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): November 30,
1997
FIRST OF AMERICA BANK CORPORATION
(Exact name of registrant as specified in its charter)
Michigan 1-10534 38-1971791
(State or other (Commission File (IRS Employer
jurisdiction Number) Identification No.)
of incorporation)
211 South Rose Street, Kalamazoo, Michigan 49007
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 616-376-9000
Not Applicable
(Former name or former address, if changed since last report.)<PAGE>
ITEM 5. OTHER EVENTS
On November 30, 1997 First of America Bank Corporation, a
Michigan Corporation ("First of America"), and National City
Corporation, a Delaware corporation ("National City"), and each a
bank holding company registered under the Bank Holding Company
Act of 1956, as amended, entered into an Agreement and Plan of
Merger ("Merger Agreement") providing for the merger of First of
America into National City or a wholly owned subsidiary thereof
(the "Merger"). The description of the Merger Agreement set
forth in this Report is qualified in its entirety by the copy of
the Merger Agreement filed herewith as Exhibit 2.1 and
incorporated herein by reference. A copy of the press release
issued by NCC and FOA on December 1, 1997 is attached to this
Report as Exhibit 99.1 and is incorporated herein by reference.
Pursuant to the Merger Agreement, each share of the common
stock, par value $10.00 per share, of First of America ("FOA
Common Stock") outstanding at the effective time of the Merger
(the "Effective Time") will be converted into 1.2 shares (the
"Conversion Ratio") of the common stock, par value $4.00 per
share, of National City ("NCC Common Stock"), plus cash in lieu
of fractional shares.
The Merger is intended to qualify as a tax-free
reorganization under Section 368(a) of the Internal Revenue Code
of 1986, as amended, and to be accounted for as a pooling of
interests. The parties currently anticipate consummating the
Merger during the second quarter of 1998.
The Merger Agreement provides that each employee or director
stock option or other right to purchase shares of FOA Common
Stock outstanding at the Effective Time under the stock option
and other stock-based compensation plans of First of America
(each a "FOA Plan") will be converted into a right to purchase
shares of NCC Common Stock in accordance with the terms of the
FOA Plan and option agreement by which it is evidenced, except
that from and after the Effective Time (i) the number of shares
of NCC Common Stock subject to each such FOA option shall be
equal to the number of shares of FOA Common Stock subject to such
option immediately before the effective time multiplied by the
Conversion Ratio, and (ii) the exercise price per share of NCC
Common Stock purchasable under such FOA option shall be the
number specified in the FOA option divided by the Conversion
Ratio.
Consummation of the Merger is subject to various conditions,
including: (i) receipt of the requisite approvals by the
shareholders of First of America and the stockholders of National
City of the Merger Agreement and matters related to the Merger;
(ii) receipt of requisite regulatory approvals from the Board of
Governors of the Federal Reserve System and other federal and
state regulatory authorities; (ii) receipt of opinions as to the
tax-free reorganization and pooling of interests accounting
treatment of the Merger; (iv) listing on the New York Stock
Exchange of the NCC Common Stock to be issued in the Merger; and
(v) satisfaction of certain other conditions.
Among other reasons, the Merger Agreement may be terminated
by First of America if, during the 15-day period beginning on the
date the Board of Governors of the Federal Reserve Board (the<PAGE>
"FRB") approves the Merger (the "FRB Approval Date"), both (i)
the average closing price of NCC Common Stock for the 20
consecutive trading days ending on the third trading day before
the FRB Approval Date (the "NCC Average Price") is less than
$53.375 and (ii) the number obtained by dividing the NCC Average
Price by $66.75 (the closing price of NCC Common Stock on
November 28, 1997) is less than the number obtained by (A)
dividing the average of the closing prices of a specified index
of bank stocks during the above-described 20-day period by the
closing price of such index on November 28, 1997 and (B)
subtracting 0.20.
