SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-12
First Banks America, Inc.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
Common stock of First Banks America, Inc.
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(2) Aggregate number of securities to which transaction applies:
798,753 shares
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
$40.54 per share (Represents the agreed-upon buyout price of the
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common shares held publicly)
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(4) Proposed maximum aggregate value of transaction: $32,381,446.62
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(5) Total fee paid: $2,979.09
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[ ] Fee paid previously with preliminary materials.
[X] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid: $2,979.09
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(2) Form, Schedule or Registration Statement No.: Schedule 13E-3
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(3) Filing Party: First Banks, Inc.
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(4) Date Filed: October 8, 2002
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JOHN S. DANIELS
ATTORNEY AT LAW
6440 NORTH CENTRAL EXPRESSWAY
SUITE 503
DALLAS, TEXAS 75206
(214) 368-9405
October 8, 2002
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: First Banks America, Inc. ("Registrant") preliminary proxy materials
for Annual Meeting of Stockholders
Ladies and Gentlemen:
Pursuant to Rule 14a-6 under the Securities Exchange Act of 1934,
enclosed on behalf of my client, First Banks America, Inc., are a Notice of
Annual Meeting, a preliminary Proxy Statement and form of Proxy in the form that
such materials are intended to be mailed to stockholders on or about
November __, 2002. Also enclosed is a Schedule 14A Information cover sheet
setting forth required information. The filing fee reflected on the cover sheet
has been paid in accordance with Commission procedures.
If you require additional information regarding this filing, please
contact the undersigned at (214) 368-9405.
Sincerely,
/s/ John S. Daniels
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John S. Daniels
First Banks America, Inc.
550 Montgomery Street
San Francisco, California 94111
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held Thursday, December 12, 2002
To the Stockholders of First Banks America, Inc.:
Notice is hereby given that the 2002 Annual Meeting of Stockholders
(the "Annual Meeting") of First Banks America, Inc., a Delaware corporation
("FBA"), will be held at 135 North Meramec, Clayton, Missouri, on Thursday,
December 12, 2002 at 4:00 p.m., local time, for the following purposes:
(1) To approve and adopt an Agreement and Plan of Merger dated September
23, 2002 by and among FBA, First Banks and FBA Acquisition whereby FBA
Acquisition will be merged with and into FBA, the stockholders of FBA
(other than First Banks) will be paid $40.54 per share for each share
of FBA common stock which they own, and FBA will become a wholly-owned
subsidiary of First Banks;
(2) To elect seven directors to serve until the next Annual Meeting and
until their successors have been duly elected and qualified; and
(3) To transact any and all other business as may properly be presented at
the meeting and any adjournment(s) thereof.
The board of directors has fixed the close of business on November 1,
2002 as the record date for the determination of stockholders entitled to notice
of and to vote at the Annual Meeting and any adjournment(s) thereof. The stock
transfer books will not be closed. A list of stockholders entitled to vote at
the meeting will be available for examination at 135 North Meramec, Clayton,
Missouri 63105 for ten (10) days prior to the meeting.
You are cordially invited to attend the Annual Meeting. However,
whether or not you plan to be present, you are urged to promptly mark, sign,
date and return the accompanying proxy in the enclosed, self-addressed, stamped
envelope, so that your shares may be voted in accordance with your wishes.
Your proxy will be returned to you if you should request such return in
the manner provided for revocation of proxies on page 9 of the enclosed Proxy
Statement. Your prompt response will reduce the time and expense of
solicitation.
By Order of the Board of Directors,
/s/ Allen H. Blake
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San Francisco, California ALLEN H. BLAKE
November __, 2002 Secretary
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE TRANSACTION DISCUSSED HEREIN, PASSED
UPON THE MERITS OR FAIRNESS OF THE TRANSACTION, OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THE DISCLOSURE HEREIN. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
SUMMARY TERM SHEET........................................................................................ 1
The Companies........................................................................................ 1
The Annual Meeting................................................................................... 2
The Merger........................................................................................... 2
The Merger Agreement................................................................................. 5
Election of Directors................................................................................ 6
QUESTIONS AND ANSWERS REGARDING THE ANNUAL MEETING
AND THE MERGER......................................................................................... 6
The Annual Meeting................................................................................... 6
The Merger........................................................................................... 7
Elections of FBA's Board of Directors................................................................ 9
SOLICITATION AND REVOCABILITY OF PROXIES.................................................................. 9
FORWARD-LOOKING STATEMENTS IN THIS PROXY STATEMENT........................................................ 10
SUMMARIZED FINANCIAL INFORMATION.......................................................................... 11
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS.............................................................. 12
General.............................................................................................. 12
Security Ownership of Management and of Controlling Stockholder...................................... 13
PROPOSAL NUMBER 1......................................................................................... 14
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT............................................................. 14
SPECIAL FACTORS........................................................................................... 14
Background of and Reasons for the Merger............................................................. 14
Consideration of the Merger.......................................................................... 18
Opinion of the Financial Advisor to the Special Committee............................................ 20
FBA's Analysis of the Fairness of the Merger......................................................... 24
THE MERGER................................................................................................ 26
Interests of Directors and Officers in the Merger.................................................... 26
Federal Income Tax Consequences...................................................................... 27
Appraisal Rights..................................................................................... 27
Regulatory Approvals................................................................................. 30
Recent Purchases of Stock............................................................................ 30
Accounting Treatment................................................................................. 31
Estimated Expenses; Financing........................................................................ 32
THE MERGER AGREEMENT...................................................................................... 33
Representations and Warranties....................................................................... 33
Conditions to the Consummation of the Merger......................................................... 34
Conduct of Business Pending the Merger............................................................... 35
Additional Agreements................................................................................ 36
Termination; Damages................................................................................. 37
Amendment and Waiver................................................................................. 37
Expenses............................................................................................. 37
PROPOSAL NUMBER 2......................................................................................... 38
ELECTION OF DIRECTORS..................................................................................... 38
Nominees............................................................................................. 38
Executive Officers................................................................................... 39
Committees and Meetings of the Board of Directors.................................................... 40
Director Compensation................................................................................ 40
Family Relationships................................................................................. 40
Certain Relationships and Related Transactions....................................................... 40
EXECUTIVE COMPENSATION.................................................................................... 41
Summary Compensation Table........................................................................... 41
STOCK PERFORMANCE GRAPH................................................................................... 42
COMPENSATION COMMITTEE REPORT............................................................................. 43
AUDIT COMMITTEE REPORT.................................................................................... 44
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION............................................... 45
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE................................................... 46
INDEPENDENT AUDITORS...................................................................................... 46
AVAILABLE INFORMATION..................................................................................... 46
INCORPORATION OF INFORMATION BY REFERENCE................................................................. 47
STOCKHOLDER PROPOSALS..................................................................................... 47
First Banks America, Inc.
550 Montgomery Street
San Francisco, California 94111
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on December 12, 2002
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SUMMARY TERM SHEET
This summary term sheet highlights selected information from this proxy
statement and may not contain all of the information that is important to you.
We encourage you to carefully read this entire proxy statement, including the
appendices, and the other documents we refer to for a more complete
understanding of the merger, described in more detail under the heading
"PROPOSAL NUMBER 1." In addition, we incorporate by reference important business
and financial information about FBA into this proxy statement.
The Companies
FBA is a bank holding company headquartered in San Francisco,
California. Approximately 93.78% of the voting stock of FBA is owned by First
Banks, Inc., which is also a bank holding company (described below);
accordingly, First Banks controls FBA. To avoid confusion, we refer throughout
this proxy statement to First Banks, Inc. as "First Banks" and First Banks
America, Inc. as "FBA."
FBA conducts business through our bank subsidiary, First Bank & Trust,
which has 49 offices located in California and 8 offices in Texas. As of June
30, 2002, FBA had total stockholders' equity of $301.9 million, total assets of
$3.06 billion, total net loans of $2.28 billion and total deposits of $2.53
billion. First Bank & Trust is based in San Francisco, California. A description
of the business of FBA and First Bank & Trust appears in FBA's Annual Report on
Form 10-K for the year ended December 31, 2001, one of the documents
incorporated by reference in this proxy statement. FBA's principal executive
offices are located at 550 Montgomery Street, San Francisco, California 94111,
and the telephone number at that address is (415) 781-7810.
Additional information regarding FBA is contained in its Annual Report
on Form 10-K for the year ended December 31, 2001 and its Quarterly Reports on
Form 10-Q for the quarterly periods ended March 31, 2002 and June 30, 2002, all
of which are incorporated by reference herein. See "AVAILABLE INFORMATION" and
"INCORPORATION OF INFORMATION BY REFERENCE."
First Banks is based in St. Louis, Missouri. As of June 30, 2002, First
Banks had total stockholders' equity of $479.6 million, total assets of $7.01
billion, total net loans of $5.36 billion and total deposits of $5.91 billion.
First Banks acquired control of a majority of the voting stock of FBA in 1994
and, since that time, has controlled FBA and the election of a majority of the
members of FBA's board of directors.
FBA Acquisition Corporation ("FBA Acquisition") is a Delaware
corporation formed and wholly-owned by First Banks solely for the purpose of
engaging in the merger. FBA Acquisition has not engaged in any business
activities except in contemplation of the merger and, if the merger is
consummated, its separate corporate existence will terminate.
The Annual Meeting
Date, Time and Place (see page 9)
The annual meeting will be held at 135 North Meramec, Clayton, Missouri
on Thursday, December 12, 2002 at 4:00 p.m. local time.
Proposals to be Considered (see pages 14 and 38)
There are two proposals scheduled for consideration at the annual
meeting:
o PROPOSAL #1: approval and adoption of an Agreement and Plan of
Merger dated September 23, 2002 by and among FBA, First Banks and
FBA Acquisition (the "merger agreement"), whereby FBA Acquisition
will be merged with and into FBA, the stockholders of FBA (other
than First Banks) will be paid $40.54 per share for each share of
FBA common stock which they own, and FBA will become a
wholly-owned subsidiary of First Banks; and
o PROPOSAL #2: the election of seven nominees for the board of
directors of FBA.
Vote Required for Approval (see page 12)
FBA's Certificate of Incorporation provides a merger involving an
affiliated party such as First Banks must be approved and adopted by the vote of
at least 75% of the combined outstanding common stock and Class B common stock.
In the election of directors, the seven nominees receiving the largest number of
votes cast will be elected.
Holders of shares of FBA common stock and Class B common stock
(including First Banks) are entitled to one vote for each share owned, and they
are permitted to exercise cumulative voting in a contested election of
directors. See "VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS."
Because First Banks already owns approximately 93.78% of FBA's
outstanding voting stock and intends to vote in favor of the merger and the
election of the seven nominees named herein, approval and adoption of the merger
agreement and the election of the nominees is assured.
The Merger
Background; Special Committee (see page 14)
In April 2002, First Banks proposed to FBA that they enter into a
transaction by which First Banks would acquire all of the FBA shares held by its
public stockholders. Because of First Banks' control of FBA, the board of
directors of FBA appointed a special committee (described below), consisting of
the three FBA directors who are not affiliated with First Banks, to consider the
terms of the merger and make a recommendation to the board of directors
regarding the advisability of the transaction.
Structure of the Transaction (see page 26)
FBA, First Banks and FBA Acquisition entered into the merger agreement
on September 23, 2002, providing for First Banks to acquire all of the
outstanding common stock of FBA which it does not already own. The merger
agreement provides that FBA Acquisition will merge with and into FBA, with the
result that FBA will become a wholly-owned subsidiary of First Banks and all of
the stockholders of FBA except First Banks (generally referred to herein as the
public stockholders) will be entitled to receive $40.54 per share for each share
of common stock of FBA which they own immediately prior to the closing of the
merger. We urge you to read the merger agreement, which is attached as Appendix
A to this proxy statement, carefully and in its entirety.
Reasons for the Transaction (see page 14)
FBA's special committee reviewed and considered the following reasons
as a basis for recommending approval of the proposed transaction to FBA's board
of directors:
o The financial benefit of common stock ownership by public
stockholders may not fully reflect the underlying economic value
of FBA.
o FBA's common stock is inadequately valued by sellers as
consideration in potential acquisitions.
o The financial reporting and regulatory requirements may cause
inconsistencies between the interests of First Banks and the
public stockholders.
o The expenses associated with maintaining a publicly owned company
are excessive relative to the amount of FBA common stock
outstanding.
o The special committee believes that the agreed price is fair to
the public stockholders and represents an optimum exit for
unaffiliated stockholders in light of overall market and economic
uncertainties, as well as the prevailing lack of liquidity for
the shares of FBA.
Recommendation of FBA's board of directors (see page 18)
After consulting with an independent financial advisor, and having been
advised by independent legal counsel, the members of the special committee
unanimously approved the merger agreement, and recommended that the board of
directors also do so. The board of directors then unanimously approved the
merger agreement and recommends that the stockholders vote to approve and adopt
it.
Opinion of Baxter Fentriss (see page 20)
The special committee retained Baxter, Fentriss and Company ("Baxter
Fentriss") as its financial advisor to assist the special committee in
evaluating the merger, including the price to be paid to FBA's unaffiliated
stockholders (the public stockholders, excluding officers and directors of FBA).
Baxter Fentriss delivered an opinion to the special committee that, as of the
date of the opinion and based on the procedures followed, factors considered and
assumptions made by Baxter Fentriss, and subject to the limitations set forth in
the opinion, the merger is fair to the unaffiliated stockholders of FBA from a
financial point of view. The complete opinion of Baxter Fentriss is attached as
Appendix B to this proxy statement. We urge you to read it in its entirety.
Position of First Banks as to the Fairness of the Merger (see page 24)
Rules of the Securities and Exchange Commission ("SEC") require First
Banks to express a belief regarding the fairness of the merger to the
unaffiliated stockholders of FBA. First Banks believes that the merger is fair
to such stockholders, based on its own analysis of the terms of the merger
agreement and also on the deliberations of the special committee, the
negotiations which occurred in order to arrive at the price and other material
terms of the merger agreement, the analysis provided by Baxter Fentriss, and
information and advice which First Banks received from its own financial
advisor.
Interests of Directors and Officers in the Merger (see page 26)
Certain of the directors and officers of FBA are owners of FBA common
stock (see the table herein entitled "VOTING SECURITIES AND PRINCIPAL
STOCKHOLDERS"). At the effective time of the merger, they will each receive
$40.54 per share, the same price payable to the public stockholders, for each
share of FBA common stock that they own.
You should also be aware that directors and officers of FBA have
interests in the merger that are in addition to, or different from, those of the
public stockholders of FBA. You may wish to take those interests into account in
determining what weight, if any, to give to the recommendations of the special
committee and the board of directors. These interests can lead to
inconsistencies between the objectives of the officers and directors and those
of the public stockholders, as follows:
o First Banks' controlling shareholder, James F. Dierberg, and
members of his immediate family will be the beneficial owners of
all of the outstanding equity of FBA following the merger and
will therefore obtain the benefit of any future earnings and
growth of FBA and its assets;
o FBA officers and directors who are officers of First Banks will
continue their roles in managing FBA or its successor following
the merger, while the public stockholders will receive cash for
their shares if the merger is consummated and will have no
further interest in FBA;
o FBA's officers and directors are generally entitled to be
indemnified for liabilities arising from their conduct in those
capacities, and First Banks and FBA maintain insurance for the
purpose of protecting them against such liabilities. Furthermore,
the members of the special committee are parties to
indemnification agreements with FBA and First Banks, which
provide generally for indemnification against liabilities which
they may incur as a result of their services as directors of FBA
or as members of the special committee; and
o each member of the special committee has received a fee of
$10,000 for serving on the special committee, and will be
reimbursed for reasonable expenses incurred in connection with
the performance of their responsibilities on the special
committee. Such fees and expenses are payable whether or not the
special committee recommended approval of the merger agreement
and whether or not the merger is consummated.
Material Federal Income Tax Consequences (see page 27)
The receipt by an FBA stockholder of cash for FBA shares will be a
taxable transaction for United States federal income tax purposes. An FBA
stockholder will generally recognize gain or loss in an amount equal to the
difference between the cash received by the stockholder and the stockholder's
tax basis in the FBA shares surrendered in the merger. That gain or loss will be
a capital gain or loss if the FBA shares are held as a capital asset by the
stockholder. Because the tax consequences of the merger may vary depending upon
your particular circumstances, we recommend that you consult with your tax
advisor regarding the tax consequences of the merger.
Appraisal Rights of FBA Stockholders (see page 27)
You will be entitled to appraisal rights under Section 262 of the
Delaware General Corporation Law ("DGCL") in connection with the merger so long
as you take all steps necessary to protect those rights. Section 262 is
reprinted in its entirety as Appendix C to this proxy statement. You will not be
entitled to exercise appraisal rights if you vote in favor of the merger.
The Merger Agreement
Conditions to Completion of the Merger (see page 33)
The obligations of FBA and First Banks to complete the merger are
subject to the prior satisfaction or waiver of certain conditions. The following
conditions must be satisfied or waived before completion of the merger:
o no injunction or order preventing consummation of the merger may
be in effect, and the merger shall not
have been made illegal;
o all legally necessary approvals, consents and authorizations,
including approval by FBA's stockholders and any required
regulatory approvals, shall have been obtained. In that regard,
no approval by federal or state banking regulatory authorities is
required, because First Banks already controls FBA. If it is
determined that any notices to any regulatory authority is
required or desirable, First Banks is required by the merger
agreement to seek such approvals, and FBA is required to
cooperate with respect to such notifications and provide any
information reasonably required in connection therewith; and
o the special committee shall have received an opinion of Baxter
Fentriss to the effect that the merger is fair to the
unaffiliated stockholders of FBA from a financial point of view,
and such opinion shall not have been withdrawn. The fairness
opinion (which appears as Appendix B) was received on September
23, 2002, and we do not have any reason to believe that it will
be withdrawn.
In addition, there are certain additional conditions that must be
satisfied or waived in order for FBA (but not First Banks) to be required to
complete the merger, as follows:
o the representations and warranties made by First Banks and FBA
Acquisition in the merger agreement must be true in all material
respects;
o First Banks and FBA Acquisition must comply with its agreements
in the merger agreement; and
o FBA shall have received all documents required to be received
from First Banks and FBA Acquisition.
Termination of the Merger Agreement (see page 37)
The merger agreement may be terminated before completion of the merger
by First Banks and FBA acting jointly, or by either FBA or First Banks if:
o a breach of the agreement by the other party occurs, which is not
cured within thirty days after receipt of written notice of such
breach;
o any of the conditions to the obligations are not satisfied or
waived on or prior to the closing date and after the expiration
of any applicable cure period;
o the merger is not completed by March 31, 2003; or
o a required regulatory approval is finally denied.
Election of Directors
PROPOSAL NUMBER 2 at the annual meeting is for the election of
directors. The seven nominees for FBA's board of directors are the seven
incumbent directors. Information regarding the nominees and other relevant
information regarding the election of directors appears in this proxy statement
under the heading `PROPOSAL NUMBER 2: ELECTION OF DIRECTORS."
QUESTIONS AND ANSWERS REGARDING
THE ANNUAL MEETING AND THE MERGER
The Annual Meeting
Q: When and where is the annual meeting?
A: The annual meeting of stockholders of FBA will be held on December 12,
2002 at 4:00 o'clock p.m., local time at 135 North Meramec, Clayton,
Missouri.
Q: What am I to vote on?
A: Two proposals are to be voted on by FBA's stockholders of record as of
November 1, 2002: the proposed buyout of FBA through a merger with a
subsidiary of First Banks, and the annual election of the board of
directors of FBA.
Q: Once I have voted, may I change my vote or revoke my proxy?
A: Yes, you may change your vote or revoke your proxy up to the time your
shares are voted at the annual meeting. You may do this in any of three
ways: by giving written notice of revocation to the Secretary of FBA at
our principal executive offices, by executing and delivering a
later-dated proxy, or by attending the annual meeting and voting your
shares in person. Additional information regarding these procedures
appears on page 9 of this proxy statement.
Q: What does the board of directors of FBA recommend?
A: The board of directors recommends that you vote
o FOR approval and adoption of the merger agreement, and
o FOR the election of the seven nominees for director named in this
proxy statement.
In considering the recommendation of the board of directors, you should
take into account that the directors have some interests in the merger
in addition to or different from yours. See the section entitled
"INTEREST OF DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER" for
additional information.
Q: How can I obtain additional information?
A: This proxy statement incorporates certain documents by reference which
you may want to review. Information regarding how to obtain copies of
such documents is set forth under the headings "AVAILABLE INFORMATION"
and "INFORMATION INCORPORATED BY REFERENCE" in this proxy statement.
Any request for information or documents from FBA should be delivered
to us at least ten days prior to the annual meeting.
The Merger
Q: What is the nature of the proposed transaction?
A: The merger will result in
o FBA's becoming a wholly-owned subsidiary of First Banks; and
o each FBA stockholder (other than First Banks) being entitled to
receive $40.54 in cash per share for his or her shares, shortly
after the completion of the merger.
Q: How were the merger price and other terms determined?
A: Because of the relationship between First Banks and FBA, the FBA board
of directors (a majority of whom are affiliated with First Banks)
recognized that the merger should be considered by a special committee
composed solely of directors who are not affiliated with First Banks.
The special committee (Messrs. Charles A. Crocco, Jr., Albert M.
Lavezzo and Edward T. Story, Jr.) was authorized by the board of
directors to analyze the terms on which such a transaction might be
conducted, and to retain its own advisors, including legal and
financial advisors, to assist it in performing such analysis.
The special committee, whose members have received a fee of $10,000
plus reasonable expenses for serving on the special committee,
irrespective of whether any transaction is approved or completed,
engaged independent legal counsel and a financial advisor. Having
considered the information and advice provided by its advisors, the
special committee and its legal counsel negotiated the merger price and
other material terms of the merger agreement with First Banks and its
legal counsel.
For additional information regarding the special committee and its
deliberations and recommendation, see "APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT - Consideration of the Merger."
Q: What are the tax consequences of the merger?
A: The receipt by a stockholder of FBA of cash for his or her shares will
be a taxable transaction for United States federal income tax purposes.
An FBA stockholder will generally recognize gain or loss in an amount
equal to the difference between the cash received by the stockholder
and the stockholder's tax basis in the shares of FBA common stock
surrendered in the merger. That gain or loss will be a capital gain or
loss if the FBA shares are held as a capital asset by the stockholder.
Because the tax consequences of the merger may vary depending upon your
particular circumstances, we recommend that you consult with your tax
advisor regarding the tax consequences of the merger.
Q: What vote is required to approve and adopt the merger agreement?
A: The affirmative vote of 75% or more of the outstanding voting stock of
FBA is required in order to approve and adopt the merger agreement.
Because First Banks owns approximately 93.78% of FBA's voting stock and
intends to vote in favor of the proposal, such approval and adoption is
assured.
Q: What if I oppose the merger? Do I have appraisal rights?
A: If you object to the merger, and if you comply with procedures required
by Delaware law, you may elect to pursue appraisal rights to receive
the "fair value" of your shares as determined under the DGCL. That
"fair value" may be more or less than the merger price of $40.54 per
share of FBA common stock. In order to be eligible to pursue these
rights, you must not vote for approval and adoption of the merger
agreement and you must comply with the procedures and deadlines set
forth in Section 262 of the DGCL.
For additional information regarding the procedures that must be
followed to exercise your rights to an appraisal, see "THE MERGER -
Appraisal Rights." In addition, Appendix C to this proxy statement sets
forth the text of Section 262 of the DGCL, which governs the exercise
of appraisal rights.
Q: When will the merger be completed? Is it subject to conditions?
