect to deficiencies
asserted as a result of such examination has been reserved against in
accordance with GAAP. To the best of Firstar's knowledge, there are no
material disputes pending, or claims asserted for, Taxes or assessments
upon Firstar or any of its Subsidiaries for which Firstar has not
established reserves in accordance with GAAP. In addition, (A) proper
and accurate amounts have been withheld by Firstar and its Subsidiaries
from their employees for all prior periods in compliance in all material
respects with the tax withholding provisions of applicable federal,
state and local laws, except where failure to do
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so will not, either individually or in the aggregate, have a Material
Adverse Effect on Firstar, (B) federal, state, and local returns that
are accurate and complete in all material respects have been filed by
Firstar and its Subsidiaries for all periods for which returns were due
with respect to income tax withholding, Social Security and unemployment
taxes, except where failure to do so will not, either individually or in
the aggregate, have a Material Adverse Effect on Firstar, (C) the
amounts shown on such federal, state or local returns to be due and
payable have been paid in full or provision therefor has been included
by Firstar in its consolidated financial statements in accordance with
GAAP, except where failure to do so will not, either individually or in
the aggregate, have a Material Adverse Effect on Firstar and (D) there
are no Tax liens upon any property or assets of Firstar or its
Subsidiaries except liens for current Taxes not yet due or liens that
will not, either individually or in the aggregate, have a Material
Adverse Effect on Firstar. Neither Firstar nor any of its Subsidiaries
has been required to include in income any adjustment pursuant to
Section 481 of the Code by reason of a voluntary change in accounting
method initiated by Firstar or any of its Subsidiaries, and the IRS has
not initiated or proposed in writing any such adjustment or change in
accounting method, in either case that has had or will have, either
individually or in the aggregate, a Material Adverse Effect on Firstar.
Except as set forth in the financial statements described in Section 3.6
(including the related notes, where applicable), neither Firstar nor any
of its Subsidiaries has entered into a transaction that is being
accounted for as an installment obligation under Section 453 of the
Code, that will have, either individually or in the aggregate, a
Material Adverse Effect on Firstar.
(b) As used in this Agreement, the term "Tax" or "Taxes" means
all federal, state, local, and foreign income, excise, gross receipts,
gross income, ad valorem, profits, gains, property, capital, sales,
-- -------
transfer, use, payroll, employment, severance, withholding, duties,
intangibles, franchise, backup withholding, and other taxes, charges,
levies or like assessments together with all penalties and additions to
tax and interest thereon.
(c) No deduction has been disallowed under Section 162(m) of the
Code for employee remuneration of any amount paid or payable by Firstar
or any Subsidiary of Firstar under any contract, plan, program,
arrangement or understanding.
3.11 Employee Benefit Plans. (a) The Firstar Disclosure
Schedule sets forth a true and complete list of each material employee
or director benefit, employment or compensation plan, arrangement or
agreement that is maintained, or contributed to, as of the date of this
Agreement (the "Firstar Benefit Plans") by Firstar, any of its
Subsidiaries or by any trade or business, whether or not incorporated (a
"Firstar ERISA Affiliate"), all of which together with Firstar would be
deemed a "single employer" within the meaning of Section 4001 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(b) Firstar has heretofore made available to Mercantile true and
complete copies of each of the Firstar Benefit Plans and certain related
documents, including, but not limited to, (i) the actuarial report for
such Firstar Benefit Plan (if applicable) for each of the last two years
and (ii) the most recent determination letter from the IRS (if
applicable) for such Firstar Benefit Plan.
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(c) (i) Each of the Firstar Benefit Plans has been operated and
administered in all material respects in compliance with applicable
laws, including, but not limited to, ERISA and the Code, (ii) each of
the Firstar Benefit Plans intended to be "qualified" within the meaning
of Section 401(a) of the Code is so qualified, and, to the knowledge of
Firstar, there are no existing circumstances or any events that have
occurred that will adversely affect the qualified status of any such
Firstar Benefit Plan, (iii) with respect to each Firstar Benefit Plan
that is subject to Title IV of ERISA, the present value of accrued
benefits under such Firstar Benefit Plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial
report prepared by such Firstar Benefit Plan's actuary with respect to
such Firstar Benefit Plan, did not, as of its latest valuation date,
exceed the then-current value of the assets of such Firstar Benefit Plan
allocable to such accrued benefits, (iv) no Firstar Benefit Plan
provides benefits, including, without limitation, death or medical
benefits (whether or not insured), with respect to current or former
employees or directors of Firstar or its Subsidiaries beyond their
retirement or other termination of service, other than (A) coverage
mandated by applicable law, (B) death benefits or retirement benefits
under any "employee pension plan" (as such term is defined in Section
3(2) of ERISA), (C) deferred compensation benefits accrued as
liabilities on the books of Firstar or its Subsidiaries or (D) benefits
the full cost of which is borne by the current or former employee or
director (or his or her beneficiary), (v) no material liability under
Title IV of ERISA has been incurred by Firstar, its Subsidiaries or any
Firstar ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to Firstar, its
Subsidiaries or any Firstar ERISA Affiliate of incurring a material
liability thereunder, (vi) no Firstar Benefit Plan is a "multiemployer
pension plan" (as such term is defined in Section 3(37) of ERISA), (vii)
all contributions or other amounts payable by Firstar or its
Subsidiaries as of the Effective Time with respect to each Firstar
Benefit Plan in respect of current or prior plan years have been paid or
accrued in accordance with GAAP and Section 412 of the Code, (viii) none
of Firstar, its Subsidiaries or any other person, including any
fiduciary, has engaged in a transaction in connection with which
Firstar, its Subsidiaries or any Firstar Benefit Plan will be subject to
either a material civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a material tax imposed pursuant to Section 4975 or
4976 of the Code, and (ix) to the best knowledge of Firstar there are no
pending, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Firstar Benefit Plans
or any trusts related thereto that will have, either individually or in
the aggregate, a Material Adverse Effect on Firstar.
(d) Neither the execution and delivery of this Agreement nor the
shareholder approval or consummation of the transactions contemplated
hereby will (either alone or in conjunction with any other event)
(i) result (either alone or upon the occurrence of any additional acts
or events) in any payment (including, without limitation, severance,
unemployment compensation, "excess parachute payment" (within the
meaning of Section 280G of the Code), forgiveness of indebtedness or
otherwise) becoming due to any director or any employee of Firstar or
any of its affiliates from Firstar or any of its affiliates under any
Firstar Benefit Plan or otherwise, (ii) increase or affect the
calculation of the amount of any benefits otherwise payable under any
Firstar Benefit Plan or (iii) result in any acceleration of the time of
payment or vesting of any such benefits.
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3.12 SEC Reports. No (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since
January 1, 1997 by Firstar with the SEC pursuant to the Securities Act
of 1933, as amended (the "Securities Act"), or the Exchange Act (the
"Firstar Reports") and prior to the date hereof or (b) communication
mailed by Firstar to its shareholders since January 1, 1997 and prior to
the date hereof, as of the date thereof, contained any untrue statement
of a material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances in which they were made, not misleading,
except that information as of a later date (but before the date hereof)
shall be deemed to modify information as of an earlier date. Since
January 1, 1997, as of their respective dates, all Firstar Reports filed
under the Securities Act and the Exchange Act complied in all material
respects with the published rules and regulations of the SEC with
respect thereto.
3.13 Compliance with Applicable Law. (a) Firstar and each of
its Subsidiaries hold all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to each, and have complied in all material
respects with and are not in default in any material respect under any,
applicable law, statute, order, rule, regulation, policy and/or
guideline of any Governmental Entity relating to Firstar or any of its
Subsidiaries, except where the failure to hold such license, franchise,
permit or authorization or such noncompliance or default will not,
either individually or in the aggregate, have a Material Adverse Effect
on Firstar.
(b) Except as will not have, either individually or in the
aggregate, a Material Adverse Effect on Firstar, Firstar and each
Firstar Subsidiary have properly administered all accounts for which it
acts as a fiduciary, including accounts for which it serves as a
trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the
governing documents, applicable state and federal law and regulation and
common law. None of Firstar, any Firstar Subsidiary, or any director,
officer or employee of Firstar or of any Firstar Subsidiary, has
committed any breach of trust with respect to any such fiduciary account
that will have a Material Adverse Effect on Firstar, and the accountings
for each such fiduciary account are true and correct in all material
respects and accurately reflect the assets of such fiduciary account.
3.14 Certain Contracts. (a) Neither Firstar nor any of its
Subsidiaries is a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i) with respect
to the employment of any directors, officers or employees, other than in
the ordinary course of business consistent with past practice, (ii) that
is a "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this
Agreement that has not been filed or incorporated by reference in the
Firstar Reports, (iii) that materially restricts the conduct of any line
of business by Firstar or upon consummation of the Merger will
materially restrict the ability of the Surviving Corporation to engage
in any line of business in which a bank holding company may lawfully
engage or (iv) with or to a labor union or guild (including any
collective bargaining agreement). Firstar has previously made available
to Mercantile true and correct copies of all employment and deferred
compensation agreements that are in writing and to which Firstar is a
party. Each
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contract, arrangement, commitment or understanding of the type described
in this Section 3.14(a) and in Section 3.11(a), whether or not set forth
in the Firstar Disclosure Schedule, is referred to herein as a "Firstar
Contract", and neither Firstar nor any of its Subsidiaries knows of, or
has received notice of, any violation of the above by any of the other
parties thereto that, either individually or in the aggregate, will have
a Material Adverse Effect on Firstar.
(b) (i) Each Firstar Contract is valid and binding on Firstar
or any of its Subsidiaries, as applicable, and in full force and effect,
(ii) Firstar and each of its Subsidiaries has in all material respects
performed all obligations required to be performed by it to date under
each Firstar Contract, except where such noncompliance, either
individually or in the aggregate, will not have a Material Adverse
Effect on Firstar, and (iii) no event or condition exists that
constitutes or, after notice or lapse of time or both, will constitute,
a material default on the part of Firstar or any of its Subsidiaries
under any such Firstar Contract, except where such default, either
individually or in the aggregate, will not have a Material Adverse
Effect on Firstar.
