<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
----------------------
August 28, 1995
-------------------------------------------------
(Date of Report; Date of Earliest Event Reported)
THE CHASE MANHATTAN CORPORATION
-----------------------------------------------------
(Exact Name of Registrant as specified in its Charter)
Delaware 1-5945 13-2633613
- ---------------------------------------------------------------------------
(State of Incorporation) (Commission File No.) (IRS Employer
Identification No.)
One Chase Manhattan Plaza, New York, New York 10081
- ------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(212) 552 - 2222
---------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
------------------------------------------------------------
(Former name or former address, if changed since last report)
Exhibit Index is on page 8
<PAGE> 2
Items 1-4. Not Applicable.
Item 5. Other Events.
The Chase Manhattan Corporation, a Delaware corporation
("Chase"), and Chemical Banking Corporation, a Delaware corporation
("Chemical"), have entered into an Agreement and Plan of Merger, dated as of
August 27, 1995 (the "Merger Agreement"). The Merger Agreement provides for
the merger of Chase with and into Chemical (the "Merger"). The combined
company will be named The Chase Manhattan Corporation.
The Merger is expected to be (1) accounted for under the
pooling-of-interests method and (2) a "reorganization" under the Internal
Revenue Code of 1986, as amended.
In the Merger, each share of common stock, par value $2.00 per
share ("Chase Common Stock"), of Chase, other than certain shares owned by
Chase or Chemical, issued and outstanding immediately prior to the effective
time of the Merger will be converted into 1.04 shares of common stock, par
value $1.00 per share ("Chemical Common Stock"), of Chemical. Also, in the
Merger, each share of preferred stock, without par value ("Chase Preferred
Stock"), of Chase, other than certain shares owned by Chase or Chemical, issued
and outstanding immediately prior to the effective time of the Merger will be
converted into one share of preferred stock, par value $1.00 per share, of
Chemical
<PAGE> 3
having substantially the same terms as the share of Chase Preferred Stock it
will replace. The outstanding Chase Preferred Stock includes the following
series: Preferred Stock, 10-1/2% Series G, stated value $25.00 per share;
Preferred Stock, 9.76% Series H, stated value $25.00 per share; Preferred
Stock, 10.84% Series I, stated value $25.00 per share; Preferred Stock, 9.08%
Series J, stated value $25.00 per share; Preferred Stock, 8-1/2% Series K,
stated value $25.00 per share; Preferred Stock, 8.32% Series L, stated value
$25.00 per share; Preferred Stock, 8.40% Series M, stated value $25.00 per
share; and Preferred Stock, Adjustable Rate Series N, stated value $25.00 per
share.
Consummation of the Merger is subject to a number of
conditions, including (1) receipt of the approval of the holders of a majority
of the outstanding shares of Chase Common Stock and (2) receipt of all
requisite governmental approvals (including approval of the Board of Governors
of the Federal Reserve System).
As an inducement and condition to Chemical's entering into the
Merger Agreement, Chase, as issuer, and Chemical, as grantee, entered into a
Stock Option Agreement (the "Chase Stock Option Agreement") wherein Chase
granted to Chemical an option to purchase up to 34,551,183 shares (representing
approximately 19.9% of the outstanding shares) of Chase Common Stock at a price
per share equal to $51.875. The option is exercisable only upon the occurrence
of
<PAGE> 4
certain events, including: a tender or exchange offer by a third party for at
least 15% of Chase's outstanding stock; an agreement by Chase to enter into
certain business combinations with a third party; acquisition of beneficial
ownership by a third party of 15% of Chase's voting securities; or failure of
Chase's stockholders to approve the Merger Agreement, or withdrawal by Chase's
Board of Directors of its recommendation of the Merger to Chase's stockholders,
after a third party has proposed a business combination with Chase. Chemical
and Chase also entered into a substantially identical stock option agreement
pursuant to which Chemical has granted to Chase an option to purchase up
to 50,170,882 shares (representing approximately 19.9% of the outstanding
shares) of Chemical Common Stock at a price per share equal to $53.50. The
Stock Option Agreements each (1) provide the grantee (a) with the right or
obligation, in certain circumstances, to require the issuer to repurchase the
option granted thereby, together with any shares acquired by exercise of such
option and (b) with the right to require the issuer to register the common
stock acquired by or issuable upon exercise of the option under the Securities
Act of 1933, and (2) provide the issuer with a right of first refusal, in
certain circumstances, in the event the grantee desires to sell any shares
acquired by exercise of such option.
<PAGE> 5
In connection with entry into the Merger Agreement, Chase
amended the Rights Agreement, dated as of February 15, 1989 (the "Rights
Agreement Amendment"), between Chase and The Chase Manhattan Bank, N.A., as
Rights Agent (the "Rights Agreement"), in order to exclude from the definition
of "Acquiring Person" (as defined in the Rights Agreement) Chemical and its
affiliates as a result of any acquisition of beneficial ownership of Chase
Common Stock pursuant to either the Chase Stock Option Agreement or the Merger.
Consequently, the transactions contemplated by the Merger Agreement and the
Chase Stock Option Agreement will not result in a "Distribution Date," "Stock
Acquisition Date" or "Triggering Event" under the Rights Agreement. In
addition, Chase and Chemical entered into an Employee Benefits Agreement, dated
as of August 27, 1995 (the "Employee Benefits Agreement"), addressing certain
employee benefits matters related to the Merger.
The Merger Agreement, the Stock Option Agreements, the Rights
Agreement Amendment, the Employee Benefits Agreement and the registrant's press
release issued August 28, 1995 regarding the Merger appear as exhibits to this
report and are incorporated herein by reference. The foregoing summary is
qualified in its entirety by reference to such documents, as well as the Rights
Agreement (which also is incorporated by reference herein).
Item 6. Not Applicable.
<PAGE> 6
Item 7. Financial Statements
Pro Forma Financial Information and Exhibits.
(a)-(b) Not Applicable.
(c) Exhibits Required by Item 601 of Regulation S-K
Exhibit Number Description
-------------- -----------
2 The Merger Agreement
4(a) The Rights Agreement (incorporated herein by
reference from Exhibit (28) to Chase's Annual
Report on Form 10-K for the year ended
December 31, 1988. (File No. 1-5945).
4(b) The Rights Agreement Amendment
10(a) The Chase Stock Option Agreement
10(b) The Chemical Stock Option Agreement
10(c) The Employee Benefits Agreement
20 Press release of Chase, issued August 28, 1995,
regarding the Merger.
Item 8. Not Applicable.
<PAGE> 7
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: August 28, 1995
THE CHASE MANHATTAN CORPORATION
By: /s/ L. EDWARD SHAW, JR.
------------------------------
Name: L. Edward Shaw, Jr.
Title: Executive Vice President
and General Counsel
<PAGE> 8
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
[S] [C]
2 Agreement and Plan of Merger, dated as of
August 27, 1995, between The Chase Manhattan
Corporation ("Chase") and Chemical Banking
Corporation ("Chemical").
4(a) Rights Agreement, dated as of February 15,
1989 (the "Rights Agreement"), between Chase
and The Chase Manhattan Bank, N.A., as Rights
Agent (incorporated by reference from
Exhibit (28) to Chase's Annual Report on Form
10-K for the year ended December 31, 1988.
(File No. 1-5945).
4(b) Amendment, dated as of August 27, 1995, to the
Rights Agreement.
10(a) Stock Option Agreement, dated as of August 27,
1995, between Chemical and Chase.
10(b) Stock Option Agreement, dated as of August 27,
1995, between Chase and Chemical.
10(c) Employee Benefits Agreement, dated as of
August 27, 1995, between Chase and Chemical.
20 Press release of Chase, issued August 28, 1995,
regarding the Merger.
<PAGE> 1
EXHIBIT 2
================================================================================
AGREEMENT AND PLAN OF MERGER
dated as of August 27, 1995
between
CHEMICAL BANKING CORPORATION
and
THE CHASE MANHATTAN CORPORATION
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
<S> <C>
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 2
1.1. Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES . . . . . . . . . . 3
2.1. Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Cancellation of Treasury Stock and Chemical-Owned Stock, etc. . . . . . . . . . . . . . . 3
(b) Conversion of Chase Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Conversion of Chase Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2. Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) Distributions with Respect to Unexchanged Shares; Voting . . . . . . . . . . . . . . . . 6
(d) No Further Ownership Rights in Chase Common Stock or Chase Preferred Stock . . . . . . . 6
(e) No Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(f) Termination of Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(g) No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . 8
3.1. Representations and Warranties of Chase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(d) SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(e) Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(f) Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(h) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(i) Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(j) Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(k) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(l) Agreements with Bank Regulators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
(m) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(n) Section 203 of the DGCL and Certain Provisions of
Certificate of Incorporation Not Applicable . . . . . . . . . . . . . . . . . . . . . 16
(o) Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(p) Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(q) Chase Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(r) Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(s) Ownership of Chemical Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(t) Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.2. Representations and Warranties of Chemical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(a) Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(c) Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(d) SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(e) Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(f) Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(h) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(i) Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(j) Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(k) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(l) Agreements with Bank Regulators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(m) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(n) Section 203 of the DGCL Not Applicable . . . . . . . . . . . . . . . . . . . . . . . . . 25
(o) Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(p) Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(q) Chemical Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(r) Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(s) Ownership of Chase Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(t) Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . . . . . . . 26
4.1. Covenants of Chase and Chemical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(b) Dividends; Changes in Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Issuance of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(d) Governing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(e) No Solicitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(f) No Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(g) No Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(h) Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(i) Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(j) Advice of Changes; Government Filings . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
(k) Accounting Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(l) Pooling and Tax-Free Reorganization Treatment . . . . . . . . . . . . . . . . . . . . . . 31
(m) Compensation and Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE V
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . 32
5.1. Preparation of S-4, and the Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.2. Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.3. Stockholder Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.4. Legal Conditions to Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.5. Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.6. Stock Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.7. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.8. Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.9. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.10. Governance; Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.11. Indemnification; Directors' and Officers' Insurance . . . . . . . . . . . . . . . . . . . . . . . . 36
5.12. Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.13. Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VI
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . 38
6.1. Conditions to Each Party's Obligation To Effect the Merger . . . . . . . . . . . . . . . . . . . . . 38
(a) Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(b) NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(c) Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(d) S-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(e) No Injunctions or Restraints; Illegality . . . . . . . . . . . . . . . . . . . . . . . . 38
(f) Pooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(g) Burdensome Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.2. Conditions to Obligations of Chemical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(b) Performance of Obligations of Chase . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(c) Consents Under Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(d) Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(e) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.3. Conditions to Obligations of Chase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(b) Performance of Obligations of Chemical . . . . . . . . . . . . . . . . . . . . . . . . . 40
(c) Consents Under Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(d) Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(e) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(f) Authorization of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
- iii -
<PAGE> 5
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE VII
TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . 41
7.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.3. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.4. Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VIII
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . 43
8.1. Nonsurvival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . . . . 43
8.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.3. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.5. Entire Agreement; No Third Party Beneficiaries;
Rights of Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.6. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.7. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.8. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
- iv -
<PAGE> 6
Index of Defined Terms
<TABLE>
<CAPTION>
Page
<S> <C>
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Bank Regulators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
BHC Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Burdensome Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
CFTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Chase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chase 10.84% Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Chase 10-1/2% Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Chase 8.32% Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Chase 8.40% Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Chase 8-1/2% Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Chase 9.08% Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Chase 9.76% Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Chase Adjustable Rate Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Chase Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chase Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Chase Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Chase Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chase Junior Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Chase Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Chase Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Chase Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Chase Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Chase Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Chase SAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Chase SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Chase Stock Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Chase Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chase Stock Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Chase Stock Purchase Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Chase Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Chase's Current Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Chemical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chemical Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chemical Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Chemical Class B Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Chemical Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chemical Common Stock Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Chemical Junior Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chemical Merger Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
</TABLE>
- i -
<PAGE> 7
<TABLE>
<CAPTION>
Page
<S> <C>
Chemical Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Chemical Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Chemical Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chemical Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chemical SARs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Chemical SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Chemical Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chemical Stock Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Common Shares Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Constituent Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DPC shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Employee Benefits Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Excess Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
FDIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Federal Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
FRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
incentive stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Indemnified Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
material adverse effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Requisite Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
S-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SBA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SBIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
- ii -
<PAGE> 8
<TABLE>
<CAPTION>
Page
<S> <C>
Significant Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
State Banking Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
State Takeover Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Stock Option Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
takeover proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
trust account shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
U.S. Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Voting Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
-iii-
<PAGE> 9
AGREEMENT AND PLAN OF MERGER dated as of August 27, 1995 (this
"Agreement") between CHEMICAL BANKING CORPORATION, a Delaware corporation
("Chemical"), and THE CHASE MANHATTAN CORPORATION, a Delaware corporation
("Chase").
WHEREAS, the Boards of Directors of Chemical and Chase have
approved, and deem it advisable and in the best interests of their respective
stockholders to consummate, the business combination transaction provided for
herein in which Chase would merge with and into Chemical (the "Merger");
WHEREAS, the Boards of Directors of Chemical and Chase have
each determined that the Merger and the other transactions contemplated hereby
are consistent with, and in furtherance of, their respective business strategies
and goals;
WHEREAS, concurrently with the execution and delivery of this
Agreement, (i) as a condition and inducement to Chemical's willingness to enter
into this Agreement and the Chemical Stock Option Agreement referred to below,
Chemical and Chase are entering into a Stock Option Agreement dated as of the
date hereof in the form of Exhibit 1.1(a) (the "Chase Stock Option Agreement")
pursuant to which Chase is granting to Chemical an option to purchase shares of
the Common Stock, par value $2.00 per share, of Chase (the "Chase Common Stock")
and (ii) as a condition and inducement to Chase's willingness to enter into this
Agreement and the Chase Stock Option Agreement, Chase and Chemical are entering
into a Stock Option Agreement dated as of the date hereof in the form of Exhibit
1.1(b) (the "Chemical Stock Option Agreement", and together with the Chase Stock
Option Agreement, the "Stock Option Agreements"), pursuant to which Chemical is
granting to Chase an option to purchase shares of the Common Stock, par value
$1.00 per share, of Chemical (the "Chemical Common Stock", which term shall,
unless the context indicates otherwise, also refer to and include the associated
rights ("Chemical Rights") to purchase one one-hundredth of a share of Junior
Participating Preferred Stock, par value $1.00 per share ("Chemical Junior
Preferred Stock"), of Chemical pursuant to the Rights Agreement, dated as of
April 13, 1989 (the "Chemical Rights Agreement"), between Chemical and Chemical
Bank, as Rights Agent);
WHEREAS, Chemical and Chase desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;
WHEREAS, for Federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, for accounting purposes, it is intended that the
Merger shall be accounted for as a "pooling of interests"; and
WHEREAS, promptly following the consummation of the Merger, the
parties hereto intend that Chemical Bank, a New York banking corporation and a
wholly-owned subsidiary of Chemical ("Chemical Bank"), and The Chase Manhattan
Bank, N.A., a national banking association and a wholly-owned subsidiary of
Chase ("Chase Bank"), be merged;
<PAGE> 10
2
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein and in the Stock Option Agreements, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1. Effective Time of the Merger. Subject to the provisions of
this Agreement, a certificate of merger (the "Certificate of Merger") shall be
duly prepared, executed and acknowledged by Chemical, on behalf of the Surviving
Corporation (as defined in Section 1.3(b)), and thereafter delivered to the
Secretary of State of the State of Delaware, for filing, as provided in the
Delaware General Corporation Law (the "DGCL"), on the Closing Date (as defined
in Section 1.2). The Merger shall become effective upon the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware or at
such time thereafter as is provided in the Certificate of Merger (the "Effective
Time").
1.2. Closing. The closing of the Merger (the "Closing") will
take place at 10:00 a.m. on a date to be specified by the parties, which shall
be the first day which is (a) the last business day of a month and (b) at least
two business days after satisfaction or waiver (subject to applicable law) of
the conditions (excluding conditions that, by their terms, cannot be satisfied
until the Closing Date) set forth in Article VI (the "Closing Date"), unless
another time or date is agreed to in writing by the parties hereto. The Closing
shall be held at such location in The City of New York as is agreed to in
writing by the parties hereto.
1.3. Effects of the Merger. (a) At the Effective Time (i) Chase
shall be merged with and into Chemical and the separate existence of Chase shall
cease, (ii) the Certificate of Incorporation of Chemical as in effect
immediately prior to the Effective Time (as amended to increase the number of
authorized shares of Chemical Common Stock, to designate and establish the terms
of the Chemical Merger Preferred Stock (as defined in Section 2.1(c)) and to
change the name of Chemical, all as contemplated by this Agreement, and with
such other amendments thereto as may be contemplated by this Agreement) shall be
the Certificate of Incorporation of the Surviving Corporation and (iii) the
By-laws of Chemical as in effect immediately prior to the Effective Time shall
be the By-laws of the Surviving Corporation.
(b) As used in this Agreement, "Constituent Corporations" shall
mean each of Chemical and Chase, and "Surviving Corporation" shall mean
Chemical, at and after the Effective Time, as the surviving corporation in the
Merger.
(c) At and after the Effective Time, the Merger will have the
effects set forth in the DGCL.
<PAGE> 11
3
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Chase Common Stock or Chase Preferred Stock (as defined in Section
2.1(c)):
(a) Cancellation of Treasury Stock and Chemical-Owned Stock,
etc. All shares of Chase Common Stock and Chase Preferred Stock that
are owned by Chase as treasury stock and all shares of Chase Common
Stock or Chase Preferred Stock that are owned by Chemical or any
wholly-owned Subsidiary of Chemical or of Chase (other than shares held
in trust, managed, custodial or nominee accounts and the like, or held
by mutual funds for which a Subsidiary of Chemical or Chase acts as
investment advisor, that in any such case are beneficially owned by
third parties (any such shares, "trust account shares") and shares
acquired in respect of debts previously contracted (any such shares,
"DPC shares")) shall be cancelled and retired and shall cease to exist
and no stock of Chemical or other consideration shall be delivered in
exchange therefor. All shares of Chemical Common Stock and Chemical
Preferred Stock (as defined in Section 3.2(b)) that are owned by Chase
(other than trust account shares and DPC shares) shall become treasury
stock. As used in this Agreement, the word "Subsidiary" when used with
respect to any party means any corporation or other organization,
whether incorporated or unincorporated, (i) of which such party or any
other Subsidiary of such party is a general partner (excluding
partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the
voting interests in such partnership), or (ii) at least a majority of
the securities or other interests of which having by their terms
ordinary voting power to elect a majority of the board of directors or
others performing similar functions with respect to such corporation or
other organization is directly or indirectly owned or controlled by
such party or by any one or more of its Subsidiaries, or by such party
and one or more of its Subsidiaries.
(b) Conversion of Chase Common Stock. Subject to Section
2.2(e), each share of Chase Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be
cancelled in accordance with Section 2.1(a)) shall be converted into
1.04 fully paid and nonassessable shares of Chemical Common Stock. All
such shares of Chase Common Stock shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist,
and each certificate previously representing any such shares shall
thereafter represent the shares of Chemical Common Stock into which
such Chase Common Stock has been converted. Certificates previously
representing shares of Chase Common Stock shall be exchanged for
certificates representing whole shares of Chemical Common Stock issued
in consideration therefor upon the surrender of such certificates in
accordance with Section 2.2, without interest.
<PAGE> 12
4
(c) Conversion of Chase Preferred Stock. Each share of the
following series of preferred stock of Chase, without par value
(collectively, the "Chase Preferred Stock"), issued and outstanding
immediately prior to the Effective Time (other than shares to be
cancelled in accordance with Section 2.1(a)) shall be converted into
shares of Preferred Stock of Chemical, with a par value of $1.00 per
share (collectively, the "Chemical Merger Preferred Stock"), as
follows:
(i) Each such share of Preferred Stock, 10-1/2%
Series G, stated value $25.00 per share, of Chase (the "Chase
10-1/2% Preferred Stock") shall be converted into one share of
preferred stock of Chemical having substantially the same terms
as the Chase 10-1/2% Preferred Stock.
(ii) Each such share of Preferred Stock, 9.76%
Series H, stated value $25.00 per share, of Chase (the "Chase
9.76% Preferred Stock") shall be converted into one share of
preferred stock of Chemical having substantially the same terms
as the Chase 9.76% Preferred Stock.
(iii) Each such share of Preferred Stock, 10.84%
Series I, stated value $25.00 per share, of Chase (the "Chase
10.84% Preferred Stock") shall be converted into one share of
preferred stock of Chemical having substantially the same terms
as the Chase 10.84% Preferred Stock.
(iv) Each such share of Preferred Stock, 9.08%
Series J, stated value $25.00 per share, of Chase (the "Chase
9.08% Preferred Stock") shall be converted into one share of
preferred stock of Chemical having substantially the same terms
as the Chase 9.08% Preferred Stock.
(v) Each such share of Preferred Stock, 8-1/2%
Series K, stated value $25.00 per share, of Chase (the "Chase
8-1/2% Preferred Stock") shall be converted into one share of
preferred stock of Chemical having substantially the same terms
as the Chase 8-1/2% Preferred Stock.
(vi) Each such share of Preferred Stock, 8.32%
Series L, stated value $25.00 per share, of Chase (the "Chase
8.32% Preferred Stock") shall be converted into one share of
preferred stock of Chemical having substantially the same terms
as the Chase 8.32% Preferred Stock.
(vii) Each such share of Preferred Stock, 8.40%
Series M, stated value $25.00 per share, of Chase (the "Chase
8.40% Preferred Stock") shall be converted into one share of
preferred stock of Chemical having substantially the same terms
as the Chase 8.40% Preferred Stock.
(viii) Each such share of Preferred Stock,
Adjustable Rate Series N, stated value $25.00 per share, of
Chase (the "Chase Adjustable Rate Preferred Stock") shall be
converted into one share of preferred stock of Chemical having
substantially the same terms as the Chase Adjustable Rate
Preferred Stock.
<PAGE> 13
5
All of the shares of Chase Preferred Stock converted
into Chemical Merger Preferred Stock pursuant to this Article II shall
no longer be outstanding and shall automatically be cancelled and shall
cease to exist, and each certificate previously representing any such
shares of Chase Preferred Stock shall thereafter represent the shares
of Chemical Merger Preferred Stock into which such Chase Preferred
Stock has been converted. Certificates previously representing shares
of Chase Preferred Stock shall be exchanged for certificates
representing whole shares of corresponding Chemical Merger Preferred
Stock issued in consideration therefor upon the surrender of such
certificates in accordance with Section 2.2 hereof, without interest.
2.2. Exchange of Certificates. (a) Exchange Agent. As of the
Effective Time, Chemical shall deposit, or shall cause to be deposited, with
Chemical Bank or another affiliate of Chemical or such other bank or trust
company as may be mutually designated by Chemical and Chase (the "Exchange
Agent"), for the benefit of the holders of certificates which immediately prior
to the Effective Time evidenced shares of Chase Common Stock and Chase Preferred
Stock (the "Chase Certificates"), for exchange in accordance with this Article
II, certificates representing the shares of Chemical Common Stock and Chemical
Merger Preferred Stock (such certificates for shares of Chemical Common Stock
and Chemical Merger Preferred Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund") issuable pursuant to Section 2.1 in exchange for such shares of
Chase Common Stock and Chase Preferred Stock.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder of record
of shares of Chase Common Stock or Chase Preferred Stock immediately prior to
the Effective Time whose shares were converted into shares of Chemical Common
Stock or Chemical Merger Preferred Stock pursuant to Section 2.1, (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Chase Certificates shall pass, only upon delivery of the
Chase Certificates to the Exchange Agent, and which shall be in such form and
have such other provisions as Chemical and Chase may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Chase Certificates
in exchange for certificates representing shares of Chemical Common Stock and
Chemical Merger Preferred Stock, as the case may be. Upon surrender of a Chase
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, the holder of such Chase Certificate shall be
entitled to receive in exchange therefor a certificate representing that number
of whole shares of Chemical Common Stock or Chemical Merger Preferred Stock
which such holder has the right to receive in respect of the Chase Certificate
surrendered pursuant to the provisions of this Article II (after taking into
account all shares of Chase Common Stock then held by such holder), and the
Chase Certificate so surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of Chase Common Stock or Chase Preferred Stock which is
not registered in the transfer records of Chase, a certificate representing the
proper number of shares of Chemical Common Stock or Chemical Merger Preferred
Stock may be issued to a transferee if the Chase Certificate representing such
Chase Common Stock or Chase Preferred Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock
<PAGE> 14
6
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.2, each Chase Certificate shall be deemed at any time after the Effective Time
to represent only the Chemical Common Stock or Chemical Merger Preferred Stock
into which the shares of Chase Common Stock or Chase Preferred Stock represented
by such Chase Certificate have been converted as provided in this Article II and
the right to receive upon such surrender cash in lieu of any fractional shares
of Chemical Common Stock as contemplated by this Section 2.2.
(c) Distributions with Respect to Unexchanged Shares; Voting.
(i) No dividends or other distributions declared or made after the 30th day
following the Effective Time with respect to Chemical Common Stock or Chemical
Merger Preferred Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Chase Certificate with respect to the shares
of Chemical Common Stock or Chemical Merger Preferred Stock represented thereby,
and no cash payment in lieu of fractional shares shall be paid to any such
holder pursuant to Section 2.2(e), until the holder of such Chase Certificate
shall surrender such Chase Certificate. Subject to the effect of applicable
laws, following surrender of any such Chase Certificate, there shall be paid to
the holder of the certificates representing whole shares of Chemical Common
Stock or Chemical Merger Preferred Stock issued in exchange therefor, without
interest, (A) at the time of such surrender or as promptly after the sale of the
Excess Shares (as defined in Section 2.2(e)) as practicable, the amount of any
cash payable with respect to a fractional share of Chemical Common Stock to
which such holder is entitled pursuant to Section 2.2(e) and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid (but withheld pursuant to the immediately preceding sentence)
with respect to such whole shares of Chemical Common Stock or Chemical Merger
Preferred Stock, and (B) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of Chemical Common Stock or Chemical Merger
Preferred Stock.
(ii) Former holders of record as of the Effective Time of
shares of Chase Common Stock and Chase Preferred Stock shall be entitled, at and
after the Effective Time, to vote the number of shares of Chemical Common Stock
and Chemical Merger Preferred Stock into which their shares of Chase Common
Stock and Chase Preferred Stock shall have been converted, regardless of whether
the Chase Certificates formerly representing such shares shall have been
surrendered in accordance with this Section 2.2 or certificates evidencing such
Chemical Common Stock or Chemical Merger Preferred Stock, as the case may be,
shall have been issued in exchange therefor.
(d) No Further Ownership Rights in Chase Common Stock or Chase
Preferred Stock. All shares of Chemical Common Stock or Chemical Merger
Preferred Stock issued upon conversion of shares of Chase Common Stock or Chase
Preferred Stock in accordance with the terms hereof (including any cash paid
pursuant to Section 2.2(c) or 2.2(e)) shall be deemed to have been issued in
full satisfaction of all rights pertaining to such shares of Chase Common Stock
or Chase Preferred Stock (including with respect to the Chase Rights (as defined
in Section 3.1(b)(i)), subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective
<PAGE> 15
7
Time which may have been declared or made by Chase on such shares of Chase
Common Stock or Chase Preferred Stock in accordance with the terms of this
Agreement on or prior to the Effective Time and which remain unpaid at the
Effective Time, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of Chase Common
Stock or Chase Preferred Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Chase Certificates are presented
to the Surviving Corporation for any reason, they shall be cancelled and
exchanged as provided in this Article II.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Chemical Common Stock shall be issued upon the
surrender for exchange of Chase Certificates evidencing Chase Common Stock, and
such fractional share interests will not entitle the owner thereof to vote or to
any rights of a stockholder of the Surviving Corporation.
(ii) As promptly as practicable following the Effective Time,
the Exchange Agent shall determine the excess of (x) the number of full shares
of Chemical Common Stock delivered to the Exchange Agent by Chemical pursuant to
Section 2.2(a) over (y) the aggregate number of full shares of Chemical Common
Stock to be distributed to holders of Chase Common Stock pursuant to Section
2.2(b) (such excess being herein called the "Excess Shares"). Following the
Effective Time, the Exchange Agent, as agent for the holders of Chase Common
Stock, shall sell the Excess Shares at then prevailing prices on the New York
Stock Exchange, Inc. (the "NYSE"), all in the manner provided in paragraph (iii)
of this Section.
(iii) The sale of the Excess Shares by the Exchange Agent
shall be executed on the NYSE through one or more member firms of the NYSE and
shall be executed in round lots to the extent practicable. The Exchange Agent
shall use all reasonable efforts to complete the sale of the Excess Shares as
promptly following the Effective Time as, in the Exchange Agent's reasonable
judgment, is practicable consistent with obtaining the best execution of such
sales in light of prevailing market conditions. Until the net proceeds of such
sale or sales have been distributed to the holders of Chase Common Stock, the
Exchange Agent will hold such proceeds in trust for the holders of Chase Common
Stock (the "Common Shares Trust"). The Surviving Corporation shall pay all
commissions, transfer taxes and other out-of-pocket transaction costs, including
the expenses and compensation, of the Exchange Agent incurred in connection with
such sale of the Excess Shares. The Exchange Agent shall determine the portion
of the Common Shares Trust to which each holder of Chase Common Stock shall be
entitled, if any, by multiplying the amount of the aggregate net proceeds
comprising the Common Shares Trust by a fraction the numerator of which is the
amount of the fractional share interest to which such holder of Chase Common
Stock is entitled (after taking into account all shares of Chase Common Stock
held at the Effective Time by such holder) and the denominator of which is the
aggregate amount of fractional share interests to which all holders of Chase
Common Stock are entitled.
(iv) Notwithstanding the provisions of clauses (ii) and
(iii), above, Chemical may elect at its option, exercised prior to the Effective
Time, in lieu of the issuance and sale
<PAGE> 16
8
of Excess Shares and the making of the payments contemplated in said clauses, to
pay each holder of Chase Common Stock an amount in cash equal to the product
obtained by multiplying (a) the fractional share interest to which such holder
(after taking into account all shares of Chase Common Stock held at the
Effective Time by such holder) would otherwise be entitled by (b) the closing
price for a share of Chemical Common Stock on the NYSE Composite Transaction
Tape on the first business day immediately preceding the Effective Time, and, in
such case, all references herein to the cash proceeds of the sale of the Excess
Shares and similar references shall be deemed to mean and refer to the payments
calculated as set forth in this clause (iv).
(v) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Chase Common Stock with respect
to any fractional share interests, the Exchange Agent shall make available such
amounts to such holders of Chase Common Stock subject to and in accordance with
the terms of Section 2.2(c).
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund and Common Shares Trust which remains undistributed to the stockholders of
Chase for six months after the Effective Time shall be delivered to the
Surviving Corporation, upon demand, and any stockholders of Chase who have not
theretofore complied with this Article II shall thereafter look only to the
Surviving Corporation for payment of their claim for Chemical Common Stock or
Chemical Merger Preferred, as the case may be, any cash in lieu of fractional
shares of Chemical Common Stock and any dividends or distributions with respect
to Chemical Common Stock or Chemical Merger Preferred Stock.
(g) No Liability. Neither Chemical nor Chase nor the Surviving
Corporation shall be liable to any holder of shares of Chase Common Stock, Chase
Preferred Stock, Chemical Common Stock or Chemical Merger Preferred Stock, as
the case may be, for such shares (or dividends or distributions with respect
thereto) or cash from the Common Shares Trust delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of Chase. Chase
represents and warrants to Chemical as follows:
(a) Organization, Standing and Power. Chase is a bank holding
company registered under the Bank Holding Company Act of 1956, as
amended (the "BHC Act"). Chase Bank is a wholly-owned Subsidiary of
Chase and a national banking association organized under the laws of
the United States. Each of Chase and its Significant Subsidiaries (as
defined below) is a bank or corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite power and authority to
own, lease and operate its
<PAGE> 17
9
properties and to carry on its business as now being conducted and is
duly qualified and in good standing to do business in each jurisdiction
in which the nature of its business or the ownership or leasing of its
properties makes such qualification necessary other than in such
jurisdictions where the failure so to qualify would not, either
individually or in the aggregate, have a material adverse effect on
Chase. The Certificate of Incorporation and By-laws of Chase, copies of
which were previously furnished to Chemical, are true, complete and
correct copies of such documents as in effect on the date of this
Agreement. As used in this Agreement, (i) a "Significant Subsidiary"
means any Subsidiary of Chase or Chemical, as the case may be, that
would constitute a Significant Subsidiary of such party within the
meaning of Rule 1-02 of Regulation S-X of the Securities and Exchange
Commission (the "SEC"), (ii) any reference to any event, change or
effect being "material" with respect to any entity means an event,
change or effect which is material in relation to the condition
(financial or otherwise), properties, assets, liabilities, businesses
or results of operations of such entity and its Subsidiaries taken as a
whole and (iii) the term "material adverse effect" (other than as set
forth in Section 6.1(g)) means, with respect to any entity, a material
adverse effect on the condition (financial or otherwise), properties,
assets, liabilities, businesses or results of operations of such entity
and its Subsidiaries taken as a whole or on the ability of such entity
to perform its obligations hereunder on a timely basis.
(b) Capital Structure. (i) As of the date hereof, the
authorized capital stock of Chase consists of 500,000,000 shares of
Chase Common Stock and 100,000,000 shares of Chase Preferred Stock. At
the close of business on July 31, 1995, (A) 173,624,034 shares of Chase
Common Stock were outstanding, 3,302,544 shares of Chase Common Stock
were reserved for issuance upon the exercise of Warrants (the
"Warrants") issued pursuant to the Warrant Agreement by and between
Chase and Mellon Securities Trust Company dated as of July 24, 1992,
25,794,790 shares of Chase Common Stock were reserved for issuance upon
the exercise of outstanding stock options or pursuant to The Chase
Manhattan 1994 Long-Term Incentive Plan, The Chase Manhattan 1987
LongTerm Incentive Plan, The Chase Manhattan 1982 Long-Term Incentive
Plan, The Chase Manhattan Stock Option Program for Employees, or in
connection with Chase's dividend reinvestment and stock purchase plan
(such stock options and plans collectively, the "Chase Stock Plans"),
11,725,806 shares of Chase Common Stock were reserved for issuance in
connection with the proposed acquisition of U.S. Trust Corporation
pursuant to the terms of the acquisition agreement dated November 18,
1994, as in effect on the date hereof (the "U.S. Trust Agreement"), and
13,668,900 shares of Chase Common Stock were held by Chase in its
treasury or by its Subsidiaries (other than as trust account shares or
as DPC shares), (B) 56,000,000 shares of Chase Preferred Stock were
outstanding, consisting of 5,600,000 shares of Chase 10.50% Preferred,
4,000,000 shares of Chase 9.76% Preferred, 8,000,000 shares of Chase
10.84% Preferred, 6,000,000 shares of Chase 9.08% Preferred, 6,800,000
shares of Chase 8.50% Preferred, 9,600,000 shares of Chase 8.32%
Preferred, 6,900,000 shares of Chase 8.40% Preferred, and 9,100,000
shares of Chase Adjustable Rate Preferred, and (C) 2,500,000 shares of
Junior Participating Preferred Stock (the "Chase Junior Preferred
Stock") were reserved for
<PAGE> 18
10
issuance upon exercise of the rights (the "Chase Rights") distributed
to the holders of Chase Common Stock pursuant to the Rights Agreement
dated as of February 15, 1989 between Chase and Chase Bank, as Rights
Agent (the "Chase Rights Agreement"). All outstanding shares of Chase
Common Stock and Chase Preferred Stock have been duly authorized and
validly issued and are fully paid and non-assessable and not subject to
preemptive rights. The shares of Chase Common Stock which may be issued
pursuant to the Chase Stock Option Agreement have been duly authorized
and, if and when issued pursuant to the terms thereof, will be validly
issued, fully paid and non-assessable and not subject to preemptive
rights.
(ii) No bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which
stockholders may vote ("Voting Debt") of Chase are issued or
outstanding.
(iii) As of the date of this Agreement, except for
this Agreement, the Warrants, $150,000,000 aggregate principal amount
of Subordinated Notes due 1999 of Chase Bank with attached Equity
Contracts (the "Chase Stock Purchase Contracts"), Chase Stock Options
(as defined in Section 5.8), the U.S. Trust Agreement and the Chase
Stock Option Agreement, there are no options, warrants, calls,
rights, commitments or agreements of any character to which Chase or
any Subsidiary of Chase is a party or by which it is bound obligating
Chase or any Subsidiary of Chase to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock or any
Voting Debt of Chase or of any Subsidiary of Chase or obligating Chase
or any Subsidiary of Chase to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement. Assuming
compliance by Chemical (and the Surviving Corporation) with Section
5.8, after the Effective Time, there will be no option, warrant, call,
right or agreement obligating Chase or any Subsidiary of Chase to
issue, deliver or sell, or cause to be issued, delivered or sold, any
shares of capital stock or any Voting Debt of Chase or any Subsidiary
of Chase, or obligating Chase or any Subsidiary of Chase to grant,
extend or enter into any such option, warrant, call, right or
agreement. As of the date hereof, there are no outstanding contractual
obligations of Chase or any of its Subsidiaries to repurchase, redeem
or otherwise acquire any shares of capital stock of Chase or any of its
Subsidiaries, other than the Chase Stock Option Agreement.
(iv) Since July 31, 1995, Chase has not (A) issued
or permitted to be issued any shares of capital stock, or securities
exercisable for or convertible into shares of capital stock, of Chase
or any of its Subsidiaries, other than pursuant to and as required by
the terms of the Chase Stock Purchase Contracts, the Chase Rights
Agreement, the Chase Stock Option Agreement, the dividend reinvestment
and stock purchase plan referred to above, and any employee stock
options issued prior to the date hereof under the Chase Stock Plans and
outstanding on such date (or in the ordinary course of business as
permitted by such plans and consistent with past practice); (B)
repurchased, redeemed or otherwise acquired, directly or indirectly
through one or more Chase Subsidiaries, any shares of capital stock of
Chase or any of its Subsidiaries (other than the acquisition of trust
account shares and DPC shares);
<PAGE> 19
11
or (C) declared, set aside, made or paid to the stockholders of Chase
dividends or other distributions on the outstanding shares of capital
stock of Chase, other than (x) regular quarterly cash dividends on the
Chase Common Stock at a rate not in excess of the regular quarterly
cash dividends most recently declared by Chase prior to the date of
this Agreement and (y) cash dividends on the Chase Preferred Stock as
required by the terms thereof as in effect on the date hereof.
(v) Chase has terminated its dividend reinvestment
and stock purchase plan effective as of the date of this Agreement;
provided that such termination shall not preclude Chase from the
issuance after the date hereof of Chase Common Stock effected pursuant
to the reinvestment under such plan of the Chase Common Stock dividend
payable on August 15, 1995.
(c) Authority. (i) Chase has all requisite corporate power and
authority to enter into this Agreement and the Stock Option Agreements
and, subject to approval of this Agreement by the requisite vote of the
holders of Chase Common Stock, to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and the Stock Option Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action on the part of Chase, subject in the
case of the consummation of the Merger contemplated hereby to the
approval of this Agreement by the stockholders of Chase. This Agreement
and the Stock Option Agreements have been duly executed and delivered
by Chase and each constitutes a valid and binding obligation of Chase,
enforceable in accordance with its terms.
(ii) The execution and delivery of this Agreement
and the Stock Option Agreements do not or will not, as the case may be,
and the consummation of the transactions contemplated hereby and
thereby will not, conflict with, or result in any violation of, or
constitute a default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit under,
or the creation of a lien, pledge, security interest, charge or other
encumbrance on any assets (any such conflict, violation, default, right
of termination, cancellation or acceleration, loss or creation, a
"Violation") pursuant to, any provision of the Certificate of
Incorporation or By-laws of Chase or any Subsidiary of Chase or, except
as disclosed in writing to the other party prior to the date hereof and
subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
paragraph (iii) below, result in any Violation of any loan or credit
agreement, note, mortgage, indenture, lease, Benefit Plan (as defined
in Section 3.1(j)) or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Chase or any Subsidiary of
Chase or their respective properties or assets, which Violation,
individually or in the aggregate, would have a material adverse effect
on Chase.
(iii) No consent, approval, order or authorization
of, or registration, declaration or filing with, any court,
administrative agency or commission or other
<PAGE> 20
12
governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity"), is required by or with respect to Chase or any
Subsidiary of Chase in connection with the execution and delivery of
this Agreement and the Stock Option Agreements by Chase or the
consummation by Chase of the transactions contemplated hereby and
thereby, the failure to make or obtain which would have a material
adverse effect on Chase, except for (A) the filing of applications and
notices with the Board of Governors of the Federal Reserve System (the
"Federal Reserve") under the BHC Act, the Federal Reserve Act (the
"FRA") and the Federal Deposit Insurance Act ("FDIA") and approval of
same, (B) the filing with the SEC of (1) a joint proxy statement in
definitive form relating to the meetings of Chase's and Chemical's
stockholders to be held in connection with the Merger (the "Proxy
Statement") and (2) such reports under Sections 13(a), 13(d), 13(g) and
16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as may be required in connection with this Agreement, the Stock
Option Agreements and the transactions contemplated hereby and thereby
and the obtaining from the SEC of such orders as may be required in
connection therewith, (C) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which Chase
is qualified to do business, (D) if necessary, the filing of an
application with the Superintendent of Banks and the Banking Board of
the State of New York and such other applications, filings,
authorizations, orders and approvals as may be required under the
banking laws of other states, and approval thereof (collectively, the
"State Banking Approvals") and pursuant to any applicable state
takeover laws ("State Takeover Approvals"), (E) filings pursuant to
Article 31-B of the New York Tax Law, (F) consents, authorizations,
approvals, filings or exemptions in connection with compliance with the
applicable provisions of federal securities laws relating to the
regulation of broker-dealers, investment companies and investment
advisors and federal commodities laws relating to the regulation of
futures commission merchants and the rules and regulations of the SEC
and the Commodity Futures Trading Commission (the "CFTC") thereunder
and of any applicable industry self-regulatory organizations, and the
rules of the NYSE, or which are required under consumer finance,
mortgage banking and other similar laws, (G) notices under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (H) such filings, authorizations, orders and approvals as
may be required under foreign laws and (I) such filings, notifications
and approvals as are required under the Small Business Investment Act
of 1958 ("SBIA") and the rules and regulations of the Small Business
Administration ("SBA") thereunder.
(d) SEC Documents. Chase has made available to Chemical a true
and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by Chase with the SEC (other than
reports filed pursuant to Section 13(d) or 13(g) of the Exchange Act)
since December 31, 1994 (as such documents have since the time of their
filing been amended, the "Chase SEC Documents"), which are all the
documents (other than preliminary material and reports required
pursuant to Section 13(d) or 13(g) of the Exchange Act) that Chase was
required to file with the SEC since such date. As of their respective
dates of filing with the SEC, the Chase SEC Documents complied in all
material respects with the requirements of the
<PAGE> 21
13
Securities Act of 1933, as amended (the "Securities Act"), or the
Exchange Act, as the case may be, and the rules and regulations of the
SEC thereunder applicable to such Chase SEC Documents, and did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of Chase included in the
Chase SEC Documents complied as to form, as of their respective dates
of filing with the SEC, in all material respects with applicable
accounting requirements and with the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by
Form 10-Q of the SEC) and fairly present in all material respects the
consolidated financial position of Chase and its consolidated
Subsidiaries as at the dates thereof and the consolidated results of
operations, changes in stockholders' equity and cash flows of such
companies for the periods then ended. All material agreements,
contracts and other documents required to be filed as exhibits to any
of the Chase SEC Documents have been so filed.