A: We estimate that the merger will be completed as soon as practicable
following the annual meeting, and during the fourth quarter of 2002.
However, the timing of completion is subject to change and could be
delayed.
Completion of the merger is subject to certain conditions. See "THE
MERGER AGREEMENT - Conditions to the Merger" for additional
information.
Q: Should I send in my FBA stock certificates now?
A: No. If the merger is completed, shortly thereafter you will receive a
letter of transmittal from our exchange agent, with instructions
informing you how to send in your stock certificates. Unless you are
seeking to pursue your appraisal rights, you should use the letter of
transmittal (following the instructions that will accompany it) to
transmit your certificates for the $40.54 per share merger
consideration to which you will be entitled when the merger is
consummated. You should not send in any stock certificates now.
Elections to FBA's Board of Directors
Q: Who are the nominees?
A: The seven nominees all currently serve as directors of FBA and are
being nominated for re-election. Information about the nominees appears
under "PROPOSAL NUMBER 2 - ELECTION OF DIRECTORS - Nominees."
SOLICITATION AND REVOCABILITY OF PROXIES
This proxy statement is being furnished to stockholders of FBA in
connection with the solicitation by FBA's board of directors of proxies to be
voted at the 2002 Annual Meeting of Stockholders (the "Annual Meeting") to be
held on Thursday, December 12, 2002, at the time and place and for the purposes
set forth in the accompanying Notice of Annual Meeting of Stockholders, and at
any adjournment(s) thereof. This proxy statement and the enclosed form of proxy
are first being mailed to the stockholders on or about November __, 2002.
The accompanying form of proxy is designed to permit each holder of FBA
common stock, par value $.15 per share, (1) to vote for or against the approval
and adoption of the merger agreement, as described herein (see the discussion
under the caption "PROPOSAL NUMBER 1"); (2) to vote for or withhold voting for
any or all of the seven nominees for director listed on the proxy (see "PROPOSAL
NUMBER 2"); and (3) to authorize the named proxies to vote in their discretion
with respect to any other proposal properly presented at the Annual Meeting.
As of November 1, 2002, the record date for determining the
stockholders entitled to vote at the Annual Meeting, there were 12,843,860
shares of voting stock outstanding, consisting of 2,500,000 shares of Class B
common stock and 10,343,860 shares of common stock. All of the outstanding
shares of Class B common stock and 9,545,107 of the outstanding shares of common
stock are owned by First Banks. Each share of Class B common stock and of common
stock is entitled to one vote in the election of each director. By virtue of its
ownership of the Class B common stock and common stock referred to above, First
Banks controlled 93.78% of all shares entitled to vote at the Annual Meeting as
of the record date.
First Banks is owned by trusts created and administered by and for the
benefit of James F. Dierberg and members of his immediate family. Mr.Dierberg
is the Chairman of the Board, Chief Executive Officer and President of FBA. Mr.
Dierberg is also Chairman of the Board and Chief Executive Officer of First
Banks. FBA's other executive officers and directors were the record holders of
34,764 shares of common stock as of the record date.
When a stockholder's proxy specifies a choice with respect to a voting
matter, the shares will be voted accordingly. If no such specification is made,
the accompanying form of proxy will be voted at the Annual Meeting and any
adjournment(s) thereof FOR the approval and adoption of the merger agreement and
FOR the election of the nominees listed herein under the caption "ELECTION OF
DIRECTORS" and at the discretion of the proxies on any other business properly
presented at the Annual Meeting and any adjournment(s) thereof.
We encourage your personal attendance at the Annual Meeting, and
execution of the accompanying proxy will not affect your right to attend the
Annual Meeting and to vote in person. Any stockholder giving a proxy has the
right to revoke it by giving written notice of revocation to the Secretary of
FBA at 600 James S. McDonnell Blvd., Mail Code #M1-199-014, Hazelwood, Missouri
63042 at any time before the proxy is voted, or by executing and delivering a
later-dated proxy, or by attending the Annual Meeting and voting his or her
shares in person. No such notice of revocation or later-dated proxy, however,
will be effective until we receive it at or prior to the Annual Meeting. Such a
revocation will not affect a vote on any matters taken prior to our receipt of
the revocation. Simply attending the Annual Meeting will not revoke a proxy.
The total cost of the solicitation of proxies pursuant to this proxy
statement will be borne by FBA. Proxies may be solicited by our directors,
officers and employees without special remuneration. We will reimburse banks,
brokerage houses and other custodians, nominees and fiduciaries who forward
soliciting material to the beneficial owners of shares of common stock entitled
to vote at the meeting for their out-of-pocket expenses. In addition to the
mails and other delivery services, we may solicit proxies by personal
interviews, telephone or other methods.
We previously mailed our Annual Report to Stockholders covering the
fiscal year ended December 31, 2001, including audited consolidated financial
statements, to our stockholders. The Annual Report does not form any part of the
proxy solicitation material. You may obtain an additional copy of the 2001
Annual Report to Stockholders without charge upon written request to Allen H.
Blake, Secretary, First Banks America, Inc., 600 James S. McDonnell Blvd., Mail
Code #M1-199-014, Hazelwood, Missouri 63042.
FORWARD-LOOKING STATEMENTS IN THIS PROXY STATEMENT
This proxy statement and the documents incorporated by reference
contain some forward-looking statements with respect to FBA's financial
condition, results of operations and business and on the expected effects and
timing of the merger. Words such as "anticipates," "expects," "intends,"
"plans," "believes," "seeks," "estimates" and similar expressions identify
forward-looking statements. These forward-looking statements are not guarantees
of future performance and are subject to risks and uncertainties that could
cause actual results to differ materially from the results contemplated by the
forward-looking statements. In evaluating the merger, you should carefully
consider the discussions of such risks and uncertainties that appear on page 3
of FBA's Annual Report to Stockholders for the year ended December 31, 2001 and
on page 12 of the Quarterly Report on Form 10-Q for the six months ended June
30, 2002. Both documents are incorporated by reference in this proxy statement.
SUMMARIZED FINANCIAL INFORMATION
The summarized financial information set forth below for the years
ended December 31, 2001 and 2000 is derived from our consolidated financial
statements, which have been audited by KPMG LLP. The summarized financial
information for the six months ended June 30, 2002 is unaudited. This
information is qualified by reference to our consolidated financial statements
incorporated herein by reference and should be read in conjunction with such
consolidated financial statements, the related notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations." See
"INCORPORATION OF INFORMATION BY REFERENCE. "
As of or for the As of or for the
Six Months Ended Year Ended
June 30, (1)(2) December 31, (1)
----------------- -----------------
2002 2001 2000
---- ---- ----
(dollars expressed inthousands, except per share data)
Income Statement Data:
Interest income .......................................... $ 94,134 208,347 177,248
Interest expense.......................................... 30,015 86,924 75,533
---------- --------- ---------
Net interest income....................................... 64,119 121,423 101,715
Provision for loan losses................................. 15,500 5,010 1,877
---------- --------- ---------
Net interest income after provision for loan losses....... 48,619 116,413 99,838
---------- --------- ---------
Noninterest income........................................ 10,712 27,140 12,077
Noninterest expense....................................... 43,032 89,668 66,111
---------- --------- ---------
Income before provision for income taxes,
minority interest in income of subsidiary and
cumulative effect of change in accounting principle.... 16,299 53,885 45,804
Provision for income taxes................................ 6,297 13,811 18,007
---------- --------- ---------
Income before minority interest in income of
subsidiary and cumulative effect of change
in accounting principle................................ 10,002 40,074 27,797
Minority interest in income of subsidiary................. -- -- --
---------- --------- ---------
Income before cumulative effect of change
in accounting principle................................ 10,002 40,074 27,797
Cumulative effect of change in accounting principle,
net of tax............................................. -- (459) --
---------- --------- ---------
Net income................................................ $ 10,002 39,615 27,797
========== ========= =========
Per Share Data:
Earnings per common share:
Basic:
Income before cumulative effect of change
in accounting principle............................ $ 0.78 3.29 2.29
Cumulative effect of change in accounting principle,
net of tax......................................... -- (0.04) --
---------- --------- ---------
Basic................................................. $ 0.78 3.25 2.29
========== ========= =========
Diluted:
Income before cumulative effect of change
in accounting principle............................ $ 0.78 3.29 2.29
Cumulative effect of change in accounting principle,
net of tax......................................... -- (0.04) --
---------- --------- ---------
Diluted............................................... $ 0.78 3.25 2.29
========== ========= =========
Weighted average common stock outstanding................. 12,855 12,204 12,129
Book value per common share............................... $ 23.50 22.19 16.27
Balance Sheet Data:
Investment securities..................................... $ 360,218 368,207 335,219
Loans, net of unearned discount........................... 2,278,398 2,323,263 2,058,677
Total assets.............................................. 3,062,478 3,060,988 2,741,379
Total deposits............................................ 2,527,115 2,555,261 2,306,356
Note payable.............................................. 50,000 71,000 98,000
Guaranteed preferred beneficial interest in First Banks
America, Inc. subordinated debentures................... 44,988 44,342 44,280
Stockholders' equity...................................... 301,887 285,317 196,909
- --------------------------
(1) The comparability of the selected data presented is affected by the
acquisitions of 12 banks and five branch office purchases during the five
year period ended December 31, 2001, and two purchases of branch offices
during the six-month period ended June 30, 2002. These acquisitions were
accounted for as purchases and, accordingly, the selected data includes
the financial position and results of operations of each acquired entity
only for the periods subsequent to its respective date of acquisition.
(2) On January 1, 2002, FBA adopted Statement of Financial Accounting Standards
("SFAS") No. 142 - Goodwill and Other Intangible Assets, which requires
that goodwill and other intangible assets with indefinite useful lives no
longer be amortized, but instead be tested for impairment at least
annually. SFAS No. 142 also requires that intangible assets with definite
useful lives be amortized over their respective estimated useful lives to
their estimated residual values, and reviewed for impairment in accordance
with SFAS No. 144 - Accounting for the Impairment or Disposal of Long-Lived
Assets. Consequently, the amortization of goodwill ceased upon adoption of
SFAS No. 142.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
General
Only holders of record of outstanding shares of common stock and Class
B common stock as of the record date are entitled to notice of, and to vote, in
person or by proxy, at the Annual Meeting and any adjournment(s) thereof. As of
the record date, there were issued and outstanding 10,343,860 shares of common
stock and 2,500,000 shares of Class B common stock.
Holders of shares of common stock and Class B common stock are entitled
to one vote for each share held of record on the record date. Holders of common
stock and Class B common stock are permitted to exercise cumulative voting in a
contested election of directors. This means that, if there were more nominees
for director than positions to be elected, each holder would be permitted to
cast as many votes as equals the product of the number of directors to be
elected (i.e., seven at the Annual Meeting) times the number of shares held by
such holder, and to cast all these votes for one candidate or to divide the
votes among two or more candidates in any amounts chosen by the stockholder.
First Banks would also have the right to utilize cumulative voting with respect
to its shares of common stock and Class B common stock. The proxy holders
authorized to vote in favor of nominees listed herein under the caption
"ELECTION OF DIRECTORS" will be permitted to vote cumulatively in the absence of
instructions to the contrary.
FBA's Certificate of Incorporation provides that a merger involving an
affiliated party such as First Banks must be approved and adopted by the vote of
at least 75% of the combined outstanding common stock and Class B common stock.
In the election of directors, the seven nominees receiving the largest number of
votes cast will be elected.
The presence, in person or by proxy, of the holders of a majority of
the issued and outstanding shares of voting stock, including the common stock
and the Class B common stock, is necessary to constitute a quorum to transact
business at the Annual Meeting and any adjournment(s) thereof.
On each proposed action, proxies marked as withheld votes or
abstentions and broker non-votes will not be voted but will be treated as
present and entitled to vote. Such proxies will therefore have the same effect
as votes against the proposed action.
Security Ownership of Management and of Controlling Stockholder
The following table sets forth as of the record date certain
information with respect to the beneficial ownership of common stock and Class B
common stock by each person known by FBA to be the beneficial owner of more than
five percent of the outstanding shares of either class of stock, by each
director, by executive officers and by all of our executive officers and
directors as a group:
Title of Name of Number of Shares and Nature of Percent of
Class Beneficial Owner Beneficial Ownership Class
- --------------------- ------------------------ ------------------------------ ----------
Class B common stock First Banks, Inc. 2,500,000 (1)(2)(3) 100.0%
135 North Meramec
Clayton, Missouri 63105
Class B common stock James F. Dierberg 2,500,000 (1)(2)(3) 100.0
Common stock First Banks, Inc. 9,545,107 (1)(2)(3) 92.3
Common stock James F. Dierberg 9,545,107 (1)(2)(3) 92.3
Common stock Allen H. Blake 1,000 (4) (*)
Common stock Charles A. Crocco, Jr. 8,272 (4) (*)
Common stock Albert M. Lavezzo 10,710 (4) (*)
Common stock Terrance M. McCarthy 2,000 (4) (*)
Common stock Ellen D. Schepman 1,500 (2)(3)(4) (*)
Common stock Edward T. Story, Jr. 11,182 (4) (*)
Common stock Donald W. Williams 100 (4) (*)
All executive officers 9,579,871 shares 92.6% of
and directors as a group Common stock Common stock
(8 persons)
100.0% of
2,500,000 shares Class B
Class B common stock common stock
- ----------------------
(*) Less than one percent.
(1) The shares shown as beneficially owned by First Banks and James F. Dierberg
comprise 100% of the outstanding shares of Class B common stock and 92.3%
of the outstanding shares of common stock. Each share of common stock and
Class B common stock is entitled to one vote on matters subject to
stockholder vote. All of the shares of Class B common stock and common
stock owned by First Banks are pledged to secure a loan to First Banks from
a group of unaffiliated lenders. The related credit agreement contains
customary provisions which could ultimately result in transfer of such
shares if First Banks were to default in the repayment of the loan and such
default were not cured, or other arrangements satisfactory to the lenders
were not made, by First Banks.
(2) The controlling stockholders of First Banks are (i) the James F. Dierberg
II Family Trust, dated December 30, 1992; (ii) Irrevocable Trust of Michael
J. Dierberg, dated May 1, 1998; (iii) the Ellen C. Dierberg Family Trust,
dated December 30, 1992; (iv) James F. Dierberg, trustee of the James F.
Dierberg living trust, dated October 8, 1985; (v) the Michael J. Dierberg
Family Trust, dated December 30, 1992; and (vi) First Trust (Mary W.
Dierberg and First Bank, Trustees) established U/I James F. Dierberg, dated
December 30, 1992. Mr. James F. Dierberg and Mrs. Mary W. Dierberg are
husband and wife, and Messrs. James F. Dierberg, II, Michael J. Dierberg
and Mrs. Ellen D. Schepman, formerly Ellen C. Dierberg, are their adult
children.
(3) Due to the relationships among James F. Dierberg, Mary W. Dierberg, First
Bank and the three adult children of James F. and Mary W. Dierberg, Mr.
Dierberg is deemed to share voting and investment power over all of the
outstanding voting stock of First Banks, which in turn exercises voting and
investment power over the shares of common stock and Class B common stock
attributed to it in the table.
(4) All of the shares attributed in the table to Mrs. Schepman and Messrs.
Blake, Crocco, Lavezzo, McCarthy, Story and Williams are owned by them
directly.
PROPOSAL NUMBER 1:
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT
This portion of the proxy statement presents a detailed discussion of
the proposed merger, beginning with an explanation of the background and reasons
for the merger from the perspectives of both FBA and First Banks. Following that
discussion are sections describing, among other things, the following:
o the process by which the merger and the terms of the merger
agreement were developed;
o the role of and conclusion reached by the financial advisor to
the special committee of our board of directors;
o our analysis of the fairness of the merger;
o interests of our directors and executive officers in the merger,
which in some cases are in addition to, or different from, those
of unaffiliated stockholders;
o federal income tax consequences of the merger;
o your appraisal rights under Delaware law;
o information regarding transactions in FBA's common stock by FBA
and First Banks;
o a table showing estimated expenses of the transaction; and
o a description of significant provisions of the merger agreement
(a complete copy of the merger agreement appears in Appendix A).
We encourage you to read the entire discussion, as well as the
appendices, to obtain a complete understanding of the merger.
SPECIAL FACTORS
Background of and Reasons for the Merger
FBA's Reasons for the Merger
First Banks acquired control of a majority of FBA's voting stock in
1994. In April 2002, First Banks proposed to FBA's board of directors that the
two companies enter into a transaction by which First Banks would acquire all of
the outstanding shares of FBA stock held by FBA's public stockholders. FBA's
special committee reviewed and considered the following reasons as a basis for
recommending approval of the proposed transaction to FBA's board of directors:
1. The financial benefit of common stock ownership by public
stockholders may not fully reflect the underlying economic value
of FBA.
The market value of FBA common stock has, at times, been
relatively weak, reflecting a greater amount of stock for sale in
the market than potential buyers wish to purchase. This has
frequently been mitigated through FBA's share repurchase programs
through which the excess supply of stock has been acquired by
FBA. However, during periods in which FBA is not able to purchase
shares, market prices have tended to decline. This pattern has
not had any apparent relationship to FBA's financial performance.
FBA has elected to reinvest all of its earnings to support its
growth objectives. As of June 30, 2002, FBA had a note payable to
First Banks of $50.0 million resulting from various acquisitions
that FBA has made. It is not anticipated that FBA would pay
dividends while there is a principal balance outstanding on this
note. Consequently, FBA has not paid dividends on its common
stock. In the event FBA were to commence the payment of dividends
to its stockholders, the Class B common stock, which is owned by
First Banks, would receive dividends only to the extent that
dividends on the common stock exceed $0.45 per share annually.
Consequently, the differentiation in dividend rates between the
common stock and the Class B common stock creates an economic
disincentive to the declaration of dividends from First Banks'
perspective.
The existence of a controlling shareholder limits the potential
opportunity for an acquisition premium from a subsequent buyout.
There are various types of investors who elect not to purchase
shares in companies that have a controlling shareholder or do not
pay dividends. Since both of these attributes apply to FBA, there
exists a segment of the investing public that is unwilling to
acquire FBA's common stock, thereby limiting the demand for
shares in the market.
2. FBA's common stock is inadequately valued by sellers as
consideration in potential acquisitions.
FBA believes its common stock is not adequately valued by sellers
as consideration for potential acquisition transactions primarily
due to the following characteristics of the common stock:
o The public float represents only a small percentage of the total
voting stock outstanding;
o There is generally limited liquidity in the common stock to
public stockholders;
o The market value of the common stock may not reflect FBA's
financial performance due to limited trading volumes, the
existence of a controlling stockholder and other factors; and
o Unusually large trading volumes may cause excessive and
misleading fluctuations in the market price of the common stock.
3. The financial reporting and regulatory requirements may cause
inconsistencies between the interests of First Banks and the
public stockholders.
Certain regulatory and financial reporting requirements with
respect to First Banks' ownership of FBA are disadvantageous to
First Banks if its ownership percentage should be reduced to less
than 80%. In some acquisitions, a tax-free exchange of stock is
the preferred form to the sellers. A potential exists for
situations in which an acquisition would be advantageous to FBA's
public stockholders, but disadvantageous to First Banks.
Consequently, this creates the opportunity for the objectives of
the public stockholders to conflict with those of First Banks.
Under regulatory capital guidelines with respect to bank holding
companies, FBA is considered a "second tier" bank holding company
of First Banks. Because of this, First Banks was viewed as
providing the capital strength for FBA and, prior to 2000, FBA was
allowed to maintain regulatory capital ratios that were lower than
those required for First Banks, or other first tier holding
companies. This enabled FBA to achieve returns on equity that were
higher than FBA might otherwise have been able to achieve.
However, beginning in 2000, regulatory authorities began requiring
increased capital levels for second tier holding companies,
thereby reducing this advantage substantially.
4. The expenses associated with maintaining a publicly owned company
are excessive relative to the amount of FBA common stock
outstanding.
FBA incurs numerous expenditures associated with maintaining its
status as a publicly owned company. In particular, some of the
more significant expenditures associated with FBA's public status
are as follows:
o Separate annual and quarterly reports, including preparation,
review by external accountants and counsel, printing and
distribution to stockholders;
o Separate Securities and Exchange Commission filings, including
but not limited to Forms 10-K, 10-Q and 8-K;
o Annual and special stockholders meetings, including preparation
of materials, filing fees, printing and distribution of Proxy
materials to stockholders;
o Separate annual audits and quarterly reviews performed by FBA's
externalaccounting firm;
o Separate board of directors and Audit Committee, which requires
fees associated with compensating members of the Board and the
Audit Committee, conducting quarterly meetings (including travel
and other related expenses), and preparing and distributing Board
materials;
o New York Stock Exchange listing fees and related expenses; and
o Administrative and internal staff expenditures associated with
maintaining separate accounting records and financial
reporting including but not limited to: intercompany
recordkeeping and billing required for personnel, services and
supplies used by FBA; data processing and information
technology fees and services; internal audit services; income
tax preparation and assistance; accounting services; and other
management and administrative functions.
o FBA has estimated the annual expenditures associated with
maintaining its status as a publicly owned company to be in
the range of $500,000 - $750,000.
First Banks' Reasons for the Merger
First Banks' board of directors reviewed and considered the following
reasons as a basis for recommending the proposed transaction to FBA's board of
directors:
1. The financial objectives of stock ownership by First Banks and
the public stockholders may not coincide.
The financial objectives of First Banks and the public
stockholders may not coincide primarily due to the following
issues:
o FBA does not pay dividends on its common stock. In the event
FBA were to commence the payment of dividends to its
stockholders, the Class B common stock would receive dividends
only to the extent that dividends on the common stock exceed
$0.45 per share annually. Consequently, the differentiation in
dividend rates between the common stock and the Class B common
stock creates an economic disincentive to the declaration of
dividends from First Banks' perspective.
o Certain regulatory, financial reporting and tax requirements with
respect to First Banks' ownership of FBA are disadvantageous
to First Banks if its ownership percentage should be reduced
to less than 80%. In some acquisitions, a tax-free exchange of
stock is the preferred form to the sellers. A potential exists
for situations in which this would be advantageous to FBA's
public stockholders, but disadvantageous to First Banks.
Consequently, this creates the opportunity for a divergence of
objectives to arise.
o In order to preserve the separate structure of FBA, First Bank
& Trust must operate independently from First Banks' other
banking interest. If the proposed merger is consummated, First
Banks anticipates merging First Bank & Trust into First Banks'
wholly owned subsidiary, First Bank. It is anticipated that
this will allow certain administrative and operational
economies not available while the two banks maintain separate
charters.
2. FBA's common stock has not proven to be a viable currency in
potential acquisition transactions.
First Banks has been unable to utilize FBA's common stock as a
vehicle for potential acquisition transactions primarily as a
result of the following:
o The liquidity of FBA's common stock is limited because the
public float represents only a small percentage of the total
voting stock outstanding;
o The market value of FBA's common stock may not fully reflect
FBA's financial performance due to limited trading volumes,
the existence of a controlling shareholder and other factors;
and
o At various times, the primary purchaser of FBA common stock
has been FBA through its authorized stock repurchase programs.
3. Stock market conditions may lead to undue litigation or reputation
risks for First Banks that may not be related to economic or
financial issues.
First Banks may be subjected to potential undue litigation and
reputation risks associated with fluctuations in the market value
of FBA's publicly held common stock. For example, during 2000, FBA
was unable to repurchase common stock through its authorized stock
repurchase program as a result of pending acquisitions. During
that same time period, the absence of other buyers in the market
led to a depressed market value that was inconsistent with FBA's
financial performance. In early 2002, FBA's common stock
experienced unusually large trading volumes and inordinate
increases in market value that could not be correlated with
financial performance. Circumstances such as these could lead to
dissatisfaction among stockholders, selling stockholders and
buying stockholders. For these reasons and other similar potential
scenarios, First Banks could be exposed to risks that it has
limited opportunity to control.
