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
Date of report (Date of earliest event reported): April 10, 1998
BANC ONE CORPORATION
(Exact Name of Registrant as Specified in Charter)
Ohio
(State or Other Jurisdiction of Incorporation)
1-8552 31-0738296
(Commission File Number) (IRS Employer Identification No.)
100 East Broad Street, Columbus, Ohio 43271
(Address of Principal Executive (Zip Code)
Offices)
Registrant's telephone number, including area code: (614) 248-5944
N/A
(Former Name or Former Address, If Changed Since Last Report)
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ITEM 5. OTHER EVENTS
On April 10, 1998, the Registrant and First Chicago NBD Corporation,
a Delaware corporation ("FCN") entered into an Agreement and Plan of
Reorganization (the "Agreement"), pursuant to which, subject to the conditions
and upon the terms stated therein, the Registrant and FCN will each merge into a
new company ("Newco") organized to effect the Merger (such mergers,
collectively, the "Merger"). Newco will be the surviving corporation in the
Merger.
In accordance with the Agreement, each share of the common stock,
without par value, of the Registrant ( "ONE Common Stock") outstanding
immediately prior to the effective time of the Merger (the "Effective Time")
will at the Effective Time be converted into one share of the common stock,
without par value, of Newco ("Newco Common Stock), and each share of the common
stock, par value $1.00 per share, of FCN ("FCN Common Stock") outstanding
immediately prior to the Effective Time will at the Effective Time be converted
into the right to receive 1.62 shares of Newco Common Stock. In addition, each
share of FCN's Preferred Stock with Cumulative and Adjustable Dividends, Series
B, and Preferred Stock with Cumulative and Adjustable Dividends, Series C, in
each case outstanding immediately prior to the Effective Time, will be converted
into the right to receive one share of a series of corresponding preferred stock
of Newco with substantially the same terms.
Consummation of the transactions contemplated by the Agreement is
subject to the terms and conditions contained in the Agreement, including, among
other things, the receipt of approval of the Merger by the respective
shareholders of FCN and the Registrant and the receipt of certain regulatory
approvals. The Merger and the transactions contemplated by the Agreement will be
submitted for approval at meetings of the shareholders of FCN and the Registrant
that are expected to take place in the third quarter of 1998. The foregoing
description is qualified in its entirety by reference to the complete text of
the Agreement, which is filed as Exhibit 2.1 hereto and hereby incorporated
herein by reference.
Immediately following their execution and delivery of the Agreement,
the Registrant and FCN entered into stock option agreements (the "Stock Option
Agreements") pursuant to one of which FCN granted the Registrant the right, upon
the terms and subject to the conditions set forth therein, to purchase up to
57,150,376 shares of FCN Common Stock at a price of $94.00 per share, and
pursuant to the other of which the Registrant granted FCN the right, upon the
terms and subject to the conditions set forth therein, to purchase up to
128,122,944 shares of ONE Common Stock at a price of $61.75 per share. The
foregoing description of the Stock Option Agreements is qualified in its
entirety by reference to the complete text of such Stock Option Agreements,
which are filed as Exhibits 99.1 and 99.2 hereto, respectively, and hereby
incorporated herein by reference.
A copy of the press release, dated April 13, 1998, jointly issued by
the Registrant and FCN relating to the Merger is attached as Exhibit 99.3 hereto
and is hereby incorporated herein by reference.
A copy of the presentation to investors, dated April 13, 1998,
relating to the Merger and given jointly by the Registrant and FCN, is attached
as Exhibit 99.4 hereto and is hereby incorporated herein by reference.
This current report on Form 8-K, and the exhibits hereto, contain
certain estimates and projections regarding the Registrant, FCN and the
combined company following the Merger, including without limitation
estimates and projections relating to the pro forma
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business and assets of the combined company, the cost savings, revenue increases
and restructuring charges expected as a result of the Merger and the expected
impact of the transaction on earnings per share of the constituent corporations.
These estimates and projections constitute forward-looking statements (within
the meaning of the Private Securities Litigation Reform Act of 1995), and they
involve significant risks and uncertainties. Actual results may differ
materially from the results discussed in these forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
risks and uncertainties related to the consummation and execution of the Merger
(including integration activities) and the factors discussed in the section
captioned "Forward-Looking Statements" in Item 1 of the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 as filed with
the Securities and Exchange Commission, which section is hereby incorporated
herein by reference.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
Exhibit 2.1 Agreement and Plan of Reorganization, dated as of April
10, 1998, by and among BANC ONE CORPORATION, First Chicago NBD
Corporation and Hornet Reorganization Corporation.
Exhibit 99.1 Stock Option Agreement, dated as of April 10, 1998, by
and between First Chicago NBD Corporation, as issuer, and BANC
ONE CORPORATION, as grantee.
Exhibit 99.2 Stock Option Agreement, dated April 10, 1998, by and
between BANC ONE CORPORATION, as issuer, and First Chicago NBD
Corporation, as grantee.
Exhibit 99.3 Joint Press Release, dated April 13, 1998.
Exhibit 99.4 Investor Presentation, dated April 13, 1998.
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SIGNATURES
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.
Date: April 14, 1998 BANC ONE CORPORATION
(Registrant)
By: /s/ Steven Alan Bennett
-------------------------
Steven Alan Bennett
Senior Vice President,
General Counsel and Secretary
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
by and among
BANC ONE CORPORATION,
FIRST CHICAGO NBD CORPORATION
and
HORNET REORGANIZATION CORPORATION
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DATED AS OF APRIL 10, 1998
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TABLE OF CONTENTS
Page
AGREEMENT AND PLAN OF REORGANIZATION
ARTICLE I
THE FIRST STEP MERGER
1.1 The First Step Merger....................................... 2
1.2 Effective Time.............................................. 2
1.3 Effects of the Second Step Merger........................... 2
1.4 Conversion of BANC ONE Common Stock......................... 2
1.5 Newco Common Stock.......................................... 3
1.6 Dissenting Shares........................................... 3
1.7 Options..................................................... 4
1.8 Certificate of Incorporation................................ 4
1.9 By-Laws..................................................... 4
1.10 Board of Directors; Management.............................. 4
ARTICLE II
THE SECOND STEP MERGER
2.1 The Second Step Merger...................................... 5
2.2 Effective Time.............................................. 5
2.3 Effects of the Second Step Merger........................... 5
2.4 Conversion of FCN Common Stock;
FCN Preferred Stock...................................... 5
2.5 Newco Common Stock.......................................... 7
2.6 Options..................................................... 7
2.7 Certificate of Incorporation................................ 8
2.8 By-Laws..................................................... 8
2.9 Tax and Accounting Consequences............................. 8
2.10 Management Succession....................................... 8
2.11 Board of Directors.......................................... 8
2.12 Headquarters of Surviving Corporation....................... 9
ARTICLE III
EXCHANGE OF SHARES
3.1 Newco to Make Shares Available.............................. 9
3.2 Exchange of Shares.......................................... 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FCN
4.1 Corporate Organization...................................... 12
4.2 Capitalization.............................................. 12
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4.3 Authority; No Violation..................................... 14
4.4 Consents and Approvals...................................... 15
4.5 Reports..................................................... 16
4.6 Financial Statements........................................ 16
4.7 Broker's Fees............................................... 17
4.8 Absence of Certain Changes or Events........................ 17
4.9 Legal Proceedings........................................... 18
4.10 Taxes and Tax Returns....................................... 18
4.11 Employees................................................... 20
4.12 SEC Reports................................................. 21
4.13 Compliance with Applicable Law.............................. 22
4.14 Certain Contracts........................................... 22
4.15 Agreements with Regulatory Agencies......................... 23
4.16 Other Activities of FCN and its
Subsidiaries............................................. 23
4.17 Investment Securities....................................... 24
4.18 Interest Rate Risk Management Instruments................... 24
4.19 Undisclosed Liabilities..................................... 25
4.20 Insurance................................................... 25
4.21 Environmental Liability..................................... 25
4.22 State Takeover Laws; FCN Certificate
of Incorporation......................................... 26
4.23 Year 2000................................................... 26
4.24 Reorganization; Pooling of Interests........................ 26
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BANC ONE AND NEWCO
5.1 Corporate Organization...................................... 26
5.2 Capitalization.............................................. 27
5.3 Authority; No Violation..................................... 29
5.4 Consents and Approvals...................................... 30
5.5 Reports..................................................... 31
5.6 Financial Statements........................................ 31
5.7 Broker's Fees............................................... 32
5.8 Absence of Certain Changes or Events........................ 32
5.9 Legal Proceedings........................................... 33
5.10 Taxes and Tax Returns....................................... 33
5.11 Employees................................................... 35
5.12 SEC Reports................................................. 36
5.13 Compliance with Applicable Law.............................. 37
5.14 Certain Contracts........................................... 37
5.15 Agreements with Regulatory Agencies......................... 38
5.16 Other Activities of BANC ONE and its
Subsidiaries............................................. 38
5.17 Investment Securities....................................... 39
5.18 Interest Rate Risk Management Instruments................... 39
5.19 Undisclosed Liabilities..................................... 40
5.20 Insurance................................................... 40
5.21 Environmental Liability..................................... 40
5.22 State Takeover Laws......................................... 41
5.23 Interim Operations of Newco................................. 41
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5.24 Year 2000................................................... 41
5.25 Reorganization; Pooling of Interests........................ 41
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Conduct of Businesses Prior to the
Effective Time........................................... 41
6.2 Forbearances................................................ 42
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters.......................................... 45
7.2 Access to Information....................................... 47
7.3 Stockholders' Approvals..................................... 47
7.4 Legal Conditions to Merger.................................. 48
7.5 Affiliates; Publication of Combined
Financial Results........................................ 48
7.6 Stock Exchange Listing...................................... 49
7.7 Employee Benefit Plans; Certain Insurance................... 49
7.8 Indemnification; Directors' and Officers'
Insurance................................................ 50
7.9 Additional Agreements....................................... 52
7.10 Advice of Changes........................................... 52
7.11 Dividends................................................... 52
7.12 Authorized Stock of Newco................................... 52
7.13 Pooling of Interests........................................ 53
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation
To Effect the Second Step Merger......................... 53
8.2 Conditions to Obligations of BANC ONE
and Newco................................................ 55
8.3 Conditions to Obligations of FCN............................ 55
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination................................................. 56
9.2 Effect of Termination....................................... 57
9.3 Amendment................................................... 57
9.4 Extension; Waiver........................................... 58
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ARTICLE X
GENERAL PROVISIONS
10.1 Closing..................................................... 58
10.2 Nonsurvival of Representations, Warranties
and Agreements........................................... 59
10.3 Expenses.................................................... 59
10.4 Notices..................................................... 59
10.5 Interpretation.............................................. 59
10.6 Counterparts................................................ 60
10.7 Entire Agreement............................................ 60
10.8 Governing Law............................................... 60
10.9 Severability................................................ 60
10.10 Publicity................................................... 60
10.11 Assignment; Third Party Beneficiaries....................... 61
10.12 Certain Agreements of Newco................................ 61
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INDEX OF DEFINED TERMS
Section Page No.
Agreement...................................... Preamble.......... 1
BANC ONE....................................... Preamble.......... 1
BANC ONE 10-K.................................. 5.6............... 32
BANC ONE Articles.............................. 5.1(a)............ 27
BANC ONE Bank Subsidiary....................... 5.16(b)........... 39
BANC ONE Benefit Plans......................... 5.11(a)........... 35
BANC ONE Capital Stock......................... 5.2(a)............ 27
BANC ONE Class A Preferred Stock............... 5.2(a)............ 27
BANC ONE Class B Preferred Stock............... 5.2(a)............ 27
BANC ONE Common Certificate.................... 1.4(b)............ 2
BANC ONE Common Stock.......................... 1.4(a)............ 2
BANC ONE Contract.............................. 5.14(a)........... 38
BANC ONE Disclosure Schedule................... Article V......... 26
BANC ONE ERISA Affiliate....................... 5.11(a)........... 35
BANC ONE Option Agreement...................... Recitals.......... 1
BANC ONE Preferred Stock....................... 5.2(a)............ 27
BANC ONE Regulatory Agreement.................. 5.15.............. 38
BANC ONE Reports............................... 5.12.............. 36
BANC ONE Rights................................ 5.2(a)............ 28
BANC ONE Series C Preferred.................... 5.2(a)............ 27
BANC ONE Stock Plans........................... 1.7............... 4
BHC Act........................................ 4.1(a)............ 12
CERCLA......................................... 4.21.............. 25
Certificate.................................... 2.4(f)............ 6
Certificate of Merger.......................... 2.2............... 5
Claim.......................................... 7.8(a)............ 51
Closing........................................ 10.1.............. 58
Closing Date................................... 10.1.............. 59
Code........................................... 1.7............... 4
Common Certificate............................. 2.4(d)............ 6
Confidentiality Agreement...................... 7.2(b)............ 47
Delaware Secretary............................. 1.2............... 2
DGCL........................................... 1.1............... 2
Dissenting Shares.............................. 1.6............... 3
DPC Shares..................................... 1.4(c)............ 3
Effective Time................................. 2.2............... 4
ERISA.......................................... 4.11(a)........... 20
ESPSP.......................................... 4.2(a)............ 13
Exchange Act................................... 4.6............... 16
Exchange Agent................................. 3.1............... 9
Exchange Fund.................................. 3.1............... 9
Exchange Ratio................................. 2.4(a)............ 5
FCN............................................ Preamble.......... 1
FCN Bank Subsidiary............................ 4.16(b)........... 24
FCN Benefit Plans.............................. 4.11(a)........... 20
FCN Capital Stock.............................. 2.4(a)............ 5
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FCN Certificate of
Incorporation................................ 4.1(a)............ 12
FCN Common Stock............................... 2.4(a)............ 5
FCN Contract................................... 4.14(a)........... 23
FCN Disclosure Schedule........................ Article IV........ 11
FCN ERISA Affiliate............................ 4.11(a)........... 20
FCN Option Agreement........................... Recitals.......... 1
FCN Preferred Stock............................ 2.4(c)............ 6
FCN Regulatory Agreement....................... 4.15.............. 23
FCN Reports.................................... 4.12.............. 21
FCN Rights..................................... 4.2(a)............ 13
FCN Series B Preferred......................... 2.4(b)............ 5
FCN Series C Preferred......................... 2.4(c)............ 6
FCN Stock Plans................................ 2.6(a)............ 7
Federal Reserve Board.......................... 4.4(i)............ 15
First Commerce Merger Agreement................ 5.2(a)............ 28
First Effective Time........................... 1.2............... 2
First Merger Exchange Ratio.................... 1.4(a)............ 2
First Step Merger.............................. Recitals.......... 1
GAAP........................................... 2.9............... 8
Governmental Entity............................ 4.4(viii)......... 16
Indemnified Parties............................ 7.8(a)............ 50
Insurance Amount............................... 7.8(b)............ 51
Injunction..................................... 8.1(e)............ 54
IRS............................................ 4.10(a)........... 19
Joint Proxy Statement.......................... 4.4(iii).......... 15
Liens.......................................... 4.2(b)............ 14
Material Adverse Effect........................ 4.1(a)............ 12
Merger......................................... Recitals.......... 1
New Benefit Plans.............................. 7.7(a)............ 49
Newco.......................................... Preamble.......... 1
Newco Capital Stock............................ 2.4(a)............ 5
Newco Certificate of Incorporation............. 5.1(a)............ 27
Newco Common Stock............................. 1.4(a)............ 2
Newco New Preferred Stock...................... 2.4(c)............ 6
Newco Series B Adjustable Preferred............ 2.4(b)............ 5
Newco Series C Adjustable Preferred............ 2.4(c)............ 6
NYSE........................................... 3.2(e)............ 11
OCC............................................ 4.5(iv)........... 16
OGCL........................................... 1.1............... 2
Ohio Secretary................................. 1.2............... 2
Option Agreements.............................. Recitals.......... 1
Preferred Stock Certificate.................... 2.4(f)............ 7
Regulations.................................... 5.1(a)............ 27
Regulatory Agencies............................ 4.5(v)............ 16
Requisite Regulatory Approvals................. 8.1(c)............ 53
Roney Agreement................................ 4.2(a)............ 13
S-4............................................ 4.4(iii).......... 15
SBA............................................ 4.4(v)............ 15
SEC............................................ 4.4(iii).......... 15
Second Step Merger............................. Recitals.......... 1
Securities Act................................. 4.12.............. 21
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SRO............................................ 4.4(vi)........... 15
State Approvals................................ 4.4(ii)........... 15
State Regulator................................ 4.5(iii).......... 16
Subsidiary..................................... 4.1(a)............ 12
Surviving Corporation.......................... Recitals.......... 1
Tax............................................ 4.10(b)........... 19
Taxes.......................................... 4.10(b)........... 19
Trust Account Shares........................... 1.4(c)............ 3
Trust Activities............................... 4.16(b)........... 24
Year 2000 Issues............................... 4.23.............. 26
Year 2000 Deficiency Notification
Letter....................................... 4.23.............. 26
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of April 10, 1998 (this
"Agreement"), by and among BANC ONE CORPORATION, an Ohio corporation ("BANC
ONE"), HORNET REORGANIZATION CORPORATION, a Delaware corporation ("Newco"), and
FIRST CHICAGO NBD CORPORATION, a Delaware corporation ("FCN").
WHEREAS, the Boards of Directors of FCN, BANC ONE and Newco have
determined that it is in the best interests of their respective companies and
their stockholders to consummate the business combination transaction provided
for herein in which (x) BANC ONE will, subject to the terms and conditions set
forth herein, merge with and into Newco (the "First Step Merger") so that Newco
is the surviving corporation in the First Step Merger, and (b) immediately
thereafter FCN will, subject to the terms and conditions set forth herein, merge
with and into Newco (the "Second Step Merger" and, together with the First Step
Merger, the "Merger"), so that Newco is the surviving corporation (hereinafter
sometimes referred to in such capacity as the "Surviving Corporation") in the
Second Step Merger; and
WHEREAS, it is the intent of the respective Boards of Directors of BANC
ONE and FCN that the Merger be structured as a "merger of equals" of BANC ONE
and FCN and that the Surviving Corporation be governed and operated on this
basis; and
WHEREAS, as a condition to, and immediately after the execution of, this
Agreement, BANC ONE and FCN are entering into a BANC ONE stock option agreement
(the "BANC ONE Option Agreement") in the form attached hereto as Exhibit C; and
WHEREAS, as a condition to, and immediately after the execution of, this
Agreement, BANC ONE and FCN are entering into a FCN stock option agreement (the
"FCN Option Agreement"; and together with the BANC ONE Option Agreement, the
"Option Agreements") in the form attached hereto as Exhibit D; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
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ARTICLE I
THE FIRST STEP MERGER
1.1 The First Step Merger. Subject to the terms and conditions of this
Agreement, in accordance with the General Corporation Law of the State of Ohio
(the "OGCL") and the General Corporation Law of the State of Delaware (the
"DGCL"), at the First Effective Time, BANC ONE shall merge with and into Newco.
Newco shall be the surviving corporation in the First Step Merger, and shall
continue its corporate existence under the laws of the State of Delaware. Upon
consummation of the First Step Merger, the separate corporate existence of BANC
ONE shall terminate.
1.2 Effective Time. The First Step Merger shall become effective as set
forth in the certificate of merger which shall be filed with the Secretary of
State of the State of Ohio (the "Ohio Secretary") and the certificate of merger
which shall be filed with the Secretary of State of the State of Delaware (the
"Delaware Secretary") on the Closing Date. The term "First Effective Time" shall
be the date and time when the First Step Merger becomes effective, as set forth
in the certificates of merger referred to in this Section 1.2.
1.3 Effects of the First Step Merger. At and after the First Effective
Time, the First Step Merger shall have the effects set forth in Section 1701.82
of the OGCL and Sections 259 and 261 of the DGCL.
1.4 Conversion of BANC ONE Common Stock. (a) At the First Effective Time,
by virtue of the First Step Merger and without any action on the part of BANC
ONE, Newco or the holders of capital stock of BANC ONE or Newco, each share of
the common stock, without par value, of BANC ONE (the "BANC ONE Common Stock")
issued and outstanding immediately prior to the First Effective Time (other than
Dissenting Shares and shares of BANC ONE Common Stock held in BANC ONE's
treasury or directly or indirectly by BANC ONE or any of its wholly owned
Subsidiaries or Newco (except for Trust Account Shares and DPC shares) shall be
converted into one share (the "First Merger Exchange Ratio") of the common
stock, without par value, of Newco (the "Newco Common Stock").
(b) All of the shares of BANC ONE Common Stock converted into the right to
receive Newco Common Stock pursuant to this Article I shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist as of
the First Effective Time, and each certificate (each a "BANC ONE Common
Certificate") previously representing any such shares of BANC ONE Common Stock
shall thereafter represent, without the requirement of any exchange thereof,
only the number of shares of
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Newco Common Stock into which the shares of BANC ONE Common Stock represented by
such BANC ONE Common Certificate have been converted pursuant to this Section
1.4.
(c) At the First Effective Time, all shares of BANC ONE Common Stock that
are owned by BANC ONE as treasury stock and all shares of BANC ONE Common Stock
that are owned, directly or indirectly, by BANC ONE or any of its wholly owned
Subsidiaries or Newco (other than shares of BANC ONE Common Stock held, directly
or indirectly, in trust accounts, managed accounts and the like or otherwise
held in a fiduciary capacity that are beneficially owned by third parties (any
such shares, and shares of Newco Common Stock and FCN Common Stock which are
similarly held, whether held directly or indirectly by BANC ONE, Newco or FCN,
as the case may be, being referred to herein as "Trust Account Shares") and
other than any shares of BANC ONE Common Stock held by BANC ONE or FCN or any of
their respective Subsidiaries or Newco in respect of a debt previously
contracted (any such shares of BANC ONE Common Stock, and shares of FCN Common
Stock and Newco Common Stock which are similarly held, whether held directly or
indirectly by BANC ONE, Newco or FCN or any of their respective Subsidiaries,
being referred to herein as "DPC Shares")) shall be cancelled and shall cease to
exist and no stock of Newco or other consideration shall be delivered in
exchange therefor. All shares of Newco Common Stock that are owned by BANC ONE
or any of its wholly-owned Subsidiaries (other than Trust Account Shares and DPC
Shares) shall become treasury stock of Newco.
1.5 Newco Common Stock. At and after the First Effective Time, each share
of Newco Common Stock issued and outstanding immediately prior to the First
Effective Time shall be cancelled and retired and shall resume the status of
authorized and unissued shares of Newco Common Stock, and no shares of Newco
Common Stock or other securities of Newco shall be issued in respect thereof.
1.6 Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, shares of BANC ONE Common Stock which are outstanding immediately
prior to the First Effective Time and with respect to which dissenters' rights
shall have been properly demanded in accordance with Section 1701.85 of the OGCL
("Dissenting Shares") shall not be converted into Newco Common Stock; instead,
the holders thereof shall be entitled to payment of the appraised value of such
Dissenting Shares in accordance with the provisions of Section 1701.85 of the
OGCL; provided, however, that (i) if any holder of Dissenting Shares shall
subsequently deliver a written withdrawal of his demand for appraisal of such
shares, or (ii) if any holder fails to establish his entitlement to dissenters'
rights as provided in Section 1701.85 of the OGCL, such holder or holders (as
the case may be) shall forfeit the right to appraisal of
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such shares of BANC ONE Common Stock and each of such shares shall thereupon be
deemed to have been converted into the right to receive, and to have become
exchangeable for, as of the First Effective Time, Newco Common Stock, as
provided in Section 1.4(a) hereof.
1.7 Options. At the First Effective Time, each option granted by BANC ONE
to purchase shares of BANC ONE Common Stock which is outstanding and unexercised
immediately prior thereto shall cease to represent a right to acquire shares of
BANC ONE Common Stock and shall be converted automatically into an option to
purchase a number of shares of Newco Common Stock equal to the number of shares
of BANC ONE Common Stock subject to such option immediately prior to the First
Effective Time at an exercise price per share of Newco Common Stock equal to the
exercise price per share of BANC ONE Common Stock in effect immediately prior to
the First Effective Time and otherwise subject to the terms of the appropriate
BANC ONE Benefit Plan pursuant to which such options have been granted (such
plans collectively the "BANC ONE Stock Plans") under which such option was
issued and the agreements evidencing grants thereunder. The adjustment provided
herein with respect to any options which are "incentive stock options" (as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code")) shall be and is intended to be effected in a manner which is consistent
with Section 424(a) of the Code. The duration and other terms of the new option
shall be the same as the original option except that all references to BANC ONE
shall be deemed to be references to Newco.