3.15 Agreements with Regulatory Agencies. Neither Firstar nor
any of its Subsidiaries is subject to any cease-and-desist or other
order issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any order
or directive by, or has been since January 1, 1997, a recipient of any
supervisory letter from, or since January 1, 1997, has adopted any board
resolutions at the request of any Regulatory Agency or other
Governmental Entity that currently restricts in any material respect the
conduct of its business or that in any material manner relates to its
capital adequacy, its credit policies, its management or its business
(each, whether or not set forth in the Firstar Disclosure Schedule, a
"Firstar Regulatory Agreement"), nor has Firstar or any of its
Subsidiaries been advised since January 1, 1997, by any Regulatory
Agency or other Governmental Entity that it is considering issuing or
requesting any such Regulatory Agreement.
3.16 Interest Rate Risk Management Instruments. All derivative
instruments, as such term is used in Statement of Financial Accounting
Standards No. 133 (including, without limitation, interest rate swaps,
caps, floors and option agreements and other interest rate risk
management arrangements) ("Derivative Instruments"), to which Firstar or
any of its Subsidiaries is a party, whether entered into for the account
of Firstar or for the account of a customer of Firstar or one of its
Subsidiaries, were entered into in the ordinary course of business and,
to Firstar's knowledge, in accordance with prudent banking practice and
applicable rules, regulations and policies of any Regulatory Authority
and with counterparties believed to be financially responsible at the
time and are legal, valid and binding obligations of Firstar or one of
its Subsidiaries enforceable in accordance with their terms (except as
may be limited by bankruptcy, insolvency, moratorium, reorganization or
similar laws affecting the rights of creditors generally and the
availability of equitable remedies), and are in full force and effect.
Firstar and each of its Subsidiaries have duly performed in all material
respects all of their material obligations thereunder to the extent that
such obligations to perform have accrued; and, to Firstar's knowledge,
there are no material breaches, violations or defaults or allegations or
assertions of such by any party thereunder.
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3.17 Undisclosed Liabilities. Except for those liabilities that
are fully reflected or reserved against on the consolidated balance
sheet of Firstar included in the Firstar December 31, 1998 Form 10-K and
for liabilities incurred in the ordinary course of business consistent
with past practice, since December 31, 1998, neither Firstar nor any of
its Subsidiaries has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or
to become due) that, either individually or in the aggregate, has had or
will have a Material Adverse Effect on Firstar.
3.18 Insurance. Firstar and its Subsidiaries have in effect
insurance coverage with reputable insurers or are self-insured, that in
respect of amounts, premiums, types and risks insured, constitutes
reasonably adequate coverage against all risks customarily insured
against by bank holding companies and their subsidiaries comparable in
size and operations to Firstar and its Subsidiaries.
3.19 Environmental Liability. There are no legal,
administrative, arbitral or other proceedings, claims, actions, causes
of action, private environmental investigations or remediation
activities or governmental investigations of any nature seeking to
impose, or that could reasonably result in the imposition, on Firstar of
any liability or obligation arising under common law or under any local,
state or federal environmental statute, regulation or ordinance
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), pending
or threatened against Firstar, which liability or obligation will,
either individually or in the aggregate, have a Material Adverse Effect
on Firstar. To the knowledge of Firstar, there is no reasonable basis
for any such proceeding, claim, action or governmental investigation
that would impose any liability or obligation that will, individually or
in the aggregate, have a Material Adverse Effect on Firstar. Firstar is
not subject to any agreement, order, judgment, decree, letter or
memorandum by or with any Governmental Entity, regulatory agency or
third party imposing any liability or obligation with respect to the
foregoing that will have, either individually or in the aggregate, a
Material Adverse Effect on Firstar.
3.20 Charter Provisions; State Takeover Laws; Firstar Rights
Agreement. (a) The provisions of Section 1131 of the WBCL are not
applicable to this Agreement, the Firstar Option Agreement or the
transactions contemplated hereby or thereby. The Board of Directors of
Firstar has approved the transactions contemplated by this Agreement and
the Firstar Option Agreement for purposes of Article V of the Firstar
Articles and Section 1141 of the WBCL such that the provisions of such
Article V and such Section 1141 will not apply to this Agreement or
Firstar Option Agreement or any of the transactions contemplated hereby
or thereby.
(b) Firstar has taken all action, if any, necessary or
appropriate so that the entering into of this Agreement and the Firstar
Option Agreement, and the consummation of the transactions contemplated
hereby and thereby, do not and will not result in the ability of any
person to exercise any Firstar Shareholder Rights under the Firstar
Rights Agreement or enable or require the Firstar Shareholder Rights to
separate from the shares of Firstar Common Stock to which they are
attached or to be triggered or become exercisable. No "Distribution
Date" or "Shares Acquisition Date" (as such terms are defined in the
Firstar Rights Plan) has occurred.
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3.21 Year 2000. None of Firstar or any of the Firstar
Subsidiaries has received, or reasonably expects to receive, a "Year
2000 Deficiency Notification Letter" (as such term is employed in the
Federal Reserve Board's Supervision and Regulation Letter No.
SR 98-3(SUP), dated March 4, 1998). Firstar has made available to
Mercantile a complete and accurate copy of Firstar's plan, including an
estimate of the anticipated associated costs, for addressing the issues
("Year 2000 Issues") set forth in the interagency statements of the
Federal Financial Institutions Examination Council addressed to the
boards of directors and chief executive officers of all federally
supervised financial institutions regarding Year 2000 safety and soundness
for insured depository institutions. Between the date of this Agreement
and the Effective Time, Firstar shall use reasonable best efforts to
implement such plan. Firstar and its Subsidiaries has complied in all
material respects with the "Interagency Guidelines Establishing Year
2000 Standards for Safety and Soundness" issued pursuant to section 39
of the Federal Deposit Insurance Act and effective October 15, 1998.
3.22 Reorganization; Pooling of Interests. As of the date of
this Agreement, Firstar has no reason to believe that the Merger will
not qualify as a "reorganization" within the meaning of Section 368(a)
of the Code and as a "pooling of interests" for accounting purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF MERCANTILE
Except as disclosed in the Mercantile disclosure schedule
delivered to Firstar concurrently herewith (the "Mercantile Disclosure
Schedule") Mercantile hereby represents and warrants to Firstar as
follows:
4.1 Corporate Organization. (a) Mercantile is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Missouri. Mercantile has the corporate power and authority
to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified
to do business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified would
not, either individually or in the aggregate, have a Material Adverse
Effect on Mercantile. Mercantile is duly registered as a bank holding
company under the BHC Act. True and complete copies of the Articles of
Incorporation of Mercantile (the "Mercantile Articles") and By-Laws of
Mercantile, as in effect as of the date of this Agreement, have
previously been made available by Mercantile to Firstar.
(b) Each Mercantile Subsidiary (i) is duly organized and validly
existing under the laws of its jurisdiction of organization, (ii) is
duly qualified to do business and in good standing in all jurisdictions
(whether Federal, state, local or foreign) where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and in which the failure
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to be so qualified would have a Material Adverse Effect on Mercantile,
and (iii) has all requisite corporate power and authority to own or
lease its properties and assets and to carry on its business as now
conducted.
4.2 Capitalization. (a) The authorized capital stock of
Mercantile consists of 400,000,000 shares of Mercantile Common Stock, of
which, as of March 31, 1999, 157,868,547 shares were issued and
outstanding, and 5,000,000 shares of preferred stock, no par value
("Mercantile Preferred Stock" and, together with the Mercantile Common
Stock, the "Mercantile Capital Stock"), of which none is issued and
outstanding as of the date hereof. As of March 31, 1999, 47,363 shares
of Mercantile Common Stock were held in Mercantile's treasury. As of the
date hereof, no shares of Mercantile Common Stock or Mercantile
Preferred Stock were reserved for issuance, except for (i) the shares of
Mercantile Common Stock issuable pursuant to the Mercantile Option
Agreement, (ii) 11,074,528 shares reserved for issuance pursuant to
employee and director stock plans of Mercantile in effect as of the date
hereof (the "Mercantile Stock Plans"), (iii) 2,000,000 shares reserved
for issuance pursuant to the Mercantile Shareholder Investment Plan (the
"Mercantile DRIP") and (iv) 2,000,000 shares of Series B Junior
Participating Preferred Stock reserved for issuance pursuant to the
Mercantile Rights Agreement. All of the issued and outstanding shares of
Mercantile Capital Stock have been duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. As of the date of
this Agreement, except for the Mercantile Option Agreement, the
Mercantile Stock Plans and as contemplated by the Mercantile Rights
Agreement, Mercantile does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of
any character calling for the purchase or issuance of any shares of
Mercantile Capital Stock or any other equity securities of Mercantile or
any securities representing the right to purchase or otherwise receive
any shares of Mercantile Capital Stock (collectively, "Mercantile
Rights"). Since March 31, 1999, Mercantile has not issued any shares of
its capital stock or any securities convertible into or exercisable for
any shares of its capital stock, other than as permitted by Section
5.2(b) and pursuant to (A) the exercise of employee stock options
granted prior to such date, (B) the Mercantile DRIP and (C) pursuant to
the Mercantile Option Agreement. Mercantile shall terminate or suspend
the Mercantile DRIP prior to the next record date to be declared
following the date hereof with respect to the quarterly dividend payable
on shares of Mercantile Common Stock (currently anticipated to be on or
about June 10, 1999) such that no shares of Mercantile Capital Stock
shall thereafter be issued or become issuable pursuant thereto (the date
of such termination or suspension, the "DRIP Suspension Date").
Mercantile has previously provided Firstar with a list of the option
holders, the date of each option to purchase Mercantile Common Stock
granted, the number of shares subject to each such option, the
expiration date of each such option and the price at which each such
option may be exercised under an applicable Mercantile Stock Plan.