4. The expenses associated with maintaining a publicly owned company
are excessive relative to the amount of FBA common stock
outstanding.
First Banks, through its existing ownership in FBA, incurs
numerous expenditures associated with maintaining FBA's status as
a publicly owned company. In particular, some of the more
significant expenditures associated with FBA's public status are
as follows:
o Separate annual and quarterly reports, including preparation,
review by external accountants and counsel, printing and
distribution to stockholders;
o Separate Securities and Exchange Commission filings, including
but not limited to Forms 10-K, 10-Q and 8-K;
o Annual and special stockholders meetings, including preparation
of materials, filing fees, printing and distribution of Proxy
materials to stockholders;
o Separate annual audits and quarterly reviews performed by FBA's
external accounting firm;
o Separate board of directors and Audit Committee, which
requires fees associated with compensating
members of the Board and the Audit Committee, conducting
quarterly meetings (including travel and other related
expenses), and preparing and distributing Board materials;
o New York Stock Exchange listing fees and related expenses; and
o Administrative and internal staff expenditures associated with
maintaining separate accounting records and financial
reporting including but not limited to: intercompany
recordkeeping and billing required for personnel, services and
supplies used by FBA; data processing and information
technology fees and services; internal audit services; income
tax preparation and assistance; accounting services; and other
management and administrative functions.
Consideration of the Merger
On April 25, 2002, First Banks proposed to FBA that they enter into a
transaction by which First Banks would acquire the outstanding shares of FBA
currently held by the public stockholders of FBA.
The board of directors of FBA then created a special committee of its
board to consist of independent directors with no affiliation with First Banks.
The board appointed Albert M. Lavezzo, Charles A. Crocco and Edward T. Story,
Jr. as members of the special committee. The members appointed Mr. Lavezzo as
chairman of the special committee. The board gave the special committee the
authority to consider and negotiate, on behalf of FBA, the terms of the
transaction proposed by First Banks and to make a recommendation to the full
board of directors of FBA with respect to such a proposed transaction.
The special committee was also authorized to engage professional
advisors, including a financial advisor and legal counsel of its own selection.
The special committee identified four law firms with experience in representing
financial institutions and special committees in connection with bank mergers.
The special committee solicited proposals from these four firms and conducted
telephonic interviews with each of them. The special committee confirmed that
the candidate firms had not previously represented First Banks, FBA or any of
their affiliates in any current or previous transactions. On May 29, 2002, the
special committee determined to engage the firm of McCutchen Doyle Brown &
Enersen, LLP (which on July 1 became Bingham McCutchen LLP as a result of a
merger) of San Francisco.
On May 30, counsel for First Banks informed the special committee that
it proposed that FBA forego a previously announced rights offering to its public
stockholders, and First Banks proposed instead that the price to be paid to the
public stockholders (if an agreement could be reached regarding a merger)
include an additional increment attributable to the value of the rights that
would have been issued to FBA's public stockholders in a rights offering. The
private placement and the rights offering are discussed further under "The
MERGER - Recent Purchases of Stock - Purchase by First Banks." First Banks
proposed that the increment be equal to the difference between $32.50, the price
at which First Banks had purchased shares of FBA in a private placement in the
fourth quarter of 2001, and the price negotiated for the acquisition of the
shares held by the public stockholders.
In May 2002, the chairman of the special committee solicited proposals
from five investment banking firms to act as financial advisor to the special
committee in connection with the proposed transaction. The special committee
identified investment banking firms based on their experience in advising
financial institutions in connection with similar transactions. The five
investment banking firms submitted proposals, and the chairman circulated copies
of all of the proposals to the members of the committee and counsel.
On June 7, the special committee conducted a meeting to consider the
proposals of the financial advisors. The special committee considered the
relevant experience of each candidate, the familiarity of the committee members
with the candidate, the fees and expenses proposed to be charged by each
candidate, and each candidate's independence from any current or past financial
relationship with First Banks.
At the conclusion of the meeting, the special committee selected Baxter
Fentriss as its financial advisor, subject to the confirmation of the absence of
any financial connections between Baxter Fentriss and First Banks. Upon
receiving such confirmation, the special committee engaged Baxter Fentriss as
its financial advisor. This decision was based on several factors, including the
firm's extensive involvement with and knowledge of bank and thrift merger and
acquisition transactions, the members' familiarity with Baxter Fentriss'
performance of services similar to those required, and the special committee's
assessment of the value of the services to be provided in relation to the costs
to be incurred by FBA for such services.
On June 19, the special committee held a meeting to discuss the
schedule for proposed negotiations, the combining of the rights offering value
with the transaction in lieu of a separate rights offering, the due diligence
that Baxter Fentriss desired to perform in order to assist the special committee
in its deliberations and related matters. Counsel and representatives of Baxter
Fentriss attended the meeting as well. The special committee confirmed that it
had no objection to including the rights offering value as an additional
increment to any purchase price that it might ultimately agree to in the course
of negotiations with First Banks. The special committee asked counsel to advise
it with respect to the appropriate measure of value of the rights offering.
Counsel provided the special committee with a letter addressing this issue on
July 16.
On July 19, the special committee members received written materials
from Baxter Fentriss describing its analysis of the value of common stock of FBA
and presenting several valuation methods. The materials, which were in draft
form at the time, described assumptions made by Baxter Fentriss in preparing the
materials and arriving at its conclusions.
On July 22, the special committee held a committee meeting to review
the analysis prepared by Baxter Fentriss. The counsel and representatives of
Baxter Fentriss also attended. Representatives of Baxter Fentriss made a
presentation to the members of the special committee and discussed their
methodology, assumptions and conclusions as set forth in their written report.
The special committee reached a tentative consensus with respect to a per-share
price that the special committee would be able to recommend to the full board of
directors.
On July 25, the special committee met with counsel and representatives
of Baxter Fentriss for a final review and preparation for negotiations with
First Banks with respect to the proposed transaction. Later that same day, the
special committee and Baxter Fentriss met with representatives of First Banks to
discuss the proposed transaction. Negotiations continued for approximately seven
hours. First Banks was also accompanied by its financial advisor. Initially,
First Banks was willing to offer a price that was lower than the special
committee was willing to recommend. In the course of discussions, First Banks
and its financial advisor suggested to Baxter Fentriss that certain factors,
including FBA's earnings prospects, were not as favorable as Baxter Fentriss had
assumed in the preparation of its analysis. First Banks agreed to provide the
special committee with documentation supporting its position on these issues.
The special committee proceeded with negotiations on the assumption that First
Banks would provide the documentation supporting its position on the unfavorable
factors it had described. First Banks and the special committee ultimately
reached a tentative agreement that $40.00 per share represented a fair price for
the shares held by the public stockholders and that $.54 per share represented a
fair value for forgoing the rights offering.
This agreement was subject to receipt and review of the confirming
documentation.
On August 7, members of the committee noted that the market price for
common stock of FBA was higher than the conditional price agreed by the special
committee and First Banks at their negotiation meeting on July 25. Committee
members questioned whether the agreed price was appropriate in light of the
current market price. The committee members concluded that the market price was
in part a function of the very light volume of trading (the average daily volume
for FBA common stock during the 12 months ended June 30, 2002 was 6,098 shares),
and that any attempt by public stockholders to sell a significant portion of
their shares in the public market would most likely result in a rapid decline in
the market price. Therefore, they determined that a brief increase in the market
price above the negotiated price did not impair the soundness of the committee's
decision.
Counsel to the committee confirmed that Baxter Fentriss had received
the confirming documentation from First Banks. Baxter Fentriss indicated that
the information supported the position taken by First Banks at the July 25
negotiating meeting.
On August 13, the special committee met again with counsel and
representatives of Baxter Fentriss. Baxter Fentriss explained the significance
of the documentation provided by First Banks and its effect on the analysis and
conclusions of Baxter Fentriss with respect to the value of the common stock of
FBA. Baxter Fentriss confirmed that it considered $40.00 per share, together
with $.54 per share on account of the foregone rights offering, to be fair from
a financial point of view to the unaffiliated stockholders of FBA. Members of
the special committee then unanimously approved the price as negotiated at the
July 25 meeting. The chairman called representatives of First Banks to inform
them of the special committee's decision. FBA and First Banks issued a press
release describing the principal terms of the agreement on August 14. The
attorneys for First Banks and the special committee then prepared a draft of a
merger agreement setting forth the terms that the special committee had
approved.
The merger agreement was approved by the special committee on September
20 and by the full board of directors of FBA on September 23, 2002. Thereafter,
it was signed and announced in a press release on September 23, 2002.
Opinion of the Financial Advisor to the Special Committee
Baxter Fentriss has acted as financial advisor to the special committee
in connection with the Merger. On September 23, 2002, Baxter Fentriss delivered
to the special committee its opinion that as of such date, and on the basis of
matters referred to herein, the consideration is fair, from a financial point of
view, to the unaffiliated holders of FBA common stock. In rendering its opinion,
Baxter Fentriss consulted with the management of FBA; reviewed the merger
agreement, certain publicly-available information, certain additional materials
made available by management, and drafts of this proxy statement. In addition,
Baxter Fentriss discussed with the management of FBA its businesses and outlook.
No limitations were imposed by FBA's board of directors upon Baxter
Fentriss with respect to the investigation made or procedures followed by it in
rendering its opinion. The full text of Baxter Fentriss' written opinion is
attached as Appendix B to this proxy statement and should be read in its
entirety with respect to the procedures followed, assumptions made, matters
considered, and qualifications and limitations on the review undertaken by
Baxter Fentriss in connection therewith.
Baxter Fentriss' opinion is directed to the special committee, and is
directed only to the fairness, from a financial point of view, of the
consideration received by the unaffiliated stockholders of FBA. It does not
address FBA's underlying business decision to effect the proposed merger, nor
does it constitute a recommendation to any FBA stockholder as to how such
stockholder should vote with respect to the merger at the annual meeting or as
to any other matter.
Baxter Fentriss' opinion was one of many factors taken into
consideration by the special committee in making its determination to approve
the merger agreement, and the receipt of Baxter Fentriss' opinion is a condition
precedent to the obligations of both FBA and First Banks to consummate the
merger. The opinion of Baxter Fentriss does not address the relative merits of
the merger as compared to any alternative business strategies that might exist
for FBA or the effect of any other business combination in which FBA might
engage.
Baxter Fentriss, as part of its investment banking business, is
continually engaged in the valuation of financial institutions and their
securities in connection with mergers and acquisitions and valuations for
estate, corporate and other purposes. Baxter Fentriss is a nationally recognized
advisor to firms in the financial services industry on mergers and acquisitions.
The special committee selected Baxter Fentriss as its financial advisor because
it is an investment banking firm focusing on bank and thrift transactions and
because of the firm's extensive experience and expertise in transactions similar
to the merger. Baxter Fentriss is not affiliated with FBA or First Banks. Baxter
Fentriss has represented from time to time certain financial institutions that
have ultimately been merged with or acquired by FBA and First Banks. In
addition, Baxter Fentriss advised a special committee of the board of directors
of FBA in 2000 with regard to a transaction in which FBA acquired First Bank &
Trust from First Banks, in exchange for 6,530,769 shares of FBA common stock.
In connection with rendering its opinion to the special committee,
Baxter Fentriss performed a variety of financial analyses. In conducting its
analyses and arriving at its opinion as expressed herein, Baxter Fentriss
considered such financial and other factors as it deemed appropriate under the
circumstances including the following: (i) the historical and current financial
condition and results of operations of FBA including interest income; interest
expense, provision for loan losses, noninterest income, noninterest expense,
earnings, book value, returns on assets and equity, capitalization, the reserve
for loan losses and possible tax consequences resulting from the transaction;
(ii) the business prospects of FBA; (iii) the economies of FBA's respective
market areas; (iv) the historical and current market for FBA common stock; (v)
and the nature and terms of certain other merger transactions that it believed
to be relevant. Baxter Fentriss also considered its assessment of general
economic, market, financial and regulatory conditions and trends, as well as its
knowledge of the financial institutions industry. Baxter Fentriss' experience in
connection with similar transactions, its knowledge of securities valuation
generally, and its knowledge of merger transactions throughout the United States
were also important in its analysis of the merger.
In connection with rendering its opinion, Baxter Fentriss reviewed (i)
the merger agreement; (ii) drafts of this proxy statement; (iii) FBA's Annual
Reports to stockholders, including the audited financial statements of FBA, for
the years ended December 31, 1999, 2000 and 2001; (iv) consolidated reports of
condition ("call reports") on First Bank & Trust filed with the Federal Deposit
Insurance Corporation for the years ended December 31, 1999, 2000 and 2001; (v)
budgeted financial information and projections provided by management for the
years ending December 31, 2002 and 2003 for FBA, (vi) unaudited quarterly
financial information as of March 31, 2002 and June 30, 2002, and (vii) certain
additional financial and operating information with respect to the business,
operations and prospects of FBA as it deemed appropriate. Baxter Fentriss also
(a) held discussions with members of the senior management of FBA regarding its
historical and current business operations, financial condition and future
prospects; (b) compared the results of operations of FBA with those of certain
banking companies that it deemed to be relevant; (c) analyzed the pro forma
financial impact of the merger on First Banks, and (d) conducted such other
studies, analyses, inquiries and examinations as Baxter Fentriss deemed
appropriate.
The preparation of a fairness opinion involves various determinations
as to the most appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances and, therefore,
such an opinion is not readily susceptible to partial analysis or summary
description. Moreover, the evaluation of fairness, from a financial point of
view, of the consideration received by the unaffiliated stockholders of FBA
common stock was to some extent a subjective one based on the experience and
judgment of Baxter Fentriss and not merely the result of mathematical analysis
of financial data. Accordingly, notwithstanding the separate factors summarized
below, Baxter Fentriss believes that its analyses must be considered as a whole
and that selecting portions of its analyses and/or the factors considered by it,
without considering all analyses and factors, could create an incomplete view of
the evaluation process underlying its opinion. The ranges of valuations
resulting from any particular analysis described below should not be taken to be
Baxter Fentriss' view of the actual value of FBA.
In performing its analyses, Baxter Fentriss made numerous assumptions
with respect to industry performance, business and economic conditions and other
matters, many of which are beyond the control of FBA. The analyses performed by
Baxter Fentriss are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than suggested by
such analyses. Additionally, analyses relating to the values of businesses do
not purport to be appraisals or to reflect the prices at which businesses
actually may be sold. In rendering its opinion, Baxter Fentriss assumed that any
regulatory consideration of the merger would not result in the imposition of any
conditions that will have a material adverse effect on the contemplated benefits
of the merger, on a pro forma basis, to FBA or First Banks.
The following is a summary of selected analyses performed by Baxter
Fentriss in connection with its opinion.
1. Comparison to Publicly Traded Financial Institutions. This analysis
was performed to make a determination of value for the unaffiliated shares of
FBA using the financial data of publicly traded financial institutions from
select markets across the United States. Baxter Fentriss compared certain
trading multiples of select financial institutions and compared them to the
value offered by First Banks. This peer group consisted of sixty publicly traded
banks with assets between $2 billion and $10 billion as of June 30, 2002.
The ranges of the multiples compiled from the peer group were as
follows: the low and high price to earnings multiples were 9.0x and 21.2x; the
low and high price to LTM earnings multiples were 9.6x and 31.2x, the low and
high price to book multiples were 1.01x and 3.97x; the low and high price to
tangible book multiples were 1.27x and 4.27x; the low and high price to assets
percentages were 6.8% and 31.2%; while the low and high price to deposits
percentages were 9.3% and 38.7%.
The averages of the statistics compiled for the peer group were as
follows: the average price to earnings multiple was 14.2x; the average price to
LTM earnings multiple was 16.1x; the average price to book multiple was 2.01x;
the average price to tangible book multiple was 2.32x; the average price to
assets percentage was 17.3%; and the average price to deposits percentage was
23.1%.
These averages were used to establish valuation parameters for the
unaffiliated shares of FBA. The values produced by this analysis were as
follows: $34.59 based on price to adjusted earnings, $40.50 based on price to
adjusted LTM earnings, $47.13 based on price to book value, $35.75 based on
price to tangible book value, $41.26 based on price to assets, and $45.38 based
on price to deposits.
These values ranged from a low of $34.59 to a high of $47.13 while the
average of these values is $40.77.
2. Discounted Free Cash Flow / Net Present Value. Baxter Fentriss made
a determination of the value of FBA's unaffiliated shares based on FBA's
earnings capacity, operating cash flow, and its theoretical capacity to pay
dividends while still retaining equity to support future, sustainable growth.
This approach requires projecting cash flows for an extended period of time,
estimating a terminal value, and discounting the future free cash flows and
terminal value back to the valuation date. The discounted cash flow calculation
consists of three major components: (1) future free cash flows and/or potential
equity flows; (2) a terminal value; and (3) the required rate of return.
The future cash flows are projected by forecasting earnings growth and
potential dividend payout. While various growth rates can produce different
results, it is best to view a range of growth estimates in order to choose a
"likely" scenario. Economic conditions in general, as well as local economic
conditions, competition, management, and other non-quantifiable variables can
impact future real growth.
The required rate of return is the expected return required by
investors for investments with similar risk profiles. Typically, the required
rates of return of publicly traded banks are approximately 500-700 basis points
over the US Treasury 10-year note. This analysis incorporates a range of
discount rates between 10.50% and 11.50%.
The terminal value was calculated by treating the free cash flow in the
final time period as a perpetuity and then discounting it to obtain a present
value. The same range of discount rates were used to discount the perpetuity to
get the final period's equity flow.
The range of valuations for FBA common stock using this analysis was
from $36.12 to $42.51. The mid-point of this range was $39.32.
3. Sale of Enterprise Valuation. Baxter Fentriss considered the
potential acquisition of FBA by another financial institution in order to
determine a fair market value for the whole bank or control position in FBA.
Certain assumptions were made regarding the financing rates, amortization
periods, tax rates, core deposit intangible valuations, and level of cost
savings an acquiror might achieve, as well as dilution levels it might accept.
The assumptions applied are deemed appropriate for an organization such as FBA,
the types of institutions which are capable of acquiring FBA, and for FBA's
current financial condition.
The analysis produced a range of values for FBA of $39.36 to $53.61,
for the controlling interest in the company. The current ownership structure of
FBA does not allow the unaffiliated stockholders to effect a decision to make
such a transaction occur. In addition, the controlling stockholders have stated
it is not their intent for such a transaction to occur. The proposed transaction
is to acquire the public ownership position; therefore, the valuation is
discounted by 15% to reflect lack of control. This results in a range of values
for FBA's public shares of $33.46 to $45.57. The midpoint of this range was
$39.52.
Using publicly available information, Baxter Fentriss considered the
impact of the merger on First Banks. Its analysis indicated that the merger
would not materially dilute First Banks' capital and earnings capacity and
would, therefore, likely not be opposed by the banking regulatory agencies from
a capital perspective. First Banks currently is the majority stockholder of FBA
and reports the financial performance and condition of FBA in its consolidated
financial statements. First Banks has effective control over FBA's management,
policies and election of directors. Baxter Fentriss has relied, without any
independent verification, upon the accuracy and completeness of all financial
and other information reviewed. Baxter Fentriss has assumed that all estimates,
including those as to projected future earnings were reasonably prepared by
management and reflect their best current judgments. Baxter Fentriss did not
make an independent appraisal of the assets or liabilities of FBA, and has not
been furnished such an appraisal.
No company or transaction used as a comparison in the above analysis is
identical to FBA or First Banks, or the merger. Accordingly, an analysis of the
results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and other factors that could affect the public trading value of
the companies used for comparison in the above analysis.
Baxter Fentriss has been, or will be, paid (i) an advisory fee of
$10,000, (ii) an evaluation and negotiation fee of $15,000, (iii) a fairness
opinion fee of $40,000, and (iv) reasonable out-of-pocket expenses for its
services. Such fees are not contingent on the results of its findings. FBA has
agreed to indemnify Baxter Fentriss against certain liabilities, including
certain liabilities under federal securities laws.
FBA's Analysis of the Fairness of the Merger
In voting to approve the merger agreement, the special committee
unanimously reached the conclusion that the merger and the merger agreement are
fair from a financial point of view to the public stockholders of FBA. This
conclusion was based on information provided to the special committee by Baxter
Fentriss, the oral opinion (subsequently confirmed in writing) of Baxter
Fentriss to the effect that, subject to the matters discussed in its opinion,
the merger consideration of $40.54 per share is fair from a financial point of
view to the unaffiliated FBA stockholders, and other factors which the members
of the special committee deemed relevant. These factors included, without
limitation, the following:
o the financial data and analysis on which Baxter Fentriss based
its opinion, including comparisons to other publicly held bank
stocks based on trading multiples, the analysis of the discounted
free cash flow attributable to FBA based on projected cash flows,
and the data indicating a potential sale of enterprise valuation
for FBA;
o information concerning the recent and historical market prices
for FBA common stock and the nature of the market for such stock,
including the very limited volume of trading which has generally
been prevalent for the stock, and the resulting limited liquidity
available to FBA stockholders (particularly when FBA is not able
to engage in open market purchases of its stock);
o the certainty of value available to FBA stockholders in a
transaction for all cash consideration, and the liquidity
provided by the merger;
o The special committee believes that the agreed price is fair to
the public stockholders and represents an optimum exit for
unafiliated stockholders in light of overall market and
economic uncertainties, as well as the prevailing lack of
liquidity for the shares of FBA. In that regard, the controlling
stockholders of First Banks have expressed that they have no
intention of selling FBA or the entire corporate group.
o the financial position of First Banks and its access to financing
in an amount sufficient to make timely completion of the merger
highly likely;
o the limited number of conditions required to be satisfied in
order for First Banks to complete the merger, which enhances the
probability of timely completion of the merger;
o the provisions in the merger agreement that limit potential
liability of FBA in the event that the merger is not completed;
o the fact that the special committee was given broad latitude as
to how to evaluate the proposed transaction, as well as the
authority to choose independent legal and financial advisors
responsible solely to, and directed solely by, the special
committee;
o the process by which the merger price and other terms of the
merger were arrived at, including the opportunity for the members
of the special committee to consult with the special committee's
advisors and to obtain information sufficient to inform their
decision and to satisfy themselves regarding the fairness of the
transaction; and
o the fact that FBA stockholders have the legal right to demand
appraisal of their FBA stock if they are not satisfied with the
merger price.
The board of directors of FBA unanimously approved the merger
agreement, acting primarily based on the recommendation of the special committee
and each member's analysis of the merits of the transaction. Among the factors
chiefly considered by the board of directors were the factors cited above, and
also the following:
o the fact that the members of the special committee are
independent, sophisticated and experienced in undertaking the
type of analysis necessary in order to evaluate the merger;
o the familiarity of each of the members of the special committee
with the operations, financial condition, and history of FBA (all
three members of the special committee have served as directors
of FBA for more than four years, and two of the three have served
for approximately 15 years); and
o the fact that the members of the special committee are owners of
FBA common stock and thus have interests substantially aligned
with those of FBA's public stockholders, because they will
receive the same consideration for their shares as that payable
to all public stockholders.