(e) Information Supplied. None of the information supplied or
to be supplied by Chase for inclusion or incorporation by reference in
(i) the registration statement on Form S-4 to be filed with the SEC by
Chemical in connection with the issuance of shares of Chemical Common
Stock in the Merger (the "S-4") will, at the time the S-4 is filed with
the SEC and at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Proxy Statement will,
at the date of mailing to stockholders and at the times of the meetings
of stockholders to be held in connection with the Merger, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The Proxy Statement (except for such portions
thereof that relate only to Chemical) will comply as to form in all
material respects with the requirements of the Exchange Act and the
rules and regulations of the SEC thereunder.
(f) Compliance with Applicable Laws. Chase and its Subsidiaries
hold all permits, licenses, variances, exemptions, orders and approvals
of all Governmental Entities which are material to the operation of the
businesses of Chase and its Subsidiaries, taken as a whole (the "Chase
Permits"). Chase and its Subsidiaries are in compliance with the terms
of the Chase Permits, except where the failure so to comply,
individually or in the aggregate, would not have a material adverse
effect on Chase. Except as disclosed in the Chase SEC Documents filed
prior to the date of this Agreement, the businesses of Chase and its
Subsidiaries are not being conducted in violation of any law, ordinance
or regulation of any Governmental Entity, except for possible
violations which, individually or in the aggregate, do not, and,
insofar as reasonably can be foreseen, in the future will not, have a
material adverse effect on Chase. Except for routine examinations by
Federal or state Governmental Entities
<PAGE> 22
14
charged with the supervision or regulation of banks or bank holding
companies or engaged in the insurance of bank deposits ("Bank
Regulators"), as of the date of this Agreement, to the knowledge of
Chase, no investigation by any Governmental Entity with respect to
Chase or any of its Subsidiaries is pending or threatened, other than,
in each case, those the outcome of which, individually or in the
aggregate, as far as reasonably can be foreseen, will not have a
material adverse effect on Chase.
(g) Litigation. As of the date of this Agreement, except as
disclosed in the Chase SEC Documents filed prior to the date of this
Agreement, there is no suit, action or proceeding pending or, to the
knowledge of Chase, threatened, against or affecting Chase or any
Subsidiary of Chase as to which there is a substantial possibility of
an outcome which would, individually or in the aggregate, have a
material adverse effect on Chase, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Chase or any Subsidiary of Chase having, or which,
insofar as reasonably can be foreseen, in the future could have,
individually or in the aggregate, any such effect.
(h) Taxes. Chase and each of its Subsidiaries have filed all
tax returns required to be filed by any of them and have paid (or Chase
has paid on their behalf), or have set up an adequate reserve for the
payment of, all taxes required to be paid as shown on such returns, and
the most recent financial statements contained in the Chase SEC
Documents reflect an adequate reserve for all taxes payable by Chase
and its Subsidiaries accrued through the date of such financial
statements. No material deficiencies for any taxes have been proposed,
asserted or assessed against Chase or any of its Subsidiaries that are
not adequately reserved for. For the purpose of this Agreement, the
term "tax" (including, with correlative meaning, the terms "taxes" and
"taxable") shall include, except where the context otherwise requires,
all Federal, state, local and foreign income, profits, franchise, gross
receipts, payroll, sales, employment, use, property, withholding,
excise, occupancy and other taxes, duties or assessments of any nature
whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts.
(i) Certain Agreements. Except as disclosed in the Chase SEC
Documents filed prior to the date of this Agreement or as disclosed in
writing to the other party prior to the date hereof and except for this
Agreement, as of the date of this Agreement, neither Chase nor any of
its Subsidiaries is a party to any oral or written (i) consulting
agreement not terminable on six months or less notice involving the
payment of more than $1,000,000 per annum, in the case of any such
agreement with an individual, or $5,000,000 per annum, in the case of
any other such agreement, or union, guild or collective bargaining
agreement covering any employees in the United States, (ii) agreement
with any executive officer or other key employee of Chase or any
Subsidiary of Chase the benefits of which are contingent, or the terms
of which are materially altered, upon the occurrence of a transaction
involving Chase or Chase Bank of the nature contemplated by this
Agreement or the Chase Stock Option Agreement and which provides for
the payment of in excess of $400,000, (iii) agreement with respect to
any executive officer of Chase or any Subsidiary of Chase
<PAGE> 23
15
providing any term of employment or compensation guarantee extending
for a period longer than three years and for the payment of in excess
of $1,000,000 per annum or (iv) agreement or plan, including any stock
option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or
the Chase Stock Option Agreement or the value of any of the benefits of
which will be calculated on the basis of any of the transactions
contemplated by this Agreement or the Chase Stock Option Agreement.
(j) Benefit Plans. (i) With respect to each employee benefit
plan (including, without limitation, any "employee benefit plan", as
defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) (all the foregoing being herein called
"Benefit Plans"), maintained or contributed to by Chase or Chase Bank
(the "Chase Benefit Plans"), Chase has made available to Chemical a
true and correct copy of (A) the most recent annual report (Form 5500)
filed with the IRS, (B) such Chase Benefit Plan, (C) each trust
agreement relating to such Chase Benefit Plan, (D) the most recent
summary plan description for each Chase Benefit Plan for which a
summary plan description is required, (E) the most recent actuarial
report or valuation relating to a Chase Benefit Plan subject to Title
IV of ERISA and (F) the most recent determination letter issued by the
IRS with respect to any Chase Benefit Plan qualified under Section
401(a) of the Code.
(ii) With respect to the Chase Benefit Plans,
individually and in the aggregate, no event has occurred and, to the
knowledge of Chase, there exists no condition or set of circumstances,
in connection with which Chase or any of its Subsidiaries could be
subject to any liability that is reasonably likely to have a material
adverse effect on Chase (except liability for benefits claims and
funding obligations payable in the ordinary course) under ERISA, the
Code or any other applicable law.
(iii) True and complete copies of the Chase Stock
Plans as in effect on the date hereof have been provided to Chemical.
(k) Subsidiaries. Exhibit 21 to Chase's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 includes all the
Subsidiaries of Chase as of the date of this Agreement which are
Significant Subsidiaries. Chase owns, directly or indirectly,
beneficially and of record 100% of the issued and outstanding voting
securities of each such Significant Subsidiary (other than directors'
qualifying shares, if any). Each of Chase's Subsidiaries that is a bank
(as defined in the BHC Act) is an "insured bank" as defined in the FDIA
and applicable regulations thereunder. Except as provided in 12 U.S.C.
Section 55 in the case of Chase Bank, The Chase Manhattan Bank of New
Jersey, N.A. and The Chase Manhattan Private Bank (Florida), N.A., and
any comparable provision of applicable state law in the case of Chase
Subsidiaries that are state-chartered banks, all of the shares of
capital stock of each of the Subsidiaries held by Chase or by another
Chase Subsidiary are fully paid and nonassessable and are
<PAGE> 24
16
owned by Chase or a Subsidiary of Chase free and clear of any claim,
lien or encumbrance.
(l) Agreements with Bank Regulators. Neither Chase nor any
Subsidiary of it is a party to any written agreement or memorandum of
understanding with, or a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted
any board resolutions at the request of, any Bank Regulator which
restricts materially the conduct of its business, or in any manner
relates to its capital adequacy, its credit policies or its management,
nor has Chase been advised by any Bank Regulator that it is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission, or any such board
resolutions.
(m) Absence of Certain Changes or Events. Except as disclosed
in the Chase SEC Documents filed prior to the date of this Agreement,
since June 30, 1995, Chase and its Subsidiaries have not incurred any
material liability, except in the ordinary course of their businesses
consistent with their past practices, nor has there been any change, or
any event involving a prospective change, in the business, financial
condition or results of operations of Chase or any of its Subsidiaries
which has had, or is reasonably likely to have, a material adverse
effect on Chase, and Chase and its Subsidiaries have conducted their
respective businesses in the ordinary course consistent with their past
practices.
(n) Section 203 of the DGCL and Certain Provisions of
Certificate of Incorporation Not Applicable. The provisions of Section
203 of the DGCL will not, assuming the accuracy of the representations
contained in Section 3.2(s) (without giving effect to the knowledge
qualification thereof), apply to this Agreement, the Chase Stock Option
Agreement, the Merger or the transactions contemplated hereby and
thereby. The provisions of Section 8.01 of Chase's Certificate of
Incorporation do not and will not apply to this Agreement, the Chase
Stock Option Agreement, the Merger or the transactions contemplated
hereby or thereby.
(o) Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Chase Common Stock is the only
vote of the holders of any class or series of Chase capital stock
necessary to approve this Agreement and the transactions contemplated
hereby (assuming for purposes of this representation the accuracy of
the representations contained in Section 3.2(s), without giving effect
to the knowledge qualification thereof).
(p) Accounting Matters. Neither Chase nor, to its best
knowledge, any of its affiliates, has through the date hereof taken or
agreed to take any action that would prevent Chemical from accounting
for the business combination to be effected by the Merger as a "pooling
of interests".
<PAGE> 25
17
(q) Chase Rights Agreement. The Chase Rights Agreement has been
amended so as to provide that Chemical will not become an "Acquiring
Person" and that no "Triggering Event", "Stock Acquisition Date" or
"Distribution Date" (as such terms are defined in the Chase Rights
Agreement) will occur as a result of the approval, execution or
delivery of this Agreement or the Chase Stock Option Agreement or the
consummation of the Merger pursuant to the Merger Agreement or the
acquisition of shares of Chase Common Stock by Chemical pursuant to the
Chase Stock Option Agreement.
(r) Properties. Except as disclosed in the Chase SEC Documents
filed prior to the date of this Agreement, Chase or one of its
Subsidiaries (i) has good and marketable title to all the properties
and assets reflected in the latest audited balance sheet included in
such Chase SEC Documents as being owned by Chase or one of its
Subsidiaries or acquired after the date thereof which are material to
Chase's business on a consolidated basis (except properties sold or
otherwise disposed of since the date thereof in the ordinary course of
business), free and clear of all claims, liens, charges, security
interests or encumbrances of any nature whatsoever except (A) statutory
liens securing payments not yet due, (B) liens on assets of
Subsidiaries of Chase which are banks incurred in the ordinary course
of their banking business and (C) such imperfections or irregularities
of title, claims, liens, charges, security interests or encumbrances as
do not materially affect the use of the properties or assets subject
thereto or affected thereby or otherwise materially impair business
operations at such properties and (ii) is the lessee of all leasehold
estates reflected in the latest audited financial statements included
in such Chase SEC Documents or acquired after the date thereof which
are material to its business on a consolidated basis (except for leases
that have expired by their terms since the date thereof) and is in
possession of the properties purported to be leased thereunder, and
each such lease is valid without default thereunder by the lessee or,
to Chase's knowledge, as of the date hereof, the lessor.
(s) Ownership of Chemical Common Stock. Other than pursuant to
the Chemical Stock Option Agreement, as of the date hereof, neither
Chase nor, to its best knowledge, any of its affiliates or associates
(as such terms are defined under the Exchange Act), (i) beneficially
owns, directly or indirectly, or (ii) is party to any agreement,
arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in each case, shares of capital stock of
Chemical, which in the aggregate represent 10% or more of the
outstanding shares of Chemical Common Stock (other than trust account
shares).
(t) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in
connection with any of the transactions contemplated by this Agreement,
except Goldman, Sachs & Co. and James D. Wolfensohn Incorporated, whose
fees and expenses will be paid by Chase in accordance with Chase's
agreements with such firms (copies of which agreements have been
delivered by Chase to Chemical prior to the date of this Agreement),
and
<PAGE> 26
18
Chase agrees to indemnify Chemical and to hold Chemical harmless from
and against any and all claims, liabilities or obligations with respect
to any other fees, commissions or expenses asserted by any person on
the basis of any act or statement alleged to have been made by Chase or
its affiliate.
3.2. Representations and Warranties of Chemical. Chemical
represents and warrants to Chase as follows:
(a) Organization, Standing and Power. Chemical is a bank
holding company registered under the BHC Act. Chemical Bank is a
wholly-owned Subsidiary of Chemical and a banking corporation organized
under the laws of the State of New York. Each of Chemical and its
Significant Subsidiaries is a bank, corporation or partnership duly
organized, validly existing and, in the case of banks or corporations,
in good standing under the laws of its jurisdiction of incorporation or
organization, has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted, and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification necessary other
than in such jurisdictions where the failure so to qualify would not,
either individually or in the aggregate, have a material adverse effect
on Chemical. The Certificate of Incorporation and By-laws of Chemical,
copies of which were previously furnished to Chase, are true, complete
and correct copies of such documents as in effect on the date of this
Agreement.
(b) Capital Structure. (i) As of the date hereof, the
authorized capital stock of Chemical consists of 400,000,000 shares of
Chemical Common Stock, 34,700,000 shares of Class B Common Stock,
without par value ("Chemical Class B Common Stock"), and 200,000,000
shares of preferred stock, par value $1.00 per share ("Chemical
Preferred Stock"). As of the close of business on July 31, 1995 (A)
252,114,984 shares of Chemical Common Stock were outstanding, 60,385
shares of Chemical Common Stock were reserved for issuance upon the
conversion of Chemical Preferred Stock, 16,185,158 shares of Chemical
Common Stock were reserved for issuance upon the exercise of
outstanding stock options or pursuant to Chemical's dividend
reinvestment plan, the Chemical Banking Corporation Long-Term Stock
Incentive Plan, the Deferred Compensation Plan for Non-Employee
Directors of Chemical Banking Corporation and Chemical Bank, the
Chemical Banking Corporation Post-Retirement Compensation Plan for
Non-Employee Directors, the Chemical Bank U.K. Profit Sharing
Scheme, the Long-Term Incentive Program of Manufacturers Hanover
Corporation and Subsidiaries, the Chemical Banking Corporation 1992
Stock Option Plan of Margaretten Financial Corporation, the Chemical
Banking Corporation 1993 Long-Term Incentive Plan of Margaretten
Financial Corporation and the Chemical Banking Corporation 1983
Employee Stock Purchase Plan (such plans and programs, together with
the Chemical Success Sharing Program, collectively, the "Chemical Stock
Plans"), and 2,816,490 shares of Chemical Common Stock were held by
Chemical in its treasury or by its Subsidiaries (other than trust
account shares or DPC shares); (B) no shares of Chemical Class B Common
<PAGE> 27
19
Stock were outstanding; (C) 26,000,000 shares of Chemical Preferred
Stock were outstanding, consisting of 4,000,000 shares of 10.96%
Preferred Stock, 14,000,000 shares of 8-3/8% Preferred Stock, 2,000,000
shares of 7.92% Cumulative Preferred Stock, 2,000,000 shares of 7.58%
Cumulative Preferred Stock, 2,000,000 shares of 7-1/2% Cumulative
Preferred Stock, and 2,000,000 shares of Adjustable Rate Cumulative
Preferred Stock, Series L; and (D) 4,000,000 shares of Chemical Junior
Preferred Stock were reserved for issuance upon exercise of Chemical
Rights pursuant to the Chemical Rights Agreement. All outstanding
shares of Chemical Common Stock and Chemical Preferred Stock have been
duly authorized and validly issued and are fully paid and
non-assessable and not subject to preemptive rights. The shares of
Chemical Common Stock and Chemical Merger Preferred Stock (A) to be
issued pursuant to or as specifically contemplated by this Agreement
(including without limitation as contemplated by Section 5.8 hereof),
or (B) which may be issued pursuant to the Chemical Stock Option
Agreement, will be, if and when issued in accordance with the terms
hereof and thereof or as contemplated hereby and thereby, and subject
to approval by the stockholders of Chemical of the Chemical Common
Stock Amendment (as defined in Section 3.2(c)(ii)), duly authorized,
validly issued, fully paid and non-assessable and not subject to
preemptive rights.
(ii) No Voting Debt of Chemical is issued or
outstanding.
(iii) As of the date of this Agreement, except for
this Agreement, the Chemical Stock Plans, the Chemical Rights Agreement
and the Chemical Stock Option Agreement, there are no options,
warrants, calls, rights, commitments or agreements of any character to
which Chemical or any Subsidiary of Chemical is a party or by which it
is bound obligating Chemical or any Subsidiary of Chemical to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or any Voting Debt of Chemical or of any
Subsidiary of Chemical or obligating Chemical or any Subsidiary of
Chemical to grant, extend or enter into any such option, warrant, call,
right, commitment or agreement. As of the date hereof, there are no
outstanding contractual obligations of Chemical or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Chemical or any of its Subsidiaries, other than the
Chemical Stock Option Agreement.
(iv) Since July 31, 1995, Chemical has not (A)
issued or permitted to be issued any shares of capital stock, or
securities exercisable for or convertible into shares of capital stock,
of Chemical or any of its Subsidiaries, other than pursuant to and as
required by the terms of the Chemical Stock Plans (or in the ordinary
course of business as permitted by such plans and consistent with past
practice), the Chemical Rights Agreement and the Chemical Stock Option
Agreement; (B) repurchased, redeemed or otherwise acquired, directly or
indirectly through one or more Chemical Subsidiaries, any shares of
capital stock of Chemical or any of its Subsidiaries (other than the
acquisition of trust account shares or DPC shares); or (C) declared,
set aside, made or paid to the stockholders of Chemical dividends or
other distributions on the outstanding shares of capital stock of
Chemical, other than (x) regular quarterly cash dividends on the
Chemical Common Stock at a rate not in excess of the regular
<PAGE> 28
20
quarterly cash dividends most recently declared by Chemical prior to
the date of this Agreement and (y) cash dividends on the Chemical
Preferred Stock as required by the terms of the Chemical Preferred
Stock as in effect on the date hereof.
(c) Authority. (i) Chemical has all requisite corporate power
and authority to enter into this Agreement and the Stock Option
Agreements and, subject to approval by the requisite vote of the
holders of Chemical Common Stock of (x) this Agreement and (y) the
amendment to Chemical's Certificate of Incorporation necessary to
increase the shares of authorized Chemical Common Stock to a number not
less than the number sufficient to consummate the issuance of Chemical
Common Stock contemplated under this Agreement (the "Chemical Common
Stock Amendment"), to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Stock
Option Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate
action on the part of Chemical, subject in the case of the consummation
of the Merger contemplated hereby to the approval of this Agreement and
the Chemical Common Stock Amendment by the stockholders of Chemical.
This Agreement and the Stock Option Agreements have been duly executed
and delivered by Chemical and each constitutes a valid and binding
obligation of Chemical, enforceable in accordance with its terms.
(ii) The execution and delivery of this Agreement and
the Stock Option Agreements do not or will not, as the case may be, and
the consummation of the transactions contemplated hereby and thereby
will not, result in any Violation pursuant to any provision of the
Certificate of Incorporation or By-laws of Chemical or any Subsidiary
of Chemical or, except as disclosed in writing to the other party prior
to the date hereof and subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and
filings referred to in paragraph (iii) below, result in any Violation
of any loan or credit agreement, note, mortgage, indenture, lease,
Benefit Plan or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Chemical or any Subsidiary
of Chemical or their respective properties or assets which Violation,
individually or in the aggregate, would have a material adverse effect
on Chemical.
(iii) No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Chemical, or any Subsidiary of
Chemical in connection with the execution and delivery of this
Agreement and the Stock Option Agreements by Chemical or the
consummation by Chemical of the transactions contemplated hereby and
thereby, the failure to obtain which would have a material adverse
effect on Chemical, except for (A) the filing of applications and
notices with the Federal Reserve under the BHC Act, the FRA and the
FDIA and approval of same, (B) the filing with the SEC of the Proxy
Statement, the S-4 and such reports under Sections 12, 13(a), 13(d),
13(g) and 16(a) of the Exchange Act as may be required in connection
with this Agreement, the Stock Option Agreements and the transactions
contemplated hereby and thereby and the
<PAGE> 29
21
obtaining from the SEC of such orders as may be required in connection
therewith, (C) such filings and approvals as are required to be made or
obtained under the securities or blue sky laws of various states in
connection with the transactions contemplated by this Agreement, (D)
the filing of the Certificate of Merger (including therein the Chemical
Common Stock Amendment) and the Certificates of Designations for the
Chemical Merger Preferred Stock with the Secretary of State of the
State of Delaware and appropriate documents with the relevant
authorities of other states in which the Surviving Corporation will be
qualified to do business, (E) the State Banking Approvals and any
applicable State Takeover Approvals, (F) filings pursuant to Article
31-B of the New York Tax Law, (G) consents, authorizations, approvals,
filings or exemptions in connection with compliance with the applicable
provisions of federal securities laws relating to the regulation of
broker-dealers, investment companies and investment advisors and
federal commodities laws relating to the regulation of futures
commission merchants and the rules and regulations of the SEC and the
CFTC thereunder and of any applicable industry self-regulatory
organization, and the rules of the NYSE, or which are required under
consumer finance, mortgage banking and other similar laws, (H) notices
under the HSR Act, (I) such filings, authorizations, orders and
approvals as may be required under foreign laws and (J) such filings,
notifications and approvals as are required under the SBIA and the
rules and regulations of the SBA thereunder.
(d) SEC Documents. Chemical has made available to Chase a true
and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by Chemical with the SEC (other than
reports filed pursuant to Section 13(d) or 13(g) of the Exchange Act)
since December 31, 1994 (as such documents have since the time of their
filing been amended, the "Chemical SEC Documents"), which are all the
documents (other than preliminary material and reports required
pursuant to Section 13(d) or 13(g) of the Exchange Act) that Chemical
was required to file with the SEC since such date. As of their
respective dates of filing with the SEC, the Chemical SEC Documents
complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules
and regulations of the SEC thereunder applicable to such Chemical SEC
Documents, and did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of
Chemical included in the Chemical SEC Documents complied as to form, as
of their respective dates of filing with the SEC, in all material
respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC) and fairly present in
all material respects the consolidated financial position of Chemical
and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of operations, changes in stockholders' equity and
cash flows of such companies for the periods then ended. All material
<PAGE> 30
22
agreements, contracts and other documents required to be filed as
exhibits to any of the Chemical SEC Documents have been so filed.
(e) Information Supplied. None of the information supplied or
to be supplied by Chemical for inclusion or incorporation by reference
in (i) the S-4 will, at the time the S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary
to make the statements therein not misleading and (ii) the Proxy
Statement will, at the date of mailing to stockholders and at the times
of the meetings of stockholders to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Proxy Statement (except
for such portions thereof that relate only to Chase) will comply as to
form in all material respects with the requirements of the Exchange Act
and the rules and regulations of the SEC thereunder, and the S-4
(except for such portions thereof that relate only to Chase) will
comply as to form in all material respects with the requirements of the
Securities Act and the rules and regulations of the SEC thereunder.
(f) Compliance with Applicable Laws. Chemical and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders
and approvals of all Governmental Entities which are material to the
operation of the businesses of Chemical and its Subsidiaries, taken as
a whole (the "Chemical Permits"). Chemical and its Subsidiaries are in
compliance with the terms of the Chemical Permits and all applicable
laws and regulations, except where the failure so to comply,
individually or in the aggregate, would not have a material adverse
effect on Chemical. Except as disclosed in the Chemical SEC Documents
filed prior to the date hereof, the businesses of Chemical and its
Subsidiaries are not being conducted in violation of any law, ordinance
or regulation of any Governmental Entity, except for possible
violations which, individually or in the aggregate, do not, and,
insofar as reasonably can be foreseen, in the future will not, have a
material adverse effect on Chemical. Except for routine examinations by
Bank Regulators, as of the date of this Agreement, to the knowledge of
Chemical, no investigation by any Governmental Entity with respect to
Chemical or any of its Subsidiaries is pending or threatened, other
than, in each case, those the outcome of which, individually or in the
aggregate, as far as reasonably can be foreseen, will not have a
material adverse effect on Chemical.
(g) Litigation. As of the date of this Agreement, except as
disclosed in the Chemical SEC Documents filed prior to the date of this
Agreement, there is no suit, action or proceeding pending or, to the
knowledge of Chemical, threatened, against or affecting Chemical or any
Subsidiary of Chemical as to which there is a substantial possibility
of an outcome which would, individually or in the aggregate, have a
material adverse effect on Chemical, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Chemical or any Subsidiary of Chemical having, or
which, insofar as reasonably can be foreseen, in the future could have,
individually or in the aggregate, any such effect.
<PAGE> 31
23
(h) Taxes. Chemical and each of its Subsidiaries have filed all
tax returns required to be filed by any of them and have paid (or
Chemical has paid on their behalf), or have set up an adequate reserve
for the payment of, all taxes required to be paid as shown on such
returns, and the most recent financial statements contained in the
Chemical SEC Documents reflect an adequate reserve for all taxes
payable by Chemical and its Subsidiaries accrued through the date of
such financial statements. No material deficiencies for any taxes have
been proposed, asserted or assessed against Chemical or any of its
Subsidiaries that are not adequately reserved for.
(i) Certain Agreements. Except as disclosed in the Chemical SEC
Documents filed prior to the date of this Agreement, or as disclosed in
writing to the other party prior to the date of this Agreement, and
except for this Agreement, as of the date of this Agreement neither
Chemical nor any of its Subsidiaries is a party to any oral or written
(i) consulting agreement not terminable on six months or less notice
involving the payment of more than $1,000,000 per annum, in the case of
any such agreement with an individual, or $5,000,000 per annum, in the
case of any other such agreement, or union, guild or collective
bargaining agreement covering any employees in the United States, (ii)
agreement with any executive officer or other key employee of Chemical
or any Subsidiary of Chemical the benefits of which are contingent, or
the terms of which are materially altered, upon the occurrence of a
transaction involving Chemical or any Subsidiary of Chemical of the
nature contemplated by this Agreement or the Chemical Stock Option
Agreement and which provides for the payment of in excess of $400,000,
(iii) agreement with respect to any executive officer of Chemical or
any Subsidiary of Chemical providing any term of employment or
compensation guarantee extending for a period longer than three years
and for the payment of in excess of $1,000,000 per annum or (iv)
agreement or plan, including any stock option plan, stock appreciation
rights plan, restricted stock plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the Chemical Stock Option Agreement
or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement or the
Chemical Stock Option Agreement.
(j) Benefit Plans. (i) With respect to each Benefit Plan
maintained or contributed to by Chemical or Chemical Bank (the
"Chemical Benefit Plans"), Chemical has made available to Chase a true
and correct copy of (A) the most recent annual report (Form 5500) filed
with the IRS, (B) such Chemical Benefit Plan, (C) each trust agreement
relating to such Chemical Benefit Plan, (D) the most recent summary
plan description for each Chemical Benefit Plan for which a summary
plan description is required, (E) the most recent actuarial report or
valuation relating to a Chemical Benefit Plan subject to Title IV of
ERISA and (F) the most recent determination letter issued by the IRS
with respect to any Chemical Benefit Plan qualified under Section
401(a) of the Code.
(ii) With respect to the Chemical Benefit Plans,
individually and in the aggregate, no event has occurred and, to the
knowledge of Chemical, there exists no
<PAGE> 32
24
condition or set of circumstances in connection with which Chemical or
any of its Subsidiaries could be subject to any liability that is
reasonably likely to have a material adverse effect upon Chemical
(except liability for benefits claims and funding obligations payable
in the ordinary course) under ERISA, the Code or any other applicable
law.
(iii) True and complete copies of the Chemical Stock Plans as
in effect on the date hereof have been provided to Chase.
(k) Subsidiaries. Exhibit 21.1 to Chemical's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994, includes all the
Subsidiaries of Chemical as of the date of this Agreement which are
Significant Subsidiaries. Chemical owns, directly or indirectly,
beneficially and of record 100% of the issued and outstanding voting
securities of each such Subsidiary (other than directors' qualifying
shares, if any). Each of Chemical's Subsidiaries that is a bank (as
defined in the BHC Act) is an "insured bank" as defined in the FDIA and
applicable regulations thereunder. Except as provided in 12 U.S.C.
Section 55 in the case of Subsidiaries of Chemical that are national
banks and any comparable provision of applicable state law in the case
of Subsidiaries of Chemical that are state-chartered banks, all of the
shares of capital stock of each of the Subsidiaries held by Chemical or
by another Subsidiary of Chemical are fully paid and nonassessable and
are owned by Chemical or a Subsidiary of Chemical free and clear of any
claim, lien or encumbrance.
(l) Agreements with Bank Regulators. Neither Chemical nor any
Subsidiary of it is a party to any written agreement or memorandum of
understanding with, or a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted
any board resolutions at the request of, any Bank Regulator which
restricts materially the conduct of its business, or in any manner
relates to its capital adequacy, its credit policies or its management,
nor has Chemical been advised by any Bank Regulator that it is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission, or any such board
resolutions.
(m) Absence of Certain Changes or Events. Except as disclosed
in the Chemical SEC Documents filed prior to the date of this
Agreement, since June 30, 1995, Chemical and its Subsidiaries have not
incurred any material liability, except in the ordinary course of their
business consistent with their past practices, nor has there been any
change, or any event involving a prospective change, in the business,
financial condition or results of operations of Chemical or any of its
Subsidiaries which has had, or is reasonably likely to have, a material
adverse effect on Chemical, and Chemical and its Subsidiaries have
conducted their respective businesses in the ordinary course consistent
with their past practices.
<PAGE> 33
25
(n) Section 203 of the DGCL Not Applicable. The provisions of
Section 203 of the DGCL will not, assuming the accuracy of the
representations contained in Section 3.1(s) (without giving effect to
the knowledge qualification thereof), apply to this Agreement, the
Chemical Stock Option Agreement, the Merger or the transactions
contemplated hereby and thereby.
(o) Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Chemical Common Stock is the only
vote of the holders of any class or series of Chemical capital stock
necessary to approve the Merger (assuming for the purposes of this
representation the accuracy of the representations contained in Section
3.1(s) without giving effect to the knowledge qualification thereof) or
the Chemical Common Stock Amendment.
(p) Accounting Matters. Neither Chemical nor, to its best
knowledge, any of its affiliates, has through the date of this
Agreement taken or agreed to take any action that would prevent
Chemical from accounting for the business combination to be effected by
the Merger as a "pooling of interests".
(q) Chemical Rights Agreement. The Chemical Rights Agreement
has been amended so as to provide that Chase will not become an
"Acquiring Person" or an "Adverse Person" and that no "Triggering
Event", "Stock Acquisition Date" or "Distribution Date" (as such terms
are defined in the Chemical Rights Agreement) will occur as a result of
the approval, execution or delivery of this Agreement or the Chemical
Stock Option Agreement or the consummation of the Merger pursuant to
the Merger Agreement or the acquisition of shares of Chemical Common
Stock by Chase pursuant to the Chemical Stock Option Agreement.
(r) Properties. Except as disclosed in the Chemical SEC
Documents filed prior to the date of this Agreement, Chemical or one of
its Subsidiaries (i) has good and marketable title to all the
properties and assets reflected in the latest audited balance sheet
included in such Chemical SEC Documents as being owned by Chemical or
one of its Subsidiaries or acquired after the date thereof which are
material to Chemical's business on a consolidated basis (except
properties sold or otherwise disposed of since the date thereof in the
ordinary course of business), free and clear of all claims, liens,
charges, security interests or encumbrances of any nature whatsoever
except (A) statutory liens securing payments not yet due, (B) liens on
assets of Subsidiaries of Chemical which are banks incurred in the
ordinary course of their banking business and (C) such imperfections or
irregularities of title, claims, liens, charges, security interests or
encumbrances as do not materially effect the use of the properties or
assets subject thereto or affected thereby or otherwise materially
impair business operations at such properties and (ii) is the lessee of
all leasehold estates reflected in the latest audited financial
statements included in such Chemical SEC Documents or acquired after
the date thereof which are material to its business on a consolidated
basis (except for leases that have expired by their terms since the
date thereof) and is in possession of the properties purported to be
leased thereunder and
<PAGE> 34
26
each such lease is valid without default thereunder by the lessee or,
to Chemical's knowledge, as of the date hereof, the lessor.
(s) Ownership of Chase Common Stock. Other than pursuant to the
Chase Stock Option Agreement, as of the date hereof, neither Chemical
nor, to its best knowledge, any of its affiliates or associates (as
such terms are defined under the Exchange Act), (i) beneficially owns,
directly or indirectly, or (ii) is party to any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, shares of capital stock of Chase, which in
the aggregate represent 10% or more of the outstanding shares of Chase
Common Stock (other than trust account shares).
(t) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in
connection with any of the transactions contemplated by this Agreement,
except Morgan Stanley & Co. Incorporated, whose fees and expenses will
be paid by Chemical in accordance with Chemical's agreement with such
firm (a copy of which agreement has been delivered by Chemical to Chase
prior to the date of this Agreement), and Chemical agrees to indemnify
Chase and to hold Chase harmless from and against any and all claims,
liabilities or obligations with respect to any other fees, commissions
or expenses asserted by any person on the basis of any act or statement
alleged to have been made by Chemical or its affiliates.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. Covenants of Chase and Chemical. During the period from
the date of this Agreement and continuing until the Effective Time, Chase and
Chemical each agrees as to itself and its Subsidiaries that (except as expressly
contemplated or permitted by this Agreement or the Stock Option Agreements or to
the extent that the other party shall otherwise consent in writing):
(a) Ordinary Course. Such party and its Subsidiaries shall
carry on their respective businesses in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted and use
all reasonable efforts to preserve intact their present business
organizations, maintain their rights and franchises and preserve their
relationships with customers, suppliers and others having business
dealings with them to the end that their goodwill and ongoing
businesses shall not be impaired in any material respect at the
Effective Time. No party shall, or shall permit any of its Subsidiaries
to, (i) enter into any new material line of business, (ii) change its
or its Subsidiaries' lending, investment, liability management and
other material banking policies in any respect which is material to
such party, except as required by law or by policies imposed by a Bank
Regulator, or (iii) incur or commit to any capital expenditures or any
obligations or liabilities in connection therewith other than capital
<PAGE> 35
27
expenditures and obligations or liabilities incurred or committed to in
the ordinary course of business consistent with past practice.
(b) Dividends; Changes in Stock. No party shall, or shall
permit any of its Subsidiaries to, or shall propose to, (i) declare or
pay any dividends on or make other distributions in respect of any of
its capital stock, except (A) as provided in Section 5.12, (B) Chase
may continue the declaration and payment of regular quarterly cash
dividends not in excess of $.45 per share of Chase Common Stock and
regular cash dividends as provided by and in accordance with the terms
of the Chase Preferred Stock as in effect on the date of this Agreement
and Chemical may continue the declaration and payment of regular
quarterly cash dividends not in excess of $.50 per share of Chemical
Common Stock and regular cash dividends as provided by and in
accordance with the present terms of the Chemical Preferred Stock as in
effect on the date of this Agreement, in each case with usual record
and payment dates for such dividends in accordance with such parties'
past dividend practice or as required by the terms of such preferred
stock, and (C) for dividends by a wholly-owned Subsidiary of such
party, (ii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital
stock or (iii) repurchase, redeem or otherwise acquire, or permit any
Subsidiary to purchase or otherwise acquire (other than as agent for
stockholders reinvesting dividends pursuant to a dividend reinvestment
plan in accordance with the terms thereof as in effect on the date of
this Agreement, and except for the acquisition of trust account shares
and DPC shares), any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock.
Chase shall not redeem the Chase Rights and Chemical shall not redeem
the Chemical Rights.
(c) Issuance of Securities. No party shall, or shall permit any
of its Subsidiaries to, issue, deliver or sell, or authorize or propose
the issuance, delivery or sale of, any shares of its capital stock of
any class, any Voting Debt or any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any
such shares or Voting Debt, or enter into any agreement with respect to
any of the foregoing, other than (i) the issuance of Chase Common Stock
(and attached Chase Rights) or Chemical Common Stock, as the case may
be, upon the exercise of Warrants, or pursuant to, or pursuant to the
exercise of stock options issued under, the Chemical Stock Plans or
Chase Stock Plans, in each case in the ordinary course of business and
consistent with past practices and in accordance with the terms of the
applicable Chemical Stock Plan or Chase Stock Plan as in effect on the
date of this Agreement, or pursuant to the Chase Stock Purchase
Contracts or the Stock Option Agreements, (ii) issuances by a
wholly-owned Subsidiary of its capital stock to its parent, (iii) in
the case of Chemical, issuance of Chemical Junior Preferred Stock
(and/or Chemical Common Stock) upon exercise of the Chemical Rights in
accordance with their present terms and reservation for issuance in
accordance with such terms of shares of Chemical Junior Preferred Stock
(and/or Chemical Common Stock) in addition to those presently reserved
for issuance, (iv) in the case of Chase, issuance of Chase Junior
Preferred Stock (and/or Chase Common Stock) upon exercise of the
<PAGE> 36
28
Chase Rights in accordance with their present terms and reservation for
issuance in accordance with such terms of shares of Chase Junior
Preferred Stock (and/or Chase Common Stock) in addition to those
presently reserved for issuance, (v) the issuance of Chase Common Stock
pursuant to the U.S. Trust Agreement as in effect on the date hereof,
and (vi) issuances of Chase Common Stock effected pursuant to the
reinvestment under Chase's dividend reinvestment plan of the Chase
Common Stock dividend payable on August 15, 1995.
(d) Governing Documents. No party shall amend or propose to
amend the Certificate of Incorporation or By-laws of such party, nor
shall Chemical amend the Chemical Rights Agreement (as amended as
described in Section 3.2(q)) in any way adverse to Chase or its ability
to consummate the transactions contemplated hereby or by the Stock
Option Agreements nor shall Chase amend the Chase Rights Agreement (as
amended as described in Section 3.1(q)) in any way adverse to Chemical
or its ability to consummate the transactions contemplated hereby or by
the Stock Option Agreements; provided, however, that Chemical, at or
prior to the Effective Time, (i) shall file Certificates of
Designations for each series of Chemical Merger Preferred Stock as
contemplated by Section 2.1, (ii) shall amend its Certificate of
Incorporation as contemplated by Section 3.2(c)(i), (iii) may amend its
Certificate of Incorporation to eliminate provisions therein relating
to the Chemical Class B Common Stock (provided that the effectiveness
of such an amendment as described in this clause (iii) shall in no
event be a condition to or impair either party's ability to consummate
the Merger) and (iv) may file such certificates as may be necessary to
eliminate from its Certificate of Incorporation provisions relating to
any series of Chemical Preferred Stock which is no longer outstanding
(provided that the effectiveness of such a certificate as described in
this clause (iv) shall in no event be a condition to or impair either
party's ability to consummate the Merger).
(e) No Solicitations. No party shall, or shall permit any of
its Subsidiaries to, or shall authorize or permit any of its officers,
directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative or agent (collectively,
"Representatives") retained by it or any of its Subsidiaries to,
solicit or encourage (including by way of furnishing nonpublic
information), or take any other action to facilitate, any inquiries or
the making of any proposal which constitutes, or may reasonably be
expected to lead to, any takeover proposal (as defined below), or agree
to or endorse any takeover proposal, or participate in any discussions
or negotiations, or provide third parties with any nonpublic
information, relating to any such inquiry or proposal. Each of Chemical
and Chase shall advise the other orally (within one business day) and
in writing (as promptly as practicable), in reasonable detail, of any
such inquiry or proposal which it or any of its Subsidiaries or any
Representative of Chemical or Chase, as the case may be, may receive
and if such inquiry or proposal is in writing, then Chemical or Chase,
as the case may be, shall deliver to the other a copy of such inquiry
or proposal. As used in this Agreement, "takeover proposal" shall mean
any tender or exchange offer, proposal for a merger, consolidation or
other business combination involving Chemical or Chase or any
Significant Subsidiary of Chemical or Chase or any proposal or offer to
acquire in any
<PAGE> 37
29
manner 20% or more of the outstanding shares of any class of voting
securities, or 15% or more of the consolidated assets, of Chemical or
Chase or any Significant Subsidiary of Chemical or Chase, other than
the transactions contemplated by this Agreement and the Stock Option
Agreements. This Section 4.1(e) shall not prohibit accurate disclosure
by a party that is required in any Chase SEC Document or Chemical SEC
Document (including the Proxy Statement and the S-4) or otherwise under
applicable law of the opinion of the Board of Directors of such party
as of the date of such Chase SEC Document or Chemical SEC Document or
such other required disclosure as to the transactions contemplated
hereby or as to any takeover proposal.
(f) No Acquisitions. Other than (i) pursuant to the Stock
Option Agreements, (ii) acquisitions disclosed in writing to the other
party prior to the date of this Agreement, (iii) acquisitions in
existing or related lines of business of the party making such
acquisition the fair market value of the total consideration for which
does not exceed $50,000,000 in the aggregate in the case of each party,
or (iv) pursuant to the U.S. Trust Agreement as in effect on the date
hereof, neither party shall, or shall permit any of its Subsidiaries
to, acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets, in each
case which are material, individually or in the aggregate, to such
party; provided, however, that the foregoing shall not prohibit (i)
internal reorganizations or consolidations involving existing
Subsidiaries other than Chemical Bank or Chase Bank, (ii) foreclosures
and other debt-previously-contracted acquisitions in the ordinary
course of business, (iii) acquisitions of control by a banking
Subsidiary in its fiduciary capacity, (iv) investments made by small
business investment company or venture capital Subsidiaries,
acquisitions of financial assets and merchant banking activities, in
each case in the ordinary course of business, (v) the creation of new
Subsidiaries organized to conduct or continue activities otherwise
permitted by this Agreement, or (vi) agreements relating to the merger
of Chemical Bank and Chase Bank after the Effective Time.
(g) No Dispositions. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries other than Chemical Bank
or Chase Bank, (ii) dispositions referred to in Chase SEC Documents or
Chemical SEC Documents filed prior to the date of this Agreement or as
previously disclosed in writing by a party to the other party, (iii) as
may be required by law to consummate the transactions contemplated
hereby, (iv) securitization activities in the ordinary course of
business and (v) other activities in the ordinary course of business
consistent with prior practice, no party shall, or shall permit any of
its Subsidiaries to, sell, lease, encumber or otherwise dispose of, or
agree to sell, lease, encumber or otherwise dispose of, any of its
assets (including capital stock of Subsidiaries), which are material,
individually or in the aggregate, to such party.
(h) Indebtedness. No party shall, or shall permit any of its
Subsidiaries to, incur any long-term indebtedness for borrowed money or
guarantee any such
<PAGE> 38
30
long-term indebtedness or issue or sell any long-term debt securities
or warrants or rights to acquire any long-term debt securities of such
party or any of its Subsidiaries or guarantee any long-term debt
securities of others other than (i) in replacement for existing or
maturing debt, (ii) indebtedness of any Subsidiary of a party to such
party or another Subsidiary of such party or (iii) in the ordinary
course of business consistent with prior practice.