1.8 Certificate of Incorporation. Subject to the terms and conditions of
this Agreement, at the First Effective Time, the Certificate of Incorporation of
the surviving corporation in the First Step Merger shall be substantially in the
form attached hereto as Exhibit A, with such changes thereto as shall be
mutually agreed upon by BANC ONE and FCN, until thereafter amended in accordance
with applicable law.
1.9 By-Laws. Subject to the terms and conditions of this Agreement, at the
First Effective Time, the By-Laws of the surviving corporation in the First Step
Merger shall be in substantially the form attached hereto as Exhibit B, with
such changes as may be mutually agreed upon by BANC ONE and FCN, until
thereafter amended in accordance with applicable law.
1.10 Board of Directors; Management. From and after the First Effective
Time, until duly changed pursuant hereto or in accordance with applicable law,
the directors of BANC ONE shall be the directors of Newco, and the officers of
BANC ONE shall be the officers of Newco.
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ARTICLE 2
THE SECOND STEP MERGER
2.1 The Second Step Merger. Subject to the terms and conditions of this
Agreement, in accordance with the DGCL, at the Effective Time, FCN shall merge
with and into Newco. Newco shall be the Surviving Corporation in the Second Step
Merger, and shall continue its corporate existence under the laws of the State
of Delaware. Upon consummation of the Second Step Merger, the separate corporate
existence of FCN shall terminate.
2.2 Effective Time. The Second Step Merger shall become effective as set
forth in the certificate of merger (the "Certificate of Merger") which shall be
filed with the Delaware Secretary on the Closing Date. The term "Effective Time"
shall be the date and time when the Second Step Merger becomes effective, as set
forth in the Certificate of Merger.
2.3 Effects of the Second Step Merger. At and after the Effective Time,
the Second Step Merger shall have the effects set forth in Sections 259 and 261
of the DGCL.
2.4 Conversion of FCN Common Stock; FCN Preferred Stock. At the Effective
Time, by virtue of the Second Step Merger and without any action on the part of
BANC ONE, Newco, FCN or the holder of any of the following securities:
(a) Subject to Section 3.2(e), each share of the common stock, par value
$1.00 per share, of FCN (the "FCN Common Stock" and, together with the FCN
Preferred Stock, the "FCN Capital Stock") issued and outstanding immediately
prior to the Effective Time (other than shares of FCN Capital Stock held in
FCN's treasury or directly or indirectly by BANC ONE, Newco or FCN or any of
their respective wholly owned Subsidiaries (except for Trust Account Shares and
DPC shares) shall be converted into the right to receive 1.62 shares (the
"Exchange Ratio") of Newco Common Stock (the Newco Common Stock and the Newco
New Preferred Stock (as defined Section 2.4(c)) being referred to herein as the
"Newco Capital Stock")).
(b) Each share of FCN Preferred Stock with Cumulative and Adjustable
Dividends, Series B, without par value (the "FCN Series B Preferred"), issued
and outstanding immediately prior to the Effective Time shall be converted into
the right to receive one share of preferred stock with cumulative and adjustable
dividends of Newco designated as the Preferred Stock with Cumulative and
Adjustable Dividends, Series B, of Newco (the "Newco Series B Adjustable
Preferred"). The terms of the Newco Series B Adjustable Preferred shall be
substantially the same as the terms of the FCN Series B Preferred.
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(c) Each share of FCN Preferred Stock with Cumulative and Adjustable
Dividends, Series C, without par value (the "FCN Series C Preferred" and,
together with the FCN Series B Preferred, the "FCN Preferred Stock"), issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive one share of preferred stock with cumulative and adjustable
dividends of Newco designated as the Preferred Stock with Cumulative and
Adjustable Dividends, Series C, of Newco (the "Newco Series C Adjustable
Preferred" and, together with the Newco Series B Adjustable Preferred, the
"Newco New Preferred Stock"). The terms of the Newco Series C Adjustable
Preferred shall be substantially the same as the terms of the FCN Series C
Preferred.
(d) All of the shares of FCN Common Stock converted into the right to
receive Newco Common Stock pursuant to this Article II shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist as of
the Effective Time, and each certificate (each a "Common Certificate")
previously representing any such shares of FCN Common Stock shall thereafter
represent only the right to receive (i) a certificate representing the number of
whole shares of Newco Common Stock and (ii) cash in lieu of fractional shares
into which the shares of FCN Common Stock represented by such Common Certificate
have been converted pursuant to this Section 2.4 and Section 3.2(e). Common
Certificates previously representing shares of FCN Common Stock shall be
exchanged for certificates representing whole shares of Newco Common Stock and
cash in lieu of fractional shares issued in consideration therefor upon the
surrender of such Common Certificates in accordance with Section 3.2, without
any interest thereon. If, prior to the Effective Time, the outstanding shares of
FCN Common Stock or BANC ONE Common Stock (or, following the consummation of the
First Step Merger, the outstanding shares of Newco Common Stock) shall have been
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities as a result of a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
similar change in capitalization (other than solely as a result of the First
Step Merger), an appropriate and proportionate adjustment shall be made to the
Exchange Ratio and to the FCN Maximum Share Amount.
(e) At the Effective Time, all shares of FCN Common Stock that are owned
by FCN as treasury stock and all shares of FCN Common Stock that are owned,
directly or indirectly, by BANC ONE, Newco or FCN or any of their respective
wholly owned Subsidiaries (other than Trust Account Shares and DPC Shares) shall
be cancelled and shall cease to exist and no stock of Newco or other
consideration shall be delivered in exchange therefor. All shares of Newco
Common Stock that are owned by FCN or any of its wholly-owned Subsidiaries
(other than Trust
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Account Shares and DPC Shares) shall become treasury stock of Newco.
(f) All of the shares of FCN Preferred Stock converted into Newco New
Preferred Stock pursuant to this Article II shall no longer be outstanding and
shall automatically be cancelled and shall cease to exist as of the Effective
Time, and each certificate (each a "Preferred Stock Certificate"; and together
with a Common Certificate, a "Certificate") previously representing any such
shares of FCN Preferred Stock shall thereafter represent the right to receive a
certificate representing the number of shares of corresponding Newco New
Preferred Stock into which the shares of FCN Preferred Stock represented by such
Preferred Stock Certificate have been converted pursuant to this Section 2.4.
Preferred Stock Certificates previously representing shares of FCN Preferred
Stock shall be exchanged for certificates representing shares of corresponding
Newco New Preferred Stock issued in consideration therefor upon the surrender of
such Preferred Stock Certificates in accordance with Section 3.2 hereof, without
any interest thereon.
2.5 Newco Common Stock. At and after the Effective Time, each share of
Newco Common Stock issued and outstanding immediately prior to the Closing Date
shall remain an issued and outstanding share of common stock of the Surviving
Corporation and shall not be affected by the Second Step Merger.
2.6 Options. (a) At the Effective Time, each option granted by FCN to
purchase shares of FCN Common Stock which is outstanding and unexercised
immediately prior thereto shall cease to represent a right to acquire shares of
FCN Common Stock and shall be converted automatically into an option to purchase
shares of Newco Common Stock in an amount and at an exercise price determined as
provided below (and otherwise, in the case of options, subject to the terms of
the FCN Benefit Plans pursuant to which such options have been issued (such
plans collectively the "FCN Stock Plans") and the agreements evidencing grants
thereunder)):
(i) The number of shares of Newco Common Stock to be subject to the
new option shall be equal to the product of the number of shares of FCN
Common Stock subject to the original option and the Exchange Ratio,
provided that any fractional shares of Newco Common Stock resulting from
such multiplication shall be rounded to the nearest whole share; and
(ii) The exercise price per share of Newco Common Stock under the
new option shall be equal to the exercise price per share of FCN Common
Stock under the original option divided by the Exchange Ratio, provided
that such
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exercise price shall be rounded down to the nearest whole cent.
(b) The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the the Code) shall be
and is intended to be effected in a manner which is consistent with Section
424(a) of the Code. The duration and other terms of the new option shall be the
same as the original option except that all references to FCN shall be deemed to
be references to Newco.
2.7 Certificate of Incorporation. Subject to the terms and conditions of
this Agreement, at the Effective Time, the Certificate of Incorporation of Newco
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended in accordance with applicable law.
2.8 By-Laws. Subject to the terms and conditions of this Agreement, at the
Effective Time, the By-Laws of Newco shall be the By-Laws of the Surviving
Corporation until thereafter amended in accordance with applicable law.
2.9 Tax and Accounting Consequences. It is intended that the First Step
Merger and the Second Step Merger shall each constitute a reorganization within
the meaning of Section 368(a) of the Code, that this Agreement shall constitute
a "plan of reorganization" for the purposes of Sections 354 and 361 of the Code
and that the Merger be accounted for as a "pooling of interests" under generally
accepted accounting principles ("GAAP").
2.10 Management Succession. At the Effective Time, Verne G. Istock shall
be Chairman of the Board of the Surviving Corporation and John B. McCoy shall be
the President and Chief Executive Officer of the Surviving Corporation.
2.11 Board of Directors. (a) From and after the Effective Time, until duly
changed in compliance with applicable law and the Certificate of Incorporation
and Bylaws of the Surviving Corporation, the Board of Directors of the Surviving
Corporation shall consist of 22 persons, including Messrs. Istock and McCoy, 10
additional persons to be named by Mr. McCoy and the Board of Directors of BANC
ONE, and 10 additional persons to be named by Mr. Istock and the Board of
Directors of FCN.
(b) From and after the Effective Time, the representatives of BANC ONE and
FCN shall be represented in proportion to the aggregate representation set forth
above on all committees of the Board of Directors of the Surviving Corporation.
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2.12 Headquarters of Surviving Corporation. At the Effective Time, the
location of the headquarters and principal executive offices of the Surviving
Corporation shall be that of the headquarters and principal executive offices of
FCN as of the date of this Agreement.
ARTICLE III
EXCHANGE OF SHARES
3.1 Newco to Make Shares Available. At or prior to the Effective Time,
Newco shall deposit, or shall cause to be deposited, with FCN Trust Company of
New York, or another bank or trust company reasonably acceptable to each of BANC
ONE and FCN (the "Exchange Agent"), for the benefit of the holders of
Certificates, for exchange in accordance with this Article III, certificates
representing the shares of Newco Common Stock and Newco New Preferred Stock, and
cash in lieu of any fractional shares (such cash and certificates for shares of
Newco Common Stock and Newco New Preferred Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund"), to be issued pursuant to Section 2.4 and paid pursuant to
Section 3.2(a) in exchange for outstanding shares of FCN Capital Stock.
3.2 Exchange of Shares. (a) As soon as practicable after the Effective
Time, and in no event later than five business days thereafter, the Exchange
Agent shall mail to each holder of record of one or more Certificates a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing the
shares of Newco Common Stock, Newco New Preferred Stock and any cash in lieu of
fractional shares into which the shares of FCN Common Stock or FCN Preferred
Stock represented by such Certificate or Certificates shall have been converted
pursuant to this Agreement. Upon proper surrender of a Certificate for exchange
and cancellation to the Exchange Agent, together with such properly completed
letter of transmittal, duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor, as applicable, (i) a certificate
representing that number of whole shares of Newco Common Stock or Newco New
Preferred Stock to which such holder of FCN Common Stock or FCN Preferred Stock
shall have become entitled pursuant to the provisions of Article II and (ii) a
check representing the amount of any cash in lieu of fractional shares which
such holder has the right to receive in respect of the Certificate surrendered
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pursuant to the provisions of this Article III, and the Certificate so
surrendered shall forthwith be cancelled. No interest will be paid or accrued on
any cash in lieu of fractional shares or on any unpaid dividends and
distributions payable to holders of Certificates.
(b) No dividends or other distributions declared with respect to Newco
Common Stock or Newco New Preferred Stock shall be paid to the holder of any
unsurrendered Certificate until the holder thereof shall surrender such
Certificate in accordance with this Article III. After the surrender of a
Certificate in accordance with this Article III, the record holder thereof shall
be entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
Newco Common Stock or Newco New Preferred Stock represented by such Certificate.
(c) If any certificate representing shares of Newco Common Stock or Newco
New Preferred Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be a
condition of the issuance thereof that the Certificate so surrendered shall be
properly endorsed (or accompanied by an appropriate instrument of transfer) and
otherwise in proper form for transfer, and that the person requesting such
exchange shall pay to the Exchange Agent in advance any transfer or other taxes
required by reason of the issuance of a certificate representing shares of Newco
Common Stock or Newco New Preferred Stock in any name other than that of the
registered holder of the Certificate surrendered, or required for any other
reason, or shall establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of FCN of the shares of FCN Common Stock or FCN Preferred Stock
which were issued and outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates representing such shares are presented
for transfer to the Exchange Agent, they shall be cancelled and exchanged for
certificates representing shares of Newco Common Stock or Newco New Preferred
Stock as provided in this Article III.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Newco Common Stock shall
be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Newco Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a stockholder of
Newco. In lieu of the issuance of
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any such fractional share, Newco shall pay to each former stockholder of FCN who
otherwise would be entitled to receive such fractional share an amount in cash
determined by multiplying (i) the average of the closing-sale prices of BANC ONE
Common Stock on the New York Stock Exchange, Inc. (the "NYSE") as reported by
The Wall Street Journal for the five trading days immediately preceding the date
of the Effective Time by (ii) the fraction of a share (rounded to the nearest
thousandth when expressed in decimal form) of Newco Common Stock to which such
holder would otherwise be entitled to receive pursuant to Section 1.4.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of FCN for 12 months after the Effective Time shall be paid to
Newco. Any former stockholders of FCN who have not theretofore complied with
this Article III shall thereafter look only to Newco for payment of the shares
of Newco Common Stock or Newco New Preferred Stock, cash in lieu of any
fractional shares and any unpaid dividends and distributions on the Newco Common
Stock or Newco New Preferred Stock deliverable in respect of each share of FCN
Common Stock or FCN Preferred Stock, as the case may be, such stockholder holds
as determined pursuant to this Agreement, in each case, without any interest
thereon. Notwithstanding the foregoing, none of BANC ONE, Newco, FCN, the
Exchange Agent or any other person shall be liable to any former holder of
shares of FCN Common Stock or FCN Preferred Stock for any amount delivered in
good faith to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if reasonably required by
Newco, the posting by such person of a bond in such amount as Newco may
determine is reasonably necessary as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the shares of Newco
Capital Stock and any cash in lieu of fractional shares deliverable in respect
thereof pursuant to this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FCN
Except as disclosed in the FCN disclosure schedule delivered to BANC ONE
concurrently herewith (the "FCN Disclosure Schedule") FCN hereby represents and
warrants to BANC ONE as follows:
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4.1 Corporate Organization. (a) FCN is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
FCN has the corporate power and authority to own or lease all of its properties
and assets and to carry on its business as it is now being conducted, and is
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a Material Adverse Effect on FCN. As used in this Agreement, the
term "Material Adverse Effect" means, with respect to BANC ONE, FCN or the
Surviving Corporation, as the case may be, a material adverse effect on (i) the
business, operations, results of operations or financial condition of such party
and its Subsidiaries taken as a whole or (ii) the ability of such party to
consummate the transactions contemplated hereby. As used in this Agreement, the
word "Subsidiary" when used with respect to any party, means any bank,
corporation, partnership, limited liability company, or other organization,
whether incorporated or unincorporated, which is consolidated with such party
for financial reporting purposes. FCN is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended (the "BHC Act").
True and complete copies of the Restated Certificate of Incorporation (the "FCN
Certificate of Incorporation") and By-Laws of FCN, as in effect as of the date
of this Agreement, have previously been made available by FCN to BANC ONE.
(b) Each FCN Subsidiary (i) is duly organized and validly existing as a
bank, corporation, partnership or limited liability company under the laws of
its jurisdiction of organization, (ii) is duly qualified to do business and in
good standing in all jurisdictions (whether federal, state, local or foreign)
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and in which the failure to be so qualified would
have a Material Adverse Effect on FCN and (iii) has all requisite corporate
power and authority to own or lease its properties and assets and to carry on
its business as now conducted.
(c) The minute books of FCN accurately reflect in all material respects
all corporate actions held or taken since January 1, 1996 of its stockholders
and Board of Directors (including committees of the Board of Directors of FCN).
4.2 Capitalization. (a) The authorized capital stock of FCN consists of
(i) 750,000,000 shares of FCN Common Stock, of which, as of March 31, 1998,
287,187,823 shares were issued and outstanding and 32,321,153 shares were held
in treasury, and (ii) 10,000,000 shares of FCN Preferred Stock, of which, as of
the date hereof, (A) 1,191,000 shares were designated, issued
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and outstanding as FCN Series B Preferred, (B) 713,800 shares were designated,
issued and outstanding as FCN Series C Preferred, (C) 160,000 shares were
designated and no shares were issued and outstanding as 8.45% Cumulative
Preferred Stock, Series E, stated value $625 per share, and (D) 40,000 shares
were designated and no shares were issued and outstanding as 5 3/4% Cumulative
Convertible Preferred Stock, Series B, stated value $5,000 per share. All of the
issued and outstanding shares of FCN Capital Stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. As of the date of
this Agreement, except pursuant to the terms of (i) the FCN Option Agreement,
(ii) options issued pursuant to the FCN Stock Plans, (iii) the FCN 7 1/2%
preferred purchase units due May 10, 2023 and (iv) the Asset Purchase Agreement,
dated as of November 18, 1997, between FCN and Roney & Co., L.L.C. (the "Roney
Agreement"), FCN does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of FCN Capital
Stock or any other equity securities of FCN or any securities representing the
right to purchase or otherwise receive any shares of FCN Common Stock or FCN
Preferred Stock (collectively, including the items contemplated by clauses (i)
through (iv) of this sentence, the "FCN Rights"). As of the date of this
Agreement, no shares of FCN Capital Stock are reserved for issuance, except for
63,582,286 shares of FCN Common Stock reserved for issuance upon exercise of the
FCN Option Agreement, shares of FCN Common Stock reserved for issuance in
connection with FCN Employee Stock Purchase and Savings Plan (the "ESPSP"),
shares of FCN Common Stock reserved for issuance in connection with the FCN
Dividend Reinvestment Plan, 13,100,000 shares of FCN Common Stock reserved for
issuance upon the exercise of stock options pursuant to the FCN Stock Plans and
shares of FCN Common Stock reserved for issuance in connection with the Roney
Agreement. Since December 31, 1997, FCN has not issued any shares of its capital
stock or any securities convertible into or exercisable for any shares of its
capital stock, other than pursuant to the FCN Option Agreement, the ESPSP, the
FCN Dividend Reinvestment Plan, the exercise of employee stock options granted
prior to such date, the FCN Stock Performance Plan and the Roney Agreement.
Assuming compliance by BANC ONE and Newco with Articles I and II of this
Agreement, after the Effective Time, there will not be any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character by which FCN or any of its Subsidiaries or their respective successors
will be bound calling for the purchase or issuance of any shares of the capital
stock of FCN. FCN has previously provided BANC ONE with a list of the option
holders, the date of each option to purchase FCN Common Stock granted, the
number of shares subject to each such option, the expiration date of each such
option, and the price
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at which each such option may be exercised under an applicable FCN Stock Plan.
In no event will the aggregate number of shares of FCN Common Stock outstanding
at the Effective Time (including all shares of FCN Common Stock subject to FCN
Rights other than the FCN Option Agreement) exceed the number specified in
Section 4.2(a) of the FCN Disclosure Schedule.
(b) FCN owns, directly or indirectly, all of the issued and outstanding
shares of capital stock or other equity ownership interests of each of the FCN
Subsidiaries, free and clear of any liens, pledges, charges, encumbrances and
security interests whatsoever ("Liens"), and all of such shares or equity
ownership interests are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No FCN Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary.
4.3 Authority; No Violation. (a) FCN has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of FCN. The Board of Directors of FCN
has directed that this Agreement and the transactions contemplated hereby be
submitted to FCN's stockholders for approval at a meeting of such stockholders
and, except for the adoption of this Agreement by the affirmative vote of the
holders of a majority of the outstanding shares of FCN Common Stock, no other
corporate proceedings on the part of FCN are necessary to approve this Agreement
and to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by FCN and (assuming due authorization,
execution and delivery by BANC ONE and Newco) constitutes a valid and binding
obligation of FCN, enforceable against FCN in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by FCN nor the
consummation by FCN of the transactions contemplated hereby, nor compliance by
FCN with any of the terms or provisions hereof, will (i) violate any provision
of the FCN Certificate of Incorporation or By-Laws or (ii) assuming that the
consents and approvals referred to in Section 4.4 are duly obtained, (x) violate
any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to FCN or any of its Subsidiaries or any of their
respective properties or assets, or (y) violate, conflict with, result in
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a breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of FCN or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which FCN or any of its
Subsidiaries is a party, or by which they or any of their respective properties
or assets may be bound or affected, except (in the case of clause (y) above) for
such violations, conflicts, breaches or defaults which, either individually or
in the aggregate, will not have or be reasonably likely to have a Material
Adverse Effect on FCN.
4.4 Consents and Approvals. Except for (i) the filing of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act and approval of such
applications and notices, (ii) the filing of any required applications or
notices with any state or foreign agencies and approval of such applications and
notices (the "State Approvals"), (iii) the filing with the Securities and
Exchange Commission (the "SEC") of a joint proxy statement in definitive form
relating to the meetings of BANC ONE's shareholders and FCN's stockholders to be
held in connection with this Agreement and the transactions contemplated hereby
(the "Joint Proxy Statement") and the registration statement on Form S-4 (the
"S-4") in which the Joint Proxy Statement will be included as a prospectus, (iv)
the filing of the Certificate of Merger with the Delaware Secretary pursuant to
the DGCL, and certificate of merger with the Ohio Secretary pursuant to the OGCL
and a certificate of merger with the Delaware Secretary pursuant to the DGCL in
respect of the First Step Merger, (v) any notices to or filings with the Small
Business Administration ("SBA"), (vi) any consents, authorizations, approvals,
filings or exemptions in connection with compliance with the applicable
provisions of federal and state securities laws relating to the regulation of
broker-dealers or investment advisers, and federal commodities laws relating to
the regulation of futures commission merchants and the rules and regulations
thereunder and of any applicable industry self-regulatory organization ("SRO"),
and the rules of the NYSE, or which are required under consumer finance,
mortgage banking and other similar laws, (vii) such filings and approvals as are
required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the shares of Newco Common
Stock pursuant to this Agreement and (viii) the approval of this Agreement by
the requisite vote of the stockholders of BANC ONE and FCN, no consents or
approvals of or filings or registrations with any court, administrative
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agency or commission or other governmental authority or instrumentality (each a
"Governmental Entity") or with any third party are necessary in connection with
(A) the execution and delivery by FCN of this Agreement and (B) the consummation
by FCN of the Second Step Merger and the other transactions contemplated hereby.
4.5 Reports. FCN and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since January 1,
1996 with (i) the Federal Reserve Board, (ii) the Federal Deposit Insurance
Corporation, (iii) any state regulatory authority (each a "State Regulator"),
(iv) the Office of the Comptroller of the Currency (the "OCC"), (v) the SEC and
(vi) any SRO (collectively "Regulatory Agencies"), and all other reports and
statements required to be filed by them since January 1, 1996, including,
without limitation, any report or statement required to be filed pursuant to the
laws, rules or regulations of the United States, any state, or any Regulatory
Agency, and have paid all fees and assessments due and payable in connection
therewith, except where the failure to file such report, registration or
statement or to pay such fees and assessments, either individually or in the
aggregate, will not have a Material Adverse Effect on FCN. Except for normal
examinations conducted by a Regulatory Agency in the regular course of the
business of FCN and its Subsidiaries, no Regulatory Agency has initiated any
proceeding or, to the best knowledge of FCN, investigation into the business or
operations of FCN or any of its Subsidiaries since January 1, 1996, except where
such proceedings or investigation are not likely, either individually or in the
aggregate, to have a Material Adverse Effect on FCN. There is no unresolved
violation, criticism, or exception by any Regulatory Agency with respect to any
report or statement relating to any examinations of FCN or any of its
Subsidiaries which, in the reasonable judgment of FCN, is likely, either
individually or in the aggregate, to have a Material Adverse Effect on FCN.