The Merger Agreement and the Merger will be submitted for
approval at meetings of the shareholders of First of America and
the stockholders of National City. Before those meetings,
National City will file a registration statement with the
Securities and Exchange Commission registering under the
Securities Act of 1933, as amended, the NCC Common Stock to be
issued First of America shareholders in the Merger and including
a prospectus that will also serve as a joint proxy statement for
the shareholders' meetings.
Following consummation of the Merger, Richard F. Chormann,
Chairman, President and Chief Executive Officer of First of
America, will become a Vice Chairman of National City. David A.
Daberko will remain Chairman and Chief Executive Officer of
National City. In addition, five current members of the Board of
Directors of First of America, including Mr. Chormann, will be
added to the Board of Directors of National City.
In connection with the Merger Agreement, First of America
and National City entered into the following stock option
agreements, each dated November 30, 1997: (i) a Stock Option
Agreement (the "FOA Option Agreement") pursuant to which First of
America granted to National City an option to purchase, under
certain circumstances, up to 16,813,611 shares of FOA Common
Stock at a price, subject to certain adjustments, of $58.75 per
share (the "FOA Option"); and (ii) a Stock Option Agreement (the
"NCC Option Agreement") pursuant to which National City granted
to First of America an option to purchase, under certain
circumstances, up to 21,110,884 shares of NCC Common Stock at a
price, subject to certain adjustments of $66.75 per share (the
"NCC Option," and together with the FOA Option Agreement and FOA
Option, the "Option Agreements" and the "Options," respectively).
The descriptions of the FOA Option Agreement and NCC Option
Agreement set forth in this Report are qualified in their
entirety by the copies of the FOA Option Agreement and the NCC
Option Agreement filed herewith as Exhibits 2.2 and 2.3,
respectively, and each of which is incorporated herein by
reference. Each of the Options is exercisable upon the
occurrence of certain events, none of which has occurred as of
the date of this Report. The FOA Option, if exercised in full,
would result in National City beneficially owning, before giving
effect to the exercise of the FOA Option, 19.9 percent of the
number of shares of FOA Common Stock outstanding. The NCC
Option, if exercised in full, would result in First of America
beneficially owning, before giving effect to the exercise of the
NCC Option, 10.0 percent of the number of shares of NCC Common
Stock outstanding. The Options were granted by the respective
parties as conditions and inducements to each other's entry into<PAGE>
the Merger Agreement. Under certain circumstances, the
respective issuers of the Options may be required to repurchase
the Options or the shares acquired pursuant to exercise thereof.
In connection with the Merger Agreement and the FOA Option
Agreement, First of America amended its Rights Agreement, dated
as of July 18, 1990 (as amended, the "Rights Agreement") between
First of America and First of America Bank, N.A. (formerly known
as First of America Bank-Michigan, N.A.), as Rights Agent, to
provide that the Merger Agreement and the FOA Option will not
trigger the rights issued under the Rights Agreement.
In connection with the Merger Agreement, First of America
amended its Bylaws to opt out of Chapter 7B of the Michigan
Business Corporation Act, as amended, governing control share
acquisitions.
In connection with the execution of the Merger Agreement,
First of America's and National City's Boards of Directors
terminated their authorizations for the repurchase of their
respective shares.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
2.1 Agreement and Plan of Merger, dated as of November
30, 1997, by and between National City Corporation
and First of America Bank Corporation is
incorporated herein by reference to Exhibit 2.1 to
NCC's Current Report on Form 8-K filed with the
Securities and Exchange Commission on December 9,
1997 (the "NCC 8-K").
2.2 Stock Option Agreement, dated as of November 30,
1997, between National City Corporation (as
Grantee) and First of America Bank Corporation (as
Issuer) is incorporated herein by reference to
Exhibit 2.2 to the NCC 8-K.
2.3 Stock Option Agreement, dated as of November 30,
1997, between National City Corporation (as
Issuer) and First of America Bank Corporation (as
Grantee) is filed herewith.
99.1 Press Release issued by National City Corporation
and First of America Bank Corporation on December
1, 1997 is incorporated herein by reference to
Exhibit 99.1 to the NCC 8-K.<PAGE>
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.