(i) Other Actions. No party shall, or shall permit any of its
Subsidiaries to, intentionally take any action that would, or
reasonably might be expected to, result in any of its representations
and warranties set forth in this Agreement being or becoming untrue,
subject to such exceptions as do not have, and would not reasonably be
expected to have, individually or in the aggregate, a material adverse
effect on such party or on the Surviving Corporation following the
Effective Time, or in any of the conditions to the Merger set forth in
Article VI not being satisfied or in a violation of any provision of
either of the Stock Option Agreements, or (unless such action is
required by applicable law or sound banking practice) which would
adversely affect the ability of any of them to obtain any of the
Requisite Regulatory Approvals without imposition of a condition or
restriction of the type referred to in Section 6.1(g).
(j) Advice of Changes; Government Filings. Each party shall
confer on a regular and frequent basis with the other, report on
operational matters and promptly advise the other orally and in writing
of any change or event having, or which, insofar as can reasonably be
foreseen, could have, a material adverse effect on such party or which
would cause or constitute a material breach of any of the
representations, warranties or covenants of such party contained
herein. Chemical and Chase shall file all reports required to be filed
by each of them with the SEC between the date of this Agreement and the
Effective Time and shall deliver to the other party copies of all such
reports promptly after the same are filed. Chemical, Chase and each
Subsidiary of Chemical or Chase that is a bank shall file all call
reports with the appropriate Bank Regulators and all other reports,
applications and other documents required to be filed with the
applicable Governmental Entities between the date hereof and the
Effective Time and shall make available to the other party copies of
all such reports promptly after the same are filed. Each of Chemical
and Chase shall have the right to review in advance, and to the extent
practicable each will consult with the other, in each case subject to
applicable laws relating to the exchange of information, with respect
to all the information relating to the other party, and any of their
respective Subsidiaries, which appear in any filing made with, or
written materials submitted to, any third party or any Governmental
Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties
hereto agrees to act reasonably and as promptly as practicable. Each
party hereto agrees that to the extent practicable it will consult with
the other party hereto with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and
Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep
the other party apprised of the status of matters relating to
completion of the transactions contemplated hereby.
<PAGE> 39
31
(k) Accounting Methods. Except as disclosed in Chemical SEC
Documents or Chase SEC Documents (as the case may be) filed prior to
the date of this Agreement, neither Chemical nor Chase shall change its
methods of accounting in effect at December 31, 1994, except as
required by changes in generally accepted accounting principles as
concurred in by such party's independent auditors. Neither Chemical nor
Chase will change its fiscal year.
(l) Pooling and Tax-Free Reorganization Treatment. Neither
Chemical nor Chase shall, or shall permit any of its Subsidiaries to,
intentionally take or cause to be taken any action, whether before or
after the Effective Time, which would disqualify the Merger as a
"pooling of interests" for accounting purposes or as a "reorganization"
within the meaning of Section 368(a) of the Code; provided, however,
that nothing hereunder shall limit the ability of Chemical or Chase to
exercise their respective rights under the Stock Option Agreements.
(m) Compensation and Benefit Plans. Concurrently with the
execution and delivery of this Agreement, Chemical and Chase shall
enter into the Employee Benefits Agreement in the form of Exhibit
4.1(m) (the "Employee Benefits Agreement"). Except as provided in the
Employee Benefits Agreement, which is hereby incorporated by reference
herein, during the period from the date of this Agreement and
continuing until the Effective Time, each of Chemical and Chase agrees
as to itself and its Subsidiaries that it will not, without the prior
written consent of the other party, (i) enter into, adopt, amend
(except for (A) such amendments as may be required by law, (B) plan
documents and restatements currently being prepared by Chase or
Chemical which do not increase benefits and (C) amendments or
restatements currently being prepared by Chemical in connection with
its acquisition of Margaretten Financial Corporation) or terminate any
Chemical Benefit Plan or Chase Benefit Plan, as the case may be, or any
other employee benefit plan or any agreement, arrangement, plan or
policy between such party and one or more of its directors or officers,
(ii) except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not result in
a material increase in benefits or compensation expense to such party,
increase in any manner the compensation or fringe benefits of any
director, officer or employee or pay any benefit not required by any
plan and arrangement as in effect as of the date hereof (including,
without limitation, the granting of stock options, stock appreciation
rights, restricted stock, restricted stock units or performance units
or shares) or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing or (iii) enter into or renew any
contract, agreement, commitment or arrangement providing for the
payment to any director, officer or employee of such party of
compensation or benefits contingent, or the terms of which are
materially altered, upon the occurrence of any of the transactions
contemplated by this Agreement or the Stock Option Agreements.
<PAGE> 40
32
ARTICLE V
ADDITIONAL AGREEMENTS
5.1. Preparation of S-4, and the Proxy Statement. Chemical and
Chase shall cooperate with each other in the preparation of, and shall promptly
prepare and file with the SEC, the Proxy Statement and Chemical shall prepare
and file with the SEC the S-4, in which the Proxy Statement will be included as
a prospectus. Each of Chemical and Chase shall use all reasonable efforts to
have the S-4 declared effective under the Securities Act as promptly as
practicable after such filing. Chemical shall also take any action (other than
qualifying to do business in any jurisdiction in which it is now not so
qualified) required to be taken under any applicable state securities laws in
connection with the issuance of Chemical Common Stock and Chemical Merger
Preferred Stock in the Merger and Chemical Common Stock upon the exercise of the
Chase Stock Options and the Warrants, and Chase shall furnish all information
concerning Chase and the holders of Chase Common Stock and Chase Preferred Stock
as may be reasonably requested in connection with any such action.
5.2. Access to Information. Upon reasonable notice, Chase and
Chemical shall each (and shall cause each of their respective Subsidiaries to)
afford to the Representatives of the other, access, during normal business hours
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, each of Chase and
Chemical shall (and shall cause each of their respective Subsidiaries to) make
available to the other (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of Federal securities laws or Federal or state banking laws
(other than reports or documents which such party is not permitted to disclose
under applicable law) and (b) all other information concerning its business,
properties and personnel as such other party may reasonably request. The parties
will hold any such information which is nonpublic in confidence to the extent
required by, and in accordance with, the provisions of the letter dated July 31,
1995, between Chase and Chemical (the "Confidentiality Agreement"). No
investigation by either Chemical or Chase shall affect the representations and
warranties of the other, except to the extent such representations and
warranties are by their terms qualified by disclosures made to such first party.
5.3. Stockholder Meetings. Chase and Chemical each shall call a
meeting of its respective stockholders to be held as promptly as practicable for
the purpose of voting upon the approval of this Agreement and, in the case of
the stockholders of Chemical, the Chemical Common Stock Amendment. Subject to
the next succeeding sentence, Chase and Chemical will, through their respective
Boards of Directors, recommend to their respective stockholders approval of such
matters. The Board of Directors of Chemical or Chase, acting on behalf of
Chemical or Chase, respectively, may fail to make such recommendation, or
withdraw, modify or change any such recommendation, if and only if such Board of
Directors, after having consulted with and considered the written advice of
outside counsel, has determined that the making of such recommendation, or the
failure so to withdraw, modify or change such recommendation, would constitute a
breach of the fiduciary duties of such directors to their respective
stockholders under applicable law. Chase and Chemical
<PAGE> 41
33
shall coordinate and cooperate with respect to the timing of such meetings and
shall use their best efforts to hold such meetings on the same day and as soon
as practicable after the date on which the S-4 becomes effective. This Section
5.3 shall not prohibit accurate disclosure by a party that is required in any
Chase SEC Document or Chemical SEC Document (including the Proxy Statement and
the S-4) or otherwise under applicable law of the opinion of the Board of
Directors of such party as of the date of such SEC Document or such other
required disclosure as to the transactions contemplated hereby or as to any
takeover proposal.
5.4. Legal Conditions to Merger. (a) Each of Chase and Chemical
shall, and shall cause its Subsidiaries to, use all reasonable efforts (i) to
take, or cause to be taken, all actions necessary to comply promptly with all
legal requirements which may be imposed on such party or its Subsidiaries with
respect to the Merger and to consummate the transactions contemplated by this
Agreement as promptly as practicable, subject to the appropriate vote of
stockholders of Chase and Chemical described in Section 6.1(a), and (ii) to
obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and or any other public or private third party which is required to be
obtained or made by such party or any of its Subsidiaries in connection with the
Merger and the transactions contemplated by this Agreement; provided, however,
that a party shall not be obligated to take any action pursuant to the foregoing
if the taking of such action or such compliance or the obtaining of such
consent, authorization, order, approval or exemption is likely, in such party's
reasonable opinion, to result in a condition or restriction on such party or on
the Surviving Corporation having an effect of the type referred to in Section
6.1(g). Each of Chase and Chemical will promptly cooperate with and furnish
information to the other in connection with any such burden suffered by, or
requirement imposed upon, any of them or any of their Subsidiaries in connection
with the foregoing.
(b) Chemical agrees to execute and deliver, or cause to be
executed and delivered by or on behalf of the Surviving Corporation, at or prior
to the Effective Time, supplemental indentures and other instruments required
for the due assumption of Chase's outstanding debt securities and the Warrants
to the extent required by the terms of such securities and the instruments and
agreements relating thereto.
5.5. Affiliates. At least 40 days prior to the Closing Date,
Chase shall deliver to Chemical a letter identifying all persons who are, at the
time this Agreement is submitted for approval to the stockholders of Chase,
"affiliates" of Chase for purposes of Rule 145 under the Securities Act and
Chemical shall deliver to Chase a letter identifying all persons who are, at the
time this Agreement is submitted for approval to the stockholders of Chemical,
"affiliates" of Chemical for purposes of such Rule 145. Each of Chemical and
Chase shall use all reasonable efforts to cause each person named on the letter
delivered by it to deliver to the other party at least 30 days prior to the
Closing Date a written agreement, substantially in the form attached as Exhibit
5.5(a) (in the case of persons named in the letter delivered by Chase) or
Exhibit 5.5(b) (in the case of persons named in the letter delivered by
Chemical).
<PAGE> 42
34
5.6. Stock Exchange Listing. Chemical shall use all reasonable
efforts to cause the shares of Chemical Common Stock and of each series of
Chemical Merger Preferred Stock to be issued in the Merger and the shares of
Chemical Common Stock to be reserved for issuance upon exercise of Chase Stock
Options (as defined below) and the Warrants to be approved for listing on the
NYSE, subject to official notice of issuance, prior to the Closing Date.
5.7. Employee Benefit Plans. (a) Except as otherwise provided
in the Employee Benefits Agreement, Chemical and Chase agree that, unless
otherwise mutually determined, the Chemical Benefit Plans and Chase Benefit
Plans in effect at the date of this Agreement shall remain in effect after the
Effective Time with respect to employees covered by such plans at the Effective
Time, and the parties shall negotiate in good faith to formulate Benefit Plans
for the Surviving Corporation and its Subsidiaries, with respect both to
employees who were covered by the Chemical Benefit Plans and Chase Benefit Plans
at the Effective Time and employees who were not covered by such plans at the
Effective Time, that provide benefits for services after the Effective Time on a
basis that does not discriminate between employees who were covered by the
Chemical Benefit Plans and employees who were covered by the Chase Benefit
Plans.
(b) Except as otherwise provided in Section 5.8, in the case of
Chase Benefit Plans under which the employees' interests are based upon Chase
Common Stock, Chemical and Chase agree that such interests shall be based on
Chemical Common Stock in an equitable manner.
(c) With respect to Benefit Plans maintained or contributed to
outside the United States for the benefit of non-United States citizens or
residents, the principles set forth in the preceding paragraphs of this Section
5.7 shall apply to the extent the application of such principles does not
violate applicable foreign law.
5.8. Stock Options. (a) At the Effective Time, each outstanding
option to purchase shares of Chase Common Stock (a "Chase Stock Option") and
each outstanding stock appreciation right (a "Chase SAR") or restricted stock
unit (a "Chase Unit") issued pursuant to any incentive or stock option program
of Chase (the "Chase Plan"), whether vested or unvested, shall be assumed by
Chemical. Each Chase Stock Option shall be deemed to constitute an option to
acquire, on the same terms and conditions as were applicable under such Chase
Stock Option, the same number of shares of Chemical Common Stock as the holder
of such Chase Stock Option would have been entitled to receive pursuant to the
Merger had such holder exercised such option in full immediately prior to the
Effective Time, rounded, if necessary, up or down, to the nearest whole share,
at a price per share equal to (y) the aggregate exercise price for the shares of
Chase Common Stock otherwise purchasable pursuant to such Chase Stock Option
divided by (z) the number of full shares of Chemical Common Stock deemed
purchasable pursuant to such Chase Stock Option; provided, however, that in the
case of any option to which section 421 of the Code applies by reason of its
qualification under section 422 of the Code ("incentive stock options"), the
option price, the number of shares purchasable pursuant to such option and the
terms and conditions of exercise of such option shall be determined in order to
comply with section
<PAGE> 43
35
424(a) of the Code. Each holder of a Chase SAR shall be
entitled to that number of stock appreciation rights of Chemical ("Chemical
SARs"), determined in the same manner as set forth above with respect to Chase
Stock Options assumed by Chemical. Each holder of a Chase Unit shall be entitled
to that number of restricted stock units of Chemical determined by multiplying
the number of Chase Units held by such holder immediately prior to the Effective
Time by 1.04.
(b) As soon as practicable after the Effective Time, Chemical
shall deliver to the holders of Chase Stock Options, Chase SARs and Chase Units
appropriate notices setting forth such holders' rights pursuant to the Chase
Plan and the agreements evidencing the grants of such Chase Stock Options, Chase
SARs or Chase Units, as the case may be, shall continue in effect on the same
terms and conditions (subject to the adjustments required by this Section 5.8
after giving effect to the Merger and the assumption by Chemical as set forth
above). If necessary, Chemical shall comply with the terms of the Chase Plan and
ensure, to the extent required by, and subject to the provisions of, such Plan,
that Chase Stock Options which qualified as incentive stock options prior to the
Effective Time continue to qualify as incentive stock options of Chemical after
the Effective Time.
(c) Chemical shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Chemical Common Stock for
delivery upon exercise of Chase Stock Options assumed by it in accordance with
this Section 5.8. As soon as practicable after the Effective Time, Chemical
shall file a registration statement on Form S-3 or Form S-8, as the case may be
(or any successor or other appropriate forms), or another appropriate form with
respect to the shares of Chemical Common Stock subject to such options and shall
use its best efforts to maintain the effectiveness of such registration
statement or registration statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as such options remain
outstanding. With respect to those individuals who subsequent to the Merger will
be subject to the reporting requirements under Section 16(a) of the Exchange
Act, where applicable, Chemical shall administer the Chase Plan assumed pursuant
to this Section 5.8 in a manner that complies with Rule 16b-3 promulgated under
the Exchange Act to the extent the Chase Plan complied with such rule prior to
the Merger.
5.9. Fees and Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement,
the Stock Option Agreements and the transactions contemplated hereby and thereby
shall be paid by the party incurring such expense, except as otherwise provided
in the Stock Option Agreements and except that (a) if the Merger is consummated,
Chemical shall pay, or cause to be paid, any and all property or transfer taxes
imposed on Chase or its Subsidiaries and any real property transfer or gains tax
imposed on any holder of shares of capital stock of Chase resulting from the
Merger and (b) expenses incurred in connection with filing, printing and mailing
the Proxy Statement and the S-4 shall be shared equally by Chemical and Chase.
5.10. Governance; Name. (a) Chemical's Board of Directors shall
take action to cause the directors comprising the full Board of Directors of the
Surviving Corporation at the Effective Time to be the persons listed in Exhibit
5.10(a). Chemical's Board of Directors
<PAGE> 44
36
shall also take action to cause the persons indicated in Exhibit 5.10(b) to be
elected to the offices specified in such Exhibit. If, prior to the Effective
Time, any of the persons listed in Exhibit 5.10(a) shall decline or be unable to
serve as a director, Chemical (if such person was so designated by Chemical) or
Chase (if such person was so designated by Chase) shall designate another person
to serve in such person's stead, which person shall be reasonably acceptable to
the other party.
(b) As of the Effective Time, the name of the Surviving
Corporation shall be The Chase Manhattan Corporation.
5.11. Indemnification; Directors' and Officers' Insurance. (a)
From and after the Effective Time, the Surviving Corporation shall indemnify,
defend and hold harmless each person who is now, or has been at any time prior
to the date hereof or who becomes prior to the Effective Time, an officer,
director or employee of Chase or any of its Subsidiaries (the "Indemnified
Parties") against (i) all losses, claims, damages, costs, expenses, liabilities
or judgments or amounts that are paid in settlement of or in connection with any
claim, action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or was a
director, officer or employee of Chase or any Subsidiary of Chase, whether
pertaining to any matter existing or occurring at or prior to the Effective Time
and whether asserted or claimed prior to, or at or after, the Effective Time
("Indemnified Liabilities") and (ii) all Indemnified Liabilities based in whole
or in part on, or arising in whole or in part out of, or pertaining to this
Agreement or the transactions contemplated hereby, in each case to the full
extent Chase would have been permitted under Delaware law and its Certificate of
Incorporation and By-laws to indemnify such person (and the Surviving
Corporation shall pay expenses in advance of the final disposition of any such
action or proceeding to each Indemnified Party to the full extent permitted by
law upon receipt of any undertaking required by Section 145(e) of the DGCL).
Without limiting the foregoing, in the event any such claim, action, suit,
proceeding or investigation is brought against any Indemnified Parties (whether
arising before or after the Effective Time), (i) any counsel retained by the
Indemnified Parties for any period after the Effective Time shall be reasonably
satisfactory to the Surviving Corporation; (ii) after the Effective Time, the
Surviving Corporation shall pay all reasonable fees and expenses of such counsel
for the Indemnified Parties promptly as statements therefor are received; and
(iii) after the Effective Time, the Surviving Corporation will use all
reasonable efforts to assist in the vigorous defense of any such matter,
provided that the Surviving Corporation shall not be liable for any settlement
of any claim effected without its written consent, which consent, however, shall
not be unreasonably withheld. Any Indemnified Party wishing to claim
indemnification under this Section 5.11, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify the Surviving
Corporation (but the failure so to notify the Surviving Corporation shall not
relieve it from any liability which it may have under this Section 5.11 except
to the extent such failure materially prejudices the Surviving Corporation), and
shall deliver to the Surviving Corporation the undertaking, if any, required by
Section 145(e) of the DGCL. The Surviving Corporation shall be liable for the
fees and expenses hereunder with respect to only one law firm, in addition to
local counsel in each applicable jurisdiction, to represent the Indemnified
Parties as a group with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict between the positions
of any
<PAGE> 45
37
two or more Indemnified Parties that would preclude or render inadvisable
joint or multiple representation of such parties.
(b) For a period of six years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by Chase
(provided that the Surviving Corporation may substitute therefor policies of at
least the same coverage and amounts containing terms and conditions which are no
less advantageous) with respect to claims arising from facts or events which
occurred before the Effective Time; provided, however, that the Surviving
Corporation shall not be obligated to make annual premium payments for such
insurance to the extent such premiums exceed 250% of the premiums paid as of the
date hereof by Chase for such insurance ("Chase's Current Premium"), and if such
premiums for such insurance would at any time exceed 250% of Chase's Current
Premium, then the Surviving Corporation shall cause to be maintained policies of
insurance which, in the Surviving Corporation's good faith determination,
provide the maximum coverage available at an annual premium equal to 250% of
Chase's Current Premium. Notwithstanding anything to the contrary contained
elsewhere herein, the Surviving Corporation's indemnity agreement set forth
above shall be limited to cover claims only to the extent that those claims are
not covered under Chase's directors' and officers' insurance policies (or any
substitute policies permitted by this Section 5.11(b)).
(c) In the event Chemical or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any person, then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of Chemical assume
the obligations set forth in this section.
(d) The provisions of this Section 5.11 (i) are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party, his
heirs and his representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
5.12. Dividends. After the date of this Agreement, each of
Chemical and Chase shall coordinate with the other the payment of dividends with
respect to the Chemical Common Stock and Chase Common Stock and the record dates
and payment dates relating thereto, it being the intention of the parties hereto
that holders of Chemical Common Stock and Chase Common Stock shall not receive
two dividends, or fail to receive one dividend, for any single calendar quarter
with respect to their shares of Chemical Common Stock and/or Chase Common Stock
or any shares of Chemical Common Stock that any such holder receives in exchange
for such shares of Chase Common Stock in the Merger.
5.13. Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities
<PAGE> 46
38
and franchises of either of the Constituent Corporations, the proper officers
and directors of each party to this Agreement shall take all such necessary
action.
ARTICLE VI
CONDITIONS PRECEDENT
6.1. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been
approved and adopted by the affirmative vote of the holders of a
majority of the outstanding shares of Chase Common Stock, and this
Agreement and the Chemical Common Stock Amendment shall have been
approved and adopted by the affirmative vote of the holders of a
majority of the outstanding shares of Chemical Common Stock.
(b) NYSE Listing. The shares of Chemical Common Stock and of
each series of Chemical Merger Preferred Stock issuable to Chase
stockholders pursuant to this Agreement and such other shares of
Chemical Common Stock required to be reserved for issuance in
connection with the Merger shall have been authorized for listing on
the NYSE upon official notice of issuance.
(c) Other Approvals. Other than the filing provided for by
Section 1.1 and any filing pursuant to Article 31-B of the New York Tax
Law, all authorizations, consents, orders or approvals of, or
declarations or filings with, and all expirations of waiting periods
imposed by, any Governmental Entity (all the foregoing, "Consents")
which are necessary for the consummation of the Merger, other than
immaterial Consents the failure to obtain which would have no material
adverse effect on the consummation of the Merger or on the Surviving
Corporation, shall have been filed, have occurred or been obtained (all
such permits, approvals, filings and consents and the lapse of all such
waiting periods being referred to as the "Requisite Regulatory
Approvals") and all such Requisite Regulatory Approvals shall be in
full force and effect. Chemical shall have received all state
securities or blue sky permits and other authorizations necessary to
issue the Chemical Common Stock and Chemical Merger Preferred Stock in
exchange for Chase Common Stock and Chase Preferred Stock and to
consummate the Merger.
(d) S-4. The S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(e) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint
or prohibition (an "Injunction") preventing the consummation of the
Merger shall be in effect. There shall not be any action taken,
<PAGE> 47
39
or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger, by any Federal or state Governmental
Entity which makes the consummation of the Merger illegal.
(f) Pooling. Chemical and Chase shall each have received
letters from Price Waterhouse LLP to the effect that the Merger
qualifies for "pooling of interests" accounting treatment if
consummated in accordance with this Agreement and such letters shall
not have been withdrawn.
(g) Burdensome Condition. There shall not be any action taken,
or any statute, rule, regulation, order or decree enacted, entered,
enforced or deemed applicable to the Merger by any Federal or state
Governmental Entity which, in connection with the grant of a Requisite
Regulatory Approval or otherwise, imposes any condition or restriction
(a "Burdensome Condition") upon the Surviving Corporation or its
Subsidiaries which would reasonably be expected to either (i) have a
material adverse effect after the Effective Time on the present or
prospective consolidated financial condition, business or operating
results of the Surviving Corporation, or (ii) prevent the parties from
realizing the major portion of the economic benefits of the Merger and
the transactions contemplated thereby (including the merger of Chemical
Bank and Chase Bank) that they currently anticipate obtaining
therefrom.
6.2. Conditions to Obligations of Chemical. The obligation of
Chemical to effect the Merger is subject to the satisfaction of the following
conditions unless waived by Chemical:
(a) Representations and Warranties. The representations and
warranties of Chase set forth in this Agreement shall be true and
correct as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, subject to
such exceptions as do not have, and would not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on
Chase or on the Surviving Corporation following the Effective Time, and
Chemical shall have received a certificate signed on behalf of Chase by
the Chairman and Chief Executive Officer or the Vice Chairman and by
the Executive Vice President and Chief Financial Officer of Chase to
such effect.
(b) Performance of Obligations of Chase. Chase shall have
performed in all material respects all obligations required to be
performed by it under this Agreement and the Employee Benefits
Agreement at or prior to the Closing Date, and Chemical shall have
received a certificate signed on behalf of Chase by the Chairman and
Chief Executive Officer or the Vice Chairman and by the Executive Vice
President and Chief Financial Officer of Chase to such effect.
(c) Consents Under Agreements. Chase shall have obtained the
consent or approval of each person (other than the Governmental
Entities referred to in Section
<PAGE> 48
40
6.1(c)) whose consent or approval shall be required in order to permit
the succession by the Surviving Corporation pursuant to the Merger to
any obligation, right or interest of Chase or any Subsidiary of Chase
under any loan or credit agreement, note, mortgage, indenture, lease,
license or other agreement or instrument, except those for which
failure to obtain such consents and approvals would not, individually
or in the aggregate, have a material adverse effect, after the
Effective Time, on the Surviving Corporation.
(d) Rights Agreement. None of the events described in Section
11(a)(ii) or 13 of the Chase Rights Agreement shall have occurred, and
the Chase Rights shall not have become nonredeemable and the Rights
shall not become exercisable for capital stock of Chemical upon
consummation of the Merger.
(e) Tax Opinion. Chemical shall have received the opinion of
Simpson Thacher & Bartlett, counsel to Chemical, dated the Closing
Date, to the effect that (i) the Merger will be treated for Federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code, (ii) Chemical and Chase will each be a party to
that reorganization within the meaning of Section 368(b) of the Code,
(iii) no income, gain or loss will be recognized for Federal income tax
purposes by either Chase or Chemical as a result of the consummation of
the Merger, and (iv) no income, gain or loss will be recognized for
Federal income tax purposes by stockholders of Chase upon the exchange
in the Merger of shares of Chase solely for shares of Chemical (except
to the extent of any cash received in lieu of fractional shares). In
connection with clause (iv) of the foregoing, it shall not be a
requirement of this Section 6.2(e) that counsel opine as to the Federal
income tax treatment of any real property transfer or gains taxes paid
by Chemical pursuant to Section 5.9 of this Agreement.
6.3. Conditions to Obligations of Chase. The obligation of
Chase to effect the Merger is subject to the satisfaction of the following
conditions unless waived by Chase:
(a) Representations and Warranties. The representations and
warranties of Chemical set forth in this Agreement shall be true and
correct as of the date of this Agreement and (except to the extent such
representations speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date, subject to such exceptions
as do not have, and would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on Chemical
or on the Surviving Corporation following the Effective Time, and Chase
shall have received a certificate signed on behalf of Chemical by the
Chairman and Chief Executive Officer or the President or Vice Chairman
and by the Executive Vice President and Chief Financial Officer of
Chemical to such effect.
(b) Performance of Obligations of Chemical. Chemical shall have
performed in all material respects all obligations required to be
performed by it under this Agreement and the Employee Benefits
Agreement at or prior to the Closing Date, and Chase shall have
received a certificate signed on behalf of Chemical by the Chairman
<PAGE> 49
41
and Chief Executive Officer or the President or Vice Chairman and by
the Executive Vice President and Chief Financial Officer of Chemical to
such effect.
(c) Consents Under Agreements. Chemical shall have obtained the
consent or approval of each person (other than the Governmental
Entities referred to in Section 6.1(c)) whose consent or approval shall
be required in connection with the transactions contemplated hereby
under any loan or credit agreement, note, mortgage, indenture, lease,
license or other agreement or instrument, except those for which
failure to obtain such consents and approvals would not, individually
or in the aggregate, have a material adverse effect, after the
Effective Time, on the Surviving Corporation.
(d) Rights Agreement. None of the events described in Section
11(a)(ii) or 13 of the Chemical Rights Agreement shall have occurred,
and the Chemical Rights shall not have become nonredeemable and shall
not become nonredeemable upon consummation of the Merger.
(e) Tax Opinion. Chase shall have received the opinion of
Sullivan & Cromwell, counsel to Chase, dated the Closing Date, to the
effect that (i) the Merger will be treated for Federal income tax
purposes as a reorganization within the meaning of Section 368(a) of
the Code, (ii) Chemical and Chase will each be a party to that
reorganization within the meaning of Section 368(b) of the Code, (iii)
no income, gain or loss will be recognized for Federal income tax
purposes by either Chase or Chemical as a result of the consummation of
the Merger, and (iv) no income, gain or loss will be recognized for
Federal income tax purposes by stockholders of Chase upon the exchange
in the Merger of shares of Chase solely for shares of Chemical (except
to the extent of any cash received in lieu of fractional shares). In
connection with clause (iv) of the foregoing, it shall not be a
requirement of this Section 6.3(e) that counsel opine as to the Federal
income tax treatment of any real property transfer or gains taxes paid
by Chemical pursuant to Section 5.9 of this Agreement.
(f) Authorization of Stock. Subject only to the filing of the
Certificate of Merger and the Certificates of Designations in
accordance with the DGCL, Chemical shall have duly taken all corporate
action so that, when issued, the shares of Chemical Common Stock and
Chemical Merger Preferred Stock to be issued pursuant to Article II
shall have been duly authorized, validly issued, fully paid and
non-assessable.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, by action taken or authorized by the Board of
Directors of the terminating party or parties, whether before or after approval
of the matters presented in connection with the Merger by the stockholders of
Chase or Chemical:
<PAGE> 50
42
(a) by mutual consent of Chemical and Chase in a written
instrument;
(b) by either Chemical or Chase upon written notice to the
other party if the Federal Reserve shall have issued an order denying
approval of the Merger and the other material aspects of the
transactions contemplated by this Agreement (including, without
limitation, the merger of Chemical Bank and Chase Bank) or if any
Governmental Entity of competent jurisdiction shall have issued a final
permanent order enjoining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement or imposing a
Burdensome Condition, and in any such case the time for appeal or
petition for reconsideration of such order shall have expired without
such appeal or petition being granted;
(c) by either Chemical or Chase if the Merger shall not have
been consummated on or before September 30, 1996; or
(d) by either Chemical or Chase if any approval of the
stockholders of Chase or of Chemical required for the consummation of
the Merger shall not have been obtained by reason of the failure to
obtain the required vote at a duly held meeting of stockholders or at
any adjournment thereof.
7.2. Effect of Termination. (a) In the event of termination of
this Agreement by either Chase or Chemical as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Chemical or Chase or their respective officers or
directors except (i) with respect to Sections 3.1(t) and 3.2(t), the penultimate
sentence of Section 5.2, and Section 5.9, and (ii) with respect to any
liabilities or damages incurred or suffered by a party as a result of the wilful
breach by the other party of any of its representations, warranties, covenants
or agreements set forth in this Agreement.
7.3. Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of Chase or of Chemical, but, after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
7.4. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Board of Directors, may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
<PAGE> 51
43
ARTICLE VIII
GENERAL PROVISIONS
8.1. Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement (other than
the Stock Option Agreements, which shall terminate in accordance with their
terms), including any rights arising out of any breach of such representations,
warranties, covenants, and agreements, shall survive the Effective Time, except
for those covenants and agreements contained herein and therein that by their
terms apply or are to be performed in whole or in part after the Effective Time.
8.2. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (a) on the date of delivery
if delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (b) on the first business day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the third business
day following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice.
(a) if to Chemical, to
Chemical Banking Corporation
270 Park Avenue
New York, New York 10017
Attention: General Counsel
Telecopy No.: (212) 270-4288
with a copy to
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, N.Y. 10017
Attention: Lee Meyerson, Esq.
Telecopy No.: (212) 455-2502
and
<PAGE> 52
44
(b) if to Chase, to
The Chase Manhattan Corporation
1 Chase Manhattan Plaza
New York, New York 10081
Attention: General Counsel
Telecopy No.: (212) 552-5378
with a copy to
Sullivan & Cromwell
125 Broad Street
New York, N.Y. 10004
Attention: H. Rodgin Cohen, Esq.
Telecopy No.: (212) 558-3588
8.3. Interpretation. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. The phrases "the date of this
Agreement", "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to August 27, 1995.
8.4. Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
8.5. Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (including the documents and the instruments referred
to herein, including the Stock Option Agreements) (a) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, other
than the Confidentiality Agreement, which shall survive the execution and
delivery of this Agreement and (b) except as provided in Section 5.11, is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder. The parties hereby acknowledge that, except as otherwise
specifically provided in the Stock Option Agreements or as hereinafter agreed to
in writing, no party shall have the
<PAGE> 53
45
right to acquire or shall be deemed to have acquired shares of common stock of
the other party pursuant to the Merger until consummation thereof.
8.6. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York, without regard
to any applicable conflicts of law provisions thereof.
8.7. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability and, unless the effect of such invalidity or unenforceability
would prevent the parties from realizing the major portion of the economic
benefits of the Merger that they currently anticipate obtaining therefrom, shall
not render invalid or unenforceable the remaining terms and provisions of this
Agreement or affect the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable. For purposes of this Agreement, the term
"major portion" of the economic benefits of the Merger means two-thirds of such
economic benefits.
8.8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party, and any attempt to make any such assignment without
such consent shall be null and void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
<PAGE> 54
46
IN WITNESS WHEREOF, Chemical and Chase have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of August 27, 1995.
CHEMICAL BANKING CORPORATION
By: /s/ Walter V. Shipley
-----------------------
Name: Walter V. Shipley
Title: Chairman and Chief
Executive Officer
Attest:
/s/ John B. Wynne
- --------------------------
Name: John B. Wynne
Title: Secretary
THE CHASE MANHATTAN CORPORATION
By: /s/ Thomas G. Labrecque
-----------------------
Name: Thomas G. Labrecque
Title: Chairman and Chief
Executive Officer
Attest:
/s/ L. Edward Shaw, Jr.
- --------------------------
Name: L. Edward Shaw, Jr.
Title: Executive Vice President
and General Counsel
<PAGE> 55
EXHIBIT 1.1(a)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of August 27, 1995 (the "Agreement"),
by and between THE CHASE MANHATTAN CORPORATION, a Delaware corporation
("Issuer"), and CHEMICAL BANKING CORPORATION, a Delaware corporation
("Grantee").
WHEREAS, Grantee and Issuer are concurrently herewith entering into an
Agreement and Plan of Merger dated as of the date hereof (the "Merger
Agreement"; capitalized terms not defined herein shall have the meanings set
forth in the Merger Agreement), providing for, among other things, the merger of
Issuer with and into Grantee with Grantee as the surviving corporation;
WHEREAS, as a condition and inducement to Grantee's willingness to
enter into the Merger Agreement and the Chemical Stock Option Agreement, Grantee
has requested that Issuer agree, and Issuer has agreed, to grant Grantee the
Option (as defined below); and
WHEREAS, as a condition and inducement to Issuer's willingness to enter
into the Merger Agreement and this Agreement, Issuer has requested that Grantee
agree, and Grantee has agreed, to grant Issuer an option to purchase shares of
Grantee's common stock on substantially the same terms as the Option;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, in the
Merger Agreement and in the Chemical Stock Option Agreement, Issuer and Grantee
agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 34,551,183 (as adjusted as set forth herein) shares (the "Option
Shares") of Common Stock, par value $2.00 per share ("Issuer Common Stock"), of
Issuer at a purchase price of $51.875 per Option Share (the "Purchase Price").
2. Exercise of Option. (a) If not in material breach of the Merger
Agreement or the Chemical Stock Option Agreement, Grantee may exercise the
Option, in whole or in part, at any time and from time to time following the
occurrence of a Purchase Event (as defined below); provided that, except as
provided in the last sentence of this Section 2(a), the Option shall terminate
and be of no further force and effect upon the earliest to occur of (i) the
Effective Time, (ii) 18 months after the first occurrence of a Purchase Event or
(iii) termination of the Merger Agreement prior to the occurrence of a Purchase
Event; and, provided, further, that any purchase of shares upon exercise of the
Option shall be subject to compliance with applicable law, including the Bank
Holding Company Act of 1956, as amended (the "BHC Act"). Notwithstanding the
termination of the Option, Grantee shall be entitled to purchase those Option
Shares with respect to which it has exercised the Option in accordance with the
terms hereof prior to the termination of the Option. The termination of the
Option shall not affect any rights hereunder which by their terms extend beyond
the date of such termination.
(b) As used herein, a "Purchase Event" means any of the following
events:
(i) any person (other than Grantee or any Subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act), or shall have filed a registration statement
under the Securities Act with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person or a "group" (as such term is
defined under the Exchange Act) of which such person is a member shall
have acquired beneficial ownership (as such term is defined in Rule
13d-3 of the Exchange Act), or the right to acquire beneficial
ownership, of 15% or more of the then outstanding Issuer Common Stock
(any such offer, a "Tender Offer");
<PAGE> 56
2
(ii) Issuer or any Subsidiary of Issuer shall have authorized,
recommended, proposed or publicly announced an intention to authorize,
recommend or propose, or entered into, an agreement with any person
(other than Grantee or any Subsidiary of Grantee) to (A) effect a
merger, consolidation or other business combination involving Issuer or
any of its Significant Subsidiaries, (B) sell, lease or otherwise
dispose of assets or deposits of Issuer or its Subsidiaries aggregating
20% or more of the consolidated assets or deposits of Issuer and its
Subsidiaries or (C) issue, sell or otherwise dispose of (including by
way of merger, consolidation, share exchange or any similar
transaction) securities representing 15% or more of the voting power of
Issuer or any of its Significant Subsidiaries (any of the foregoing an
"Acquisition Transaction");
(iii) any person (other than Grantee or any Subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 under the Exchange Act) or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under
the Exchange Act) shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, shares of Issuer Common
Stock (other than trust account shares) aggregating 15% or more of the
then outstanding Issuer Common Stock; or
(iv) the holders of Issuer Common Stock shall not have
approved the Merger Agreement at the meeting of such stockholders held
for the purpose of voting on the Merger Agreement, such meeting shall
not have been held or shall have been cancelled prior to termination of
the Merger Agreement or Issuer's Board of Directors shall have
withdrawn or modified in a manner adverse to Grantee or to Grantee's
ability to consummate the transactions contemplated by the Merger
Agreement the recommendation of Issuer's Board of Directors with
respect to the Merger Agreement, in each case after any person (other
than Grantee or any Subsidiary of Grantee) shall have (A) publicly
announced a proposal, or publicly disclosed an intention to make a
proposal, to engage in an Acquisition Transaction or (B) filed an
application (or given a notice), whether in draft or final form, under
the BHC Act or the Change in Bank Control Act of 1978 for approval to
engage in an Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event Grantee wishes to exercise the Option, it shall send
to Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 20 business days from the Notice Date for the
closing of such purchase (the "Closing Date"); provided that if the closing of
the purchase and sale pursuant to the Option (the "Closing") cannot be
consummated by reason of any applicable judgment, decree, order, law or
regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated; and provided, further, without
limiting the foregoing, that if prior notification to or approval of the Federal
Reserve or any other regulatory authority is required in connection with such
purchase, Grantee shall promptly file the required notice or application for
approval and shall expeditiously process the same (and Issuer shall cooperate
with Grantee in the filing of any such notice or application and the obtaining
of any such approval), and the period of time that otherwise would run pursuant
to this sentence shall run instead from the date on which, as the case may be,
(i) any required notification period has expired or been terminated or (ii) such
approval has been obtained, and in either event, any requisite waiting period
has passed.
(d) Notwithstanding Section 2(c), in no event shall any Closing Date be
more than 18 months after the related Notice Date, and if the Closing Date shall
not have occurred within 18 months after the related Notice Date due to the
failure to obtain any such required approval, the exercise of the Option
effected on the Notice Date shall be deemed to have expired. In the event (i)
Grantee receives official notice that an approval of the Federal Reserve or any
other regulatory authority required for the purchase of Option Shares will not
be issued or granted or (ii) a Closing Date shall not have occurred within 18
months after the related Notice Date due to the failure to obtain any such
required approval, Grantee shall be entitled to exercise its right as set forth
in Section 7 or Section 8, as applicable, or to exercise the Option in
connection with the resale of Issuer
<PAGE> 57
3
Common Stock or other securities pursuant to a registration statement as
provided in Section 10. The provisions of this Section 2 and Section 3 shall
apply with appropriate adjustments to any such exercise.
3. Payment and Delivery of Certificates. (a) On each Closing Date,
Grantee shall pay to Issuer in immediately available funds by wire transfer to a
bank account designated by Issuer an amount equal to the Purchase Price
multiplied by the Option Shares to be purchased on such Closing Date.
(b) At each Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Issuer shall deliver to Grantee a
certificate or certificates representing the Option Shares to be purchased at
such Closing, which Option Shares shall be free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever, and Grantee shall deliver to
Issuer a letter agreeing that Grantee shall not offer to sell or otherwise
dispose of such Option Shares in violation of applicable law or the provisions
of this Agreement. If at the time of issuance of any Option Shares pursuant to
an exercise of all or part of the Option hereunder, Issuer shall not have
redeemed the Chase Rights, or shall have issued any similar securities, then
each Option Share issued pursuant to such exercise shall also represent a
corresponding Chase Right or new rights with terms substantially the same as and
at least as favorable to Grantee as are provided under the Chase Rights
Agreement or any similar agreement then in effect.
(c) Certificates for the Option Shares delivered at each Closing shall
be endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF AUGUST
27, 1995. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER
HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST
THEREFOR.
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act and
(ii) the reference to restrictions pursuant to this Agreement in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the Option Shares evidenced by certificate(s) containing such
reference have been sold or transferred in compliance with the provisions of
this Agreement under circumstances that do not require the retention of such
reference.
4. Representations and Warranties of Issuer. Issuer hereby represents
and warrants to Grantee as follows:
(a) Due Authorization. Issuer has all requisite corporate power
and authority to enter into this Agreement and, subject to any
approvals referred to herein, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Issuer.
This Agreement has been duly executed and delivered by Issuer and
constitutes a valid and binding obligation of Issuer, enforceable in
accordance with its terms.
(b) Authorized Stock. Issuer has taken all necessary corporate and
other action to authorize and reserve and, subject to obtaining the
governmental and other approvals and consents referred to herein, to
permit it to issue, and, at all times from the date hereof until the
obligation to deliver Issuer Common Stock upon the exercise of the
Option terminates, will have reserved for issuance, upon exercise of
the Option, shares of Issuer Common Stock necessary for Grantee to
exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional shares of
Issuer Common Stock or other securities which may be issued pursuant to
Section 6 upon
<PAGE> 58
4
exercise of the Option or any Substitute Option (as hereinafter
defined). The shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer
Common Stock or other securities which may be issuable upon exercise of
the Option or any Substitute Option pursuant to Section 6, upon
issuance pursuant hereto, shall be duly and validly issued, fully paid
and nonassessable, and shall be delivered free and clear of all liens,
claims, charges and encumbrances of any kind or nature whatsoever,
including any preemptive rights of any stockholder of Issuer.
(c) No Conflicts. Except as disclosed pursuant to the Merger
Agreement, the execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not,
conflict with, or result in any Violation pursuant to any provision of
the Certificate of Incorporation or By-laws of Issuer or any Subsidiary
of Issuer or, subject to obtaining any approvals or consents
contemplated hereby, result in any Violation of any loan or credit
agreement, note, mortgage, indenture, lease, Chase Benefit Plan or
other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Issuer or any Subsidiary of Issuer or their
respective properties or assets which Violation would, individually or
in the aggregate, have a material adverse effect (as defined in the
Merger Agreement) on Issuer.
(d) Board Action. The Board of Directors of Issuer having
approved this Agreement and the consummation of the transactions
contemplated hereby, the provisions of Section 203 of the Delaware
General Corporation Law and the provisions of Section 8.01 of Issuer's
Certificate of Incorporation do not and will not apply to this
Agreement or the purchase of shares of Issuer Common Stock pursuant to
this Agreement.