4.6 Financial Statements. FCN has previously made available to BANC ONE
copies of the consolidated balance sheets of FCN and its Subsidiaries as of
December 31, for the fiscal years 1996 and 1997, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for the
fiscal years 1995 through 1997, inclusive, as reported in FCN's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997 filed with the SEC under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in each
case accompanied by the audit report of Arthur Andersen LLP, independent public
accountants with respect to FCN. The December 31, 1997 consolidated balance
sheet of FCN (including the related
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notes, where applicable) fairly presents the consolidated financial position of
FCN and its Subsidiaries as of the date thereof, and the other financial
statements referred to in this Section 4.6 (including the related notes, where
applicable) fairly present the results of the consolidated operations and
changes in stockholders' equity and consolidated financial position of FCN and
its Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto; and each of such statements (including the related notes, where
applicable) has been prepared in all material respects in accordance with GAAP
consistently applied during the periods involved, except, in each case, as
indicated in such statements or in the notes thereto. The books and records of
FCN and its Subsidiaries have been, and are being, maintained in all material
respects in accordance with GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions. The reserve for possible loan
and lease losses shown on the December 31, 1997 consolidated balance sheet of
FCN is adequate in all material respects under the requirements of GAAP to
provide for possible losses, net of recoveries relating to loans previously
charged off, on loans outstanding (including, without limitation, accrued
interest receivable) as of December 31, 1997.
4.7 Broker's Fees. Except as set forth in the engagement letter agreements
between FCN and each of Lazard Freres & Co. LLC and Goldman, Sachs & Co., true
and complete copies of which have previously been provided to BANC ONE, neither
FCN nor any FCN Subsidiary nor any of their respective officers or directors has
employed any broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with the Second Step Merger or
related transactions contemplated by this Agreement or the Option Agreements.
4.8 Absence of Certain Changes or Events. (a) Except as publicly disclosed
in FCN Reports filed prior to the date hereof, since December 31, 1997, no event
or events have occurred which have had, individually or in the aggregate, a
Material Adverse Effect on FCN.
(b) Except as publicly disclosed in FCN Reports filed prior to the date
hereof, since December 31, 1997, FCN and its Subsidiaries have carried on their
respective businesses in all material respects in the ordinary and usual course.
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(c) Since December 31, 1997, neither FCN nor any of its Subsidiaries has
(i) except for such actions as are in the ordinary course of business consistent
with past practice or except as required by applicable law, (A) increased the
wages, salaries, compensation, pension, or other fringe benefits or perquisites
payable to any executive officer, employee, or director from the amount thereof
in effect as of December 31, 1997, or (B) granted any severance or termination
pay, entered into any contract to make or grant any severance or termination
pay, or paid any bonuses aggregating in excess of 5% of FCN's 1997 salary and
employee benefits expenses, other than customary year-end bonuses for fiscal
1997, or (ii) suffered any strike, work stoppage, slowdown, or other labor
disturbance which is likely, either individually or in the aggregate, to have a
Material Adverse Effect on FCN.
4.9 Legal Proceedings. (a) Neither FCN nor any of its Subsidiaries is a
party to any, and there are no pending or, to the best of FCN's knowledge,
threatened, material legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against FCN or any of its Subsidiaries or challenging the validity or propriety
of the transactions contemplated by this Agreement or the FCN Option Agreement
as to which there is a reasonable probability of an adverse determination and
which, if adversely determined, would, individually or in the aggregate, have a
Material Adverse Effect on FCN.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply to similarly situated bank holding
companies or banks) imposed upon FCN, any of its Subsidiaries or the assets of
FCN or any of its Subsidiaries which has had, or might reasonably be expected to
have, a Material Adverse Effect on FCN.
4.10 Taxes and Tax Returns. (a) Each of FCN and its Subsidiaries has duly
filed all federal, state, county, foreign and, to the best of FCN's knowledge,
local information returns and tax returns required to be filed by it on or prior
to the date hereof (all such returns being accurate and complete in all material
respects) and has duly paid or made provisions for the payment of all Taxes and
other governmental charges which have been incurred or are due or claimed to be
due from it by federal, state, county, foreign or local taxing authorities on or
prior to the date of this Agreement (including, without limitation, if and to
the extent applicable, those due in respect of its properties, income, business,
capital stock, deposits, franchises, licenses, sales and payrolls) other than
(i) Taxes or other charges which are not yet delinquent or are being contested
in good faith and have not been finally determined, or (ii) information returns,
tax returns, Taxes or other governmental charges the failure to file, pay or
make provision
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for, either individually or in the aggregate, are not likely, in the reasonable
judgment of FCN, to have a Material Adverse Effect on FCN. The income tax
returns of FCN and its Subsidiaries have been examined by the Internal Revenue
Service (the "IRS") and any liability with respect thereto has been satisfied
for all years to and including 1982, and either no material deficiencies were
asserted as a result of such examination for which FCN does not have adequate
reserves or all such deficiencies were satisfied. To the best of FCN's
knowledge, there are no material disputes pending, or claims asserted for, Taxes
or assessments upon FCN or any of its Subsidiaries for which FCN does not have
adequate reserves, nor has FCN or any of its Subsidiaries given any currently
effective waivers extending the statutory period of limitation applicable to any
federal, state, county or local income tax return for any period. In addition,
(A) proper and accurate amounts have been withheld by FCN and its Subsidiaries
from their employees for all prior periods in compliance in all material
respects with the tax withholding provisions of applicable federal, state and
local laws, except where failure to do so would not have a Material Adverse
Effect on FCN, (B) federal, state, county and local returns which are accurate
and complete in all material respects have been filed by FCN and its
Subsidiaries for all periods for which returns were due with respect to income
tax withholding, Social Security and unemployment taxes, except where failure to
do so would not have a Material Adverse Effect on FCN, (C) the amounts shown on
such federal, state, local or county returns to be due and payable have been
paid in full or adequate provision therefor has been included by FCN in its
consolidated financial statements as of December 31, 1997, except where failure
to do so would not have a Material Adverse Effect on FCN and (D) there are no
Tax liens upon any property or assets of FCN or its Subsidiaries except liens
for current taxes not yet due or liens that would not have a Material Adverse
Effect on FCN. Neither FCN nor any of its Subsidiaries has been required to
include in income any adjustment pursuant to Section 481 of the Code by reason
of a voluntary change in accounting method initiated by FCN or any of its
Subsidiaries, and the IRS has not initiated or proposed any such adjustment or
change in accounting method, in either case which has had or is reasonably
likely to have a Material Adverse Effect on FCN. Except as set forth in the
financial statements described in Section 4.6, neither FCN nor any of its
Subsidiaries has entered into a transaction which is being accounted for as an
installment obligation under Section 453 of the Code, which would be reasonably
likely to have a Material Adverse Effect on FCN.
(b) As used in this Agreement, the term "Tax" or "Taxes" means all
federal, state, county, local, and foreign income, excise, gross receipts, gross
income, ad valorem, profits,
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gains, property, capital, sales, transfer, use, payroll, employment, severance,
withholding, duties, intangibles, franchise, backup withholding, and other
taxes, charges, levies or like assessments together with all penalties and
additions to tax and interest thereon.
(c) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by FCN or any Subsidiary of
FCN under any contract, plan, program, arrangement or understanding would be
reasonably likely to have a Material Adverse Effect on FCN.
4.11 Employees. (a) The FCN Disclosure Schedule sets forth a true and
complete list of each material employee or director benefit plan, arrangement or
agreement that is maintained, or conributed to, as of the date of this Agreement
(the "FCN Benefit Plans") by FCN or any of its Subsidiaries or by any trade or
business, whether or not incorporated (a "FCN ERISA Affiliate"), all of which
together with FCN would be deemed a "single employer" within the meaning of
Section 4001 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(b) FCN has heretofore made available to BANC ONE true and complete copies
of each of the FCN Benefit Plans and certain related documents, including, but
not limited to, (i) the actuarial report for such FCN Benefit Plan (if
applicable) for each of the last two years, and (ii) the most recent
determination letter from the IRS (if applicable) for such Plan.
(c) (i) Each of the FCN Benefit Plans has been operated and administered
in all material respects with applicable laws, including, but not limited to,
ERISA and the Code, (ii) each of the FCN Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code is so qualified,
and there are no existing circumstances or any events that have occurred that
could reasonably be expected to adversely affect the qualified status of any
such plan, (iii) with respect to each Plan which is subject to Title IV of
ERISA, the present value of accrued benefits under such Plan, based upon the
actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such Plan's actuary with respect to such Plan, did not, as of
its latest valuation date, exceed the then current value of the assets of such
Plan allocable to such accrued benefits, (iv) no FCN Benefit Plan provides
benefits, including, without limitation, death or medical benefits (whether or
not insured), with respect to current or former employees or directors of FCN,
its Subsidiaries or any FCN ERISA Affiliate beyond their retirement or other
termination of service, other than (A) coverage mandated by applicable law, (B)
death benefits or retirement benefits under any "employee pension plan" (as such
term is defined in Section
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3(2) of ERISA), (C) deferred compensation benefits accrued as liabilities on the
books of FCN, its Subsidiaries or the FCN ERISA Affiliates or (D) benefits the
full cost of which is borne by the current or former employee or director (or
his beneficiary), (v) no material liability under Title IV of ERISA has been
incurred by FCN, its Subsidiaries or any FCN ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk to FCN,
its Subsidiaries or any FCN ERISA Affiliate of incurring a material liability
thereunder, (vi) no FCN Benefit Plan is a "multiemployer pension plan" (as such
term is defined in Section 3(37) of ERISA), (vii) all contributions or other
amounts payable by FCN or its Subsidiaries as of the Effective Time with respect
to each FCN Benefit Plan in respect of current or prior plan years have been
paid or accrued in accordance with GAAP and Section 412 of the Code, (viii)
neither FCN, its Subsidiaries nor any FCN ERISA Affiliate has engaged in a
transaction in connection with which FCN, its Subsidiaries or any FCN ERISA
Affiliate reasonably could be subject to either a material civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a material tax imposed
pursuant to Section 4975 or 4976 of the Code, and (ix) to the best knowledge of
FCN there are no pending, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against any of the FCN Benefit Plans or
any trusts related thereto which are, in the reasonable judgment of FCN, likely,
either individually or in the aggregate, to have a Material Adverse Effect on
FCN.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) (i) result in any material payment (including,
without limitation, severance, unemployment compensation, "excess parachute
payment" (within the meaning of Section 280G of the Code), forgiveness of
indebtedness or otherwise) becoming due to any director or any employee of FCN
or any of its affiliates from FCN or any of its affiliates under any FCN Benefit
Plan or otherwise, (ii) materially increase any benefits otherwise payable under
any FCN Benefit Plan or (iii) result in any acceleration of the time of payment
or vesting of any such benefits to any material extent.
4.12 SEC Reports. FCN has previously made available to BANC ONE an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1996 by
FCN with the SEC pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act (the "FCN Reports") and prior to the date
hereof and (b) communication mailed by FCN to its stockholders since January 1,
1996 and prior to the date hereof, and no such registration statement,
prospectus, report, schedule, proxy statement or communication contained any
untrue
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statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances in which they were made, not misleading, except that
information as of a later date shall be deemed to modify information as of an
earlier date. Since January 1, 1996, FCN has timely filed all FCN Reports and
other documents required to be filed by it under the Securities Act and the
Exchange Act, and, as of their respective dates, all FCN Reports complied in all
material respects with the published rules and regulations of the SEC with
respect thereto.
4.13 Compliance with Applicable Law. FCN and each of its Subsidiaries hold
all material licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses under and pursuant to each, and
have complied in all material respects with and are not in default in any
material respect under any, applicable law, statute, order, rule, regulation,
policy and/or guideline of any Governmental Entity relating to FCN or any of its
Subsidiaries, except where the failure to hold such license, franchise, permit
or authorization or such noncompliance or default would not, individually or in
the aggregate, have a Material Adverse Effect on FCN.
4.14 Certain Contracts. (a) Neither FCN nor any of its Subsidiaries is a
party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) with respect to the employment of any directors,
officers or employees, other than in the ordinary course of business consistent
with past practice, (ii) which, upon the consummation or stockholder approval of
the transactions contemplated by this Agreement will (either alone or upon the
occurrence of any additional acts or events) result in any payment (whether of
severance pay or otherwise) becoming due from BANC ONE, FCN, the Surviving
Corporation, or any of their respective Subsidiaries to any officer or employee
thereof, (iii) which is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) to be performed after the date of this
Agreement that has not been filed or incorporated by reference in the FCN
Reports, (iv) which materially restricts the conduct of any line of business by
FCN, (v) with or to a labor union or guild (including any collective bargaining
agreement) or (vi) (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 value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement. FCN has previously made
available to BANC ONE true and correct copies of all employment and deferred
compensation
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agreements which are in writing and to which FCN is a party. Each contract,
arrangement, commitment or understanding of the type described in this Section
4.14(a), whether or not set forth in the FCN Disclosure Schedule, is referred to
herein as an "FCN Contract", and neither FCN nor any of its Subsidiaries knows
of, or has received notice of, any violation of the above by any of the other
parties thereto which, individually or in the aggregate, would have a Material
Adverse Effect on FCN.
(b) (i) Each FCN Contract is valid and binding on FCN or any of its
Subsidiaries, as applicable, and in full force and effect, (ii) FCN and each of
its Subsidiaries has in all material respects performed all obligations required
to be performed by it to date under each FCN Contract, except where such
noncompliance, individually or in the aggregate, would not have a Material
Adverse Effect on FCN, and (iii) no event or condition exists which constitutes
or, after notice or lapse of time or both, would constitute, a material default
on the part of FCN or any of its Subsidiaries under any such FCN Contract,
except where such default, individually or in the aggregate, would not have a
Material Adverse Effect on FCN.
4.15 Agreements with Regulatory Agencies. Neither FCN nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or has been since
January 1, 1996, a recipient of any supervisory letter from, or since January 1,
1996, has adopted any board resolutions at the request of any Regulatory Agency
or other Governmental Entity that currently restricts in any material respect
the conduct of its business or that in any material manner relates to its
capital adequacy, its credit policies, its management or its business (each,
whether or not set forth in the FCN Disclosure Schedule, an "FCN Regulatory
Agreement"), nor has FCN or any of its Subsidiaries been advised since January
1, 1996, by any Regulatory Agency or other Governmental Entity that it is
considering issuing or requesting any such Regulatory Agreement.
4.16 Other Activities of FCN and its Subsidiaries.
(a) Neither of FCN nor any of its Subsidiaries that is not a bank, a bank
operating subsidiary or a bank service corporation, directly or indirectly,
engages in any activity prohibited by the Federal Reserve Board. Without
limiting the generality of the foregoing, any equity investment of FCN and each
Subsidiary that is not a bank, a bank operating subsidiary or a bank service
corporation, is not prohibited by the Federal Reserve Board.
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(b) To FCN's knowledge, each FCN Subsidiary which is a bank (a "FCN Bank
Subsidiary") currently performs all personal trust, corporate trust and other
fiduciary activities ("Trust Activities") with requisite authority under
applicable law of Governmental Entities and in accordance in all material
respects with the agreed-upon terms of the agreements and instruments governing
such Trust Activities, sound fiduciary principles and applicable law and
regulation (specifically including, but not limited to, Section 9 of Title 12 of
the Code of Federal Regulations); there is no investigation or inquiry by any
Governmental Entity pending, or to the knowledge of FCN, threatened, against or
affecting FCN, or any Significant Subsidiary thereof relating to the compliance
by FCN or any such Significant Subsidiary (as such term is defined in Rule
1-02(w) of Regulation S-X of the SEC) with sound fiduciary principles and
applicable regulations; and except where any such failure would not have a
Material Adverse Effect on FCN, each employee of a FCN Bank Subsidiary had the
authority to act in the capacity in which he or she acted with respect to Trust
Activities, in each case, in which such employee held himself or herself out as
a representative of a FCN Bank Subsidiary; and each FCN Bank Subsidiary has
established policies and procedures for the purpose of complying with applicable
laws of Governmental Entities relating to Trust Activities, has followed such
policies and procedures in all material respects and has performed appropriate
internal audit reviews of, and has engaged independent accountants to perform
audits of, Trust Activities, which audits since January 1, 1996 have disclosed
no material violations of applicable laws of Governmental Entities or such
policies and procedures.
4.17 Investment Securities. Each of FCN and its Subsidiaries has good and
marketable title to all securities held by it (except securities sold under
repurchase agreements or held in any fiduciary or agency capacity), free and
clear of any Lien, except to the extent such securities are pledged in the
ordinary course of business consistent with prudent banking practices to secure
obligations of FCN or any of its Subsidiaries. Such securities are valued on the
books of FCN in accordance with GAAP.
4.18 Interest Rate Risk Management Instruments. All interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements, whether entered into for the account of FCN or for the account of
a customer of FCN or one of its Subsidiaries, were entered into in the ordinary
course of business and, to FCN's knowledge, in accordance with prudent banking
practice and applicable rules, regulations and policies of any Regulatory
Authority and with counterparties believed to be financially responsible at the
time and are legal, valid and binding obligations of FCN or one of its
Subsidiaries enforceable in accordance with their terms (except as
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may be limited by bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting the rights of creditors generally and the availability of
equitable remedies), and are in full force and effect. FCN and each of its
Subsidiaries have duly performed in all material respects all of their material
obligations thereunder to the extent that such obligations to perform have
accrued; and, to FCN's knowledge, there are no material breaches, violations or
defaults or allegations or assertions of such by any party thereunder.
4.19 Undisclosed Liabilities. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of FCN included
in the FCN December 31, 1997 Form 10-K and for liabilities incurred in the
ordinary course of business consistent with past practice, since December 31,
1997, neither FCN nor any of its Subsidiaries has incurred any liability of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether due or to become due) that, either alone or when combined with all
similar liabilities, has had, or could reasonably be expected to have, a
Material Adverse Effect on FCN.
4.20 Insurance. FCN and its Subsidiaries have in effect insurance coverage
with reputable insurers, which in respect of amounts, premiums, types and risks
insured, constitutes reasonably adequate coverage against all risks customarily
insured against by bank holding companies and their subsidiaries comparable in
size and operations to FCN and its Subsidiaries.
4.21 Environmental Liability. Except as set forth in the FCN Disclosure
Schedule, there are no legal, administrative, arbitral or other proceedings,
claims, actions, causes of action, private environmental investigations or
remediation activities or governmental investigations of any nature seeking to
impose, or that could reasonably result in the imposition, on FCN of any
liability or obligation arising under common law or under any local, state or
federal environmental statute, regulation or ordinance including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), pending or threatened against FCN, which
liability or obligation could reasonably be expected to have a Material Adverse
Effect on FCN. To the knowledge of FCN, there is no reasonable basis for any
such proceeding, claim, action or governmental investigation that would impose
any material liability or obligation that could reasonably be expected to have a
Material Adverse Effect on FCN. FCN is not subject to any agreement, order,
judgment, decree, letter or memorandum by or with any court, governmental
authority, regulatory agency or third party imposing any material liability or
obligation that could reasonably be expected to have a Material Adverse Effect
on FCN.
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4.22 State Takeover Laws; FCN Certificate of Incorporation. The Board of
Directors of FCN has approved the transactions contemplated by this Agreement
and the Option Agreements (i) for purposes of Section 203(a)(1) of the DGCL such
that the provisions of Section 203(a) of the DGCL and (ii) for purposes of
Article Thirteenth of the FCN Certificate of Incorporation such that the
provisions thereof will not apply to this Agreement or the Option Agreements or
any of the transactions contemplated hereby or thereby.
4.23 Year 2000. None of FCN or any of the FCN Subsidiaries has received,
or reasonably expects to receive, a "Year 2000 Deficiency Notification Letter"
(as such term is employed in the Federal Reserve's Supervision and Regulation
Letter No. SR 98-3(SUP), dated March 4, 1998). FCN has disclosed to BANC ONE a
complete and accurate copy of FCN's plan, including an estimate of the
anticipated associated costs, for addressing the issues ("Year 2000 Issues") set
forth in the statements of the Federal Financial Institutions Examination
Council, dated May 5, 1997, entitled "Year 2000 Project Management Awareness,"
and December 1997, entitled "Safety and Soundness Guidelines Concerning the Year
2000 Business Risk," as such issues affect FCN and its Subsidiaries. Between the
date of this Agreement and the Effective Time, FCN shall use commercially
practicable efforts to implement such plan.
4.24 Reorganization; Pooling of Interests. As of the date of this
Agreement, assuming compliance by BANC ONE and FCN with the covenants and
agreements set forth in Section 7.13 hereof, FCN has no reason to believe that
the Second Step Merger will not qualify as a "reorganization" within the meaning
of Section 368(a) of the Code and as a "pooling of interests" for accounting
purposes.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BANC ONE AND NEWCO
Except as disclosed in the BANC ONE disclosure schedule delivered to FCN
concurrently herewith (the "BANC ONE Disclosure Schedule") BANC ONE and Newco
hereby represent and warrant to FCN as follows:
5.1 Corporate Organization. (a) BANC ONE is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio. BANC
ONE has the corporate power and authority to own or lease all of its properties
and assets and to carry on its business as it is now being conducted, and is
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted
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by it or the character or location of the properties and assets owned or leased
by it makes such licensing or qualification necessary, except where the failure
to be so licensed or qualified would not have a Material Adverse Effect on BANC
ONE. BANC ONE is, and at the Effective Time Newco will be, duly registered as a
bank holding company under the BHC Act. True and complete copies of the Restated
Articles of Incorporation (the "BANC ONE Articles") and Regulations (the
"Regulations") of BANC ONE, and of the Certificate of Incorporation (the "Newco
Certificate of Incorporation") and By-Laws of Newco, in each case as in effect
as of the date of this Agreement, have previously been made available by BANC
ONE to FCN.
(b) Each BANC ONE Subsidiary (i) is duly organized and validly existing as
a bank, corporation, partnership or limited liability company under the laws of
its jurisdiction of organization, (ii) is duly qualified to do business and in
good standing in all jurisdictions (whether Federal, state, local or foreign)
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and in which the failure to be so qualified would
have a Material Adverse Effect on BANC ONE, and (iii) has all requisite
corporate power and authority to own or lease its properties and assets and to
carry on its business as now conducted.
(c) The minute books of each of BANC ONE and Newco accurately reflect in
all material respects all corporate actions held or taken since January 1, 1996
(or the date of its incorporation, in the case of Newco) of its stockholders and
Board of Directors (including committees of the Board of Directors of BANC ONE).
5.2 Capitalization. (a) The authorized capital stock of BANC ONE consists
of 950,000,000 shares of BANC ONE Common Stock, of which, as of March 31, 1998,
643,833,890 were issued and outstanding, and 35,000,000 shares of Preferred
Stock, no par value (the "BANC ONE Preferred Stock" and, together with the BANC
ONE Common Stock, the "BANC ONE Capital Stock"), of which (i) 10,000,000 shares
were designated and no shares were issued and outstanding as Class A Preferred
Stock ("BANC ONE Class A Preferred Stock"), (ii) 1,000,000 shares were
designated and no shares were issued and outstanding as Class B Preferred Stock
("BANC ONE Class B Preferred Stock") and (iii) 24,000,000 shares were designated
and 1,992,046 were issued and outstanding as Series C $3.50 Cumulative
Convertible Preferred Stock, without par value, of BANC ONE (the "BANC ONE
Series C Preferred"). BANC ONE has called the BANC ONE Series C Prerred for
redemption and no shares of BANC ONE Series C Preferred will be outstanding at
the First Effective Time. As of March 31, 1998, 3,742,299 shares of BANC ONE
Common Stock were held in BANC ONE's treasury. As of the date hereof, no shares
of BANC ONE Common Stock or BANC ONE Preferred Stock were reserved
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for issuance, except for (i) 19,533,088 shares of BANC ONE Common Stock issuable
upon the exercise of stock options pursuant to the BANC ONE Stock Plans, (ii)
62,599,680 shares of BANC ONE Common Stock issuable pursuant to the Agreement
and Plan of Merger, dated as of October 20, 1997, by and between BANC ONE and
First Commerce Corporation (the "First Commerce Merger Agreement") and (iii) the
shares of BANC ONE Common Stock issuable pursuant to the BANC ONE Option
Agreement. All of the issued and outstanding shares of BANC ONE Common Stock and
BANC ONE Preferred Stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. As of the date of this Agreement,
except for the BANC ONE Option Agreement, the First Commerce Merger Agreement
and the BANC ONE Stock Plans, BANC ONE does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of BANC ONE
Common Stock or BANC ONE Preferred Stock or any other equity securities of BANC
ONE or any securities representing the right to purchase or otherwise receive
any shares of BANC ONE Common Stock or BANC ONE Preferred Stock (collectively,
"BANC ONE Rights"). Since December 31, 1997, BANC ONE has not issued any shares
of its capital stock or any securities convertible into or exercisable for any
shares of its capital stock, other than in connection with a 10% stock dividend
on the outstanding shares of BANC ONE Common Stock paid on February 26, 1998 and
pursuant to (A) the exercise of employee stock options granted prior to such
date, (B) the conversion of the BANC ONE Series C Preferred into shares of BANC
ONE Common Stock in accordance with the terms thereof, (C) the consummation of
the merger contemplated by the First Commerce Merger Agreement and (D) pursuant
to the BANC ONE Option Agreement. BANC ONE has previously provided FCN with a
list of the option holders, the date of each option to purchase BANC ONE Common
Stock granted, the number of shares subject to each such option and the price at
which each such option may be exercised under an applicable BANC ONE Stock Plan.