FIRST OF AMERICA BANK CORPORATION
Dated: December 12, 1997 By: /s/ THOMAS W. LAMBERT
Thomas W. Lambert
Executive Vice
President and
Chief Financial
Officer<PAGE>
EXHIBIT INDEX
Exhibit Number Description
2.3 Stock Option Agreement, dated as of November 30,
1997, between National City Corporation (as
Issuer) and First of America Bank Corporation (as
Grantee).<PAGE>
Exhibit 2.3
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of November 30, 1997,
between National City Corporation, a Delaware corporation
("Issuer"), and First of America Bank Corporation, a Michigan
corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, as a condition to, and contemporaneous with
the execution of this Stock Option Agreement the parties are
entering into an Agreement and Plan of Merger dated November 30
1997 (Agreement) and in consideration therefor, Issuer has agreed
to grant Grantee the Option (as hereinafer defined):
NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements set forth herein and in the
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 21,110,884 fully paid and
nonassessable shares of Common Stock, par value $4.00 ("Common
Stock"), of Issuer at a price of $66.75 share; provided, however,
that in the event Issuer issues or agrees to issue any shares of
Common Stock at a price less than $66.75 per share (as adjusted
pursuant to subsection 5(b)), such price shall be equal to such
lesser price (such price, as adjusted if applicable, the "Option
Price"); provided further that in no event shall the number of
shares for which this Option is exercisable together with the
number of shares owned by Grantee other than Trust Account Shares
(as defined in the Agreement exceed 10.0% of the Issuer's issued
and outstanding common shares without giving effect to any shares
subject 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 issued or otherwise become outstanding after the date
of this Stock Option Agreement, the number of shares of Common
Stock subject to the Option shall be increased so that, after
such issuance, together with the number of shares owned by
Grantee other than Trust Account Shares equals 10.0% 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 Stock Option Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Agreement.
2. (a) The Holder (as hereinafter defined) may
exercise the Option, in whole or part, 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 30 days following such<PAGE>
Subsequent Triggering Event (or such later date as provided in
Section 10). Each of the following shall be an Exercise
Termination Event: (i) immediately prior to the Effective Time
of the Merger; (ii) termination of the Agreement in accordance
with the provisions thereof (other than a termination resulting
from a willful breach by Issuer of any provision of the
Agreement) if such termination occurs prior to the occurrence of
an Initial Triggering Event; or (iii) the passage of twelve
months after termination of the Agreement if such termination
follows the occurrence of an Initial Triggering Event (provided
that if an Initial Triggering Event continues or another Initial
Triggering Event occurs beyond such termination, the Exercise
Termination Event shall be twelve 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 occur. 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, or the Issuer s board of directors recommends
that stockholders of the Issuer approve or accept, an
Acquisition Transaction (as hereinafter defined) with any
person (the term "person" for purposes of this Stock Option
Agreement having the meaning assigned thereto in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934
(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 have recommended that the stockholders of Issuer
approve or accept any Acquisition Transaction other than as
contemplated by the Agreement. For purposes of this Stock
Option Agreement, "Acquisition Transaction" shall mean (a) a
merger or consolidation, or any similar transaction,
involving Issuer or any of Issuer's subsidiaries where the
Issuer or any Issuer Subsidiary is not the surviving entity,
(b) a purchase, lease or other acquisition of all or
substantially all of the assets of Issuer or any Issuer
Subsidiary, (c) a purchase or other acquisition (including
by way of merger, consolidation, share exchange or
otherwise) of securities representing 20% or more of the
voting power of Issuer or (d) any substantially similar
transaction; (The term Acquisition Transaction specifically
does not include any merger or consolidation among Issuer
and/or Issuer Subsidiaries.)