(b) Mercantile owns, directly or indirectly, all of the issued
and outstanding shares of capital stock or other equity ownership
interests of each of the Mercantile Subsidiaries, free and clear of any
Liens, and all of such shares or equity ownership interests are duly
authorized and validly issued and are fully paid, nonassessable (subject
to 12 U.S.C. Section 55) and free of preemptive rights, with no personal
liability attaching to the ownership thereof. No Mercantile
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Subsidiary has or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of capital stock or any other
equity security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock or
any other equity security of such Subsidiary. Section 4.2(b) of the
Mercantile Disclosure Schedule sets forth a list of the material
investments of Mercantile in Non-Subsidiary Affiliates.
4.3 Authority; No Violation. (a) Mercantile has full corporate
power and authority to execute and deliver this Agreement and each of
the Option Agreements and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and
each of the Option Agreements and the consummation of the transactions
contemplated hereby and thereby have been duly and validly approved by
the Board of Directors of Mercantile. The Board of Directors of
Mercantile has directed that this Agreement and the transactions
contemplated hereby be submitted to Mercantile's shareholders for
adoption at a meeting of such shareholders and, except for the adoption
of this Agreement by the affirmative vote of the holders of two-thirds
of the outstanding shares of Mercantile Common Stock entitled to vote
thereon, no other corporate proceedings on the part of Mercantile are
necessary to approve this Agreement and the Option Agreements and to
consummate the transactions contemplated hereby and thereby. This
Agreement and each of the Option Agreements have been duly and validly
executed and delivered by Mercantile and (assuming due authorization,
execution and delivery by Firstar) constitute valid and binding
obligations of Mercantile, enforceable against Mercantile in accordance
with their terms (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of
creditors generally and the availability of equitable remedies).
(b) Neither the execution and delivery of this Agreement or the
Option Agreements by Mercantile, nor the consummation by Mercantile of
the transactions contemplated hereby or thereby, nor compliance by
Mercantile with any of the terms or provisions hereof or thereof, will
(i) violate any provision of the Mercantile Articles or By-Laws, or (ii)
assuming that the consents and approvals referred to in Section 4.4 are
duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to
Mercantile, any of its Subsidiaries or Non-Subsidiary Affiliates or any
of their respective properties or assets or (y) violate, conflict with,
result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event that, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or
a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any Lien upon any of the
respective properties or assets of Mercantile, any of its Subsidiaries
or its Non-Subsidiary Affiliates under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which
Mercantile, any of its Subsidiaries or Non-Subsidiary Affiliates is a
party, or by which they or any of their respective properties or assets
may be bound or affected, except (in the case of clause (y) above) for
such violations, conflicts, breaches or defaults that either
individually or in the aggregate will not have a Material Adverse Effect
on Mercantile.
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4.4 Consents and Approvals. Except for (i) the filing of
applications and notices, as applicable, with the Federal Reserve Board
under the BHC Act and the Federal Reserve Act, as amended, and approval
of such applications and notices, (ii) the State Approvals, (iii) the
filing with the SEC of the Joint Proxy Statement and the S-4, (iv) the
filing of the Wisconsin Articles with the Wisconsin Department pursuant
to the WBCL, (v) the filing of the Missouri Articles with the Missouri
Secretary pursuant to the MBCL, (vi) any consents, authorizations,
approvals, filings or exemptions in connection with compliance with the
applicable provisions of federal and state securities laws relating to
the regulation of broker-dealers, investment advisers or transfer
agents, and federal commodities laws relating to the regulation of
futures commission merchants and the rules and regulations thereunder
and of any applicable SRO, and the rules of the NYSE, or that are
required under consumer finance, mortgage banking and other similar laws
and (vii) such filings and approvals as are required to be made or
obtained under the securities or "Blue Sky" laws of various states in
connection with the issuance of shares of Firstar Capital Stock pursuant
to this Agreement, no consents or approvals of or filings or
registrations with any Governmental Entity are necessary in connection
with (A) the execution and delivery by Mercantile of this Agreement and
the Option Agreements and (B) the consummation by Mercantile of the
transactions contemplated hereby or thereby.
4.5 Reports. Mercantile and each of its Subsidiaries have
timely filed all reports, registrations and statements, together with
any amendments required to be made with respect thereto, that they were
required to file since January 1, 1997 with the Regulatory Agencies, and
all other reports and statements required to be filed by them since
January 1, 1997, including, without limitation, any report or statement
required to be filed pursuant to the laws, rules or regulations of the
United States, any state, or any Regulatory Agency, and have paid all
fees and assessments due and payable in connection therewith, except
where the failure to file such report, registration or statement or to
pay such fees and assessments, either individually or in the aggregate,
will not have a Material Adverse Effect on Mercantile. Except for normal
examinations conducted by a Regulatory Agency in the ordinary course of
the business of Mercantile and its Subsidiaries, no Regulatory Agency
has initiated any proceeding or, to the best knowledge of Mercantile,
investigation into the business or operations of Mercantile or any of
its Subsidiaries since January 1, 1997, except where such proceedings or
investigation will not have, either individually or in the aggregate, a
Material Adverse Effect on Mercantile. There is no unresolved violation,
criticism, or exception by any Regulatory Agency with respect to any
report or statement relating to any examinations of Mercantile or any of
its Subsidiaries that, in the reasonable judgment of Mercantile, will
have, either individually or in the aggregate, a Material Adverse Effect
on Mercantile.
4.6 Financial Statements. Mercantile has previously made
available to Firstar copies of the consolidated balance sheets of
Mercantile and its Subsidiaries as of December 31, for the fiscal years
1997 and 1998, and the related consolidated statements of income,
changes in shareholders' equity and cash flows for the fiscal years 1996
through 1998, inclusive, as reported in Mercantile's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998 filed with the SEC
under the Exchange Act (the "Mercantile 10-K"), in each case accompanied
by the audit report of KPMG LLP, independent public accountants with
respect to Mercantile. The December 31, 1998 consolidated balance sheet
of Mercantile (including the
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related notes, where applicable) fairly presents in all material
respects the consolidated financial position of Mercantile and its
Subsidiaries as of the date thereof, and the other financial statements
referred to in this Section 4.6 (including the related notes, where
applicable) fairly present in all material respects the results of the
consolidated operations and changes in shareholders' equity and
consolidated financial position of Mercantile and its Subsidiaries for
the respective fiscal periods or as of the respective dates therein set
forth; each of such statements (including the related notes, where
applicable) complies in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC
with respect thereto; and each of such statements (including the related
notes, where applicable) has been prepared in all material respects in
accordance with GAAP consistently applied during the periods involved,
except, in each case, as indicated in such statements or in the notes
thereto. The books and records of Mercantile and its Subsidiaries have
been, and are being, maintained in all material respects in accordance
with GAAP and any other applicable legal and accounting requirements and
reflect only actual transactions.
4.7 Broker's Fees. Except for Donaldson, Lufkin & Jenrette and
Morgan Stanley & Co. Incorporated, none of Mercantile nor any Mercantile
Subsidiary nor any of their respective officers or directors has
employed any broker or finder or incurred any liability for any broker's
fees, commissions or finder's fees in connection with the Merger or
related transactions contemplated by this Agreement or the Option
Agreements.
4.8 Absence of Certain Changes or Events. (a) Except as
publicly disclosed in Mercantile Reports filed prior to the date hereof,
since December 31, 1998, no event or events have occurred that has had,
individually or in the aggregate, a Material Adverse Effect on
Mercantile.
(b) Except as publicly disclosed in Mercantile Reports filed
prior to the date hereof, since December 31, 1998, Mercantile and its
Subsidiaries have carried on their respective businesses in all material
respects in the ordinary course.
(c) Since December 31, 1998, neither Mercantile nor any of its
Subsidiaries has (i) except for such actions as are in the ordinary
course of business or except as required by applicable law, (A)
increased the wages, salaries, compensation, pension, or other fringe
benefits or perquisites payable to any executive officer, employee, or
director from the amount thereof in effect as of December 31, 1998, or
(B) granted any severance or termination pay, entered into any contract
to make or grant any severance or termination pay, or paid any bonuses,
that in the aggregate exceed 5% of Mercantile's 1998 salary and employee
benefit expenses (other than customary year-end bonuses for fiscal 1998
and, if applicable, 1999) or (ii) suffered any strike, work stoppage,
slowdown, or other labor disturbance that will have, either individually
or in the aggregate, a Material Adverse Effect on Mercantile.
4.9 Legal Proceedings. (a) Neither Mercantile nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best
of Mercantile's knowledge, threatened, legal, administrative, arbitral
or other proceedings, claims, actions or governmental or regulatory
investigations of any nature against Mercantile or any of its
Subsidiaries or challenging
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the validity or propriety of the transactions contemplated by this
Agreement or the Mercantile Option Agreement as to which, in any such
case, there is a reasonable probability of an adverse determination and
that, if adversely determined, will have, either individually or in the
aggregate, a Material Adverse Effect on Mercantile.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction (other than those that apply to similarly
situated bank holding companies or banks) imposed upon Mercantile, any
of its Subsidiaries or the assets of Mercantile or any of its
Subsidiaries that has had or will have, either individually or in the
aggregate, a Material Adverse Effect on Mercantile or the Surviving
Corporation.