In no event will the aggregate number of shares of BANC ONE Common Stock
outstanding at the First Effective Time (including all shares of BANC ONE Common
Stock subject to BANC ONE Rights other than the BANC ONE Option Agreement)
exceed the number specified in Section 5.2(a) of the BANC ONE Disclosure
Schedule.
(b) The initial authorized capital stock of Newco consists of (i) 1,000
shares of Newco Common Stock, of which (x) as of the date hereof, no shares are
issued and outstanding and (y) immediately prior to the First Effective Time,
100 shares will be issued and outstanding, and (ii) 1,000 shares of preferred
stock, no par value per share, of which no shares are issued and outstanding.
The authorized capital stock of Newco immediately following consummation of the
First Step Merger
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(and prior to the Effective Time) will be as set forth in the form of Newco
Certificate of Incorporation annexed as Exhibit A hereto. No change in such
capitalization has occurred since such date or will occur prior to the Effective
Time except as provided in or contemplated by this Agreement. At the Effective
Time, no capital stock of Newco (and no options, warrants or other rights to
acquire, and no securities convertible into or exchangeable for, any such
capital stock) will be outstanding other than capital stock, options, warrants,
rights or securities issued or converted at the effective time of the First Step
Merger in respect of BANC ONE Common Stock and any associated rights issued
pursuant to and as described in Article I of this Agreement. The shares of Newco
Capital Stock to be issued pursuant to the Merger will be duly authorized and
validly issued and, at the Effective Time, all such shares will be fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof.
(c) BANC ONE owns (and will own at the First Effective Time, in the case
of Newco), directly or indirectly, all of the issued and outstanding shares of
capital stock or other ownership interests of each of the BANC ONE Subsidiaries
and Newco, free and clear of any Liens, and all of such shares or ownership
interests are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No BANC ONE Subsidiary has or is bound by
any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of such Subsidiary. Newco has, and
will have prior to the First Effective Time, no Subsidiaries or material
investments of any kind in any entity.
5.3 Authority; No Violation. (a) Each of BANC ONE and Newco has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly approved by the Board of Directors of each of BANC ONE and
Newco. As of the First Effective Time, BANC ONE, as sole stockholder of Newco,
will have duly approved this Agreement and the transactions contemplated hereby.
The Board of Directors of BANC ONE has directed that this Agreement and the
transactions contemplated hereby be submitted to BANC ONE's shareholders for
approval at a meeting of such shareholders and, except for (i) the adoption of
this Agreement by the affirmative vote of the holders of a majority of the
outstanding shares of BANC ONE Common Stock, (ii) the issuance to BANC ONE of
shares of Newco Common Stock, (iii) the increase in
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the number of shares of authorized capital stock of Newco contemplated by
Section 7.12, (iv) the filing by Newco with the Delaware Secretary of
certificates of designations with respect to the Newco New Preferred Stock and
(v) the approval by BANC ONE contemplated by the prior sentence, no other
corporate proceedings on the part of BANC ONE or Newco are necessary to approve
this Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by each of BANC ONE
and Newco and (assuming due authorization, execution and delivery by FCN)
constitutes a valid and binding obligation of each of BANC ONE and Newco,
enforceable against each of BANC ONE and Newco in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by BANC ONE or
Newco, nor the consummation by BANC ONE of the transactions contemplated hereby,
nor compliance by BANC ONE with any of the terms or provisions hereof, will (i)
violate any provision of the BANC ONE Articles or Regulations, or the Newco
Certificate of Incorporation or Bylaws, or (ii) assuming that the consents and
approvals referred to in Section 5.4 are duly obtained, (x) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to BANC ONE or any of its Subsidiaries or any of their respective
properties or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any Lien
upon any of the respective properties or assets of BANC ONE or any of its
Subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which BANC ONE or any of its Subsidiaries is a
party, or by which they or any of their respective properties or assets may be
bound or affected, except (in the case of clause (y) above) for such violations,
conflicts, breaches or defaults which either individually or in the aggregate
will not have or be reasonably likely to have a Material Adverse Effect on BANC
ONE.
5.4 Consents and Approvals. Except for (i) the filing of applications and
notices, as applicable, with the Federal Reserve Board under the BHC Act and
approval of such applications and notices, (ii) the State Approvals, (iii) the
filing with the SEC of the Joint Proxy Statement and the S-4, (iv) the filing of
the certificates of merger with the Ohio Secretary pursuant to the OGCL and with
the Delaware Secretary in respect of the First Step Merger, and the Certificate
of Merger with the Delaware Secretary pursuant to the DGCL, (v) any notices to
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or filings with the SBA, (vi) any consent, authorizations, approvals, filings or
exemptions in connection with compliance with the applicable provisions of
federal and state securities laws relating to the regulation of broker-dealers
or investment advisers, and federal commodities laws relating to the regulation
of futures commission merchants and the rules and regulations thereunder and of
any applicable SRO, and the rules of the NYSE, or which are required under
consumer finance, mortgage banking and other similar laws, (vii) such filings
and approvals as are required to be made or obtained under the securities or
"Blue Sky" laws of various states in connection with the issuance of shares of
Newco Common Stock pursuant to this Agreement and (viii) the approval of this
Agreement by the requisite vote of the stockholders of BANC ONE and FCN, no
consents or approvals of or filings or registrations with any Governmental
Entity or with any third party are necessary in connection with (A) the
execution and delivery by BANC ONE or Newco of this Agreement and (B) the
consummation of the Merger and the other transactions contemplated hereby.
5.5 Reports. BANC ONE and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since January 1,
1996 with the Regulatory Agencies, and all other reports and statements required
to be filed by them since January 1, 1996, including, without limitation, any
report or statement required to be filed pursuant to the laws, rules or
regulations of the United States, any state, or any Regulatory Agency and have
paid all fees and assessments due and payable in connection therewith, except
where the failure to file such report, registration or statement or to pay such
fees and assessments, either individually or in the aggregate, will not have a
Material Adverse Effect on BANC ONE. Except for normal examinations conducted by
a Regulatory Agency in the regular course of the business of BANC ONE and its
Subsidiaries, no Regulatory Agency has initiated any proceeding or, to the best
knowledge of BANC ONE, investigation into the business or operations of BANC ONE
or any of its Subsidiaries since January 1, 1996, except where such proceedings
or investigation are not likely, either individually or in the aggregate, to
have a Material Adverse Effect on BANC ONE. There is no unresolved violation,
criticism, or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of BANC ONE or any of its Subsidiaries
which, in the reasonable judgment of BANC ONE, is likely, either individually or
in the aggregate, to have a Material Adverse Effect on BANC ONE.
5.6 Financial Statements. BANC ONE has previously made available to FCN
copies of the consolidated balance sheets of BANC ONE and its Subsidiaries as of
December 31, for the fiscal years 1996 and 1997, and the related consolidated
statements of
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income, changes in stockholders' equity and cash flows for the fiscal years 1995
through 1997, inclusive, as reported in BANC ONE's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997 filed with the SEC under the
Exchange Act (the "BANC ONE 10-K"), in each case accompanied by the audit report
of Coopers & Lybrand L.L.P., independent public accountants with respect to BANC
ONE. The December 31, 1997 consolidated balance sheet of BANC ONE (including the
related notes) fairly presents the consolidated financial position of BANC ONE
and its Subsidiaries as of the date thereof, and the other financial statements
referred to in this Section 5.6 (including the related notes) fairly present the
results of the consolidated operations and changes in stockholders' equity and
consolidated financial position of BANC ONE and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth; each
of such statements (including the related notes) comply in all material respects
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto; and each of such statements
(including the related notes) has been prepared in all material respects in
accordance with GAAP consistently applied during the periods involved, except in
each case as indicated in such statements or in the notes thereto. The books and
records of BANC ONE and its Subsidiaries have been, and are being, maintained in
all material respects in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions. The reserve for
possible loan and lease losses shown on the December 31, 1997 consolidated
balance sheet of BANC ONE is adequate in all material respects under the
requirements of GAAP to provide for possible losses, net of recoveries relating
to loans previously charged off, on loans outstanding (including, without
limitation, accrued interest receivable) as of December 31, 1997.
5.7 Broker's Fees. Except as set forth in the engagement letter agreements
between BANC ONE and each of Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Morgan Stanley & Co. Incorporated, true and complete copies of which have
previously been provided to FCN, neither BANC ONE nor any BANC ONE Subsidiary
nor any of their respective officers or directors has employed any broker or
finder or incurred any liability for any broker's fees, commissions or finder's
fees in connection with the Merger or related transactions contemplated by this
Agreement or the Option Agreements.
5.8 Absence of Certain Changes or Events. (a) Except as publicly disclosed
in BANC ONE Reports filed prior to the date hereof, since December 31, 1997, no
event has occurred which has had, individually or in the aggregate, a Material
Adverse Effect on BANC ONE.
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(b) Except as publicly disclosed in BANC ONE Reports filed prior to the
date hereof, since December 31, 1997, BANC ONE and its Subsidiaries have carried
on their respective businesses in all material respects in the ordinary and
usual course.
(c) Since December 31, 1997, neither BANC ONE nor any of its Subsidiaries
has (i) except for such actions as are in the ordinary course of business
consistent with past practice or except as required by applicable law, (A)
increased the wages, salaries, compensation, pension, or other fringe benefits
or perquisites payable to any executive officer, employee, or director from the
amount thereof in effect as of December 31, 1997, or (B) granted any severance
or termination pay, entered into any contract to make or grant any severance or
termination pay, or paid any bonuses aggregating in excess of 5% of BANC ONE's
1997 salary and employee benefit expenses, other than customary year-end bonuses
for fiscal 1997 or (ii) suffered any strike, work stoppage, slowdown, or other
labor disturbance which, in the reasonable judgment of BANC ONE is likely,
either individually or in the aggregate, to have a Material Adverse Effect on
BANC ONE.
5.9 Legal Proceedings. (a) Neither BANC ONE nor any of its Subsidiaries is
a party to any and there are no pending or, to the best of BANC ONE's knowledge,
threatened, material legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against BANC ONE or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement or the BANC ONE
Option Agreement as to which there is a reasonable probability of an adverse
determination and which, if adversely determined, would, individually or in the
aggregate, have a Material Adverse Effect on BANC ONE.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply to similarly situated bank holding
companies or banks) imposed upon BANC ONE, any of its Subsidiaries or the assets
of BANC ONE or any of its Subsidiaries which has had, or might reasonably be
expected to have, a Material Adverse Effect on BANC ONE or the Surviving
Corporation.
5.10 Taxes and Tax Returns. (a) Each of BANC ONE and its Subsidiaries has
duly filed all federal, state, county, foreign and, to the best of BANC ONE's
knowledge, local information returns and tax returns required to be filed by it
on or prior to the date hereof (all such returns being accurate and complete in
all material respects) and has duly paid or made provisions for the payment of
all Taxes and other governmental charges which have been incurred or are due or
claimed to be due from it by federal, state, county, foreign or local taxing
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authorities on or prior to the date of this Agreement (including, without
limitation, if and to the extent applicable, those due in respect of its
properties, income, business, capital stock, deposits, franchises, licenses,
sales and payrolls) other than (i) Taxes or other charges which are not yet
delinquent or are being contested in good faith and have not been finally
determined, or (ii) information returns, tax returns, Taxes or other
governmental charges the failure to file, pay or make provision for, either
individually or in the aggregate, is not likely, in the reasonable judgment of
BANC ONE, to have a Material Adverse Effect on BANC ONE. The income tax returns
of BANC ONE and its Subsidiaries have been examined by the IRS through 1992 and
any liability with respect thereto has been satisfied, and either no material
deficiencies were asserted as a result of such examination for which BANC ONE
does not have adequate reserves or all such deficiencies were satisfied. To the
best of BANC ONE's knowledge, there are no material disputes pending, or claims
asserted for, Taxes or assessments upon BANC ONE or any of its Subsidiaries for
which BANC ONE does not have adequate reserves, nor has BANC ONE or any of its
Subsidiaries given any currently effective waivers extending the statutory
period of limitation applicable to any federal, state, county or local income
tax return for any period. In addition, (A) proper and accurate amounts have
been withheld by BANC ONE and its Subsidiaries from their employees for all
prior periods in compliance in all material respects with the tax withholding
provisions of applicable federal, state and local laws, except where failure to
do so would not have a Material Adverse Effect on BANC ONE, (B) federal, state,
county and local returns which are accurate and complete in all material
respects have been filed by BANC ONE and its Subsidiaries for all periods for
which returns were due with respect to income tax withholding, Social Security
and unemployment taxes, except where failure to do so would not have a Material
Adverse Effect on BANC ONE, (C) the amounts shown on such federal, state, local
or county returns to be due and payable have been paid in full or adequate
provision therefor has been included by BANC ONE in its consolidated financial
statements as of December 31, 1997, except where failure to do so would not have
a Material Adverse Effect on BANC ONE and (D) there are no Tax liens upon any
property or assets of BANC ONE or its Subsidiaries except liens for current
taxes not yet due or liens that would not have a Material Adverse Effect on BANC
ONE. Neither BANC ONE nor any of its Subsidiaries has been required to include
in income any adjustment pursuant to Section 481 of the Code by reason of a
voluntary change in accounting method initiated by BANC ONE or any of its
Subsidiaries, and the IRS has not initiated or proposed any such adjustment or
change in accounting method, in either case, which has had or is reasonably
likely to have a Material Adverse Effect on BANC ONE. Except as set forth in the
financial statements described in Section 5.6, neither BANC ONE nor any of its
Subsidiaries has entered
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into a transaction which is being accounted for as an installment obligation
under Section 453 of the Code, which would be reasonably likely to have a
Material Adverse Effect on BANC ONE.
(b) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by BANC ONE or any
Subsidiary of BANC ONE under any contract, plan, program, arrangement or
understanding would be reasonably likely to have a Material Adverse Effect on
BANC ONE.
5.11 Employees. (a) The BANC ONE Disclosure Schedule sets forth a true and
complete list of each material employee benefit plan, arrangement or agreement
that is maintained, or contributed to, as of the date of this Agreement (the
"BANC ONE Benefit Plans") by BANC ONE, any of its Subsidiaries or by any trade
or business, whether or not incorporated (a "BANC ONE ERISA Affiliate"), all of
which together with BANC ONE would be deemed a "single employer" within the
meaning of Section 4001 of ERISA.
(b) BANC ONE has heretofore made available to FCN true and complete copies
of each of the BANC ONE Benefit Plans and certain related documents, including,
but not limited to, (i) the actuarial report for such BANC ONE Benefit Plan (if
applicable) for each of the last two years, and (ii) the most recent
determination letter from the IRS (if applicable) for such BANC ONE Benefit
Plan.
(c) (i) Each of the BANC ONE Benefit Plans has been operated and
administered in all material respects in accordance with applicable laws,
including, but not limited to, ERISA and the Code, (ii) each of the BANC ONE
Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code is so qualified, and there are no existing circumstances or any events
that have occurred that could reasonably be expected to adversely affect the
qualified status of any such Plan, (iii) with respect to each BANC ONE Benefit
Plan which is subject to Title IV of ERISA, the present value of accrued
benefits under such BANC ONE Benefit Plan, based upon the actuarial assumptions
used for funding purposes in the most recent actuarial report prepared by such
BANC ONE Benefit Plan's actuary with respect to such BANC ONE Benefit Plan, did
not, as of its latest valuation date, exceed the then current value of the
assets of such BANC ONE Benefit Plan allocable to such accrued benefits, (iv) no
BANC ONE Benefit Plan provides benefits, including, without limitation, death or
medical benefits (whether or not insured), with respect to current or former
employees or directors of BANC ONE, its Subsidiaries or any BANC ONE ERISA
Affiliate beyond their retirement or other termination of service, other than
(A) coverage mandated by applicable law, (B)
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death benefits or retirement benefits under any "employee pension plan" (as such
term is defined in Section 3(2) of ERISA), (C) deferred compensation benefits
accrued as liabilities on the books of BANC ONE, its Subsidiaries or the BANC
ONE ERISA Affiliates or (D) benefits the full cost of which is borne by the
current or former employee or director (or his beneficiary), (v) no material
liability under Title IV of ERISA has been incurred by BANC ONE, its
Subsidiaries or any BANC ONE ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to BANC ONE, its
Subsidiaries or any BANC ONE ERISA Affiliate of incurring a material liability
thereunder, (vi) no BANC ONE Benefit Plan is a "multiemployer pension plan" (as
such term is defined in Section 3(37) of ERISA), (vii) all contributions or
other amounts payable by BANC ONE or its Subsidiaries as of the Effective Time
with respect to each BANC ONE Benefit Plan in respect of current or prior plan
years have been paid or accrued in accordance with GAAP and Section 412 of the
Code, (viii) neither BANC ONE, its Subsidiaries nor any BANC ONE ERISA Affiliate
has engaged in a transaction in connection with which BANC ONE, its Subsidiaries
or any BANC ONE ERISA Affiliate reasonably could be subject to either a material
civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a material
tax imposed pursuant to Section 4975 or 4976 of the Code, and (ix) to the best
knowledge of BANC ONE there are no pending, threatened or anticipated claims
(other than routine claims for benefits) by, on behalf of or against any of the
BANC ONE Benefit Plans or any trusts related thereto which are, in the
reasonable judgment of BANC ONE, likely, either individually or in the
aggregate, to have a Material Adverse Effect on BANC ONE.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) (i) result in any material payment (including,
without limitation, severance, unemployment compensation, "excess parachute
payment" (within the meaning of Section 280G of the Code), forgiveness of
indebtedness or otherwise) becoming due to any director or any employee of BANC
ONE or any of its affiliates from BANC ONE or any of its affiliates under any
BANC ONE Benefit Plan or otherwise, (ii) materially increase any benefits
otherwise payable under any BANC ONE Benefit Plan or (iii) result in any
acceleration of the time of payment or vesting of any such benefits to any
material extent.
5.12 SEC Reports. BANC ONE has previously made available to FCN an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1996 by
BANC ONE with the SEC pursuant to the Securities Act or the Exchange Act (the
"BANC ONE Reports") and prior to the date hereof and (b) communication mailed by
BANC ONE to its stockholders since
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January 1, 1996 and prior to the date hereof, and no such registration
statement, prospectus, report, schedule, proxy statement or communication
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading, except that information as of a later date shall be deemed to modify
information as of an earlier date. Since January 1, 1996, BANC ONE has timely
filed all BANC ONE Reports and other documents required to be filed by it under
the Securities Act and the Exchange Act, and, as of their respective dates, all
BANC ONE Reports complied in all material respects with the published rules and
regulations of the SEC with respect thereto.
5.13 Compliance with Applicable Law. BANC ONE and each of its Subsidiaries
hold all material licenses, franchises, permits and authorizations necessary for
the lawful conduct of their respective businesses under and pursuant to each,
and have complied in all material respects with and are not in default in any
material respect under any, applicable law, statute, order, rule, regulation,
policy and/or guideline of any Governmental Entity relating to BANC ONE or any
of its Subsidiaries, except where the failure to hold such license, franchise,
permit or authorization or such noncompliance or default would not, individually
or in the aggregate, have a Material Adverse Effect on BANC ONE.
5.14 Certain Contracts. (a) Neither BANC ONE nor any of its Subsidiaries
is a party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) with respect to the employment of any directors,
officers or employees other than in the ordinary course of business consistent
with past practice, (ii) which, upon the consummation or stockholder approval of
the transactions contemplated by this Agreement will (either alone or upon the
occurrence of any additional acts or events) result in any payment (whether of
severance pay or otherwise) becoming due from BANC ONE, FCN, the Surviving
Corporation, or any of their respective Subsidiaries to any officer or employee
thereof, (iii) which is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) to be performed after the date of this
Agreement that has not been filed or incorporated by reference in the BANC ONE
Reports, (iv) which materially restricts the conduct of any line of business by
BANC ONE, (v) with or to a labor union or guild (including any collective
bargaining agreement) or (vi) (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 value of any of the benefits of which will be
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calculated on the basis of any of the transactions contemplated by this
Agreement. BANC ONE has previously made available to FCN true and correct copies
of all employment and deferred compensation agreements which are in writing and
to which BANC ONE is a party. Each contract, arrangement, commitment or
understanding of the type described in this Section 5.14(a), whether or not set
forth in the BANC ONE Disclosure Schedule, is referred to herein as a "BANC ONE
Contract", and neither BANC ONE nor any of its Subsidiaries knows of, or has
received notice of, any violation of the above by any of the other parties
thereto which, individually or in the aggregate, would have a Material Adverse
Effect on BANC ONE.
(b) (i) Each BANC ONE Contract is valid and binding on BANC ONE or any of
its Subsidiaries, as applicable, and in full force and effect, (ii) BANC ONE and
each of its Subsidiaries has in all material respects performed all obligations
required to be performed by it to date under each BANC ONE Contract, except
where such noncompliance, individually or in the aggregate, would not have a
Material Adverse Effect on BANC ONE, and (iii) no event or condition exists
which constitutes or, after notice or lapse of time or both, would constitute, a
material default on the part of BANC ONE or any of its Subsidiaries under any
such BANC ONE Contract, except where such default, individually or in the
aggregate, would not have a Material Adverse Effect on BANC ONE.
5.15 Agreements with Regulatory Agencies. Neither BANC ONE nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or has been since
January 1, 1996, a recipient of any supervisory letter from, or since January 1,
1996, has adopted any board resolutions at the request of any Regulatory Agency
or other Governmental Entity that currently restricts in any material respect
the conduct of its business or that in any material manner relates to its
capital adequacy, its credit policies, its management or its business (each,
whether or not set forth in the BANC ONE Disclosure Schedule, a "BANC ONE
Regulatory Agreement"), nor has BANC ONE or any of its Subsidiaries been advised
since January 1, 1996, by any Regulatory Agency or other Governmental Entity
that it is considering issuing or requesting any such Regulatory Agreement.
5.16 Other Activities of BANC ONE and its Subsidiaries.
(a) Neither BANC ONE nor any of its Subsidiaries that is not a bank, a
bank operating subsidiary or a bank service corporation, directly or indirectly
engages in any activity prohibited by the Federal Reserve Board. Without
limiting the
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generality of the foregoing, any equity investment of BANC ONE and each
Subsidiary that is not a bank, a bank operating subsidiary or a bank service
corporation, is not prohibited by the Federal Reserve Board.
(b) To BANC ONE's knowledge, each BANC ONE Subsidiary which is a bank (a
"BANC ONE Bank Subsidiary") currently performs all Trust Activities with
requisite authority under applicable law of Governmental Entities and in
accordance in all material respects with the agreed-upon terms of the agreements
and instruments governing such Trust Activities, sound fiduciary principles and
applicable law and regulation (specifically including, but not limited to,
Section 9 of Title 12 of the Code of Federal Regulations); there is no
investigation or inquiry by any Governmental Entity pending, or, to the
knowledge of BANC ONE, threatened, against or affecting BANC ONE or any
Significant Subsidiary thereof relating to the compliance by BANC ONE or any
such Significant Subsidiary with sound fiduciary principles and applicable
regulations; and except where any such failure would not have a Material Adverse
Effect on BANC ONE, each employee of a BANC ONE Bank Subsidiary had the
authority to act in the capacity in which he or she acted with respect to Trust
Activities, in each case, in which such employee held himself or herself out as
a representative of a BANC ONE Bank Subsidiary; and each BANC ONE Bank
Subsidiary has established policies and procedures for the purpose of complying
with applicable laws of Governmental Entities relating to Trust Activities, has
followed such policies and procedures in all material respects and has performed
appropriate internal audit reviews of, and has engaged independent accountants
to perform audits of, Trust Activities, which audits since January 1, 1996 have
disclosed no material violations of applicable laws of Governmental Entities or
such policies and procedures.