(e) Rights Amendment. The Chase Rights Agreement has been
amended to provide that Grantee will not become an "Acquiring Person"
and that no "Triggering Event," "Stock Acquisition Date" or
"Distribution Date" (as such terms are defined in the Chase Rights
Agreement) will occur as a result of the approval, execution or
delivery of this Agreement or the Merger Agreement or the consummation
of the transactions contemplated hereby and thereby, including the
acquisition of shares of Issuer Common Stock by Grantee pursuant to
this Agreement.
5. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer that:
(a) Due Authorization. Grantee has all requisite corporate power
and authority to enter into this Agreement and, subject to any
approvals or consents referred to herein, to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by
Grantee and constitutes a valid and binding obligation of Grantee,
enforceable in accordance with its terms.
(b) No Conflicts. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby
will not result in any Violation pursuant to any provision of the
Certificate of Incorporation or By-laws of Grantee or any Subsidiary of
Grantee or, subject to obtaining any approvals or consents contemplated
hereby, result in any Violation of any loan or credit agreement, note,
mortgage, indenture, lease, Chemical Benefit Plan or other agreement,
obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Grantee or any Subsidiary of Grantee or their respective
properties or assets which Violation, individually or in the aggregate,
would have a material adverse effect on Grantee.
(c) Purchase Not for Distribution. Any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be
taken with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered
or exempt from registration under the Securities Act.
<PAGE> 59
5
6. Adjustment upon Changes in Capitalization, etc. (a) In the event of
any change in Issuer Common Stock by reason of a stock dividend, split-up,
recapitalization, combination, exchange of shares or similar transaction, the
type and number of shares or securities subject to the Option, and the Purchase
Price therefor, shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Grantee shall receive
upon exercise of the Option the number and class of shares or other securities
or property that Grantee would have received in respect of Issuer Common Stock
if the Option had been exercised immediately prior to such event or the record
date therefor, as applicable. If any additional shares of Issuer Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 6(a)), the number of shares of
Issuer Common Stock subject to the Option shall be adjusted so that, after such
issuance, it equals 19.9% of the number of shares of Issuer Common Stock then
issued and outstanding, without giving effect to any shares subject to or issued
pursuant to the Option.
(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the shares of Issuer
Common Stock outstanding immediately prior to the consummation of such merger
shall be changed into or exchanged for stock or other securities of Issuer or
any other person or cash or any other property, or the shares of Issuer Common
Stock outstanding immediately prior to the consummation of such merger shall
after such merger represent less than 50% of the outstanding voting securities
of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets or deposits to any person, other than Grantee or
one of its Subsidiaries, then, and in each such case, the agreement governing
such transaction shall make proper provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (I) the Acquiring Corporation
(as defined below) or (II) any person that controls the Acquiring Corporation
(any such person being referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option;
provided that the exercise price therefor and number of shares subject thereto
shall be as set forth in this Section 6 and the repurchase rights relating
thereto shall be as set forth in Section 8; provided, further, that the
Substitute Option shall be exercisable immediately upon issuance without the
occurrence of a Purchase Event; and provided, further, that if the terms of the
Substitute Option cannot, for legal reasons, be the same as the Option (subject
to the variations described in the foregoing provisos), such terms shall be as
similar as possible and in no event less advantageous to Grantee. Substitute
Option Issuer shall also enter into an agreement with Grantee in substantially
the same form as this Agreement (subject to the variations described in the
foregoing provisos), which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as defined below) as is equal to the Assigned
Value (as defined below) multiplied by the number of shares of Issuer Common
Stock for which the Option was theretofore exercisable, divided by the Average
Price (as defined below), rounded up to the nearest whole share. The exercise
price per share of Substitute Common Stock of the Substitute Option (the
"Substitute Option Price") shall then be equal to the Purchase Price multiplied
by a fraction in which the numerator is the number of shares of Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares of Substitute Common Stock for which the Substitute Option
is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of outstanding Substitute
Common Stock but for the limitation in the first sentence of this Section 6(e),
Substitute Option Issuer shall make a cash payment to Grantee equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in the first sentence of this Section 6(e) over (ii) the value of the
Substitute Option after giving effect to the limitation in the first sentence of
this
<PAGE> 60
6
Section 6(e). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Grantee.
(f) Issuer shall not enter into any transaction described in Section
6(b) unless the Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer hereunder and take
all other actions that may be necessary so that the provisions of this Section 6
are given full force and effect (including, without limitation, any action that
may be necessary so that the holders of the other shares of common stock issued
by Substitute Option Issuer are not entitled to exercise any rights by reason of
the issuance or exercise of the Substitute Option and the shares of Substitute
Common Stock are otherwise in no way distinguishable from or have lesser
economic value than other shares of common stock issued by Substitute Option
Issuer (other than any diminution in value resulting from the fact that the
shares of Substitute Common Stock are restricted securities, as defined in Rule
144 under the Securities Act or any successor provision)).
(g) For purposes hereof, the following terms have the following
meanings:
(1) "Acquiring Corporation" means (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving corporation and (iii) the transferee of all or
substantially all of Issuer's assets or deposits.
(2) "Assigned Value" means the highest of (w) the price per
share of Issuer Common Stock at which a Tender Offer has been made
after the date hereof and prior to the consummation of the
consolidation, merger or sale referred to in Section 6(b), (x) the
price per share to be paid by any third party or the consideration per
share to received by holders of Issuer Common Stock, in each case
pursuant to the agreement with Issuer with respect to the
consolidation, merger or sale referred to in Section 6(b), (y) the
highest closing sales price per share for Issuer Common Stock quoted on
the NYSE (or if such Issuer Common Stock is not quoted on the NYSE, the
highest bid price per share as quoted on the National Association of
Securities Dealers Automated Quotation System or, if the shares of
Issuer Common Stock are not quoted thereon, on the principal trading
market on which such shares are traded as reported by a recognized
source) during the 12-month period immediately preceding the
consolidation, merger or sale referred to in Section 6(b) and (z) in
the event the transaction referred to in Section 6(b) is a sale of all
or substantially all of Issuer's assets and/or deposits, an amount
equal to (i) the sum of the price paid in such sale for such assets
and/or deposits and the current market value of the remaining assets of
Issuer, as determined by a nationally recognized investment banking
firm selected by Grantee divided by (ii) the number of shares of Issuer
Common Stock outstanding at such time. In the event that a Tender Offer
is made for Issuer Common Stock or an agreement is entered into for a
merger or consolidation involving consideration other than cash, the
value of the securities or other property issuable or deliverable in
exchange for Issuer Common Stock shall be determined by a nationally
recognized investment banking firm selected by Grantee.
(3) "Average Price" means the average closing sales price per
share of a share of Substitute Common Stock quoted on the NYSE (or if
such Substitute Common Stock is not quoted on the NYSE, the highest bid
price per share as quoted on the National Association of Securities
Dealers Automated Quotation System or, if the shares of Substitute
Common Stock are not quoted thereon, on the principal trading market on
which such shares are traded as reported by a recognized source) for
the one year immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of the shares
of Substitute Common Stock on the day preceding such consolidation,
merger or sale; provided that if Substitute Option Issuer is Issuer,
the Average Price shall be computed with respect to a share of common
stock issued by Issuer, the person merging into Issuer or by any
company which controls such person, as Grantee may elect.
(4) "Substitute Common Stock" means the shares of capital stock
(or similar equity interest) with the greatest voting power in respect
of the election of directors (or persons similarly responsible for the
direction of the business and affairs) of the Substitute Option Issuer.
<PAGE> 61
7
7. Repurchase of Option at the Election of Grantee. (a) At the request
of Grantee at any time commencing (i) upon the first occurrence of a Repurchase
Event (as defined below) and ending 18 months immediately thereafter and (ii)
for 30 business days following the occurrence of either of the events set forth
in clauses (i) and (ii) of Section 2(d) (but solely as to the shares of Issuer
Common Stock with respect to which the required approval was not received),
Issuer (or any successor entity thereof) shall repurchase from Grantee (I) the
Option and (II) all shares of Issuer Common Stock purchased by Grantee pursuant
hereto with respect to which Grantee then has beneficial ownership. The date on
which Grantee exercises its rights under this Section 7 is referred to as the
"Section 7 Request Date". Such repurchase shall be at an aggregate price (the
"Section 7 Repurchase Consideration") equal to:
(A) the aggregate Purchase Price paid by Grantee for any shares
of Issuer Common Stock acquired pursuant to the Option with respect to
which Grantee then has beneficial ownership; plus
(B) the excess, if any, of (x) the Applicable Price (as defined
below) as of the Section 7 Request Date for a share of Issuer Common
Stock over (y) the Purchase Price (subject to adjustment pursuant to
Section 6(a)), multiplied by the number of shares of Issuer Common
Stock with respect to which the Option has not been exercised; plus
(C) the excess, if any, of the Applicable Price as of the
Section 7 Request Date over the Purchase Price paid (or, in the case of
Option Shares with respect to which the Option has been exercised but
the Closing Date has not occurred, payable (subject to adjustment
pursuant to Section 6(a))) by Grantee for each share of Issuer Common
Stock with respect to which the Option has been exercised and with
respect to which Grantee then has beneficial ownership, multiplied by
the number of such shares; plus
(D) the amount of the documented reasonable out-of-pocket
expenses incurred by Grantee in connection with the Merger Agreement
and this Agreement and the transactions contemplated thereby and
hereby, including reasonable accounting, investment banking and legal
fees.
(b) If Grantee exercises its rights under this Section 7, Issuer shall,
within 10 business days after the Section 7 Request Date, pay the Section 7
Repurchase Consideration to Grantee in immediately available funds, and Grantee
shall surrender to Issuer the Option and the certificates evidencing the shares
of Issuer Common Stock purchased hereunder with respect to which Grantee then
has beneficial ownership, and Grantee shall warrant that it has sole record and
beneficial ownership of such shares and that the same are then free and clear of
all liens, claims, charges and encumbrances of any kind whatsoever.
Notwithstanding the foregoing, to the extent that prior notification to or
approval of the Federal Reserve or other regulatory authority is required in
connection with the payment of all or any portion of the Section 7 Repurchase
Consideration, Issuer shall deliver from time to time that portion of the
Section 7 Repurchase Consideration that it is not then so prohibited from paying
and shall promptly provide the required notice or application for approval and
shall expeditiously process the same (and Grantee shall cooperate with Issuer in
the filing of any such notice or application and the obtaining of any such
approval), and the period of time that otherwise would run pursuant to the
preceding sentence for the payment of the portion of the Section 7 Repurchase
Consideration requiring such notification or approval shall run instead from the
date on which, as the case may be, (i) any required notification period has
expired or been terminated or (ii) such approval has been obtained and, in
either event, any requisite waiting period shall have passed. If the Federal
Reserve or any other regulatory authority disapproves of any part of Issuer's
proposed repurchase pursuant to this Section 7, Issuer shall promptly give
notice of such fact to Grantee and redeliver to Grantee the Option Shares it is
then prohibited from repurchasing, and Grantee shall have the right to exercise
the Option as to the number of Option Shares for which the Option was
exercisable at the Section 7 Request Date less the number of shares as to which
payment has been made pursuant to Section 7(a)(B); provided that if the Option
shall have terminated prior to the date of such notice or shall be scheduled to
terminate at any time before the expiration of a period ending on the thirtieth
business day after such date, Grantee shall nonetheless have the right so to
exercise the Option or exercise its rights under Section 10 until the expiration
of such period of 30 business days. Notwithstanding anything herein to the
contrary, Issuer shall not
<PAGE> 62
8
be obligated to repurchase the Option or any shares of Issuer Common Stock
pursuant to this Section 7 on more than one occasion.
(c) For purposes of this Agreement, the "Applicable Price," as of any
date, means the highest of (i) the highest price per share at which a Tender
Offer has been made for shares of Issuer Common Stock after the date hereof and
on or prior to such date, (ii) the price per share to be paid by any third party
for shares of Issuer Common Stock or the consideration per share to be received
by holders of Issuer Common Stock, in each case pursuant to an agreement for a
merger or other business combination transaction with Issuer entered into on or
prior to such date or (iii) the highest closing sales price per share of Issuer
Common Stock quoted on the NYSE (or if Issuer Common Stock is not quoted on the
NYSE, the highest bid price per share as quoted on the National Association of
Securities Dealers Automated Quotations System or, if the shares of Issuer
Common Stock are not quoted thereon, on the principal trading market on which
such shares are traded as reported by a recognized source) during the 60
business days preceding such date. If the consideration to be offered, paid or
received pursuant to either of the foregoing clauses (i) or (ii) shall be other
than in cash, the value of such consideration shall be determined in good faith
by an independent nationally recognized investment banking firm selected by
Grantee and reasonably acceptable to Issuer, which determination shall be
conclusive for all purposes of this Agreement.
(d) As used herein, a "Repurchase Event" means the occurrence of any of
the Purchase Events specified in Section 2(b)(ii) or (iii).
8. Repurchase of Substitute Option. (a) At the request of Grantee at
any time after issuance of the Substitute Option, Substitute Option Issuer (or
any successor entity thereof) shall repurchase from Grantee (I) the Substitute
Option and (II) all shares of Substitute Common Stock purchased by Grantee
pursuant to such Substitute Option with respect to which Grantee then has
beneficial ownership. The date on which Grantee exercises its rights under this
Section 8 is referred to as the "Section 8 Request Date". Such repurchase shall
be at an aggregate price (the "Section 8 Repurchase Consideration") equal to:
(i) the Substitute Option Price paid by Grantee for any shares
of Substitute Common Stock acquired pursuant to the Substitute Option
with respect to which Grantee then has beneficial ownership; plus
(ii) the excess, if any, of (x) the Highest Closing Price (as
defined below) for a share of Substitute Common Stock over (y) the
Substitute Option Price (subject to adjustment pursuant to Section 6),
multiplied by the number of shares of Substitute Common Stock with
respect to which the Substitute Option has not been exercised; plus
(iii) the excess, if any, of the Highest Closing Price over the
Substitute Option Price paid (or, in the case of Substitute Common
Stock with respect to which the Substitute Option has been exercised
but the Closing Date has not occurred, payable (subject to adjustment
pursuant to Section 6)) by Grantee for each share of Substitute Common
Stock with respect to which the Substitute Option has been exercised
and with respect to which Grantee then has beneficial ownership,
multiplied by the number of such shares; plus
(iv) the amount of the documented reasonable out-of-pocket
expenses incurred by Grantee in connection with the Merger Agreement
and this Agreement and the transactions contemplated thereby and
hereby, including reasonable accounting, investment banking and legal
fees.
(b) If Grantee exercises its rights under this Section 8, Substitute
Option Issuer shall, within 10 business days after the Section 8 Request Date,
pay the Section 8 Repurchase Consideration to Grantee in immediately available
funds, and Grantee shall surrender to Substitute Option Issuer the Substitute
Option and the certificates evidencing the shares of Substitute Common Stock
purchased thereunder with respect to which Grantee then has beneficial
ownership, and Grantee shall warrant that it has sole record and beneficial
ownership of such shares and that the same are then free and clear of all liens,
claims, charges and encumbrances of any
<PAGE> 63
9
kind whatsoever. Notwithstanding the foregoing, to the extent that prior
notification to or approval of the Federal Reserve or other regulatory authority
is required in connection with the payment of all or any portion of the Section
8 Repurchase Consideration, Substitute Option Issuer shall deliver from time to
time that portion of the Section 8 Repurchase Consideration that it is not then
so prohibited from paying and shall promptly provide the required notice or
application for approval and shall expeditiously process the same (and Grantee
shall cooperate with Substitute Option Issuer in the filing of any such notice
or application and the obtaining of any such approval), and the period of time
that otherwise would run pursuant to the preceding sentence for the payment of
the portion of the Section 8 Repurchase Consideration requiring such
notification or approval shall run instead from the date on which, as the case
may be, (i) any required notification period has expired or been terminated or
(ii) such approval has been obtained and, in either event, any requisite waiting
period shall have passed. If the Federal Reserve or any other regulatory
authority disapproves of any part of Substitute Option Issuer's proposed
repurchase pursuant to this Section 8, Substitute Option Issuer shall promptly
give notice of such fact to Grantee and redeliver to Grantee the Substitute
Common Stock it is then prohibited from repurchasing, and Grantee shall have the
right to exercise the Substitute Option as to the number of shares of Substitute
Common Stock for which the Substitute Option was exercisable at the Section 8
Request Date; provided that if the Substitute Option shall have terminated prior
to the date of such notice or shall be scheduled to terminate at any time before
the expiration of a period ending on the thirtieth business day after such date,
Grantee shall nonetheless have the right so to exercise the Substitute Option or
exercise its rights under Section 10 until the expiration of such period of 30
business days. Notwithstanding anything herein to the contrary, Substitute
Option Issuer shall not be obligated to repurchase the Substitute Option or any
shares of Substitute Common Stock pursuant to this Section 8 on more than one
occasion.
(c) For purposes of this Agreement, the "Highest Closing Price" means
the highest closing sales price for shares of Substitute Common Stock quoted on
the NYSE (or if the Substitute Common Stock is not quoted on the NYSE, the
highest bid price per share as quoted on the National Association of Securities
Dealers Automated Quotations System or, if the shares of Substitute Common Stock
are not quoted thereon, on the principal trading market on which such shares are
traded as reported by a recognized source) during the six-month period preceding
the Section 8 Request Date.
9. Mandatory Repurchase of Option. (a) In the event that any person
who has participated in a Purchase Event enters into any agreement or
understanding with Grantee with respect to Grantee's exercise of, or its
election not to exercise, any of Grantee's rights set forth in Section 2 or 7 of
this Agreement, Grantee shall, by written notice to Issuer, require that Issuer
repurchase, and Issuer shall repurchase, (I) the Option and (II) all (but not
less than all) the shares of Issuer Common Stock purchased by Grantee pursuant
hereto and with respect to which Grantee then has beneficial ownership;
provided, however, that the parties shall not be obligated to effect such
mandatory repurchase if the Board of Directors of Issuer determines, after
having consulted with and considered the written advice of outside counsel, that
such mandatory repurchase would cause the members of the Board of Directors to
breach their fiduciary duties; and provided, further, that any such
determination by the Board of Directors of Issuer shall not operate to limit
Grantee's rights pursuant to Section 7 hereof. The date of Grantee's written
notice referred to above is referred to as the "Section 9 Notice Date". Such
repurchase shall be at an aggregate price (the "Section 9 Repurchase
Consideration") equal to:
(i) the aggregate Purchase Price paid by Grantee for any shares
of Issuer Common Stock acquired pursuant to the Option with respect to
which Grantee then has beneficial ownership; plus
(ii) the excess, if any, of (x) the Applicable Price as of the
Section 9 Notice Date for a share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 6(a)),
multiplied by the number of shares of Issuer Common Stock with respect
to which the Option has not been exercised; plus
(iii) the excess, if any, of the Applicable Price as of the
Section 9 Notice Date over the Purchase Price paid (or, in the case of
Option Shares with respect to which the Option has been exercised but
the Closing Date has not occurred, payable (subject to adjustment
pursuant to Section 6(a))) by Grantee for
<PAGE> 64
each share of Issuer Common Stock with respect to which the Option has
been exercised and with respect to which Grantee then has beneficial
ownership, multiplied by the number of such shares; plus
(iv) the amount of the documented reasonable out-of-pocket
expenses incurred by Grantee in connection with the Merger Agreement
and this Agreement and the transactions contemplated thereby and
hereby, including reasonable accounting, investment banking and legal
fees.
(b) Notwithstanding the provisions of Section 9(a), within 30 days
following the Section 9 Notice Date, Grantee may deliver an Offeror's Notice
pursuant to Section 11, in which case the provisions of Section 11 and not those
of this Section 9 shall control. If Grantee does not deliver an Offeror's Notice
within such 30-day period, Issuer shall, within 10 business days after the
expiration of such 30-day period or, if applicable, upon abandonment of the
transaction covered by such Offeror's Notice, pay the Section 9 Repurchase
Consideration in immediately available funds, and Grantee shall surrender to
Issuer the Option and the certificates evidencing the shares of Issuer Common
Stock purchased hereunder with respect to which Grantee then has beneficial
ownership, and Grantee shall warrant that it has sole record and beneficial
ownership of such shares and that the same are then free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever. If the Federal Reserve
or any other regulatory authority disapproves of any part of Issuer's proposed
repurchase pursuant to this Section 9, Issuer shall promptly give notice of such
fact to Grantee and thereafter deliver or cause to be delivered from time to
time to Grantee the portion of the Section 9 Repurchase Consideration that
Issuer is no longer prohibited from delivering, within five business days after
the date on which it is no longer so prohibited.
(c) If, prior to the date which is 18 months after the Section 9 Notice
Date, Issuer enters into, or is the subject of, any transaction which would have
constituted a Repurchase Event hereunder but for the prior repurchase by Issuer
of the Option and shares of Issuer Common Stock under this Section 9, then
concurrently with the occurrence of such event, Issuer shall pay to Grantee, as
additional consideration for the Option and shares of Issuer Common Stock
purchased by Issuer pursuant to this Section, an amount in immediately available
funds equal to the excess, if any, of (i) the Section 9 Repurchase Consideration
calculated as if the Section 9 Notice Date had occurred on the date of such
Repurchase Event over (ii) the amount previously paid by Issuer to Grantee
pursuant to this Section 9.
(d) In the event that Issuer is, as a result of law or regulation,
prohibited from performing any of its obligations under this Section 9, Issuer
shall not thereafter enter into any Acquisition Transaction unless the other
parties thereto agree to assume Issuer's obligations under this Section 9 to the
extent not previously performed. The foregoing sentence shall not operate to
limit or waive any remedies Grantee may have against Issuer for Issuer's failure
to perform its obligations under this Section 9.
10. Registration Rights. Issuer shall, if requested by Grantee at any
time and from time to time (a) within three years of the first exercise of the
Option or (b) for 30 business days following the occurrence of either of the
events set forth in clauses (i) and (ii) of Section 2(d) or receipt by Grantee
of official notice that an approval of the Federal Reserve or any other
regulatory authority required for a repurchase as contemplated hereby would not
be issued or granted (but solely as to the securities or portion of the Option
with respect to which the required approval was not received), as expeditiously
as possible prepare and file up to two registration statements under the
Securities Act if such registration is necessary in order to permit the sale or
other disposition of any or all shares of securities that have been acquired by
or are issuable to Grantee upon exercise of the Option in accordance with the
intended method of sale or other disposition stated by Grantee, including a
"shelf" registration statement under Rule 415 under the Securities Act or any
successor provision, and Issuer shall use its best efforts to qualify such
shares or other securities under any applicable state securities laws. Grantee
agrees to use all reasonable efforts to cause, and to cause any underwriters of
any sale or other disposition to cause, any sale or other disposition pursuant
to such registration statement to be effected on a widely distributed basis so
that upon consummation thereof no purchaser or transferee shall own beneficially
more than 2% of the then outstanding voting power of Issuer. Issuer shall use
all reasonable efforts to cause each such registration statement to become
effective, to obtain all consents or waivers of other parties which are required
therefor and to keep such registration statement effective for such period not
in excess of 180 days from
<PAGE> 65
11
the day such registration statement first becomes effective as may be reasonably
necessary to effect such sale or other disposition. In the event that Grantee
requests Issuer to file a registration statement following the failure to obtain
a required approval for an exercise of the Option as described in Section 2(d),
the closing of the sale or other disposition of Issuer Common Stock or other
securities pursuant to such registration statement shall occur substantially
simultaneously with the exercise of the Option. The obligations of Issuer
hereunder to file a registration statement and to maintain its effectiveness may
be suspended for one or more periods of time not exceeding 60 days in the
aggregate if the Board of Directors of Issuer shall have determined that the
filing of such registration statement or the maintenance of its effectiveness
would require disclosure of nonpublic information that would materially and
adversely affect Issuer. Any registration statement prepared and filed under
this Section 10, and any sale covered thereby, shall be at Issuer's expense
except for underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto. Grantee shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If during the time periods referred to in the
first sentence of this Section 10 Issuer effects a registration under the
Securities Act of Issuer Common Stock for its own account or for any other
stockholders of Issuer (other than on Form S-4 or Form S-8, or any successor
form), it shall allow Grantee the right to participate in such registration, and
such participation shall not affect the obligation of Issuer to effect two
registration statements for Grantee under this Section 10; provided that, if the
managing underwriters of such offering advise Issuer in writing that in their
opinion the number of shares of Issuer Common Stock requested to be included in
such registration exceeds the number which can be sold in such offering, Issuer
shall include the shares requested to be included therein by Grantee pro rata
with the shares intended to be included therein by Issuer. In connection with
any registration pursuant to this Section 10, Issuer and Grantee shall provide
each other and any underwriter of the offering with customary representations,
warranties, covenants, indemnification and contribution in connection with such
registration.
11. First Refusal. At any time after the first occurrence of a Purchase
Event and prior to the later of (a) the expiration of 24 months immediately
following the first purchase of shares of Issuer Common Stock pursuant to the
Option and (b) the termination of the Option pursuant to Section 2(a), if
Grantee shall desire to sell, assign, transfer or otherwise dispose of all or
any of the Option or the shares of Issuer Common Stock or other securities
acquired by it pursuant to the Option, it shall give Issuer written notice of
the proposed transaction (an "Offeror's Notice"), identifying the proposed
transferee, accompanied by a copy of a binding offer to purchase the Option or
such shares or other securities signed by such transferee and setting forth the
terms of the proposed transaction. An Offeror's Notice shall be deemed an offer
by Grantee to Issuer, which may be accepted within 10 business days of the
receipt of such Offeror's Notice, on the same terms and conditions and at the
same price at which Grantee is proposing to transfer the Option or such shares
or other securities to such transferee. The purchase of the Option or any such
shares or other securities by Issuer shall be settled within 10 business days of
the date of the acceptance of the offer and the purchase price shall be paid to
Grantee in immediately available funds; provided that, if prior notification to
or approval of the Federal Reserve or any other regulatory authority is required
in connection with such purchase, Issuer shall promptly file the required notice
or application for approval and shall expeditiously process the same (and
Grantee shall cooperate with Issuer in the filing of any such notice or
application and the obtaining of any such approval) and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which, as the case may be, (a) any required notification period has expired or
been terminated or (b) such approval has been obtained and, in either event, any
requisite waiting period shall have passed. In the event of the failure or
refusal of Issuer to purchase all of the Option or all of the shares or other
securities covered by an Offeror's Notice or if the Federal Reserve or any other
regulatory authority disapproves Issuer's proposed purchase of any portion of
the Option or such shares or other securities, Grantee may, within 60 days from
the date of the Offeror's Notice (subject to any necessary extension for
regulatory notification, approval or waiting periods), sell all, but not less
than all, of such portion of the Option or such shares or other securities to
the proposed transferee at no less than the price specified and on terms no more
favorable than those set forth in the Offeror's Notice. The requirements of this
Section 11 shall not apply to (w) any disposition as a result of which the
proposed transferee would own beneficially not more than 2% of the outstanding
voting power of Issuer, (x) any disposition of Issuer Common Stock or other
securities by a person to whom Grantee has assigned its rights under the Option
with the consent of Issuer, (y) any sale by means of a public offering
registered under the Securities Act in which steps are taken to reasonably
assure that no purchaser will acquire securities representing
<PAGE> 66
12
more than 2% of the outstanding voting power of Issuer or (z) any transfer to a
wholly owned Subsidiary of Grantee which agrees in writing to be bound by the
terms hereof.
12. Listing. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then listed on the NYSE, Issuer, upon
the request of Grantee, will promptly file an application to list the shares of
Issuer Common Stock or other securities to be acquired upon exercise of the
Option on the NYSE and will use its best efforts to obtain approval of such
listing as soon as practicable.
13. Division of Option. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of Grantee, upon presentation
and surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
14. Miscellaneous. (a) Expenses. Except as otherwise provided in
Sections 7, 8, 9 and 10, each of the parties hereto shall bear and pay all costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be waived
at any time by the party that is entitled to the benefits of such provision.
This Agreement may not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability. Except
as otherwise set forth in the Merger Agreement, this Agreement (including the
Merger Agreement and the other documents and instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or a federal or state regulatory agency to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit Grantee to acquire,
or does not require Issuer to repurchase, the full number of shares of Issuer
Common Stock or Substitute Common Stock as provided in Sections 2, 7 and 8 (as
adjusted pursuant to Section 6), it is the express intention of Issuer to allow
Grantee to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York without regard to any
applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
<PAGE> 67
13
If to Issuer to:
The Chase Manhattan Corporation
1 Chase Manhattan Plaza
New York, New York 10081
Attention: General Counsel
Telecopier No.: (212) 552-5378
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: H. Rodgin Cohen, Esq.
Telecopier No.: (212) 558-3588
If to Grantee to:
Chemical Banking Corporation
270 Park Avenue
New York, New York 10017
Attention: General Counsel
Telecopier No.: (212) 270-4288
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Lee Meyerson, Esq.
Telecopier No.: (212) 455-2502
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned Subsidiary of Grantee and that Grantee may assign
all or part of its rights hereunder to any person after the occurrence of a
Purchase Event. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this Agreement
may be enforced by either party through specific performance, injunctive relief
and other equitable relief. Both parties further agree to waive any requirement
for the securing or posting of any bond in connection with the obtaining of any
such equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
<PAGE> 68
14
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized as
of the day and year first written above.
THE CHASE MANHATTAN CORPORATION
by
----------------------------------
Name:
Title:
CHEMICAL BANKING CORPORATION
by
----------------------------------
Name:
Title:
<PAGE> 69
EXHIBIT 1.1(b)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of August 27, 1995 (the "Agreement"),
by and between CHEMICAL BANKING CORPORATION, a Delaware corporation ("Issuer"),
and THE CHASE MANHATTAN CORPORATION, a Delaware corporation ("Grantee").
WHEREAS, Grantee and Issuer are concurrently herewith entering into an
Agreement and Plan of Merger dated as of the date hereof (the "Merger
Agreement"; capitalized terms not defined herein shall have the meanings set
forth in the Merger Agreement), providing for, among other things, the merger of
Grantee with and into Issuer with Issuer as the surviving corporation;
WHEREAS, as a condition and inducement to Grantee's willingness to
enter into the Merger Agreement and the Chase Stock Option Agreement, Grantee
has requested that Issuer agree, and Issuer has agreed, to grant Grantee the
Option (as defined below); and
WHEREAS, as a condition and inducement to Issuer's willingness to enter
into the Merger Agreement and this Agreement, Issuer has requested that Grantee
agree, and Grantee has agreed, to grant Issuer an option to purchase shares of
Grantee's common stock on substantially the same terms as the Option;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, in the
Merger Agreement and in the Chase Stock Option Agreement, Issuer and Grantee
agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 50,170,882 (as adjusted as set forth herein) shares (the "Option
Shares") of Common Stock, par value $1.00 per share ("Issuer Common Stock"), of
Issuer at a purchase price of $53.50 per Option Share (the "Purchase Price").
2. Exercise of Option. (a) If not in material breach of the Merger
Agreement or the Chase Stock Option Agreement, Grantee may exercise the Option,
in whole or in part, at any time and from time to time following the occurrence
of a Purchase Event (as defined below); provided that, except as provided in the
last sentence of this Section 2(a), the Option shall terminate and be of no
further force and effect upon the earliest to occur of (i) the Effective Time,
(ii) 18 months after the first occurrence of a Purchase Event or (iii)
termination of the Merger Agreement prior to the occurrence of a Purchase Event;
and, provided, further, that any purchase of shares upon exercise of the Option
shall be subject to compliance with applicable law, including the Bank Holding
Company Act of 1956, as amended (the "BHC Act"). Notwithstanding the termination
of the Option, Grantee shall be entitled to purchase those Option Shares with
respect to which it has exercised the Option in accordance with the terms hereof
prior to the termination of the Option. The termination of the Option shall not
affect any rights hereunder which by their terms extend beyond the date of such
termination.
(b) As used herein, a "Purchase Event" means any of the following
events:
(i) any person (other than Grantee or any Subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act), or shall have filed a registration statement
under the Securities Act with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person or a "group" (as such term is
defined under the Exchange Act) of which such person is a member shall
have acquired beneficial ownership (as such term is defined in Rule
13d-3 of the Exchange Act), or the right to acquire beneficial
ownership, of 15% or more of the then outstanding Issuer Common Stock
(any such offer, a "Tender Offer");
<PAGE> 70
2
(ii) Issuer or any Subsidiary of Issuer shall have authorized,
recommended, proposed or publicly announced an intention to authorize,
recommend or propose, or entered into, an agreement with any person
(other than Grantee or any Subsidiary of Grantee) to (A) effect a
merger, consolidation or other business combination involving Issuer or
any of its Significant Subsidiaries, (B) sell, lease or otherwise
dispose of assets or deposits of Issuer or its Subsidiaries aggregating
20% or more of the consolidated assets or deposits of Issuer and its
Subsidiaries or (C) issue, sell or otherwise dispose of (including by
way of merger, consolidation, share exchange or any similar
transaction) securities representing 15% or more of the voting power of
Issuer or any of its Significant Subsidiaries (any of the foregoing an
"Acquisition Transaction");
(iii) any person (other than Grantee or any Subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 under the Exchange Act) or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under
the Exchange Act) shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, shares of Issuer Common
Stock (other than trust account shares) aggregating 15% or more of the
then outstanding Issuer Common Stock; or
(iv) the holders of Issuer Common Stock shall not have
approved the Merger Agreement at the meeting of such stockholders held
for the purpose of voting on the Merger Agreement, such meeting shall
not have been held or shall have been cancelled prior to termination of
the Merger Agreement or Issuer's Board of Directors shall have
withdrawn or modified in a manner adverse to Grantee or to Grantee's
ability to consummate the transactions contemplated by the Merger
Agreement the recommendation of Issuer's Board of Directors with
respect to the Merger Agreement, in each case after any person (other
than Grantee or any Subsidiary of Grantee) shall have (A) publicly
announced a proposal, or publicly disclosed an intention to make a
proposal, to engage in an Acquisition Transaction or (B) filed an
application (or given a notice), whether in draft or final form, under
the BHC Act or the Change in Bank Control Act of 1978 for approval to
engage in an Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event Grantee wishes to exercise the Option, it shall send
to Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 20 business days from the Notice Date for the
closing of such purchase (the "Closing Date"); provided that if the closing of
the purchase and sale pursuant to the Option (the "Closing") cannot be
consummated by reason of any applicable judgment, decree, order, law or
regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated; and provided, further, without
limiting the foregoing, that if prior notification to or approval of the Federal
Reserve or any other regulatory authority is required in connection with such
purchase, Grantee shall promptly file the required notice or application for
approval and shall expeditiously process the same (and Issuer shall cooperate
with Grantee in the filing of any such notice or application and the obtaining
of any such approval), and the period of time that otherwise would run pursuant
to this sentence shall run instead from the date on which, as the case may be,
(i) any required notification period has expired or been terminated or (ii) such
approval has been obtained, and in either event, any requisite waiting period
has passed.
(d) Notwithstanding Section 2(c), in no event shall any Closing Date be
more than 18 months after the related Notice Date, and if the Closing Date shall
not have occurred within 18 months after the related Notice Date due to the
failure to obtain any such required approval, the exercise of the Option
effected on the Notice Date shall be deemed to have expired. In the event (i)
Grantee receives official notice that an approval of the Federal Reserve or any
other regulatory authority required for the purchase of Option Shares will not
be issued or granted or (ii) a Closing Date shall not have occurred within 18
months after the related Notice Date due to the failure to obtain any such
required approval, Grantee shall be entitled to exercise its right as set forth
in Section 7 or Section 8, as applicable, or to exercise the Option in
connection with the resale of Issuer
<PAGE> 71
3
Common Stock or other securities pursuant to a registration statement as
provided in Section 10. The provisions of this Section 2 and Section 3 shall
apply with appropriate adjustments to any such exercise.
3. Payment and Delivery of Certificates. (a) On each Closing Date,
Grantee shall pay to Issuer in immediately available funds by wire transfer to a
bank account designated by Issuer an amount equal to the Purchase Price
multiplied by the Option Shares to be purchased on such Closing Date.
(b) At each Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Issuer shall deliver to Grantee a
certificate or certificates representing the Option Shares to be purchased at
such Closing, which Option Shares shall be free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever, and Grantee shall deliver to
Issuer a letter agreeing that Grantee shall not offer to sell or otherwise
dispose of such Option Shares in violation of applicable law or the provisions
of this Agreement. If at the time of issuance of any Option Shares pursuant to
an exercise of all or part of the Option hereunder, Issuer shall not have
redeemed the Chemical Rights, or shall have issued any similar securities, then
each Option Share issued pursuant to such exercise shall also represent a
corresponding Chemical Right or new rights with terms substantially the same as
and at least as favorable to Grantee as are provided under the Chemical Rights
Agreement or any similar agreement then in effect.
(c) Certificates for the Option Shares delivered at each Closing shall
be endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF AUGUST
27, 1995. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER
HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST
THEREFOR.
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act and
(ii) the reference to restrictions pursuant to this Agreement in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the Option Shares evidenced by certificate(s) containing such
reference have been sold or transferred in compliance with the provisions of
this Agreement under circumstances that do not require the retention of such
reference.
4. Representations and Warranties of Issuer. Issuer hereby represents
and warrants to Grantee as follows:
(a) Due Authorization. Issuer has all requisite corporate power
and authority to enter into this Agreement and, subject to any
approvals referred to herein, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Issuer.
This Agreement has been duly executed and delivered by Issuer and
constitutes a valid and binding obligation of Issuer, enforceable in
accordance with its terms.
(b) Authorized Stock. Issuer has taken all necessary corporate
and other action to authorize and reserve and, subject to obtaining the
governmental and other approvals and consents referred to herein, to
permit it to issue, and, at all times from the date hereof until the
obligation to deliver Issuer Common Stock upon the exercise of the
Option terminates, will have reserved for issuance, upon exercise of
the Option, shares of Issuer Common Stock necessary for Grantee to
exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional shares of
Issuer Common Stock or other securities which may be issued pursuant to
Section 6 upon
<PAGE> 72
4
exercise of the Option or any Substitute Option (as hereinafter
defined). The shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer
Common Stock or other securities which may be issuable upon exercise of
the Option or any Substitute Option pursuant to Section 6, upon
issuance pursuant hereto, shall be duly and validly issued, fully paid
and nonassessable, and shall be delivered free and clear of all liens,
claims, charges and encumbrances of any kind or nature whatsoever,
including any preemptive rights of any stockholder of Issuer.
(c) No Conflicts. Except as disclosed pursuant to the Merger
Agreement, the execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not,
conflict with, or result in any Violation pursuant to any provision of
the Certificate of Incorporation or By-laws of Issuer or any Subsidiary
of Issuer or, subject to obtaining any approvals or consents
contemplated hereby, result in any Violation of any loan or credit
agreement, note, mortgage, indenture, lease, Chemical Benefit Plan or
other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Issuer or any Subsidiary of Issuer or their
respective properties or assets which Violation would, individually or
in the aggregate, have a material adverse effect (as defined in the
Merger Agreement) on Issuer.
(d) Board Action. The Board of Directors of Issuer having
approved this Agreement and the consummation of the transactions
contemplated hereby, the provisions of Section 203 of the Delaware
General Corporation Law do not and will not apply to this Agreement or
the purchase of shares of Issuer Common Stock pursuant to this
Agreement.
(e) Rights Amendment. The Chemical Rights Agreement has been
amended to provide that Grantee will not become an "Acquiring Person"
or an "Adverse Person" and that no "Triggering Event," "Stock
Acquisition Date" or "Distribution Date" (as such terms are defined in
the Chemical Rights Agreement) will occur as a result of the approval,
execution or delivery of this Agreement or the Merger Agreement or the
consummation of the transactions contemplated hereby and thereby,
including the acquisition of shares of Issuer Common Stock by Grantee
pursuant to this Agreement.
5. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that:
(a) Due Authorization. Grantee has all requisite corporate power
and authority to enter into this Agreement and, subject to any
approvals or consents referred to herein, to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by
Grantee and constitutes a valid and binding obligation of Grantee,
enforceable in accordance with its terms.
(b) No Conflicts. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby
will not result in any Violation pursuant to any provision of the
Certificate of Incorporation or By-laws of Grantee or any Subsidiary of
Grantee or, subject to obtaining any approvals or consents contemplated
hereby, result in any Violation of any loan or credit agreement, note,
mortgage, indenture, lease, Chase Benefit Plan or other agreement,
obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Grantee or any Subsidiary of Grantee or their respective
properties or assets which Violation, individually or in the aggregate,
would have a material adverse effect on Grantee.
(c) Purchase Not for Distribution. Any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be
taken with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered
or exempt from registration under the Securities Act.
<PAGE> 73
5
6. Adjustment upon Changes in Capitalization, etc. (a) In the event of
any change in Issuer Common Stock by reason of a stock dividend, split-up,
recapitalization, combination, exchange of shares or similar transaction, the
type and number of shares or securities subject to the Option, and the Purchase
Price therefor, shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Grantee shall receive
upon exercise of the Option the number and class of shares or other securities
or property that Grantee would have received in respect of Issuer Common Stock
if the Option had been exercised immediately prior to such event or the record
date therefor, as applicable. If any additional shares of Issuer Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 6(a)), the number of shares of
Issuer Common Stock subject to the Option shall be adjusted so that, after such
issuance, it equals 19.9% of the number of shares of Issuer Common Stock then
issued and outstanding, without giving effect to any shares subject to or issued
pursuant to the Option.
(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the shares of Issuer
Common Stock outstanding immediately prior to the consummation of such merger
shall be changed into or exchanged for stock or other securities of Issuer or
any other person or cash or any other property, or the shares of Issuer Common
Stock outstanding immediately prior to the consummation of such merger shall
after such merger represent less than 50% of the outstanding voting securities
of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets or deposits to any person, other than Grantee or
one of its Subsidiaries, then, and in each such case, the agreement governing
such transaction shall make proper provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (I) the Acquiring Corporation
(as defined below) or (II) any person that controls the Acquiring Corporation
(any such person being referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option;
provided that the exercise price therefor and number of shares subject thereto
shall be as set forth in this Section 6 and the repurchase rights relating
thereto shall be as set forth in Section 8; provided, further, that the
Substitute Option shall be exercisable immediately upon issuance without the
occurrence of a Purchase Event; and provided, further, that if the terms of the
Substitute Option cannot, for legal reasons, be the same as the Option (subject
to the variations described in the foregoing provisos), such terms shall be as
similar as possible and in no event less advantageous to Grantee. Substitute
Option Issuer shall also enter into an agreement with Grantee in substantially
the same form as this Agreement (subject to the variations described in the
foregoing provisos), which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as defined below) as is equal to the Assigned
Value (as defined below) multiplied by the number of shares of Issuer Common
Stock for which the Option was theretofore exercisable, divided by the Average
Price (as defined below), rounded up to the nearest whole share. The exercise
price per share of Substitute Common Stock of the Substitute Option (the
"Substitute Option Price") shall then be equal to the Purchase Price multiplied
by a fraction in which the numerator is the number of shares of Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares of Substitute Common Stock for which the Substitute Option
is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of outstanding Substitute
Common Stock but for the limitation in the first sentence of this Section 6(e),
Substitute Option Issuer shall make a cash payment to Grantee equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in the first sentence of this Section 6(e) over (ii) the value of the
Substitute Option after giving effect to the limitation in the first sentence of
this
<PAGE> 74
6
Section 6(e). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Grantee.