4.10 Taxes and Tax Returns. (a) Each of Mercantile and its
Subsidiaries has duly filed all federal, state, foreign and local
information returns and tax returns required to be filed by it on or
prior to the date hereof (all such returns being accurate and complete
in all material respects) and has duly paid or made provisions for the
payment of all Taxes and other governmental charges that have been
incurred or are due or claimed to be due from it by federal, state,
foreign or local taxing authorities on or prior to the date of this
Agreement (including, without limitation, if and to the extent
applicable, those due in respect of its properties, income, business,
capital stock, deposits, franchises, licenses, sales and payrolls) other
than (i) Taxes or other charges that are not yet delinquent or are being
contested in good faith and have not been finally determined, or (ii)
information returns, tax returns, Taxes or other governmental charges as
to which the failure to file, pay or make provision for will not have,
either individually or in the aggregate, a Material Adverse Effect on
Mercantile. The federal and material state income tax returns of
Mercantile and its Subsidiaries have been examined by the IRS or the
relevant state taxing authorities, as the case may be, through 1994 and
any liability with respect thereto has been satisfied or any liability
with respect to deficiencies asserted as a result of such examination
has been reserved against in accordance with GAAP. To the best of
Mercantile's knowledge, there are no material disputes pending, or
claims asserted for, Taxes or assessments upon Mercantile or any of its
Subsidiaries for which Mercantile has not established reserves in
accordance with GAAP. In addition, (A) proper and accurate amounts have
been withheld by Mercantile and its Subsidiaries from their employees
for all prior periods in compliance in all material respects with the
tax withholding provisions of applicable federal, state and local laws,
except where failure to do so will not, either individually or in the
aggregate, have a Material Adverse Effect on Mercantile, (B) federal,
state and local returns that are accurate and complete in all material
respects have been filed by Mercantile and its Subsidiaries for all
periods for which returns were due with respect to income tax
withholding, Social Security and unemployment taxes, except where
failure to do so will not, either individually or in the aggregate, have
a Material Adverse Effect on Mercantile, (C) the amounts shown on such
federal, state or local returns to be due and payable have been paid in
full or provision therefor has been included by Mercantile in its
consolidated financial statements in accordance with GAAP, except where
failure to do so will not, individually or in the aggregate, have a
Material Adverse Effect on Mercantile and (D) there are no Tax liens
upon any property or assets of Mercantile or its Subsidiaries except
liens for current Taxes not yet due or liens that will not have, either
individually or in the aggregate, a Material Adverse Effect on
Mercantile. Neither Mercantile nor any of its Subsidiaries has been
required to in-
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clude in income any adjustment pursuant to Section 481 of the Code by
reason of a voluntary change in accounting method initiated by
Mercantile or any of its Subsidiaries, and the IRS has not initiated or
proposed in writing any such adjustment or change in accounting method,
in either case, that has had or will have, either individually or in the
aggregate, a Material Adverse Effect on Mercantile. Except as set forth
in the financial statements described in Section 4.6 (including the
related notes, where applicable), neither Mercantile nor any of its
Subsidiaries has entered into a transaction that is being accounted for
as an installment obligation under Section 453 of the Code, that will
have, either individually or in the aggregate, a Material Adverse Effect
on Mercantile.
(b) No deduction has been disallowed under Section 162(m) of the
Code for employee remuneration of any amount paid or payable by
Mercantile or any Subsidiary of Mercantile under any contract, plan,
program, arrangement or understanding.
4.11 Employee Benefit Plans. (a) The Mercantile Disclosure
Schedule sets forth a true and complete list of each material employee
benefit, employment or compensation plan, arrangement or agreement that
is maintained, or contributed to, as of the date of this Agreement (the
"Mercantile Benefit Plans") by Mercantile, any of its Subsidiaries or by
any trade or business, whether or not incorporated (a "Mercantile ERISA
Affiliate"), all of which together with Mercantile would be deemed a
"single employer" within the meaning of Section 4001 of ERISA.
(b) Mercantile has heretofore made available to Firstar true and
complete copies of each of the Mercantile Benefit Plans and certain
related documents, including, but not limited to, (i) the actuarial
report for such Mercantile Benefit Plan (if applicable) for the plan
year ended December 31, 1998, and (ii) the most recent determination
letter from the IRS (if applicable) for such Mercantile Benefit Plan.
(c) (i) Each of the Mercantile Benefit Plans has been operated
and administered in all material respects in compliance with applicable
laws, including, but not limited to, ERISA and the Code, (ii) each of
the Mercantile Benefit Plans intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified, and, to the
knowledge of Mercantile, there are no existing circumstances or any
events that have occurred that will adversely affect the qualified
status of any such Mercantile Benefit Plan, (iii) with respect to each
Mercantile Benefit Plan that is subject to Title IV of ERISA, the
present value of accrued benefits under such Mercantile Benefit Plan,
based upon the actuarial assumptions used for funding purposes in the
most recent actuarial report prepared by such Mercantile Benefit Plan's
actuary with respect to such Mercantile Benefit Plan, did not, as of its
latest valuation date, exceed the then current value of the assets of
such Mercantile Benefit Plan allocable to such accrued benefits, (iv) no
Mercantile Benefit Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured), with
respect to current or former employees or directors of Mercantile or its
Subsidiaries beyond their retirement or other termination of service,
other than (A) coverage mandated by applicable law, (B) death benefits
or retirement benefits under any "employee pension plan" (as such term
is defined in Section 3(2) of ERISA), (C) deferred compensation benefits
accrued as liabilities on the books of Mercantile or its Subsidiaries or
-24-
(D) benefits the full cost of which is borne by the current or former
employee or director (or his beneficiary), (v) no material liability
under Title IV of ERISA has been incurred by Mercantile, its
Subsidiaries or any Mercantile ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk
to Mercantile, its Subsidiaries or any Mercantile ERISA Affiliate of
incurring a material liability thereunder, (vi) no Mercantile Benefit
Plan is a "multiemployer pension plan" (as such term is defined in
Section 3(37) of ERISA), (vii) all contributions or other amounts
payable by Mercantile or its Subsidiaries as of the Effective Time with
respect to each Mercantile Benefit Plan in respect of current or prior
plan years have been paid or accrued in accordance with GAAP and Section
412 of the Code, (viii) none of Mercantile, its Subsidiaries or any
other person, including any fiduciary, has engaged in a transaction in
connection with which Mercantile, its Subsidiaries or any Mercantile
Benefit Plan will be subject to either a material civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a material tax imposed
pursuant to Section 4975 or 4976 of the Code, and (ix) to the best
knowledge of Mercantile there are no pending, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of or
against any of the Mercantile Benefit Plans or any trusts related
thereto that will have, either individually or in the aggregate, a
Material Adverse Effect on Mercantile.
(d) Neither the execution and delivery of this Agreement nor the
shareholder approval or consummation of the transactions contemplated
hereby will (either alone or in conjunction with any other event)
(i) result (either alone or upon the occurrence of any additional acts
or events) in any payment (including, without limitation, severance,
unemployment compensation, "excess parachute payment" (within the
meaning of Section 280G of the Code), forgiveness of indebtedness or
otherwise) becoming due to any director or any employee of Mercantile or
any of its affiliates from Mercantile or any of its affiliates under any
Mercantile Benefit Plan or otherwise, (ii) increase or affect the
calculation of the amount of any benefits otherwise payable under any
Mercantile Benefit Plan or (iii) result in any acceleration of the time
of payment or vesting of any such benefits.
4.12 SEC Reports. Mercantile has previously made available to
Firstar an accurate and complete copy of each (a) final registration
statement, prospectus, report, schedule and definitive proxy statement
filed since January 1, 1997 by Mercantile with the SEC pursuant to the
Securities Act or the Exchange Act (the "Mercantile Reports") and prior
to the date hereof and (b) communication mailed by Mercantile to its
shareholders since January 1, 1997 and prior to the date hereof, and no
such Mercantile Report or communication, as of the date thereof,
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances in which they
were made, not misleading, except that information as of a later date
(but before the date hereof) shall be deemed to modify information as of
an earlier date. Since January 1, 1997, as of their respective dates,
all Mercantile Reports filed under the Securities Act and the Exchange
Act complied in all material respects with the published rules and
regulations of the SEC with respect thereto.
4.13 Compliance with Applicable Law. (a) Mercantile and each of
its Subsidiaries hold all material licenses, franchises, permits and
authorizations necessary for the lawful con-
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duct of their respective businesses under and pursuant to each, and have
complied in all material respects with and are not in default in any
material respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating
to Mercantile or any of its Subsidiaries, except where the failure to
hold such license, franchise, permit or authorization or such
noncompliance or default will not, either individually or in the
aggregate, have a Material Adverse Effect on Mercantile.
(b) Except as will not have, either individually or in the
aggregate, a Material Adverse Effect on Mercantile, Mercantile and each
Mercantile Subsidiary have properly administered all accounts for which
it acts as a fiduciary, including accounts for which it serves as a
trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the
governing documents, applicable state and federal law and regulation and
common law. None of Mercantile, any Mercantile Subsidiary, or any
director, officer or employee of Mercantile or of any Mercantile
Subsidiary, has committed any breach of trust with respect to any such
fiduciary account that will have a Material Adverse Effect on
Mercantile, and the accountings for each such fiduciary account are true
and correct in all material respects and accurately reflect the assets
of such fiduciary account.
4.14 Certain Contracts. (a) Neither Mercantile nor any of its
Subsidiaries is a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i) with respect
to the employment of any directors, officers or employees other than in
the ordinary course of business consistent with past practice, (ii) that
is a "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this
Agreement that has not been filed or incorporated by reference in the
Mercantile Reports, (iii) that materially restricts the conduct of any
line of business by Mercantile or upon consummation of the Merger will
materially restrict the ability of the Surviving Corporation to engage
in any line of business in which a bank holding company may lawfully
engage or (iv) with or to a labor union or guild (including any
collective bargaining agreement). Mercantile has previously made
available to Firstar true and correct copies of all employment and
deferred compensation agreements that are in writing and to which
Mercantile is a party. Each contract, arrangement, commitment or
understanding of the type described in this Section 4.14(a) and in
Section 4.11(a), whether or not set forth in the Mercantile Disclosure
Schedule, is referred to herein as a "Mercantile Contract", and neither
Mercantile nor any of its Subsidiaries knows of, or has received notice
of, any violation of the above by any of the other parties thereto that
will have, individually or in the aggregate, a Material Adverse Effect
on Mercantile.