(ii) The Board of Directors of Issuer does not
recommend that the stockholders of Issuer approve the
Agreement or publicly withdraws or modifies, or publicly
announces its intention to withdraw or modify, in any manner
adverse to the Grantee, its recommendation that its
stockholders approve the Agreement in anticipation of
engaging in an Acquisition Transaction; <PAGE>
(iii) Any person other than Grantee, any Grantee
Subsidiary or any Issuer Subsidiary acting in a fiduciary
capacity shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 20% or more of the
outstanding shares of Common Stock (the term "beneficial
ownership" for purposes of this Stock Option 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;
(v) After a proposal 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 Agreement and such breach (x)
would entitle Grantee to terminate the 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 Board of
Governors of the Federal Reserve System (the "FRB"), the
Office of Thrift Supervision ( OTS ) or other governmental
authority or regulatory or administrative agency or
commission, domestic or foreign (each, a "Government
Entity"), 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, other than
any Grantee Subsidiary or any Issuer Subsidiary in a
fiduciary capacity, of beneficial ownership of 30% or more
of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering
Event described in clause (i) of subsection 2(b), except
that the percentage referred to in clause (c) shall be 30%.
(d) Issuer shall notify Grantee promptly in writing of
the occurrence of any Initial Triggering Event or Subsequent
Triggering Event (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<PAGE>
Notice Date for the closing of such purchase (the "Closing
Date"); provided that if prior notification to or approval of the
FRB or any other Governmental Entity 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 from the later of (x) the
date on which any required notification periods have expired or
been terminated and (y) the date on which 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
Stock Option 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 Stock
Option Agreement.
(h) Certificates for Common Stock delivered at a
closing hereunder shall 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 Securities and Exchange Commission (the "SEC"), or an
opinion of counsel, in form and substance satisfactory to Issuer,
to the effect that such legend is not required for purposes of
the 1933 Act; (ii) the reference to the provisions of this Stock
Option 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 Stock Option Agreement and under circumstances that do<PAGE>
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.
Paragrah l8a and regulations promulgated thereunder and (y) in
the event, under the Bank Holding Company Act of 1956, as
amended, or the Change in Bank Control Act of 1978, as amended,
or any state banking law, prior approval of or notice to the FRB
or to any other Governmental Entity is necessary before the
Option may be exercised, cooperating fully with the Holder in
preparing such applications or notices and providing such
information to each such Governmental Entity 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.
4. This Stock Option Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of the
Holder, upon presentation and surrender of this Stock Option
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 "Stock Option Agreement" and "Option" as used herein
include any Stock Option Agreements and related options for which
this Stock Option Agreement (and the Option granted hereby) may
be exchanged. Upon receipt by Issuer of evidence reasonably<PAGE>
satisfactory to it of the loss, theft, destruction or mutilation
of this Stock Option Agreement, and (in the case of loss, theft
or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Stock Option Agreement,
if mutilated, Issuer will execute and deliver a new Stock Option
Agreement of like tenor and date. Any such new Stock Option
Agreement executed and delivered shall constitute an additional
contractual obligation on the part of Issuer, whether or not the
Stock Option 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 Stock Option Agreement, the
number of shares of Common Stock purchasable upon the exercise of
the Option shall be subject to adjustment from time to time as
provided in this Section 5.
(a) In the event of any change in Common Stock by
reason of stock dividends, split-ups, mergers, recapitalizations,
combinations, subdivisions, conversions, exchanges of shares or
the like, the type and number of shares of Common Stock
purchasable upon exercise hereof shall be appropriately adjusted.
(b) Whenever the number of shares of Common Stock
purchasable upon exercise hereof is adjusted as provided in this
Section 5, the Option Price shall be adjusted by multiplying the
Option Price by a fraction, the numerator of which shall be equal
to the number of shares of Common Stock purchasable prior to the
adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the
adjustment.