(f) Issuer shall not enter into any transaction described in Section
6(b) unless the Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer hereunder and take
all other actions that may be necessary so that the provisions of this Section 6
are given full force and effect (including, without limitation, any action that
may be necessary so that the holders of the other shares of common stock issued
by Substitute Option Issuer are not entitled to exercise any rights by reason of
the issuance or exercise of the Substitute Option and the shares of Substitute
Common Stock are otherwise in no way distinguishable from or have lesser
economic value than other shares of common stock issued by Substitute Option
Issuer (other than any diminution in value resulting from the fact that the
shares of Substitute Common Stock are restricted securities, as defined in Rule
144 under the Securities Act or any successor provision)).
(g) For purposes hereof, the following terms have the following
meanings:
(1) "Acquiring Corporation" means (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving corporation and (iii) the transferee of all or
substantially all of Issuer's assets or deposits.
(2) "Assigned Value" means the highest of (w) the price per
share of Issuer Common Stock at which a Tender Offer has been made
after the date hereof and prior to the consummation of the
consolidation, merger or sale referred to in Section 6(b), (x) the
price per share to be paid by any third party or the consideration per
share to received by holders of Issuer Common Stock, in each case
pursuant to the agreement with Issuer with respect to the
consolidation, merger or sale referred to in Section 6(b), (y) the
highest closing sales price per share for Issuer Common Stock quoted on
the NYSE (or if such Issuer Common Stock is not quoted on the NYSE, the
highest bid price per share as quoted on the National Association of
Securities Dealers Automated Quotation System or, if the shares of
Issuer Common Stock are not quoted thereon, on the principal trading
market on which such shares are traded as reported by a recognized
source) during the 12-month period immediately preceding the
consolidation, merger or sale referred to in Section 6(b) and (z) in
the event the transaction referred to in Section 6(b) is a sale of all
or substantially all of Issuer's assets and/or deposits, an amount
equal to (i) the sum of the price paid in such sale for such assets
and/or deposits and the current market value of the remaining assets of
Issuer, as determined by a nationally recognized investment banking
firm selected by Grantee divided by (ii) the number of shares of Issuer
Common Stock outstanding at such time. In the event that a Tender Offer
is made for Issuer Common Stock or an agreement is entered into for a
merger or consolidation involving consideration other than cash, the
value of the securities or other property issuable or deliverable in
exchange for Issuer Common Stock shall be determined by a nationally
recognized investment banking firm selected by Grantee.
(3) "Average Price" means the average closing sales price per
share of a share of Substitute Common Stock quoted on the NYSE (or if
such Substitute Common Stock is not quoted on the NYSE, the highest bid
price per share as quoted on the National Association of Securities
Dealers Automated Quotation System or, if the shares of Substitute
Common Stock are not quoted thereon, on the principal trading market on
which such shares are traded as reported by a recognized source) for
the one year immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of the shares
of Substitute Common Stock on the day preceding such consolidation,
merger or sale; provided that if Substitute Option Issuer is Issuer,
the Average Price shall be computed with respect to a share of common
stock issued by Issuer, the person merging into Issuer or by any
company which controls such person, as Grantee may elect.
(4) "Substitute Common Stock" means the shares of capital stock
(or similar equity interest) with the greatest voting power in respect
of the election of directors (or persons similarly responsible for the
direction of the business and affairs) of the Substitute Option Issuer.
<PAGE> 75
7
7. Repurchase of Option at the Election of Grantee. (a) At the request
of Grantee at any time commencing (i) upon the first occurrence of a Repurchase
Event (as defined below) and ending 18 months immediately thereafter and (ii)
for 30 business days following the occurrence of either of the events set forth
in clauses (i) and (ii) of Section 2(d) (but solely as to the shares of Issuer
Common Stock with respect to which the required approval was not received),
Issuer (or any successor entity thereof) shall repurchase from Grantee (I) the
Option and (II) all shares of Issuer Common Stock purchased by Grantee pursuant
hereto with respect to which Grantee then has beneficial ownership. The date on
which Grantee exercises its rights under this Section 7 is referred to as the
"Section 7 Request Date". Such repurchase shall be at an aggregate price (the
"Section 7 Repurchase Consideration") equal to:
(A) the aggregate Purchase Price paid by Grantee for any shares of
Issuer Common Stock acquired pursuant to the Option with respect to
which Grantee then has beneficial ownership; plus
(B) the excess, if any, of (x) the Applicable Price (as defined
below) as of the Section 7 Request Date for a share of Issuer Common
Stock over (y) the Purchase Price (subject to adjustment pursuant to
Section 6(a)), multiplied by the number of shares of Issuer Common
Stock with respect to which the Option has not been exercised; plus
(C) the excess, if any, of the Applicable Price as of the Section 7
Request Date over the Purchase Price paid (or, in the case of Option
Shares with respect to which the Option has been exercised but the
Closing Date has not occurred, payable (subject to adjustment pursuant
to Section 6(a))) by Grantee for each share of Issuer Common Stock with
respect to which the Option has been exercised and with respect to
which Grantee then has beneficial ownership, multiplied by the number
of such shares; plus
(D) the amount of the documented reasonable out-of-pocket expenses
incurred by Grantee in connection with the Merger Agreement and this
Agreement and the transactions contemplated thereby and hereby,
including reasonable accounting, investment banking and legal fees.
(b) If Grantee exercises its rights under this Section 7, Issuer shall,
within 10 business days after the Section 7 Request Date, pay the Section 7
Repurchase Consideration to Grantee in immediately available funds, and Grantee
shall surrender to Issuer the Option and the certificates evidencing the shares
of Issuer Common Stock purchased hereunder with respect to which Grantee then
has beneficial ownership, and Grantee shall warrant that it has sole record and
beneficial ownership of such shares and that the same are then free and clear of
all liens, claims, charges and encumbrances of any kind whatsoever.
Notwithstanding the foregoing, to the extent that prior notification to or
approval of the Federal Reserve or other regulatory authority is required in
connection with the payment of all or any portion of the Section 7 Repurchase
Consideration, Issuer shall deliver from time to time that portion of the
Section 7 Repurchase Consideration that it is not then so prohibited from paying
and shall promptly provide the required notice or application for approval and
shall expeditiously process the same (and Grantee shall cooperate with Issuer in
the filing of any such notice or application and the obtaining of any such
approval), and the period of time that otherwise would run pursuant to the
preceding sentence for the payment of the portion of the Section 7 Repurchase
Consideration requiring such notification or approval shall run instead from the
date on which, as the case may be, (i) any required notification period has
expired or been terminated or (ii) such approval has been obtained and, in
either event, any requisite waiting period shall have passed. If the Federal
Reserve or any other regulatory authority disapproves of any part of Issuer's
proposed repurchase pursuant to this Section 7, Issuer shall promptly give
notice of such fact to Grantee and redeliver to Grantee the Option Shares it is
then prohibited from repurchasing, and Grantee shall have the right to exercise
the Option as to the number of Option Shares for which the Option was
exercisable at the Section 7 Request Date less the number of shares as to which
payment has been made pursuant to Section 7(a)(B); provided that if the Option
shall have terminated prior to the date of such notice or shall be scheduled to
terminate at any time before the expiration of a period ending on the thirtieth
business day after such date, Grantee shall nonetheless have the right so to
exercise the Option or exercise its rights under Section 10 until the expiration
of such period of 30 business days. Notwithstanding anything herein to the
contrary, Issuer shall not
<PAGE> 76
8
be obligated to repurchase the Option or any shares of Issuer Common Stock
pursuant to this Section 7 on more than one occasion.
(c) For purposes of this Agreement, the "Applicable Price," as of any
date, means the highest of (i) the highest price per share at which a Tender
Offer has been made for shares of Issuer Common Stock after the date hereof and
on or prior to such date, (ii) the price per share to be paid by any third party
for shares of Issuer Common Stock or the consideration per share to be received
by holders of Issuer Common Stock, in each case pursuant to an agreement for a
merger or other business combination transaction with Issuer entered into on or
prior to such date or (iii) the highest closing sales price per share of Issuer
Common Stock quoted on the NYSE (or if Issuer Common Stock is not quoted on the
NYSE, the highest bid price per share as quoted on the National Association of
Securities Dealers Automated Quotations System or, if the shares of Issuer
Common Stock are not quoted thereon, on the principal trading market on which
such shares are traded as reported by a recognized source) during the 60
business days preceding such date. If the consideration to be offered, paid or
received pursuant to either of the foregoing clauses (i) or (ii) shall be other
than in cash, the value of such consideration shall be determined in good faith
by an independent nationally recognized investment banking firm selected by
Grantee and reasonably acceptable to Issuer, which determination shall be
conclusive for all purposes of this Agreement.
(d) As used herein, a "Repurchase Event" means the occurrence of any of
the Purchase Events specified in Section 2(b)(ii) or (iii).
8. Repurchase of Substitute Option. (a) At the request of Grantee at
any time after issuance of the Substitute Option, Substitute Option Issuer (or
any successor entity thereof) shall repurchase from Grantee (I) the Substitute
Option and (II) all shares of Substitute Common Stock purchased by Grantee
pursuant to such Substitute Option with respect to which Grantee then has
beneficial ownership. The date on which Grantee exercises its rights under this
Section 8 is referred to as the "Section 8 Request Date". Such repurchase shall
be at an aggregate price (the "Section 8 Repurchase Consideration") equal to:
(i) the Substitute Option Price paid by Grantee for any shares of
Substitute Common Stock acquired pursuant to the Substitute Option with
respect to which Grantee then has beneficial ownership; plus
(ii) the excess, if any, of (x) the Highest Closing Price (as
defined below) for a share of Substitute Common Stock over (y) the
Substitute Option Price (subject to adjustment pursuant to Section 6),
multiplied by the number of shares of Substitute Common Stock with
respect to which the Substitute Option has not been exercised; plus
(iii) the excess, if any, of the Highest Closing Price over the
Substitute Option Price paid (or, in the case of Substitute Common
Stock with respect to which the Substitute Option has been exercised
but the Closing Date has not occurred, payable (subject to adjustment
pursuant to Section 6)) by Grantee for each share of Substitute Common
Stock with respect to which the Substitute Option has been exercised
and with respect to which Grantee then has beneficial ownership,
multiplied by the number of such shares; plus
(iv) the amount of the documented reasonable out-of-pocket expenses
incurred by Grantee in connection with the Merger Agreement and this
Agreement and the transactions contemplated thereby and hereby,
including reasonable accounting, investment banking and legal fees.
(b) If Grantee exercises its rights under this Section 8, Substitute
Option Issuer shall, within 10 business days after the Section 8 Request Date,
pay the Section 8 Repurchase Consideration to Grantee in immediately available
funds, and Grantee shall surrender to Substitute Option Issuer the Substitute
Option and the certificates evidencing the shares of Substitute Common Stock
purchased thereunder with respect to which Grantee then has beneficial
ownership, and Grantee shall warrant that it has sole record and beneficial
ownership of such shares and that the same are then free and clear of all liens,
claims, charges and encumbrances of any
<PAGE> 77
9
kind whatsoever. Notwithstanding the foregoing, to the extent that prior
notification to or approval of the Federal Reserve or other regulatory authority
is required in connection with the payment of all or any portion of the Section
8 Repurchase Consideration, Substitute Option Issuer shall deliver from time to
time that portion of the Section 8 Repurchase Consideration that it is not then
so prohibited from paying and shall promptly provide the required notice or
application for approval and shall expeditiously process the same (and Grantee
shall cooperate with Substitute Option Issuer in the filing of any such notice
or application and the obtaining of any such approval), and the period of time
that otherwise would run pursuant to the preceding sentence for the payment of
the portion of the Section 8 Repurchase Consideration requiring such
notification or approval shall run instead from the date on which, as the case
may be, (i) any required notification period has expired or been terminated or
(ii) such approval has been obtained and, in either event, any requisite waiting
period shall have passed. If the Federal Reserve or any other regulatory
authority disapproves of any part of Substitute Option Issuer's proposed
repurchase pursuant to this Section 8, Substitute Option Issuer shall promptly
give notice of such fact to Grantee and redeliver to Grantee the Substitute
Common Stock it is then prohibited from repurchasing, and Grantee shall have the
right to exercise the Substitute Option as to the number of shares of Substitute
Common Stock for which the Substitute Option was exercisable at the Section 8
Request Date; provided that if the Substitute Option shall have terminated prior
to the date of such notice or shall be scheduled to terminate at any time before
the expiration of a period ending on the thirtieth business day after such date,
Grantee shall nonetheless have the right so to exercise the Substitute Option or
exercise its rights under Section 10 until the expiration of such period of 30
business days. Notwithstanding anything herein to the contrary, Substitute
Option Issuer shall not be obligated to repurchase the Substitute Option or any
shares of Substitute Common Stock pursuant to this Section 8 on more than one
occasion.
(c) For purposes of this Agreement, the "Highest Closing Price" means
the highest closing sales price for shares of Substitute Common Stock quoted on
the NYSE (or if the Substitute Common Stock is not quoted on the NYSE, the
highest bid price per share as quoted on the National Association of Securities
Dealers Automated Quotations System or, if the shares of Substitute Common Stock
are not quoted thereon, on the principal trading market on which such shares are
traded as reported by a recognized source) during the six-month period preceding
the Section 8 Request Date.
9. Mandatory Repurchase of Option. (a) In the event that any person who
has participated in a Purchase Event enters into any agreement or understanding
with Grantee with respect to Grantee's exercise of, or its election not to
exercise, any of Grantee's rights set forth in Section 2 or 7 of this Agreement,
Grantee shall, by written notice to Issuer, require that Issuer repurchase, and
Issuer shall repurchase, (I) the Option and (II) all (but not less than all) the
shares of Issuer Common Stock purchased by Grantee pursuant hereto and with
respect to which Grantee then has beneficial ownership; provided, however, that
the parties shall not be obligated to effect such mandatory repurchase if the
Board of Directors of Issuer determines, after having consulted with and
considered the written advice of outside counsel, that such mandatory repurchase
would cause the members of the Board of Directors to breach their fiduciary
duties; and provided, further, that any such determination by the Board of
Directors of Issuer shall not operate to limit Grantee's rights pursuant to
Section 7 hereof. The date of Grantee's written notice referred to above is
referred to as the "Section 9 Notice Date". Such repurchase shall be at an
aggregate price (the "Section 9 Repurchase Consideration") equal to:
(i) the aggregate Purchase Price paid by Grantee for any shares of
Issuer Common Stock acquired pursuant to the Option with respect to
which Grantee then has beneficial ownership; plus
(ii) the excess, if any, of (x) the Applicable Price as of the
Section 9 Notice Date for a share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 6(a)),
multiplied by the number of shares of Issuer Common Stock with respect
to which the Option has not been exercised; plus
(iii) the excess, if any, of the Applicable Price as of the Section 9
Notice Date over the Purchase Price paid (or, in the case of Option
Shares with respect to which the Option has been exercised but the
Closing Date has not occurred, payable (subject to adjustment pursuant
to Section 6(a))) by Grantee for
<PAGE> 78
10
each share of Issuer Common Stock with respect to which the Option has
been exercised and with respect to which Grantee then has beneficial
ownership, multiplied by the number of such shares; plus
(iv) the amount of the documented reasonable out-of-pocket expenses
incurred by Grantee in connection with the Merger Agreement and this
Agreement and the transactions contemplated thereby and hereby,
including reasonable accounting, investment banking and legal fees.
(b) Notwithstanding the provisions of Section 9(a), within 30 days
following the Section 9 Notice Date, Grantee may deliver an Offeror's Notice
pursuant to Section 11, in which case the provisions of Section 11 and not those
of this Section 9 shall control. If Grantee does not deliver an Offeror's Notice
within such 30-day period, Issuer shall, within 10 business days after the
expiration of such 30-day period or, if applicable, upon abandonment of the
transaction covered by such Offeror's Notice, pay the Section 9 Repurchase
Consideration in immediately available funds, and Grantee shall surrender to
Issuer the Option and the certificates evidencing the shares of Issuer Common
Stock purchased hereunder with respect to which Grantee then has beneficial
ownership, and Grantee shall warrant that it has sole record and beneficial
ownership of such shares and that the same are then free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever. If the Federal Reserve
or any other regulatory authority disapproves of any part of Issuer's proposed
repurchase pursuant to this Section 9, Issuer shall promptly give notice of such
fact to Grantee and thereafter deliver or cause to be delivered from time to
time to Grantee the portion of the Section 9 Repurchase Consideration that
Issuer is no longer prohibited from delivering, within five business days after
the date on which it is no longer so prohibited.
(c) If, prior to the date which is 18 months after the Section 9 Notice
Date, Issuer enters into, or is the subject of, any transaction which would have
constituted a Repurchase Event hereunder but for the prior repurchase by Issuer
of the Option and shares of Issuer Common Stock under this Section 9, then
concurrently with the occurrence of such event, Issuer shall pay to Grantee, as
additional consideration for the Option and shares of Issuer Common Stock
purchased by Issuer pursuant to this Section, an amount in immediately available
funds equal to the excess, if any, of (i) the Section 9 Repurchase Consideration
calculated as if the Section 9 Notice Date had occurred on the date of such
Repurchase Event over (ii) the amount previously paid by Issuer to Grantee
pursuant to this Section 9.
(d) In the event that Issuer is, as a result of law or regulation,
prohibited from performing any of its obligations under this Section 9, Issuer
shall not thereafter enter into any Acquisition Transaction unless the other
parties thereto agree to assume Issuer's obligations under this Section 9 to the
extent not previously performed. The foregoing sentence shall not operate to
limit or waive any remedies Grantee may have against Issuer for Issuer's failure
to perform its obligations under this Section 9.
10. Registration Rights. Issuer shall, if requested by Grantee at any
time and from time to time (a) within three years of the first exercise of the
Option or (b) for 30 business days following the occurrence of either of the
events set forth in clauses (i) and (ii) of Section 2(d) or receipt by Grantee
of official notice that an approval of the Federal Reserve or any other
regulatory authority required for a repurchase as contemplated hereby would not
be issued or granted (but solely as to the securities or portion of the Option
with respect to which the required approval was not received), as expeditiously
as possible prepare and file up to two registration statements under the
Securities Act if such registration is necessary in order to permit the sale or
other disposition of any or all shares of securities that have been acquired by
or are issuable to Grantee upon exercise of the Option in accordance with the
intended method of sale or other disposition stated by Grantee, including a
"shelf' registration statement under Rule 415 under the Securities Act or any
successor provision, and Issuer shall use its best efforts to qualify such
shares or other securities under any applicable state securities laws. Grantee
agrees to use all reasonable efforts to cause, and to cause any underwriters of
any sale or other disposition to cause, any sale or other disposition pursuant
to such registration statement to be effected on a widely distributed basis so
that upon consummation thereof no purchaser or transferee shall own beneficially
more than 2% of the then outstanding voting power of Issuer. Issuer shall use
all reasonable efforts to cause each such registration statement to become
effective, to obtain all consents or waivers of other parties which are required
therefor and to keep such registration statement effective for such period not
in excess of 180 days from
<PAGE> 79
11
the day such registration statement first becomes effective as may be reasonably
necessary to effect such sale or other disposition. In the event that Grantee
requests Issuer to file a registration statement following the failure to obtain
a required approval for an exercise of the Option as described in Section 2(d),
the closing of the sale or other disposition of Issuer Common Stock or other
securities pursuant to such registration statement shall occur substantially
simultaneously with the exercise of the Option. The obligations of Issuer
hereunder to file a registration statement and to maintain its effectiveness may
be suspended for one or more periods of time not exceeding 60 days in the
aggregate if the Board of Directors of Issuer shall have determined that the
filing of such registration statement or the maintenance of its effectiveness
would require disclosure of nonpublic information that would materially and
adversely affect Issuer. Any registration statement prepared and filed under
this Section 10, and any sale covered thereby, shall be at Issuer's expense
except for underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto. Grantee shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If during the time periods referred to in the
first sentence of this Section 10 Issuer effects a registration under the
Securities Act of Issuer Common Stock for its own account or for any other
stockholders of Issuer (other than on Form S-4 or Form S-8, or any successor
form), it shall allow Grantee the right to participate in such registration, and
such participation shall not affect the obligation of Issuer to effect two
registration statements for Grantee under this Section 10; provided that, if the
managing underwriters of such offering advise Issuer in writing that in their
opinion the number of shares of Issuer Common Stock requested to be included in
such registration exceeds the number which can be sold in such offering, Issuer
shall include the shares requested to be included therein by Grantee pro rata
with the shares intended to be included therein by Issuer. In connection with
any registration pursuant to this Section 10, Issuer and Grantee shall provide
each other and any underwriter of the offering with customary representations,
warranties, covenants, indemnification and contribution in connection with such
registration.
11. First Refusal. At any time after the first occurrence of a Purchase
Event and prior to the later of (a) the expiration of 24 months immediately
following the first purchase of shares of Issuer Common Stock pursuant to the
Option and (b) the termination of the Option pursuant to Section 2(a), if
Grantee shall desire to sell, assign, transfer or otherwise dispose of all or
any of the Option or the shares of Issuer Common Stock or other securities
acquired by it pursuant to the Option, it shall give Issuer written notice of
the proposed transaction (an "Offeror's Notice"), identifying the proposed
transferee, accompanied by a copy of a binding offer to purchase the Option or
such shares or other securities signed by such transferee and setting forth the
terms of the proposed transaction. An Offeror's Notice shall be deemed an offer
by Grantee to Issuer, which may be accepted within 10 business days of the
receipt of such Offeror's Notice, on the same terms and conditions and at the
same price at which Grantee is proposing to transfer the Option or such shares
or other securities to such transferee. The purchase of the Option or any such
shares or other securities by Issuer shall be settled within 10 business days of
the date of the acceptance of the offer and the purchase price shall be paid to
Grantee in immediately available funds; provided that, if prior notification to
or approval of the Federal Reserve or any other regulatory authority is required
in connection with such purchase, Issuer shall promptly file the required notice
or application for approval and shall expeditiously process the same (and
Grantee shall cooperate with Issuer in the filing of any such notice or
application and the obtaining of any such approval) and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which, as the case may be, (a) any required notification period has expired or
been terminated or (b) such approval has been obtained and, in either event, any
requisite waiting period shall have passed. In the event of the failure or
refusal of Issuer to purchase all of the Option or all of the shares or other
securities covered by an Offeror's Notice or if the Federal Reserve or any other
regulatory authority disapproves Issuer's proposed purchase of any portion of
the Option or such shares or other securities, Grantee may, within 60 days from
the date of the Offeror's Notice (subject to any necessary extension for
regulatory notification, approval or waiting periods), sell all, but not less
than all, of such portion of the Option or such shares or other securities to
the proposed transferee at no less than the price specified and on terms no more
favorable than those set forth in the Offeror's Notice. The requirements of this
Section 11 shall not apply to (w) any disposition as a result of which the
proposed transferee would own beneficially not more than 2% of the outstanding
voting power of Issuer, (x) any disposition of Issuer Common Stock or other
securities by a person to whom Grantee has assigned its rights under the Option
with the consent of Issuer, (y) any sale by means of a public offering
registered under the Securities Act in which steps are taken to reasonably
assure that no purchaser will acquire securities representing
<PAGE> 80
12
more than 2% of the outstanding voting power of Issuer or (z) any transfer to a
wholly owned Subsidiary of Grantee which agrees in writing to be bound by the
terms hereof.
12. Listing. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then listed on the NYSE, Issuer, upon
the request of Grantee, will promptly file an application to list the shares of
Issuer Common Stock or other securities to be acquired upon exercise of the
Option on the NYSE and will use its best efforts to obtain approval of such
listing as soon as practicable.
13. Division of Option. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of Grantee, upon presentation
and surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
14. Miscellaneous. (a) Expenses. Except as otherwise provided in
Sections 7, 8, 9 and 10, each of the parties hereto shall bear and pay all costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be waived
at any time by the party that is entitled to the benefits of such provision.
This Agreement may not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability. Except
as otherwise set forth in the Merger Agreement, this Agreement (including the
Merger Agreement and the other documents and instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or a federal or state regulatory agency to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit Grantee to acquire,
or does not require Issuer to repurchase, the full number of shares of Issuer
Common Stock or Substitute Common Stock as provided in Sections 2, 7 and 8 (as
adjusted pursuant to Section 6), it is the express intention of Issuer to allow
Grantee to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York without regard to any
applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
<PAGE> 81
13
If to Grantee to:
The Chase Manhattan Corporation
1 Chase Manhattan Plaza
New York, New York 10081
Attention: General Counsel
Telecopier No.: (212) 552-5378
with a copy to:
H. Rodgin Cohen, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telecopier No.: (212) 558-3588
If to Issuer to:
Chemical Banking Corporation
270 Park Avenue
New York, New York 10017
Attention: General Counsel
Telecopier No.: (212) 270-4288
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Lee Meyerson, Esq.
Telecopier No.: (212) 455-2502
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned Subsidiary of Grantee and that Grantee may assign
all or part of its rights hereunder to any person after the occurrence of a
Purchase Event. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this Agreement
may be enforced by either party through specific performance, injunctive relief
and other equitable relief. Both parties further agree to waive any requirement
for the securing or posting of any bond in connection with the obtaining of any
such equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
<PAGE> 82
14
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized as
of the day and year first written above.
THE CHASE MANHATTAN CORPORATION
by
---------------------------
Name:
Title:
CHEMICAL BANKING CORPORATION
by
---------------------------
Name:
Title:
<PAGE> 83
EXHIBIT 4.1(m)
EMPLOYEE BENEFITS AGREEMENT
EMPLOYEE BENEFITS AGREEMENT, dated as of August 27, 1995 (this
"Agreement"), between CHEMICAL BANKING CORPORATION ("Chemical"), a Delaware
corporation, and THE CHASE MANHATTAN CORPORATION ("Chase"), a Delaware
corporation.
WHEREAS, Chemical and Chase are entering into an Agreement and
Plan of Merger (the "Merger Agreement") dated as of the date hereof providing
for the merger of Chase into Chemical;
WHEREAS, concurrently therewith Chemical and Chase are
entering into this Agreement in order to cover various employee benefit matters
relating to the Merger; and
WHEREAS, Chemical and Chase wish to achieve consistency, where
appropriate, between the treatment of Chemical and Chase employees and Chase
wishes to give effect to its intent, in the context of an approved change in
control (as further described herein) to amend or interpret its plans so that
the merger does not, of itself, result in the acceleration of vesting and
payments thereunder, to the extent permitted by the applicable employee plans or
arrangements, or by law;
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained herein and in the Merger
Agreement, the parties hereto agree as follows:
1. Definitions.
All capitalized terms in this Agreement shall have the same
meanings as set forth therefor in the Merger Agreement unless otherwise
specified herein.
2. Executive Agreements.
Promptly after the execution and delivery of the Merger
Agreement, Chase shall offer to its officers who are parties to individual
agreements (the "Chase Executive Agreements") with Chase concerning their
termination of employment after the occurrence of a Change in Control (as
defined therein) to modify such Chase Executive Agreements in the manner agreed
upon between Chemical and Chase. Such modified Agreements shall be referred to
hereafter as the "Revised Chase Executive Agreements."
If any such officer of Chase whose individual agreement
expires on December 31, 1995 does not accept the offer described above, then
prior to September 30, 1995, Chase shall provide such officer a notice pursuant
to Section 2 of his or her Chase Executive Agreement that the term of such Chase
Executive
<PAGE> 84
2
Agreement shall not be extended beyond December 31, 1995 except as otherwise
provided in Section 2 of such agreement.
Promptly after the execution and delivery of the Merger
Agreement, Chemical will offer to approximately 40 executives of Chemical, at
the Executive Vice-President level or higher, to enter into agreements with them
(the "Chemical Executive Agreements") concerning their termination of employment
after the occurrence of the shareholder approval of the Merger in a form agreed
upon between Chemical and Chase and providing for benefits equivalent or
comparable to those in the Revised Chase Executive Agreements, with appropriate
adjustments to reflect differences in existing benefit and compensation plans
between Chemical and Chase. Any existing individual contracts between Chemical
and its executives will not be renewed or modified by Chemical to extend their
terms.
3. Special Severance Plan.
Chase hereby represents to Chemical that, prior to a
"Potential Change in Control," as defined in such Plan, Chase amended its
Special Severance Plan for certain key management personnel (the "Chase Special
Severance Plan") to provide that with respect to any Approved Change in Control
(as defined therein), the term "Good Reason," as used in such Plan, shall be
defined as set forth in Exhibit A hereto, and the severance payment schedule in
the event of an eligible termination of employment shall be amended as set forth
in Exhibit B. This Plan, as amended, shall apply to eligible terminations
occurring on or after the date of this Agreement.
Chemical hereby represents to Chase that it has adopted or may
adopt a special severance plan for approximately 385 key management personnel of
Chemical at or above Chemical's salary grade 380 providing for severance
benefits equivalent to those afforded by Chase to its key management personnel
under the Chase Special Severance Plan, as amended pursuant to the preceding
paragraph. This Plan shall apply to eligible terminations occurring on or after
the date of this Agreement.
4. General Severance Plans.
Chemical and Chase hereby represent and agree that the
severance pay to be provided to all employees of Chemical and Chase (and their
respective subsidiaries) under their respective current severance or salary
continuation plans whose positions are eliminated between the date of this
Agreement and the second anniversary of the effective date of the Merger, and
who are not covered by the arrangements referred to in Sections 2 and 3 of this
Agreement, shall be as set forth in Exhibit C hereto.
<PAGE> 85
3
5. Long Term Incentive Plans.
Chase hereby represents that, prior to the execution and
delivery of the Merger Agreement (and prior, where applicable, to a "Potential
Change in Control," as defined in a plan subject to this Section 5), as Chase
always contemplated in the case of a strategic business combination of the kind
contemplated by the Merger Agreement, it amended its 1987/1982 Long-Term
Incentive Plan and the Compensation Committee of its Board of Directors (the
"Chase Compensation Committee") amended its 1994 Long-Term Incentive Plan so
that:
(a) there shall be no acceleration of vesting of restricted
stock, restricted stock units, performance share units or other equity
interests granted under any of the Long-Term Incentive Plans
(collectively, the "Equity Awards") or acceleration of exercisability
of options or stock appreciation rights (collectively, the "Options")
granted thereunder, upon the occurrence of an Approved Change in
Control;
(b) any unvested Equity Awards, and any Options that are not
yet exercisable, granted to an employee of Chase and/or a subsidiary of
Chase prior to the date hereof shall become vested or exercisable, as
the case may be, upon a termination of such employee's employment after
an Approved Change in Control for any reason other than by Chase (and
its subsidiaries) or by the Surviving Corporation (and its
subsidiaries) for "Cause" or by such employee for other than for "Good
Reason," (as such terms are defined in the participant's Revised Chase
Executive Agreement, the amended Chase Manhattan Corporation Special
Severance Plan or the amended Chase Manhattan 1994 Long Term Incentive
Plan, as applicable to such employee) at any time after the Approved
Change in Control; and
(c) the definition of Good Reason in each such Long Term
Incentive Plan shall contain no reference to the participant's job
status or responsibilities.
In addition, as otherwise provided in the applicable Long-Term
Incentive Plan, in the event of a termination described in (b) above the Options
shall remain exercisable for two years from the date of such employee's
termination unless they expire prior to such two-year period in accordance with
their original terms.
Chemical hereby represents that it will continue its practice
of providing for acceleration of vesting of restricted stock and restricted
stock units, (except those relating to its outstanding grants of Performance
Accelerated Restricted Stock ("PARS"), which are provided for in Section 11
below) and accelerated exercisability of stock options granted under such plans,
as well as providing for a two-year exercise period for
<PAGE> 86
4
such accelerated options, in the event of a job elimination, and that it will
utilize the same definition of "Good Reason" in administering its plans as set
forth in Section 5(b) with respect to Chase's plans.
6. Stock Option Program for Employees.
Chase hereby represents that it will administer its Stock
Option Program for Employees so that no more than 200,000 exercise-sales
thereunder can be made on any one day.
7. Supplemental Benefit Plans.
Chase hereby represents that prior to execution and delivery
of the Merger Agreement (and prior, where applicable, to a "Potential Change in
Control" as defined in one or more such Plans), it has caused The Chase
Manhattan Bank, N.A. ("Chase Bank") to amend its Supplemental Benefit Plan, its
TRA 86 Supplemental Benefit Plan and its Supplemental Retirement Plan to provide
that an Approved Change in Control will not constitute a Change in Control for
the purposes of any of such Plan; provided, however, that any vesting of plan
benefits that would have occurred under such Plans if the Approved Change in
Control had been a Change in Control shall occur upon the termination of a Plan
participant's employment by Chase (and its subsidiaries) or by the Surviving
Corporation (and its subsidiaries) unless such termination is by Chase for
"cause" or by the Plan participant's resignation other than for "good reason"
(as each such term is defined in the participant's Revised Chase Executive
Agreement, the amended Chase Manhattan Corporation Special Severance Plan or the
amended Chase Manhattan 1994 Long Term Incentive Plan, as applicable to such
Plan participant, in the latter case without regard to a participant's job
status or responsibilities).
Chemical shall amend the supplemental plans of Chemical and
its subsidiaries to provide for treatment of participants in such plans
equivalent to the treatment of Chase employees under the foregoing Chase
amendments.
8. Retirement and Family Benefits Plan.
Chase hereby represents that prior to execution and delivery
of the Merger Agreement, it amended its Retirement and Family Benefits Plan, to
the extent permitted by law and consistent with maintaining its qualified status
under the Code, to provide that an Approved Change in Control in 1995 or 1996
will not constitute a Change in Control for the purposes of such Plan. The
principal effect of such amendment will be that no acceleration of vesting shall
occur with respect to any employee who, on the date of the amendment, has less
than three years of service for vesting purposes under the Plan.
Chemical will amend the Retirement Plan of Chemical Bank and
Certain Affiliated Companies and any qualified defined
<PAGE> 87
5
benefit plan of any Chemical subsidiary to produce the same result with respect
to plan participants as was produced with respect to similarly situated
employees of Chase by the foregoing Chase amendments.
9. Thrift-Incentive Plan.
Chase hereby represents that prior to execution and delivery
of the Merger Agreement, it amended its Thrift-Incentive Plan, to the extent
permitted by law and consistent with maintaining its qualified status under the
Code, to provide that the Approved Change in Control in 1995 or 1996 will not
constitute a Change in Control for the purposes of such Plan. The principal
effect of such amendment will be that no acceleration of vesting shall occur
with respect to any employee who, on the date of the amendment, has less than
three years of service for vesting purposes under the Plan.
Chemical will amend the Savings Incentive Plan of Chemical
Bank and Certain Affiliated Companies and any qualified defined contribution
plan of any Chemical subsidiary to produce the same result with respect to plan
participants as was produced with respect to similarly situated employees of
Chase by the foregoing Chase amendments.
10. Three Year Incentive Arrangement for Certain Executive
Officers.
Chase hereby represents that, prior to the execution and
delivery of the Merger Agreement, the Chase Compensation Committee amended
Chase's Three Year Incentive Arrangement for Certain Executive Officers to
provide that the Chase Compensation Committee shall have the authority to reduce
the amount of any award that would be payable under the Plan (and/or to impose
additional conditions upon the payment of such award) on account of an Approved
Change in Control.
11. Management Incentive Plan.
Chase hereby represents that prior to execution and delivery
of the Merger Agreement, it caused Chase Bank to amend its Management Incentive
Plan to provide that an Approved Change in Control will not constitute a Change
in Control for the purposes of such Plan.
In addition, with respect to the grant by the Compensation
Committee of Chase Bank of a three year award arrangement intended to parallel
the Three Year Arrangement for Certain Executive Officers (as described in
Section 10 above), Chase hereby represents that, prior to the execution and
delivery of the Merger Agreement, it has caused the Compensation Committee of
Chase Bank to amend such arrangement to provide that:
<PAGE> 88
6
(a) an Approved Change in Control will not constitute a Change
in Control for the purposes of such Arrangement; and
(b) the Compensation Committee of Chase Bank will determine,
on or about the date hereof, the amount to be awarded with respect to
achievement of the $52 target and such amount will be paid out in cash
within 30 days after the date hereof. If the $60 target (as adjusted to
reflect the Merger) is met on or before March 31, 1997, the
Compensation Committee of the successor to the Chase Bank will then
determine the amount payable with respect to the achievement of such
target. If, prior to March 31, 1997, the executive's employment is
terminated without "cause" or the executive resigns for "good reason,"
(each as defined in the executive's Revised Chase Executive Agreement,
the amended Chase Manhattan Corporation Special Severance Plan or the
amended Chase Manhattan 1994 Long Term Incentive Plan, as applicable to
such executive) the executive will be entitled to a subsequent payout
of the amount payable for the $60 target if such target is reached
after termination of employment.
Chemical will afford holders of PARs the same treatment
described above, except that (i) if the Executive's employment is terminated
without "cause" or the executive resigns for "good reason" (as defined above)
prior to the applicable vesting date, a portion of the restricted shares shall
become immediately vested, without regard to the attainment of any stock value
targets, in accordance with Chemical's prevailing practice and (ii) the stock
value targets of $55, $60 and $65 shall be preserved and the applicable vesting
date will be adjusted to reflect Chemical's PARs program.
12. Annual Incentive Compensation Deferrals.
Chase hereby represents that prior to execution and delivery
of the Merger Agreement, it amended its Annual Incentive Compensation Plan
Deferral Program to provide that an Approved Change in Control will not
constitute a Change in Control for the purposes of such Program.
13. Annual Incentive Arrangement for Certain Executive
Officers.
Chase hereby represents that prior to execution and delivery
of the Merger Agreement, the Chase Compensation Committee has determined that
any awards that may be deferred under Chase's Annual Incentive Arrangement for
Certain Executive Officers for 1995 or 1996 shall be deferred under principles
and procedures substantially identical to those applicable to the plan described
in the first paragraph of Section 11.
<PAGE> 89
7
14. Director Plans.
Chase hereby represents that prior to execution and delivery
of the Merger Agreement, it amended all of its plans and arrangements for
compensation and benefits for outside directors to provide that an Approved
Change in Control will not constitute a Change in Control for the purposes of
any such plans or arrangements.
15. Assumption of Obligations by Surviving Corporation.
Upon the Merger, Chemical and Chase agree that the Surviving
Corporation will expressly assume and perform the respective obligations of
Chase and Chemical under each of the agreements, arrangement plans and programs
described in Section 2 and 3 of this Agreement.
16. No Third Party Beneficiaries.
It is the express understanding and intention of the parties
hereto that no current, future or former employee of Chemical or Chase or any
other person or entity shall be deemed to be a third party beneficiary or to
have or acquire any right with respect to or to enforce the provisions of this
Agreement, and that nothing in this Agreement shall be deemed to constitute a
plan or an amendment to any plan, program, agreement or arrangement.
<PAGE> 90
8
IN WITNESS WHEREOF, Chemical and Chase have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the day and year first written above.
THE CHASE MANHATTAN CORPORATION
By:
--------------------------
Name:
Title:
CHEMICAL BANKING CORPORATION
By:
--------------------------
Name:
Title:
<PAGE> 91
Exhibit A
Good Reason
"Good Reason" for termination by the Participant* of the Participant's
employment shall mean the occurrence (without the Participant's express written
consent) of any one of the following acts, or failure to act, unless, in the
case of any act or failure to act described in clause (2), (3), (4) or (5)
below, such act or failure to act is corrected prior to the Date of Termination
specified in the Notice of Termination given in respect thereof:
(1) a reduction in the Participant's Annual Base Salary as in effect on
the date the Participant first became a Participant in the Plan or as the same
may be increased from time to time;
(2) the failure by the Participant's primary employer to pay to the
Participant any portion of the Participant's current compensation, or the
failure by Chase or any Subsidiary to pay to the Participant any portion of an
installment of deferred compensation under any deferred compensation program
within seven days of the date such compensation is due;
(3) the failure by Chase or a Subsidiary to pay to the Participant by
February 15 following any calendar year an annual cash bonus for such calendar
year that, in the reasonable, good faith judgment of the Compensation Committee
of the Board of Directors of Chase or the Corporate Human Resources Executive of
Chase, fairly reflects the performance of the Participant, any unit or units (or
portions thereof) for which the Participant was responsible and Chase as a whole
during such calendar year; provided that the Participant may not claim that a
bonus equal to or greater than the highest annual bonus paid to the Participant
for any of the three calendar years immediately preceding the Change in Control
does not fairly reflect such performance;
(4) the failure by Chase or a Subsidiary to include the Participant in
any other employee benefit or compensation plan or arrangement on a basis
reasonably comparable to that of other participants in the Plan having
responsibilities of equal importance to those of the Participant; provided,
however, that failure to include the Participant in a plan or arrangement
designed for a general category of positions that does not include the
Participant's position, as determined in good faith by the Compensation
Committee of the Board of Directors of Chase or the Corporate Human Resources
Executive of Chase, shall not be considered Good Reason;
- --------
* Capitalized terms shall have the meanings set forth therefor in the
Chase Manhattan Corporation Special Severance Plan.
<PAGE> 92
2
(5) any purported termination of the Participant's employment which is
not effected pursuant to a Notice of Termination and, for purposes of the Plan,
no such purported termination shall be effective.
A Participant's right to terminate employment for Good Reason shall not
be affected by the Participant's incapacity due to physical or mental illness.
The Participant's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting Good
Reason hereunder.
<PAGE> 93
EXHIBIT B
Chase Special Severance Plan -
(c) Amount of Severance Benefits.
(1) Lump Sum Severance Payment. A Participant's Lump Sum
Severance Payment shall be an amount equal to the sum of (i) the Participant's
Annual Base Salary, and (ii) the number of Weeks of Annual Base Salary
determined by reference to the schedule set forth below based on the
Participant's length of full-time service with Chase and its subsidiaries:
Lump Sum Severance Payment Schedule
<TABLE>
<CAPTION>
Weeks of
Length of Service Annual Base Salary
- ----------------- ------------------
<S> <C>
0 - 2 years Eight
More than 2 years 3 weeks for each complete
year of service
</TABLE>
Notwithstanding the foregoing, the Lump-Sum Severance Payment determined under
this subsection (1) may not exceed 104 Weeks of Annual Base Salary.
<PAGE> 94
EXHIBIT C
Chase General Severance Plan -
Each eligible employee shall be entitled to a lump sum severance payment
determined by reference to the schedule set forth below based on the employee's
length of full-time service with Chase and its subsidiaries and the employee's
base salary:
Severance Payment Schedule
<TABLE>
<CAPTION>
Weeks of
Length of Service Base Salary
- ----------------- -----------
<S> <C>
0 - 2 years Eight
More than 2 years 3 weeks for each complete
year of service
</TABLE>
In addition, each such Participant who shall have completed 25 years or
more of full-time service with Chase and its subsidiaries on or before
December 31, 1995 shall be entitled to an additional 26 weeks of Annual
Base Salary.