5.17 Investment Securities. Each of BANC ONE and its Subsidiaries has good
and marketable title to all securities held by it (except securities sold under
repurchase agreements or held in any fiduciary or agency capacity), free and
clear of any Lien, except to the extent such securities are pledged in the
ordinary course of business consistent with prudent banking practice to secure
obligations of BANC ONE or any of its Subsidiaries. Such securities are valued
on the books of BANC ONE in accordance with GAAP.
5.18 Interest Rate Risk Management Instruments. All interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements, whether entered into for the account of BANC ONE or for the
account of a customer of BANC ONE or one of its Subsidiaries, were entered into
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in the ordinary course of business and, to BANC ONE's knowledge, in accordance
with prudent banking practice and applicable rules, regulations and policies of
any Regulatory Authority and with counterparties believed to be financially
responsible at the time and are legal, valid and binding obligations of BANC ONE
or one of its Subsidiaries enforceable in accordance with their terms (except as
may be limited by bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting the rights of creditors generally and the availability of
equitable remedies), and are in full force and effect. BANC ONE and each of its
Subsidiaries has duly performed in all material respects all of its material
obligations thereunder to the extent that such obligations to perform have
accrued; and to BANC ONE's knowledge, there are no material breaches, violations
or defaults or allegations or assertions of such by any party thereunder.
5.19 Undisclosed Liabilities. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of BANC ONE
included in the BANC ONE Form 10-K and for liabilities incurred in the ordinary
course of business consistent with past practice, since December 31, 1997,
neither BANC ONE nor any of its Subsidiaries has incurred any liability of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether due or to become due) that, either alone or when combined with all
similar liabilities, has had, or could reasonably be expected to have, a
Material Adverse Effect on BANC ONE.
5.20 Insurance. BANC ONE and its Subsidiaries have in effect insurance
coverage with reputable insurers, which in respect of amounts, premiums, types
and risks insured, constitutes reasonably adequate coverage against all risks
customarily insured against by bank holding companies and their subsidiaries
comparable in size and operations to BANC ONE and its Subsidiaries.
5.21 Environmental Liability. Except as set forth in the BANC ONE
Disclosure Schedule, there are no legal, administrative, arbitral or other
proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that reasonably could result in the imposition, on
BANC ONE of any liability or obligation arising under common law or under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, CERCLA, pending or threatened against BANC ONE,
which liability or obligation could reasonably be expected to have a Material
Adverse Effect on BANC ONE. To the knowledge of BANC ONE, there is no reasonable
basis for any such proceeding, claim, action or governmental investigation that
would impose any material liability or obligation that could reasonably be
expected to
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have a Material Adverse Effect on BANC ONE. BANC ONE is not subject to any
agreement, order, judgment, decree, letter or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any material
liability or obligation that could reasonably be expected to have a Material
Adverse Effect on BANC ONE.
5.22 State Takeover Laws. (a) The Board of Directors of BANC ONE has
approved the transactions contemplated by this Agreement and the Option
Agreements pursuant to (i) Section 1704 of the OGCL such that the provisions
thereof, and (ii) Article Tenth of the BANC ONE Articles such that the
provisions thereof, will not apply to this Agreement or the Option Agreements or
any of the transactions contemplated hereby or thereby.
5.23 Interim Operations of Newco. Newco has been incorporated on behalf of
BANC ONE solely for the purposes of accomplishing the First Step Merger, has not
engaged in any other business activity and has conducted its operations only as
contemplated hereby.
5.24 Year 2000. None of BANC ONE or any of the BANC ONE Subsidiaries has
received, or reasonably expects to receive, a Year 2000 Deficiency Notification
Letter. BANC ONE has disclosed to FCN a complete and accurate copy of BANC ONE's
plan, including an estimate of the anticipated associated costs, for addressing
Year 2000 Issues as such issues affect BANC ONE and its Subsidiaries. Between
the date of this Agreement and the Effective Time, BANC ONE shall use
commercially practicable efforts to implement such plan.
5.25 Reorganization; Pooling of Interests. As of the date of this
Agreement, assuming compliance by BANC ONE and FCN with the covenants and
agreements set forth in Section 7.13 hereof, BANC ONE has no reason to believe
that the Merger will not qualify as a "reorganization" within the meaning of
Section 368(a) of the Code and as a "pooling of interests" for accounting
purposes.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Conduct of Businesses Prior to the Effective Time. During the period
from the date of this Agreement to the Effective Time, except as expressly
contemplated or permitted by this Agreement (including the FCN Disclosure
Schedule and the BANC ONE Disclosure Schedule) or the Option Agreements, each of
BANC ONE and FCN shall, and shall cause each of their respective Subsidiaries
to, (a) conduct its business in the usual,
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regular and ordinary course consistent with past practice, (b) use reasonable
best efforts to maintain and preserve intact its business organization,
employees and advantageous business relationships and retain the services of its
key officers and key employees and (c) take no action which would adversely
affect or delay the ability of either BANC ONE or FCN to obtain any necessary
approvals of any Regulatory Agency or other governmental authority required for
the transactions contemplated hereby or to perform its covenants and agreements
under this Agreement or the Option Agreements or to consummate the transactions
contemplated hereby or thereby.
6.2 Forbearances. During the period from the date of this Agreement to the
Effective Time, except as set forth in the BANC ONE Disclosure Schedule or the
FCN Disclosure Schedule, as the case may be, and, except as expressly
contemplated or permitted by this Agreement or the Option Agreements, none of
BANC ONE, Newco and FCN shall, and neither BANC ONE nor FCN shall permit any of
their respective Subsidiaries to, without the prior written consent of BANC ONE,
in the case of actions proposed to be undertaken by FCN, or of FCN, in the case
of actions proposed to be undertaken by BANC ONE or Newco:
(a) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money (other than
short-term indebtedness incurred to refinance short-term indebtedness and
indebtedness of FCN or any of its wholly-owned Subsidiaries to FCN or any
of its Subsidiaries, on the one hand, or of BANC ONE or any of its
Subsidiaries to BANC ONE or any of its wholly-owned Subsidiaries, on the
other hand), assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other individual,
corporation or other entity, or make any loan or advance (it being
understood and agreed that incurrence of indebtedness in the ordinary
course of business shall include, without limitation, the creation of
deposit liabilities, purchases of Federal funds, sales of certificates of
deposit and entering into repurchase agreements);
(b)(i) adjust, split, combine or reclassify any capital
stock;
(ii) make, declare or pay any dividend, or make any other
distribution on, or directly or indirectly redeem, purchase
or otherwise acquire, any shares of its capital stock or
any securities or obligations convertible into or
exchangeable for any shares of its capital stock (except
(A) in the case of FCN, for regular quarterly cash
dividends at a rate not in excess of $0.44 per share
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of FCN Common Stock and regular quarterly cash dividends on
the FCN Preferred Stock outstanding as of the date hereof
at the rate set forth in the applicable certificate of
designation, (B) in the case of BANC ONE, for regular
quarterly cash dividends on BANC ONE Common Stock at a rate
not in excess of $0.38 per share of BANC ONE Common Stock
and regular quarterly cash dividends on the BANC ONE
Preferred Stock outstanding as of the date hereof at the
rates set forth in the BANC ONE Articles for such BANC ONE
Preferred Stock, (C) dividends paid by any of the
Subsidiaries of each of BANC ONE and FCN to BANC ONE or FCN
or any of their Subsidiaries, respectively, and dividends
paid in the ordinary course of business consistent with
past practice by any subsidiaries (whether or not wholly
owned) of each of BANC ONE and FCN) and (D) in the case of
BANC ONE, for the redemption of all of the shares of BANC
ONE Series C Preferred Stock outstanding as of the date
hereof as described in the BANC ONE 10-K;
(iii) grant any stock appreciation rights or grant any individual,
corporation or other entity any right to acquire any shares of
its capital stock (except options converted in connection with
the transactions contemplated by the First Commerce Merger
Agreement and for regular periodic grants of options to
purchase stock made in the ordinary course of business
consistent with past practice pursuant to the BANC ONE Stock
Plans and the FCN Stock Plans); or
(iv) issue any additional shares of capital stock except
pursuant to (A) the exercise of stock options or warrants
outstanding as of the date hereof and options issued
thereafter in compliance with Section 6.2(b)(iii) hereof,
(B) the Option Agreements, (C) in the case of BANC ONE, the
consummation of the transactions contemplated by the First
Commerce Merger Agreement or (D) in the case of FCN, (x) in
the ordinary course of business and consistent with past
practice, in connection with the ESPSP and the FCN Dividend
Reinvestment Plan and (y) the Roney Agreement;
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(c) sell, transfer, mortgage, encumber or otherwise dispose of any
of its properties or assets to any individual, corporation or other
entity other than a Subsidiary, or cancel, release or assign any
indebtedness to any such person or any claims held by any such person,
except in the ordinary course of business consistent with past practice
or pursuant to contracts or agreements in force at the date of this
Agreement;
(d) except for transactions in the ordinary course of business
consistent with past practice or pursuant to contracts or agreements in
force at the date of this Agreement, make any material investment either
by purchase of stock or securities, contributions to capital, property
transfers, or purchase of any property or assets of any other individual,
corporation or other entity other than a Subsidiary thereof;
(e) except for transactions in the ordinary course of business
consistent with past practice, enter into or terminate any material
contract or agreement, or make any change in any of its material leases
or contracts, other than renewals of contracts and leases without
material adverse changes of terms;
(f) increase in any manner the compensation or fringe benefits of
any of its employees or pay any pension or retirement allowance not
required by any existing plan or agreement to any such employees or
become a party to, amend or commit itself to any pension, retirement,
profit-sharing or welfare benefit plan or agreement or employment
agreement with or for the benefit of any employee other than in the
ordinary course of business consistent with past practice, or accelerate
the vesting of, or the lapsing of restrictions with respect for any stock
options or other stock-based compensation;
(g) solicit, encourage or authorize any individual, corporation or
other entity to solicit or encourage from any third party any inquiries
or proposals relating to the disposition of its business or assets, or
the acquisition of its voting securities, or the merger of it or any of
its Subsidiaries with any corporation or other entity other than as
provided by this Agreement (and each party shall promptly notify the
other of all of the relevant details relating to all inquiries and
proposals which it may receive relating to any of such matters);
(h) settle any claim, action or proceeding involving money damages,
except in the ordinary course of business consistent with past practice;
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(i) take any action that would prevent or impede the Second Step
Merger from qualifying (i) for "pooling of interests" accounting
treatment or (ii) as a reorganization within the meaning of Section 368
of the Code; provided, however, that nothing contained herein shall limit
the ability of BANC ONE or FCN to exercise its rights under the FCN
Option Agreement or the BANC ONE Option Agreement, as the case may be;
(j) amend its certificate of incorporation or articles of
incorporation, as the case may be, or its bylaws or regulations, as
the case may be;
(k) other than in prior consultation with the other party to this
Agreement, restructure or materially change its investment securities
portfolio or its gap position, through purchases, sales or otherwise, or
the manner in which the portfolio is classified or reported;
(l) take any action that is intended or may reasonably be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Merger
set forth in Article VIII not being satisfied or in a violation of any
provision of this Agreement, except, in every case, as may be required by
applicable law;
(m) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP; or
(n) agree to, or make any commitment to, take any of the actions
prohibited by this Section 6.2.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters. (a) BANC ONE and FCN shall promptly prepare and
file with the SEC the Joint Proxy Statement and BANC ONE and Newco shall
promptly prepare and file with the SEC the S-4, in which the Joint Proxy
Statement will be included as a prospectus. Each of BANC ONE, FCN and Newco
shall use all reasonable efforts to have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing, and BANC ONE and
FCN shall thereafter mail or deliver the Joint Proxy Statement to their
respective stockholders. BANC ONE shall also use all reasonable efforts to
obtain all necessary state securities law or "Blue Sky" permits
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and approvals required to carry out the transactions contemplated by this
Agreement, and FCN shall furnish all information concerning FCN and the holders
of FCN Capital Stock as may be reasonably requested in connection with any such
action.
(b) The parties hereto shall cooperate with each other and use their best
efforts to promptly prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings, to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to consummate
the transactions contemplated by this Agreement (including, without limitation,
the Second Step Merger), and to comply with the terms and conditions of all such
permits, consents, approvals and authorizations of all such Governmental
Entities. BANC ONE and FCN shall have the right to review in advance, and, to
the extent practicable, each will consult the other on, in each case subject to
applicable laws relating to the exchange of information, all the information
relating to FCN or BANC ONE, as the case may be, 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 shall act reasonably and as promptly as practicable.
The parties hereto agree that they will consult with each other with respect to
the obtaining of all permits, consents, approvals and authorizations of all
third parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein.
(c) BANC ONE and FCN shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Joint Proxy Statement, the S-4 or any other statement,
filing, notice or application made by or on behalf of BANC ONE, FCN or any of
their respective Subsidiaries to any Governmental Entity in connection with the
Second Step Merger and the other transactions contemplated by this Agreement.
(d) BANC ONE and FCN shall promptly advise each other upon receiving any
communication from any Governmental Entity whose consent or approval is required
for consummation of the transactions contemplated by this Agreement which causes
such party to believe that there is a reasonable likelihood that any Requisite
Regulatory Approval will not be obtained or that the receipt of any such
approval will be materially delayed.
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7.2 Access to Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each of BANC ONE and
FCN, for the purposes of verifying the representations and warranties of the
other and preparing for the Merger and the other matters contemplated by this
Agreement, shall, and shall cause each of their respective Subsidiaries to,
afford to the officers, employees, accountants, counsel and other
representatives of the other party, access, during normal business hours during
the period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, each of BANC ONE and FCN shall,
and shall cause their respective Subsidiaries to, make available to the other
party (i) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of federal securities laws or federal or state banking laws, savings and loan or
savings association laws (other than reports or documents which BANC ONE or FCN,
as the case may be, is not permitted to disclose under applicable law) and (ii)
all other information concerning its business, properties and personnel as such
party may reasonably request. Neither BANC ONE nor FCN nor any of their
respective Subsidiaries shall be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of BANC ONE's or FCN's, as the case may be, customers, jeopardize the
attorney-client privilege of the institution in possession or control of such
information or contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
(b) Each of BANC ONE and FCN shall hold all information furnished by or on
behalf of the other party or any of such party's Subsidiaries or representatives
pursuant to Section 7.2(a) in confidence to the extent required by, and in
accordance with, the provisions of the confidentiality agreement, dated March
25, 1998, between BANC ONE and FCN (the "Confidentiality Agreement").
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
7.3 Stockholders' Approvals. Each of BANC ONE and FCN shall call a meeting
of its stockholders to be held as soon as reasonably practicable for the purpose
of voting upon the requisite stockholder approvals required in connection with
this Agreement, the First Step Merger and the Second Step Merger, and each shall
use its best efforts to cause such meetings to occur on the same date. The Board
of Directors of each of BANC
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ONE and FCN shall recommend to its shareholders the approval of the Merger, this
Agreement and the transactions contemplated hereby.
7.4 Legal Conditions to Merger. Each of BANC ONE and FCN shall, and shall
cause its Subsidiaries to, use their best efforts (a) to take, or cause to be
taken, all actions necessary, proper or advisable to comply promptly with all
legal requirements which may be imposed on such party or its Subsidiaries with
respect to the First Step Merger and the Second Step Merger and, subject to the
conditions set forth in Article VIII hereof, to consummate the transactions
contemplated by this Agreement, and (b) 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 any other third party which is
required to be obtained by FCN or BANC ONE or any of their respective
Subsidiaries in connection with the Merger and the other transactions
contemplated by this Agreement.
7.5 Affiliates; Publication of Combined Financial Results. (a) Each of
BANC ONE and FCN shall use its best efforts to cause each director, executive
officer and other person who is an "affiliate" (for purposes of Rule 145 under
the Securities Act and for purposes of qualifying the Second Step Merger for
"pooling of interests" accounting treatment) of such party to deliver to the
other party hereto, as soon as practicable after the date of this Agreement, and
prior to the date of the stockholders meetings called by BANC ONE and FCN to
approve this Agreement, a written agreement, in the form of Exhibit 6.5(a)(1) or
(2), as applicable, hereto, providing that such person will not sell, pledge,
transfer or otherwise dispose of any shares of BANC ONE Capital Stock, Newco
Capital Stock or FCN Capital Stock held by such "affiliate" and, in the case of
the "affiliates" of FCN, the shares of Newco Capital Stock to be received by
such "affiliate" in the Second Step Merger: (i) in the case of shares of Newco
Capital Stock to be received by "affiliates" of FCN in the Second Step Merger,
except in compliance with the applicable provisions of the Securities Act and
the rules and regulations thereunder; and (ii) except to the extent and under
the conditions permitted therein, during the period commencing 30 days prior to
the Effective Time and ending at the time of the publication of financial
results covering at least 30 days of combined operations of Newco and FCN.
(b) The Surviving Corporation shall use its best efforts to publish as
promptly as reasonably practical, but in no event later than 90 days after the
end of the first month after the Effective Time in which there are at least 30
days of post-Merger combined operations (which month may be the month in which
the Effective Time occurs), combined sales and net income
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figures as contemplated by and in accordance with the terms of SEC Accounting
Series Release No. 135.
7.6 Stock Exchange Listing. BANC ONE shall cause the shares of Newco
Common Stock and the Newco New Preferred Stock to be issued in the Merger to be
approved for listing on the NYSE, subject to official notice of issuance, prior
to the First Effective Time.
7.7 Employee Benefit Plans; Certain Insurance. (a) From and after the
Effective Time, unless otherwise mutually determined, the FCN Benefit Plans and
BANC ONE Benefit Plans in effect as of the date of this Agreement shall remain
in effect with respect to employees of FCN or Newco (or their Subsidiaries),
respectively, covered by such plans at the Effective Time until such time as the
Surviving Corporation shall, subject to applicable law, the terms of this
Agreement and the terms of such plans, adopt new benefit plans with respect to
employees of the Surviving Corporation and its Subsidiaries (the "New Benefit
Plans"). Prior to the Closing Date, FCN and BANC ONE shall cooperate in
reviewing, evaluating and analyzing the BANC ONE Benefit Plans and FCN Benefit
Plans with a view towards developing appropriate New Benefit Plans for the
employees covered thereby subsequent to the Second Step Merger. It is the
intention of FCN and BANC ONE to develop New Benefit Plans, as soon as
reasonably practicable after the Effective Time, which, among other things, (i)
treat similarly situated employees on a substantially equivalent basis, taking
into account all relevant factors, including, without limitation, duties,
geographic location, tenure, qualifications and abilities, and (ii) do not
discriminate between employees of the Surviving Corporation who were covered by
FCN Benefit Plans, on the one hand, and those covered by BANC ONE Benefit Plans,
on the other, at the Effective Time.
(b) The foregoing notwithstanding, the Surviving Corporation agrees to
honor in accordance with their terms all benefits vested as of the date hereof
under the BANC ONE Benefit Plans or the FCN Benefit Plans or under other
contracts, arrangements, commitments, or understandings described in the BANC
ONE Disclosure Schedule and the FCN Disclosure Schedule.
(c) Nothing in this Section 7.7 shall be interpreted as preventing the
Surviving Corporation from amending, modifying or terminating any BANC ONE
Benefit Plans, FCN Benefit Plans, or other contracts, arrangements, commitments
or understandings, in accordance with their terms and applicable law.
(d) From and after the Effective Time, the policy of Newco in respect of
directors' and officers' insurance (including but not limited to persons covered
and the scope and amount
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of coverage thereunder) shall be the same as the policy of FCN in effect as of
the date of this Agreement.
(e) Certain additional agreements of BANC ONE and FCN with respect to
compensation and benefits matters are set forth on Schedule 7.7(e) hereto.
7.8 Indemnification; Directors' and Officers' Insurance. (a) In the event
of any threatened or actual claim, action, suit, proceeding or investigation,
whether civil, criminal or administrative, including, without limitation, any
such claim, action, suit, proceeding or investigation in which any individual
who is now, or has been at any time prior to the date of this Agreement, or who
becomes prior to the Effective Time, a director or officer or employee of BANC
ONE, FCN, Newco or any of their respective Subsidiaries, including any entity
specified in the BANC ONE Disclosure or the FCN Disclosure Schedule (the
"Indemnified Parties"), is, or is threatened to be, made a party based in whole
or in part on, or arising in whole or in part out of, or pertaining to (i) the
fact that he is or was a director, officer or employee of BANC ONE, FCN, Newco
any of their respective Subsidiaries or any entity specified in the BANC ONE
Disclosure Schedule or the FCN Disclosure Schedule or any of their respective
predecessors or (ii) this Agreement, the Option Agreements or any of the
transactions contemplated hereby or thereby, whether in any case asserted or
arising before or after the Effective Time, the parties hereto agree to
cooperate and use their best efforts to defend against and respond thereto. It
is understood and agreed that after the Effective Time, Newco shall indemnify
and hold harmless, as and to the fullest extent permitted by law, each such
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including reasonable attorney's fees and expenses in advance of the
final disposition of any claim, suit, proceeding or investigation to each
Indemnified Party to the fullest extent permitted by law upon receipt of any
undertaking required by applicable law), judgments, fines and amounts paid in
settlement in connection with any such threatened or actual claim, action, suit,
proceeding or investigation, and in the event of any such threatened or actual
claim, action, suit, proceeding or investigation (whether asserted of arising
before or after the Effective Time); and Newco, after consultation with an
Indemnified Party, shall retain counsel and direct the defense thereof,
provided, however, that by virtue of the obligations herein set forth, Newco
shall not be liable to any Indemnified Party for any legal expenses of other
counsel or any other expenses incurred by any Indemnified Party in connection
with the defense thereof, except that if Newco fails or elects not to assume
such defense or counsel for the Indemnified Parties reasonably advises the
Indemnified Parties that there are issues
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which raise conflicts of interest between Newco and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to them after
consultation with Newco, and Newco shall pay the reasonable fees and expenses of
such counsel for the Indemnified Parties, (B) Newco shall be obligated pursuant
to this paragraph to pay for only one firm of counsel for all Indemnified
Parties, unless an Indemnified Party shall have reasonably concluded, based on
the advice of counsel and after consultation with Newco, that in order to be
adequately represented, separate counsel is necessary for such Indemnified
Party, in which case, Newco shall be obligated to pay for such separate counsel,
(C) Newco shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld) and (D) Newco
shall have no obligation hereunder to any Indemnified Party when and if a court
of competent jurisdiction shall ultimately determine, and such determination
shall have become final and nonappealable, that indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law. Any Indemnified Party wishing to claim Indemnification under this Section
7.8, upon learning of any such claim, action, suit, proceeding or investigation,
shall notify Newco thereof, provided that the failure to so notify shall not
affect the obligations of Newco under this Section 7.8 except to the extent such
failure to notify materially prejudices Newco. Newco's obligations under this
Section 7.8 continue in full force and effect for a period of six years from the
Effective Time (or the period of the applicable statute of limitations, if
longer); provided, however, that all rights to indemnification in respect of any
claim (a "Claim") asserted or made within such period shall continue until the
final disposition of such Claim.
(b) BANC ONE (and Newco, from and after the First Effective Time) shall
use its best efforts to cause the individuals serving as officers and directors
of FCN, its Subsidiaries or any entity specified in the FCN Disclosure Schedule
immediately prior to the Effective Time to be covered for a period of six (6)
years from the Effective Time (or the period of the applicable statute of
limitations, if longer) by the directors' and officers' liability insurance
policy maintained by FCN (provided that Newco may substitute therefor policies
of at least the same coverage and amounts containing terms and conditions which
are not less advantageous than such policy) with respect to acts or omissions
occurring prior to the Effective Time which were committed by such officers and
directors in their capacity as such; provided, however, that in no event shall
Newco be required to expend more than 200% of the current amount expended by FCN
(the "Insurance Amount") to maintain or procure insurance coverage pursuant
hereto and provided further that if Newco is unable to maintain or obtain the
insurance called for by this Section 7.8(b), Newco shall use its best
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efforts to obtain as much comparable insurance as available for the Insurance
Amount.
(c) In the event Newco 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 Newco
assume the obligations set forth in this section.