(b) (i) Each Mercantile Contract is valid and binding on
Mercantile or any of its Subsidiaries, as applicable, and in full force
and effect, (ii) Mercantile and each of its Subsidiaries has in all
material respects performed all obligations required to be performed by
it to date under each Mercantile Contract, except where such
noncompliance, either individually or in the aggregate, will not have a
Material Adverse Effect on Mercantile, and (iii) no event or condition
exists that constitutes or, after notice or lapse of time or both, will
constitute, a material default on the part of Mercantile or any of its
Subsidiaries under any such Mercantile
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Contract, except where such default, either individually or in the
aggregate, will not have a Material Adverse Effect on Mercantile.
4.15 Agreements with Regulatory Agencies. Neither Mercantile nor
any of its Subsidiaries is subject to any cease-and-desist or other
order issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any order
or directive by, or has been since January 1, 1997, a recipient of any
supervisory letter from, or since January 1, 1997, has adopted any board
resolutions at the request of any Regulatory Agency or other
Governmental Entity that currently restricts in any material respect the
conduct of its business or that in any material manner relates to its
capital adequacy, its credit policies, its management or its business
(each, whether or not set forth in the Mercantile Disclosure Schedule, a
"Mercantile Regulatory Agreement"), nor has Mercantile or any of its
Subsidiaries been advised since January 1, 1997, by any Regulatory
Agency or other Governmental Entity that it is considering issuing or
requesting any such Regulatory Agreement.
4.16 Interest Rate Risk Management Instruments. All Derivative
Instruments to which Mercantile or any of its Subsidiaries is a party,
whether entered into for the account of Mercantile or for the account of
a customer of Mercantile or one of its Subsidiaries, were entered into
in the ordinary course of business and, to Mercantile's knowledge, in
accordance with prudent banking practice and applicable rules,
regulations and policies of any Regulatory Authority and with
counterparties believed to be financially responsible at the time and
are legal, valid and binding obligations of Mercantile or one of its
Subsidiaries enforceable in accordance with their terms (except as may
be limited by bankruptcy, insolvency, moratorium, reorganization or
similar laws affecting the rights of creditors generally and the
availability of equitable remedies), and are in full force and effect.
Mercantile and each of its Subsidiaries have duly performed in all
material respects all of their material obligations thereunder to the
extent that such obligations to perform have accrued; and to
Mercantile's knowledge, there are no material breaches, violations or
defaults or allegations or assertions of such by any party thereunder.
4.17 Undisclosed Liabilities. Except for those liabilities that
are fully reflected or reserved against on the consolidated balance
sheet of Mercantile included in the Mercantile December 31, 1998 Form
10-K and for liabilities incurred in the ordinary course of business
consistent with past practice, since December 31, 1998, neither
Mercantile nor any of its Subsidiaries has incurred any liability of any
nature whatsoever (whether absolute, accrued, contingent or otherwise
and whether due or to become due) that, either individually or in the
aggregate, has had or will have a Material Adverse Effect on Mercantile.
4.18 Insurance. Mercantile and its Subsidiaries have in effect
insurance coverage with reputable insurers or are self-insured, that in
respect of amounts, premiums, types and risks insured, constitutes
reasonably adequate coverage against all risks customarily insured
against by bank holding companies and their subsidiaries comparable in
size and operations to Mercantile and its Subsidiaries.
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4.19 Environmental Liability. There are no legal,
administrative, arbitral or other proceedings, claims, actions, causes
of action, private environmental investigations or remediation
activities or governmental investigations of any nature seeking to
impose, or that reasonably could result in the imposition, on Mercantile
of any liability or obligation arising under common law or under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, CERCLA, pending or threatened against
Mercantile, which liability or obligation will have, either individually
or in the aggregate, a Material Adverse Effect on Mercantile. To the
knowledge of Mercantile, there is no reasonable basis for any such
proceeding, claim, action or governmental investigation that would
impose any liability or obligation that will have, either individually
or in the aggregate, a Material Adverse Effect on Mercantile. Mercantile
is not subject to any agreement, order, judgment, decree, letter or
memorandum by or with any Governmental Entity, regulatory agency or
third party imposing any liability or obligation with respect to the
foregoing that will have, either individually or in the aggregate, a
Material Adverse Effect on Mercantile.
4.20 Charter Provisions; State Takeover Laws; Mercantile Rights
Agreement. (a) The Board of Directors of Mercantile has approved the
transactions contemplated by this Agreement and the Mercantile Option
Agreement for purposes of Article 13, Section B of the Mercantile
Articles and Sections 459.2 and 459.3 of the MBCL such that the
provisions of Article 13, Section A of the Mercantile Articles or such
sections of the MBCL will not apply to this Agreement or the Mercantile
Option Agreement or any of the transactions contemplated hereby or
thereby.
(b) Mercantile has taken all action, if any, necessary or
appropriate so that the entering into of this Agreement and the
Mercantile Stock Option Agreement, and the consummation of the
transactions contemplated hereby and thereby, do not and will not result
in the ability of any person to exercise any Mercantile Shareholder
Rights under the Mercantile Rights Agreement or enable or require the
Mercantile Shareholder Rights to separate from the shares of Mercantile
Common Stock to which they are attached or to be triggered or become
exercisable. No "Distribution Date" or "Stock Acquisition Date" (as such
terms are defined in the Mercantile Rights Plan) has occurred.
4.21 Year 2000. None of Mercantile or any of the Mercantile
Subsidiaries has received, or reasonably expects to receive, a Year 2000
Deficiency Notification Letter. Mercantile has made available to Firstar
a complete and accurate copy of Mercantile's plan, including an estimate
of the anticipated associated costs, for addressing Year 2000 Issues.
Between the date of this Agreement and the Effective Time, Mercantile
shall use reasonable best efforts to implement such plan and any
revisions thereto that may be reasonably requested by Firstar.
Mercantile and its Subsidiaries has complied in all material respects
with the "Interagency Guidelines Establishing Year 2000 Standards for
Safety and Soundness" issued pursuant to section 39 of the Federal
Deposit Insurance Act and effective October 15, 1998.
4.22 Reorganization; Pooling of Interests. As of the date of this
Agreement, Mercantile has no reason to believe that the Merger will not
qualify as a "reorganization" within
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the meaning of Section 368(a) of the Code and, subject to Section 6.4,
as a "pooling of interests" for accounting purposes.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time. During
the period from the date of this Agreement to the Effective Time, except
as expressly contemplated or permitted by this Agreement (including the
Firstar Disclosure Schedule and the Mercantile Disclosure Schedule) or
the Option Agreements, each of Mercantile and Firstar shall, and shall
cause each of their respective Subsidiaries to, (a) conduct its business
in the ordinary course, (b) use reasonable best efforts to maintain and
preserve intact its business organization, employees and advantageous
business relationships and retain the services of its key officers and
key employees and (c) take no action that would adversely affect or
delay the ability of either Mercantile or Firstar to obtain any
necessary approvals of any Regulatory Agency or other Governmental
Entity required for the transactions contemplated hereby or to perform
its covenants and agreements under this Agreement or the Option
Agreements or to consummate the transactions contemplated hereby or
thereby.
5.2 Forbearances. During the period from the date of this
Agreement to the Effective Time, except as set forth in the Mercantile
Disclosure Schedule or the Firstar Disclosure Schedule, as the case may
be, and, except as expressly contemplated or permitted by this Agreement
or the Option Agreements or as otherwise indicated in this Section 5.2,
neither Mercantile nor Firstar shall, and neither Mercantile nor Firstar
shall permit any of their respective Subsidiaries to, without the prior
written consent of the other party to this Agreement:
(a) In the case of Mercantile, other than in the ordinary
course of business, incur any indebtedness for borrowed money
(other than short-term indebtedness incurred to refinance short-
term indebtedness (it being understood that for purposes of this
Section 5.2(a) "short-term" shall mean maturities of six months or
less) and indebtedness of Mercantile or any of its Subsidiaries to
Mercantile or any of its wholly-owned Subsidiaries), assume,
guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual,
corporation or other entity, or make any loan or advance (it being
understood and agreed that incurrence of indebtedness in the
ordinary course of business shall include, without limitation, the
creation of deposit liabilities, purchases of Federal funds, sales
of certificates of deposit and entering into repurchase
agreements);
(b) (i) in the case of Mercantile, adjust, split, combine or
reclassify any capital stock;
(ii) make, declare or pay any dividend, or make any other
distribution on, or directly or indirectly redeem, purchase
or otherwise acquire, any shares of its capital stock or any
securities or obligations convertible (whether currently
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convertible or convertible only after the passage of time or
the occurrence of certain events) into or exchangeable for
any shares of its capital stock (except (A) in the case of
Firstar, for regular quarterly cash dividends at a rate not
in excess of $0.30 per share of Firstar Common Stock, (B) in
the case of Mercantile, for regular quarterly cash dividends
on Mercantile Common Stock at a rate not in excess of $0.34
per share of Mercantile Common Stock and (C) dividends paid
by any of the Subsidiaries of each of Mercantile and Firstar
to Mercantile or Firstar or any of their Subsidiaries,
respectively, and dividends paid in the ordinary course of
business consistent with past practice by any Subsidiaries
(whether or not wholly owned) of each of Mercantile and
Firstar);
(iii) in the case of Mercantile, grant any stock
appreciation rights or grant any individual, corporation or
other entity any right to acquire any shares of its capital
stock, other than pursuant to the Mercantile Rights
Agreement as in effect as of the date hereof;
(iv) in the case of Mercantile, issue any additional
shares of capital stock except pursuant to (A) the exercise
of stock options outstanding as of the date hereof, (B) the
Mercantile Option Agreement (C) the Mercantile Rights
Agreement or (D) the Mercantile DRIP in the ordinary course
of business prior to the DRIP Suspension Date; or
(c) in the case of Mercantile, sell, transfer, mortgage,
encumber or otherwise dispose of any material part of its business or
any of its material properties or assets to any individual, corporation
or other entity other than a Subsidiary, or cancel, release or assign
any indebtedness to any such person or any claims held by any such
person, except in the ordinary course of business or pursuant to
contracts or agreements in force at the date of this Agreement;
(d) in the case of Mercantile, except for transactions in the
ordinary course of business or pursuant to contracts or agreements in
force at the date of or permitted by this Agreement, make any material
investment (either by purchase of stock or securities, contributions to
capital, property transfers, or purchase of any property or assets) in