The members of the special committee and the board also considered
potentially negative factors that might offset or outweigh the foregoing
benefits of the merger, but they concluded that the benefits described above
were ultimately more significant. Among potential negative factors considered
were the following:
o the merger compels FBA's public stockholders to sell their shares
and forego any future interest in FBA's assets and earnings,
whether or not any particular stockholder desires to dispose of
his or her shares; and
o the merger consideration did not represent a premium to the
recent market price of FBA common stock. In that regard, the
special committee and the board have been aware that the market
for FBA's stock does not necessarily reflect the financial
performance or other fundamental indications of FBA's value, and
the market price has fluctuated over time without any apparent
relationship to underlying performance. In 2002, market prices
have been unusually high compared to historical prices, but at
other times the stock price has been well below what management
and the board viewed as its intrinsic value. Such fluctuations
have also been observed relative to other bank and thrift stocks.
Members of the board concluded that, on balance, the market price
at a given point in time has not been a reliable indicator of
value, and that the recent market price should not be given as
much weight as other factors in determining the current value.
The foregoing discussion of the factors considered is not intended to
be exhaustive, and different members of the special committee and the board may
have emphasized different factors as they considered all of the information they
deemed relevant. Neither the special committee nor the board assigned specific
weight to any of the factors cited, and individual members may not agree on the
significance of all of the factors discussed.
THE MERGER
The following information summarizes the material terms of the merger.
Insofar as it relates to matters contained in the merger agreement, this
discussion is qualified in its entirety by reference thereto, a copy of which is
attached hereto as Appendix A and incorporated herein by reference.
The merger agreement provides for the merger of FBA Acquisition with
and into FBA. Upon consummation of the merger, the legal existence of FBA
Acquisition and FBA will be combined, FBA will become a wholly-owned subsidiary
of First Banks, and each outstanding share of FBA common stock (except for
shares owned by First Banks) will be converted into the right to receive $40.54
in cash.
Following the merger, First Banks intends to cause FBA to be merged
into First Banks and First Bank & Trust to be merged into First Banks'
wholly-owned banking subsidiary, First Bank, which is headquartered in Missouri,
so that all of First Banks' banking operations will be conducted in a single
bank subsidiary. However, these subsequent transactions are not part of the
proposal to be voted on by FBA's stockholders.
Interests of Directors and Officers in the Merger
As of the record date, some of the directors and officers of FBA owned
shares of FBA common stock, as reflected in the table on page 13 entitled
"SECURITY OWNERSHIP OF MANAGEMENT AND OF CONTROLLING STOCKHOLDER" and in the
footnotes to the table. When the merger is completed, such holders will receive
$40.54 per share in cash, the same consideration payable to public stockholders
generally.
FBA stockholders should also be aware that directors and officers of
FBA have interests in the merger that are in addition to, or different from,
those of the public stockholders of FBA. You may wish to take those interests
into account in determining what weight, if any, to give to the recommendations
of the special committee and the board of directors. These interests can lead to
inconsistencies between the objective of the officers and directors and those of
the public stockholders, as follows:
o First Banks' controlling shareholder, James F. Dierberg, and
members of his immediate family will own all of the outstanding
equity of FBA following the merger and will therefore obtain the
benefit of any future earnings and growth of FBA and its assets;
o FBA officers and directors who are officers of First Banks will
continue their roles in managing FBA or its successor following
the merger, while the public stockholders will receive cash for
their shares if the merger is consummated and will have no
further interest in FBA;
o FBA's officers and directors are generally entitled to be
indemnified for liabilities arising from their conduct in those
capacities, and First Banks and FBA maintain insurance for the
purpose of protecting them against such liabilities. Furthermore,
the members of the special committee are parties to
indemnification agreements with FBA and First Banks, which
provide generally for indemnification against liabilities which
they may incur as a result of their services as directors of FBA
or as members of the special committee; and
o each member of the special committee has received a fee of
$10,000 for serving on the special committee, and will be
reimbursed for reasonable expenses incurred in connection with
the performance of their responsibilities on the special
committee. Such fees and expenses are payable whether or not the
special committee recommended approval of the merger agreement
and whether or not the merger is consummated.
Federal Income Tax Consequences
This summary of the material United States federal income tax
consequences of the merger to FBA stockholders is based on the law as currently
in effect. This summary does not discuss all of the tax consequences that may be
relevant to any particular stockholder in light of his or her particular
circumstances or to stockholders subject to special rules, such as financial
institutions, broker-dealers, tax-exempt organizations, stockholders that hold
their shares as part of a straddle, hedging or conversion transaction, or
stockholders who acquired their shares through the exercise of a stock option or
otherwise as compensation. FBA stockholders are urged to consult their own tax
advisors as to the particular tax consequences to them of the merger, including
the effect of United States state and local tax laws or, if applicable, foreign
tax laws. In general, the receipt in the merger by a stockholder of cash for FBA
shares will be a taxable transaction for United States federal income tax
purposes. A stockholder will recognize gain or loss in an amount equal to the
difference between the cash received in the merger by the stockholder and the
stockholder's tax basis in the shares surrendered in the merger. That gain or
loss will be a capital gain or loss if the shares are held as a capital asset by
the stockholder, and will be a long term capital gain or loss if the shares have
been held for more than one year at the time of the merger. A stockholder may be
subject to backup withholding at a rate of 31% unless, at the time he or she
surrenders shares in the merger, the stockholder provides a taxpayer
identification number and certifies that the number is correct, or unless an
exemption is demonstrated to apply. Backup withholding is not an additional tax.
An amount so withheld can be refunded or credited against the federal income tax
liability of the stockholder, provided appropriate information is forwarded to
the Internal Revenue Service in a timely manner.
Appraisal Rights
Under Section 262 of the DGCL, if you comply with the conditions
established by Section 262, you will be entitled to dissent and elect to have
the "fair value" of your shares, exclusive of any element of value arising from
the accomplishment or expectation of the merger, together with a fair rate of
interest, if any, judicially determined by the Delaware Court of Chancery and
paid to you in cash. The following is a summary of the law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by applicable
Delaware case law and the full text of Section 262, a copy of which is provided
as Appendix C to this proxy statement. All references in Section 262 and in this
summary to a "stockholder" are to the record holder of the shares of FBA stock
as to which appraisal rights may be asserted. If you have a beneficial interest
in shares of stock held of record in the name of another person, such as a
broker or nominee, you will be required to act promptly to cause the record
holder to follow the steps summarized below properly and in a timely manner to
perfect your appraisal rights.
Under Section 262, a stockholder must deliver to FBA, before the taking
of the vote on the merger, a written demand for appraisal of such stockholder's
shares; a proxy or vote at the annual meeting against the merger does not
constitute such a required demand. Within ten days after the effective date of
the merger, FBA must notify each stockholder who has made a proper demand and
who has not voted in favor of the merger of the date on which the merger became
effective. At that time, if you wish to exercise your appraisal rights or wish
to preserve the right to do so, you should review carefully Section 262 and seek
advice of legal counsel, since failure to comply fully with the procedures of
Section 262 will result in the loss of appraisal rights.
Only a holder of record of shares of FBA stock will be entitled to make
the written demand described above and to assert appraisal rights for the shares
of stock registered in that holder's name. A demand for appraisal should be
executed by or on behalf of the stockholder of record, fully and correctly, as
that stockholder's name appears on the stock certificates, and the demand should
specify the stockholder's name and mailing address, the number of shares of
stock owned and that the stockholder intends thereby to demand appraisal of the
stockholder's shares. If your shares are owned of record in a fiduciary
capacity, such as by a trustee, guardian or custodian, execution of the written
demand should be made in that capacity. If your shares are owned of record by
more than one person as in a joint tenancy or tenancy in common, the demand
should be executed by or on behalf of all owners. An authorized agent, including
one or more joint owners, may execute a demand for appraisal on behalf of a
stockholder; however, the agent must identify the record owner or owners and
expressly disclose the fact that, in executing the demand, the agent is acting
as agent for the owner or owners. A record holder such as a broker who holds
shares of FBA stock as nominee for several beneficial owners may exercise
appraisal rights with respect to the shares of FBA stock held for one or more
beneficial owners while not exercising those rights with respect to the shares
of FBA stock held for one or more other beneficial owners; in that case, the
written demand should set forth the number of shares of FBA stock as to which
appraisal is sought, and where no number of shares is expressly mentioned, the
demand will be presumed to cover all shares of FBA stock held in the name of the
record owner.
If you hold your shares of FBA stock in brokerage accounts or other
nominee forms and wish to exercise appraisal rights, you are urged to consult
promptly with the person or entity holding the shares to determine the
appropriate procedures for the making of a timely demand for appraisal by the
nominee.
Within 120 days after the completion of the merger, but not thereafter,
either FBA or any holder of dissenting shares who has complied with the
requirements of Section 262 may file a petition in the Delaware Chancery Court
demanding a determination of the fair value of all shares of FBA stock held by
dissenting stockholders. FBA is under no obligation to and has no present intent
to file a petition for appraisal, and you should not assume that FBA will file a
petition or initiate any negotiations with respect to the fair value of the
shares. Accordingly, if you desire to have your shares appraised, you should
take any actions necessary for the perfection for your appraisal rights within
the time periods and in the manner prescribed in Section 262. Within 120 days
after the completion of the merger, any stockholder who has complied with the
provisions of Section 262 will be entitled to receive from FBA, upon written
request, a statement setting forth the aggregate number of shares of FBA stock
for which demands for appraisal have been received by FBA and the aggregate
number of holders of the shares. FBA must mail this statement to the stockholder
within 10 days of receipt of a request or within 10 days after the expiration of
the period for the delivery of demands as described above, whichever is later.
Within 120 days after the effectiveness of the merger, any FBA stockholder
complying with Section 262 and who is otherwise entitled to appraisal rights may
file a petition in the Delaware Chancery Court demanding a determination of the
value of the stock of all such holders.
A stockholder timely filing a petition for appraisal with the Delaware
Chancery Court must deliver a copy to FBA, which will then be obligated within
20 days to provide the Delaware Chancery Court with a duly verified list
containing the names and addresses of all stockholders who have demanded
appraisal of their shares and with whom agreements as to the value of their
shares have not been reached with FBA. After notice to the stockholders, the
Delaware Chancery Court is empowered to conduct a hearing on the petition to
determine which stockholders are entitled to appraisal rights. The Delaware
Chancery Court may require stockholders who have demanded appraisal and who hold
stock represented by certificates to submit their certificates to the Register
in Chancery for notation thereon of the pendency of the appraisal proceedings,
and if any stockholder fails to comply with the requirement, the Delaware
Chancery Court may dismiss the proceedings as to that stockholder. After
determining the stockholders entitled to an appraisal, the Delaware Chancery
Court will appraise the "fair value" of their shares, exclusive of any element
of value arising from the accomplishment or expectation of the merger, together
with a fair rate of interest, if any, to be paid upon the amount determined to
be the fair value. The costs of the action may be determined by the Delaware
Chancery Court and taxed upon the parties as the Delaware Chancery Court deems
equitable. Upon application of a holder of dissenting shares, the Delaware
Chancery Court may also order that all or a portion of the expenses incurred by
any stockholder in connection with the appraisal proceeding, including
reasonable attorneys' fees and the fees and expenses of experts, be charged pro
rata against the value of all of the shares entitled to appraisal.
If you consider seeking appraisal, you should be aware that the fair
value of your shares as determined under Section 262 could be more than, the
same as or less than the merger consideration you would receive under the merger
agreement if you did not seek appraisal of your shares. In determining fair
value and, if applicable, a fair rate of interest, the Delaware Chancery Court
is to take into account all relevant factors. In Weinberger v. UOP, Inc., the
Delaware Supreme Court discussed the factors that could be considered in
determining fair value in an appraisal proceeding, stating that "proof of value
by any techniques or methods which are generally considered acceptable in the
financial community and otherwise admissible in court" should be considered, and
that "fair price obviously requires consideration of all relevant factors
involving the value of a company." The Delaware Supreme Court stated that, in
making this determination of fair value, the court must consider market value,
asset value, dividends, earnings, prospects, the nature of the enterprise and
any other facts that could be ascertained as of the date of the merger that
throw any light on future prospects of the merged corporation. The Delaware
Supreme Court further stated that "elements of future value, including the
nature of the enterprise, which are known or susceptible of proof as of the date
of the merger and not the product of speculation, may be considered. Section 262
provides that a fair value is to be "exclusive of any element of value arising
from the accomplishment or expectation of the merger."
Any stockholder who has duly demanded appraisal in compliance with
Section 262 will not, after the completion of the merger, be entitled to vote
the shares subject to this demand for any purpose or to receive payment of
dividends or other distributions on those shares (except dividends or other
distributions payable to holders of record of shares as of a record date prior
to the completion of the merger). If any stockholder who demands appraisal under
Section 262 fails to perfect, or effectively withdraws or loses, the right to
appraisal, the stockholder's shares will be converted into the right to receive
the merger consideration in cash in accordance with the merger agreement,
without interest. A stockholder will fail to perfect, or effectively lose or
withdraw, the right to appraisal if no petition for appraisal is filed within
120 calendar days after the completion of the merger. A stockholder may withdraw
a demand for appraisal by delivering to FBA a written withdrawal of the demand
for appraisal and acceptance of the merger consideration, except that any such
attempt to withdraw made more than 60 calendar days after the completion of the
merger will require the written approval of FBA. Once a petition for appraisal
has been filed, the appraisal proceeding may not be dismissed as to any
stockholder, without the approval of the Delaware Chancery Court.
Regulatory Approvals
Acquisitions of banks and bank holding companies are generally subject
to the prior approval of the federal and state bank regulatory agencies with
jurisdiction over the operations of those entities. First Banks has previously
obtained the regulatory approvals necessary to enable it to control FBA and
First Bank & Trust. Accordingly, under applicable laws and regulations, no
application is required to be submitted to federal or state regulatory agencies
prior to the consummation of the merger. First Banks has made the applicable
regulatory agencies aware of its intention to acquire the outstanding public
interests in FBA and will file any notices or other communications required or
requested by such agencies.
Recent Purchases of Stock
Purchases by FBA
For several years, FBA has had an ongoing program of purchasing common
stock in the open market from time to time, depending on market conditions,
access to funds, and other factors. FBA's board of directors, through various
resolutions passed from 1995 to 2000, has authorized the purchase of up to a
cumulative total of 1,094,797 shares of common stock. At June 30, 2002, FBA
could purchase approximately 222,000 additional shares of common stock under the
existing authorization.
In the past two years, FBA has purchased 77,300 shares of common stock
pursuant to the repurchase program, at average prices and in price ranges shown
in the following table:
Number of Shares
Purchased during Average Prices Range of Prices Paid
Quarter Ended the Quarter Paid Per Quarter during the Quarter
------------- ----------- ---------------- ------------------
12/31/00 12,500 $15.09 $14.00 - $17.00
03/31/01 37,600 $21.66 $19.75 - $22.50
06/30/01 2,300 $21.66 $21.66
09/30/01 16,000 $24.49 $24.49
12/31/01 -- -- --
03/31/02 -- -- --
06/30/02 8,900 $36.72 $36.22 - $38.00
09/30/02 600 $38.84 $38.00 - $40.25
In the 60-day period preceding the date of this proxy statement, FBA
purchased the shares reflected in the table below, in transactions effected
through a broker-dealer on the NYSE:
Date Number of Shares Price Per Share
---- ---------------- ---------------
09/25/02 200 $40.25
09/26/02 200 $40.25
09/27/02 2,200 $40.25
09/30/02 300 $40.20
Purchase by First Banks
On October 31, 2001, First Banks purchased 803,757 shares of FBA common
stock for $32.50 per share in a private placement for an aggregate purchase
price of $26,122,103. The price was based on recent market prices at the time of
the transaction. The purpose of the transaction was to provide capital with
which FBA funded its acquisition of BYL Bancorp, a California bank holding
company. In conjunction with the private placement, FBA's board of directors
resolved to conduct a rights offering to all of our other stockholders, allowing
each stockholder the right to purchase a proportionate number of shares of FBA
common stock at the same per share price paid by First Banks. We planned to
conduct the rights offering (which required, among other things, filing a
registration statement with the SEC) in the first half of 2002.
While we were preparing for the rights offering, First Banks began to
consider whether a buyout of FBA's public stockholders would be desirable and
feasible from its perspective. In April 2002, First Banks proposed the merger to
FBA's board of directors. In the discussions which followed, both First Banks
and the special committee agreed that, if the merger were completed this year,
there would be little or no benefit to conducting the rights offering, since it
would result in the issuance of additional shares to stockholders who would then
sell their shares in the merger. Accordingly, First Banks proposed, and the
special committee agreed, that, if a merger agreement was reached, FBA
stockholders could be compensated for the value of rights they would otherwise
have received by adding to the merger price an amount equal to the value that a
stockholder would have received if he or she fully exercised the right to buy
shares in the rights offering, and then sold such shares in the merger. This
amount was calculated to be $0.54 per share. Accordingly, when the merger is
completed, FBA stockholders will receive a payment of $0.54 per share in
addition to the agreed merger price of $40.00 per share. See "Consideration of
the Merger."
Common Stock Prices
The high and low common stock prices and dividend declarations for the
past two years are shown in the following table:
Quarter Ended High Low Dividend Declaration
------------- ---- --- --------------------
12/31/00 $17.63 $14.00 N/A
03/31/01 $22.75 $17.75 N/A
06/30/01 $29.53 $21.00 N/A
09/30/01 $30.75 $22.65 N/A
12/31/01 $32.93 $29.65 N/A
03/31/02 $41.40 $31.46 N/A
06/30/02 $42.09 $35.72 N/A
09/30/02 $41.70 $39.00 N/A
Accounting Treatment
It is anticipated that the merger, when consummated, will be accounted
for using the purchase method of accounting. The excess of the purchase price
over the book value of the FBA common stock acquired in the transaction will be
recorded by First Banks as goodwill and will not be amortized, but instead will
be periodically tested for impairment in accordance with existing accounting
pronouncements.
The following table summarizes First Banks' interest (in dollars and as
a percentage) in the net book value and net earnings of FBA as of and for the
six months ended June 30, 2002 and on a pro forma basis giving effect to the
merger as if it had been consummated on June 30, 2002.
June 30, 2002 Pro Forma Basis
------------- ---------------
Dollars Percentage Dollars Percentage
-------------------------- -------------------------
(dollars expressed in thousands)
Net book value $283,041 93.76% $288,353 100.00%
Net earnings 9,373 93.76 10,002 100.00
Estimated Expenses; Financing
The estimated expenses of the merger, including those associated with
this proxy statement, are estimated to be as follows:
Filing fees $ 6,500
Fees and expenses of financial advisor 75,000
Legal fees and expenses 75,000
Accounting fees 5,000
Printing and mailing 35,000
Miscellaneous expenses 13,500
--------
Total $210,000
========
Expenses attributable to FBA, such as the costs of preparing, mailing
and printing the proxy statement and the fees and expenses of counsel to the
special committee, will be paid by FBA. First Banks will pay expenses
attributable to it.
First Banks intends to use available working capital plus proceeds from
its existing line of credit with a group of unaffiliated banks to fund the costs
of the merger, including the merger consideration in the aggregate amount of
approximately $32.5 million. First Banks' line of credit provides a $90 million
revolving loan facility and a $20 million letter of credit facility to be used
for acquisitions and other corporate requirements. Both the line of credit
facility and the letter of credit facility are collateralized by the stock of
First Banks' second tier holding companies, FBA and Union Financial Group, Ltd.,
The San Francisco Company, ("SFCo"), FBA's wholly owned subsidiary bank holding
company, and First Bank, Union Financial Group, Ltd.'s wholly owned bank
subsidiary, and First Banks' intercompany note receivable from FBA. The
intercompany note receivable is collateralized by the stock of First Bank &
Trust, SFCo's wholly-owned bank subsidiary. If the balances outstanding under
the line of credit are accruing at the Prime Rate, interest is to be paid
monthly. At the option of First Banks, funds may be borrowed at the London
InterBank Offering Rate ("LIBOR") with interest payable based on the one, two,
three or six-month LIBOR rates as determined by First Banks. The rate is the sum
of the selected LIBOR plus an applicable margin based on the performance of
First Banks for the preceding four calendar quarters and the principal amounts
outstanding under the line of credit. As of September 30, 2002, First Banks did
not have any outstanding borrowings under the revolving loan facility, and one
letter of credit in the amount of $5.0 million was outstanding under the letter
of credit facility. The line of credit matures on August 21, 2003.
THE MERGER AGREEMENT
The following is a summary of all material provisions of the merger
agreement, a copy of which is attached as Appendix A to this proxy statement.
The merger agreement is incorporated herein by reference, and this summary is
qualified in its entirety by reference to the specific provisions of the merger
agreement.
The merger agreement provides that, following the approval of the
merger agreement by FBA's stockholders, the receipt of any required regulatory
approvals and the satisfaction or waiver of the other conditions to the merger,
FBA Acquisition will be merged with and into FBA. The merger will become
effective when a Certificate of Merger is filed with the office of the Secretary
of the State of Delaware, or at a later time specified in such Certificate, and
all outstanding shares of FBA common stock (other than shares owned by First
Banks) will be converted into the right to receive $40.54 in cash.
Representations and Warranties
Representations and Warranties of FBA. The merger agreement contains
representations and warranties of FBA made to First Banks including, but not
limited to:
o the organization and corporate status of FBA and its
subsidiaries;
o the authorization, execution, delivery and enforceability of the
merger agreement;
o the delivery of FBA's financial statements;
o the material accuracy, as of the dates of the merger agreement
and of this proxy statement, of information provided by FBA, and
the material compliance with law of the documents which FBA is
responsible for filing with governmental entities in connection
with the merger;
o the incurrence by FBA and its subsidiaries of fees for brokers or
finders in connection with the merger;
o the adequacy of FBA's allowance for loan losses;
o except as otherwise disclosed, the absence since June 30, 2002 of
changes or other events requiring disclosure to make FBA's
financial statements not misleading or involving a material
adverse change in the financial condition, the results of
operations or the business of FBA;
o the absence of material litigation against FBA and its
subsidiaries except as otherwise disclosed;
o identification of FBA's subsidiaries;
o the absence of any regulatory actions against FBA or any of its
subsidiaries, and compliance by FBA and its subsidiaries with
applicable laws and regulations;
o identification of contracts, employee arrangements and other
agreements meeting certain criteria specified in the merger
agreement;
o the filing of all required reports by FBA and its subsidiaries
with governmental agencies, and the compliance of such reports
with applicable requirements;
o proper accounting for the securities in FBA's investment
portfolio;
o the status of the loans in FBA's loan portfolio and the
documentation relating thereto;
o the status of employee benefit plans affecting employees of FBA
and its subsidiaries;
o the absence of undisclosed liabilities;
o legal title to FBA's properties and the existence and nature of
insurance relating thereto; and
o the nature and status of any loans, contracts and other
arrangements with any of FBA's officers, directors or employees
or any of their related interests.
Representations and Warranties of First Banks and FBA Acquisition. The
merger agreement contains representations and warranties of First Banks and FBA
Acquisition made to FBA including, but not limited to:
o the organization and corporate status of First Banks and FBA
Acquisition;
o the authorization, execution, delivery and enforceability of the
merger agreement;
o the material accuracy, as of the dates of the merger agreement
and of this proxy statement, of information provided by First
Banks, and the material compliance with law of the documents
which First Banks is responsible for filing with governmental
entities in connection with the merger;
o the incurrence by First Banks of any fees for brokers or finders
in connection with the merger;
o the absence of litigation against First Banks or FBA Acquisition
which, if adversely determined, would prevent, delay or
materially interfere with the consummation of the merger;
o the absence of any regulatory actions against First Banks or FBA
Acquisition; and
o First Banks' access to sufficient funds to enable it to pay the
merger consideration and all fees and expenses arising from the
merger.