(d) The provisions of this Section 7.8 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
7.9 Additional Agreements. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement (including, without limitation, any merger between a Subsidiary of
FCN, on the one hand, and a Subsidiary of BANC ONE or Newco, on the other) or to
vest the surviving corporation in the First Step Merger or the Surviving
Corporation with full title to all properties, assets, rights, approvals,
immunities and franchises of any of the parties to the First Step Merger or the
Second Step Merger, as the case may be, the proper officers and directors of
each party to this Agreement and their respective Subsidiaries shall take all
such necessary action as may be reasonably requested by, and at the sole expense
of, BANC ONE.
7.10 Advice of Changes. BANC ONE and FCN shall each promptly advise the
other party of any change or event (i) having a Material Adverse Effect on it or
(ii) which it believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations, warranties or
covenants contained herein.
7.11 Dividends. After the date of this Agreement, each of BANC ONE and FCN
shall coordinate with the other the declaration of any dividends in respect of
BANC ONE Common Stock and FCN Common Stock and the record dates and payment
dates relating thereto, it being the intention of the parties hereto that
holders of BANC ONE Common Stock or FCN Common Stock shall not receive two
dividends, or fail to receive one dividend, for any quarter with respect to
their shares of BANC ONE Common Stock and/or FCN Common Stock and any shares of
Newco Capital Stock any such holder receives in exchange therefor in the Second
Step Merger.
7.12 Authorized Stock of Newco. BANC ONE and Newco shall, prior to the
First Effective Time, take such corporate,
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stockholder and other action as is required to amend the Newco Certificate of
Incorporation in order to authorize sufficient shares of Newco Capital Stock to
complete the transactions contemplated hereby.
7.13 Pooling of Interests. Each of BANC ONE and FCN shall, prior to the
First Effective Time, coordinate with the other party with respect to the
issuance of, and pursuant thereto shall issue, shares of BANC ONE Common Stock
or FCN Common Stock, as may be appropriate, in such manner, and limited to such
number, as is necessary to reduce the aggregate number of "tainted treasury
shares" of such parties to a number that is consistent with the accounting of
the Merger as a "pooling of interests" under GAAP.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation To Effect the Second Step
Merger. The respective obligations of the parties to effect the Second Step
Merger, and of BANC ONE and Newco to effect the First Step Merger, shall be
subject to the satisfaction at or prior to the Effective Time (and the First
Effective Time, in the case of the consummation of the First Step Merger) of the
following conditions:
(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby, including the Second Step Merger and, in the case of
the holders of BANC ONE Common Stock, the First Step Merger, shall have
been approved and adopted by the respective requisite affirmative votes
of the holders of FCN Common Stock and BANC ONE Common Stock entitled to
vote thereon.
(b) NYSE Listing. The shares of Newco Common Stock and Newco New
Preferred which shall be issued to the stockholders of FCN upon
consummation of the Merger shall have been authorized for listing on the
NYSE, subject to official notice of issuance.
(c) Other Approvals. All regulatory approvals required to consummate
the transactions contemplated hereby shall have been obtained and shall
remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired (all such approvals and the expiration
of all such waiting periods being referred to herein as the "Requisite
Regulatory Approvals").
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(d) S-4. The S-4 shall have become effective under the Securities
Act and no stop order suspending the effectiveness of the S-4 shall have
been issued and no proceedings for that purpose shall have been initiated
or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order, injunction
or decree issued by any court or agency of competent jurisdiction or
other legal restraint or prohibition (an "Injunction") preventing the
consummation of the First Step Merger, the Second Step Merger or any of
the other transactions contemplated by this Agreement shall be in effect.
No statute, rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any Governmental Entity
which prohibits, materially restricts or makes illegal consummation of
the First Step Merger or the Second Step Merger.
(f) Federal Tax Opinion. FCN and BANC ONE each shall have received
an opinion of Wachtell, Lipton, Rosen & Katz, in form and substance
reasonably satisfactory to BANC ONE and FCN, dated the Closing Date,
substantially to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion which are consistent with the
state of facts existing at the Effective Time:
(i) Each of the First Step Merger and the Second Step Merger
will constitute a reorganization under Section 368(a) of the Code;
BANC ONE and Newco will each be a party to the reorganization in
respect of the First Step Merger; and Newco and FCN will each be a
party to the reorganization in respect of the Second Step Merger;
(ii) No gain or loss will be recognized by BANC ONE or Newco
as a result of the First Step Merger or Newco or FCN as a result of
the Second Step Merger;
(iii) No gain or loss will be recognized by stockholders of
BANC ONE who receive solely Newco Capital Stock for their BANC ONE
Capital Stock pursuant to the First Step Merger; and
(iv) No gain or loss will be recognized by the stockholders of
FCN who exchange their FCN Capital Stock solely for Newco Capital
Stock pursuant to the Second Step Merger (except with respect to
cash received in lieu of a fractional share interest in Newco
Capital Stock).
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In rendering such opinion, counsel may require and rely upon
representations contained in certificates of officers of BANC ONE, Newco,
FCN and others.
(g) Pooling of Interests. BANC ONE and FCN shall each have received
a letter from their respective independent accountants addressed to FCN
or BANC ONE, as the case may be, to the effect that the First Step Merger
and the Second Step Merger, taken together, will qualify for "pooling of
interests" accounting treatment.
8.2 Conditions to Obligations of BANC ONE and Newco. The obligations of
BANC ONE and Newco to effect the First Step Merger, and the obligation of Newco
to effect the Second Step Merger, are also subject to the satisfaction, or
waiver by BANC ONE or Newco, at or prior to the Effective Time, of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of FCN set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing
Date, provided, however, that for purposes of this paragraph, such
representations and warranties shall be deemed to be true and correct
unless the failure or failures of such representations and warranties to
be so true and correct, individually or in the aggregate, and without
giving effect to any qualification as to materiality set forth in such
representations or warranties, would have a Material Adverse Effect on
FCN. BANC ONE shall have received a certificate signed on behalf of FCN
by the Chief Executive Officer and the Chief Financial Officer of FCN to
the foregoing effect.
(b) Performance of Obligations of FCN. FCN shall have performed in
all material respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date, and BANC ONE shall
have received a certificate signed on behalf of FCN by the Chief
Executive Officer and the Chief Financial Officer of FCN to such effect.
8.3 Conditions to Obligations of FCN. The obligation of FCN to effect the
Second Step Merger is also subject to the satisfaction or waiver by FCN at or
prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of BANC ONE and Newco set forth in this Agreement shall be
true and correct in all material
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respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the
Closing Date, provided, however, that for purposes of this paragraph,
such representations and warranties shall be deemed to be true
and correct unless the failure or failures of such representations and
warranties to be so true and correct, individually or in the aggregate,
and without giving effect to any qualification as to materiality set
forth in such representations or warranties, would have a Material
Adverse Effect on BANC ONE. FCN shall have received a certificate signed
on behalf of BANC ONE by the Chief Executive Officer and the Chief
Financial Officer of BANC ONE to the foregoing effect.
(b) Performance of Obligations of BANC ONE. Each of BANC ONE and
Newco shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the
Closing Date, and FCN shall have received a certificate signed on behalf
of BANC ONE by the Chief Executive Officer and the Chief Financial
Officer of BANC ONE to such effect.
(c) Consummation of the First Step Merger. The First Effective Time
shall have occurred and the First Step Merger shall have been
consummated.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination. This Agreement may be terminated at any time prior to the
First Effective Time, whether before or after approval of the matters presented
in connection with the Second Step Merger by the stockholders of BANC ONE or
FCN:
(a) by mutual consent of BANC ONE and FCN in a written instrument,
if the Board of Directors of each so determines by a vote of a majority
of the members of its entire Board;
(b) by either the Board of Directors of BANC ONE or the Board of
Directors of FCN if any Governmental Entity which must grant a Requisite
Regulatory Approval has denied approval of the Merger and such denial has
become final and nonappealable or any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order permanently
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement;
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(c) by either the Board of Directors of BANC ONE or the Board of
Directors of FCN if the Second Step Merger shall not have been
consummated on or before the first anniversary of the date of this
Agreement, unless the failure of the Closing to occur by such date shall
be due to the failure of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such party set forth
herein;
(d) by either the Board of Directors of BANC ONE or the Board of
Directors of FCN (provided that the terminating party is not then in
breach of any representation, warranty, covenant or other agreement
contained herein) if there shall have been a breach of any of the
covenants or agreements or any of the representations or warranties set
forth in this Agreement on the part of FCN, in the case of a termination
by BANC ONE, or BANC ONE or Newco, in the case of a termination by FCN,
which breach, individually or together with other such breaches, would
constitute, if occurring or continuing on the Closing Date, the failure
of the conditions set forth in Section 8.2 or 8.3, as the case may be,
and which is not cured within 45 days following written notice to the
party committing such breach or by its nature or timing cannot be cured
prior to the Closing Date; or
(e) by either BANC ONE or FCN if any approval of the stockholders of
BANC ONE or FCN required for the consummation of the Second Step Merger,
or the approval of the shareholders of BANC ONE required for the
consummation of the First Step 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 or postponement thereof.
9.2 Effect of Termination. In the event of termination of this Agreement
by either BANC ONE or FCN as provided in Section 9.1, this Agreement shall
forthwith become void and have no effect, and none of BANC ONE, FCN, Newco, any
of their respective Subsidiaries or any of the officers or directors of any of
them shall have any liability of any nature whatsoever hereunder, or in
connection with the transactions contemplated hereby, except that (i) Sections
7.2(b), 9.2, 10.2 and 10.3 shall survive any termination of this Agreement, and
(ii) notwithstanding anything to the contrary contained in this Agreement,
neither BANC ONE nor FCN shall be relieved or released from any liabilities or
damages arising out of its willful breach of any provision of this Agreement.
9.3 Amendment. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by
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action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with Merger by
the stockholders of BANC ONE and FCN; provided, however, that after any approval
of the transactions contemplated by this Agreement by the respective
stockholders of BANC ONE or FCN, there may not be, without further approval of
such stockholders, any amendment of this Agreement which changes the amount or
the form of the consideration to be delivered hereunder to the holders of FCN
Common Stock, or into which shares of BANC ONE Capital Stock shall be converted
pursuant to the First Step Merger, other than as contemplated by this Agreement.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
9.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein; provided, however,
that after any approval of the transactions contemplated by this Agreement by
the respective stockholders of BANC ONE or FCN, there may not be, without
further approval of such stockholders, any extension or waiver of this Agreement
or any portion thereof which reduces the amount or changes the form of the
consideration to be delivered to the holders of FCN Common Stock hereunder, or
into which shares of BANC ONE Capital Stock shall be converted pursuant to the
First Step Merger, other than as contemplated by this Agreement. Any agreement
on the part of a party hereto to any such extension or waiver shall be valid
only if set forth in a written instrument signed on behalf of such party, but
such extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE X
GENERAL PROVISIONS
10.1 Closing. Subject to the terms and conditions of this Agreement and
the Option Agreements, the closing of the Second Step Merger (the "Closing")
will take place at 10:00 a.m. on a date and at a place to be specified by the
parties, which shall be no later than five business days after the satisfaction
or waiver (subject to applicable law) of the latest to occur of the conditions
set forth in Article VIII hereof,
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unless extended by mutual agreement of the parties (the "Closing Date").
10.2 Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement (other than the Option
Agreements and the Confidentiality Agreement, which shall terminate in
accordance with terms) shall survive the Effective Time, except for those
covenants and agreements contained herein and therein which by their terms apply
in whole or in part after the Effective Time.
10.3 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, provided, however, that the costs and expenses of
printing and mailing the Joint Proxy Statement, and all filing and other fees
paid to the SEC in connection with the Merger, shall be borne equally by BANC
ONE and FCN.
10.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to BANC ONE or Newco, to:
BANC ONE CORPORATION
100 East Broad Street
Columbus, Ohio 43271
Attn: General Counsel
Fax: (614) 248-2010
and
(b) if to FCN, to:
First Chicago NBD Corporation
One First National Plaza
Chicago, Illinois 60670
Attn: General Counsel
Fax: (312) 732-6393
10.5 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference
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shall be to a Section of or Exhibit or Schedule to this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". No provision of this Agreement shall
be construed to require FCN, BANC ONE, Newco or any of their respective
Subsidiaries or affiliates to take any action which would violate any applicable
law, rule or regulation.
10.6 Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
10.7 Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof other than the Option
Agreements and the Confidentiality Agreement.
10.8 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to any
applicable conflicts of law (except to the extent that mandatory provisions of
federal law or of the DGCL or OGCL are applicable).
10.9 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 without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting 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.
10.10 Publicity. Except as otherwise required by applicable law or the
rules of the NYSE, none of BANC ONE, Newco or FCN shall, or shall permit any of
its Subsidiaries to, issue or cause the publication of any press release or
other public announcement with respect to, or otherwise make any public
statement concerning, the transactions contemplated by this Agreement without
the consent of FCN, in the case of a proposed announcement or statement by BANC
ONE or Newco, or BANC ONE, in
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the case of a proposed announcement or statement by FCN, which consent shall not
be unreasonably withheld.
10.11 Assignment; Third Party Beneficiaries. Neither this Agreement nor
any of the rights, interests or obligations shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. Except as otherwise
specifically provided in Section 7.8, this Agreement (including the documents
and instruments referred to herein) is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
10.12 Certain Agreements of Newco. Newco hereby consents, effective as of
the First Effective Time, to be sued and served with process in the State of
Ohio and irrevocably appoints the Ohio Secretary as its agent to accept service
of process in any proceeding in the State of Ohio to enforce against it any
obligation of BANC ONE or to enforce the rights of a BANC ONE shareholder who
dissents from the First Step Merger pursuant to Section 1.6.
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IN WITNESS WHEREOF, BANC ONE, FCN and Newco have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of the
date first above written.
FIRST CHICAGO NBD CORPORATION BANC ONE CORPORATION
By: /s/ Verne G. Istock By: /s/ John B. McCoy
-------------------- --------------------
Chairman, President and Chairman and
Chief Executive Officer Chief Executive Officer
HORNET REORGANIZATION
CORPORATION
By: /s/ John B. McCoy
--------------------
Chairman and
Chief Executive Officer
EXHIBIT 99.1
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated April 10, 1998, between First Chicago
NBD Corporation, a Delaware corporation ("Issuer"), and BANC ONE CORPORATION, an
Ohio corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan
of Reorganization of even date herewith (the "Merger Agreement"), which
agreement has been executed by the parties hereto immediately prior to this
Stock Option Agreement (the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 57,150,376 fully paid and nonassessable shares of Issuer's Common Stock, par
value $1.00 per share ("Common Stock"), at a price of $94.00 per share (the
"Option Price"); provided, however, that in no event shall the number of shares
of Common Stock for which this Option is exercisable exceed 19.9% of the
Issuer's issued and outstanding shares of Common Stock without giving effect to
any shares subject to or issued pursuant to the Option. The number of shares of
Common Stock that may be received upon the exercise of the Option and the Option
Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are
either (i) issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement) or (ii) redeemed, repurchased,
retired or otherwise cease to be outstanding after the date of the Agreement,
the number of shares of Common Stock subject to the Option shall be increased or
decreased, as appropriate, so that, after such
<PAGE>
issuance, such number equals 19.9% of the number of shares of Common Stock then
issued and outstanding without giving effect to any shares subject or issued
pursuant to the Option. Nothing contained in this Section 1(b) or elsewhere in
this Agreement shall be deemed to authorize Issuer or Grantee to breach any
provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the
Option, in whole or part, and from time to time, if, but only if, both an
Initial Triggering Event (as hereinafter defined) and a Subsequent Triggering
Event (as hereinafter defined) shall have occurred prior to the occurrence of an
Exercise Termination Event (as hereinafter defined), provided that the Holder
shall have sent the written notice of such exercise (as provided in subsection
(e) of this Section 2) within 90 days following such Subsequent Triggering
Event. Each of the following shall be an "Exercise Termination Event": (i) the
Effective Time (as defined in the Merger Agreement) of the Merger; (ii)
termination of the Merger Agreement in accordance with the provisions thereof if
such termination occurs prior to the occurrence of an Initial Triggering Event,
except a termination by Grantee pursuant to Section 9.1(d) of the Merger
Agreement (unless the breach by Issuer giving rise to such right of termination
is non-volitional); or (iii) the passage of 12 months after termination of the
Merger Agreement if such termination follows the occurrence of an Initial
Triggering Event or is a termination by Grantee pursuant to Section 9.1(d) of
the Merger Agreement (unless the breach by Issuer giving rise to such right of
termination is non-volitional) (provided that if an Initial Triggering Event
continues or occurs beyond such termination and prior to the passage of such
12-month period, the Exercise Termination Event shall be 12 months from the
expiration of the Last Triggering Event but in no event more than 18 months
after such termination). The "Last Triggering Event" shall mean the last Initial
Triggering Event to expire. The term "Holder" shall mean the holder or holders
of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer
Subsidiary"), without having received Grantee's prior written consent,
shall have entered into an agreement to engage in an Acquisition
Transaction (as hereinafter defined) with any person (the term "person"
for purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the rules and regulations thereunder) other
than Grantee or any of its Subsidiaries (each a "Grantee
<PAGE>
Subsidiary") or the Board of Directors of Issuer shall have
recommended that the stockholders of Issuer approve or accept
any Acquisition Transaction. For purposes of this Agreement,
"Acquisition Transaction" shall mean (w) a merger or consolidation,
or any similar transaction, involving Issuer or any Significant
Subsidiary (as defined in Rule 1-02 of Regulation S-X
promulgated by the Securities and Exchange Commission (the "SEC")) of
Issuer, (x) a purchase, lease or other acquisition or assumption of all or
a substantial portion of the assets or deposits of Issuer or any
Significant Subsidiary of Issuer, (y) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise)
of securities representing 10% or more of the voting power of Issuer, or
(z) any substantially similar transaction; provided, however, that in no
event shall any merger, consolidation, purchase or similar transaction
involving only the Issuer and one or more of its Subsidiaries or involving
only any two or more of such Subsidiaries, be deemed to be an Acquisition
Transaction, provided that any such transaction is not entered into in
violation of the terms of the Merger Agreement;
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended,
proposed or publicly announced its intention to authorize, recommend or
propose, to engage in an Acquisition Transaction with any person other
than Grantee or a Grantee Subsidiary, or the Board of Directors of Issuer
shall have publicly withdrawn or modified, or publicly announced its
interest to withdraw or modify, in any manner adverse to Grantee, its
recommendation that the stockholders of Issuer approve the transactions
contemplated by the Merger Agreement in anticipation of engaging in an
Acquisition Transaction;
(iii) Any person other than Grantee, any Grantee Subsidiary or
any Issuer Subsidiary acting in a fiduciary capacity in the ordinary
course of its business shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 10% or more of the outstanding
shares of Common Stock (the term "beneficial ownership" for purposes of
this Agreement having the meaning assigned thereto in Section 13(d) of the
1934 Act, and the rules and regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its stockholders by
public announcement or written communication that is or becomes the
subject of
<PAGE>
public disclosure to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to Issuer or
its stockholders to engage in an Acquisition Transaction, Issuer shall
have breached any covenant or obligation contained in the Merger Agreement
and such breach (x) would entitle Grantee to terminate the Merger
Agreement and (y) shall not have been cured prior to the Notice Date (as
defined below); or
(vi) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has given its
prior written consent, shall have filed an application or notice with the
Federal Reserve Board, or other federal or state bank regulatory
authority, which application or notice has been accepted for processing,
for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of
the following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial ownership of
20% or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described
in paragraph (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event of
which it has notice (together, a "Triggering Event"), it being understood that
the giving of such notice by Issuer shall not be a condition to the right of the
Holder to exercise the Option.
(e) In the event the Holder is entitled to and 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
shares it will purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 60 business days from the Notice
Date for the closing of such purchase (the "Closing Date"); provided that if
prior notification to or approval of the Federal Reserve Board or any other
regulatory agency is required in connection with such purchase, the Holder shall
promptly file the required notice or application for approval and shall
expeditiously process
<PAGE>
the same and the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section
2, the Holder shall pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of shares of Common Stock purchased by the Holder and, if the Option
should be exercised in part only, a new Option evidencing the rights of the
Holder thereof to purchase the balance of the shares purchasable hereunder, and
the Holder shall deliver to Issuer a copy of this Agreement and a letter
agreeing that the Holder will not offer to sell or otherwise dispose of such
shares in violation of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under
the Securities Act of 1933, as amended. A copy of such agreement is
on file at the principal office of Issuer and will be provided to
the holder hereof without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder 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, to the effect that such legend is not required for
purposes of the
<PAGE>
1933 Act; (ii) the reference to the provisions to this Agreement in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the shares have been sold or transferred in compliance with the
provisions of this Agreement and under circumstances that do not require the
retention of such reference; and (iii) the legend shall be removed in its
entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend as may be
required by law.
(i) Upon the giving by the Holder to Issuer of the written notice
of exercise of the Option provided for under subsection (e) of this Section 2
and the tender of the applicable purchase price in immediately available funds,
the Holder shall be deemed to be the holder of record of the shares of Common
Stock issuable upon such exercise, notwithstanding that the stock transfer books
of Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. sections. 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHCA"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or notice to the Federal
Reserve Board or to any state regulatory authority is necessary before the
Option may be exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the Federal Reserve
Board or such state regulatory authority as they may require) in order to permit
the Holder to exercise the Option and Issuer duly and effectively to issue
shares of Common Stock pursuant hereto;
<PAGE>
and (iv) promptly to take all action provided herein to protect the rights of
the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, 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,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
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.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject to adjustment from
time to time as provided in this Section 5. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares, distributions on or in respect of the Common Stock that
would be prohibited under the terms of the Merger Agreement, or the like, the
type and number of shares of Common Stock purchasable upon exercise hereof and
the Option Price shall be appropriately adjusted in such manner as shall fully
preserve the economic benefits provided hereunder and proper provision shall be
made in any agreement governing any such transaction to provide for such proper
adjustment and the full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within 90 days of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a
<PAGE>
shelf registration statement under the 1933 Act covering this Option and any
shares issued and issuable pursuant to this Option and shall use its reasonable
best efforts to cause such registration statement to become effective and remain
current in order to permit the sale or other disposition of this Option and any
shares of Common Stock issued upon total or partial exercise of this Option
("Option Shares") in accordance with any plan of disposition requested by
Grantee. Issuer will use its reasonable best efforts to cause such registration
statement first to become effective and then to remain effective for such period
not in excess of 180 days from the day such registration statement first becomes
effective or such shorter time as may be reasonably necessary to effect such
sales or other dispositions. Grantee shall have the right to demand two such
registrations. The foregoing notwithstanding, if, at the time of any request by
Grantee for registration of the Option or Option Shares as provided above,
Issuer is in registration with respect to an underwritten public offering of
shares of Common Stock, and if in the good faith judgment of the managing
underwriter or managing underwriters, or, if none, the sole underwriter or
underwriters, of such offering the inclusion of the Holder's Option or Option
Shares would interfere with the successful marketing of the shares of Common
Stock offered by Issuer, the number of Option Shares otherwise to be covered in
the registration statement contemplated hereby may be reduced; and provided,
however, that after any such required reduction the number of Option Shares to
be included in such offering for the account of the Holder shall constitute at
least 25% of the total number of shares to be sold by the Holder and Issuer in
the aggregate; and provided further, however, that if such reduction occurs,
then the Issuer shall file a registration statement for the balance as promptly
as practical and no reduction shall thereafter occur. Each such Holder shall
provide all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. If requested by any such Holder in
connection with such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in secondary offering
underwriting agreements for the Issuer. Upon receiving any request under this
Section 6 from any Holder, Issuer agrees to send a copy thereof to any other
person known to Issuer to be entitled to registration rights under this Section
6, in each case by promptly mailing the same, postage prepaid, to the address of
record of the persons entitled to receive such copies. Notwithstanding anything
to the contrary contained herein, in no event shall Issuer be obligated to
effect more than two registrations pursuant to this Section 6 by reason of the
fact
<PAGE>
that there shall be more than one Grantee as a result of any assignment or
division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event
(as defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the "Option Repurchase Price") equal to
the amount by which (A) the Market/Offer Price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which this Option may
then be exercised and (ii) at the request of the owner of Option Shares from
time to time (the "Owner"), delivered within 90 days of such occurrence (or such
later period as provided in Section 10), Issuer shall repurchase such number of
the Option Shares from the Owner as the Owner shall designate at a price (the
"Option Share Repurchase Price") equal to the Market/Offer Price multiplied by
the number of Option Shares so designated. The term "Market/Offer Price" shall
mean the highest of (i) the price per share of Common Stock at which a tender
offer or exchange offer therefor has been made, (ii) the price per share of
Common Stock to be paid by any third party pursuant to an agreement with Issuer,
(iii) the highest closing price for shares of Common Stock within the six-month
period immediately preceding the date the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the required repurchase
of Option Shares, as the case may be, or (iv) in the event of a sale of all or a
substantial portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Issuer
as determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to the
Issuer, divided by the number of shares of Common Stock of Issuer outstanding at
the time of such sale. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or Owner, as the case may be, and
reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares pursuant
to this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. Within the latter to occur of (x) five business days after the
surrender of the Option and/or certificates
<PAGE>
representing Option Shares and the receipt of such notice or notices relating
thereto and (y) the time that is immediately prior to the occurrence of a
Repurchase Event, Issuer shall deliver or cause to be delivered to the Holder
the Option Repurchase Price and/or to the Owner the Option Share Repurchase
Price therefor or the portion thereof, if any, that Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law
or regulation from repurchasing the Option and/or the Option Shares in full,
Issuer shall immediately so notify the Holder and/or the Owner and thereafter
deliver or cause to be delivered, from time to time, to the Holder and/or the
Owner, as appropriate, the portion of the Option Repurchase Price and the Option
Share Repurchase Price, respectively, that it is no longer prohibited from
delivering, within five business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to paragraph (b) of this Section 7
is prohibited under applicable law or regulation from delivering to the Holder
and/or the Owner, as appropriate, the Option Repurchase Price and the Option
Share Repurchase Price, respectively, in full (and Issuer hereby undertakes to
use its best efforts to obtain all required regulatory and legal approvals and
to file any required notices, in each case as promptly as practicable in order
to accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to the extent
of the prohibition, whereupon, in the latter case, Issuer shall promptly (i)
deliver to the Holder and/or the Owner, as appropriate, that portion of the
Option Repurchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Stock Option Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock Option
Agreement was exercisable at the time of delivery of the notice of repurchase by
a fraction, the numerator of which is the Option Repurchase Price less the
portion thereof theretofore delivered to the Holder and the denominator of which
is the Option Repurchase Price, or (B) to the Owner, a certificate for the
Option Shares it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall be
deemed to have occurred (i) upon the consummation of any merger, consolidation
or similar transaction involving Issuer or any purchase, lease or other
acquisition of all or a substantial portion of the assets of Issuer, other than
any such transaction which would not constitute an
<PAGE>
Acquisition Transaction pursuant to the provisos to Section 2(b)(i) hereof or
(ii) upon the acquisition by any person of beneficial ownership of 50% or more
of the then outstanding shares of Common Stock, provided that no such event
shall constitute a Repurchase Event unless a Subsequent Triggering Event shall
have occurred prior to an Exercise Termination Event. The parties hereto agree
that Issuer's obligations to repurchase the Option or Option Shares under this
Section 7 shall not terminate upon the occurrence of an Exercise Termination
Event unless no Subsequent Triggering Event shall have occurred prior to the
occurrence of an Exercise Termination Event.