Notwithstanding the foregoing, the number of weeks of base salary to be provided
hereunder shall not exceed 104 weeks.
Eligible employees would be continued in the health and welfare plans for the
number of weeks equal to the weeks of base salary upon which their severance
payment is computed during which they receive salary continuation. Any remaining
COBRA coverage would begin after that period.
<PAGE> 95
EXHIBIT 5.5(a)
The Chase Manhattan Corporation
1 Chase Manhattan Plaza
New York, New York 10081
Chemical Banking Corporation
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed
to be an "affiliate" of The Chase Manhattan Corporation, a Delaware corporation
("Chase"), as the term "affiliate" is (i) defined for purposes of paragraphs
(c) and (d) of Rule 145 of the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Act"), and/or (ii) used in
and for purposes of Accounting Series Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Agreement and Plan of Merger dated as
of August 27, 1995 (the "Agreement"), between Chemical Banking Corporation, a
Delaware corporation ("Chemical"), and Chase, Chase will be merged with and
into Chemical (the "Merger").
As a result of the Merger, I may receive shares of Common
Stock, par value $1.00 per share, of Chemical ("Chemical Common Stock") or
shares of one or more series of preferred stock, par value $1.00 per share, of
Chemical ("Chemical Preferred Stock") in exchange for, respectively, shares (or
options for shares) owned by me of Common Stock, par value $2.00 per share, of
Chase ("Chase Common Stock") or shares of one or more series of preferred
stock, without par value, of Chase ("Chase Preferred Stock"). The Chemical
Common Stock and the Chemical Preferred Stock are referred to herein
collectively as the "Chemical Securities".
I represent, warrant and covenant to Chemical and Chase that
in the event I receive any Chemical Securities as a result of the Merger:
A. I shall not make any sale, transfer or other
disposition of the Chemical Securities in violation of the Act or the
Rules and Regulations.
B. I have carefully read this letter and the Agreement
and discussed its requirements and other applicable limitations upon
my ability to sell, transfer or otherwise dispose of Chemical
Securities, to the extent I felt necessary, with my counsel or counsel
for Chase.
C. I have been advised that the issuance of Chemical
Securities to me pursuant to the Merger has been registered with the
Commission under the Act on a Registration Statement on Form S-4.
However, I have also been advised that, because
<PAGE> 96
2
at the time the Merger was submitted for a vote of the stockholders of
Chase, (a) I may be deemed to have been an affiliate of Chase and (b)
the distribution by me of the Chemical Securities has not been
registered under the Act, I may not sell, transfer or otherwise
dispose of Chemical Securities issued to me in the Merger unless (i)
such sale, transfer or other disposition has been registered under the
Act, (ii) such sale, transfer or other disposition is made in
conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Act, or (iii) in the opinion
of counsel reasonably acceptable to Chemical, such sale, transfer or
other disposition is otherwise exempt from registration under the Act.
D. I understand that, except as provided in the
Agreement in Section 5.8(c), Chemical is under no obligation to
register the sale, transfer or other disposition of the Chemical
Securities by me or on my behalf under the Act or to take any other
action necessary in order to make compliance with an exemption from
such registration available.
E. I also understand that stop transfer instructions
will be given to Chemical's transfer agents with respect to the
Chemical Securities and that there will be placed on the certificates
for the Chemical Securities issued to me, or any substitutions
therefor, a legend stating in substance:
"The shares represented by this certificate were
issued in a transaction to which Rule 145 promulgated under
the Securities Act of 1933 applies. The shares represented by
this certificate may only be transferred in accordance with
the terms of an agreement dated , 199 between the
registered holder hereof and Chemical Banking Corporation, a
copy of which agreement is on file at the principal offices of
Chemical Banking Corporation."
F. I also understand that unless the transfer by me of
my Chemical Securities has been registered under the Act or is a sale
made in conformity with the provisions of Rule 145, Chemical reserves
the right to put the following legend on the certificates issued to my
transferee:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and were
acquired from a person who received such shares in a
transaction to which Rule 145 promulgated under the Securities
Act of 1933 applies. The shares have been acquired by the
holder not with a view to, or for resale in connection with,
any distribution thereof within the meaning of the Securities
Act of 1933 and may not be sold, pledged or otherwise
transferred except in accordance with an exemption from the
registration requirements of the Securities Act of 1933."
It is understood and agreed that the legend set forth in
paragraph E or F above, as the case may be, shall be removed by delivery of
substitute certificates without such legend if the undersigned shall have
delivered to Chemical a copy of a letter from the staff of
<PAGE> 97
3
the Commission, or an opinion of counsel in form and substance reasonably
satisfactory to Chemical, to the effect that such legend is not required for
purposes of the Act.
I further represent to and covenant with Chemical and Chase
that I have not, within the 30 days prior to the Effective Time (as defined in
the Agreement), sold, transferred or otherwise disposed of any shares of the
capital stock of Chase or Chemical held by me and that I will not sell,
transfer or otherwise dispose of any shares of Chemical Securities received by
me in the Merger or other shares of the capital stock of Chemical until after
such time as results covering at least 30 days of combined operations of Chase
and Chemical have been published by Chemical, in the form of a quarterly
earnings report, an effective registration statement filed with the Commission,
a report to the Commission on Form 10-K, 10-Q, or 8-K, or any other public
filing or announcement which includes the combined results of operations.
By its acceptance hereof, Chemical agrees, for a period of two
years after the Effective Time (as defined in the Agreement), that it, as the
surviving corporation, will file on a timely basis all reports required to be
filed by it pursuant to Section 13 of the Securities Exchange Act of 1934, as
amended, so that the public information provisions of Rule 144(c) under the Act
are satisfied and the resale provisions of Rules 145(d)(1) and (2) under the
Act are therefore available to me in the event I desire to transfer any
Chemical Securities issued to me in the Merger.
<PAGE> 98
4
By signing this letter, without limiting or abrogating my
agreements set forth above, I do not admit that I am an "affiliate" of Chase
within the meaning of the Act or the Rules and Regulations, and I do not waive
any right I may have to object to any assertion that I am such an affiliate.
Very truly yours,
_________________________
Name:
Accepted this day of
, 199_, by
THE CHASE MANHATTAN CORPORATION
By:____________________________
Name:
Title:
CHEMICAL BANKING CORPORATION
By:____________________________
Name:
Title:
<PAGE> 99
EXHIBIT 5.5(b)
Chemical Banking Corporation
270 Park Avenue
New York, New York 10017
The Chase Manhattan Corporation
1 Chase Manhattan Plaza
New York, New York 10081
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed
to be an "affiliate" of Chemical Banking Corporation, a Delaware corporation
("Chemical"), as the term "affiliate" is (i) defined for purposes of paragraphs
(c) and (d) of Rule 145 of the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Act"), and/or (ii) used in
and for purposes of Accounting Series Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Agreement and Plan of Merger dated as
of August 27, 1995 (the "Agreement"), between Chemical and The Chase Manhattan
Corporation, a Delaware corporation ("Chase"), Chase will be merged with and
into Chemical (the "Merger").
As a result of the Merger, I may receive shares of Common
Stock, par value $1.00 per share, of Chemical ("Chemical Common Stock") or
shares of one or more series of preferred stock, par value $1.00 per share, of
Chemical ("Chemical Preferred Stock") in exchange for, respectively, shares (or
options for shares) owned by me of Common Stock, par value $2.00 per share of
Chase ("Chase Common Stock") or shares of one or more series of preferred
stock, without par value, of Chase ("Chase Preferred Stock"). The Chemical
Common Stock and the Chemical Preferred Stock are referred to herein
collectively as the "Chemical Securities".
I represent, warrant and covenant to Chemical and Chase that
in the event I receive any Chemical Securities as a result of the Merger:
A. I shall not make any sale, transfer or other
disposition of the Chemical Securities in violation of the Act or the
Rules and Regulations.
B. I have carefully read this letter and the Agreement
and discussed its requirements and other applicable limitations upon
my ability to sell, transfer or otherwise dispose of Chemical
Securities, to the extent I felt necessary, with my counsel or counsel
for Chemical.
C. I have been advised that the issuance of Chemical
Securities to me pursuant to the Merger has been registered with the
Commission under the Act on a Registration Statement on Form S-4.
However, I have also been advised that, because at the time the Merger
was submitted for a vote of the stockholders of Chemical, (a) I
<PAGE> 100
2
may be deemed to have been an affiliate of Chemical and (b) the
distribution by me of the Chemical Securities has not been registered
under the Act, I may not sell, transfer or otherwise dispose of
Chemical Securities issued to me in the Merger unless (i) such sale,
transfer or other disposition has been registered under the Act, (ii)
such sale, transfer or other disposition is made in conformity with
the volume and other limitations of Rule 145 promulgated by the
Commission under the Act, or (iii) in the opinion of counsel
reasonably acceptable to Chemical, such sale, transfer or other
disposition is otherwise exempt from registration under the Act.
D. I understand that, except as provided in the
Agreement in Section 5.8(c), Chemical is under no obligation to
register the sale, transfer or other disposition of the Chemical
Securities by me or on my behalf under the Act or to take any other
action necessary in order to make compliance with an exemption from
such registration available.
E. I also understand that stop transfer instructions
will be given to Chemical's transfer agents with respect to the
Chemical Securities and that there will be placed on the certificates
for the Chemical Securities issued to me, or any substitutions
therefor, a legend stating in substance:
"The shares represented by this certificate were
issued in a transaction to which Rule 145 promulgated under
the Securities Act of 1933 applies. The shares represented by
this certificate may only be transferred in accordance with
the terms of an agreement dated , 199_ between
the registered holder hereof and Chemical Banking Corporation,
a copy of which agreement is on file at the principal offices
of Chemical Banking Corporation."
F. I also understand that unless the transfer by me of
my Chemical Securities has been registered under the Act or is a sale
made in conformity with the provisions of Rule 145, Chemical reserves
the right to put the following legend on the certificates issued to my
transferee:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and were
acquired from a person who received such shares in a
transaction to which Rule 145 promulgated under the Securities
Act of 1933 applies. The shares have been acquired by the
holder not with a view to, or for resale in connection with,
any distribution thereof within the meaning of the Securities
Act of 1933 and may not be sold, pledged or otherwise
transferred except in accordance with an exemption from the
registration requirements of the Securities Act of 1933."
It is understood and agreed that the legend set forth in
paragraph E or F above, as the case may be, shall be removed by delivery of
substitute certificates without such legend if the undersigned shall have
delivered to Chemical a copy of a letter from the staff of the Commission, or
an opinion of counsel in form and substance reasonably satisfactory to
Chemical, to the effect that such legend is not required for purposes of the
Act.
<PAGE> 101
3
I further represent to and covenant with Chemical and Chase
that I have not, within the 30 days prior to the Effective Time (as defined in
the Agreement), sold, transferred or otherwise disposed of any shares of the
capital stock of Chemical or Chase held by me and that I will not sell,
transfer or otherwise dispose of any shares of Chemical Securities received by
me in the Merger or other shares of the capital stock of Chemical until after
such time as results covering at least 30 days of combined operations of Chase
and Chemical have been published by Chemical, in the form of a quarterly
earnings report, an effective registration statement filed with the Commission,
a report to the Commission on Form 10-K, 10-Q, or 8-K, or any other public
filing or announcement which includes the combined results of operations.
By its acceptance hereof, Chemical agrees, for a period of two
years after the Effective Time (as defined in the Agreement), that it, as the
surviving corporation, will file on a timely basis all reports required to be
filed by it pursuant to Section 13 of the Securities Exchange Act of 1934, as
amended, so that the public information provisions of Rule 144(c) under the Act
are satisfied and the resale provisions of Rules 145(d)(1) and (2) under the
Act are therefore available to me in the event I desire to transfer any
Chemical Securities issued to me in the Merger.
<PAGE> 102
4
By signing this letter, without limiting or abrogating my
agreements set forth above, I do not admit that I am an "affiliate" of Chemical
within the meaning of the Act or the Rules and Regulations, and I do not waive
any right I may have to object to any assertion that I am such an affiliate.
Very truly yours,
_________________________
Name:
Title:
Accepted this day of
, 199_, by
CHEMICAL BANKING CORPORATION
By:________________________________
Name:
Title:
THE CHASE MANHATTAN CORPORATION
By:________________________________
Name:
Title:
<PAGE> 103
Exhibit 5.10(a)
BOARD OF DIRECTORS OF SURVIVING CORPORATION*
Chemical Banking Corporation The Chase Manhattan Corporation
- ---------------------------- -------------------------------
Frank A. Bennack, Jr. Susan V. Berresford
Michel C. Bergerac M. Anthony Burns
Randolph W. Bromery Jairo A. Estrada
Charles W. Duncan, Jr. James L. Ferguson
Melvin R. Goodes H. Laurance Fuller
George V. Grune William H. Gray, III
William B. Harrison, Jr. David T. Kearns
Harold S. Hook E. Michel Kruse
Helene L. Kaplan Thomas G. Labrecque
J. Bruce Llewellyn Delano E. Lewis
John P. Mascotte Paul W. MacAvoy
John F. McGillicuddy John H. McArthur
Edward D. Miller David T. McLaughlin
Walter V. Shipley Edmund T. Pratt, Jr.
Andrew C. Sigler Henry B. Schacht
Michael I. Sovern Donald H. Trautlein
John R. Stafford
W. Bruce Thomas
Marina V. N. Whitman
Richard D. Wood
______________________________
* Subject to regularly scheduled retirements.
<PAGE> 104
Exhibit 5.10(b)
OFFICERS OF SURVIVING CORPORATION
Walter V. Shipley: Chairman of the Board,* Chief Executive Officer* and a
Director.*
Thomas G. Labrecque: President*, Chief Operating Officer* and a Director.*
Edward D. Miller: Senior Vice Chairman* and a Director,* with responsibility for
regional banking, nationwide consumer services and technology.
William B. Harrison Jr.: Vice Chairman* and a Director,* with responsibility for
global wholesale banking, including private banking.
E. Michel Kruse: Vice Chairman* and a Director,* with responsibility for market
and credit risk management, finance, and information and transaction services.
Each of the above officers will be a member of the Office of the Chairman.
* * *
Reporting to Mr. Miller:
- - Donald L. Boudreau, vice chairman** in charge of retail credit products.
- - Michael Hegarty, vice chairman** in charge of deposit and investment
products.
- - Denis J. O'Leary, chief information officer.**
- - Marc J. Shapiro, chairman, president and chief executive officer of Texas
Commerce Bank, N.A.
- - Joseph G. Sponholz, chief administrative officer.**
- - William H. Turner, vice chairman** in charge of middle market banking and
community development.
- - Michael Urkowitz, executive vice president** in charge of consumer product
integration. Mr. Urkowitz will report jointly to Mr. Hegarty and Mr.
Boudreau.
Reporting to Mr. Harrison:
- - Donald H. Layton, vice chairman** in charge of global capital markets,
trading and treasury.
- - James B. Lee Jr., senior executive vice president** in charge of global
investment banking.
- - Arjun K. Mathrani, in charge of global client management.***
- - James W. Zeigon, executive vice president** in charge of global asset
management and private banking.
__________________________________
* This title is for both the holding company level and the bank level.
** This title is at the operating company level (i.e., bank or securities
subsidiary).
*** Title to be determined.
<PAGE> 105
Reporting to Mr. Kruse:
- - Richard J. Matteis, group executive** in charge of information and
transaction services.
- - William J. Moran,*** senior vice president and general auditor.*
- - Peter J. Tobin, chief financial officer.*
Named to the following senior corporate staff positions:
- - A. Wright Elliott, executive vice president** in charge of marketing
resources and corporate communications.
- - John J. Farrell, executive vice president* in charge of human resources.
- - William H. McDavid, general counsel.*
______________________________
* This title is for both the holding company level and the bank level.
** This title is at the operating company level (i.e., bank or securities
subsidiary).
*** Mr. Moran, who reports functionally to the Board of Directors, reports
administratively to Mr. Kruse.
2
<PAGE> 1
EXHIBIT 4(b)
AMENDMENT TO THE CHASE MANHATTAN
CORPORATION RIGHTS AGREEMENT
AMENDMENT, dated as of August 27, 1995 (the "Amendment"), to
the Rights Agreement, dated as of February 15, 1989 (the "Rights Agreement"),
between The Chase Manhattan Corporation, a Delaware corporation (the "Company"),
and The Chase Manhattan Bank, N.A., a national banking association.
WITNESSETH
WHEREAS, on February 15, 1989, the Board of Directors of the
Company authorized and declared a dividend distribution of one Right for each
share of Common Stock outstanding at the close of business on the Record Date,
each Right representing the right to purchase one one-hundredth of a share of
Preferred Stock upon the terms and conditions set forth in the Rights Agreement;
and
WHEREAS, the Rights remain issued and outstanding and the
Rights Agreement remains in effect with respect thereto; and
WHEREAS, Mellon Bank, N.A., has succeeded The Chase Manhattan
Bank, N.A. as the Rights Agent (in such capacity, the "Rights Agent"); and
WHEREAS, no Distribution Date has occurred; and
WHEREAS, the Company and Chemical Banking Corporation, a
Delaware corporation ("Chemical"), propose to enter into an Agreement and Plan
of Merger (the "Merger Agreement"), pursuant to which the Company would merge
with and into Chemical; and
WHEREAS, in connection with the Merger Agreement, the Company
and Chemical intend to enter into a Stock Option Agreement referred to therein
(the "Stock Option Agreement") pursuant to which the Company would grant to
Chemical an option to acquire up to 19.9% of the outstanding shares of Common
Stock under certain circumstances; and
WHEREAS, in connection with the anticipated approval,
execution, and delivery of the Merger Agreement, the Board of Directors of the
Company has approved, in accordance with Section 27(iv) of the Rights Agreement,
this Amendment and has directed the appropriate officers of the Company to take
all appropriate steps to execute and deliver this Amendment.
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein set forth, the parties hereby agree as follows:
(1) Amendment to Section 1(a).
Section 1(a) of the Rights Agreement is hereby amended to read
in its entirety as follows:
"(a) `Acquiring Person' shall mean any Person who or
which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of 20% or more of the
shares of Common Stock then outstanding, but shall not include
any of the following:
(i) the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any
such plan; or
(ii) until the termination of the Option (as defined
in the Stock Option Agreement) in accordance with the terms
prior to any exercise thereof, Chemical or any Affiliate or
Associate of Chemical, as a result of their acquisition of
Beneficial Ownership of shares of Common Stock by reason of the
approval, execution, or delivery of the Stock Option Agreement
or the Merger Agreement, or by reason of the consummation of
any transaction contemplated by the Stock Option Agreement or
the Merger Agreement, so long as Chemical and any Affiliate or
Associate of Chemical is not the Beneficial Owner of any shares
of Common Stock, other than (w) shares of Common Stock of which
Chemical or any Affiliate or Associate of Chemical is or
becomes the Beneficial Owner by reason of the approval,
execution, or delivery of the Stock Option Agreement or the
Merger Agreement, or by reason of the consummation of any
transaction, contemplated by the Stock Option Agreement or the
Merger Agreement, (x) shares of Common Stock Beneficially Owned
by Chemical or any Affiliate or Associate of Chemical on the
date hereof, (y) shares of Common Stock of which Chemical or
any Affiliate or Associate of Chemical inadvertently becomes
the Beneficial Owner after the date hereof, provided that the
number of such shares of Common Stock does not
-2-
<PAGE> 3
exceed 1/2 of 1% of the shares of Common Stock outstanding on
the date hereof and that Chemical or any such Affiliate or
Associate, as the case may be, divests such shares of Common
Stock as soon as practicable after it becomes aware of such
acquisition of Beneficial Ownership, and (z) shares of Common
Stock Beneficially Owned or otherwise held by Chemical or any
Affiliate or Associate of Chemical in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in
good faith, in either case in the ordinary course of its
banking business."
(2) Addition of Section 1(o).
A new Section 1(o) is inserted, to read as follows:
"(o) `Chemical' shall mean Chemical Banking
Corporation, a Delaware corporation, and its successors."
(3) Addition of Section 1(p).
A new Section 1(p) is inserted, to read as follows:
"(p) `Merger Agreement' shall mean the Agreement and
Plan of Merger, dated as of August 27, 1995, by and between
Chemical and the Company, as the same may be amended from time
to time."
(4) Addition of Section 1(q).
A new Section 1(q) is inserted, to read as follows:
"(q) `Stock Option Agreement' shall mean the Stock
Option Agreement, dated as of August 27, 1995, by and between
the Company, as issuer, and Chemical, as grantee, as the same
may be amended from time to time."
(5) Amendment to Section 11(a)(ii).
Section 11(a)(ii) of the Rights Agreement is amended to read in
its entirety as follows:
"(ii) Subject to Section 24 of this Agreement, in the
event any Person, alone or
-3-
<PAGE> 4
together with its Affiliates and Associates, shall, at any time
after the Rights Dividend Declaration Date, become an Acquiring
Person, unless the event causing the 20% threshold to be
crossed (A) is a transaction set forth in Section 13(a) hereof,
or (B) is an acquisition of shares of Common Stock pursuant to
a tender offer or an exchange offer for all outstanding shares
of Common Stock at a price and on terms determined by at least
a majority of the members of the Board of Directors of the
Company who are not officers of the Company and who are not
representatives, nominees, Affiliates or Associates of an
Acquiring Person, after receiving advice from one or more
investment banking firms, to be (a) at a price which is fair to
stockholders (taking into account all factors which the Board
of Directors deems relevant including, without limitation,
prices which could reasonably be achieved if the Company or its
assets were sold on an orderly basis designed to realize
maximum value) and (b) otherwise in the best interests of the
Company and its stockholders, then, promptly following the
first occurrence of a Section 11(a)(ii) Event, proper provision
shall be made so that each holder of a Right (except as
provided below and in Section 7(e) hereof) shall thereafter
have the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this
Agreement, in lieu of a number of one one-hundredths of a share
of Preferred Stock, such number of shares of Common Stock of
the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number
of one one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence
of a Section 11(a)(ii) Event, and (y) dividing that product
(which, following such first occurrence, shall thereafter be
referred to as the `Purchase Price' for each Right and for all
purposes of this Agreement) by 50% of the lowest closing price
(as determined pursuant to the second sentence of Section
11(d)(i) hereof) per share of Common Stock on any Trading Day
(as defined in Section 11(d)(i) hereof) occurring within the
twelve-month period immediately preceding the date of such
first occurrence (such number of shares, the `Adjustment
Shares')."
-4-
<PAGE> 5
(6) Effectiveness. This Amendment shall be deemed to be in
force and effective immediately prior to the execution and delivery of the
Merger Agreement. Except as amended hereby, the Rights Agreement shall remain in
full force and effect and shall be otherwise unaffected hereby.
(7) Defined Terms. Unless otherwise defined herein, all defined
terms used herein shall have the same meanings given to them in the Rights
Agreement.
(8) Governing Law. This Amendment shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
(9) Counterparts. This Amendment may be executed in any number
of counterparts, each of which shall for all purposes be deemed an original and
all of which shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the day and year first above written.
THE CHASE MANHATTAN CORPORATION
By: /s/ L. Edward Shaw, Jr.
-----------------------------
Name: L. Edward Shaw, Jr.
Title: Executive Vice President
and General Counsel
MELLON BANK, N.A.
By: /s/ Lawrence E. Dennedy
-----------------------------
Name: Lawrence E. Dennedy
Title: Vice President
-5-
<PAGE> 1
EXHIBIT 10(a)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of August 27, 1995 (the "Agreement"),
by and between CHEMICAL BANKING CORPORATION, a Delaware corporation ("Issuer"),
and THE CHASE MANHATTAN CORPORATION, a Delaware corporation ("Grantee").
WHEREAS, Grantee and Issuer are concurrently herewith entering into an
Agreement and Plan of Merger dated as of the date hereof (the "Merger
Agreement"; capitalized terms not defined herein shall have the meanings set
forth in the Merger Agreement), providing for, among other things, the merger of
Grantee with and into Issuer with Issuer as the surviving corporation;
WHEREAS, as a condition and inducement to Grantee's willingness to
enter into the Merger Agreement and the Chase Stock Option Agreement, Grantee
has requested that Issuer agree, and Issuer has agreed, to grant Grantee the
Option (as defined below); and
WHEREAS, as a condition and inducement to Issuer's willingness to enter
into the Merger Agreement and this Agreement, Issuer has requested that Grantee
agree, and Grantee has agreed, to grant Issuer an option to purchase shares of
Grantee's common stock on substantially the same terms as the Option;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, in the
Merger Agreement and in the Chase Stock Option Agreement, Issuer and Grantee
agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 50,170,882 (as adjusted as set forth herein) shares (the "Option
Shares") of Common Stock, par value $1.00 per share ("Issuer Common Stock"), of
Issuer at a purchase price of $53.50 per Option Share (the "Purchase Price").
2. Exercise of Option. (a) If not in material breach of the Merger
Agreement or the Chase Stock Option Agreement, Grantee may exercise the Option,
in whole or in part, at any time and from time to time following the occurrence
of a Purchase Event (as defined below); provided that, except as provided in the
last sentence of this Section 2(a), the Option shall terminate and be of no
further force and effect upon the earliest to occur of (i) the Effective Time,
(ii) 18 months after the first occurrence of a Purchase Event or (iii)
termination of the Merger Agreement prior to the occurrence of a Purchase Event;
and, provided, further, that any purchase of shares upon exercise of the Option
shall be subject to compliance with applicable law, including the Bank Holding
Company Act of 1956, as amended (the "BHC Act"). Notwithstanding the termination
of the Option, Grantee shall be entitled to purchase those Option Shares with
respect to which it has exercised the Option in accordance with the terms hereof
prior to the termination of the Option. The termination of the Option shall not
affect any rights hereunder which by their terms extend beyond the date of such
termination.
(b) As used herein, a "Purchase Event" means any of the following
events:
(i) any person (other than Grantee or any Subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act), or shall have filed a registration statement
under the Securities Act with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person or a "group" (as such term is
defined under the Exchange Act) of which such person is a member shall
have acquired beneficial ownership (as such term is defined in Rule
13d-3 of the Exchange Act), or the right to acquire beneficial
ownership, of 15% or more of the then outstanding Issuer Common Stock
(any such offer, a "Tender Offer");
<PAGE> 2
2
(ii) Issuer or any Subsidiary of Issuer shall have authorized,
recommended, proposed or publicly announced an intention to authorize,
recommend or propose, or entered into, an agreement with any person
(other than Grantee or any Subsidiary of Grantee) to (A) effect a
merger, consolidation or other business combination involving Issuer or
any of its Significant Subsidiaries, (B) sell, lease or otherwise
dispose of assets or deposits of Issuer or its Subsidiaries aggregating
20% or more of the consolidated assets or deposits of Issuer and its
Subsidiaries or (C) issue, sell or otherwise dispose of (including by
way of merger, consolidation, share exchange or any similar
transaction) securities representing 15% or more of the voting power of
Issuer or any of its Significant Subsidiaries (any of the foregoing an
"Acquisition Transaction");
(iii) any person (other than Grantee or any Subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 under the Exchange Act) or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under
the Exchange Act) shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, shares of Issuer Common
Stock (other than trust account shares) aggregating 15% or more of the
then outstanding Issuer Common Stock; or
(iv) the holders of Issuer Common Stock shall not have
approved the Merger Agreement at the meeting of such stockholders held
for the purpose of voting on the Merger Agreement, such meeting shall
not have been held or shall have been cancelled prior to termination of
the Merger Agreement or Issuer's Board of Directors shall have
withdrawn or modified in a manner adverse to Grantee or to Grantee's
ability to consummate the transactions contemplated by the Merger
Agreement the recommendation of Issuer's Board of Directors with
respect to the Merger Agreement, in each case after any person (other
than Grantee or any Subsidiary of Grantee) shall have (A) publicly
announced a proposal, or publicly disclosed an intention to make a
proposal, to engage in an Acquisition Transaction or (B) filed an
application (or given a notice), whether in draft or final form, under
the BHC Act or the Change in Bank Control Act of 1978 for approval to
engage in an Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event Grantee wishes to exercise the Option, it shall send
to Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 20 business days from the Notice Date for the
closing of such purchase (the "Closing Date"); provided that if the closing of
the purchase and sale pursuant to the Option (the "Closing") cannot be
consummated by reason of any applicable judgment, decree, order, law or
regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated; and provided, further, without
limiting the foregoing, that if prior notification to or approval of the Federal
Reserve or any other regulatory authority is required in connection with such
purchase, Grantee shall promptly file the required notice or application for
approval and shall expeditiously process the same (and Issuer shall cooperate
with Grantee in the filing of any such notice or application and the obtaining
of any such approval), and the period of time that otherwise would run pursuant
to this sentence shall run instead from the date on which, as the case may be,
(i) any required notification period has expired or been terminated or (ii) such
approval has been obtained, and in either event, any requisite waiting period
has passed.
(d) Notwithstanding Section 2(c), in no event shall any Closing Date be
more than 18 months after the related Notice Date, and if the Closing Date shall
not have occurred within 18 months after the related Notice Date due to the
failure to obtain any such required approval, the exercise of the Option
effected on the Notice Date shall be deemed to have expired. In the event (i)
Grantee receives official notice that an approval of the Federal Reserve or any
other regulatory authority required for the purchase of Option Shares will not
be issued or granted or (ii) a Closing Date shall not have occurred within 18
months after the related Notice Date due to the failure to obtain any such
required approval, Grantee shall be entitled to exercise its right as set forth
in Section 7 or Section 8, as applicable, or to exercise the Option in
connection with the resale of Issuer
<PAGE> 3
3
Common Stock or other securities pursuant to a registration statement as
provided in Section 10. The provisions of this Section 2 and Section 3 shall
apply with appropriate adjustments to any such exercise.
3. Payment and Delivery of Certificates. (a) On each Closing Date,
Grantee shall pay to Issuer in immediately available funds by wire transfer to a
bank account designated by Issuer an amount equal to the Purchase Price
multiplied by the Option Shares to be purchased on such Closing Date.
(b) At each Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Issuer shall deliver to Grantee a
certificate or certificates representing the Option Shares to be purchased at
such Closing, which Option Shares shall be free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever, and Grantee shall deliver to
Issuer a letter agreeing that Grantee shall not offer to sell or otherwise
dispose of such Option Shares in violation of applicable law or the provisions
of this Agreement. If at the time of issuance of any Option Shares pursuant to
an exercise of all or part of the Option hereunder, Issuer shall not have
redeemed the Chemical Rights, or shall have issued any similar securities, then
each Option Share issued pursuant to such exercise shall also represent a
corresponding Chemical Right or new rights with terms substantially the same as
and at least as favorable to Grantee as are provided under the Chemical Rights
Agreement or any similar agreement then in effect.
(c) Certificates for the Option Shares delivered at each Closing shall
be endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF AUGUST
27, 1995. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER
HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST
THEREFOR.
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act and
(ii) the reference to restrictions pursuant to this Agreement in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the Option Shares evidenced by certificate(s) containing such
reference have been sold or transferred in compliance with the provisions of
this Agreement under circumstances that do not require the retention of such
reference.
4. Representations and Warranties of Issuer. Issuer hereby represents
and warrants to Grantee as follows:
(a) Due Authorization. Issuer has all requisite corporate power
and authority to enter into this Agreement and, subject to any
approvals referred to herein, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Issuer.
This Agreement has been duly executed and delivered by Issuer and
constitutes a valid and binding obligation of Issuer, enforceable in
accordance with its terms.
(b) Authorized Stock. Issuer has taken all necessary corporate
and other action to authorize and reserve and, subject to obtaining the
governmental and other approvals and consents referred to herein, to
permit it to issue, and, at all times from the date hereof until the
obligation to deliver Issuer Common Stock upon the exercise of the
Option terminates, will have reserved for issuance, upon exercise of
the Option, shares of Issuer Common Stock necessary for Grantee to
exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional shares of
Issuer Common Stock or other securities which may be issued pursuant to
Section 6 upon
<PAGE> 4
4
exercise of the Option or any Substitute Option (as hereinafter
defined). The shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer
Common Stock or other securities which may be issuable upon exercise of
the Option or any Substitute Option pursuant to Section 6, upon
issuance pursuant hereto, shall be duly and validly issued, fully paid
and nonassessable, and shall be delivered free and clear of all liens,
claims, charges and encumbrances of any kind or nature whatsoever,
including any preemptive rights of any stockholder of Issuer.
(c) No Conflicts. Except as disclosed pursuant to the Merger
Agreement, the execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not,
conflict with, or result in any Violation pursuant to any provision of
the Certificate of Incorporation or By-laws of Issuer or any Subsidiary
of Issuer or, subject to obtaining any approvals or consents
contemplated hereby, result in any Violation of any loan or credit
agreement, note, mortgage, indenture, lease, Chemical Benefit Plan or
other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Issuer or any Subsidiary of Issuer or their
respective properties or assets which Violation would, individually or
in the aggregate, have a material adverse effect (as defined in the
Merger Agreement) on Issuer.
(d) Board Action. The Board of Directors of Issuer having
approved this Agreement and the consummation of the transactions
contemplated hereby, the provisions of Section 203 of the Delaware
General Corporation Law do not and will not apply to this Agreement or
the purchase of shares of Issuer Common Stock pursuant to this
Agreement.
(e) Rights Amendment. The Chemical Rights Agreement has been
amended to provide that Grantee will not become an "Acquiring Person"
or an "Adverse Person" and that no "Triggering Event," "Stock
Acquisition Date" or "Distribution Date" (as such terms are defined in
the Chemical Rights Agreement) will occur as a result of the approval,
execution or delivery of this Agreement or the Merger Agreement or the
consummation of the transactions contemplated hereby and thereby,
including the acquisition of shares of Issuer Common Stock by Grantee
pursuant to this Agreement.
5. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that:
(a) Due Authorization. Grantee has all requisite corporate power
and authority to enter into this Agreement and, subject to any
approvals or consents referred to herein, to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by
Grantee and constitutes a valid and binding obligation of Grantee,
enforceable in accordance with its terms.
(b) No Conflicts. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby
will not result in any Violation pursuant to any provision of the
Certificate of Incorporation or By-laws of Grantee or any Subsidiary of
Grantee or, subject to obtaining any approvals or consents contemplated
hereby, result in any Violation of any loan or credit agreement, note,
mortgage, indenture, lease, Chase Benefit Plan or other agreement,
obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Grantee or any Subsidiary of Grantee or their respective
properties or assets which Violation, individually or in the aggregate,
would have a material adverse effect on Grantee.
(c) Purchase Not for Distribution. Any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be
taken with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered
or exempt from registration under the Securities Act.
<PAGE> 5
5
6. Adjustment upon Changes in Capitalization, etc. (a) In the event of
any change in Issuer Common Stock by reason of a stock dividend, split-up,
recapitalization, combination, exchange of shares or similar transaction, the
type and number of shares or securities subject to the Option, and the Purchase
Price therefor, shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Grantee shall receive
upon exercise of the Option the number and class of shares or other securities
or property that Grantee would have received in respect of Issuer Common Stock
if the Option had been exercised immediately prior to such event or the record
date therefor, as applicable. If any additional shares of Issuer Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 6(a)), the number of shares of
Issuer Common Stock subject to the Option shall be adjusted so that, after such
issuance, it equals 19.9% of the number of shares of Issuer Common Stock then
issued and outstanding, without giving effect to any shares subject to or issued
pursuant to the Option.
(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the shares of Issuer
Common Stock outstanding immediately prior to the consummation of such merger
shall be changed into or exchanged for stock or other securities of Issuer or
any other person or cash or any other property, or the shares of Issuer Common
Stock outstanding immediately prior to the consummation of such merger shall
after such merger represent less than 50% of the outstanding voting securities
of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets or deposits to any person, other than Grantee or
one of its Subsidiaries, then, and in each such case, the agreement governing
such transaction shall make proper provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (I) the Acquiring Corporation
(as defined below) or (II) any person that controls the Acquiring Corporation
(any such person being referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option;
provided that the exercise price therefor and number of shares subject thereto
shall be as set forth in this Section 6 and the repurchase rights relating
thereto shall be as set forth in Section 8; provided, further, that the
Substitute Option shall be exercisable immediately upon issuance without the
occurrence of a Purchase Event; and provided, further, that if the terms of the
Substitute Option cannot, for legal reasons, be the same as the Option (subject
to the variations described in the foregoing provisos), such terms shall be as
similar as possible and in no event less advantageous to Grantee. Substitute
Option Issuer shall also enter into an agreement with Grantee in substantially
the same form as this Agreement (subject to the variations described in the
foregoing provisos), which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as defined below) as is equal to the Assigned
Value (as defined below) multiplied by the number of shares of Issuer Common
Stock for which the Option was theretofore exercisable, divided by the Average
Price (as defined below), rounded up to the nearest whole share. The exercise
price per share of Substitute Common Stock of the Substitute Option (the
"Substitute Option Price") shall then be equal to the Purchase Price multiplied
by a fraction in which the numerator is the number of shares of Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares of Substitute Common Stock for which the Substitute Option
is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of outstanding Substitute
Common Stock but for the limitation in the first sentence of this Section 6(e),
Substitute Option Issuer shall make a cash payment to Grantee equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in the first sentence of this Section 6(e) over (ii) the value of the
Substitute Option after giving effect to the limitation in the first sentence of
this
<PAGE> 6
6
Section 6(e). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Grantee.
(f) Issuer shall not enter into any transaction described in Section
6(b) unless the Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer hereunder and take
all other actions that may be necessary so that the provisions of this Section 6
are given full force and effect (including, without limitation, any action that
may be necessary so that the holders of the other shares of common stock issued
by Substitute Option Issuer are not entitled to exercise any rights by reason of
the issuance or exercise of the Substitute Option and the shares of Substitute
Common Stock are otherwise in no way distinguishable from or have lesser
economic value than other shares of common stock issued by Substitute Option
Issuer (other than any diminution in value resulting from the fact that the
shares of Substitute Common Stock are restricted securities, as defined in Rule
144 under the Securities Act or any successor provision)).
(g) For purposes hereof, the following terms have the following
meanings:
(1) "Acquiring Corporation" means (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving corporation and (iii) the transferee of all or
substantially all of Issuer's assets or deposits.
(2) "Assigned Value" means the highest of (w) the price per
share of Issuer Common Stock at which a Tender Offer has been made
after the date hereof and prior to the consummation of the
consolidation, merger or sale referred to in Section 6(b), (x) the
price per share to be paid by any third party or the consideration per
share to received by holders of Issuer Common Stock, in each case
pursuant to the agreement with Issuer with respect to the
consolidation, merger or sale referred to in Section 6(b), (y) the
highest closing sales price per share for Issuer Common Stock quoted on
the NYSE (or if such Issuer Common Stock is not quoted on the NYSE, the
highest bid price per share as quoted on the National Association of
Securities Dealers Automated Quotation System or, if the shares of
Issuer Common Stock are not quoted thereon, on the principal trading
market on which such shares are traded as reported by a recognized
source) during the 12-month period immediately preceding the
consolidation, merger or sale referred to in Section 6(b) and (z) in
the event the transaction referred to in Section 6(b) is a sale of all
or substantially all of Issuer's assets and/or deposits, an amount
equal to (i) the sum of the price paid in such sale for such assets
and/or deposits and the current market value of the remaining assets of
Issuer, as determined by a nationally recognized investment banking
firm selected by Grantee divided by (ii) the number of shares of Issuer
Common Stock outstanding at such time. In the event that a Tender Offer
is made for Issuer Common Stock or an agreement is entered into for a
merger or consolidation involving consideration other than cash, the
value of the securities or other property issuable or deliverable in
exchange for Issuer Common Stock shall be determined by a nationally
recognized investment banking firm selected by Grantee.
(3) "Average Price" means the average closing sales price per
share of a share of Substitute Common Stock quoted on the NYSE (or if
such Substitute Common Stock is not quoted on the NYSE, the highest bid
price per share as quoted on the National Association of Securities
Dealers Automated Quotation System or, if the shares of Substitute
Common Stock are not quoted thereon, on the principal trading market on
which such shares are traded as reported by a recognized source) for
the one year immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of the shares
of Substitute Common Stock on the day preceding such consolidation,
merger or sale; provided that if Substitute Option Issuer is Issuer,
the Average Price shall be computed with respect to a share of common
stock issued by Issuer, the person merging into Issuer or by any
company which controls such person, as Grantee may elect.
(4) "Substitute Common Stock" means the shares of capital stock
(or similar equity interest) with the greatest voting power in respect
of the election of directors (or persons similarly responsible for the
direction of the business and affairs) of the Substitute Option Issuer.
<PAGE> 7
7
7. Repurchase of Option at the Election of Grantee. (a) At the request
of Grantee at any time commencing (i) upon the first occurrence of a Repurchase
Event (as defined below) and ending 18 months immediately thereafter and (ii)
for 30 business days following the occurrence of either of the events set forth
in clauses (i) and (ii) of Section 2(d) (but solely as to the shares of Issuer
Common Stock with respect to which the required approval was not received),
Issuer (or any successor entity thereof) shall repurchase from Grantee (I) the
Option and (II) all shares of Issuer Common Stock purchased by Grantee pursuant
hereto with respect to which Grantee then has beneficial ownership. The date on
which Grantee exercises its rights under this Section 7 is referred to as the
"Section 7 Request Date". Such repurchase shall be at an aggregate price (the
"Section 7 Repurchase Consideration") equal to:
(A) the aggregate Purchase Price paid by Grantee for any shares of
Issuer Common Stock acquired pursuant to the Option with respect to
which Grantee then has beneficial ownership; plus
(B) the excess, if any, of (x) the Applicable Price (as defined
below) as of the Section 7 Request Date for a share of Issuer Common
Stock over (y) the Purchase Price (subject to adjustment pursuant to
Section 6(a)), multiplied by the number of shares of Issuer Common
Stock with respect to which the Option has not been exercised; plus
(C) the excess, if any, of the Applicable Price as of the Section 7
Request Date over the Purchase Price paid (or, in the case of Option
Shares with respect to which the Option has been exercised but the
Closing Date has not occurred, payable (subject to adjustment pursuant
to Section 6(a))) by Grantee for each share of Issuer Common Stock with
respect to which the Option has been exercised and with respect to
which Grantee then has beneficial ownership, multiplied by the number
of such shares; plus
(D) the amount of the documented reasonable out-of-pocket expenses
incurred by Grantee in connection with the Merger Agreement and this
Agreement and the transactions contemplated thereby and hereby,
including reasonable accounting, investment banking and legal fees.
(b) If Grantee exercises its rights under this Section 7, Issuer shall,
within 10 business days after the Section 7 Request Date, pay the Section 7
Repurchase Consideration to Grantee in immediately available funds, and Grantee
shall surrender to Issuer the Option and the certificates evidencing the shares
of Issuer Common Stock purchased hereunder with respect to which Grantee then
has beneficial ownership, and Grantee shall warrant that it has sole record and
beneficial ownership of such shares and that the same are then free and clear of
all liens, claims, charges and encumbrances of any kind whatsoever.