Conditions to the Consummation of the Merger
Conditions to the Obligations of All of the Parties. The obligations of
the parties to the merger agreement to effect the merger are subject to the
following conditions (which may be waived):
o there shall not be any injunction or restraining order preventing
the consummation of the merger in effect, nor shall any
proceeding by any governmental entity seeking the same be
pending, nor shall the merger be illegal under any applicable
law;
o all necessary governmental approvals for the merger shall have
been obtained, and any waiting periods imposed by any applicable
law or regulation for the consummation of the merger shall have
expired; and
o the special committee shall have received an opinion from Baxter
Fentriss to the effect that the merger is fair to the holders of
FBA common stock (other than First Banks) from a financial point
of view, and such opinion shall not have been withdrawn. This
opinion was received by the special committee on September 23,
2002, and we do not have any reason to believe that it will be
withdrawn.
Conditions to the Obligations of FBA. The obligation of FBA to effect
the merger is subject to the fulfillment or waiver, at or prior to the effective
time of the merger, of the following additional conditions:
o as of the closing date of the merger, the representations and
warranties of First Banks and FBA Acquisition set forth in the
merger agreement shall be true in all material respects;
o First Banks and FBA Acquisition shall have performed in all
material respects their respective obligations under the merger
agreement; and
o FBA shall have received certain documents required to be
delivered by First Banks and FBA Acquisition.
Conduct of Business Pending the Merger
Pursuant to the terms of the merger agreement, FBA and its subsidiaries
are generally required to conduct their businesses only in the ordinary and
usual course consistent with past practices. Furthermore, the merger agreement
contains certain specific restrictions upon the conduct of FBA's business
pending the merger. In particular, the merger agreement provides that FBA and
its subsidiaries will not, except with First Banks' consent:
o declare or pay any dividend or make any other distribution to
stockholders, whether in cash, stock or other property;
o issue capital stock or rights relating thereto;
o effect a reclassification, recapitalization, split-up, exchange
of shares, readjustment or other similar change in or to any
capital stock, or otherwise reorganize or recapitalize;
o change their certificate or articles of incorporation or bylaws,
or enter into any agreement to merge or sell a significant
portion of their assets.
o grant any increase (other than ordinary and normal increases
consistent with past practices) in the compensation payable or to
become payable to officers or employees, grant any stock options
or, except as required by law, adopt or make any change in any
employee benefit plan, agreement, payment or arrangement made to,
for or with any such officers or employees;
o borrow funds except in the ordinary course of business,
o make or commit to make any new loan or letter of credit or any
new or additional discretionary advance under any existing line
of credit, except in the ordinary course of business;
o enter into any agreement, contract or commitment having a term in
excess of three months other than letters of credit loan
agreements, deposit agreements, and other lending, credit and
deposit agreements and documents made in the ordinary course of
business;
o except in the ordinary course of business, place on any of its
assets or properties any mortgage, pledge, lien, charge, or other
encumbrance;
o except in the ordinary course of business, cancel or accelerate
any material indebtedness owing to such entity or any claims
which such entity may possess, or waive any material rights of
substantial value;
o sell or otherwise dispose of any real property or any material
amount of any tangible or intangible personal property, other
than properties acquired in foreclosure or otherwise in the
ordinary collection of indebtedness;
o violate any law, statute, rule, governmental regulation or order,
which violation might have a material adverse effect on such
entity's business, financial condition, or earnings; or
o increase or decrease the rate of interest paid on time deposits
or on certificates of deposit, except in a manner consistent with
past practices.
The parties to the merger agreement are also required to use their best
efforts to perform and fulfill all conditions and obligations under the merger
agreement and to effect the merger in accordance with the terms and provisions
thereof. The merger agreement requires each party to furnish to the other in a
timely manner all information, data and documents requested to obtain any
necessary regulatory or other approvals of the merger and for FBA to deliver
certain financial information covering periods prior to the closing date to
First Banks, as well as all other financial reports or statements submitted to
regulatory authorities.
Additional Agreements
Additional Covenants of FBA, First Banks and FBA Acquisition. The
merger agreement contains additional covenants of FBA, First Banks and FBA
Acquisition, among other things:
o to consult with the other party as to the form of any press
release or other public disclosures related to the merger;
o to promptly notify the other parties in the event of any breach
of the merger agreement and use their best efforts to prevent or
remedy such a breach;
o to use their best efforts to perform and fulfill their respective
obligations under the merger agreement; and
o to maintain the confidentiality of information received from the
other parties.
Additional Covenants of FBA. The merger agreement requires FBA:
o to prepare, file and distribute this proxy statement and to hold
a meeting of the stockholders of FBA to vote on the merger
agreement, and to use its best efforts to obtain the approval
thereof by the stockholders of FBA;
o to permit First Banks to have reasonable access to FBA's books,
records and other documents; and
o to use its best efforts to obtain all consents required for the
consummation of the merger.
Termination; Damages
Termination. The merger agreement may be terminated at any time prior
to the closing date, either before or after approval by the stockholders of FBA,
by the mutual consent of the parties; or by either FBA or First Banks at any
time if:
o the other party materially breaches any of its representations,
warranties and agreements made under the merger agreement and the
breach is not cured within 30 days after written notice has been
provided to the breaching party;
o the conditions to the obligations of a party are not satisfied or
waived prior to the closing date and any applicable 30-day cure
period has lapsed, after written notice has been provided by such
party to the other party, or any required regulatory approval is
finally denied; or
o the effective time has not occurred prior to March 31, 2003.
Effect of Termination. The merger agreement provides that, upon a
termination, the merger agreement shall become void, and no obligation or
liability would exist on the part of any party, except for willful violation of
certain specified provisions thereof.
Amendment and Waiver
The merger agreement may be amended at any time by all of the parties
thereto, and each party may extend the time for performance of the obligations
of the other parties, waive inaccuracies in representations and warranties and
waive compliance with any agreements or conditions contained in the merger
agreement.
Expenses
Whether or not the merger is consummated, all costs and expenses
incurred in connection with the merger agreement and the transactions
contemplated thereby are to be paid by the party incurring such expense.
PROPOSAL NUMBER 2:
ELECTION OF DIRECTORS
Our board of directors recommends that the stockholders vote to
re-elect Messrs. Blake, Crocco, Dierberg, Lavezzo, McCarthy and Story and Mrs.
Schepman as directors, each for a one-year term.
Nominees
Our board of directors consists of seven members, who are identified in
the following table which sets forth the information indicated as of the record
date. Each of the directors was elected or appointed to serve a one-year term
and until his or her successor has been duly qualified for office.
Name Age Director Since
- ---------------------------------------------------------------------------
Allen H. Blake 59 1994
Charles A. Crocco, Jr. (2) 64 1988
James F. Dierberg 65 1994
Albert M. Lavezzo (2) 66 1998
Terrance M. McCarthy 48 2001
Ellen D. Schepman (1) 28 1999
Edward T. Story, Jr. (2) 58 1987
- -------------------
(1) Mrs. Schepman is the adult daughter of James F. Dierberg; see "Family
Relationships."
(2) Member of the Audit Committee.
Allen H. Blake has been Executive Vice President of FBA since 1998, its
Chief Operating Officer from 1999 to July 2002; its Chief Financial Officer from
1994 to September 1999 and since June 2001; and Secretary since 1994. Mr. Blake
has been the President of First Banks since October 1999, its Chief Operating
Officer from 1998 to July 2002; its Chief Financial Officer from 1984 to
September 1999 and since June 2001; and its Secretary since 1988.
Charles A. Crocco, Jr. has practiced law in the New York City area
since 1970. He has been Counsel to the law firm of Crocco & DeMaio, P.C., Mount
Kisco, New York since April 2000. He previously was Counsel to Jackson & Nash,
LLP in New York City from January 1999 until April 2000, Counsel to Crocco &
DeMaio, P.C. in 1998, and a Partner in Crocco & DeMaio, P.C. prior to 1998. Mr.
Crocco is also a director of The Hallwood Group Incorporated, a merchant banking
firm.
James F. Dierberg has been the Chairman of the board of directors,
President and Chief Executive Officer of FBA since 1994 and the Chairman of the
board of directors and Chief Executive Officer of First Banks since 1988. Mr.
Dierberg has also been a director of First Banks since 1979 and its President
from 1979 until 1992 and from 1994 to October 1999.
Albert M. Lavezzo has been President and Chief Operating Officer of the
law firm of Favaro, Lavezzo, Gill, Caretti & Heppell, Vallejo, California, since
1974. Mr. Lavezzo was the Chairman of the board of directors of Surety Bank in
Vallejo, California for 15 years prior to its acquisition by FBA in 1997 and is
the President of North Bay Exchange Co., Inc.
Terrance M. McCarthy has been Executive Vice President of FBA since
1999 and its Chief Operating Officer since July 2002. Mr. McCarthy has been
Executive Vice President of First Banks since 1999 and its Chief Operating
Officer since July 2002. He has also served as Chairman of the board of
directors, President and Chief Executive Officer of First Bank & Trust since
1998. Prior to 1998, Mr. McCarthy was employed in various executive capacities
with First Banks.
Ellen D. Schepman has been a Retail Marketing Officer of First Banks
since May 1999. She was a Retail Marketing Specialist with First Bank & Trust
from 1997 to May 1999.
Edward T. Story, Jr. has been the President, Chief Executive Officer
and a Director of SOCO International, plc, a corporation engaged in
international oil and gas operations, since 1991. Mr. Story is also a Director
of Cairn Energy plc and Hallwood Realty Corporation.
Although we do not anticipate that any nominee will refuse or be unable
to serve as a director, the persons named in the enclosed form of proxy intend,
if any nominee becomes unavailable, to vote the shares represented by the proxy
for the election of another person or persons nominated or designated by
management, unless you direct them in your proxy to do otherwise.
Assuming the presence of a quorum, the seven nominees receiving the
largest number of the votes cast, including those cast by holders of the common
stock and the Class B common stock represented at the Annual Meeting, will be
elected as directors. FBA's By-Laws require that any nominations by a
stockholder comply with certain procedural and disclosure requirements,
including advance written notice to the Secretary of FBA.
Executive Officers
Our executive officers as of the record date were as follows:
Name Age Office(s) Held
- -------------------------------------------------------------------------------------------------------------------
James F. Dierberg 65 Chairman of the Board of Directors, President and
Chief Executive Officer.
Allen H. Blake 59 Executive Vice President; Chief Financial Officer
and Secretary.
Terrance M. McCarthy 48 Executive Vice President; Chief Operating Officer;
Chairman of the Board of Directors, President and
Chief Executive Officer of First Bank & Trust.
Donald W. Williams 55 Executive Vice President and Chief Credit Officer
The executive officers were each elected by the board of directors to
the office indicated.
Committees and Meetings of the Board of Directors
Three members of our board of directors serve on the Audit Committee;
there are no other committees of the Board. See "AUDIT COMMITTEE REPORT" for
additional information regarding our Audit Committee.
Board and Committee Meetings. The board of directors held four meetings
in 2001, including regular and special meetings, and there were four meetings of
the Audit Committee. During 2001, all of our directors attended more than 75% of
the aggregate of the number of meetings of the board of directors and the
meetings held by all committees of the board of directors on which they served.
Director Compensation
Directors who are not our officers or affiliated with First Banks
(Messrs. Crocco, Lavezzo and Story) were paid a fee of $2,000 for each meeting
of our board of directors attended, and a fee of $500 for each committee meeting
attended. For their services as directors in 2001, Messrs. Crocco, Story and
Lavezzo received aggregate fees of $10,000. In addition, each of these
individuals was paid a fee of $10,000 for his participation on a special
committee of our board of directors created during 2002 for the purpose of
conducting an independent evaluation of our acquisition of 801,653 shares of our
common stock held publicly. Mrs. Schepman, who serves as a Retail Marketing
Officer of First Banks, but who is not an officer of FBA, also received $8,000
for her service as a director in 2001. Furthermore, Mr. Lavezzo received $1,500
as a member of the board of directors of First Bank & Trust.
Messrs. Crocco, Story and Lavezzo and Mrs. Schepman also participated
in our 1993 Directors' Stock Bonus Plan, or our Stock Bonus Plan, which provided
for an annual grant of 500 shares of common stock to each such director. The
maximum number of shares that could be issued was limited to 16,667 shares, and
the plan expired on July 1, 2001. Directors' compensation expense of $46,000 was
incurred in 2001 in connection with our Stock Bonus Plan.
None of our three directors who are also executive officers of First
Banks (Messrs. Dierberg, Blake and McCarthy) receive any compensation from FBA
or our subsidiaries for services as a director, nor do they participate in our
Stock Bonus Plan or any of our other compensation plans or those of our
subsidiaries. First Banks, of which Messrs. Dierberg, Blake and Williams are
directors and executive officers and Mr. McCarthy is an executive officer,
provides various services to us and our subsidiaries for which it is compensated
(see "Compensation Committee Interlocks and Insider Participation").
Family Relationships
Mrs.Schepman is the adult daughter of Mr. Dierberg; except for that
relationship, there is no family relationship between any of the nominees for
director or our directors or executive officers or those of our subsidiaries.
Certain Relationships and Related Transactions
First Bank & Trust has had in the past, and may have in the future,
loan transactions in the ordinary course of business with our directors or their
affiliates. These loan transactions have been and will be on the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with unaffiliated persons and did not and will not
involve more than the normal risk of collectibility or present other unfavorable
features. First Bank & Trust does not extend credit to our officers or its own
officers, except extensions of credit secured by mortgages on personal
residences, loans to purchase automobiles and other consumer-type loans.
Certain of our directors and officers and their respective affiliates
have deposit accounts with First Bank & Trust. It is the policy of First Bank &
Trust not to permit any of its officers or directors or their affiliates to
overdraw their respective deposit accounts unless that person has been
previously approved for overdraft protection under a plan whereby a credit limit
has been established in accordance with First Bank & Trust's standard credit
criteria.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding
compensation earned during the year ended December 31, 2001, and specified
information with respect to the two preceding years, by Mr. McCarthy, who is our
only executive officer whose annual compensation in 2001 from FBA and our
subsidiaries exceeded $100,000.
Presently, Messrs. Dierberg, Blake, Williams and McCarthy do not
receive any compensation directly from either FBA or our subsidiaries. FBA and
First Bank & Trust have entered into various contracts with First Banks, of
which Messrs. Dierberg, Blake and Williams are directors and executive officers
and Mr. McCarthy is an executive officer, pursuant to which services are
provided to First Bank & Trust and us (see "Compensation Committee Interlocks
and Insider Participation" for additional information regarding contracts with
First Banks).
SUMMARY COMPENSATION TABLE FOR YEAR ENDED DECEMBER 31, 2001
Salary Bonus All Other
Name and Principal Position Year $$ (1) $$ Compensation $$ (2)
- -------------------------------------------- -------- --------------- ----------- ---------------------------------
Terrance M. McCarthy 2001 220,000 38,000 5,200
Executive Vice President;
Chief Operating Officer; 2000 180,000 25,000 6,650
Chairman of the Board of Directors,
President and Chief Executive Officer of 1999 147,500 20,000 4,950
First Bank & Trust
- -----------------------
(1) The total of all other annual compensation for Mr. McCarthy is less than
the amount required to be reported, which is the lesser of (a) $50,000 or
(b) ten percent (10%) of the total of the annual salary and bonus paid to
that person.
(2) All other compensation reported represents matching contributions to our
401(k) Plan for the year indicated and ownership interests granted in units
of Star Lane Trust, First Banks' unit investment trust that was created on
January 21, 2000.
We have omitted from this Proxy Statement tables that would disclose
information regarding stock options granted during 2001, stock options exercised
during 2001 and long term incentive plan awards. No options were granted to or
exercised by executive officers in 2001, and we do not have a long-term
incentive plan.
STOCK PERFORMANCE GRAPH
The following graph sets forth a comparison of the cumulative total
stockholder returns of our common stock, the New York Stock Exchange Market
Value Index and the Index of Regional Banks located in the Pacific region
published by Media General Financial Services ("MGFS") for the five year period
from December 31, 1996 through December 31, 2001. The securities of 112 other
banks are included in the MGFS index.
In previous years, our performance graph included a comparison with a
different group of regional banks (those generally located in the Southwest
region of the United States), because we originally operated in Texas. However,
in light of the increasing size and importance of California in our operations
(particularly since our acquisition of First Bank & Trust in 2000), we believe
that an index composed of banks in the Pacific region is more relevant than the
index previously used.
The graph and the table which follow are based on the assumption that
the value of the investment in our common stock and in each index was $100 at
December 31, 1996 and that all dividends were reinvested (we did not pay any
dividends during the period).
[Performance Graph]
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
-------- -------- -------- -------- -------- --------
First Banks America, Inc. 100.00 229.01 192.59 180.25 174.07 311.31
NYSE Market Value Index 100.00 180.06 168.64 171.94 198.96 225.87
MGFS Regional Banks - Pacific Region 100.00 131.56 156.55 171.42 175.51 159.87
COMPENSATION COMMITTEE REPORT
The Compensation Committee of FBA is comprised of its entire board of
directors. Four of the current directors, including Mr. Dierberg, who is
Chairman of the Board, Chief Executive Officer and President, Mr. Blake, who is
Executive Vice President, Chief Financial Officer and Secretary, and Mr.
McCarthy, who is Executive Vice President and Chief Operating Officer, are
affiliated with First Banks, which is compensated for their services under the
provisions of a management fee agreement between FBA and First Banks. None of
the current directors has ever been compensated by FBA as an executive officer.
The Compensation Committee considers the levels and components of
executive compensation relative to those generally available in its market
place, to the overall long-term objectives of FBA and to the interest of its
stockholders. By maintaining appropriate balance in these factors, the
Compensation Committee believes it will be most effective in attracting and
retaining well-qualified executives who will be capable of contributing to the
success of FBA and enhancing the value of FBA to its stockholders.
The paramount objective of FBA is building the long-term value of the
stockholders' investment, within the framework of operating its subsidiary
financial institution in a safe and sound manner. This is accomplished by
achieving substantial improvements and consistency in earnings, strengthening
the subsidiary banking franchise, and entering into strategic,
economically-viable acquisitions of other financial institutions. Consequently,
the compensation of executives should be structured to attract individuals
capable of contributing to the achievement of these objectives and to align the
welfare of those individuals with that of the stockholders.
The Compensation Committee periodically reviews the various components
of FBA's executive compensation programs. The individual components of
compensation to executives are evaluated taking into consideration the factors
discussed below. However, the Compensation Committee does not give specific
weights to particular factors and subjectively adjusts the compensation levels
of the executive officers based, in part, on non-quantifiable considerations.
The compensation adjustments, while influenced by the evaluation factors, are
not determined by applying a mathematical formula to any individual performance
measurements.
Base Salary. In determining the appropriate base salaries of its
executive officers, the Compensation Committee evaluates the performance of FBA,
considering general business and industry conditions, among other factors, and
the contributions of specific executives toward that performance. Particular
measurements to which the Compensation Committee assigns significance are net
income, earnings per share, expense control, net interest margin, credit
quality, and regulatory exam results. The Compensation Committee also evaluates
each officer's areas of responsibility and FBA's performance in those areas.
Finally, FBA considers the level of compensation paid to comparable executives
by other financial institutions of comparable size in its market places.
Bonus. The Compensation Committee may elect to award bonuses to
selected executive officers based largely upon the same criteria as the
evaluations of base salaries, emphasizing the need to maintain competitive
compensation packages and the desire to recognize outstanding performance by the
officers.
Along with the need to improve operating results, FBA evaluated its
management structure, recognizing the additional management resources available
from First Banks. This evaluation resulted in a realignment of FBA's executive
officers and presently, none of FBA's current executive officers receive any
compensation from FBA (see "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION").
The Compensation Committee reviewed the performance of FBA for 2001
relative to its net income, earnings per share, external growth, business
development and asset quality. Net income for the year ended December 31, 2001
was $39.6 million (as compared to $27.8 million in 2000), while diluted earnings
per share totaled $3.25 (as compared to $2.29 in 2000). FBA's total assets
increased to $3.06 billion at December 31, 2001 from $2.74 billion at December
31, 2000, reflecting both external growth through acquisitions and expanded
business development efforts. Additionally, nonperforming assets totaled $20.1
million and $15.7 million at December 31, 2001 and 2000, respectively.
The Compensation Committee determined that improvement had been
achieved in the performance measurement areas, that significant inroads were
accomplished in enhancing FBA's banking franchise and its prospects for
progressive and profitable growth, and that these improvements should be
recognized in terms of compensation. As a result, the Compensation Committee
concluded that an increase in Mr. McCarthy's base compensation was warranted and
that an increased bonus was appropriate.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. As noted above, Mr. Dierberg,
the Chief Executive Officer of FBA, does not receive any compensation from FBA
or First Bank & Trust. First Banks receives fees from FBA pursuant to data
processing and management fee agreements (see "COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION").
The foregoing Report has been presented by the entire board of
directors consisting of Messrs. Blake, Crocco, Dierberg, Lavezzo, McCarthy and
Story and Mrs. Schepman.
AUDIT COMMITTEE REPORT
The Audit Committee, which is comprised of Messrs. Crocco, Lavezzo and
Story (who serves as Chairman) is responsible for oversight of our financial
reporting process on behalf of the board of directors. Management has primary
responsibility for our financial statements and financial reporting, including
internal controls, subject to the oversight of the Audit Committee and the board
of directors. In fulfilling its responsibilities, the Audit Committee reviewed
the audited consolidated financial statements with management and discussed the
acceptability of the accounting principles used, the reasonableness of
significant judgments made and the clarity of disclosures.
The Audit Committee reviewed with the independent auditors, who are
responsible for planning and carrying out a proper audit and expressing an
opinion on the conformity of our audited consolidated financial statements with
accounting principles generally accepted in the United States of America, their
judgments as to the acceptability of the accounting principles we use, and such
other matters as are required to be discussed with the Audit Committee. In
addition, the Audit Committee discussed with the independent auditors their
independence from management and FBA, including the matters required by Standard
No. 1 of the Independence Standards Board, and the Audit Committee considered
the compatibility of nonaudit services provided by the independent auditors with
the auditors' independence.
The Audit Committee discussed with our internal and independent
auditors the overall scope and plans for their respective audits. The Audit
Committee met with the internal and independent auditors, with and without
management present, to discuss the results of their examinations, their
evaluations of FBA's internal controls and the overall quality of the FBA's
financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the board of directors that the audited consolidated
financial statements be included in the FBA's Annual Report on Form 10-K as of
and for the year ended December 31, 2001, and the board of directors approved
that recommendation. The Audit Committee also recommended, and the board of
directors authorized, the selection of KPMG LLP ("KPMG") as our independent
auditors for the year ending December 31, 2002.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
Messrs. Dierberg, Blake and Williams, who are executive officers of FBA
but do not receive any compensation for their services as such, are also
executive officers and members of the board of directors of First Banks. Mr.
McCarthy, who is an executive officer of FBA and an executive officer of First
Banks, no longer receives compensation from First Bank & Trust as he became
directly employed by First Banks in July 2002. First Banks does not have a
compensation committee, but its board of directors performs the functions of
such a committee. Except for the foregoing, none of our executive officers
served during 2001 as a member of the Compensation Committee, or any other
committee performing comparable functions, or as a director of another entity,
any of whose executive officers or directors served on our board of directors or
Compensation Committee.
We purchase certain services and supplies from or through First Banks.
Our financial position and operating results could significantly differ from
those that would be obtained if our relationship with First Banks did not exist.
First Banks provides management services to FBA and our subsidiaries
under a management fee agreement whereby we compensate First Banks for our use
of its personnel for various functions including internal audit, loan review,
income tax preparation and assistance, accounting, asset/liability management
and investment services, loan servicing and other management and administrative
services. Fees paid under this agreement were $8.0 million, $5.2 million and
$4.4 million for the years ended December 31, 2001, 2000 and 1999, respectively.