any other individual, corporation or other entity other than a
Subsidiary thereof;
(e) in the case of Mercantile, except for transactions in the
ordinary course of business, terminate, or waive any material provision
of, any Mercantile Contract or make any change in any instrument or
agreement governing the terms of any of its securities, or material
lease or contract, other than normal renewals of contracts and leases
without material adverse changes of terms;
(f) in the case of Mercantile, increase in any manner the
compensation or fringe benefits of any of its employees or pay any
pension or retirement allowance not required by any existing plan or
agreement to any such employees or become a party to, amend or commit
itself to any pension, retirement, profit-sharing or welfare benefit
plan or agreement (or any individual agreements evidencing grants or
awards thereunder) or employment agreement with
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or for the benefit of any employee other than in the ordinary course of
business, or accelerate the vesting of, or the lapsing of restrictions
with respect to, any stock options or other stock-based compensation;
(g) solicit or encourage from any third party or enter into any
negotiations, discussions or agreement in respect of, or authorize any
individual, corporation or other entity to solicit or encourage from any
third party or enter into any negotiations, discussions or agreement in
respect of, or provide or cause to be provided any confidential
information in connection with, any inquiries or proposals relating to
the disposition of all or substantially all of its business or assets,
or the acquisition of its voting securities, or the merger or
consolidation of it or any of its Subsidiaries with any corporation or
other entity, other than as provided by this Agreement (and it has
discontinued any such negotiations or discussions initiated prior to the
date hereof and shall promptly notify the other party hereto of all of
the relevant details relating to all inquiries and proposals that it may
receive from and after the date hereof through and excluding the
Effective Time relating to any of such matters);
(h) in the case of Mercantile, settle any material claim, action
or proceeding involving money damages, except in the ordinary course of
business;
(i) knowingly take any action that would prevent or impede the
Merger from qualifying (i) for "pooling of interests" accounting
treatment or (ii) as a reorganization within the meaning of Section
368(a) of the Code; provided, however, that nothing contained herein
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shall limit the ability of Mercantile or Firstar to exercise its rights
under the Firstar Option Agreement or the Mercantile Option Agreement,
as the case may be;
(j) amend its certificate of incorporation or its bylaws;
(k) in the case of Mercantile, other than in prior consultation
with Firstar, restructure or materially change its investment securities
portfolio or its gap position, through purchases, sales or otherwise, or
the manner in which the portfolio is classified or reported;
(l) take any action that is intended or expected to result in
any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect at any time prior to
the Effective Time, or in any of the conditions to the Merger set forth
in Article VII not being satisfied or in a violation of any provision of
this Agreement, except, in every case, as may be required by applicable
law;
(m) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP or
regulatory guidelines; or
(n) agree to take, make any commitment to take, or adopt any
resolutions of its board of directors in support of, any of the actions
prohibited to it by this Section 5.2.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters. (a) Mercantile and Firstar shall
promptly prepare and file with the SEC the Joint Proxy Statement and
Firstar shall promptly prepare and file with the SEC the S-4, in which
the Joint Proxy Statement will be included as a prospectus. Each of
Mercantile and Firstar shall use their reasonable best efforts to have
the S-4 declared effective under the Securities Act as promptly as
practicable after such filing, and Mercantile and Firstar shall
thereafter mail or deliver the Joint Proxy Statement to their respective
shareholders. Firstar shall also use its reasonable best efforts to
obtain all necessary state securities law or "Blue Sky" permits and
approvals required to carry out the transactions contemplated by this
Agreement, and Mercantile shall furnish all information concerning
Mercantile and the holders of Mercantile Common Stock as may be
reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use
their reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and
filings, to obtain as promptly as practicable all permits, consents,
approvals and authorizations of all third parties and Governmental
Entities that are necessary or advisable to consummate the transactions
contemplated by this Agreement (including, without limitation, the
Merger) and the Option Agreements, and to comply with the terms and
conditions of all such permits, consents, approvals and authorizations
of all such Governmental Entities. Mercantile and Firstar shall have the
right to review in advance, and, to the extent practicable, each will
consult the other on, in each case subject to applicable laws relating
to the exchange of information, all the information relating to Firstar
or Mercantile, as the case may be, and any of their respective
Subsidiaries, that appears in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection
with the transactions contemplated by this Agreement. In exercising the
foregoing rights of review and consultation, each of the parties hereto
shall act reasonably and as promptly as practicable. The parties hereto
agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all
third parties and Governmental Entities necessary or advisable to
consummate the transactions contemplated by this Agreement and the
Option Agreements and each party will keep the other apprised of the
status of matters relating to completion of the transactions
contemplated herein.
(c) Mercantile and Firstar shall, upon request, furnish each
other with all information concerning themselves, their Subsidiaries,
directors, officers and shareholders and such other matters as may be
reasonably necessary or advisable in connection with the Joint Proxy
Statement, the S-4 or any other statement, filing, notice or application
made by or on behalf of Mercantile, Firstar or any of their respective
Subsidiaries to any Governmental Entity in connection with the Merger
and the other transactions contemplated by this Agreement.
(d) Mercantile and Firstar shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent
or approval is required for con-
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summation of the transactions contemplated by this Agreement or the
Option Agreements that causes such party to believe that there is a
reasonable likelihood that any Requisite Regulatory Approval will not be
obtained or that the receipt of any such approval will be materially
delayed.
6.2 Access to Information. (a) Upon reasonable notice and
subject to applicable laws relating to the exchange of information, each
of Mercantile and Firstar, for the purposes of verifying the
representations and warranties of the other and preparing for the Merger
and the other matters contemplated by this Agreement, shall, and shall
cause each of their respective Subsidiaries to, afford to the officers,
employees, accountants, counsel and other representatives of the other
party, access, during normal business hours during the period prior to
the Effective Time, to all its properties, books, contracts, commitments
and records and, during such period, each of Mercantile and Firstar
shall, and shall cause their respective Subsidiaries to, make available
to the other party (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period
pursuant to the requirements of federal securities laws or federal or
state banking laws (other than reports or documents that Mercantile or
Firstar, as the case may be, is not permitted to disclose under
applicable law) and (ii) all other information concerning its business,
properties and personnel as such party may reasonably request. Neither
Mercantile nor Firstar nor any of their respective Subsidiaries shall be
required to provide such access or to disclose such information where
such access or disclosure would violate or prejudice the rights of
Mercantile's or Firstar's, as the case may be, customers, jeopardize the
attorney-client privilege of the institution in possession or control of
such information or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior
to the date of this Agreement. The parties hereto will make appropriate
substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
(b) Each of Mercantile and Firstar shall hold all information
furnished by or on behalf of the other party or any of such party's
Subsidiaries or representatives pursuant to Section 6.2(a) in confidence
to the extent required by, and in accordance with, the provisions of
confidentiality agreements, dated April 21, 1999 and April 23, 1999, in
each case between Mercantile and Firstar (together, the "Confidentiality
Agreement").
(c) No investigation by either of the parties or their
respective representatives shall affect the representations and
warranties of the other set forth herein.
6.3 Shareholders' Approvals. Each of Mercantile and Firstar
shall call a meeting of its shareholders to be held as soon as
reasonably practicable for the purpose of voting upon the requisite
shareholder approvals required in connection with this Agreement and the
transactions contemplated hereby, and each shall use its reasonable best
efforts to cause such meetings to occur as soon as reasonably
practicable and on the same date. The Boards of Directors of each of
Firstar and Mercantile shall use its reasonable best efforts to obtain
from such shareholders the vote in favor of the approval of this
Agreement required by the WBCL and, as applicable, the rules of the
NYSE, in the case of Firstar, or by the MBCL, in the case of Mercantile,
to consummate the transactions contemplated hereby.
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6.4 Legal Conditions to Merger. Each of Mercantile and Firstar
shall, and shall cause its Subsidiaries to, use their reasonable best
efforts (a) to take, or cause to be taken, all actions necessary, proper
or advisable to comply promptly with all legal requirements that may be
imposed on such party or its Subsidiaries with respect to the Merger
and, subject to the conditions set forth in Article VII hereof, to
consummate the transactions contemplated by this Agreement, and (b) to
obtain (and to cooperate with the other party to obtain) any material
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party that is required to be
obtained by Firstar or Mercantile or any of their respective
Subsidiaries in connection with the Merger and the other transactions
contemplated by this Agreement. Without limiting the foregoing and
notwithstanding any other provision hereof to the contrary, Mercantile
shall promptly take (or has taken prior to the date hereof) any and all
action with respect to any Mercantile Benefit Plan (including any
Mercantile Stock Plan) and any award agreement thereunder (including, if
necessary, appropriately amending such Plan) to the extent such action
is reasonably necessary in order for the Merger to qualify for "pooling
of interests" accounting treatment.
6.5 Affiliates; Publication of Combined Financial Results. (a)
Each of Mercantile and Firstar shall use its reasonable best efforts to
cause each director, executive officer and other person who is an
"affiliate" (for purposes of Rule 145 under the Securities Act, in the
case of Mercantile only, and for purposes of qualifying the Merger for
"pooling of interests" accounting treatment) of such party to deliver to
the other party hereto, as soon as practicable after the date of this
Agreement, and prior to the date of the shareholders' meetings called by
Mercantile and Firstar to approve this Agreement, a written agreement,
in the form of Exhibit 6.5(a)(1) or (2), as applicable, hereto,
providing that such person will not sell, pledge, transfer or otherwise
dispose of any shares of Mercantile Common Stock or Firstar Common Stock
held by such "affiliate" and, in the case of the "affiliates" of
Mercantile, the shares of Firstar Common Stock to be received by such
"affiliate" in the Merger.