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 30 days (or
such later date as may be provided pursuant to Section 10) 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 any shares issued and
issuable pursuant to this Option and shall use its best efforts
to cause such registration statement to become effective and
remain current in order to permit the sale or other disposition
of 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; provided, however, that
Issuer may postpone filing a registration statement relating to a
registration request by Grantee under this Section 6 for a period
of time (not in excess of 180 days) if in its judgment such
filing would require the disclosure of material information that
Issuer has a bona fide business purpose for preserving as
confidential. Issuer will use its 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. If requested by any such Holder in<PAGE>
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 such underwriting agreements. The
foregoing notwithstanding, if, at the time of any request by
Grantee for registration of Option Shares as provided above,
Issuer is in the process of 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 offering or 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; 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 issued by the Holder and Issuer in the aggregate;
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. 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.
7. (a) Upon the occurrence of a Subsequent Triggering
Event that occurs prior to an Exercise Termination Event, (i) at
the request of the Holder, delivered within 30 days of the
Subsequent Trigger Event (or such later period as may be provided
pursuant to Section 10), Issuer shall repurchase the Option from
the Holder at a price (the "Option Repurchase Price") equal to
(x) 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 plus (y)
Grantee's Out-of-Pocket Expenses (as defined below) (to the
extent not previously reimbursed) and (ii) at the request of the
owner of Option Shares from time to time (the "Owner"), delivered
within 30 days of a Subsequent Trigger Event (or such later
period as may be provided pursuant to 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 (x) the market/ offer price multiplied by the
number of Option Shares so designated plus (y) Grantee's
Out-of-Pocket Expenses (to the extent not previously reimbursed).
The term "Out-of-Pocket Expenses" shall mean Grantee's reasonable
out-of-pocket expenses incurred in connection with the
transactions contemplated by the Agreement, including, without
limitation, legal, accounting and investment banking fees. 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 after the date hereof, (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<PAGE>
price for shares of Common Stock within the 30-day 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 substantially all 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, 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, whose
determination shall be conclusive and binding on all parties.
(b) The Holder or 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
Stock Option 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. As promptly
as practicable, and in any event within 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, 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 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, or as a consequence of
administrative policy, 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 subsection (b) of this Section 7 is
prohibited under applicable law or regulation, or as a
consequence of administrative policy, 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 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
Purchase Price or the Option Share Repurchase Price that Issuer
is not prohibited from delivering; and (ii) deliver, as<PAGE>
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 sum of (x) the portion thereof
theretofore delivered to the Holder and (y) Out-of-Pocket
Expenses and the denominator of which is the Option Repurchase
Price less Out-of-Pocket Expenses, or (B) to the Owner, a
certificate for the Option Shares it is then so prohibited from
repurchasing, assuming that the portion of the Option Share
Repurchase Price theretofore delivered is first applied to the
payment of Out-of-Pocket Expenses and then to the repurchase of
Option Shares.
8. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to
consolidate or merge with 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 shares and 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:
(1) "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.
(2) "Substitute Common Stock" shall mean the
common stock to be 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.
(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<PAGE>
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 Stock
Option 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 a
number of shares that together with the number of shares owned by
Grantee, other than Trust Account Shares, is more than 10.0% 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 10.0% 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 the
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.
(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 issuer of the
Substitute Option (the "Substitute Option Issuer") shall
repurchase the Substitute Option from the Substitute Option
Holder at a price (the "Substitute Option Repurchase Price")
equal to (x) the amount by which (i) the Highest Closing Price
(as hereinafter defined) exceeds (ii) the exercise price of the<PAGE>
Substitute Option, multiplied by the number of shares of
Substitute Common Stock for which the Substitute Option may then
be exercised plus (y) Grantee's Out-of-Pocket Expenses (to the
extent not previously reimbursed), 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 (x) the Highest
Closing Price multiplied by the number of Substitute Shares so
designated plus (y) Grantee's Out-of-Pocket Expenses (to the
extent not previously reimbursed). The term "Highest Closing
Price" shall mean the highest closing price for shares of
Substitute Common Stock within the 30-day 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 or 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 Stock Option 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 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, or as a
consequence of administrative policy, from repurchasing the
Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer 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, or as a consequence of administrative policy, from
delivering to the Substitute Option Holder and/or the Substitute
Share Owner, as appropriate, the Substitute Option Repurchase<PAGE>
Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Issuer shall use its best efforts
to receive all required regulatory and legal approvals 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 sum of (x) the portion thereof
theretofore delivered to the Substitute Option Holder and (y)
Out-of-Pocket Expenses and the denominator of which is the
Substitute Option Repurchase Price less Out-of-Pocket Expenses,
or (B) to the Substitute Share Owner, a certificate for the
Substitute Option Shares it is then so prohibited from
repurchasing, assuming that the portion of the Substitute Share
Repurchase Price theretofore delivered is first applied to the
payment of Out-of-Pocket Expenses and then to the repurchase of
Substitute Shares.