Notwithstanding the foregoing, to the extent that prior notification to or
approval of the Federal Reserve or other regulatory authority is required in
connection with the payment of all or any portion of the Section 7 Repurchase
Consideration, Issuer shall deliver from time to time that portion of the
Section 7 Repurchase Consideration that it is not then so prohibited from paying
and shall promptly provide the required notice or application for approval and
shall expeditiously process the same (and Grantee shall cooperate with Issuer in
the filing of any such notice or application and the obtaining of any such
approval), and the period of time that otherwise would run pursuant to the
preceding sentence for the payment of the portion of the Section 7 Repurchase
Consideration requiring such notification or approval shall run instead from the
date on which, as the case may be, (i) any required notification period has
expired or been terminated or (ii) such approval has been obtained and, in
either event, any requisite waiting period shall have passed. If the Federal
Reserve or any other regulatory authority disapproves of any part of Issuer's
proposed repurchase pursuant to this Section 7, Issuer shall promptly give
notice of such fact to Grantee and redeliver to Grantee the Option Shares it is
then prohibited from repurchasing, and Grantee shall have the right to exercise
the Option as to the number of Option Shares for which the Option was
exercisable at the Section 7 Request Date less the number of shares as to which
payment has been made pursuant to Section 7(a)(B); provided that if the Option
shall have terminated prior to the date of such notice or shall be scheduled to
terminate at any time before the expiration of a period ending on the thirtieth
business day after such date, Grantee shall nonetheless have the right so to
exercise the Option or exercise its rights under Section 10 until the expiration
of such period of 30 business days. Notwithstanding anything herein to the
contrary, Issuer shall not
<PAGE> 8
8
be obligated to repurchase the Option or any shares of Issuer Common Stock
pursuant to this Section 7 on more than one occasion.
(c) For purposes of this Agreement, the "Applicable Price," as of any
date, means the highest of (i) the highest price per share at which a Tender
Offer has been made for shares of Issuer Common Stock after the date hereof and
on or prior to such date, (ii) the price per share to be paid by any third party
for shares of Issuer Common Stock or the consideration per share to be received
by holders of Issuer Common Stock, in each case pursuant to an agreement for a
merger or other business combination transaction with Issuer entered into on or
prior to such date or (iii) the highest closing sales price per share of Issuer
Common Stock quoted on the NYSE (or if Issuer Common Stock is not quoted on the
NYSE, the highest bid price per share as quoted on the National Association of
Securities Dealers Automated Quotations System or, if the shares of Issuer
Common Stock are not quoted thereon, on the principal trading market on which
such shares are traded as reported by a recognized source) during the 60
business days preceding such date. If the consideration to be offered, paid or
received pursuant to either of the foregoing clauses (i) or (ii) shall be other
than in cash, the value of such consideration shall be determined in good faith
by an independent nationally recognized investment banking firm selected by
Grantee and reasonably acceptable to Issuer, which determination shall be
conclusive for all purposes of this Agreement.
(d) As used herein, a "Repurchase Event" means the occurrence of any of
the Purchase Events specified in Section 2(b)(ii) or (iii).
8. Repurchase of Substitute Option. (a) At the request of Grantee at
any time after issuance of the Substitute Option, Substitute Option Issuer (or
any successor entity thereof) shall repurchase from Grantee (I) the Substitute
Option and (II) all shares of Substitute Common Stock purchased by Grantee
pursuant to such Substitute Option with respect to which Grantee then has
beneficial ownership. The date on which Grantee exercises its rights under this
Section 8 is referred to as the "Section 8 Request Date". Such repurchase shall
be at an aggregate price (the "Section 8 Repurchase Consideration") equal to:
(i) the Substitute Option Price paid by Grantee for any shares of
Substitute Common Stock acquired pursuant to the Substitute Option with
respect to which Grantee then has beneficial ownership; plus
(ii) the excess, if any, of (x) the Highest Closing Price (as
defined below) for a share of Substitute Common Stock over (y) the
Substitute Option Price (subject to adjustment pursuant to Section 6),
multiplied by the number of shares of Substitute Common Stock with
respect to which the Substitute Option has not been exercised; plus
(iii) the excess, if any, of the Highest Closing Price over the
Substitute Option Price paid (or, in the case of Substitute Common
Stock with respect to which the Substitute Option has been exercised
but the Closing Date has not occurred, payable (subject to adjustment
pursuant to Section 6)) by Grantee for each share of Substitute Common
Stock with respect to which the Substitute Option has been exercised
and with respect to which Grantee then has beneficial ownership,
multiplied by the number of such shares; plus
(iv) the amount of the documented reasonable out-of-pocket expenses
incurred by Grantee in connection with the Merger Agreement and this
Agreement and the transactions contemplated thereby and hereby,
including reasonable accounting, investment banking and legal fees.
(b) If Grantee exercises its rights under this Section 8, Substitute
Option Issuer shall, within 10 business days after the Section 8 Request Date,
pay the Section 8 Repurchase Consideration to Grantee in immediately available
funds, and Grantee shall surrender to Substitute Option Issuer the Substitute
Option and the certificates evidencing the shares of Substitute Common Stock
purchased thereunder with respect to which Grantee then has beneficial
ownership, and Grantee shall warrant that it has sole record and beneficial
ownership of such shares and that the same are then free and clear of all liens,
claims, charges and encumbrances of any
<PAGE> 9
9
kind whatsoever. Notwithstanding the foregoing, to the extent that prior
notification to or approval of the Federal Reserve or other regulatory authority
is required in connection with the payment of all or any portion of the Section
8 Repurchase Consideration, Substitute Option Issuer shall deliver from time to
time that portion of the Section 8 Repurchase Consideration that it is not then
so prohibited from paying and shall promptly provide the required notice or
application for approval and shall expeditiously process the same (and Grantee
shall cooperate with Substitute Option Issuer in the filing of any such notice
or application and the obtaining of any such approval), and the period of time
that otherwise would run pursuant to the preceding sentence for the payment of
the portion of the Section 8 Repurchase Consideration requiring such
notification or approval shall run instead from the date on which, as the case
may be, (i) any required notification period has expired or been terminated or
(ii) such approval has been obtained and, in either event, any requisite waiting
period shall have passed. If the Federal Reserve or any other regulatory
authority disapproves of any part of Substitute Option Issuer's proposed
repurchase pursuant to this Section 8, Substitute Option Issuer shall promptly
give notice of such fact to Grantee and redeliver to Grantee the Substitute
Common Stock it is then prohibited from repurchasing, and Grantee shall have the
right to exercise the Substitute Option as to the number of shares of Substitute
Common Stock for which the Substitute Option was exercisable at the Section 8
Request Date; provided that if the Substitute Option shall have terminated prior
to the date of such notice or shall be scheduled to terminate at any time before
the expiration of a period ending on the thirtieth business day after such date,
Grantee shall nonetheless have the right so to exercise the Substitute Option or
exercise its rights under Section 10 until the expiration of such period of 30
business days. Notwithstanding anything herein to the contrary, Substitute
Option Issuer shall not be obligated to repurchase the Substitute Option or any
shares of Substitute Common Stock pursuant to this Section 8 on more than one
occasion.
(c) For purposes of this Agreement, the "Highest Closing Price" means
the highest closing sales price for shares of Substitute Common Stock quoted on
the NYSE (or if the Substitute Common Stock is not quoted on the NYSE, the
highest bid price per share as quoted on the National Association of Securities
Dealers Automated Quotations System or, if the shares of Substitute Common Stock
are not quoted thereon, on the principal trading market on which such shares are
traded as reported by a recognized source) during the six-month period preceding
the Section 8 Request Date.
9. Mandatory Repurchase of Option. (a) In the event that any person who
has participated in a Purchase Event enters into any agreement or understanding
with Grantee with respect to Grantee's exercise of, or its election not to
exercise, any of Grantee's rights set forth in Section 2 or 7 of this Agreement,
Grantee shall, by written notice to Issuer, require that Issuer repurchase, and
Issuer shall repurchase, (I) the Option and (II) all (but not less than all) the
shares of Issuer Common Stock purchased by Grantee pursuant hereto and with
respect to which Grantee then has beneficial ownership; provided, however, that
the parties shall not be obligated to effect such mandatory repurchase if the
Board of Directors of Issuer determines, after having consulted with and
considered the written advice of outside counsel, that such mandatory repurchase
would cause the members of the Board of Directors to breach their fiduciary
duties; and provided, further, that any such determination by the Board of
Directors of Issuer shall not operate to limit Grantee's rights pursuant to
Section 7 hereof. The date of Grantee's written notice referred to above is
referred to as the "Section 9 Notice Date". Such repurchase shall be at an
aggregate price (the "Section 9 Repurchase Consideration") equal to:
(i) the aggregate Purchase Price paid by Grantee for any shares of
Issuer Common Stock acquired pursuant to the Option with respect to
which Grantee then has beneficial ownership; plus
(ii) the excess, if any, of (x) the Applicable Price as of the
Section 9 Notice Date for a share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 6(a)),
multiplied by the number of shares of Issuer Common Stock with respect
to which the Option has not been exercised; plus
(iii) the excess, if any, of the Applicable Price as of the Section 9
Notice Date over the Purchase Price paid (or, in the case of Option
Shares with respect to which the Option has been exercised but the
Closing Date has not occurred, payable (subject to adjustment pursuant
to Section 6(a))) by Grantee for
<PAGE> 10
10
each share of Issuer Common Stock with respect to which the Option has
been exercised and with respect to which Grantee then has beneficial
ownership, multiplied by the number of such shares; plus
(iv) the amount of the documented reasonable out-of-pocket expenses
incurred by Grantee in connection with the Merger Agreement and this
Agreement and the transactions contemplated thereby and hereby,
including reasonable accounting, investment banking and legal fees.
(b) Notwithstanding the provisions of Section 9(a), within 30 days
following the Section 9 Notice Date, Grantee may deliver an Offeror's Notice
pursuant to Section 11, in which case the provisions of Section 11 and not those
of this Section 9 shall control. If Grantee does not deliver an Offeror's Notice
within such 30-day period, Issuer shall, within 10 business days after the
expiration of such 30-day period or, if applicable, upon abandonment of the
transaction covered by such Offeror's Notice, pay the Section 9 Repurchase
Consideration in immediately available funds, and Grantee shall surrender to
Issuer the Option and the certificates evidencing the shares of Issuer Common
Stock purchased hereunder with respect to which Grantee then has beneficial
ownership, and Grantee shall warrant that it has sole record and beneficial
ownership of such shares and that the same are then free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever. If the Federal Reserve
or any other regulatory authority disapproves of any part of Issuer's proposed
repurchase pursuant to this Section 9, Issuer shall promptly give notice of such
fact to Grantee and thereafter deliver or cause to be delivered from time to
time to Grantee the portion of the Section 9 Repurchase Consideration that
Issuer is no longer prohibited from delivering, within five business days after
the date on which it is no longer so prohibited.
(c) If, prior to the date which is 18 months after the Section 9 Notice
Date, Issuer enters into, or is the subject of, any transaction which would have
constituted a Repurchase Event hereunder but for the prior repurchase by Issuer
of the Option and shares of Issuer Common Stock under this Section 9, then
concurrently with the occurrence of such event, Issuer shall pay to Grantee, as
additional consideration for the Option and shares of Issuer Common Stock
purchased by Issuer pursuant to this Section, an amount in immediately available
funds equal to the excess, if any, of (i) the Section 9 Repurchase Consideration
calculated as if the Section 9 Notice Date had occurred on the date of such
Repurchase Event over (ii) the amount previously paid by Issuer to Grantee
pursuant to this Section 9.
(d) In the event that Issuer is, as a result of law or regulation,
prohibited from performing any of its obligations under this Section 9, Issuer
shall not thereafter enter into any Acquisition Transaction unless the other
parties thereto agree to assume Issuer's obligations under this Section 9 to the
extent not previously performed. The foregoing sentence shall not operate to
limit or waive any remedies Grantee may have against Issuer for Issuer's failure
to perform its obligations under this Section 9.
10. Registration Rights. Issuer shall, if requested by Grantee at any
time and from time to time (a) within three years of the first exercise of the
Option or (b) for 30 business days following the occurrence of either of the
events set forth in clauses (i) and (ii) of Section 2(d) or receipt by Grantee
of official notice that an approval of the Federal Reserve or any other
regulatory authority required for a repurchase as contemplated hereby would not
be issued or granted (but solely as to the securities or portion of the Option
with respect to which the required approval was not received), as expeditiously
as possible prepare and file up to two registration statements under the
Securities Act if such registration is necessary in order to permit the sale or
other disposition of any or all shares of securities that have been acquired by
or are issuable to Grantee upon exercise of the Option in accordance with the
intended method of sale or other disposition stated by Grantee, including a
"shelf' registration statement under Rule 415 under the Securities Act or any
successor provision, and Issuer shall use its best efforts to qualify such
shares or other securities under any applicable state securities laws. Grantee
agrees to use all reasonable efforts to cause, and to cause any underwriters of
any sale or other disposition to cause, any sale or other disposition pursuant
to such registration statement to be effected on a widely distributed basis so
that upon consummation thereof no purchaser or transferee shall own beneficially
more than 2% of the then outstanding voting power of Issuer. Issuer shall use
all reasonable efforts to cause each such registration statement to become
effective, to obtain all consents or waivers of other parties which are required
therefor and to keep such registration statement effective for such period not
in excess of 180 days from
<PAGE> 11
11
the day such registration statement first becomes effective as may be reasonably
necessary to effect such sale or other disposition. In the event that Grantee
requests Issuer to file a registration statement following the failure to obtain
a required approval for an exercise of the Option as described in Section 2(d),
the closing of the sale or other disposition of Issuer Common Stock or other
securities pursuant to such registration statement shall occur substantially
simultaneously with the exercise of the Option. The obligations of Issuer
hereunder to file a registration statement and to maintain its effectiveness may
be suspended for one or more periods of time not exceeding 60 days in the
aggregate if the Board of Directors of Issuer shall have determined that the
filing of such registration statement or the maintenance of its effectiveness
would require disclosure of nonpublic information that would materially and
adversely affect Issuer. Any registration statement prepared and filed under
this Section 10, and any sale covered thereby, shall be at Issuer's expense
except for underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto. Grantee shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If during the time periods referred to in the
first sentence of this Section 10 Issuer effects a registration under the
Securities Act of Issuer Common Stock for its own account or for any other
stockholders of Issuer (other than on Form S-4 or Form S-8, or any successor
form), it shall allow Grantee the right to participate in such registration, and
such participation shall not affect the obligation of Issuer to effect two
registration statements for Grantee under this Section 10; provided that, if the
managing underwriters of such offering advise Issuer in writing that in their
opinion the number of shares of Issuer Common Stock requested to be included in
such registration exceeds the number which can be sold in such offering, Issuer
shall include the shares requested to be included therein by Grantee pro rata
with the shares intended to be included therein by Issuer. In connection with
any registration pursuant to this Section 10, Issuer and Grantee shall provide
each other and any underwriter of the offering with customary representations,
warranties, covenants, indemnification and contribution in connection with such
registration.
11. First Refusal. At any time after the first occurrence of a Purchase
Event and prior to the later of (a) the expiration of 24 months immediately
following the first purchase of shares of Issuer Common Stock pursuant to the
Option and (b) the termination of the Option pursuant to Section 2(a), if
Grantee shall desire to sell, assign, transfer or otherwise dispose of all or
any of the Option or the shares of Issuer Common Stock or other securities
acquired by it pursuant to the Option, it shall give Issuer written notice of
the proposed transaction (an "Offeror's Notice"), identifying the proposed
transferee, accompanied by a copy of a binding offer to purchase the Option or
such shares or other securities signed by such transferee and setting forth the
terms of the proposed transaction. An Offeror's Notice shall be deemed an offer
by Grantee to Issuer, which may be accepted within 10 business days of the
receipt of such Offeror's Notice, on the same terms and conditions and at the
same price at which Grantee is proposing to transfer the Option or such shares
or other securities to such transferee. The purchase of the Option or any such
shares or other securities by Issuer shall be settled within 10 business days of
the date of the acceptance of the offer and the purchase price shall be paid to
Grantee in immediately available funds; provided that, if prior notification to
or approval of the Federal Reserve or any other regulatory authority is required
in connection with such purchase, Issuer shall promptly file the required notice
or application for approval and shall expeditiously process the same (and
Grantee shall cooperate with Issuer in the filing of any such notice or
application and the obtaining of any such approval) and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which, as the case may be, (a) any required notification period has expired or
been terminated or (b) such approval has been obtained and, in either event, any
requisite waiting period shall have passed. In the event of the failure or
refusal of Issuer to purchase all of the Option or all of the shares or other
securities covered by an Offeror's Notice or if the Federal Reserve or any other
regulatory authority disapproves Issuer's proposed purchase of any portion of
the Option or such shares or other securities, Grantee may, within 60 days from
the date of the Offeror's Notice (subject to any necessary extension for
regulatory notification, approval or waiting periods), sell all, but not less
than all, of such portion of the Option or such shares or other securities to
the proposed transferee at no less than the price specified and on terms no more
favorable than those set forth in the Offeror's Notice. The requirements of this
Section 11 shall not apply to (w) any disposition as a result of which the
proposed transferee would own beneficially not more than 2% of the outstanding
voting power of Issuer, (x) any disposition of Issuer Common Stock or other
securities by a person to whom Grantee has assigned its rights under the Option
with the consent of Issuer, (y) any sale by means of a public offering
registered under the Securities Act in which steps are taken to reasonably
assure that no purchaser will acquire securities representing
<PAGE> 12
12
more than 2% of the outstanding voting power of Issuer or (z) any transfer to a
wholly owned Subsidiary of Grantee which agrees in writing to be bound by the
terms hereof.
12. Listing. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then listed on the NYSE, Issuer, upon
the request of Grantee, will promptly file an application to list the shares of
Issuer Common Stock or other securities to be acquired upon exercise of the
Option on the NYSE and will use its best efforts to obtain approval of such
listing as soon as practicable.
13. Division of Option. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of Grantee, upon presentation
and surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
14. Miscellaneous. (a) Expenses. Except as otherwise provided in
Sections 7, 8, 9 and 10, each of the parties hereto shall bear and pay all costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be waived
at any time by the party that is entitled to the benefits of such provision.
This Agreement may not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability. Except
as otherwise set forth in the Merger Agreement, this Agreement (including the
Merger Agreement and the other documents and instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or a federal or state regulatory agency to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit Grantee to acquire,
or does not require Issuer to repurchase, the full number of shares of Issuer
Common Stock or Substitute Common Stock as provided in Sections 2, 7 and 8 (as
adjusted pursuant to Section 6), it is the express intention of Issuer to allow
Grantee to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York without regard to any
applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
<PAGE> 13
13
If to Grantee to:
The Chase Manhattan Corporation
1 Chase Manhattan Plaza
New York, New York 10081
Attention: General Counsel
Telecopier No.: (212) 552-5378
with a copy to:
H. Rodgin Cohen, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telecopier No.: (212) 558-3588
If to Issuer to:
Chemical Banking Corporation
270 Park Avenue
New York, New York 10017
Attention: General Counsel
Telecopier No.: (212) 270-4288
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Lee Meyerson, Esq.
Telecopier No.: (212) 455-2502
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned Subsidiary of Grantee and that Grantee may assign
all or part of its rights hereunder to any person after the occurrence of a
Purchase Event. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this Agreement
may be enforced by either party through specific performance, injunctive relief
and other equitable relief. Both parties further agree to waive any requirement
for the securing or posting of any bond in connection with the obtaining of any
such equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
<PAGE> 14
14
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized as
of the day and year first written above.
THE CHASE MANHATTAN CORPORATION
by /s/ Thomas G. Labrecque
----------------------------------
Name: Thomas G. Labrecque
Title: Chairman and Chief
Executive Officer
CHEMICAL BANKING CORPORATION
by /s/ Walter V. Shipley
----------------------------------
Name: Walter V. Shipley
Title: Chairman and Chief
Executive Officer
<PAGE> 1
EXHIBIT 10(b)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of August 27, 1995 (the "Agreement"),
by and between THE CHASE MANHATTAN CORPORATION, a Delaware corporation
("Issuer"), and CHEMICAL BANKING CORPORATION, a Delaware corporation
("Grantee").
WHEREAS, Grantee and Issuer are concurrently herewith entering into an
Agreement and Plan of Merger dated as of the date hereof (the "Merger
Agreement"; capitalized terms not defined herein shall have the meanings set
forth in the Merger Agreement), providing for, among other things, the merger of
Issuer with and into Grantee with Grantee as the surviving corporation;
WHEREAS, as a condition and inducement to Grantee's willingness to
enter into the Merger Agreement and the Chemical Stock Option Agreement, Grantee
has requested that Issuer agree, and Issuer has agreed, to grant Grantee the
Option (as defined below); and
WHEREAS, as a condition and inducement to Issuer's willingness to enter
into the Merger Agreement and this Agreement, Issuer has requested that Grantee
agree, and Grantee has agreed, to grant Issuer an option to purchase shares of
Grantee's common stock on substantially the same terms as the Option;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, in the
Merger Agreement and in the Chemical Stock Option Agreement, Issuer and Grantee
agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 34,551,183 (as adjusted as set forth herein) shares (the "Option
Shares") of Common Stock, par value $2.00 per share ("Issuer Common Stock"), of
Issuer at a purchase price of $51.875 per Option Share (the "Purchase Price").
2. Exercise of Option. (a) If not in material breach of the Merger
Agreement or the Chemical Stock Option Agreement, Grantee may exercise the
Option, in whole or in part, at any time and from time to time following the
occurrence of a Purchase Event (as defined below); provided that, except as
provided in the last sentence of this Section 2(a), the Option shall terminate
and be of no further force and effect upon the earliest to occur of (i) the
Effective Time, (ii) 18 months after the first occurrence of a Purchase Event or
(iii) termination of the Merger Agreement prior to the occurrence of a Purchase
Event; and, provided, further, that any purchase of shares upon exercise of the
Option shall be subject to compliance with applicable law, including the Bank
Holding Company Act of 1956, as amended (the "BHC Act"). Notwithstanding the
termination of the Option, Grantee shall be entitled to purchase those Option
Shares with respect to which it has exercised the Option in accordance with the
terms hereof prior to the termination of the Option. The termination of the
Option shall not affect any rights hereunder which by their terms extend beyond
the date of such termination.
(b) As used herein, a "Purchase Event" means any of the following
events:
(i) any person (other than Grantee or any Subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act), or shall have filed a registration statement
under the Securities Act with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person or a "group" (as such term is
defined under the Exchange Act) of which such person is a member shall
have acquired beneficial ownership (as such term is defined in Rule
13d-3 of the Exchange Act), or the right to acquire beneficial
ownership, of 15% or more of the then outstanding Issuer Common Stock
(any such offer, a "Tender Offer");
<PAGE> 2
2
(ii) Issuer or any Subsidiary of Issuer shall have authorized,
recommended, proposed or publicly announced an intention to authorize,
recommend or propose, or entered into, an agreement with any person
(other than Grantee or any Subsidiary of Grantee) to (A) effect a
merger, consolidation or other business combination involving Issuer or
any of its Significant Subsidiaries, (B) sell, lease or otherwise
dispose of assets or deposits of Issuer or its Subsidiaries aggregating
20% or more of the consolidated assets or deposits of Issuer and its
Subsidiaries or (C) issue, sell or otherwise dispose of (including by
way of merger, consolidation, share exchange or any similar
transaction) securities representing 15% or more of the voting power of
Issuer or any of its Significant Subsidiaries (any of the foregoing an
"Acquisition Transaction");
(iii) any person (other than Grantee or any Subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 under the Exchange Act) or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under
the Exchange Act) shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, shares of Issuer Common
Stock (other than trust account shares) aggregating 15% or more of the
then outstanding Issuer Common Stock; or
(iv) the holders of Issuer Common Stock shall not have
approved the Merger Agreement at the meeting of such stockholders held
for the purpose of voting on the Merger Agreement, such meeting shall
not have been held or shall have been cancelled prior to termination of
the Merger Agreement or Issuer's Board of Directors shall have
withdrawn or modified in a manner adverse to Grantee or to Grantee's
ability to consummate the transactions contemplated by the Merger
Agreement the recommendation of Issuer's Board of Directors with
respect to the Merger Agreement, in each case after any person (other
than Grantee or any Subsidiary of Grantee) shall have (A) publicly
announced a proposal, or publicly disclosed an intention to make a
proposal, to engage in an Acquisition Transaction or (B) filed an
application (or given a notice), whether in draft or final form, under
the BHC Act or the Change in Bank Control Act of 1978 for approval to
engage in an Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event Grantee wishes to exercise the Option, it shall send
to Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 20 business days from the Notice Date for the
closing of such purchase (the "Closing Date"); provided that if the closing of
the purchase and sale pursuant to the Option (the "Closing") cannot be
consummated by reason of any applicable judgment, decree, order, law or
regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated; and provided, further, without
limiting the foregoing, that if prior notification to or approval of the Federal
Reserve or any other regulatory authority is required in connection with such
purchase, Grantee shall promptly file the required notice or application for
approval and shall expeditiously process the same (and Issuer shall cooperate
with Grantee in the filing of any such notice or application and the obtaining
of any such approval), and the period of time that otherwise would run pursuant
to this sentence shall run instead from the date on which, as the case may be,
(i) any required notification period has expired or been terminated or (ii) such
approval has been obtained, and in either event, any requisite waiting period
has passed.
(d) Notwithstanding Section 2(c), in no event shall any Closing Date be
more than 18 months after the related Notice Date, and if the Closing Date shall
not have occurred within 18 months after the related Notice Date due to the
failure to obtain any such required approval, the exercise of the Option
effected on the Notice Date shall be deemed to have expired. In the event (i)
Grantee receives official notice that an approval of the Federal Reserve or any
other regulatory authority required for the purchase of Option Shares will not
be issued or granted or (ii) a Closing Date shall not have occurred within 18
months after the related Notice Date due to the failure to obtain any such
required approval, Grantee shall be entitled to exercise its right as set forth
in Section 7 or Section 8, as applicable, or to exercise the Option in
connection with the resale of Issuer
<PAGE> 3
3
Common Stock or other securities pursuant to a registration statement as
provided in Section 10. The provisions of this Section 2 and Section 3 shall
apply with appropriate adjustments to any such exercise.
3. Payment and Delivery of Certificates. (a) On each Closing Date,
Grantee shall pay to Issuer in immediately available funds by wire transfer to a
bank account designated by Issuer an amount equal to the Purchase Price
multiplied by the Option Shares to be purchased on such Closing Date.
(b) At each Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Issuer shall deliver to Grantee a
certificate or certificates representing the Option Shares to be purchased at
such Closing, which Option Shares shall be free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever, and Grantee shall deliver to
Issuer a letter agreeing that Grantee shall not offer to sell or otherwise
dispose of such Option Shares in violation of applicable law or the provisions
of this Agreement. If at the time of issuance of any Option Shares pursuant to
an exercise of all or part of the Option hereunder, Issuer shall not have
redeemed the Chase Rights, or shall have issued any similar securities, then
each Option Share issued pursuant to such exercise shall also represent a
corresponding Chase Right or new rights with terms substantially the same as and
at least as favorable to Grantee as are provided under the Chase Rights
Agreement or any similar agreement then in effect.
(c) Certificates for the Option Shares delivered at each Closing shall
be endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF AUGUST
27, 1995. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER
HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST
THEREFOR.
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act and
(ii) the reference to restrictions pursuant to this Agreement in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the Option Shares evidenced by certificate(s) containing such
reference have been sold or transferred in compliance with the provisions of
this Agreement under circumstances that do not require the retention of such
reference.
4. Representations and Warranties of Issuer. Issuer hereby represents
and warrants to Grantee as follows:
(a) Due Authorization. Issuer has all requisite corporate power
and authority to enter into this Agreement and, subject to any
approvals referred to herein, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Issuer.
This Agreement has been duly executed and delivered by Issuer and
constitutes a valid and binding obligation of Issuer, enforceable in
accordance with its terms.
(b) Authorized Stock. Issuer has taken all necessary corporate and
other action to authorize and reserve and, subject to obtaining the
governmental and other approvals and consents referred to herein, to
permit it to issue, and, at all times from the date hereof until the
obligation to deliver Issuer Common Stock upon the exercise of the
Option terminates, will have reserved for issuance, upon exercise of
the Option, shares of Issuer Common Stock necessary for Grantee to
exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional shares of
Issuer Common Stock or other securities which may be issued pursuant to
Section 6 upon
<PAGE> 4
4
exercise of the Option or any Substitute Option (as hereinafter
defined). The shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer
Common Stock or other securities which may be issuable upon exercise of
the Option or any Substitute Option pursuant to Section 6, upon
issuance pursuant hereto, shall be duly and validly issued, fully paid
and nonassessable, and shall be delivered free and clear of all liens,
claims, charges and encumbrances of any kind or nature whatsoever,
including any preemptive rights of any stockholder of Issuer.
(c) No Conflicts. Except as disclosed pursuant to the Merger
Agreement, the execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not,
conflict with, or result in any Violation pursuant to any provision of
the Certificate of Incorporation or By-laws of Issuer or any Subsidiary
of Issuer or, subject to obtaining any approvals or consents
contemplated hereby, result in any Violation of any loan or credit
agreement, note, mortgage, indenture, lease, Chase Benefit Plan or
other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Issuer or any Subsidiary of Issuer or their
respective properties or assets which Violation would, individually or
in the aggregate, have a material adverse effect (as defined in the
Merger Agreement) on Issuer.
(d) Board Action. The Board of Directors of Issuer having
approved this Agreement and the consummation of the transactions
contemplated hereby, the provisions of Section 203 of the Delaware
General Corporation Law and the provisions of Section 8.01 of Issuer's
Certificate of Incorporation do not and will not apply to this
Agreement or the purchase of shares of Issuer Common Stock pursuant to
this Agreement.
(e) Rights Amendment. The Chase Rights Agreement has been
amended to provide that Grantee will not become an "Acquiring Person"
and that no "Triggering Event," "Stock Acquisition Date" or
"Distribution Date" (as such terms are defined in the Chase Rights
Agreement) will occur as a result of the approval, execution or
delivery of this Agreement or the Merger Agreement or the consummation
of the transactions contemplated hereby and thereby, including the
acquisition of shares of Issuer Common Stock by Grantee pursuant to
this Agreement.
5. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer that:
(a) Due Authorization. Grantee has all requisite corporate power
and authority to enter into this Agreement and, subject to any
approvals or consents referred to herein, to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by
Grantee and constitutes a valid and binding obligation of Grantee,
enforceable in accordance with its terms.
(b) No Conflicts. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby
will not result in any Violation pursuant to any provision of the
Certificate of Incorporation or By-laws of Grantee or any Subsidiary of
Grantee or, subject to obtaining any approvals or consents contemplated
hereby, result in any Violation of any loan or credit agreement, note,
mortgage, indenture, lease, Chemical Benefit Plan or other agreement,
obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Grantee or any Subsidiary of Grantee or their respective
properties or assets which Violation, individually or in the aggregate,
would have a material adverse effect on Grantee.
(c) Purchase Not for Distribution. Any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be
taken with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered
or exempt from registration under the Securities Act.
<PAGE> 5
5
6. Adjustment upon Changes in Capitalization, etc. (a) In the event of
any change in Issuer Common Stock by reason of a stock dividend, split-up,
recapitalization, combination, exchange of shares or similar transaction, the
type and number of shares or securities subject to the Option, and the Purchase
Price therefor, shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Grantee shall receive
upon exercise of the Option the number and class of shares or other securities
or property that Grantee would have received in respect of Issuer Common Stock
if the Option had been exercised immediately prior to such event or the record
date therefor, as applicable. If any additional shares of Issuer Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 6(a)), the number of shares of
Issuer Common Stock subject to the Option shall be adjusted so that, after such
issuance, it equals 19.9% of the number of shares of Issuer Common Stock then
issued and outstanding, without giving effect to any shares subject to or issued
pursuant to the Option.
(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the shares of Issuer
Common Stock outstanding immediately prior to the consummation of such merger
shall be changed into or exchanged for stock or other securities of Issuer or
any other person or cash or any other property, or the shares of Issuer Common
Stock outstanding immediately prior to the consummation of such merger shall
after such merger represent less than 50% of the outstanding voting securities
of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets or deposits to any person, other than Grantee or
one of its Subsidiaries, then, and in each such case, the agreement governing
such transaction shall make proper provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (I) the Acquiring Corporation
(as defined below) or (II) any person that controls the Acquiring Corporation
(any such person being referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option;
provided that the exercise price therefor and number of shares subject thereto
shall be as set forth in this Section 6 and the repurchase rights relating
thereto shall be as set forth in Section 8; provided, further, that the
Substitute Option shall be exercisable immediately upon issuance without the
occurrence of a Purchase Event; and provided, further, that if the terms of the
Substitute Option cannot, for legal reasons, be the same as the Option (subject
to the variations described in the foregoing provisos), such terms shall be as
similar as possible and in no event less advantageous to Grantee. Substitute
Option Issuer shall also enter into an agreement with Grantee in substantially
the same form as this Agreement (subject to the variations described in the
foregoing provisos), which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as defined below) as is equal to the Assigned
Value (as defined below) multiplied by the number of shares of Issuer Common
Stock for which the Option was theretofore exercisable, divided by the Average
Price (as defined below), rounded up to the nearest whole share. The exercise
price per share of Substitute Common Stock of the Substitute Option (the
"Substitute Option Price") shall then be equal to the Purchase Price multiplied
by a fraction in which the numerator is the number of shares of Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares of Substitute Common Stock for which the Substitute Option
is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of outstanding Substitute
Common Stock but for the limitation in the first sentence of this Section 6(e),
Substitute Option Issuer shall make a cash payment to Grantee equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in the first sentence of this Section 6(e) over (ii) the value of the
Substitute Option after giving effect to the limitation in the first sentence of
this
<PAGE> 6
6
Section 6(e). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Grantee.
(f) Issuer shall not enter into any transaction described in Section
6(b) unless the Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer hereunder and take
all other actions that may be necessary so that the provisions of this Section 6
are given full force and effect (including, without limitation, any action that
may be necessary so that the holders of the other shares of common stock issued
by Substitute Option Issuer are not entitled to exercise any rights by reason of
the issuance or exercise of the Substitute Option and the shares of Substitute
Common Stock are otherwise in no way distinguishable from or have lesser
economic value than other shares of common stock issued by Substitute Option
Issuer (other than any diminution in value resulting from the fact that the
shares of Substitute Common Stock are restricted securities, as defined in Rule
144 under the Securities Act or any successor provision)).
(g) For purposes hereof, the following terms have the following
meanings:
(1) "Acquiring Corporation" means (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving corporation and (iii) the transferee of all or
substantially all of Issuer's assets or deposits.
(2) "Assigned Value" means the highest of (w) the price per
share of Issuer Common Stock at which a Tender Offer has been made
after the date hereof and prior to the consummation of the
consolidation, merger or sale referred to in Section 6(b), (x) the
price per share to be paid by any third party or the consideration per
share to received by holders of Issuer Common Stock, in each case
pursuant to the agreement with Issuer with respect to the
consolidation, merger or sale referred to in Section 6(b), (y) the
highest closing sales price per share for Issuer Common Stock quoted on
the NYSE (or if such Issuer Common Stock is not quoted on the NYSE, the
highest bid price per share as quoted on the National Association of
Securities Dealers Automated Quotation System or, if the shares of
Issuer Common Stock are not quoted thereon, on the principal trading
market on which such shares are traded as reported by a recognized
source) during the 12-month period immediately preceding the
consolidation, merger or sale referred to in Section 6(b) and (z) in
the event the transaction referred to in Section 6(b) is a sale of all
or substantially all of Issuer's assets and/or deposits, an amount
equal to (i) the sum of the price paid in such sale for such assets
and/or deposits and the current market value of the remaining assets of
Issuer, as determined by a nationally recognized investment banking
firm selected by Grantee divided by (ii) the number of shares of Issuer
Common Stock outstanding at such time. In the event that a Tender Offer
is made for Issuer Common Stock or an agreement is entered into for a
merger or consolidation involving consideration other than cash, the
value of the securities or other property issuable or deliverable in
exchange for Issuer Common Stock shall be determined by a nationally
recognized investment banking firm selected by Grantee.
(3) "Average Price" means the average closing sales price per
share of a share of Substitute Common Stock quoted on the NYSE (or if
such Substitute Common Stock is not quoted on the NYSE, the highest bid
price per share as quoted on the National Association of Securities
Dealers Automated Quotation System or, if the shares of Substitute
Common Stock are not quoted thereon, on the principal trading market on
which such shares are traded as reported by a recognized source) for
the one year immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of the shares
of Substitute Common Stock on the day preceding such consolidation,
merger or sale; provided that if Substitute Option Issuer is Issuer,
the Average Price shall be computed with respect to a share of common
stock issued by Issuer, the person merging into Issuer or by any
company which controls such person, as Grantee may elect.
(4) "Substitute Common Stock" means the shares of capital stock
(or similar equity interest) with the greatest voting power in respect
of the election of directors (or persons similarly responsible for the
direction of the business and affairs) of the Substitute Option Issuer.
<PAGE> 7
7
7. Repurchase of Option at the Election of Grantee. (a) At the request
of Grantee at any time commencing (i) upon the first occurrence of a Repurchase
Event (as defined below) and ending 18 months immediately thereafter and (ii)
for 30 business days following the occurrence of either of the events set forth
in clauses (i) and (ii) of Section 2(d) (but solely as to the shares of Issuer
Common Stock with respect to which the required approval was not received),
Issuer (or any successor entity thereof) shall repurchase from Grantee (I) the
Option and (II) all shares of Issuer Common Stock purchased by Grantee pursuant
hereto with respect to which Grantee then has beneficial ownership. The date on
which Grantee exercises its rights under this Section 7 is referred to as the
"Section 7 Request Date". Such repurchase shall be at an aggregate price (the
"Section 7 Repurchase Consideration") equal to:
(A) the aggregate Purchase Price paid by Grantee for any shares
of Issuer Common Stock acquired pursuant to the Option with respect to
which Grantee then has beneficial ownership; plus
(B) the excess, if any, of (x) the Applicable Price (as defined
below) as of the Section 7 Request Date for a share of Issuer Common
Stock over (y) the Purchase Price (subject to adjustment pursuant to
Section 6(a)), multiplied by the number of shares of Issuer Common
Stock with respect to which the Option has not been exercised; plus
(C) the excess, if any, of the Applicable Price as of the
Section 7 Request Date over the Purchase Price paid (or, in the case of
Option Shares with respect to which the Option has been exercised but
the Closing Date has not occurred, payable (subject to adjustment
pursuant to Section 6(a))) by Grantee for each share of Issuer Common
Stock with respect to which the Option has been exercised and with
respect to which Grantee then has beneficial ownership, multiplied by
the number of such shares; plus
(D) the amount of the documented reasonable out-of-pocket
expenses incurred by Grantee in connection with the Merger Agreement
and this Agreement and the transactions contemplated thereby and
hereby, including reasonable accounting, investment banking and legal
fees.
(b) If Grantee exercises its rights under this Section 7, Issuer shall,
within 10 business days after the Section 7 Request Date, pay the Section 7
Repurchase Consideration to Grantee in immediately available funds, and Grantee
shall surrender to Issuer the Option and the certificates evidencing the shares
of Issuer Common Stock purchased hereunder with respect to which Grantee then
has beneficial ownership, and Grantee shall warrant that it has sole record and
beneficial ownership of such shares and that the same are then free and clear of
all liens, claims, charges and encumbrances of any kind whatsoever.
Notwithstanding the foregoing, to the extent that prior notification to or
approval of the Federal Reserve or other regulatory authority is required in
connection with the payment of all or any portion of the Section 7 Repurchase
Consideration, Issuer shall deliver from time to time that portion of the
Section 7 Repurchase Consideration that it is not then so prohibited from paying
and shall promptly provide the required notice or application for approval and
shall expeditiously process the same (and Grantee shall cooperate with Issuer in
the filing of any such notice or application and the obtaining of any such
approval), and the period of time that otherwise would run pursuant to the
preceding sentence for the payment of the portion of the Section 7 Repurchase
Consideration requiring such notification or approval shall run instead from the
date on which, as the case may be, (i) any required notification period has
expired or been terminated or (ii) such approval has been obtained and, in
either event, any requisite waiting period shall have passed. If the Federal
Reserve or any other regulatory authority disapproves of any part of Issuer's
proposed repurchase pursuant to this Section 7, Issuer shall promptly give
notice of such fact to Grantee and redeliver to Grantee the Option Shares it is
then prohibited from repurchasing, and Grantee shall have the right to exercise
the Option as to the number of Option Shares for which the Option was
exercisable at the Section 7 Request Date less the number of shares as to which
payment has been made pursuant to Section 7(a)(B); provided that if the Option
shall have terminated prior to the date of such notice or shall be scheduled to
terminate at any time before the expiration of a period ending on the thirtieth
business day after such date, Grantee shall nonetheless have the right so to
exercise the Option or exercise its rights under Section 10 until the expiration
of such period of 30 business days. Notwithstanding anything herein to the
contrary, Issuer shall not
<PAGE> 8
8
be obligated to repurchase the Option or any shares of Issuer Common Stock
pursuant to this Section 7 on more than one occasion.
(c) For purposes of this Agreement, the "Applicable Price," as of any
date, means the highest of (i) the highest price per share at which a Tender
Offer has been made for shares of Issuer Common Stock after the date hereof and
on or prior to such date, (ii) the price per share to be paid by any third party
for shares of Issuer Common Stock or the consideration per share to be received
by holders of Issuer Common Stock, in each case pursuant to an agreement for a
merger or other business combination transaction with Issuer entered into on or
prior to such date or (iii) the highest closing sales price per share of Issuer
Common Stock quoted on the NYSE (or if Issuer Common Stock is not quoted on the
NYSE, the highest bid price per share as quoted on the National Association of
Securities Dealers Automated Quotations System or, if the shares of Issuer
Common Stock are not quoted thereon, on the principal trading market on which
such shares are traded as reported by a recognized source) during the 60
business days preceding such date. If the consideration to be offered, paid or
received pursuant to either of the foregoing clauses (i) or (ii) shall be other
than in cash, the value of such consideration shall be determined in good faith
by an independent nationally recognized investment banking firm selected by
Grantee and reasonably acceptable to Issuer, which determination shall be
conclusive for all purposes of this Agreement.
(d) As used herein, a "Repurchase Event" means the occurrence of any of
the Purchase Events specified in Section 2(b)(ii) or (iii).
8. Repurchase of Substitute Option. (a) At the request of Grantee at
any time after issuance of the Substitute Option, Substitute Option Issuer (or
any successor entity thereof) shall repurchase from Grantee (I) the Substitute
Option and (II) all shares of Substitute Common Stock purchased by Grantee
pursuant to such Substitute Option with respect to which Grantee then has
beneficial ownership. The date on which Grantee exercises its rights under this
Section 8 is referred to as the "Section 8 Request Date". Such repurchase shall
be at an aggregate price (the "Section 8 Repurchase Consideration") equal to:
(i) the Substitute Option Price paid by Grantee for any shares
of Substitute Common Stock acquired pursuant to the Substitute Option
with respect to which Grantee then has beneficial ownership; plus
(ii) the excess, if any, of (x) the Highest Closing Price (as
defined below) for a share of Substitute Common Stock over (y) the
Substitute Option Price (subject to adjustment pursuant to Section 6),
multiplied by the number of shares of Substitute Common Stock with
respect to which the Substitute Option has not been exercised; plus
(iii) the excess, if any, of the Highest Closing Price over the
Substitute Option Price paid (or, in the case of Substitute Common
Stock with respect to which the Substitute Option has been exercised
but the Closing Date has not occurred, payable (subject to adjustment
pursuant to Section 6)) by Grantee for each share of Substitute Common
Stock with respect to which the Substitute Option has been exercised
and with respect to which Grantee then has beneficial ownership,
multiplied by the number of such shares; plus
(iv) the amount of the documented reasonable out-of-pocket
expenses incurred by Grantee in connection with the Merger Agreement
and this Agreement and the transactions contemplated thereby and
hereby, including reasonable accounting, investment banking and legal
fees.