First Services L.P., a limited partnership indirectly owned by First
Banks' Chairman and his adult children, provides information technology and
various related services to First Bank & Trust under the terms of data
processing agreements. Fees paid under these agreements were $9.2 million, $6.8
million and $5.3 million for the years ended December 31, 2001, 2000 and 1999,
respectively.
First Bank & Trust had $93.1 million and $108.2 million in whole loans
and loan participations outstanding at December 31, 2001 and 2000, respectively,
that were purchased from First Bank, a wholly owned subsidiary of First Banks.
In addition, First Bank & Trust had sold $137.6 million and $146.1 million in
whole loans and loan participations to First Bank at December 31, 2001 and 2000,
respectively. These loans and loan participations were acquired and sold at
interest rates and terms prevailing at the dates of their purchase or sale and
under standards and policies followed by First Bank & Trust.
We have a $100.0 million revolving note payable to First Banks, the
proceeds of which are used in our acquisitions and for other corporate purposes.
At December 31, 2001 and 2000, the amounts outstanding under our note payable
were $71.0 million and $98.0 million, respectively.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officers and
directors, and persons who beneficially own more than ten percent of a
registered class of our equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. Based upon a review of the reports we received and the
written representations from certain reporting persons that no Forms 5 were
required for such persons, we believe that during the year ended December 31,
2001, all executive officers, directors and ten percent beneficial owners
complied with the applicable filing requirements.
INDEPENDENT AUDITORS
KPMG served as our independent public accountant for the year ended
December 31, 2001 and has been selected by the board of directors to serve for
the current year. Representatives of KPMG are expected to be present at the
Annual Meeting, and they will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
During 2001, KPMG served as FBA's independent auditors and provided
additional services to FBA and our affiliates. The following table sets forth
KPMG's fees for 2001 in connection with (1) the audit of FBA's annual
consolidated financial statements and reviews of the various consolidated
financial statements included in our Quarterly Reports on Form 10-Q ("Audit
Fees"); (2) consulting services relating to the design and implementation of
systems that aggregate data underlying, or generate information significant to,
our financial statements ("Financial Information Systems Design and
Implementation Fees"); and (3) all other services, including audit-related
services, rendered by KPMG ("All Other Fees").
Financial Information
Systems Design and
Audit Fees Implementation Fees All Other Fees
---------- ------------------- --------------
$257,500 $0 $0
AVAILABLE INFORMATION
FBA is subject to the informational reporting requirements of the
Securities Exchange Act of 1934 and, in accordance with such Act, it files
reports, proxy statements and other information with the SEC. These reports,
proxy statements and other information may be inspected and copies made at the
Public Reference Room of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549 and the SEC's regional office at 175 W. Jackson Blvd., Suite 900, Chicago,
Illinois 60604. Copies of these materials can also be obtained from the Public
Reference Room of the SEC at its Washington address at prescribed rates.
Information regarding the operation of the Public Reference Room may be obtained
by calling the SEC at 1-800-SEC-0330. Copies of these materials may also be
accessed through the SEC's website at www.sec.gov. FBA's common stock trades on
the New York Stock Exchange under the symbol "FBA."
FBA has filed a Schedule 13E-3 with the SEC with respect to the merger.
As permitted by the SEC, this proxy statement omits certain information
contained in the Schedule 13E-3. The Schedule 13E-3, including any amendments
and exhibits filed or incorporated by reference as a part of such schedule, is
available for inspection or copying as set forth above.
You should rely only upon the information contained in, or incorporated
by reference in, this proxy statement. FBA has not authorized anyone to provide
you with information that is different from the information contained in and
incorporated by reference herein.
This proxy statement is dated November __, 2002. You should not assume
that the information contained herein is accurate as of any other date, and the
mailing of this proxy statement to stockholders does not create any implication
to the contrary. This proxy statement does not constitute a solicitation of a
proxy in any jurisdiction in which such a solicitation is unlawful.
INCORPORATION OF INFORMATION BY REFERENCE
FBA's Annual Report on Form 10-K for the year ended December 31, 2001,
its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2002 and
June 30, 2002, and its Current Reports on Form 8-K dated January 18, 2002, April
25, 2002, August 18, 2002 and September 24, 2002, each filed with the SEC
(Commission File No. 0-8937), are incorporated by reference in this proxy
statement. Such documents are not presented in or delivered with this proxy
statement, but are available without charge, without exhibits (unless the
exhibits are specifically incorporated by reference in this proxy statement), to
any person, including the beneficial owner, to whom this proxy statement is
delivered, upon written or telephonic requested directed to Lisa K. Vansickle at
600 James S. McDonnell Boulevard, Mail Code M1-199-014, Hazelwood, Missouri
63042, or (314) 592-6603. To receive timely delivery of any information
requested, you should deliver your request to FBA at least 10 days prior to the
annual meeting.
STOCKHOLDER PROPOSALS
If the merger is consummated, FBA will no longer be subject to the
SEC's proxy rules. If for any reason the merger is not consummated, the
provisions of the SEC's Rule 14a-8 under the Securities Exchange Act of 1934
governing proposals made by stockholders for consideration at an annual meeting
would remain applicable. Pursuant to Rule 14a-8, stockholders would then be able
to present proper proposals for inclusion in FBA's proxy statement for
consideration at its annual meeting of stockholders by submitting proposals to
FBA in a timely manner. In order to be so included for the 2003 annual meeting
of stockholders, stockholder proposals must be received by FBA a reasonable time
before FBA begins to print and mail proxy materials and must otherwise comply
with the requirements of Rule 14a-8 and with FBA's By-laws.
By Order of the Board of Directors,
/s/ Allen H. Blake
-------------------------------
San Francisco, California ALLEN H. BLAKE
November __, 2002 Secretary
Appendix A
AGREEMENT AND PLAN OF MERGER
by and among
FIRST BANKS, INC.,
a Missouri corporation,
FBA ACQUISITION CORPORATION,
a Delaware corporation,
and
FIRST BANKS AMERICA, INC.,
a Delaware corporation
September 23, 2002
TABLE OF CONTENTS
ARTICLE I - TERMS OF THE MERGER & CLOSING; EXCHANGE OF SHARES
Section 1.01. The Merger............................................................................ 2
Section 1.02. Effect of the Merger.................................................................. 2
Section 1.03. Conversion of Shares.................................................................. 2
Section 1.04. The Closing........................................................................... 3
Section 1.05. The Closing Date; Effective Time...................................................... 3
Section 1.06. Actions At Closing.................................................................... 3
Section 1.07. Exchange Procedures; Certificates..................................................... 4
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF FBA
Section 2.01. Organization and Capital Stock; Standing and Authority................................ 4
Section 2.02. Authorization; No Defaults............................................................ 5
Section 2.03. FBA Subsidiaries...................................................................... 5
Section 2.04. Financial Information................................................................. 5
Section 2.05. Absence of Changes.................................................................... 6
Section 2.06. Regulatory Enforcement Matters........................................................ 6
Section 2.07. Litigation............................................................................ 6
Section 2.08. Properties, Contracts, Employee Benefit Plans and Other Agreements.................... 6
Section 2.09. Reports............................................................................... 7
Section 2.10. Investment Portfolio.................................................................. 7
Section 2.11. Loan Portfolio........................................................................ 7
Section 2.12. Employee Matters and ERISA............................................................ 8
Section 2.13. Title to Properties; Insurance........................................................ 8
Section 2.14. Compliance with Laws.................................................................. 9
Section 2.15. Brokerage............................................................................. 9
Section 2.16. No Undisclosed Liabilities............................................................ 9
Section 2.17. Statements True and Correct........................................................... 9
Section 2.18. Commitments and Contracts............................................................. 9
Section 2.19. Material Interest of Certain Persons................................................. 10
Section 2.20. Conduct to Date...................................................................... 10
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF FIRST BANKS AND NEWCO
Section 3.01. Organization and Authority........................................................... 11
Section 3.02. Authorization; No Defaults........................................................... 11
Section 3.03. Regulatory Enforcement Matters....................................................... 12
Section 3.04. Litigation........................................................................... 12
Section 3.05. Brokerage............................................................................ 12
Section 3.06. Statements True and Correct.......................................................... 12
Section 3.07. Financial Capacity................................................................... 12
ARTICLE IV - AGREEMENTS OF FBA
Section 4.01. Business in Ordinary Course.......................................................... 13
Section 4.02. Breaches............................................................................. 14
Section 4.03. Submission to FBA's Stockholders..................................................... 14
Section 4.04. Consummation of Agreement............................................................ 15
Section 4.05. Access to Information................................................................ 15
Section 4.06. Consents to Contracts and Leases..................................................... 15
Section 4.07. Subsequent Financial Statements...................................................... 15
ARTICLE V - AGREEMENTS OF FIRST BANKS AND NEWCO
Section 5.01. Regulatory Approvals................................................................. 16
Section 5.02. Breaches............................................................................. 16
Section 5.03. Consummation of Agreement............................................................ 16
ARTICLE VI - CONDITIONS PRECEDENT TO THE MERGER
Section 6.01. Conditions to the Obligations of First Banks and Newco............................... 16
Section 6.02. Conditions to the Obligations of FBA................................................. 17
ARTICLE VII - TERMINATION
Section 7.01. Mutual Agreement......................................................................18
Section 7.02. Breach of Agreements................................................................. 18
Section 7.03. Failure of Conditions................................................................ 18
Section 7.04. Denial of Regulatory Approval........................................................ 18
Section 7.05. Unilateral Termination............................................................... 18
Section 7.06. Effect of Termination................................................................ 18
ARTICLE VIII - GENERAL PROVISIONS
Section 8.01. Confidential Information............................................................. 19
Section 8.02. Publicity............................................................................ 19
Section 8.03. Return of Documents.................................................................. 19
Section 8.04. Notices.............................................................................. 19
Section 8.05. Nonsurvival of Representations, Warranties and Agreements............................ 20
Section 8.06. Costs and Expenses................................................................... 21
Section 8.07. Entire Agreement..................................................................... 21
Section 8.08. Headings and Captions................................................................ 21
Section 8.09. Waiver, Amendment or Modification.................................................... 21
Section 8.10. Rules of Construction................................................................ 21
Section 8.11. Counterparts......................................................................... 21
Section 8.12. Successors and Assigns............................................................... 21
Section 8.13. Governing Law........................................................................ 21
Signatures............................................................................................. 22
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of September 23, 2002, is
by and among First Banks, Inc., a bank holding company organized as a Missouri
corporation ("First Banks"), FBA Acquisition Corporation, a wholly owned
subsidiary of First Banks organized as a Delaware corporation ("Newco"), and
First Banks America, Inc., a bank holding company majority-owned by First Banks
and organized as a Delaware corporation ("FBA"). This Agreement and Plan of
Reorganization is hereinafter referred to as the "Agreement."
WHEREAS, First Banks acquired control of FBA in 1994 and is the owner
of approximately 93.76% of the outstanding voting stock of FBA, with the
remaining shares of common stock of FBA, constituting approximately 6.24% of
FBA's outstanding voting stock, owned by public stockholders; and
WHEREAS, in October, 2001, First Banks invested approximately
$26,000,000 in additional shares of common stock, par value $0.15 per share, of
FBA ("FBA Common") in order to fund FBA's acquisition of BYL Bancorp, a
California bank holding company, and FBA decided at the time of that investment
by First Banks to conduct a rights offering (the "Rights Offering") to allow
FBA's public stockholders the opportunity to purchase proportionate amounts of
FBA Common for $32.50 per share, the same price paid by First Banks in October,
2001; and
WHEREAS, in April, 2002, First Banks proposed to the Board of Directors
of FBA that First Banks and FBA consider a transaction in which FBA would be
merged with a wholly-owned subsidiary of First Banks, all of the FBA Common
currently owned by public stockholders would be acquired by First Banks, and the
public stockholders would be paid by First Banks for their shares of FBA Common.
First Banks further proposed that, if such a transaction were completed, the
Rights Offering would not be conducted, but FBA's public stockholders would
receive consideration for the cancellation of the Rights Offering, based on the
difference between the market price for FBA Common and the price paid by First
Banks for FBA Common in October, 2001; and
WHEREAS, the Board of Directors of FBA appointed a Special Committee of
the Board of Directors, composed solely of the three directors of FBA who are
not affiliated with First Banks, to analyze the terms of such a transaction on
behalf of FBA and its public stockholders, with the assistance of independent
legal and financial advisers selected by and reporting directly to the Special
Committee; and
WHEREAS, the Special Committee, assisted by its independent legal and
financial advisers, has negotiated with First Banks the terms of this Agreement,
providing for the merger of FBA with a wholly-owned subsidiary of First Banks
and the payment of $40.54 per share to FBA's public stockholders for all of
their shares of FBA Common, representing an agreed price of $40.00 per share as
the fair value of the publicly held shares of FBA Common, plus $0.54 per share
in additional consideration equal to the fair value of rights that could have
been exercised by FBA's public stockholders if the Rights Offering had been
completed;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, agreements and covenants contained herein, First Banks, Newco and
FBA hereby agree as follows:
ARTICLE I
TERMS OF THE MERGER & CLOSING; EXCHANGE
OF SHARES
Section 1.01. The Merger. Pursuant to the terms and provisions of this
Agreement, Newco shall merge with and into FBA, and FBA will be the surviving
corporation of the merger (the "Merger").
Section 1.02. Effect of the Merger. The Merger shall have all of the
effects provided by the General Corporation Law of the State of Delaware
("Corporate Law") and this Agreement. The separate corporate existence of Newco
shall cease on consummation of the Merger and be combined in FBA.
Section 1.03. Conversion of Shares.
(a) At the Effective Time:
(i) each of the shares of FBA Common issued and outstanding
immediately prior to the Effective Time, except for shares owned
by First Banks and shares held in the treasury of FBA or by any
direct or indirect subsidiary of FBA (the "Excluded Shares"),
shall be converted into the right to receive cash in the amount
of $40.54. The Excluded Shares and all of the shares of Class B
common stock, per value $0.15 per share, of FBA ("Class B
Shares") shall be canceled without consideration; and
(ii) each of the outstanding shares of Newco shall be
converted into one share of common stock of FBA.
(b) At the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof, all of the FBA Common and Class B
Shares shall cease to be outstanding and shall be canceled. Upon the surrender
of any certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of FBA Common (other than the Excluded Shares),
each holder thereof shall cease to have any rights with respect to such shares,
except the right of the holder to receive the cash consideration into which the
shares of FBA Common represented by the certificate have been converted in
accordance with subsection (a).
(c) If holders of FBA Common are entitled to require appraisal of their
shares under applicable Corporate Law, shares held by a dissenting holder who
has perfected the right to obtain an appraisal of his shares shall not be
converted as described in this Section 1.03, but from and after the Effective
Time shall represent only the right to receive such consideration as may be
determined pursuant to applicable Corporate Law; provided, however, that each
share of FBA Common outstanding immediately prior to the Effective Time and held
by a dissenting holder who after the Effective Time shall withdraw his demand
for appraisal or lose his right of appraisal shall thereafter have only such
rights as are provided under applicable Corporate Law.
Section 1.04. The Closing. The closing of the Merger (the "Closing")
shall take place at the location mutually agreeable to the parties hereto at
10:00 a.m. local time on the Closing Date described in Section 1.05 of this
Agreement.
Section 1.05. The Closing Date; Effective Time. At First Banks'
election, the Closing shall take place on either (i) one of the last five (5)
business days of the month, or (ii) the first business day of the month
following the month, in each case, during which each of the conditions in
Sections 6.01 and 6.02 is satisfied or waived by the appropriate party, or on
such other date as First Banks and FBA may agree (the "Closing Date"). The
Merger shall be effective upon the filing of an appropriate Certificate of
Merger with the Secretary of State of the State of Delaware or at a later time
specified therein (the "Effective Time").
Section 1.06. Actions At Closing. (a) At the Closing, FBA shall deliver
to First Banks:
(i) a certificate signed by an appropriate officer of FBA stating
that all of the conditions set forth in Section 6.01 have been
satisfied or waived as provided therein;
(ii) certified copies of resolutions of the Board of Directors and the
stockholders of FBA, establishing the requisite approvals under
applicable corporate law of this Agreement and the Merger; and
(iii) evidence reasonably satisfactory to First Banks and Newco
regarding the legality of the Merger and the satisfaction or waiver of
the conditions set forth in Section 6.01.
(b) At the Closing, First Banks and Newco shall deliver to FBA:
(i) certificates signed by appropriate officers of First Banks and
Newco stating that (A) each of the representations and warranties
contained in Article III is true and correct in all material respects
at the time of the Closing (except for those made as of a specified
date), with the same force and effect as if such representations and
warranties had been made at the Closing, and (B) all of the conditions
set forth in Section 6.02 have been satisfied or waived as provided
therein;
(ii) certified copies of resolutions of the Boards of Directors of
First Banks and Newco, and of First Banks in its capacity as the sole
stockholder of Newco, establishing the requisite approvals under
applicable corporate law of this Agreement and the Merger; and
(iii) evidence reasonably satisfactory to FBA regarding the legality of
the Merger and the satisfaction or waiver of the conditions set forth
in Section 6.02.
Section 1.07. Exchange Procedures; Certificates. As soon as reasonably
practicable after the Effective Time, First Banks shall (i) surrender to Newco
its certificates representing the Excluded Shares and all of the Class B Shares,
and (ii) cause the transfer agent for FBA Common to mail to each record holder
of shares of FBA Common (other than Excluded Shares) a letter of transmittal in
a form reasonably satisfactory to FBA (which shall specify that delivery shall
be effected, and risk of loss and title to certificates shall pass, only upon
proper delivery of the certificates to First Banks and shall be in such form and
have such other provisions as First Banks may reasonably specify) and
instructions for use in effecting the surrender of certificates. First Banks
shall promptly pay the appropriate consideration to former holders of FBA Common
who make proper delivery of certificates or comply with First Banks' reasonable
instructions and requirements with respect to any certificate that has been lost
or stolen.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF FBA
FBA represents and warrants to First Banks and Newco as follows:
Section 2.01. Organization and Capital Stock; Standing and Authority.
(a) FBA is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with full corporate power to
own all of its property and assets, to incur all of its liabilities and to carry
on its business as now being conducted.
(b) As of the date hereof, the authorized capital stock of FBA consists
of 15,000,000 shares of FBA Common, of which 10,346,760 are outstanding, duly
and validly issued, fully paid and non-assessable; and 4,000,000 Class B Shares,
of which 2,500,000 are outstanding, duly and validly issued, fully paid and
non-assessable. None of the outstanding FBA Common or Class B Shares has been
issued in violation of any preemptive rights.
(c) Except as disclosed in Section 2.01 of that certain document
delivered by FBA to First Banks entitled the "Disclosure Schedule" and executed
by both FBA and First Banks concurrently with the execution and delivery of this
Agreement (the "Disclosure Schedule"), there are no shares of capital stock or
other equity securities of FBA issued or outstanding and no outstanding options,
warrants, rights to subscribe for, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of FBA or contracts, commitments,
understandings or arrangements by which FBA is or may be obligated to issue
additional shares of its capital stock.
Section 2.02. Authorization; No Defaults. The Board of Directors of FBA
has by all requisite action approved this Agreement and the Merger and
authorized the execution and delivery hereof on behalf of FBA and the
performance of its obligations hereunder. Nothing in the Certificate of
Incorporation or Bylaws of FBA, or any other agreement, instrument, decree,
proceeding, law or regulation (except as specifically referred to in or
contemplated by this Agreement) by or to which FBA is bound or subject would
prohibit FBA from consummating this Agreement and the Merger on the terms and
conditions herein contained. This Agreement has been duly and validly executed
and delivered by FBA and constitutes a legal, valid and binding obligation,
enforceable in accordance with its terms. Neither FBA nor any of its direct or
indirect subsidiaries (hereinafter referred to singly as an "FBA Subsidiary" and
collectively as the "FBA Subsidiaries") is in default under or violation of any
provision of its articles of incorporation, certificate of incorporation,
bylaws, or any promissory note, indenture or any evidence of indebtedness or
security therefor, lease, contract, purchase or other material commitment or
agreement.
Section 2.03. FBA Subsidiaries. Each of the FBA Subsidiaries, the names
and jurisdictions of incorporation of which are disclosed in Section 2.03 of the
Disclosure Schedule, is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. Each of the FBA
Subsidiaries has the corporate power to own its properties and assets, to incur
its liabilities and to carry on its business as now being conducted. The number
of issued and outstanding shares of capital stock of each FBA Subsidiary and the
ownership of such shares is set forth in Section 2.03 of the Disclosure
Schedule. All of such shares are owned by FBA or an FBA Subsidiary, free and
clear of all liens, encumbrances, rights of first refusal, options or other
restrictions. There are no options, warrants or rights outstanding to acquire
any stock of any FBA Subsidiary, and no person or entity has any other right to
purchase or acquire any unissued shares of stock of any FBA Subsidiary, nor does
any FBA Subsidiary have any obligation of any nature with respect to its
unissued shares of stock. Except as disclosed in Section 2.03 of the Disclosure
Schedule, neither FBA nor any FBA Subsidiary is a party to any partnership or
joint venture or owns an equity interest in any other business or enterprise.
Section 2.04. Financial Information. All of (i) the audited
consolidated balance sheets of FBA and the FBA Subsidiaries as of December 31,
2001 and related consolidated statements of income and statements of changes in
stockholders' equity and of cash flows for the three years ended December 31,
2001, together with the notes thereto, included in FBA's Annual Report on Form
10-K for the year ended December 31, 2001, as currently on file with the
Securities and Exchange Commission ("SEC"); (ii) the unaudited consolidated
balance sheets of FBA and the FBA Subsidiaries as of June 30, 2002 and related
consolidated statements of income and statements of changes in stockholders'
equity and of cash flows for the six months ended June 30, 2002, together with
the notes thereto, included in FBA's Quarterly Report on Form 10-Q for the six
months ended June 30, 2002 as currently filed with the SEC; and (iii) the
year-end and quarter-end Reports of Condition and Reports of Income of FBA's
banking subsidiary, First Bank & Trust, a California banking corporation
("FB&T"), for 2001 and for the six month period ended June 30, 2002, as filed
with the appropriate federal regulatory agency (such financial statements and
notes collectively referred to herein as the "FBA Financial Statements"), have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as disclosed therein and except for
regulatory reporting differences required for reports of FB&T) and fairly
present the consolidated financial position and the consolidated statements of
income, changes in stockholders' equity and cash flows of the respective entity
and its consolidated subsidiaries as of the dates and for the periods indicated.
Section 2.05. Absence of Changes. Since June 30, 2002 there has not
been any material adverse change in the financial condition, the results of
operations or the business or prospects of FBA and its subsidiaries taken as a
whole, nor have there been any events or transactions having such a material
adverse effect which should be disclosed in order to make the FBA Financial
Statements not misleading. Since June 30, 2002 there has been no material
adverse change in the financial condition, the results of operations or the
business of FB&T, except for changes as are disclosed in its Reports of
Condition and Income filed with the appropriate regulatory agency since such
date.
Section 2.06. Regulatory Enforcement Matters. Neither FBA nor any FBA
Subsidiary is subject to any order, agreement, memorandum of understanding or
other regulatory enforcement action or proceeding with or by any federal or
state agency charged with the supervision or regulation of banks or bank holding
companies or engaged in the insurance of bank deposits.