(b) The Surviving Corporation shall use its best efforts to
publish as promptly as reasonably practical, but in no event later than
90 days after the end of the first month after the Effective Time in
which there are at least 30 days of post-Merger combined operations
(which month may be the month in which the Effective Time occurs),
combined sales and net income figures as contemplated by and in
accordance with the terms of SEC Accounting Series Release No. 135.
6.6 Stock Exchange Listing. Firstar shall cause the shares of
Firstar Common Stock to be issued in the Merger to be approved for
listing on the NYSE, subject to official notice of issuance, prior to
the Effective Time.
6.7 Employee Benefit Plans. (a) From and after the Effective
Time, unless otherwise mutually determined, the Firstar Benefit Plans
and Mercantile Benefit Plans in effect as of the date of this Agreement
shall remain in effect with respect to employees of Firstar or
Mercantile (or their Subsidiaries), respectively, covered by such plans
at the Effective Time until such time as the Surviving Corporation
shall, subject to applicable law, the terms of this Agreement and the
terms of such plans, adopt new benefit plans with respect to employees
of
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the Surviving Corporation and its Subsidiaries (the "New Benefit
Plans"). Prior to the Closing Date, Firstar and Mercantile shall
cooperate in reviewing, evaluating and analyzing the Mercantile Benefit
Plans and Firstar Benefit Plans with a view towards developing
appropriate New Benefit Plans for the employees covered thereby. From
and after the Effective Time, Firstar will, or will cause the Surviving
Corporation to, recognize the prior service with Mercantile or its
subsidiaries of each employee of Mercantile or any of its subsidiaries
as of the Effective Time (the "Mercantile Employees") in connection with
all Firstar employee benefit plans in which such Mercantile Employees
are eligible to participate following the Effective Time, for purposes
of eligibility, vesting and levels of benefits (but not for purposes of
benefit accruals under any defined benefit pension plan). From and after
the Effective Time, Firstar will, or will cause the Surviving
Corporation to, (i) cause any pre-existing conditions or limitations and
eligibility waiting periods under any group health plans of Firstar to
be waived with respect to the Mercantile Employees and their eligible
dependents and (ii) give each Mercantile Employee credit for the plan
year in which the Effective Time occurs towards applicable deductibles
and annual out-of-pocket limits for expenses incurred prior to the
Effective Time.
(b) The foregoing notwithstanding, the Surviving Corporation
agrees to honor in accordance with their terms all benefits vested as of
the Effective Time under the Mercantile Benefit Plans provided that such
Mercantile Benefit Plans are maintained and administered after the date
hereof not in violation of Section 5.2(f) of this Agreement.
(c) Nothing in this Section 6.7 shall be interpreted as
preventing the Surviving Corporation from amending, modifying or
terminating any Mercantile Benefit Plans, Firstar Benefit Plans, or
other contracts, arrangements, commitments or understandings, in
accordance with their terms and applicable law.
6.8 Indemnification; Directors' and Officers' Insurance. (a)
In the event of any threatened or actual claim, action, suit, proceeding
or investigation, whether civil, criminal or administrative, including,
without limitation, any such claim, action, suit, proceeding or
investigation in which any individual who is now, or has been at any
time prior to the date of this Agreement, or who becomes prior to the
Effective Time, a director or officer or employee of Mercantile or any
of its Subsidiaries, including any entity specified in the Mercantile
Disclosure Schedule (the "Indemnified Parties"), is, or is threatened to
be, made a party based in whole or in part on, or arising in whole or in
part out of, or pertaining to (i) the fact that he or she is or was a
director, officer or employee of Mercantile or any of its Subsidiaries
or any entity specified in the Mercantile Disclosure Schedule or any of
their respective predecessors or (ii) this Agreement, the Option
Agreements or any of the transactions contemplated hereby or thereby,
whether in any case asserted or arising before or after the Effective
Time, the parties hereto agree to cooperate and use their best efforts
to defend against and respond thereto. It is understood and agreed that
after the Effective Time, Firstar shall indemnify and hold harmless, as
and to the fullest extent permitted by law, each such Indemnified Party
against any losses, claims, damages, liabilities, costs, expenses
(including reasonable attorney's fees and expenses in advance of the
final disposition of any claim, suit, proceeding or investigation to
each Indemnified Party to the fullest extent permitted by law upon
receipt of any undertak-
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ing required by applicable law), judgments, fines and amounts paid in
settlement in connection with any such threatened or actual claim,
action, suit, proceeding or investigation.
(b) Firstar shall use its reasonable best efforts to cause the
individuals serving as officers and directors of Mercantile, its
Subsidiaries or any entity specified in the Mercantile Disclosure
Schedule immediately prior to the Effective Time to be covered for a
period of six years from the Effective Time (or the period of the
applicable statute of limitations, if longer) by the directors' and
officers' liability insurance policy maintained by Mercantile
(provided that Firstar may substitute therefor policies of at least
--------
the same coverage and amounts containing terms and conditions that are
not less advantageous than such policy) with respect to acts or
omissions occurring prior to the Effective Time that were committed by
such officers and directors in their capacity as such.
(c) In the event Firstar or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors
and assigns of Firstar assume the obligations set forth in this Section
6.8.
(d) The provisions of this Section 6.8 shall survive the
Effective Time and are intended to be for the benefit of, and shall be
enforceable by, each Indemnified Party and his or her heirs and
representatives.
6.9 Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to carry out
the purposes of this Agreement (including, without limitation, any
merger between a Subsidiary of Firstar, on the one hand, and a
Subsidiary of Mercantile, on the other hand) or to vest the Surviving
Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the parties to the
Merger, the proper officers and directors of each party to this
Agreement and their respective Subsidiaries shall take all such
necessary action as may be reasonably requested by, and at the sole
expense of, Firstar.
6.10 Advice of Changes. Mercantile and Firstar shall each
promptly advise the other party of any change or event (i) having a
Material Adverse Effect on it or (ii) that it believes would or would be
reasonably likely to cause or constitute a material breach of any of its
representations, warranties or covenants contained herein.
6.11 Dividends. After the date of this Agreement, each of
Mercantile and Firstar shall coordinate with the other the declaration
of any dividends in respect of Mercantile Common Stock and Firstar
Common Stock and the record dates and payment dates relating thereto, it
being the intention of the parties hereto that holders of Mercantile
Common Stock shall not receive two dividends, or fail to receive one
dividend, for any quarter with respect to their shares of Mercantile
Common Stock and any shares of Firstar Common Stock any such holder
receives in exchange therefor in the Merger.
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6.12 Exemption from Liability Under Section 16(b). Assuming that
Mercantile delivers to Firstar the Section 16 Information in a timely
fashion prior to the Effective Time, the Board of Directors of Firstar,
or a committee of Non-Employee Directors thereof (as such term is
defined for purposes of Rule 16b-3(d) under the Exchange Act), shall
reasonably promptly thereafter and in any event prior to the Effective
Time adopt a resolution providing that the receipt by the Mercantile
Insiders of Firstar Common Stock in exchange for shares of Mercantile
Common Stock, and of options to purchase shares of Firstar Common Stock
upon conversion of options to purchase shares of Mercantile Common
Stock, in each case pursuant to the transactions contemplated hereby and
to the extent such securities are listed in the Section 16 Information,
are intended to be exempt from liability pursuant to Section 16(b) under
the Exchange Act such that any such receipt shall be so exempt. "Section
16 Information" shall mean information accurate in all respects
regarding the Mercantile Insiders, the number of shares of Mercantile
Common Stock held by each such Mercantile Insider and expected to be
exchanged for Firstar Common Stock in the Merger, and the number and
description of the options to purchase shares of Mercantile Common Stock
held by each such Mercantile Insider and expected to be converted into
options to purchase shares of Firstar Common Stock in connection with
the Merger. "Mercantile Insiders" shall mean those officers and
directors of Mercantile who are subject to the reporting requirements of
Section 16(a) of the Exchange Act and who are listed in the Section 16
Information.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of the parties to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Shareholder Approval. This Agreement and the
transactions contemplated hereby shall have been approved by the
respective requisite affirmative votes of the holders of Firstar
Common Stock and Mercantile Common Stock entitled to vote thereon.
(b) NYSE Listing. The shares of Firstar Common Stock that
shall be issued to the shareholders of Mercantile upon
consummation of the Merger shall have been authorized for listing
on the NYSE, subject to official notice of issuance.
(c) Other Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been
obtained and shall remain in full force and effect and all
statutory waiting periods in respect thereof shall have expired
(all such approvals and the expiration of all such waiting periods
being referred to herein as the "Requisite Regulatory Approvals").
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(d) S-4. The S-4 shall have become effective under the
Securities Act and no stop order suspending the effectiveness of
the S-4 shall have been issued and no proceedings for that purpose
shall have been initiated or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger or any of the other transactions
contemplated by this Agreement shall be in effect. No statute,
rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any Governmental
Entity that prohibits, materially restricts or makes illegal
consummation of the Merger.
(f) Federal Tax Opinion. The parties hereto shall each
have received the opinion of Wachtell, Lipton, Rosen & Katz, in
form and substance reasonably satisfactory to Mercantile and
Firstar, dated the Closing Date, substantially to the effect that,
on the basis of facts, representations and assumptions set forth
in each such opinion that are consistent with the state of facts
existing at the Effective Time:
(i) The Merger will constitute a reorganization
within the meaning of Section 368(a) of the Code, and
Mercantile and Firstar will each be a party to the
reorganization within the meaning of Section 368(b) of the
Code;
(ii) No gain or loss will be recognized by Mercantile
or Firstar as a result of the Merger; and
(iii) No gain or loss will be recognized by
shareholders of Mercantile who exchange all of their
Mercantile Common Stock solely for Firstar Common Stock
pursuant to the Merger (except with respect to cash received
in lieu of a fractional share interest in Firstar Common
Stock).
In rendering such opinions, counsel may require and rely
upon representations contained in certificates of officers of
Mercantile, Firstar and others.
(g) Pooling of Interests. Mercantile and Firstar shall
each have received a letter from their respective independent
accountants addressed to Firstar or Mercantile, as the case may
be, to the effect that the Merger will qualify for "pooling of
interests" accounting treatment.