8. (a) In the event that prior to an Exercise Termination Event,
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 then outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger represent less than 50% of the outstanding voting shares
and voting share equivalents of the merged company, or (iii) to sell or
otherwise transfer all or substantially all of its assets 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 provision 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 the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person that controls
the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(A) "Acquiring Corporation" shall mean (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 person, and (iii) the transferee of all or substantially all of
Issuer's assets.
(B) "Substitute Common Stock" shall mean the common stock
issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
<PAGE>
(3) "Assigned Value" shall mean the Market/Offer Price, as
defined in Section 7.
(4) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock 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
Issuer is the issuer of the Substitute Option, the Average Price shall be
computed with respect to a share of common stock issued by the person
merging into Issuer or by any company which controls or is controlled by
such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement, 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 is equal to the Assigned Value multiplied
by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Option
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock for which the Option is then exercisable and the
denominator of which shall be 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 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 shares of Substitute Common Stock outstanding prior to exercise but for
this clause (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
clause (e) over (ii) the value of the Substitute Option after giving effect to
the limitation in this clause (e). This difference in value shall be determined
by a nationally recognized investment
<PAGE>
banking firm selected by the Holder or the Owner, as the case may be, and
reasonably acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner,
as the case may be, may exercise its respective right to require the Substitute
Option Issuer to repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose to the Substitute
Option Issuer, at its principal office, the agreement for such Substitute Option
(or, in the absence of such an agreement, a copy of this Agreement) and
certificates for Substitute Shares accompanied by a written notice or notices
stating that the Substitute Option Holder or the Substitute Share Owner, as the
case may be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the provisions
of this Section 9. As promptly as practicable, and in any event within five
business days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute
<PAGE>
Share Owner the Substitute Share Repurchase Price therefor or, in either case,
the portion thereof which the Substitute Option Issuer is not then prohibited
under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited
under applicable law or regulation from repurchasing the Substitute Option
and/or the Substitute Shares in part or in full, the Substitute Option Issuer
following a request for repurchase pursuant to this Section 9 shall immediately
so notify the Substitute Option Holder and/or the Substitute Share Owner and
thereafter deliver or cause to be delivered, from time to time, to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the
portion of the Substitute Share Repurchase Price, respectively, which it is no
longer prohibited from delivering, within five business days after the date on
which the Substitute Option Issuer is no longer so prohibited; provided,
however, that if the Substitute Option Issuer is at any time after delivery of a
notice of repurchase pursuant to subsection (b) of this Section 9 prohibited
under applicable law or regulation from delivering to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Issuer shall use its best efforts to obtain all
required regulatory and legal approvals, in each case as promptly as
practicable, in order to accomplish such repurchase), the Substitute Option
Holder or Substitute Share Owner may revoke its notice of repurchase of the
Substitute Option or the Substitute Shares either in whole or to the extent of
the prohibition, whereupon, in the latter case, the Substitute Option Issuer
shall promptly (i) deliver to the Substitute Option Holder or Substitute Share
Owner, as appropriate, that portion of the Substitute Option Repurchase Price or
the Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Common Shares it is then so prohibited
from repurchasing.
<PAGE>
10. The 90-day period for exercise of certain rights under Sections
2, 6, 7 and 13 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, for the expiration of all
statutory waiting periods; and (ii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including if required redeeming
all of the Rights or amending or terminating the Rights Agreement) so that the
entering into of this Option Agreement, the acquisition of shares of Common
Stock hereunder and the other transactions contemplated hereby do not and will
not result in the grant of any rights to any person under the Rights Agreement
or enable or require the Rights to be exercised, distributed or triggered.
12. Grantee hereby represents and warrants to Issuer that:
(a) 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
<PAGE>
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.
(b) The Option is not being, and any shares of Common Stock or
other securities acquired by Grantee upon exercise of the Option will not be,
acquired 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.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the date 15 days
following the date on which the Federal Reserve Board approves an application by
Grantee under the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (iii) an assignment to a single party (e.g., a broker or investment
banker) for the purpose of conducting a widely dispersed public distribution on
Grantee's behalf, or (iv) any other manner approved by the Federal Reserve
Board.
14. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation making application to list the
shares of Common Stock issuable hereunder on the New York Stock Exchange upon
official notice of issuance and applying to the Federal Reserve Board under the
BHCA for approval to acquire the shares issuable hereunder, but Grantee shall
not be obligated to apply to state banking authorities for approval to acquire
the shares of Common Stock issuable hereunder until such time, if ever, as it
deems appropriate to do so.
15. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief.
<PAGE>
16. If any term, provision, covenant or restriction contained in
this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in 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 Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5
hereof), it is the express intention of Issuer to allow the Holder to acquire or
to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
18. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof
(except to the extent that mandatory provisions of federal law, the DGCL or the
OGCL apply).
19. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
20. Except as otherwise expressly provided herein, 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.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing
<PAGE>
in this Agreement, expressed or implied, is intended to confer upon any party,
other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
FIRST CHICAGO NBD CORPORATION
By: /s/ Verne G. Istock
---------------------------
Name: Verne G. Istock
Title: Chairman, President
and Chief Executive Officer
BANC ONE CORPORATION
By: /s/ John B. McCoy
---------------------------
Name: John B. McCoy
Title: Chairman and Chief
Executive Officer
EXHIBIT 99.2
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated April 10, 1998, between BANC ONE
CORPORATION, an Ohio corporation ("Issuer"), and First Chicago NBD Corporation,
a Delaware corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan
of Reorganization of even date herewith (the "Merger Agreement"), which
agreement has been executed by the parties hereto immediately prior to this
Stock Option Agreement (the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 128,122,944 fully paid and nonassessable shares of Issuer's Common Stock,
without par value ("Common Stock"), at a price of $61.75 per share (the "Option
Price"); provided, however, that in no event shall the number of shares of
Common Stock for which this Option is exercisable exceed 19.9% of the Issuer's
issued and outstanding shares of Common Stock without giving effect to any
shares subject to or issued pursuant to the Option. The number of shares of
Common Stock that may be received upon the exercise of the Option and the Option
Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are
either (i) issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement) or (ii) redeemed, repurchased,
retired or otherwise cease to be outstanding after the date of the Agreement,
the number of shares of Common Stock subject to the Option shall be increased or
decreased, as appropriate, so that, after such issuance, such number equals
19.9% of the number of shares of
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Common Stock then issued and outstanding without giving effect to any shares
subject or issued pursuant to the Option. Nothing contained in this Section 1(b)
or elsewhere in this Agreement shall be deemed to authorize Issuer or Grantee to
breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the
Option, in whole or part, and from time to time, if, but only if, both an
Initial Triggering Event (as hereinafter defined) and a Subsequent Triggering
Event (as hereinafter defined) shall have occurred prior to the occurrence of an
Exercise Termination Event (as hereinafter defined), provided that the Holder
shall have sent the written notice of such exercise (as provided in subsection
(e) of this Section 2) within 90 days following such Subsequent Triggering
Event. Each of the following shall be an "Exercise Termination Event": (i) the
Effective Time (as defined in the Merger Agreement) of the Merger; (ii)
termination of the Merger Agreement in accordance with the provisions thereof if
such termination occurs prior to the occurrence of an Initial Triggering Event,
except a termination by Grantee pursuant to Section 9.1(d) of the Merger
Agreement (unless the breach by Issuer giving rise to such right of termination
is non-volitional); or (iii) the passage of 12 months after termination of the
Merger Agreement if such termination follows the occurrence of an Initial
Triggering Event or is a termination by Grantee pursuant to Section 9.1(d) of
the Merger Agreement (unless the breach by Issuer giving rise to such right of
termination is non-volitional) (provided that if an Initial Triggering Event
continues or occurs beyond such termination and prior to the passage of such
12-month period, the Exercise Termination Event shall be 12 months from the
expiration of the Last Triggering Event but in no event more than 18 months
after such termination). The "Last Triggering Event" shall mean the last Initial
Triggering Event to expire. The term "Holder" shall mean the holder or holders
of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer
Subsidiary"), without having received Grantee's prior written consent,
shall have entered into an agreement to engage in an Acquisition
Transaction (as hereinafter defined) with any person (the term "person"
for purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the rules and regulations thereunder) other
than Grantee or any of its Subsidiaries (each a "Grantee Subsidiary") or
the Board of Directors of Issuer shall
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have recommended that the stockholders of Issuer approve or
accept any Acquisition Transaction. For purposes of this Agreement,
"Acquisition Transaction" shall mean (w) a merger or consolidation,
or any similar transaction, involving Issuer or any Significant
Subsidiary (as defined in Rule 1-02 of Regulation S-X promulgated
by the Securities and Exchange Commission (the "SEC")) of Issuer,
(x) a purchase, lease or other acquisition or assumption of all or
a substantial portion of the assets or deposits of Issuer or any
Significant Subsidiary of Issuer, (y) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise)
of securities representing 10% or more of the voting power of Issuer, or
(z) any substantially similar transaction; provided, however, that in no
event shall any merger, consolidation, purchase or similar transaction
involving only the Issuer and one or more of its Subsidiaries or involving
only any two or more of such Subsidiaries, be deemed to be an Acquisition
Transaction, provided that any such transaction is not entered into in
violation of the terms of the Merger Agreement;
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended,
proposed or publicly announced its intention to authorize, recommend or
propose, to engage in an Acquisition Transaction with any person other
than Grantee or a Grantee Subsidiary, or the Board of Directors of Issuer
shall have publicly withdrawn or modified, or publicly announced its
interest to withdraw or modify, in any manner adverse to Grantee, its
recommendation that the stockholders of Issuer approve the transactions
contemplated by the Merger Agreement in anticipation of engaging in an
Acquisition Transaction;
(iii) Any person other than Grantee, any Grantee Subsidiary or
any Issuer Subsidiary acting in a fiduciary capacity in the ordinary
course of its business shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 10% or more of the outstanding
shares of Common Stock (the term "beneficial ownership" for purposes of
this Agreement having the meaning assigned thereto in Section 13(d) of the
1934 Act, and the rules and regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its stockholders by
public announcement or written communication that is or becomes the
subject of public disclosure to engage in an Acquisition Transaction;
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(v) After an overture is made by a third party to Issuer or
its stockholders to engage in an Acquisition Transaction, Issuer shall
have breached any covenant or obligation contained in the Merger Agreement
and such breach (x) would entitle Grantee to terminate the Merger
Agreement and (y) shall not have been cured prior to the Notice Date (as
defined below); or
(vi) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has given its
prior written consent, shall have filed an application or notice with the
Federal Reserve Board, or other federal or state bank regulatory
authority, which application or notice has been accepted for processing,
for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of
the following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial ownership of
20% or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described
in paragraph (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event of
which it has notice (together, a "Triggering Event"), it being understood that
the giving of such notice by Issuer shall not be a condition to the right of the
Holder to exercise the Option.
(e) In the event the Holder is entitled to and 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
shares it will purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 60 business days from the Notice
Date for the closing of such purchase (the "Closing Date"); provided that if
prior notification to or approval of the Federal Reserve Board or any other
regulatory agency is required in connection with such purchase, the Holder shall
promptly file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been
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terminated or such approvals have been obtained and any requisite waiting period
or periods shall have passed. Any exercise of the Option shall be deemed to
occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section
2, the Holder shall pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of shares of Common Stock purchased by the Holder and, if the Option
should be exercised in part only, a new Option evidencing the rights of the
Holder thereof to purchase the balance of the shares purchasable hereunder, and
the Holder shall deliver to Issuer a copy of this Agreement and a letter
agreeing that the Holder will not offer to sell or otherwise dispose of such
shares in violation of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under
the Securities Act of 1933, as amended. A copy of such agreement is
on file at the principal office of Issuer and will be provided to
the holder hereof without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder 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, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions to this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares
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have been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written notice
of exercise of the Option provided for under subsection (e) of this Section 2
and the tender of the applicable purchase price in immediately available funds,
the Holder shall be deemed to be the holder of record of the shares of Common
Stock issuable upon such exercise, notwithstanding that the stock transfer books
of Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. ss. 18a and regulations promulgated
thereunder and (y) in the event, under the Bank Holding Company Act of 1956, as
amended (the "BHCA"), or the Change in Bank Control Act of 1978, as amended, or
any state banking law, prior approval of or notice to the Federal Reserve Board
or to any state regulatory authority is necessary before the Option may be
exercised, cooperating fully with the Holder in preparing such applications or
notices and providing such information to the Federal Reserve Board or such
state regulatory authority as they may require) in order to permit the Holder to
exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution.
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4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, 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,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
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.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject to adjustment from
time to time as provided in this Section 5. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares, distributions on or in respect of the Common Stock that
would be prohibited under the terms of the Merger Agreement, or the like, the
type and number of shares of Common Stock purchasable upon exercise hereof and
the Option Price shall be appropriately adjusted in such manner as shall fully
preserve the economic benefits provided hereunder and proper provision shall be
made in any agreement governing any such transaction to provide for such proper
adjustment and the full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within 90 days of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a shelf registration statement under the 1933 Act covering
this Option and any shares issued and issuable pursuant to this Option and shall
use its reasonable best efforts to cause
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such registration statement to become effective and remain current in order to
permit the sale or other disposition of this Option and any shares of Common
Stock issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement first to become
effective and then to remain effective for such period not in excess of 180 days
from the day such registration statement first becomes effective or such shorter
time as may be reasonably necessary to effect such sales or other dispositions.
Grantee shall have the right to demand two such registrations. The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
the Option or Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering of shares of Common Stock, and if in
the good faith judgment of the managing underwriter or managing underwriters,
or, if none, the sole underwriter or underwriters, of such offering the
inclusion of the Holder's Option or Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by Issuer, the number
of Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; and provided, however, that after any such
required reduction the number of Option Shares to be included in such offering
for the account of the Holder shall constitute at least 25% of the total number
of shares to be sold by the Holder and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then the Issuer shall file a
registration statement for the balance as promptly as practical and no reduction
shall thereafter occur. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in secondary offering underwriting agreements for the
Issuer. Upon receiving any request under this Section 6 from any Holder, Issuer
agrees to send a copy thereof to any other person known to Issuer to be entitled
to registration rights under this Section 6, in each case by promptly mailing
the same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained herein,
in no event shall Issuer be obligated to effect more than two registrations
pursuant to this Section 6 by reason of the fact that there shall be more than
one Grantee as a result of any assignment or division of this Agreement.
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7. (a) Immediately prior to the occurrence of a Repurchase Event
(as defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the "Option Repurchase Price") equal to
the amount by which (A) the Market/Offer Price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which this Option may
then be exercised and (ii) at the request of the owner of Option Shares from
time to time (the "Owner"), delivered within 90 days of such occurrence (or such
later period as provided in Section 10), Issuer shall repurchase such number of
the Option Shares from the Owner as the Owner shall designate at a price (the
"Option Share Repurchase Price") equal to the Market/Offer Price multiplied by
the number of Option Shares so designated. The term "Market/Offer Price" shall
mean the highest of (i) the price per share of Common Stock at which a tender
offer or exchange offer therefor has been made, (ii) the price per share of
Common Stock to be paid by any third party pursuant to an agreement with Issuer,
(iii) the highest closing price for shares of Common Stock within the six-month
period immediately preceding the date the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the required repurchase
of Option Shares, as the case may be, or (iv) in the event of a sale of all or a
substantial portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Issuer
as determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to the
Issuer, divided by the number of shares of Common Stock of Issuer outstanding at
the time of such sale. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or Owner, as the case may be, and
reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares pursuant
to this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. Within the latter to occur of (x) five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto and (y) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer shall
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deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof, if any, that Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law
or regulation from repurchasing the Option and/or the Option Shares in full,
Issuer shall immediately so notify the Holder and/or the Owner and thereafter
deliver or cause to be delivered, from time to time, to the Holder and/or the
Owner, as appropriate, the portion of the Option Repurchase Price and the Option
Share Repurchase Price, respectively, that it is no longer prohibited from
delivering, within five business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to paragraph (b) of this Section 7
is prohibited under applicable law or regulation from delivering to the Holder
and/or the Owner, as appropriate, the Option Repurchase Price and the Option
Share Repurchase Price, respectively, in full (and Issuer hereby undertakes to
use its best efforts to obtain all required regulatory and legal approvals and
to file any required notices, in each case as promptly as practicable in order
to accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to the extent
of the prohibition, whereupon, in the latter case, Issuer shall promptly (i)
deliver to the Holder and/or the Owner, as appropriate, that portion of the
Option Repurchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Stock Option Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock Option
Agreement was exercisable at the time of delivery of the notice of repurchase by
a fraction, the numerator of which is the Option Repurchase Price less the
portion thereof theretofore delivered to the Holder and the denominator of which
is the Option Repurchase Price, or (B) to the Owner, a certificate for the
Option Shares it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall be
deemed to have occurred (i) upon the consummation of any merger, consolidation
or similar transaction involving Issuer or any purchase, lease or other
acquisition of all or a substantial portion of the assets of Issuer, other than
any such transaction which would not constitute an Acquisition Transaction
pursuant to the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition
by any person of beneficial ownership of 50% or more of the then outstanding
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shares of Common Stock, provided that no such event shall constitute a
Repurchase Event unless a Subsequent Triggering Event shall have occurred prior
to an Exercise Termination Event. The parties hereto agree that Issuer's
obligations to repurchase the Option or Option Shares under this Section 7 shall
not terminate upon the occurrence of an Exercise Termination Event unless no
Subsequent Triggering Event shall have occurred prior to the occurrence of an
Exercise Termination Event.
8. (a) In the event that prior to an Exercise Termination Event,
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 then outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger represent less than 50% of the outstanding voting shares
and voting share equivalents of the merged company, or (iii) to sell or
otherwise transfer all or substantially all of its assets 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 provision 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 the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person that controls
the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(A) "Acquiring Corporation" shall mean (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 person, and (iii) the transferee of all or substantially all of
Issuer's assets.
(B) "Substitute Common Stock" shall mean the common stock
issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer Price, as
defined in Section 7.
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(4) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock 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
Issuer is the issuer of the Substitute Option, the Average Price shall be
computed with respect to a share of common stock issued by the person
merging into Issuer or by any company which controls or is controlled by
such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement, 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 is equal to the Assigned Value multiplied
by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Option
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock for which the Option is then exercisable and the
denominator of which shall be 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 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 shares of Substitute Common Stock outstanding prior to exercise but for
this clause (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
clause (e) over (ii) the value of the Substitute Option after giving effect to
the limitation in this clause (e). This difference in value shall be determined
by a nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.
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(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner,
as the case may be, may exercise its respective right to require the Substitute
Option Issuer to repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose to the Substitute
Option Issuer, at its principal office, the agreement for such Substitute Option
(or, in the absence of such an agreement, a copy of this Agreement) and
certificates for Substitute Shares accompanied by a written notice or notices
stating that the Substitute Option Holder or the Substitute Share Owner, as the
case may be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the provisions
of this Section 9. As promptly as practicable, and in any event within five
business days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or, in either case, the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
-13-
<PAGE>
(c) To the extent that the Substitute Option Issuer is prohibited
under applicable law or regulation from repurchasing the Substitute Option
and/or the Substitute Shares in part or in full, the Substitute Option Issuer
following a request for repurchase pursuant to this Section 9 shall immediately
so notify the Substitute Option Holder and/or the Substitute Share Owner and
thereafter deliver or cause to be delivered, from time to time, to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the
portion of the Substitute Share Repurchase Price, respectively, which it is no
longer prohibited from delivering, within five business days after the date on
which the Substitute Option Issuer is no longer so prohibited; provided,
however, that if the Substitute Option Issuer is at any time after delivery of a
notice of repurchase pursuant to subsection (b) of this Section 9 prohibited
under applicable law or regulation from delivering to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Issuer shall use its best efforts to obtain all
required regulatory and legal approvals, in each case as promptly as
practicable, in order to accomplish such repurchase), the Substitute Option
Holder or Substitute Share Owner may revoke its notice of repurchase of the
Substitute Option or the Substitute Shares either in whole or to the extent of
the prohibition, whereupon, in the latter case, the Substitute Option Issuer
shall promptly (i) deliver to the Substitute Option Holder or Substitute Share
Owner, as appropriate, that portion of the Substitute Option Repurchase Price or
the Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Common Shares it is then so prohibited
from repurchasing.
10. The 90-day period for exercise of certain rights under Sections
2, 6, 7 and 13 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, for the expiration of all
statutory waiting periods; and (ii) to the extent necessary
-14-
<PAGE>
to avoid liability under Section 16(b) of the 1934 Act by reason of such
exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including if required redeeming
all of the Rights or amending or terminating the Rights Agreement) so that the
entering into of this Option Agreement, the acquisition of shares of Common
Stock hereunder and the other transactions contemplated hereby do not and will
not result in the grant of any rights to any person under the Rights Agreement
or enable or require the Rights to be exercised, distributed or triggered.
12. Grantee hereby represents and warrants to Issuer that:
(a) 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.
-15-
<PAGE>
(b) The Option is not being, and any shares of Common Stock or
other securities acquired by Grantee upon exercise of the Option will not be,
acquired 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.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the date 15 days
following the date on which the Federal Reserve Board approves an application by
Grantee under the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (iii) an assignment to a single party (e.g., a broker or investment
banker) for the purpose of conducting a widely dispersed public distribution on
Grantee's behalf, or (iv) any other manner approved by the Federal Reserve
Board.
14. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation making application to list the
shares of Common Stock issuable hereunder on the New York Stock Exchange upon
official notice of issuance and applying to the Federal Reserve Board under the
BHCA for approval to acquire the shares issuable hereunder, but Grantee shall
not be obligated to apply to state banking authorities for approval to acquire
the shares of Common Stock issuable hereunder until such time, if ever, as it
deems appropriate to do so.
15. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief.
16. If any term, provision, covenant or restriction contained in
this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to
-16-
<PAGE>
be invalid, void or unenforceable, the remainder of the terms, provisions and
covenants and restrictions contained in 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 Holder is not
permitted to acquire, or Issuer is not permitted to repurchase pursuant to
Section 7, the full number of shares of Common Stock provided in Section 1(a)
hereof (as adjusted pursuant to Section 1(b) or 5 hereof), it is the express
intention of Issuer to allow the Holder to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
18. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof
(except to the extent that mandatory provisions of federal law, the DGCL or the
OGCL apply).
19. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
20. Except as otherwise expressly provided herein, 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.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their
-17-
<PAGE>
respective successors except as assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
22. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
-18-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.
BANC ONE CORPORATION
By: /s/ John B. McCoy
-------------------------
Name: John B. McCoy
Title: Chairman and Chief
Executive Officer
FIRST CHICAGO NBD CORPORATION
By: /s/ Verne G. Istock
-------------------------
Name: Verne G. Istock
Title: Chairman, President
and Chief Executive Officer
EXHIBIT 99.3
BANC ONE CORPORATION LETTERHEAD
For further information contact:
BANC ONE: John A. Russel (614) 248-5989
Holly Hobson (614) 248-1280
First Chicago NBD: Tom Kelly (312) 732-7007
Harry Hallowell (312) 732-4812
FOR RELEASE: April 13, 1998
BANC ONE AND FIRST CHICAGO NBD AGREE TO MERGE
BANC ONE CORPORATION (NYSE:ONE) and FIRST CHICAGO NBD CORPORATION (NYSE:FCN)
announced today a merger of equals, forming one of the country's largest
financial institutions. The company will be called BANC ONE CORPORATION, one of
the strongest brand names in America. Its headquarters will be in Chicago. The
announcement was made by John B. McCoy, Chairman and Chief Executive Officer of
BANC ONE, and Verne G. Istock, Chairman, President and Chief Executive Officer
of First Chicago NBD.
Highlights of the new BANC ONE include:
- A premier national retail and business banking franchise, and the
largest in the Midwest
- No. 2 credit card issuer with $60 billion in managed receivables
- No. 1 lender to small business
- An investment management business with more than $100 billion in assets
under management
- More than 2,000 offices nationwide
- Total managed assets of $279 billion
- Nearly $19 billion of common equity
- Market capitalization of approximately $72 billion
McCoy said, "This merger leverages the many strengths of both companies to
create a powerful national banking franchise. With greater economies of scale
and skill, we will be an even stronger player in the financial services
industry. We will be able to enhance our technological capabilities and will be
a major competitive force in credit cards, retail and business banking across
the country."
Istock added, "This combination is a win-win proposition for our shareholders,
employees and customers. Our earnings growth potential and financial returns
will be among the strongest of the nation's financial institutions.
(over)
<PAGE>
BANC ONE/First Chicago NBD: Page 2
The terms of the agreement include:
- John B. McCoy will become President and Chief Executive Officer of the
combined company. Verne G. Istock will become Chairman. Vice Chairmen of the
new BANC ONE will be Richard J. Lehmann, currently President and Chief
Operating Officer of BANC ONE, and David J. Vitale, now Vice Chairman of
First Chicago NBD.
- The new Board of Directors will total 22 - 11 from each company - including
the four individuals listed above.
- Common shareholders of First Chicago NBD will receive 1.62 shares of BANC
ONE common stock for each share of First Chicago NBD. The agreement contains
no collars and no walkways, and each company has granted the other a 19.9%
stock option.
- Current BANC ONE shareholders will own approximately 60% of the common
equity of the new company and First Chicago NBD shareholders approximately
40%.
- The merger will be accounted for as a pooling of interests; First Chicago
NBD's stock repurchase program has been terminated.
- Pending approvals, the merger is targeted to be completed during the fourth
quarter of 1998.
The new company expects synergies of $1.2 billion, composed of $930 million in
annual cost savings and revenue increases of $275 million. The transaction is
expected to be accretive to earnings per share in 1999. The restructuring charge
for severance payments, facilities writedowns and other merger-related costs is
estimated to be $1.25 billion.
BANC ONE CORPORATION had managed total assets of $147.0 billion, total assets of
$115.9 billion, and common equity of $10.2 billion at December 31, 1997. BANC
ONE operates more than 1,300 banking centers in 12 states and more than 7,750
cash dispensing and automated teller machines in 49 states. BANC ONE owns
several additional corporations that engage in a full range of financial
services. Information about BANC ONE's financial results and its products can be
accessed on the Internet at: http://www.bankone.com; through InvestQuest at:
http://www.investquest.com; or through Fax-on-demand at: (614) 844-3860.
First Chicago NBD had managed total assets of $122.7 billion, total assets of
$114.1 billion and common equity of $7.8 billion at December 31, 1997. First
Chicago NBD operates more than 650 banking branches, 1,400 automated teller
machines and 14 international offices. Information about First Chicago NBD's
financial results and its products can be accessed on the Internet at
http://www.fcnbd.com, or through First Chicago NBD Shareholder Direct at
1-888-FCN-FACT.
#
EXHIBIT 99.4
BANC ONE CORPORATION
FIRST CHICAGO NBD CORPORATION
Merger Presentation
April 13, 1998
<PAGE>
+------------------------------------------------------------------------------+
1
BANC ONE CORPORATION
First Chicago NBD Corporation
MERGER PRESENTATION
April 13, 1998
+------------------------------------------------------------------------------+
+------------------------------------------------------------------------------+
2
Introducing the New . . .
[BANC ONE CORPORATION logo]
+------------------------------------------------------------------------------+
1
<PAGE>
+------------------------------------------------------------------------------+
3
Presentation Outline
Verne G. Istock
- ---------------
* Transaction Overview
* A Great Merger for... Shareholders... Customers...
& Employees
* The New Management Team
John B. McCoy
- -------------
* A Compelling Combination
* Financial Review
* Strategic Imperatives
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
+------------------------------------------------------------------------------+
4
The New Company
* Name BANC ONE CORPORATION
* Headquarters Chicago
* Management
* Board of Directors 50/50 Split; 22 Members
* Chairman Verne G. Istock
* President & CEO John B. McCoy
* Vice Chairmen Richard J. Lehmann
David J. Vitale
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
2
<PAGE>
+------------------------------------------------------------------------------+
5
Transaction Summary
* Terms 1.62 Shares of ONE for each FCN
1.00 Shares of ONE for each Old ONE
No Collars
No Walkaway
* Structure Merger of Equals
Tax Free Exchange
Pooling of Interests
19.9% Cross Options Granted
Due Diligence Completed
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
+------------------------------------------------------------------------------+
6
Transaction Summary
* Accretive to All 1999 1.2%
Shareholders 2000 5.9%
2001 6.2%
* Targeted Close 1998 Fourth Quarter
* Approvals Required Normal Regulatory
ONE Shareholders
FCN Shareholders
Creates Shareholder Value without
Heroic Execution Risk
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
3
<PAGE>
+------------------------------------------------------------------------------+
7
Why This Merger
* High Earnings Growth Rate Profile
* Tremendous Cross-sell Opportunities
* Nationwide Credit Card Business
Leadership
* Primary Position in Midwestern and
Southwestern Retail and Business
Banking Markets
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
+------------------------------------------------------------------------------+
8
Why This Merger
* National Financial Services Powerhouse
* A Management Team...
... With a Proven Track Record
... With a Common Culture
... With Complementary Skills and
Expertise
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
4
<PAGE>
+------------------------------------------------------------------------------+
9
+----------------+---Verne G. Istock---+-----------+-------------+
| | Chairman* | | |
Thomas Hoagland William Boardman | John Ballantine Timothy Moen Sherman Goldberg
Operations Acquisitions | Risk Human General
| Management Resources Counsel
|
John B. McCoy, President & CEO*----------|
| Robert Rosholt
| Chief Financial Officer
|--------------------------+--------------------|
David Vitale, Vice Chairman* Richard Lehmann, Vice Chairman*
|--+--------------|------------| |---+-------------|-------|
Thomas McDowell Susan Moody Ronald Steinhart Kenneth Stevens Richard Vague |
Corporate Domestic Middle Market Retail Credit Card |
Banking and |
Products International Markets Donald Winkler
Consumer
Finance
*Member "Office of the Chief Executive"
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
+------------------------------------------------------------------------------+
10
A Compelling Combination*
* Leading Retail Bank in 8 States and 2,000 Offices
* #2 Credit Card Issuer
* Over $100 Billion in Assets Under Management
* Premier Business Bank in Midwest and Top 4
National Player
* Financial Scale
$ 72 Billion - Market Capitalization
$279 Billion - Managed Total Assets
$ 19 Billion - Common Equity
$ 20 Billion - Annual Revenues
*Includes First Commerce acquisition
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
5
<PAGE>
+------------------------------------------------------------------------------+
11
Significant Pro-forma Customer Bases
Retail & Finance 10,000,000 Households
Credit Card 56,000,000 Customers
Small Business 425,000 Customers
Private Banking 112,000 Customers
Middle Market 32,000 Customers
Large Corporate 5,000 Customers
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
+------------------------------------------------------------------------------+
12
Retail Banking
[Map of the United States reflecting competitive ranking of retail bank business
of First Chicago NBD Corporation and BANC ONE CORPORATION combined by deposit
market share, as follows:
#1: Arizona, Illinois, Indiana, Louisiana, Michigan
#2: Kentucky, Ohio, West Virginia
#3: Oklahoma, Texas
#4: Colorado, Utah, Wisconsin]
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
6
<PAGE>
+------------------------------------------------------------------------------+
13
Pro-forma Credit Card Market Share
Total Domestic Managed Outstandings
- -----------------------------------
$ Bill Market Share
------ ------------
Citibank $63.5 12%
+----------------------------------------------------------------------+
|ONE/FCN* 60.0 11 |
+----------------------------------------------------------------------+
MBNA 46.6 8
Discover 36.0 7
Chase 32.5 6
Source: The Nilson Report
* Includes pending acquisition
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
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14
Investment Management
Over $100 Billion in Assets Under Management
- --------------------------------------------
* #3 in Bank Mutual Fund Assets
+-------------+
| $39 Billion |
+-------------+
* Personal and Institutional Trust Assets
+-------------+
| $61 Billion |
+-------------+
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
7
<PAGE>
+------------------------------------------------------------------------------+
15
Commercial Lending Market Share
New BANC ONE
Lead Bank Relationship
----------------------
Midwest National
------- --------
Middle Market
Sales <$150 MM #1 n/a
Mid-Corporate
Sales $150-$500 MM #1 #1
Large Corporate
Sales > $500 MM #1 #4
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
+------------------------------------------------------------------------------+
16
Financial Impact
* Accretive to All Shareholders in First Full Year
* $1,205 Million Pre-tax in Synergies...
$930 Million Pre-tax Cost Saves
$275 Million Pre-tax Revenue Enhancements
* $1,250 Million Pre-tax Restructuring Charge
High Earnings Growth Rate
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
8
<PAGE>
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17
Targeted Synergies
$ in Millions Expense Revenue Total
Saves Enhancements Targeted
----- ------------ --------
Credit Cards $130 $155 $285
Operations/Technology 225 -- 225
Retail 135 50 185
Commercial 115 70 185
General & Admin. 150 -- 150
Vendor Leverage 75 -- 75
Invest. Mgmt/Cap Mkts. 50 -- 50
Indirect Lending 20 -- 20
Other 30 -- 30
-- -- --
Total $930 $275 $1,205
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
+------------------------------------------------------------------------------+
18
Pro-forma Financial Analysis
$ in Millions 1999 e 2000 e 2001 e
------ ------ ------
ONE Stand-alone EPS* $4.18 $4.68 $5.24
ONE Stand-alone Net Income $3,007 $3,368 $3,772
FCN Stand-alone Net Income 1,716 1,864 2,050
----- ----- -----
Pro-forma 4,723 5,232 5,822
After-tax Synergies 362 651 723
Incremental Income from
Higher LOB growth 0 55 115
Transaction Adjustment** (2) 20 33
--- -- --
Adjusted Net Income $5,083 $5,958 $6,693
Pro-forma EPS $4.23 $4.96 $5.57
+------------------------------------------------------------------------------+
|EPS Accretion 1.2% 5.8% 6.2% |
+------------------------------------------------------------------------------+
* Based on consensus Street estimates on a diluted basis
[BANC ONE ** On-going effect of divestitures, one-time charge, etc.
CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
9
<PAGE>
+------------------------------------------------------------------------------+
19
Pro-forma Financial Highlights - 1999
$ in Millions, except per share Pro-forma
---------
Return on Common Equity 21.0%
Efficiency Ratio 51
Common Equity/Assets 9.28
Tangible Common Equity/Assets 8.78
Book Value - 12/31 $20.40
13%-15% Earnings Growth Target
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
+------------------------------------------------------------------------------+
20
Pro-form Earnings Contribution*
[Pie chart reflecting the pro forma contribution to total earnings of the
combined company byline of business, as follows:
Private Banking & Investments: 37%
Credit Card: 31%
Retail: 23%
Financial Services: 9%]
*Targeted 1998 before any merger-related impacts
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
+------------------------------------------------------------------------------+
10
<PAGE>
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21
Pro-forma Managed Loan Portfolio Balance*
12/31/97
$193 Billion
[Pie chart reflecting the pro forma composition of the managed loan portfolio of
the combined company by type of borrower, as follows:
Consumer: 60$
Commercial: 40%]
*Includes securitized loans and loans held for sale
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
+------------------------------------------------------------------------------+
22
Strategic Imperatives
Vision to be a Nationwide Financial Services Provider
-----------------------------------------------------
* Premier Midwestern and Southwestern Consumer and Business Banking
* High Earnings Growth Rate
* Accretive to All Shareholders
* Creates Shareholder Value
* Compatible Credit & Management Cultures
* Exceptional and Complementary Businesses and Customer Bases
* Improved Technology and Operational Economies of Scale
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
11
<PAGE>
+------------------------------------------------------------------------------+
23
The New
[BANC ONE CORPORATION logo]
+------------------------------------------------------------------------------+
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24
SELECTED
LINE OF BUSINESS
HIGHTLIGHTS
APPENDIX
+------------------------------------------------------------------------------+
12
<PAGE>
+------------------------------------------------------------------------------+
25
Retail Banking Overview
Business Profile
* #1 Retail Banking System -- 2,000 Centers
* #1 or #2 Deposit Market Share in 8 States
* #1 ATM Distribution Network -- 8,650 ATMs
* 8 Million Consumer Households
Opportunity Examples
* Leverage Retail Banking Sales, Marketing, and Branding Model Across
Expanded Retail Franchise
* Cross-sell and Marketing of Credit Card
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
+------------------------------------------------------------------------------+
26
Retail Banking Overview
A Significant Presence in the Largest MSA's Representing 1/3 of U.S. Population
-------------------------------------------------------------------------------
#1 in... #2 in... #3 in...
- -------- -------- --------
Chicago, IL Detroit, MI Milwaukee, WI
Phoenix, AZ Dallas, TX Louisville, KY
Fort Worth, TX Fort Wayne, IN Dayton, OH
Indianapolis, IN Flint, MI Wilmington, DE
Columbus, OH Grand Rapids, MI
New Orleans, LA
Okalhoma City, OK
Tucson, AZ
Gary, IN
Baton Rouge, LA
Lexington, KY
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
13
<PAGE>
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27
Retail Banking Deposit Share*
Combined Combined
-------- --------
% Rank % Rank
Arizona 30% 1 W. Virginia 11% 2
Illinois 33% 1 Oklahoma 7% 3
Indiana 19% 1 Texas 7% 3
Louisiana 26% 1 Colorado 5% 4
Michigan 14% 1 Utah 4% 4
Kentucky 9% 2 Wisconsin 6% 4
Ohio 11% 2
* 6/30/97 - Includes pending acquisition &
excludes pending branch sales
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
+------------------------------------------------------------------------------+
28
Credit Card Overview
Business Profile
- ----------------
* #2 Credit Card Business
* 56 Million Customers
Opportunity Examples
- --------------------
* Leverage First USA's Los Cost/High Revenue Growth Model Across Expanded
Credit Card Business
* Cross-sell and Marketing of Retail
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
14
<PAGE>
+------------------------------------------------------------------------------+
29
Finance Company Overview
Business Profile
- ----------------
* #2 Bank-owned Finance Company
* #1 Non-captive Indirect Auto Financing
* #3 Student Loans Originator
* #2 Million Households
Opportunity Example
- -------------------
* Leverage Loan Reclaim Model Across Expanded Retail Banking Franchise
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
+------------------------------------------------------------------------------+
30
Commercial Banking Overview
Business Profile
- ----------------
* #1 Lender in the Midwest & Arizona
* #1 Joint Venture in Shareholder Services
* #2 Lender
* #2 Lock Box
* #3 ACH
* #4 Bank-owned Equipment Leasing
* #5 Corporate Cash Management
Opportunity Examples
- ---------------------
* Leverage Treasury and Cash Management Expertise
* Leverage Syndication Expertise
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
15
<PAGE>
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31
Investment Management Overview
Business Profile
- ----------------
* Over $100 Billion in Assets Under Management
* #1 Bank Annuity Sales
* #3 Bank Mutual Funds with $39 Billion in Assets Under Management
* #2 Performing Equity Mutual Fund Family for 1997 - Mutual Fund Magazine
Opportunity Example
- -------------------
* Leverage Annuity and Mutual Fund Expertise throughout Expanded Franchise
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
+------------------------------------------------------------------------------+
32
Pro-Forma Mutual Fund Assets
12/31/97
$ in Billions Bank Rank
---------
Equity $13 #3
Money Market 17 #3
Fixed Income 6 #1
Muni 3 #4
Total Mutual Fund Assets $39 #3
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
+------------------------------------------------------------------------------+
16
<PAGE>
+------------------------------------------------------------------------------+
33
PRO-FORMA
FINANCIALS
APPENDIX
+------------------------------------------------------------------------------+
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34
Financial Highlights - 1997
$ in Millions, except per share ONE FCN | Pro-forma
--- --- | ---------
Net Income $1,811 * $1,525 | $3,336
EPS 2.76 * 4.90 | 2.88
|
ROCE 18.5%* 18.6% | 18.6%
ROA 1.61 1.41 | 1.51
Net Int. Margin - Reported 5.41 3.95 | 4.71
- Managed 6.26 4.54 | 5.51
Efficiency Ratio 62 52 | 58
|
Common Equity/Assets 8.84 6.81 | 7.83
Tangible Common Equity 7.84 6.46 | 7.15
|
Book Value - 12/31 $15.89 $26.87 | $16.05
*Excludes FUSA-related charges & other one time items
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Balance Sheet - 12/31/97
$ in Billions ONE FCN | Pro-forma
--- --- | ---------
Loans $84.4* $68.7 | $153.1
Securities 15.3 9.3 | 24.6
Other Earning Assets 0.8 24.2 | 25.0
Loan Loss Reserve (1.3) (1.4) | (2.7)
Other Assets 16.7 13.3 | 30.0
---- ---- | ----
Total Assets $115.9 $114.1 | $230.0
Deposits $77.4 $68.5 | $145.9
Borrowings 24.9 29.1 | 54.0
Other Liabilities 3.2 8.6 | 11.8
--- --- | ----
Total Liabilities $105.5 $106.2 | $211.7
Common Equity $10.2 $7.8 | $18.0
Preferred Equity 0.2 0.1 | 0.3
--- --- | ---
Total Equity $10.4 $7.9 | $18.3
* Includes loans held for sale
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MANAGED LOAN DETAIL - 12/31/97*
$ in Billions ONE FCN | PRO-FORMA
--- --- | ---------
Commercial $22.4 $29.0 | $51.4
R.E. - Construction 3.8 1.4 | 5.2
R.E. - Other 5.6 5.3 | 10.9
Leases 2.8 2.1 | 4.9
Foreign 0.0 4.5 | 4.5
--- --- | ---
Total Commercial $34.6 $42.3 | $76.9
Credit Cards $40.8 $18.3 | $59.1
R.E. / Home Equity 17.4 8.9 | 26.3
Indirect / Auto Lease 16.1 4.0 | 20.1
Other 6.6 3.8 | 10.4
--- --- | ----
Total Consumer $80.9 $35.0 | $115.9
Total Managed Loans $115.5 $77.3 | $192.8
* Includes securitized loans & loans held for sale
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
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PRO-FORMA MANAGED COMMERCIAL LOAN PORTFOLIO
12/31/97
$77 BILLION
-----------
[PARTIAL PIE CHART REFLECTING THE PRO FORMA COMPOSITION
OF THE MANAGED COMMERCIAL LOAN PORTFOLIO OF THE COMBINED
COMPANY BY TYPE OF LOAN, AS FOLLOWS:
Commercial 27%
R.E. - Other 6%
R.E. - Construction 3%
Leases 2%
Foreign 2%]
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
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PRO-FORMA MANAGED COMMERCIAL LOAN PORTFOLIO
12/31/97
$116 BILLION
------------
[PARTIAL PIE CHART REFLECTING THE PRO FORMA COMPOSITION
OF THE MANAGED COMMERCIAL LOAN PORTFOLIO OF THE COMBINED
COMPANY BY TYPE OF LOAN, AS FOLLOWS:
Credit Card 31%
R.E. / Home Equity 13%
Indirect / Auto Lease 10%
Other 6%]
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
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MANAGED INCOME STATEMENT - 1997
$ in Millions ONE* FCN | PRO-FORMA
---- --- | ---------
Net Interest Income - TE $7,978 $4,419 | $12,397
Provision for Credit Losses 2,462 1,368 | 3,830
Credit Card Fee Revenue 836 795 | 1,631
Fiduciary & Invst. Mgmt. 316 407 | 723
Deposit Svc. Chg & Comm. 1,080 936 | 2,016
Equity Securities Gains 145 182 | 327
Other Fee Income 586 322 | 908
--- --- | ---
Total Noninterest Inc. 2,963 2,642 | 5,605
Salaries & Emp. Benefits 2,368 1,748 | 4,116
Other Operating Expense 3,351 1,584 | 4,935
----- ----- | -----
Total Noninterest Exp 5,719 3,332 | 9,051
----- ----- | -----
|
Income Before Taxes - TE $2,760 $2,361 | $5,121
Net Income $1,811 $1,525 | $3,336
* Excludes FUSA merger-related and other one time items
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
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CREDIT QUALITY - 1997
$ in Millions ONE* FCN | PRO-FORMA
--- --- | ---------
Net Charge Off Ratio |
Commercial 0.14% 0.11% | 0.12%
Credit Card - Managed 5.74 7.20 | 6.21
Other Consumer 0.91 0.45 | 0.76
|
12/31 - Nonperf. Loans - $ $410 $311 | $721
- % 0.49% 0.45% | 0.47%
- Nonperf.Assets - $ $476 $326 | $802
- % 0.56% 0.47% | 0.52%
Reserve / Loans 1.62% 2.05% | 1.81%
Reserve / NPL 323 453 | 379
* Includes loans held for sale
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Capital Adequacy - 12/31/97
$ in Millions ONE FCN | PRO-FORMA
--- --- | ---------
Common Equity / Assets 8.84% 6.81% | 7.83%
Tangible Common Equity 7.84 6.46 | 7.15
Risk-based Capital Ratios |
Tier 1 8.50 7.87 | 8.18
Total 13.11 11.66 | 12.36
Leverage Ratio 7.91 7.79 | 7.82
Tangible Common Equity / |
Tangible Managed Assets 6.16 6.03 | 6.10
Double Leverage Ratio 97 117 | 107
Sr. Debt Ratings - Moody's Aa3 A1 |
- S&P AA- A+ |
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
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PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
"FORWARD-LOOKING STATEMENT" DISCLOSURE
Certain statements made by management of BANC ONE
CORPORATION and First Chicago NBD Corporation in this
presentation and these materials are not statements of
historical fact, but are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995
These "forward-looking statements" involve risks and
uncertainties which may cause actual results to differ
materially from those in such statements.
Additional discussion of factors that could cause actual
results to differ materially from projections, forecasts,
estimates and expectations is contained in our respective SEC
filings, including our Annual Report on Form 10-K for the year
ending December 31, 1997.
[BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo]
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THE NEW
[BANC ONE CORPORATION LOGO]
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