10. The 30-day period for exercise of certain rights
under Sections 2, 6, 7 and 12 shall be extended: (i) to the
extent necessary to obtain all regulatory approvals for the
exercise of such rights, and for the expiration of all statutory
waiting periods; (ii) during the pendency of any temporary
restraining order, injuction or other legal ban to the exercise
of such rights and (iii) 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 Stock Option Agreement and to consummate
the transactions contemplated hereby. The execution and delivery
of this Stock Option 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 Stock Option Agreement or to consummate the
transactions so contemplated. This Stock Option Agreement has
been duly and validly executed and delivered by Issuer. This
Stock Option Agreement is the valid and legally binding
obligation of 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 Stock Option<PAGE>
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, encumbrances
and security interests and not subject to any preemptive rights.
12. Neither of the parties hereto may assign any of
its rights and obligations under this Stock 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 30 days following such Subsequent
Triggering Event (or such later period as may be provided
pursuant to Section 10); provided, however, that until the date
30 days following the date of any required approvals of the FRB
under the Bank Holding Company Act to acquire the shares of
Common Stock subject to the Option is received by the Grantee,
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.q., 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 FRB.
13. 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 Entities necessary to the
consummation of the transactions contemplated by this Stock
Option 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 making
any necessary applications to the FRB under the Bank Holding
Company Act for approval to acquire the shares issuable
hereunder.
14. Notwithstanding anything to the contrary herein,
in the event that the Holder or Owner or any affiliate (as
defined in Rule 12b-2 of the rules and regulations under the 1934
Act) thereof is a person making an offer or proposal to engage in
an Acquisition Transaction (other than the Merger), then (i) in
the case of a Holder or any affiliate thereof, the Option held by
it shall immediately terminate and be of no further force or
effect, and (ii) in the case of an Owner or any affiliate
thereof, the Option Shares held by it shall be immediately
repurchasable by Issuer at the Option Price.
15. The parties hereto acknowledge that damages would
be an inadequate remedy for a breach of this Stock Option
Agreement by either party hereto and that the obligations of the
parties shall hereto be enforceable by either party hereto
through injunctive or other equitable relief.<PAGE>
16. If any term, provision, covenant or restriction
contained in this Stock Option 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 Stock
Option 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 Agreement.
18. This Stock Option Agreement shall be governed by
and construed in accordance with the laws of the State of
Delaware, regardless of the laws that might otherwise govern
under applicable principles of conflicts of laws thereof.
19. This Stock Option 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 Agreement, this Stock Option 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 Stock Option Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing in this
Stock Option 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 Stock
Option Agreement, except as expressly provided herein.
22. Terms used in this Stock Option Agreement and not
defined herein but defined in the Agreement shall have the
meanings assigned thereto in the Agreement.
IN WITNESS WHEREOF, each of the parties has caused this
Stock Option Agreement to be executed on its behalf by their<PAGE>
officers thereunto duly authorized, all as of the date first
above written.
NATIONAL CITY CORPORATION
By:/S/ VINCENT A. DIGIROLAMO
Vincent A. DiGirolamo
Vice Chairman
FIRST OF AMERICA BANK CORPORATION
By:/S/ RICHARD F. CHORMANN
Richard F. Chormann
Chairman, President and
Chief Executive Officer<PAGE>