Section 2.07. Litigation. Except as disclosed in Section 2.07 of the
Disclosure Schedule, there is no litigation, claim or other proceeding (i)
involving an amount in controversy in excess of $1,000,000 pending or, to FBA's
knowledge, threatened against FBA or any of the FBA Subsidiaries, or to which
the property of FBA or any of the FBA Subsidiaries is or would be subject; or
(ii) which, if adversely determined, would prevent, delay or materially
interfere with the consummation of the Merger.
Section 2.08. Properties, Contracts, Employee Benefit Plans and Other
Agreements. Section 2.08 of the Disclosure Schedule specifically identifies the
following:
(a) all loan and credit agreements, conditional sales contracts or
other title retention agreements or security agreements relating to money
borrowed by FBA or an FBA Subsidiary, exclusive of deposit agreements with
customers entered into in the ordinary course of business, agreements for the
purchase of federal funds, advances from the Federal Home Loan Bank of San
Francisco and repurchase agreements;
(b) all agreements, loans, contracts, leases, guaranties, letters of
credit, lines of credit or commitments of FBA or any FBA Subsidiary not referred
to elsewhere in this Section 2.08 which:
(i) (except for loans, loan commitments or lines of credit)
involve payment by FBA or any FBA Subsidiary of more than
$500,000;
(ii) involve payments based on profits of FBA or any FBA
Subsidiary;
(iii) relate to the future purchase of goods or services in
excess of the requirements of its respective business at
current levels or for normal operating purposes;
(iv) were not made in the ordinary course of business; or
(v) materially affect the business or financial condition of FBA
or any FBA Subsidiary;
(c) all leases, subleases or licenses with respect to real or personal
property, whether as lessor, lessee, licensor or licensee, with annual rental or
other payments due thereunder in excess of $250,000; and
(d) all agreements for the employment, retention or engagement, or with
respect to the severance, of any officer, employee, agent, consultant or other
person or entity which by its terms is not terminable by FBA or an FBA
Subsidiary on thirty (30) days written notice or less without any payment by
reason of such termination.
Copies of each document, plan or contract identified in Section 2.08 of
the Disclosure Schedule have been made available for inspection by First Banks
and shall remain available at all times prior to the Closing Date.
Section 2.09. Reports. FBA and the FBA Subsidiaries have filed all
reports and statements, together with any amendments required to be made with
respect thereto, required to be filed with the SEC, the Federal Reserve Board,
the Department of Financial Institutions of the State of California, the FDIC
and all other governmental authorities with jurisdiction over FBA or any FBA
Subsidiary. As of the dates indicated thereon, each of such reports and
documents, including any financial statements, exhibits and schedules thereto,
complied in all material respects with the relevant statutes, rules and
regulations enforced or promulgated by the regulatory authority with which they
were filed, and did not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
Section 2.10. Investment Portfolio. All United States Treasury
securities, obligations of other United States Government agencies and
corporations, obligations of States and political subdivisions of the United
States and other investment securities held by FBA or an FBA Subsidiary, as
reflected in the latest consolidated balance sheets of FBA included in the FBA
Financial Statements, are carried in accordance with generally accepted
accounting principles.
Section 2.11. Loan Portfolio. (i) All loans and discounts reflected in
the FBA Financial Statements at June 30, 2002 or which were or will be entered
into after June 30, 2002 but before the Closing Date were and will be made in
all material respects for good, valuable and adequate consideration in the
ordinary course of business, in accordance in all material respects with sound
lending practices, and they are not subject to any material known defenses,
setoffs or counterclaims, including without limitation any such as are afforded
by usury or truth in lending laws, except as may be provided by bankruptcy,
insolvency or similar laws or by general principles of equity; (ii) the notes
and other evidences of indebtedness evidencing such loans and all forms of
pledges, mortgages and other collateral documents and security agreements are
and will be in all material respects enforceable, valid, true and genuine and
what they purport to be; and (iii) FBA and the FBA Subsidiaries have complied
and will through the Closing Date comply with all laws and regulations relating
to such loans, or to the extent there has not been such compliance, such failure
to comply will not materially interfere with the collection of any loan. All
loans and loan commitments extended by the FBA Subsidiaries and any extensions,
renewals or continuations of such loans and loan commitments were made in
accordance with their customary lending standards in the ordinary course of
business. Such loans are evidenced by appropriate and sufficient documentation
based upon customary and ordinary past practices. The reserve for loan losses
reflected in the FBA Financial Statements as of June 30, 2002 is adequate in all
material respects under the requirements of generally accepted accounting
principles to provide for losses on loans outstanding as of June 30, 2002.
Section 2.12. Employee Matters and ERISA.
(a) Neither FBA nor any FBA Subsidiary has entered into any collective
bargaining agreement with any labor organization with respect to any group of
employees of FBA or any FBA Subsidiary, and to the knowledge of FBA there is no
present effort nor existing proposal to attempt to unionize any group of
employees of FBA or any FBA Subsidiary.
(b) All arrangements of FBA and the FBA Subsidiaries relating to
employees, including all benefit plans and deferred compensation, bonus, stock
or incentive plans for the benefit of current or former employees (the "Employee
Plans") are administered by First Banks. All costs, liabilities and obligations
arising from the Employee Plans are properly reflected in accordance with
generally accepted accounting principles in the FBA Financial Statements.
Section 2.13. Title to Properties; Insurance. (i) FBA and the FBA
Subsidiaries have marketable title, insurable at standard rates, free and clear
of all liens, charges and encumbrances (except taxes which are a lien but not
yet payable and liens, charges or encumbrances reflected in the FBA Financial
Statements and easements, rights-of-way, and other restrictions which are not
material, and further excepting in the case of other real estate owned, as such
real estate is internally classified on the books of FBA and the FBA
Subsidiaries, rights of redemption under applicable law) to all of their real
properties; (ii) all leasehold interests for real property and any material
personal property used by FBA or a FBA Subsidiary in its business are held
pursuant to lease agreements which are valid and enforceable in accordance with
their terms; (iii) all such properties comply in all material respects with all
applicable private agreements, zoning requirements and other governmental laws
and regulations relating thereto, and there are no condemnation proceedings
pending or, to the knowledge of FBA, threatened with respect to any of such
properties; (iv) FBA and the FBA Subsidiaries have valid title or other
ownership rights under licenses to all material intangible personal or
intellectual property used by FBA or any FBA Subsidiary in its business, free
and clear of any material claim, defense or right of any other person or entity,
subject only to rights of the licensors pursuant to applicable license
agreements, which rights do not materially and adversely interfere with the use
of such property; and (v) all material insurable properties owned or held by FBA
or a FBA Subsidiary are adequately insured by financially sound and reputable
insurers in such amounts and against fire and other risks insured against by
extended coverage and public liability insurance, as is customary with bank
holding companies of similar size.
Section 2.14. Compliance with Laws. FBA and the FBA Subsidiaries have
all licenses, franchises, permits and other governmental authorizations that are
legally required to enable them to conduct their respective businesses in all
material respects, are qualified to conduct business in every jurisdiction in
which such qualification is legally required and are in compliance in all
material respects with all applicable laws and regulations.
Section 2.15. Brokerage. Except for fees payable by FBA to Baxter
Fentriss and Company, neither FBA nor any FBA Subsidiary has incurred any claims
or obligations for brokerage commissions, finders' fees, financial advisory
fees, investment banking fees or similar compensation in connection with the
transactions contemplated by this Agreement.
Section 2.16. No Undisclosed Liabilities. Neither FBA nor any FBA
Subsidiary has any material liability, whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, and whether due or to become due (and there is no past or present
fact, situation, circumstance, condition or other basis for any present or
future action, suit or proceeding, hearing, charge, complaint, claim or demand
against FBA or any FBA Subsidiary giving rise to any such liability), except for
(i) liabilities reflected in the FBA Financial Statements, and (ii) liabilities
of the same type incurred in the ordinary course of business of FBA and the FBA
Subsidiaries since June 30, 2002.
Section 2.17. Statements True and Correct. None of the information
supplied or to be supplied by FBA for inclusion in any document to be filed with
the SEC or any banking or other regulatory authority in connection with the
transactions contemplated hereby will, at the respective times such documents
are filed, and, in the case of the Proxy Statement, when mailed to the
stockholders of FBA and at the time of the Stockholders' Meeting (as such terms
are defined in Section 4.03), be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements therein not misleading or required to be stated in order to correct
any statement in an earlier communication made to such stockholders with respect
to the Stockholders' Meeting. All documents that FBA is responsible for filing
with the SEC or any other regulatory authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable law and the rules and regulations thereunder.
Section 2.18. Commitments and Contracts. Except as disclosed in Section
2.18 of the Disclosure Schedule (and with a true and correct copy of the
document or other item in question having been made available to First Banks for
inspection), neither FBA nor any FBA Subsidiary is a party or subject to any of
the following (whether written or oral, express or implied):
(i) any agreement, arrangement or commitment not made in the ordinary
course of business;
(ii) any agreement, indenture or other instrument not reflected in the
FBA Financial Statements relating to the borrowing of money or the
guarantee by FBA or any FBA Subsidiary of any obligation, other than
(A) trade payables or instruments related to transactions entered into
in the ordinary course of business, such as deposits, federal funds
borrowings and repurchase agreements or (B) agreements, indentures or
instruments providing for annual payments of less than $250,000; or
(iii) any contract containing covenants which limit the ability of FBA
to compete in any line of business or with any person or containing
any restriction of the geographical area in which, or method by which,
FBA or any FBA Subsidiary may carry on its business.
Section 2.19. Material Interest of Certain Persons. (a) Except as
disclosed in Section 2.19 of the Disclosure Schedule, no officer or director of
FBA or any "associate" (as such term is defined in Rule 14a-1 under the Exchange
Act) of any such officer or director, has any material interest in any contract
or property (real or personal, tangible or intangible), used in or pertaining to
the business of FBA or an FBA Subsidiary.
(b) All outstanding loans from FBA or any FBA Subsidiary to any of
their officers, directors, employees or any associate or related interest of any
such persons were approved by or reported to the Board of Directors in
accordance with all applicable laws and regulations.
Section 2.20. Conduct to Date. Except as disclosed in Section 2.20 of
the Disclosure Schedule, from and after June 30, 2002 through the date of this
Agreement, neither FBA nor any FBA Subsidiary has:
(i) failed to conduct its business in the ordinary and usual
course consistent with past practices;
(ii) issued, sold, granted, conferred or awarded any common or other
stock, or any corporate debt securities which would be classified
under generally accepted accounting principles applied on a consistent
basis as long-term debt on the balance sheets of FBA or an FBA
Subsidiary;
(iii) effected any stock split or adjusted, combined, reclassified or
otherwise changed its capitalization;
(iv) declared, set aside or paid any dividend or other distribution in
respect of its capital stock;
(v) incurred any material obligation or liability (absolute or
contingent), except normal trade or business obligations or
liabilities incurred in the ordinary course of business, or subjected
to lien any of its assets or properties other than in the ordinary
course of business consistent with past practice;
(vi) discharged or satisfied any material lien or paid any material
obligation or liability (absolute or contingent), other than in the
ordinary course of business;
(vii) sold, assigned, transferred, leased, exchanged, or otherwise
disposed of any of its properties or assets other than for a fair
consideration in the ordinary course of business;
(viii) except as required by contract or law, (A) increased the rate of
compensation of, or paid any bonus to, any of its directors, officers,
or other employees, except merit or promotion increases in accordance
with existing policy, (B) entered into any new, or amended or
supplemented any existing, employment, management, consulting, deferred
compensation, severance or other similar contract, (C) entered into,
terminated or substantially modified any of the Employee Plans or (D)
agreed to do any of the foregoing;
(ix) suffered any material damage, destruction, or loss, whether as
the result of fire, explosion, earthquake, accident, casualty, labor
trouble, requisition, or taking of property by any regulatory
authority, flood, windstorm, embargo, riot, act of God or the enemy,
or other casualty or event, and whether or not covered by insurance;
(x) canceled or compromised any debt, except for debts charged off or
compromised in accordance with past practice; or
(xi) entered into any material transaction, contract or commitment
outside the ordinary course of its business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
FIRST BANKS AND NEWCO
First Banks and Newco represent and warrant to FBA as follows:
Section 3.01. Organization and Authority. First Banks and Newco are
corporations duly organized, validly existing and in good standing under the
laws of the States of Missouri and Delaware, respectively. Each of such
corporations has the power to own all of its property and assets, to incur all
of its liabilities and to carry on its business as now conducted.
Section 3.02. Authorization; No Defaults. The Boards of Directors of
First Banks and Newco have by all requisite action approved this Agreement and
the Merger and authorized the execution and delivery hereof on behalf of such
corporations and the performance of their respective obligations hereunder.
First Banks, in its capacity as the sole holder of outstanding capital stock of
Newco, has approved this Agreement and the Merger. Nothing in the Articles of
Incorporation of First Banks, the Certificate of Incorporation of Newco, the
Bylaws of either entity, or any other agreement, instrument, decree, proceeding,
law or regulation (except as specifically referred to in or contemplated by this
Agreement) by or to which either entity is bound or subject would prohibit
either of such corporations from consummating this Agreement and the Merger on
the terms and conditions herein contained. This Agreement has been duly and
validly executed and delivered by First Banks and Newco and constitutes a legal,
valid and binding obligation of each of them, enforceable against them in
accordance with its terms. Neither First Banks nor Newco is in default under nor
in violation of any provision of its articles of incorporation, certificate of
incorporation, bylaws, or any promissory note, indenture or evidence of
indebtedness or security therefor, lease, contract, purchase or other material
commitment or agreement.
Section 3.03. Regulatory Enforcement Matters. First Banks and Newco are
not subject to any order, agreement, memorandum of understanding or other
regulatory enforcement action or proceeding with or by any federal or state
agency charged with the supervision or regulation of banks or bank holding
companies or engaged in the insurance of bank deposits.
Section 3.04. Litigation. There is no litigation, claim or other
proceeding pending or, to the knowledge of First Banks or Newco, threatened
against either of them which, if adversely determined, would prevent, delay or
materially interfere with the consummation of the Merger.
Section 3.05. Brokerage. Except for fees payable by First Banks to
Stifel, Nicolaus & Company, Incorporated, neither First Banks nor Newco has
incurred any claims or obligations for brokerage commissions, finders' fees,
financial advisory fees, investment banking fees or similar compensation in
connection with the transactions contemplated by this Agreement.
Section 3.06. Statements True and Correct. None of the information
supplied or to be supplied by First Banks or Newco for inclusion in any document
to be filed with the SEC or any banking or other regulatory authority in
connection with the transactions contemplated hereby will, at the respective
times such documents are filed, and, in the case of the Proxy Statement, when
mailed to the stockholders of FBA and at the time of the Stockholders' Meeting,
be false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein not misleading
or required to be stated in order to correct any statement in an earlier
communication. All documents that First Banks or Newco is responsible for filing
with the SEC or any other regulatory authority in connection with the
transactions contemplated hereby will comply in all material respects with the
provisions of applicable law and the rules and regulations thereunder.
Section 3.07. Financial Capacity. As of the date of this Agreement
First Banks has, and on the Closing Date it will have, access to sufficient
funds to enable it to pay all of the consideration contemplated to be paid in
connection with the Merger and all fees and expenses payable by First Banks.
ARTICLE IV
AGREEMENTS OF FBA
Section 4.01. Business in Ordinary Course. (a) FBA agrees that FBA and
the FBA Subsidiaries will carry on their businesses and the discharge or
incurrence of obligations and liabilities only in the usual, regular and
ordinary course of business as heretofore conducted. By way of amplification and
not limitation, neither FBA nor any FBA Subsidiary will, without the prior
written consent of First Banks:
(i) declare or pay any dividend or make any other distribution to
stockholders, whether in cash, stock or other property, except for
dividends or reductions of capital payable to FBA or an FBA
Subsidiary; or
(ii) issue any FBA Common or other capital stock or any options,
warrants, or other rights to subscribe for or purchase FBA Common or
any other capital stock or any securities convertible into or
exchangeable for any capital stock; or
(iii) effect a reclassification, recapitalization, splitup, exchange of
shares, readjustment or other similar change in or to any capital
stock, or otherwise reorganize or recapitalize; or
(iv) change its certificate of articles of incorporation or bylaws,
nor enter into any agreement to merge or consolidate with, or sell a
significant portion of its assets to, any person or entity; or
(v) grant any increase (other than ordinary and normal increases
consistent with past practices) in the compensation payable or to
become payable to officers or salaried employees, grant any stock
options or, except as required by law, adopt or make any change in any
bonus, insurance, pension, or other Employee Plan, agreement, payment
or arrangement made to, for or with any of such officers or employees;
or
(vi) borrow or agree to borrow any amount of funds except in the
ordinary course of business, or directly or indirectly guarantee or
agree to guarantee any obligations of others; or
(vii) make or commit to make any new loan or letter of credit or any
new or additional discretionary advance under any existing line of
credit, except in the ordinary course of business in compliance with
applicable laws, regulations and lending policies of the entity making
the loan or advance; or
(viii) enter into any agreement, contract or commitment having a term
in excess of three (3) months other than letters of credit, loan
agreements, deposit agreements, and other lending, credit and deposit
agreements and documents made in the ordinary course of business; or
(ix) except in the ordinary course of business, place on any of its
assets or properties any mortgage, pledge, lien, charge, or other
encumbrance; or
(x) except in the ordinary course of business, cancel or accelerate any
material indebtedness owing to FB&T or any claims which FB&T may
possess, or waive any material rights of substantial value; or
(xi) sell or otherwise dispose of any real property or any material
amount of any tangible or intangible personal property, other than
properties acquired in foreclosure or otherwise in the ordinary
collection of indebtedness; or
(xii) violate any law, statute, rule, governmental regulation or order,
which violation might have a material adverse effect on the business,
financial condition, or earnings of FBA or FB&T; or
(xiii) increase or decrease the rate of interest paid on time deposits
or on certificates of deposit, except in a manner consistent with past
practices.
(b) FBA and the FBA Subsidiaries shall not, without the prior written
consent of First Banks, engage in any transaction or take any action that would
render untrue in any material respect any of the representations and warranties
of FBA contained in Article II hereof, if such representations and warranties
were given immediately following such transaction or action.
Section 4.02. Breaches. FBA shall, in the event it has knowledge of the
occurrence, or impending or threatened occurrence, of any event or condition
which would cause or constitute a breach (or would have caused or constituted a
breach had such event occurred or been known prior to the date hereof) of any of
its representations or agreements contained or referred to herein, give prompt
written notice thereof to First Banks and use its best efforts to prevent or
promptly remedy the same.
Section 4.03. Submission to FBA's Stockholders. (a) FBA shall promptly
(i) prepare and file a proxy statement ("the Proxy Statement") with the SEC for
a meeting of the stockholders of FBA to be held as soon as reasonably
practicable (the "Stockholders' Meeting"); (ii) hold the Stockholders' Meeting;
and (iii) use its best efforts to obtain the approval of this Agreement and the
Merger by the stockholders of FBA. The Special Committee of the Board of
Directors of FBA established to consider the transaction contemplated by this
Agreement (the "Special Committee") shall recommend such approval to FBA's
stockholders, and the Board of Directors shall adopt the same recommendation,
cause the Proxy Statement to be mailed to FBA's stockholders and use its best
efforts to obtain such stockholder approval; provided, however, that neither the
Special Committee nor the Board of Directors of FBA shall be obligated to make
such recommendation if, having consulted and considered the advice of outside
legal counsel, the Special Committee or the Board of Directors has reasonably
determined in good faith that the making of such recommendation would constitute
a breach of the fiduciary duties of the members of the Board of Directors or the
Special Committee under applicable law.
(b) FBA shall cooperate and use its best efforts (i) to prepare all
documentation, to effect all filings and to obtain all permits, consents,
approvals and authorizations of all third parties, regulatory authorities and
other authorities necessary to consummate the transactions contemplated by this
Agreement, and (ii) to cause the Merger to be consummated as expeditiously as
reasonably practicable.
Section 4.04. Consummation of Agreement. FBA shall use its best efforts
to perform and fulfill all conditions and obligations on its part to be
performed or fulfilled under this Agreement and to effect the Merger in
accordance with the terms and provisions hereof. FBA shall furnish to First
Banks in a timely manner all information, data and documents requested by First
Banks as may be required to obtain any necessary regulatory or other approvals
of the Merger and shall cooperate fully with First Banks in seeking such
approvals and in consummating the Merger.
Section 4.05. Access to Information. FBA shall permit First Banks
reasonable access, in a manner which will avoid undue disruption or interference
with FBA's normal operations, to its properties, and FBA shall disclose and make
available to FBA all books, documents, papers and records relating to the
assets, stock ownership, properties, operations, obligations and liabilities of
FBA and the FBA Subsidiaries including, but not limited to, all books of account
(including the general ledger), tax records, minute books of directors' and
stockholders' meetings, organizational documents, material contracts and
agreements, loan files, filings with any regulatory authority, accountants'
workpapers (if available and subject to the accountants' consent), litigation
files, plans affecting employees, and any other business activities or prospects
in which First Banks may have a reasonable and legitimate interest in
furtherance of the transactions contemplated by this Agreement. First Banks will
hold any such information which is nonpublic in confidence in accordance with
the provisions of Section 8.01 hereof.
Section 4.06. Consents to Contracts and Leases. FBA shall use its best
efforts to obtain all consents with respect to interests of FB&T in material
leases, licenses, contracts, instruments and rights, if any, which require the
consent of another person for the consummation of the Merger.
Section 4.07. Subsequent Financial Statements. As soon as available
after the date hereof, FBA shall deliver to First Banks the monthly unaudited
consolidated balance sheets and statements of income of FB&T prepared for its
internal use, the Report of Condition and Income of FB&T for each quarterly
period completed prior to the Closing, and all other financial reports or
statements submitted to regulatory authorities after the date hereof, to the
extent permitted by law (collectively, the "Subsequent FB&T Financial
Statements"). The Subsequent FB&T Financial Statements shall be prepared on a
basis consistent with past accounting practices, shall fairly present the
financial condition and results of operations for the dates and periods
presented and shall not include any material assets or omit to state any
material liabilities, absolute or contingent, or other facts, which inclusion or
omission would render such financial statements misleading in any material
respect.
ARTICLE V
AGREEMENTS OF FIRST BANKS AND NEWCO
Section 5.01. Regulatory Approvals. First Banks and Newco shall file or
cause to be filed all regulatory applications required in order to consummate
the Merger, including but not limited to the necessary applications for the
prior approval of the Federal Reserve Board. First Banks shall keep FBA
reasonably informed as to the status of such applications and provide to FBA
copies of such applications and any supplementally filed materials.
Section 5.02. Breaches. First Banks and Newco shall, in the event
either of them has knowledge of the occurrence, or impending or threatened
occurrence, of any event or condition which would cause or constitute a breach
(or would have caused or constituted a breach had such event occurred or been
known prior to the date hereof) of any of its representations or agreements
contained or referred to herein, give prompt written notice thereof to FBA and
use its best efforts to prevent or promptly remedy the same.
Section 5.03. Consummation of Agreement. First Banks and Newco shall
use their best efforts to perform and fulfill all conditions and obligations on
their parts to be performed or fulfilled under this Agreement and to effect the
Merger in accordance with the terms and provisions hereof. First Banks and Newco
shall furnish to FBA in a timely manner all information, data and documents
requested by FBA as may be required for the Proxy Statement and Stockholders'
Meeting and shall cooperate fully with FBA in consummating the Merger.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.01. Conditions to the Obligations of First Banks and Newco.