(b) If Grantee exercises its rights under this Section 8, Substitute
Option Issuer shall, within 10 business days after the Section 8 Request Date,
pay the Section 8 Repurchase Consideration to Grantee in immediately available
funds, and Grantee shall surrender to Substitute Option Issuer the Substitute
Option and the certificates evidencing the shares of Substitute Common Stock
purchased thereunder with respect to which Grantee then has beneficial
ownership, and Grantee shall warrant that it has sole record and beneficial
ownership of such shares and that the same are then free and clear of all liens,
claims, charges and encumbrances of any
<PAGE> 9
9
kind whatsoever. Notwithstanding the foregoing, to the extent that prior
notification to or approval of the Federal Reserve or other regulatory authority
is required in connection with the payment of all or any portion of the Section
8 Repurchase Consideration, Substitute Option Issuer shall deliver from time to
time that portion of the Section 8 Repurchase Consideration that it is not then
so prohibited from paying and shall promptly provide the required notice or
application for approval and shall expeditiously process the same (and Grantee
shall cooperate with Substitute Option Issuer in the filing of any such notice
or application and the obtaining of any such approval), and the period of time
that otherwise would run pursuant to the preceding sentence for the payment of
the portion of the Section 8 Repurchase Consideration requiring such
notification or approval shall run instead from the date on which, as the case
may be, (i) any required notification period has expired or been terminated or
(ii) such approval has been obtained and, in either event, any requisite waiting
period shall have passed. If the Federal Reserve or any other regulatory
authority disapproves of any part of Substitute Option Issuer's proposed
repurchase pursuant to this Section 8, Substitute Option Issuer shall promptly
give notice of such fact to Grantee and redeliver to Grantee the Substitute
Common Stock it is then prohibited from repurchasing, and Grantee shall have the
right to exercise the Substitute Option as to the number of shares of Substitute
Common Stock for which the Substitute Option was exercisable at the Section 8
Request Date; provided that if the Substitute Option shall have terminated prior
to the date of such notice or shall be scheduled to terminate at any time before
the expiration of a period ending on the thirtieth business day after such date,
Grantee shall nonetheless have the right so to exercise the Substitute Option or
exercise its rights under Section 10 until the expiration of such period of 30
business days. Notwithstanding anything herein to the contrary, Substitute
Option Issuer shall not be obligated to repurchase the Substitute Option or any
shares of Substitute Common Stock pursuant to this Section 8 on more than one
occasion.
(c) For purposes of this Agreement, the "Highest Closing Price" means
the highest closing sales price for shares of Substitute Common Stock quoted on
the NYSE (or if the Substitute Common Stock is not quoted on the NYSE, the
highest bid price per share as quoted on the National Association of Securities
Dealers Automated Quotations System or, if the shares of Substitute Common Stock
are not quoted thereon, on the principal trading market on which such shares are
traded as reported by a recognized source) during the six-month period preceding
the Section 8 Request Date.
9. Mandatory Repurchase of Option. (a) In the event that any person
who has participated in a Purchase Event enters into any agreement or
understanding with Grantee with respect to Grantee's exercise of, or its
election not to exercise, any of Grantee's rights set forth in Section 2 or 7 of
this Agreement, Grantee shall, by written notice to Issuer, require that Issuer
repurchase, and Issuer shall repurchase, (I) the Option and (II) all (but not
less than all) the shares of Issuer Common Stock purchased by Grantee pursuant
hereto and with respect to which Grantee then has beneficial ownership;
provided, however, that the parties shall not be obligated to effect such
mandatory repurchase if the Board of Directors of Issuer determines, after
having consulted with and considered the written advice of outside counsel, that
such mandatory repurchase would cause the members of the Board of Directors to
breach their fiduciary duties; and provided, further, that any such
determination by the Board of Directors of Issuer shall not operate to limit
Grantee's rights pursuant to Section 7 hereof. The date of Grantee's written
notice referred to above is referred to as the "Section 9 Notice Date". Such
repurchase shall be at an aggregate price (the "Section 9 Repurchase
Consideration") equal to:
(i) the aggregate Purchase Price paid by Grantee for any shares
of Issuer Common Stock acquired pursuant to the Option with respect to
which Grantee then has beneficial ownership; plus
(ii) the excess, if any, of (x) the Applicable Price as of the
Section 9 Notice Date for a share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 6(a)),
multiplied by the number of shares of Issuer Common Stock with respect
to which the Option has not been exercised; plus
(iii) the excess, if any, of the Applicable Price as of the
Section 9 Notice Date over the Purchase Price paid (or, in the case of
Option Shares with respect to which the Option has been exercised but
the Closing Date has not occurred, payable (subject to adjustment
pursuant to Section 6(a))) by Grantee for
<PAGE> 10
each share of Issuer Common Stock with respect to which the Option has
been exercised and with respect to which Grantee then has beneficial
ownership, multiplied by the number of such shares; plus
(iv) the amount of the documented reasonable out-of-pocket
expenses incurred by Grantee in connection with the Merger Agreement
and this Agreement and the transactions contemplated thereby and
hereby, including reasonable accounting, investment banking and legal
fees.
(b) Notwithstanding the provisions of Section 9(a), within 30 days
following the Section 9 Notice Date, Grantee may deliver an Offeror's Notice
pursuant to Section 11, in which case the provisions of Section 11 and not those
of this Section 9 shall control. If Grantee does not deliver an Offeror's Notice
within such 30-day period, Issuer shall, within 10 business days after the
expiration of such 30-day period or, if applicable, upon abandonment of the
transaction covered by such Offeror's Notice, pay the Section 9 Repurchase
Consideration in immediately available funds, and Grantee shall surrender to
Issuer the Option and the certificates evidencing the shares of Issuer Common
Stock purchased hereunder with respect to which Grantee then has beneficial
ownership, and Grantee shall warrant that it has sole record and beneficial
ownership of such shares and that the same are then free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever. If the Federal Reserve
or any other regulatory authority disapproves of any part of Issuer's proposed
repurchase pursuant to this Section 9, Issuer shall promptly give notice of such
fact to Grantee and thereafter deliver or cause to be delivered from time to
time to Grantee the portion of the Section 9 Repurchase Consideration that
Issuer is no longer prohibited from delivering, within five business days after
the date on which it is no longer so prohibited.
(c) If, prior to the date which is 18 months after the Section 9 Notice
Date, Issuer enters into, or is the subject of, any transaction which would have
constituted a Repurchase Event hereunder but for the prior repurchase by Issuer
of the Option and shares of Issuer Common Stock under this Section 9, then
concurrently with the occurrence of such event, Issuer shall pay to Grantee, as
additional consideration for the Option and shares of Issuer Common Stock
purchased by Issuer pursuant to this Section, an amount in immediately available
funds equal to the excess, if any, of (i) the Section 9 Repurchase Consideration
calculated as if the Section 9 Notice Date had occurred on the date of such
Repurchase Event over (ii) the amount previously paid by Issuer to Grantee
pursuant to this Section 9.
(d) In the event that Issuer is, as a result of law or regulation,
prohibited from performing any of its obligations under this Section 9, Issuer
shall not thereafter enter into any Acquisition Transaction unless the other
parties thereto agree to assume Issuer's obligations under this Section 9 to the
extent not previously performed. The foregoing sentence shall not operate to
limit or waive any remedies Grantee may have against Issuer for Issuer's failure
to perform its obligations under this Section 9.
10. Registration Rights. Issuer shall, if requested by Grantee at any
time and from time to time (a) within three years of the first exercise of the
Option or (b) for 30 business days following the occurrence of either of the
events set forth in clauses (i) and (ii) of Section 2(d) or receipt by Grantee
of official notice that an approval of the Federal Reserve or any other
regulatory authority required for a repurchase as contemplated hereby would not
be issued or granted (but solely as to the securities or portion of the Option
with respect to which the required approval was not received), as expeditiously
as possible prepare and file up to two registration statements under the
Securities Act if such registration is necessary in order to permit the sale or
other disposition of any or all shares of securities that have been acquired by
or are issuable to Grantee upon exercise of the Option in accordance with the
intended method of sale or other disposition stated by Grantee, including a
"shelf" registration statement under Rule 415 under the Securities Act or any
successor provision, and Issuer shall use its best efforts to qualify such
shares or other securities under any applicable state securities laws. Grantee
agrees to use all reasonable efforts to cause, and to cause any underwriters of
any sale or other disposition to cause, any sale or other disposition pursuant
to such registration statement to be effected on a widely distributed basis so
that upon consummation thereof no purchaser or transferee shall own beneficially
more than 2% of the then outstanding voting power of Issuer. Issuer shall use
all reasonable efforts to cause each such registration statement to become
effective, to obtain all consents or waivers of other parties which are required
therefor and to keep such registration statement effective for such period not
in excess of 180 days from
<PAGE> 11
11
the day such registration statement first becomes effective as may be reasonably
necessary to effect such sale or other disposition. In the event that Grantee
requests Issuer to file a registration statement following the failure to obtain
a required approval for an exercise of the Option as described in Section 2(d),
the closing of the sale or other disposition of Issuer Common Stock or other
securities pursuant to such registration statement shall occur substantially
simultaneously with the exercise of the Option. The obligations of Issuer
hereunder to file a registration statement and to maintain its effectiveness may
be suspended for one or more periods of time not exceeding 60 days in the
aggregate if the Board of Directors of Issuer shall have determined that the
filing of such registration statement or the maintenance of its effectiveness
would require disclosure of nonpublic information that would materially and
adversely affect Issuer. Any registration statement prepared and filed under
this Section 10, and any sale covered thereby, shall be at Issuer's expense
except for underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto. Grantee shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If during the time periods referred to in the
first sentence of this Section 10 Issuer effects a registration under the
Securities Act of Issuer Common Stock for its own account or for any other
stockholders of Issuer (other than on Form S-4 or Form S-8, or any successor
form), it shall allow Grantee the right to participate in such registration, and
such participation shall not affect the obligation of Issuer to effect two
registration statements for Grantee under this Section 10; provided that, if the
managing underwriters of such offering advise Issuer in writing that in their
opinion the number of shares of Issuer Common Stock requested to be included in
such registration exceeds the number which can be sold in such offering, Issuer
shall include the shares requested to be included therein by Grantee pro rata
with the shares intended to be included therein by Issuer. In connection with
any registration pursuant to this Section 10, Issuer and Grantee shall provide
each other and any underwriter of the offering with customary representations,
warranties, covenants, indemnification and contribution in connection with such
registration.
11. First Refusal. At any time after the first occurrence of a Purchase
Event and prior to the later of (a) the expiration of 24 months immediately
following the first purchase of shares of Issuer Common Stock pursuant to the
Option and (b) the termination of the Option pursuant to Section 2(a), if
Grantee shall desire to sell, assign, transfer or otherwise dispose of all or
any of the Option or the shares of Issuer Common Stock or other securities
acquired by it pursuant to the Option, it shall give Issuer written notice of
the proposed transaction (an "Offeror's Notice"), identifying the proposed
transferee, accompanied by a copy of a binding offer to purchase the Option or
such shares or other securities signed by such transferee and setting forth the
terms of the proposed transaction. An Offeror's Notice shall be deemed an offer
by Grantee to Issuer, which may be accepted within 10 business days of the
receipt of such Offeror's Notice, on the same terms and conditions and at the
same price at which Grantee is proposing to transfer the Option or such shares
or other securities to such transferee. The purchase of the Option or any such
shares or other securities by Issuer shall be settled within 10 business days of
the date of the acceptance of the offer and the purchase price shall be paid to
Grantee in immediately available funds; provided that, if prior notification to
or approval of the Federal Reserve or any other regulatory authority is required
in connection with such purchase, Issuer shall promptly file the required notice
or application for approval and shall expeditiously process the same (and
Grantee shall cooperate with Issuer in the filing of any such notice or
application and the obtaining of any such approval) and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which, as the case may be, (a) any required notification period has expired or
been terminated or (b) such approval has been obtained and, in either event, any
requisite waiting period shall have passed. In the event of the failure or
refusal of Issuer to purchase all of the Option or all of the shares or other
securities covered by an Offeror's Notice or if the Federal Reserve or any other
regulatory authority disapproves Issuer's proposed purchase of any portion of
the Option or such shares or other securities, Grantee may, within 60 days from
the date of the Offeror's Notice (subject to any necessary extension for
regulatory notification, approval or waiting periods), sell all, but not less
than all, of such portion of the Option or such shares or other securities to
the proposed transferee at no less than the price specified and on terms no more
favorable than those set forth in the Offeror's Notice. The requirements of this
Section 11 shall not apply to (w) any disposition as a result of which the
proposed transferee would own beneficially not more than 2% of the outstanding
voting power of Issuer, (x) any disposition of Issuer Common Stock or other
securities by a person to whom Grantee has assigned its rights under the Option
with the consent of Issuer, (y) any sale by means of a public offering
registered under the Securities Act in which steps are taken to reasonably
assure that no purchaser will acquire securities representing
<PAGE> 12
12
more than 2% of the outstanding voting power of Issuer or (z) any transfer to a
wholly owned Subsidiary of Grantee which agrees in writing to be bound by the
terms hereof.
12. Listing. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then listed on the NYSE, Issuer, upon
the request of Grantee, will promptly file an application to list the shares of
Issuer Common Stock or other securities to be acquired upon exercise of the
Option on the NYSE and will use its best efforts to obtain approval of such
listing as soon as practicable.
13. Division of Option. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of Grantee, upon presentation
and surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
14. Miscellaneous. (a) Expenses. Except as otherwise provided in
Sections 7, 8, 9 and 10, each of the parties hereto shall bear and pay all costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be waived
at any time by the party that is entitled to the benefits of such provision.
This Agreement may not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability. Except
as otherwise set forth in the Merger Agreement, this Agreement (including the
Merger Agreement and the other documents and instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or a federal or state regulatory agency to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit Grantee to acquire,
or does not require Issuer to repurchase, the full number of shares of Issuer
Common Stock or Substitute Common Stock as provided in Sections 2, 7 and 8 (as
adjusted pursuant to Section 6), it is the express intention of Issuer to allow
Grantee to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York without regard to any
applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
<PAGE> 13
13
If to Issuer to:
The Chase Manhattan Corporation
1 Chase Manhattan Plaza
New York, New York 10081
Attention: General Counsel
Telecopier No.: (212) 552-5378
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: H. Rodgin Cohen, Esq.
Telecopier No.: (212) 558-3588
If to Grantee to:
Chemical Banking Corporation
270 Park Avenue
New York, New York 10017
Attention: General Counsel
Telecopier No.: (212) 270-4288
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Lee Meyerson, Esq.
Telecopier No.: (212) 455-2502
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned Subsidiary of Grantee and that Grantee may assign
all or part of its rights hereunder to any person after the occurrence of a
Purchase Event. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this Agreement
may be enforced by either party through specific performance, injunctive relief
and other equitable relief. Both parties further agree to waive any requirement
for the securing or posting of any bond in connection with the obtaining of any
such equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
<PAGE> 14
14
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized as
of the day and year first written above.
THE CHASE MANHATTAN CORPORATION
by /s/ Thomas G. Labrecque
----------------------------------
Name: Thomas G. Labrecque
Title: Chairman and Chief
Executive Officer
CHEMICAL BANKING CORPORATION
by /s/ Walter V. Shipley
----------------------------------
Name: Walter V. Shipley
Title: Chairman and Chief
Executive Officer
<PAGE> 1
EXHIBIT 10(c)
EMPLOYEE BENEFITS AGREEMENT
EMPLOYEE BENEFITS AGREEMENT, dated as of August 27, 1995 (this
"Agreement"), between CHEMICAL BANKING CORPORATION ("Chemical"), a Delaware
corporation, and THE CHASE MANHATTAN CORPORATION ("Chase"), a Delaware
corporation.
WHEREAS, Chemical and Chase are entering into an Agreement and
Plan of Merger (the "Merger Agreement") dated as of the date hereof providing
for the merger of Chase into Chemical;
WHEREAS, concurrently therewith Chemical and Chase are
entering into this Agreement in order to cover various employee benefit matters
relating to the Merger; and
WHEREAS, Chemical and Chase wish to achieve consistency, where
appropriate, between the treatment of Chemical and Chase employees and Chase
wishes to give effect to its intent, in the context of an approved change in
control (as further described herein) to amend or interpret its plans so that
the merger does not, of itself, result in the acceleration of vesting and
payments thereunder, to the extent permitted by the applicable employee plans or
arrangements, or by law;
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained herein and in the Merger
Agreement, the parties hereto agree as follows:
1. Definitions.
All capitalized terms in this Agreement shall have the same
meanings as set forth therefor in the Merger Agreement unless otherwise
specified herein.
2. Executive Agreements.
Promptly after the execution and delivery of the Merger
Agreement, Chase shall offer to its officers who are parties to individual
agreements (the "Chase Executive Agreements") with Chase concerning their
termination of employment after the occurrence of a Change in Control (as
defined therein) to modify such Chase Executive Agreements in the manner agreed
upon between Chemical and Chase. Such modified Agreements shall be referred to
hereafter as the "Revised Chase Executive Agreements."
If any such officer of Chase whose individual agreement
expires on December 31, 1995 does not accept the offer described above, then
prior to September 30, 1995, Chase shall provide such officer a notice pursuant
to Section 2 of his or her Chase Executive Agreement that the term of such Chase
Executive
<PAGE> 2
2
Agreement shall not be extended beyond December 31, 1995 except as otherwise
provided in Section 2 of such agreement.
Promptly after the execution and delivery of the Merger
Agreement, Chemical will offer to approximately 40 executives of Chemical, at
the Executive Vice-President level or higher, to enter into agreements with them
(the "Chemical Executive Agreements") concerning their termination of employment
after the occurrence of the shareholder approval of the Merger in a form agreed
upon between Chemical and Chase and providing for benefits equivalent or
comparable to those in the Revised Chase Executive Agreements, with appropriate
adjustments to reflect differences in existing benefit and compensation plans
between Chemical and Chase. Any existing individual contracts between Chemical
and its executives will not be renewed or modified by Chemical to extend their
terms.
3. Special Severance Plan.
Chase hereby represents to Chemical that, prior to a
"Potential Change in Control," as defined in such Plan, Chase amended its
Special Severance Plan for certain key management personnel (the "Chase Special
Severance Plan") to provide that with respect to any Approved Change in Control
(as defined therein), the term "Good Reason," as used in such Plan, shall be
defined as set forth in Exhibit A hereto, and the severance payment schedule in
the event of an eligible termination of employment shall be amended as set forth
in Exhibit B. This Plan, as amended, shall apply to eligible terminations
occurring on or after the date of this Agreement.
Chemical hereby represents to Chase that it has adopted or may
adopt a special severance plan for approximately 385 key management personnel of
Chemical at or above Chemical's salary grade 380 providing for severance
benefits equivalent to those afforded by Chase to its key management personnel
under the Chase Special Severance Plan, as amended pursuant to the preceding
paragraph. This Plan shall apply to eligible terminations occurring on or after
the date of this Agreement.
4. General Severance Plans.
Chemical and Chase hereby represent and agree that the
severance pay to be provided to all employees of Chemical and Chase (and their
respective subsidiaries) under their respective current severance or salary
continuation plans whose positions are eliminated between the date of this
Agreement and the second anniversary of the effective date of the Merger, and
who are not covered by the arrangements referred to in Sections 2 and 3 of this
Agreement, shall be as set forth in Exhibit C hereto.
<PAGE> 3
3
5. Long Term Incentive Plans.
Chase hereby represents that, prior to the execution and
delivery of the Merger Agreement (and prior, where applicable, to a "Potential
Change in Control," as defined in a plan subject to this Section 5), as Chase
always contemplated in the case of a strategic business combination of the kind
contemplated by the Merger Agreement, it amended its 1987/1982 Long-Term
Incentive Plan and the Compensation Committee of its Board of Directors (the
"Chase Compensation Committee") amended its 1994 Long-Term Incentive Plan so
that:
(a) there shall be no acceleration of vesting of restricted
stock, restricted stock units, performance share units or other equity
interests granted under any of the Long-Term Incentive Plans
(collectively, the "Equity Awards") or acceleration of exercisability
of options or stock appreciation rights (collectively, the "Options")
granted thereunder, upon the occurrence of an Approved Change in
Control;
(b) any unvested Equity Awards, and any Options that are not
yet exercisable, granted to an employee of Chase and/or a subsidiary of
Chase prior to the date hereof shall become vested or exercisable, as
the case may be, upon a termination of such employee's employment after
an Approved Change in Control for any reason other than by Chase (and
its subsidiaries) or by the Surviving Corporation (and its
subsidiaries) for "Cause" or by such employee for other than for "Good
Reason," (as such terms are defined in the participant's Revised Chase
Executive Agreement, the amended Chase Manhattan Corporation Special
Severance Plan or the amended Chase Manhattan 1994 Long Term Incentive
Plan, as applicable to such employee) at any time after the Approved
Change in Control; and
(c) the definition of Good Reason in each such Long Term
Incentive Plan shall contain no reference to the participant's job
status or responsibilities.
In addition, as otherwise provided in the applicable Long-Term
Incentive Plan, in the event of a termination described in (b) above the Options
shall remain exercisable for two years from the date of such employee's
termination unless they expire prior to such two-year period in accordance with
their original terms.
Chemical hereby represents that it will continue its practice
of providing for acceleration of vesting of restricted stock and restricted
stock units, (except those relating to its outstanding grants of Performance
Accelerated Restricted Stock ("PARS"), which are provided for in Section 11
below) and accelerated exercisability of stock options granted under such plans,
as well as providing for a two-year exercise period for
<PAGE> 4
4
such accelerated options, in the event of a job elimination, and that it will
utilize the same definition of "Good Reason" in administering its plans as set
forth in Section 5(b) with respect to Chase's plans.
6. Stock Option Program for Employees.
Chase hereby represents that it will administer its Stock
Option Program for Employees so that no more than 200,000 exercise-sales
thereunder can be made on any one day.
7. Supplemental Benefit Plans.
Chase hereby represents that prior to execution and delivery
of the Merger Agreement (and prior, where applicable, to a "Potential Change in
Control" as defined in one or more such Plans), it has caused The Chase
Manhattan Bank, N.A. ("Chase Bank") to amend its Supplemental Benefit Plan, its
TRA 86 Supplemental Benefit Plan and its Supplemental Retirement Plan to provide
that an Approved Change in Control will not constitute a Change in Control for
the purposes of any of such Plan; provided, however, that any vesting of plan
benefits that would have occurred under such Plans if the Approved Change in
Control had been a Change in Control shall occur upon the termination of a Plan
participant's employment by Chase (and its subsidiaries) or by the Surviving
Corporation (and its subsidiaries) unless such termination is by Chase for
"cause" or by the Plan participant's resignation other than for "good reason"
(as each such term is defined in the participant's Revised Chase Executive
Agreement, the amended Chase Manhattan Corporation Special Severance Plan or the
amended Chase Manhattan 1994 Long Term Incentive Plan, as applicable to such
Plan participant, in the latter case without regard to a participant's job
status or responsibilities).
Chemical shall amend the supplemental plans of Chemical and
its subsidiaries to provide for treatment of participants in such plans
equivalent to the treatment of Chase employees under the foregoing Chase
amendments.
8. Retirement and Family Benefits Plan.
Chase hereby represents that prior to execution and delivery
of the Merger Agreement, it amended its Retirement and Family Benefits Plan, to
the extent permitted by law and consistent with maintaining its qualified status
under the Code, to provide that an Approved Change in Control in 1995 or 1996
will not constitute a Change in Control for the purposes of such Plan. The
principal effect of such amendment will be that no acceleration of vesting shall
occur with respect to any employee who, on the date of the amendment, has less
than three years of service for vesting purposes under the Plan.
Chemical will amend the Retirement Plan of Chemical Bank and
Certain Affiliated Companies and any qualified defined
<PAGE> 5
5
benefit plan of any Chemical subsidiary to produce the same result with respect
to plan participants as was produced with respect to similarly situated
employees of Chase by the foregoing Chase amendments.
9. Thrift-Incentive Plan.
Chase hereby represents that prior to execution and delivery
of the Merger Agreement, it amended its Thrift-Incentive Plan, to the extent
permitted by law and consistent with maintaining its qualified status under the
Code, to provide that the Approved Change in Control in 1995 or 1996 will not
constitute a Change in Control for the purposes of such Plan. The principal
effect of such amendment will be that no acceleration of vesting shall occur
with respect to any employee who, on the date of the amendment, has less than
three years of service for vesting purposes under the Plan.
Chemical will amend the Savings Incentive Plan of Chemical
Bank and Certain Affiliated Companies and any qualified defined contribution
plan of any Chemical subsidiary to produce the same result with respect to plan
participants as was produced with respect to similarly situated employees of
Chase by the foregoing Chase amendments.
10. Three Year Incentive Arrangement for Certain Executive
Officers.
Chase hereby represents that, prior to the execution and
delivery of the Merger Agreement, the Chase Compensation Committee amended
Chase's Three Year Incentive Arrangement for Certain Executive Officers to
provide that the Chase Compensation Committee shall have the authority to reduce
the amount of any award that would be payable under the Plan (and/or to impose
additional conditions upon the payment of such award) on account of an Approved
Change in Control.
11. Management Incentive Plan.
Chase hereby represents that prior to execution and delivery
of the Merger Agreement, it caused Chase Bank to amend its Management Incentive
Plan to provide that an Approved Change in Control will not constitute a Change
in Control for the purposes of such Plan.
In addition, with respect to the grant by the Compensation
Committee of Chase Bank of a three year award arrangement intended to parallel
the Three Year Arrangement for Certain Executive Officers (as described in
Section 10 above), Chase hereby represents that, prior to the execution and
delivery of the Merger Agreement, it has caused the Compensation Committee of
Chase Bank to amend such arrangement to provide that:
<PAGE> 6
6
(a) an Approved Change in Control will not constitute a Change
in Control for the purposes of such Arrangement; and
(b) the Compensation Committee of Chase Bank will determine,
on or about the date hereof, the amount to be awarded with respect to
achievement of the $52 target and such amount will be paid out in cash
within 30 days after the date hereof. If the $60 target (as adjusted to
reflect the Merger) is met on or before March 31, 1997, the
Compensation Committee of the successor to the Chase Bank will then
determine the amount payable with respect to the achievement of such
target. If, prior to March 31, 1997, the executive's employment is
terminated without "cause" or the executive resigns for "good reason,"
(each as defined in the executive's Revised Chase Executive Agreement,
the amended Chase Manhattan Corporation Special Severance Plan or the
amended Chase Manhattan 1994 Long Term Incentive Plan, as applicable to
such executive) the executive will be entitled to a subsequent payout
of the amount payable for the $60 target if such target is reached
after termination of employment.
Chemical will afford holders of PARs the same treatment
described above, except that (i) if the Executive's employment is terminated
without "cause" or the executive resigns for "good reason" (as defined above)
prior to the applicable vesting date, a portion of the restricted shares shall
become immediately vested, without regard to the attainment of any stock value
targets, in accordance with Chemical's prevailing practice and (ii) the stock
value targets of $55, $60 and $65 shall be preserved and the applicable vesting
date will be adjusted to reflect Chemical's PARs program.
12. Annual Incentive Compensation Deferrals.
Chase hereby represents that prior to execution and delivery
of the Merger Agreement, it amended its Annual Incentive Compensation Plan
Deferral Program to provide that an Approved Change in Control will not
constitute a Change in Control for the purposes of such Program.
13. Annual Incentive Arrangement for Certain Executive
Officers.
Chase hereby represents that prior to execution and delivery
of the Merger Agreement, the Chase Compensation Committee has determined that
any awards that may be deferred under Chase's Annual Incentive Arrangement for
Certain Executive Officers for 1995 or 1996 shall be deferred under principles
and procedures substantially identical to those applicable to the plan described
in the first paragraph of Section 11.
<PAGE> 7
7
14. Director Plans.
Chase hereby represents that prior to execution and delivery
of the Merger Agreement, it amended all of its plans and arrangements for
compensation and benefits for outside directors to provide that an Approved
Change in Control will not constitute a Change in Control for the purposes of
any such plans or arrangements.
15. Assumption of Obligations by Surviving Corporation.
Upon the Merger, Chemical and Chase agree that the Surviving
Corporation will expressly assume and perform the respective obligations of
Chase and Chemical under each of the agreements, arrangement plans and programs
described in Section 2 and 3 of this Agreement.
16. No Third Party Beneficiaries.
It is the express understanding and intention of the parties
hereto that no current, future or former employee of Chemical or Chase or any
other person or entity shall be deemed to be a third party beneficiary or to
have or acquire any right with respect to or to enforce the provisions of this
Agreement, and that nothing in this Agreement shall be deemed to constitute a
plan or an amendment to any plan, program, agreement or arrangement.
<PAGE> 8
8
IN WITNESS WHEREOF, Chemical and Chase have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the day and year first written above.
THE CHASE MANHATTAN CORPORATION
by /s/ Thomas G. Labrecque
----------------------------------
Name: Thomas G. Labrecque
Title: Chairman and Chief
Executive Officer
CHEMICAL BANKING CORPORATION
by /s/ Walter V. Shipley
----------------------------------
Name: Walter V. Shipley
Title: Chairman and Chief
Executive Officer
<PAGE> 9
Exhibit A
Good Reason
"Good Reason" for termination by the Participant* of the Participant's
employment shall mean the occurrence (without the Participant's express written
consent) of any one of the following acts, or failure to act, unless, in the
case of any act or failure to act described in clause (2), (3), (4) or (5)
below, such act or failure to act is corrected prior to the Date of Termination
specified in the Notice of Termination given in respect thereof:
(1) a reduction in the Participant's Annual Base Salary as in effect on
the date the Participant first became a Participant in the Plan or as the same
may be increased from time to time;
(2) the failure by the Participant's primary employer to pay to the
Participant any portion of the Participant's current compensation, or the
failure by Chase or any Subsidiary to pay to the Participant any portion of an
installment of deferred compensation under any deferred compensation program
within seven days of the date such compensation is due;
(3) the failure by Chase or a Subsidiary to pay to the Participant by
February 15 following any calendar year an annual cash bonus for such calendar
year that, in the reasonable, good faith judgment of the Compensation Committee
of the Board of Directors of Chase or the Corporate Human Resources Executive of
Chase, fairly reflects the performance of the Participant, any unit or units (or
portions thereof) for which the Participant was responsible and Chase as a whole
during such calendar year; provided that the Participant may not claim that a
bonus equal to or greater than the highest annual bonus paid to the Participant
for any of the three calendar years immediately preceding the Change in Control
does not fairly reflect such performance;
(4) the failure by Chase or a Subsidiary to include the Participant in
any other employee benefit or compensation plan or arrangement on a basis
reasonably comparable to that of other participants in the Plan having
responsibilities of equal importance to those of the Participant; provided,
however, that failure to include the Participant in a plan or arrangement
designed for a general category of positions that does not include the
Participant's position, as determined in good faith by the Compensation
Committee of the Board of Directors of Chase or the Corporate Human Resources
Executive of Chase, shall not be considered Good Reason;
- --------
* Capitalized terms shall have the meanings set forth therefor in the
Chase Manhattan Corporation Special Severance Plan.
<PAGE> 10
2
(5) any purported termination of the Participant's employment which is
not effected pursuant to a Notice of Termination and, for purposes of the Plan,
no such purported termination shall be effective.
A Participant's right to terminate employment for Good Reason shall not
be affected by the Participant's incapacity due to physical or mental illness.
The Participant's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting Good
Reason hereunder.
<PAGE> 11
EXHIBIT B
Chase Special Severance Plan -
(c) Amount of Severance Benefits.
(1) Lump Sum Severance Payment. A Participant's Lump Sum
Severance Payment shall be an amount equal to the sum of (i) the Participant's
Annual Base Salary, and (ii) the number of Weeks of Annual Base Salary
determined by reference to the schedule set forth below based on the
Participant's length of full-time service with Chase and its subsidiaries:
Lump Sum Severance Payment Schedule
<TABLE>
<CAPTION>
Weeks of
Length of Service Annual Base Salary
- ----------------- ------------------
<S> <C>
0 - 2 years Eight
More than 2 years 3 weeks for each complete
year of service
</TABLE>
Notwithstanding the foregoing, the Lump-Sum Severance Payment determined under
this subsection (1) may not exceed 104 Weeks of Annual Base Salary.
<PAGE> 12
EXHIBIT C
Chase General Severance Plan -
Each eligible employee shall be entitled to a lump sum severance payment
determined by reference to the schedule set forth below based on the employee's
length of full-time service with Chase and its subsidiaries and the employee's
base salary:
Severance Payment Schedule
<TABLE>
<CAPTION>
Weeks of
Length of Service Base Salary
- ----------------- -----------
<S> <C>
0 - 2 years Eight
More than 2 years 3 weeks for each complete
year of service
</TABLE>
In addition, each such Participant who shall have completed 25 years or
more of full-time service with Chase and its subsidiaries on or before
December 31, 1995 shall be entitled to an additional 26 weeks of Annual
Base Salary.
Notwithstanding the foregoing, the number of weeks of base salary to be provided
hereunder shall not exceed 104 weeks.
Eligible employees would be continued in the health and welfare plans for the
number of weeks equal to the weeks of base salary upon which their severance
payment is computed during which they receive salary continuation. Any remaining
COBRA coverage would begin after that period.
<PAGE> 1
EXHIBIT 20
[CHEMICAL LOGO] [CHASE LOGO]
- --------------------------------------------------------------------------------
NEWS RELEASE
- --------------------------------------------------------------------------------
Chemical Press Contact: Chase Press Contact:
John Stefans/212-270-7438 Steven Rautenberg/212-552-4505
CHEMICAL AND CHASE TO MERGE, FORMING LARGEST BANK IN THE UNITED STATES
---------------
New York, August 28, 1995--Chemical Banking Corporation and The Chase
Manhattan Corporation today announced a definitive agreement to merge in a
stock-for-stock transaction that will create the largest bank in the United
States. The new institution, which will adopt the Chase name, will have nearly
$300 billion in assets and $20 billion in shareholders' equity.
Following the merger, which is expected to be completed in the first
quarter of 1996, the new Chase will have relationships with more than 25
million consumers coast to coast, be the lead bank to corporate America and
have leadership positions in global finance.
Walter V. Shipley, 59, Chemical's chairman and chief executive officer,
will be chairman and chief executive officer of the new Chase. Thomas G.
Labrecque, 56, chairman and chief executive officer of Chase, will be president
and chief operating officer. Together, they will manage the combined company
and oversee the Office of the Chairman. Joining Mr. Shipley and Mr. Labrecque
as directors of the corporation and members of the Office of the Chairman
will be:
Edward D. Miller, 54, Chemical's president, as senior vice chairman with
responsibility for regional banking, nationwide consumer services and
technology.
William B. Harrison Jr., 52, a current Chemical vice chairman, as vice
chairman with responsibility for global wholesale banking, including
private banking.
E. Michel Kruse, 54, a current Chase vice chairman, as vice chairman
with responsibility for market and credit risk management, finance,
and information and transaction services.
The outside board members will be the current directors of the two
institutions.
(More)
<PAGE> 2
2
The merger agreement, which was approved yesterday by the boards of
directors of both corporations, provides for an all-stock pooling of interests
in which 1.04 shares of Chemical common stock will be exchanged for each share
of Chase common stock on a tax-free basis. All of Chase's series of preferred
stock will be exchanged for similar Chemical preferred stock.
"The financial services industry is in the midst of the greatest period
of consolidation in its history, and we are seizing upon a truly unparalleled
opportunity to create a premier global financial services company," Mr. Shipley
said. "The combination is a unique strategic fit, with complementary product
capabilities and market coverage that will give us leadership positions across
all our major business lines, and we expect the new Chase to achieve
double-digit earnings per share growth, an efficiency ratio in the low 50s and
a return on equity of 18 percent or better."
"The merger will create scale in all our major franchises to support
business expansion as well as significant investments in technology to keep us
on the leading edge of new product development and service capabilities," said
Mr. Labrecque. "We expect to set the industry standard for customer service,
innovation and efficiency and, at the same time, have the capacity to invest
and grow in ways never before possible for either organization."
It is estimated that annual cost savings from the merger will be $1.5
billion, to be achieved within three years by consolidating certain operations
and eliminating redundant costs; this figure represents approximately 16
percent of combined 1995 operating expenses. One element will entail the
elimination of approximately 12,000 positions from a combined staff of 75,000
located in 39 states and 51 countries. It is projected that the new entity will
take a pre-tax merger charge of $1.5 billion.
In addition to the five officer/directors, other management positions
in the new Chase announced today include:
Reporting to Mr. Miller:
- Donald L. Boudreau, 54, vice chairman in charge of retail credit products.
Mr. Boudreau is currently a Chase vice chairman responsible for consumer
banking.
- Michael Hegarty, 50, vice chairman in charge of deposit and investment
products. Mr. Hegarty is currently a Chemical vice chairman responsible for
consumer banking.
- Denis J. O'Leary, 39, chief information officer, the position he currently
holds at Chemical.
(More)
<PAGE> 3
3
- Marc J. Shapiro, 47, who will remain chairman and chief executive officer of
Texas Commerce Bank, N.A., Chemical's wholly-owned subsidiary.
- Joseph G. Sponholz, 51, chief administrative officer, the position he
currently holds at Chemical.
- William H. Turner, 55, vice chairman in charge of middle market banking and
community development. Mr. Turner is currently a Chemical vice chairman
responsible for middle market banking, private banking and information and
transaction services.
- Michael Urkowitz, 52, executive vice president in charge of consumer product
integration, a position he currently holds at Chase. At the new Chase,
Mr. Urkowitz will report jointly to Mr. Hegarty and Mr. Boudreau.
Reporting to Mr. Harrison:
- Donald H. Layton, 45, vice chairman in charge of global capital markets,
trading and treasury, the position he currently holds at Chemical.
- James B. Lee Jr., 42, senior executive vice president in charge of global
investment banking, the position he currently holds at Chemical.
- Arjun K. Mathrani, 50, currently Chase's chief financial officer, who will
be in charge of global client management.
- James W. Zeigon, 48, executive vice president in charge of global asset
management and private banking, the position he currently holds at Chase.
Reporting to Mr. Kruse:
- Richard J. Matteis, 58, group executive in charge of information and
transaction services. Mr. Matteis is currently group executive in charge of
Geoserve, Chemical's information and transaction services unit. This
business will be managed as an integral part of the global wholesale
banking organization.
- William J. Moran, 54, senior vice president and general auditor, the
position he currently holds at Chase.
- Peter J. Tobin, 51, chief financial officer, the position he currently holds
at Chemical.
(More)
<PAGE> 4
4
Named to the following senior corporate staff positions:
- A. Wright Elliott, 60, executive vice president in charge of marketing
resources and corporate communications, the position he currently holds at
Chase.
- John J. Farrell, 43, executive vice president in charge of human resources,
the position he currently holds at Chase.
- William H. McDavid, 49, general counsel, the position he currently holds at
Chemical.
Richard J. Boyle, vice chairman of the board of The Chase Manhattan
Corporation, has indicated his decision to retire.
The merger is subject to approval by the shareholders of both
institutions as well as federal and state regulatory authorities.
Chemical and Chase have granted each other options to purchase up to
19.9 percent of the outstanding shares of each other's common stock if certain
events occur, including a merger proposal or tender offer by a third party
which would interfere with the transaction.
Goldman, Sachs & Co. and James D. Wolfensohn Inc. are serving as
financial advisors to Chase on the merger and have rendered fairness opinions
to Chase's board of directors with respect to the transaction. Morgan Stanley &
Co. is serving in the same capacity for Chemical and has rendered a fairness
opinion to Chemical's board of directors.
The merged organization will be headquartered at 270 Park Avenue,
Chemical's present headquarters.
(More)
<PAGE> 5
5
Facts About The "New" Chase
Name and Headquarters
The Chase Manhattan Corporation
The Chase Manhattan Bank
270 Park Avenue
New York, NY 10017
Financial Highlights (pro forma as of June 30, 1995)
$297 billion in assets
$20 billion in shareholders' equity
$149 billion in total loans
$163 billion in deposits
Risk-Based Tier 1 Capital Ratio: 8.0%
Total Capital Ratio: 12.1%
Leverage Ratio: 6.5%
Nonperforming Assets to Total Loans plus ORE: 1.3%
Nonperforming Assets to Total Assets: .65%
Reserve for Possible Loan Losses to Total Loans: 2.6%
Reserve for Loan Losses to Nonperforming Loans 227.0%
1994 Pro Forma Revenue Streams by Product Line
Corporate and Investment Banking: 24%
National Consumer: 23%
Regional Consumer: 17%
Information and Transaction Services: 13%
Trading: 9%
Middle Market Banking: 7%
Private Banking: 5%
Other: 2%
(More)
<PAGE> 6
6
1994 Pro Forma Revenue Sources by Customer Segments
Consumer: 46%
Institutional: 45%
Middle Market: 7%
Other: 2%
Market Positions as of June 30, 1995
Global Wholesale
#1 in global loan syndications
#1 in global custody
#1 in CHIPS, ACH and FedWire volume
#1 in total trading revenues
National Consumer
#1 in mortgage servicing
#4 in credit cards
#3 in mortgage origination
#1 among banks in luxury auto financing
#4 among banks in mutual fund assets
New York Metropolitan Region (New York, New Jersey and Connecticut)
#1 in consumer deposits
#1 in branch banking
#1 in middle market banking
#1 in trusts and estates under management
75,000 employees in 51 Countries and 39 States
Argentina, Australia, Austria, Bahamas, Bahrain, Belgium, Brazil,
British Virgin Islands, Canada, Channel Islands (Jersey), Chile,
Colombia, Czech Republic, Egypt, France, Germany, Greece, Hong Kong,
India, Indonesia, Ireland, Italy, Japan, Lebanon, Luxembourg,
Malaysia, Mexico, Netherlands Antilles, Norway, Pakistan, Panama,
People's Republic of China, Philippines, Portugal, Puerto Rico,
Romania, Russia, Singapore, South Africa, South Korea, Spain,
Switzerland, Taiwan, Thailand, Turkey, United Kingdom, United States,
U.S. Virgin Islands, Uruguay, Venezuela, Vietnam
(More)
<PAGE> 7
7
Alabama, Arizona, Arkansas, California, Colorado, Connecticut,
Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas,
Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota,
Mississippi, Missouri, Nevada, New Hampshire, New Jersey, New Mexico,
New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island,
South Carolina, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin
and the District of Columbia
# # #