7.2 Conditions to Obligations of Mercantile. The obligation of
Mercantile to effect the Merger is also subject to the satisfaction, or
waiver by Mercantile, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties. The representations
and warranties of Firstar set forth in this Agreement shall be
true and correct in all material respects as of the date of this
Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as
though made on and as of the
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Closing Date; provided, however, that for purposes of this
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paragraph, such representations and warranties (other than the
representations set forth in Sections 3.2(a), 3.8(a) or 3.17)
shall be deemed to be true and correct unless the failure or
failures of such representations and warranties to be so true and
correct, either individually or in the aggregate, and without
giving effect to any qualification as to materiality or Material
Adverse Effect set forth in such representations or warranties,
has had or will have a Material Adverse Effect on Firstar or the
Surviving Corporation. Mercantile shall have received a
certificate signed on behalf of Firstar by the Chief Executive
Officer and the Chief Financial Officer of Firstar to the
foregoing effect.
(b) Performance of Obligations of Firstar. Firstar shall
have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the
Closing Date, and Mercantile shall have received a certificate
signed on behalf of Firstar by the Chief Executive Officer and the
Chief Financial Officer of Firstar to such effect.
7.3 Conditions to Obligations of Firstar. The obligation of
Firstar to effect the Merger is also subject to the satisfaction or
waiver by Firstar at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. The representations
and warranties of Mercantile set forth in this Agreement shall be
true and correct in all material respects as of the date of this
Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date, provided, however,
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that for purposes of this paragraph, such representations and
warranties (other than the representations set forth in Section
4.2(a), 4.8(a) or 4.17) shall be deemed to be true and correct
unless the failure or failures of such representations and
warranties to be so true and correct, either individually or in
the aggregate, and without giving effect to any qualification as
to materiality set forth in such representations or warranties,
has had or will have a Material Adverse Effect on Mercantile.
Firstar shall have received a certificate signed on behalf of
Mercantile by the Chief Executive Officer and the Chief Financial
Officer of Mercantile to the foregoing effect.
(b) Performance of Obligations of Mercantile. Mercantile
shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to
the Closing Date, and Firstar shall have received a certificate
signed on behalf of Mercantile by the Chief Executive Officer and
the Chief Financial Officer of Mercantile to such effect.
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ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the
matters presented in connection with the Merger by the shareholders of
Mercantile or Firstar:
(a) by mutual consent of Mercantile and Firstar in a
written instrument, if the Board of Directors of each so
determines by a vote of a majority of the members of its entire
Board;
(b) by either the Board of Directors of Mercantile or the
Board of Directors of Firstar if (i) any Governmental Entity that
must grant a Requisite Regulatory Approval has denied approval of
the Merger and such denial has become final and nonappealable or
any Governmental Entity of competent jurisdiction shall have
issued a final nonappealable order permanently enjoining or
otherwise prohibiting the consummation of the transactions
contemplated by this Agreement or (ii) any shareholder approval
required by Section 7.1(a) is not obtained at shareholder meetings
duly convened pursuant to Section 6.3 or at any postponement or
adjournment thereof;
(c) by either the Board of Directors of Mercantile or the
Board of Directors of Firstar if the Merger shall not have been
consummated on or before the first anniversary of the date of this
Agreement, unless the failure of the Closing to occur by such date
shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe the covenants and agreements of
such party set forth herein; or
(d) by either the Board of Directors of Mercantile or the
Board of Directors of Firstar (provided that the terminating
--------
party is not then in breach of any representation, warranty,
covenant or other agreement contained herein) if there shall have
been a breach of any of the covenants or agreements or any of the
representations or warranties set forth in this Agreement on the
part of Firstar, in the case of a termination by Mercantile, or
Mercantile, in the case of a termination by Firstar, which breach,
either individually or in the aggregate, would constitute, if
occurring or continuing on the Closing Date, the failure of the
conditions set forth in Section 7.2 or 7.3, as the case may be,
and that is not cured within 45 days following written notice to
the party committing such breach or by its nature or timing cannot
be cured prior to the Closing Date.
8.2 Effect of Termination. In the event of termination of this
Agreement by either Mercantile or Firstar as provided in Section 8.1,
this Agreement shall forthwith become void and have no effect, and none
of Mercantile, Firstar, any of their respective Subsidiaries or any of
the officers or directors of any of them shall have any liability of any
nature whatsoever hereunder, or in connection with the transactions
contemplated hereby, except that (i) Sections 6.2(b), 8.2, 9.2 and 9.3
shall survive any termination of this Agreement, and (ii)
notwithstanding anything to the contrary contained in this Agreement,
neither Mercantile nor Firstar
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shall be relieved or released from any liabilities or damages arising
out of its willful breach of any provision of this Agreement.
8.3 Amendment. Subject to compliance with applicable law and
Section 1.1(b), this Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at
any time before or after approval of the matters presented in connection
with Merger by the shareholders of Mercantile and Firstar; provided,
--------
however, that after any approval of the transactions contemplated by
- -------
this Agreement by the respective shareholders of Mercantile or Firstar,
there may not be, without further approval of such shareholders, any
amendment of this Agreement that changes the amount or the form of the
consideration to be delivered hereunder to the holders of Mercantile
Common Stock, other than as contemplated by this Agreement. This
Agreement may not be amended except by an instrument in writing signed
on behalf of each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective
Board of Directors, may, to the extent legally allowed, (a) extend the
time for the performance of any of the obligations or other acts of the
other parties hereto, (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant
hereto and (c) waive compliance with any of the agreements or conditions
contained herein; provided, however, that after any approval of the
-------- -------
transactions contemplated by this Agreement by the respective
shareholders of Mercantile or Firstar, there may not be, without further
approval of such shareholders, any extension or waiver of this Agreement
or any portion thereof that reduces the amount or changes the form of
the consideration to be delivered to the holders of Mercantile Common
Stock hereunder, other than as contemplated by this Agreement. Any
agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on
behalf of such party, but such extension or waiver or failure to insist
on strict compliance with an obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") will take place at
10:00 a.m. on a date and at a place to be specified by the parties,
which shall be no later than five business days after the satisfaction
or waiver (subject to applicable law) of the latest to occur of the
conditions set forth in Article VII hereof, unless extended by mutual
agreement of the parties (the "Closing Date").
9.2 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties, covenants and agreements in
this Agreement or in any instrument delivered pursuant to this Agreement
(other than the Option Agreements and the Confidentiality Agreement,
which shall terminate in accordance with the terms thereof) shall survive
the Effective
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Time, except for Section 6.8 and for those other covenants and
agreements contained herein and therein that by their terms apply in
whole or in part after the Effective Time.
9.3 Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expense, provided, however, that
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the costs and expenses of printing and mailing the Joint Proxy
Statement, and all filing and other fees paid to the SEC in connection
with the Merger, shall be borne equally by Mercantile and Firstar.
9.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), mailed by registered or certified mail
(return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Mercantile, to:
Mercantile Bancorporation Inc.
P.O. Box 524
St. Louis, Missouri 63166-0524
Attention: Jon W. Bilstrom
General Counsel and Secretary
Telecopier: (314) 418-1386
and
(b) if to Firstar, to:
Firstar Corporation
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Jennie P. Carlson
Senior Vice President, General Counsel and
Secretary
Telecopier:
9.5 Interpretation. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section
of or Exhibit or Schedule to this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". No provision of
this Agreement shall be construed to require Firstar, Mercantile or any
of their respective Subsidiaries or affiliates to take or fail to take
any action, including, without limitation, the disclosure or non-
disclosure by either party of any information to its shareholders, that
would (or its failure to take would) reasonably be expected to violate
any applicable statue, law, legal duty, rule or regulation.
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9.6 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed
by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
9.7 Entire Agreement. This Agreement (including the documents
and the instruments referred to herein) constitutes the entire agreement
and supersedes all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof other
than the Option Agreements and the Confidentiality Agreement.
9.8 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York, without
regard to any applicable conflicts of law principles.
9.9 Publicity. Except as otherwise required by applicable law
or the rules of the NYSE, neither Mercantile or Firstar shall, or shall
permit any of its Subsidiaries to, issue or cause the publication of any
press release or other public announcement with respect to, or otherwise
make any public statement concerning, the transactions contemplated by
this Agreement without the consent of Firstar, in the case of a proposed
announcement or statement by Mercantile, or Mercantile, in the case of a
proposed announcement or statement by Firstar, which consent shall not
be unreasonably withheld.
9.10 Assignment; Third Party Beneficiaries. Neither this
Agreement nor any of the rights, interests or obligations shall be
assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their
respective successors and assigns. Except as otherwise specifically
provided in Section 6.8, this Agreement (including the documents and
instruments referred to herein) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
9.11 Certain Agreements of the Surviving Corporation. Pursuant
to Section 458 of the MBCL, and effective at the Effective Time, the
Surviving Corporation agrees that (i) it will promptly pay to the
holders of Dissenting Shares the amount, if any, to which they shall be
entitled under the provisions of the MBCL with respect to the rights of
dissenting shareholders, and (ii) it may be served with process in
Missouri, and hereby irrevocably appoints the Missouri Secretary as its
agent to accept service of process, in any proceeding based upon any
cause of action against Mercantile arising in Missouri prior to the
issuance of the Missouri Articles by the Missouri Secretary, and in any
proceeding for the enforcement of rights of a holder of Dissenting
Shares as such against the Surviving Corporation.
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IN WITNESS WHEREOF, Mercantile and Firstar have caused this
Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
FIRSTAR CORPORATION
By: /s/ JERRY A. GRUNDHOFER
---------------------------------------
Jerry A. Grundhofer
President and Chief
Executive Officer
MERCANTILE BANCORPORATION INC.
By: /s/ THOMAS H. JACOBSEN
---------------------------------------
Thomas H. Jacobsen
Chairman of the Board, President and Chief
Executive Officer
[Agreement and Plan of Merger]
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