The obligations of First Banks and Newco to effect the Merger shall be subject
to the satisfaction (or waiver by First Banks) prior to or on the Closing Date
of the following conditions:
(a) no temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger shall be in
effect, nor shall any proceeding by any bank regulatory authority or other
person seeking any of the foregoing be pending. There shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger which makes the consummation of the Merger
illegal;
(b) all necessary approvals, consents and authorizations required by
law for consummation of the Merger, including the requisite approval of the
stockholders of FBA and all legally required regulatory approvals, shall have
been obtained, and all waiting periods required by law shall have expired; and
(c) the Special Committee shall have received within thirty (30) days
after the date of this Agreement an opinion of the financial advisor to the
Special Committee to the effect that the Merger is fair to the stockholders of
FBA from a financial point of view, and such opinion shall not have been
withdrawn.
6.02 Conditions to the Obligations of FBA. The obligation of FBA to
effect the Merger shall be subject to the satisfaction (or waiver by FBA) prior
to or on the Closing Date of the following conditions:
(a) the representations and warranties made by First Banks and Newco in
this Agreement shall be true in all material respects on and as of the Closing
Date (except for those made as of a specified date) with the same effect as
though such representations and warranties had been made or given on and as of
the Closing Date;
(b) First Banks and Newco shall have performed and complied in all
material respects with all of their obligations and agreements required to be
performed prior to the Closing Date;
(c) no temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger shall be in
effect, nor shall any proceeding by any regulatory authority or other person
seeking any of the foregoing be pending. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger which makes the consummation of the Merger illegal;
(d) all necessary approvals, consents and authorizations required by
law for consummation of the Merger, including the requisite approval of the
stockholders of FBA and all legally required regulatory approvals, shall have
been obtained, and all waiting periods required by law shall have expired;
(e) FBA shall have received all documents required to be received from
First Banks and Newco on or prior to the Closing Date, all in form and substance
reasonably satisfactory to FBA; and
(f) the Special Committee shall have received within thirty (30) days
after the date of this Agreement an opinion of the financial advisor to the
Special Committee to the effect that the Merger is fair to the stockholders of
FBA from a financial point of view, and such opinion shall not have been
withdrawn.
ARTICLE VII
TERMINATION
Section 7.01. Mutual Agreement. This Agreement may be terminated by the
mutual written agreement of the parties at any time prior to the Closing Date,
regardless of whether approval of this Agreement and the Merger by the
stockholders of FBA shall have been previously obtained.
Section 7.02. Breach of Agreements. In the event that there is a
material breach of any of the representations and warranties or agreements of
First Banks or Newco, on the one hand, or FBA, on the other hand, which breach
is not cured within thirty days after notice to cure such breach is given to the
breaching party by the non-breaching party, then the non-breaching party,
regardless of whether approval of this Agreement and the Merger by the
stockholders of FBA shall have been previously obtained, may terminate and
cancel this Agreement by providing written notice of such action to the other
parties.
Section 7.03. Failure of Conditions. In the event that any of the
conditions to the obligations of a party are not satisfied or waived on or prior
to the Closing Date, and if any applicable cure period provided in Section 7.02
hereof has lapsed, then such party may, regardless of whether approval of the
Merger by the stockholders of FBA shall have been previously obtained, terminate
and cancel this Agreement by delivery of written notice of such action to the
other parties.
Section 7.04. Denial of Regulatory Approval. If any regulatory
application filed pursuant to Section 5.01 hereof should be finally denied or
disapproved by a regulatory authority, then this Agreement thereupon shall be
deemed terminated and canceled; provided, however, that a request for additional
information or undertaking by First Banks, as a condition for approval, shall
not be deemed to be a denial or disapproval so long as First Banks diligently
provides the requested information or undertaking. In the event an application
is denied pending an appeal, petition for review or similar such act on the part
of First Banks (hereinafter referred to as the "Appeal"), then the application
will be deemed denied unless First Banks prepares and timely files and continues
to pursue an Appeal seeking the necessary approval.
Section 7.05. Unilateral Termination. If the Closing Date does not
occur on or prior to March 31, 2003, then this Agreement may be terminated by
either First Banks or FBA by giving written notice of termination to the other
party.
Section 7.06. Effect of Termination. In the event of termination of
this Agreement in accordance with the provisions of this Article VII, this
Agreement shall become void and have no further effect, without any obligation
or liability on the part of any of the parties hereto, other than a liability
arising from a willful breach of Section 2.15, Section 3.05, the last sentence
of Section 8.01, Section 8.03, or Section 8.06.
ARTICLE VIII
GENERAL PROVISIONS
8.01 Confidential Information. The parties acknowledge the confidential
and proprietary nature of the "Information" (as herein defined) which has
heretofore been exchanged and which will be received from each other hereunder
and agree to hold and keep the same confidential. Such Information will include
any and all financial, technical, commercial, marketing, customer or other
information concerning the business, operations and affairs of a party that may
be provided to the others, irrespective of the form of the communications, by
such party's employees or agents. Such Information shall not include information
which is or becomes generally available to the public other than as a result of
a disclosure by a party or its representatives in violation of this Agreement.
The parties agree that the Information will be used solely for the purposes
contemplated by this Agreement and that such Information will not be disclosed
to any person other than employees and agents of a party who are directly
involved in implementing the Merger, who shall be informed of the confidential
nature of the Information and directed individually to abide by the restrictions
set forth in this Section 8.01.
Section 8.02. Publicity. First Banks and FBA shall cooperate with each
other in the development and distribution of all news releases and other public
disclosures concerning this Agreement and the Merger. Neither party shall issue
any news release or make any other public disclosure without the prior consent
of the other party, unless such is required by law upon the written advice of
counsel or is in response to published newspaper or other mass media reports
regarding the Merger, in which latter event the parties shall consult with each
other to the extent practicable regarding such responsive disclosure.
Section 8.03. Return of Documents. Upon termination of this Agreement
without the Merger becoming effective, each party shall deliver to the others
originals and all copies of all Information made available to such party and
will not retain any copies, extracts or other reproductions, in whole or in
part, of such Information.
Section 8.04. Notices. Any notice or other communication shall be in
writing and shall be deemed to have been given or made on the date of delivery,
in the case of hand delivery, or three (3) business days after deposit in the
United States Registered Mail, postage prepaid, or upon receipt if transmitted
by facsimile telecopy or any other means, addressed (in any case) as follows:
(a) if to FBA: Special Committee of the Board of Directors
First Banks America, Inc.
c/o Albert M. Lavezzo
Favaro, Lavezzo, Gill, Caretti & Heppell
300 Tuolumne Street, Suite A
Vallejo, California 94590
Facsimile: (707) 552-8913
and
First Banks America, Inc.
Attention: Lisa K. Vansickle
600 James S. McDonnell Boulevard
Mail Code M1-199-014
Hazelwood, Missouri 63042
Facsimile: (314) 592-6621
with a copy to: Bingham McCutchen LLP
Attention: Thomas G. Reddy
Three Embarcadero Center
San Francisco, CA 94111
Facsimile: (415) 393-2286
(b) if to First Banks or Newco:
First Banks, Inc.
Attention: Allen H. Blake, President
600 James S. McDonnell Boulevard
Mail Code M1-199-014
Hazelwood, Missouri 63042
Facsimile: (314) 592-6621
with a copy to: John S. Daniels
Attorney at Law
6440 North Central Expressway, Suite 503
Dallas, Texas 75206
Facsimile: (214) 368-9094
or to such other address as any party may from time to time designate by notice
to the others.
Section 8.05. Nonsurvival of Representations, Warranties and
Agreements. No representation, warranty or agreement contained in this Agreement
shall survive the Closing Date, and, except for the provisions of Sections 7.06,
8.01, 8.03 and 8.06 hereof, no provisions hereof shall survive the earlier
termination of this Agreement.
Section 8.06. Costs and Expenses. Except as may be otherwise provided
herein, each party shall pay its own costs and expenses incurred in connection
with this Agreement and the matters contemplated hereby, including without
limitation all fees and expenses of attorneys, accountants, brokers, financial
advisors and other professionals.
Section 8.07. Entire Agreement. This Agreement constitutes the entire
agreement among the parties and supersedes and cancels any and all prior
discussions, negotiations, undertakings, agreements in principle and other
agreements among the parties relating to the subject matter hereof.
Section 8.08. Headings and Captions. The captions of Articles and
Sections hereof are for convenience only and shall not control or affect the
meaning or construction of any of the provisions of this Agreement.
Section 8.09. Waiver, Amendment or Modification. The conditions of this
Agreement which may be waived may only be waived by a written instrument
delivered to the other party. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. This Agreement may not be amended or
modified except by a written document duly executed by the parties hereto.
Section 8.10. Rules of Construction. Unless the context otherwise
requires: (a) a term has the meaning assigned to it; (b) an accounting term not
otherwise defined has the meaning assigned to it in accordance with generally
accepted accounting principles; (c) "or" is not exclusive; and (d) words in the
singular may include the plural and in the plural include the singular.
Section 8.11. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which shall
be deemed one and the same instrument.
Section 8.12. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. There shall be no third party beneficiaries hereof.
Section 8.13. Governing Law. This Agreement shall be governed by the
laws of the State of Missouri, the General Corporation Law of the State of
Delaware, and any applicable federal laws and regulations.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officers thereunto duly authorized, all as of the date first
written above.
FIRST BANKS, INC.
By: /s/ Allen H. Blake
--------------------------------------
Its: President
--------------------------------------
FBA ACQUISITION CORPORATION
By: /s/ Lisa K. Vansickle
--------------------------------------
Its: President
--------------------------------------
FIRST BANKS AMERICA, INC.
By: /s/ Terrance M. McCarthy
--------------------------------------
Its: Executive Vice President
--------------------------------------
Appendix B
[Baxter Fentriss and Company Logo]
September 23, 2002
Special Committee of the Board of Directors
First Banks America, Inc.
c/o Mr. Albert M. Lavezzo
Favaro, Lavezzo, Gill, Caretti & Heppell
300 Tuolumne Street, Suite A
Vallejo, California 94590
Dear Members of the Special Committee of the Board:
First Banks, Inc., a bank holding company organized as a Missouri corporation
("First Banks") and First Banks America, Inc. ("FBA"), a bank holding company
majority owned by First Banks and organized as a Delaware corporation, have
entered into an agreement providing for the merger of FBA with and into a new
wholly owned subsidiary of First Banks (the "Merger"). The terms of the Merger
are set forth in the Agreement and Plan of Merger (the "Agreement").
The terms of the Merger provide that certain shares of FBA common stock which
are owned by stockholders other than First Banks, or any of its affiliates or
subsidiaries, and not held in the treasury of FBA (the "unaffiliated
stockholders"), will be converted into the right to receive $40.54 per share in
cash ( the "Consideration").
You have asked our opinion as to whether the proposed transaction, pursuant to
the terms of the Agreement, is fair to the respective unaffiliated stockholders
of FBA from a financial point of view.
In rendering our opinion, we have reviewed certain publicly available business
and financial information relating to FBA, as well as the Agreement. We have
also reviewed and relied upon without independent verification, certain other
information, including financial forecasts, provided to us by FBA, and have
discussed the business and prospects of FBA with management, as well as other
matters that may be relevant.
In addition, we have, among other things: (a) to the extent deemed relevant,
analyzed selected public information of certain other financial institutions and
compared FBA from a financial point of view to the other financial institutions;
(b) compared the terms of the Merger with the terms of certain other comparable
transactions to the extent information concerning such acquisitions was publicly
available; (c) made such other analyses and examinations as we deemed necessary.
We have not independently verified the financial and other information
concerning FBA, or other data which we have considered in our review, nor have
we conducted on site due diligence of FBA. We have assumed the accuracy and
completeness of all such information; however, we have no reason to believe that
such information is not accurate and complete. Our conclusion is rendered on the
basis of securities market conditions prevailing as of the date hereof and on
the conditions and prospects, financial and otherwise, of FBA as they exist and
are known to us as of June 30, 2002.
We have acted as financial advisor to the Special Committee of the Board of
Directors of FBA in connection with the Merger and will receive from FBA a fee
for our services, which is not contingent upon the consummation of the Merger.
It is understood that this opinion may be included in its entirety in any
communication by FBA or the Special Committee of the Board of Directors to the
stockholders of FBA. The opinion may not, however, be summarized, excerpted from
or otherwise publicly referred to without our prior written consent.
Based on the foregoing, and subject to the limitations described above, we are
of the opinion that the Consideration is fair to the unaffiliated shareholders
of FBA from a financial point of view.
Sincerely,
/s/Baxter Fentriss and Company
- ------------------------------
Baxter Fentriss and Company
Appendix C
Section 262 of the General Corporation
Law of the State of Delaware
Section 262 - Appraisal Rights
(a) Any stockholder of a corporation of this State who holds shares
of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who
continuously holds such shares through the effective date of the
merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor
of the merger or consolidation nor consented thereto in writing
pursuant to sec. 228 of this title shall be entitled to an
appraisal by the Court of Chancery of the fair value of the
stockholder's shares of stock under the circumstances described
in subsections (b) and (c) of this section. As used in this
section, the word "stockholder" means a holder of record of stock
in a stock corporation and also a member of record of a nonstock
corporation; the words "stock" and "share" mean and include what
is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and
the words "depository receipt" mean a receipt or other instrument
issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation,
which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class
or series of stock of a constituent corporation in a merger or
consolidation to be effected pursuant to sec. 251 (other than a
merger effected pursuant to sec. 251(g) of this title), sec. 252,
sec. 254, sec. 257, sec. 258, sec. 263 or sec. 264 of this title:
(1) Provided, however, that no appraisal rights under
this section shall be available for the shares of any class or
series of stock, which stock, or depository receipts in respect
thereof, at the record date fixed to determine the stockholders
entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation,
were either (i) listed on a national securities exchange or designated
as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii)
held of record by more than 2,000 holders; and further provided that
no appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the shares
of any class or series of stock of a constituent corporation if the
holders thereof are required by the terms of an agreement of merger
or consolidation pursuant to sec. 251, 252, 254, 257, 258, 263 and 264
of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or depository
receipts in respect thereof) or depository receipts at the effective
date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more than
2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a., b. and c. of
this paragraph.
(3) In the event all of the stock of a subsidiary
Delaware corporation party to a merger effected under sec. 253 of this
title is not owned by the parent corporation immediately prior to the
merger, appraisal rights shall be available for the shares of the
subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be
available for the shares of any class or series of its stock as a
result of an amendment to its certificate of incorporation, any merger
or consolidation in which the corporation is a constituent corporation
or the sale of all or substantially all of the assets of the
corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth
in subsections (d) and (e) of this section, shall apply as nearly as
is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be submitted
for approval at a meeting of stockholders, the corporation, not less
than twenty (20) days prior to the meeting, shall notify each of its
stockholders who was such on the record date for such meeting with
respect to shares for which appraisal rights are available
pursuant to subsections (b) or (c) hereof that appraisal rights are
available for any or all of the shares of the constituent
corporations, and shall include in such notice a copy of this section.
Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the
taking of the vote on the merger or consolidation, a written demand
for appraisal of such stockholder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identify of
the stockholder and that the stockholder intends thereby to demand
the appraisal of such stockholder's shares. A proxy or vote
against the merger or consolidation shall not constitute such a
demand. A stockholder electing to take such action must do so by a
separate written demand as herein provided. Within ten (10) days
after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder of
each constituent corporation who has complied with this subsection
and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant
to sec. 228 or sec. 253 of this title, each constituent corporation,
either before the effective date of the merger or consolidation or
within ten days thereafter, shall notify each of the holders of any
class or series of stock of such constituent corporation who are
entitled to appraisal rights of the approval of the merger or
consolidation and that appraisal rights are available for any or all
shares of such class or series of stock of such constituent
corporation, and shall include in such notice a copy of this section;
provided that, if the notice is given on or after the effective date of
the merger or consolidation, such notice shall be given by the
surviving or resulting corporation to all such holders of any class or
series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within twenty (20) days
after the date of mailing of such notice, demand in writing from the
surviving or resulting corporation the appraisal of such holder's
shares. Such demand will be sufficient if it reasonably informs the
corporation of the identify of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If
such notice did not notify stockholders of the effective date of the
merger or consolidation, either (i) each such constituent corporation
shall send a second notice before the effective date of the merger or
consolidation notifying each of the holders of any class or series of
stock of such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second notice to
all such holders on or within ten (10) days after such effective date;
provided, however, that if such second notice is sent more than twenty
(20) days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal
rights and who has demanded appraisal of such holder's shares in
accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that is
required to give either notice that such notice has been give shall, in
the absence of fraud, be prima facie evidence of the facts stated
therein. For purposes of determining the stockholders entitled to
receive either notice, each constituent corporation may fix, in
advance, a record date that shall be not more than ten (10) days prior
to the date the notice is given, provided, that if the notice is given
on or after the effective date of the merger or consolidation, the
record date shall be such effective date. If no record date is fixed
and the notice is given prior to the effective date, the record date
shall be the close of business on the day next preceding the day on
which the notice is given.
(e) Within one hundred twenty (120) days after the effective date of
the merger or consolidation, the surviving or resulting
corporation or any stockholder who has complied with subsections
(a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within sixty (60) days
after the effective date of the merger or consolidation, any
stockholder shall have the right to withdraw such stockholder's
demand for appraisal and to accept the terms offered upon the
merger or consolidation, any stockholder who has complied with
the requirements of subsections (a) and (d) hereof, upon written
request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a
statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which
demands for appraisal have been received and the aggregate number
of holders of such shares. Such written statement shall be mailed
to the stockholder within ten (10) days after such stockholder's
written request for such a statement is received by the surviving
or resulting corporation or within ten (10) days after expiration
of the period for delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of
a copy thereof shall be made upon the surviving or resulting
corporation, which shall within twenty (20) days after such
service file in the office of the Register in Chancery in which
the petition was filed a duly verified list containing the names
and addresses of all stockholders who have demanded payment for
their shares and with whom agreements as to the value of their
shares have not been reached by the surviving or resulting
corporation. If the petition shall be filed by the surviving or
resulting corporation, the petition shall be accompanied by such
a duly verified list. The Register in Chancery, if so ordered by
the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the
surviving or resulting corporation and to the stockholders shown
on the list at the addresses therein stated. Such notice shall
also be given by one (1) or more publications at least one (1)
week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the
notices by mail and by publication shall be approved by the
Court, and the costs thereof shall be borne by the surviving or
resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have
become entitled to appraisal rights. The Court may require the
stockholders who have demanded an appraisal for their shares and
who hold stock represented by certificates to submit their
certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Court may
dismiss the proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value
exclusive of any element of value arising from the accomplishment
or expectation of the merger or consolidation, together with a
fair rate of interest, if any, to be paid upon the amount
determined to be the fair value. In determining such fair value,
the Court shall take into account all relevant factors. In
determining the fair rate of interest, the Court may consider all
relevant factors, including the rate of interest which the
surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon
application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding,
the Court may, in its discretion, permit discovery or other
pretrial proceedings and may proceed to trial upon the appraisal
prior to the final determination of the stockholder entitled to
an appraisal. Any stockholder whose name appears on the list
filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted such
stockholder's certificates of stock to the Register in Chancery,
if such is required, may participate fully in all proceedings
until it is finally determined that such stockholder is not
entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the
shares, together with interest, if any, by the surviving or
resulting corporation to the stockholders entitled thereto.
Interest may be simple or compound, as the Court may direct.
Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of
holders of shares represented by certificates upon the surrender
to the corporation of the certificates representing such stock.
The Court's decree may be enforced as other decrees in the Court
of Chancery may be enforced, whether such surviving or resulting
corporation be a corporation of this State or any state.
(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the
circumstances. Upon the application of a stockholder, the Court
may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorney's fees and the
expenses of experts, to be charged pro rata against the value of
all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation,
no stockholder who has demanded appraisal rights as provided in
subsection (d) of this section shall be entitled to vote such
stock for any purpose or to receive other distributions payable
to stockholders of record at a date which is prior to the
effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed
within the time provided in subsection (e) of this section, or if
such stockholder shall deliver to the surviving or resulting
corporation a written withdrawal of such stockholder's demand for
an appraisal and an acceptance of the merger or consolidation,
either within sixty (60) days after the effective date of the
merger or consolidation as provided in subsection (e) of this
section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval
may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted
had they assented to the merger or consolidation shall have the
status of authorized and unissued shares of the surviving or
resulting corporation.
FORM OF PROXY CARD
Please mark
your votes as
indicated in |X|
this example
1. Election of Directors
FOR all nominees WITHHOLD
listed below AUTHORITY
(except as marked to vote for all nominee(s)
below) listed below
|_| |_|
NOMINEES: 01 Allen H. Blake, 02 Charles A. Crocco, Jr., 03 James F. Dierberg,
04 Albert M.Lavezzo, 05 Terrance M. McCarthy, 06 Ellen D. Schepman,
07 Edward T. Story, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name below.
- --------------------------------------------------------------------------------
2. To approve and adopt the merger agreement dated September 23, 2002, by and
among FBA, First Banks, Inc. and FBA Acquisition Corporation.
FOR AGAINST ABSTAIN
|_| |_| |_|
- --------------------------------------------------------------------------------
3. In their discretion, upon any other matters which may properly come before
the meeting or any adjournments thereof, hereby revoking any proxy
heretofore given by the undersigned for such meeting.
Dated: , 2002
---------------------------------
- ---------------------------------------------
Signature
- ---------------------------------------------
Signature if held jointly
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
FIRST BANKS AMERICA, INC.
Annual Meeting of Stockholders - December 12, 2002
The undersigned hereby appoints Terrance M. McCarthy and Donald W. Williams, and
each of them, with full power of substitution, the attorney and proxy of the
undersigned to attend the Annual Meeting of Stockholders of First Banks America,
Inc. to be held in Clayton, Missouri on December 12, 2002, at 4:00 p.m. local
time and at any adjournment thereof, and to vote the stock of the undersigned
with all powers the undersigned would possess if present upon the following
matters and upon any other business that may properly come before the meeting or
any adjournment thereof.
The proxy when properly executed will be voted as specified herein. If no
specification is made with respect to any particular proposal, it is the
intention of the proxies to vote FOR each of the proposals.
SEE REVERSE SIDE
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
You can now access your First Banks America, Inc. account online.
Access your First Banks America, Inc. stockholder account online via Investor
ServiceDirect(SM) (ISD).
Mellon Investor Services LLC, agent for First Banks America, Inc., now makes it
easy and convenient to get current information on your stockholder account.
After a simple and secure process of establishing a Personal Identification
Number (PIN), you are ready to log in and access your account to:
o View account status
o View certificate history
o View book-entry information
o View payment history for dividends
o Make address changes
o Obtain a duplicate 1099 tax form
o Establish/change your PIN
Visit us on the web at http://www.melloninvestor.com
and follow the instructions shown on this page.
Step 1: FIRST TIME USERS - Establish a PIN
You must first establish a Personal Identification Number (PIN) online by
following the directions provided in the upper right portion of the web screen
as follows. You will also need your Social Security Number (SSN) available to
establish a PIN.
Investor ServiceDirect(SM) is currently only available for domestic individual
and joint accounts.
o SSN
o PIN
o Then click on the Establish PIN button
Please be sure to remember your PIN, or maintain it in a secure place for future
reference.
Step 2: Log in for Account Access
You are now ready to log in. To access your account, please enter your:
o SSN
o PIN
o Then click on the Submit button
If you have more than one account, you will now be asked to select the
appropriate account.
Step 3: Account Status Screen
You are now ready to access your account information. Click on the appropriate
button to view or initiate transactions.
o Certificate History
o Book-Entry Information
o Issue Certificate
o Payment History
o Address Change
o Duplicate 1099
For Technical Assistance Call 1-877-978-7778 between
9am-7pm Monday-Friday Eastern Time