<PAGE> 1
As filed with the Securities and Exchange Commission on April 19, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
HUNTINGTON BANCSHARES INCORPORATED
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
Maryland 6711 31-0724920
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
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------------------------
Huntington Center; 41 South High Street
Columbus, Ohio 43287
(614) 480-8300
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
Richard A. Cheap, Esq., General Counsel and Secretary
Huntington Bancshares Incorporated
Huntington Center; 41 South High Street
Columbus, Ohio 43287
(614) 480-4647
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
Copies of Correspondence to:
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<S> <C>
Mary Beth M. Clary, Esq. Joseph B. Hemker, Esq.; Timothy E. Kraepel, Esq.
Porter, Wright, Morris & Arthur LLP Howard & Howard Attorneys, P.C.
5801 Pelican Bay Boulevard, Suite 300 100 Portage Street, Suite 200
Naples, Florida 34108 Kalamazoo, Michigan 49007
(941) 593-2959 (616) 382-8765
</TABLE>
------------------------
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] _________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _________
CALCULATION OF REGISTRATION FEE
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<CAPTION>
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Proposed Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price Per Aggregate Offering Amount of
Securities to be Registered Registered Unit* Price* Registration Fee*
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<S> <C> <C> <C> <C>
Common stock,
without par value...... 6,533,047 $40.0625 $128,582,357 $33,946
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</TABLE>
* Estimated solely for the purpose of calculating the registration fee based on
the market value on April 18, 2000, of the 3,209,554 shares of Empire Banc
Corporation (which includes 23,820 shares which may be issued upon exercise
of stock options prior to the merger) to be cancelled in the merger, in
accordance with Rule 457(f)(1).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
Subject to Completion
April 19, 2000
THE INFORMATION IN THIS DOCUMENT IS NOT COMPLETE AND MAY BE CHANGED. HUNTINGTON
MAY NOT ISSUE ITS COMMON STOCK UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SEC IS EFFECTIVE. THIS DOCUMENT IS NOT AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, HUNTINGTON COMMON STOCK IN ANY JURISDICTION OR TO ANY PERSON IF
THAT OFFER OR SOLICITATION IS UNLAWFUL.
PROXY STATEMENT FOR
EMPIRE BANC CORPORATION
SPECIAL MEETING
-----------------
PROSPECTUS OF
HUNTINGTON BANCSHARES INCORPORATED
6,533,047 SHARES OF COMMON STOCK
The boards of directors of Empire Banc Corporation and Huntington
Bancshares Incorporated have agreed that Huntington will acquire Empire in a
merger. If the merger is completed, each outstanding share of Empire common
stock will be exchanged for 2.0355 shares of Huntington common stock. Cash will
be paid for fractional shares. Huntington's common stock is traded on the Nasdaq
National Market under the symbol "HBAN."
The merger cannot be completed unless the shareholders of Empire approve
the merger and the merger documents, and certain other conditions are met.
Empire has scheduled a special meeting for its shareholders to vote on the
merger and the merger documents. The date, time, and place of the special
meeting are as follows:
____day, ________, 2000
____ _.m.
Northwestern Michigan College
Dennos Museum Center
1701 East Front Street
Traverse City, Michigan
This document is a proxy statement for use by the board of directors of
Empire in soliciting proxies for Empire's special meeting of shareholders. It is
also a prospectus for Huntington relating to the issuance of Huntington common
stock in connection with the merger. It gives detailed information about the
merger. Copies of the merger documents are attached. This document will be first
sent to the shareholders of Empire on ________ __, 2000.
We encourage you to read the documents carefully before deciding how to
vote. YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS RELATING TO THE MERGER
WHICH ARE DESCRIBED BEGINNING ON PAGE 11.
Whether or not you plan to attend the special meeting, please take the time
to vote by completing and mailing the enclosed proxy card to us. If you sign,
date, and mail your proxy card without indicating how you want to vote, your
proxy will be counted as a vote in favor of the merger. If you fail to return
your card, the effect will be a vote against the merger. YOUR VOTE IS VERY
IMPORTANT.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATOR HAS APPROVED OR DISAPPROVED THE HUNTINGTON COMMON STOCK TO BE ISSUED
IN THE MERGER OR DETERMINED IF THIS DOCUMENT IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF HUNTINGTON COMMON STOCK TO BE ISSUED IN THE MERGER ARE NOT
SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR NON-BANK
SUBSIDIARY OF HUNTINGTON. NOR ARE THESE SHARES INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE BANK INSURANCE FUND, OR ANY OTHER GOVERNMENTAL
AGENCY.
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-----------------
This proxy statement/prospectus is dated ________ ___, 2000
<PAGE> 3
TABLE OF CONTENTS
page
QUESTIONS AND ANSWERS ABOUT THE MERGER...................................3
SUMMARY..................................................................4
The Companies.........................................................4
The Merger............................................................4
You Will Receive Huntington Stock
in the Merger.......................................................4
Exchange of Certificates..............................................5
No Fractional Shares Will Be Issued...................................5
Reasons For the Merger................................................5
Opinion of McConnell, Budd & Downes, Inc..............................5
Recommendation of Empire Board of Directors...........................5
Conditions to the Merger..............................................5
Right to Terminate....................................................6
Termination Fee and Warrant...........................................6
No Dissenting Shareholders' Rights....................................6
Interests of Management...............................................6
Federal Income Tax Consequences.......................................6
Accounting Treatment..................................................6
Regulatory Approvals..................................................6
Material Differences in the Rights of Shareholders....................7
The Empire Special Meeting............................................7
Comparative Per Share Information.....................................8
Selected Financial Data...............................................9
Selected Financial Data of Huntington..............................9
Selected Financial Data of Empire.................................10
RISK FACTORS............................................................11
THE SPECIAL MEETING.....................................................13
General..............................................................13
Proxies..............................................................13
THE MERGER..............................................................14
General..............................................................14
Background of the Merger.............................................14
Reasons for the Merger...............................................16
Opinion of McConnell, Budd & Downes, Inc.............................17
Effective Time of the Merger.........................................23
Terms of the Merger..................................................23
Exchange of Certificates.............................................24
Terms of the Warrant.................................................24
The Subsidiary Merger................................................26
Additional Agreements of the Parties.................................26
Conditions to Completion of the Merger...............................28
Amendment............................................................29
Termination and Termination Fee......................................29
No Dissenting Shareholders' Rights...................................30
Interests of Management..............................................30
Federal Income Tax Consequences......................................32
Accounting Treatment.................................................33
Regulatory Approvals.................................................34
Resales of Huntington Common
Shares Received in the Merger......................................35
COMPARISON OF RIGHTS OF SHAREHOLDERS OF
HUNTINGTON BANCSHARES AND EMPIRE .....................................35
HUNTINGTON BANCSHARES INCORPORATED......................................39
General..............................................................39
The Huntington National Bank.........................................39
Dividends and Price Range of
Huntington Common Stock............................................40
Other Information....................................................40
EMPIRE BANC CORPORATION.................................................41
General..............................................................41
Dividends and Price Range of
Empire Common Stock................................................41
Other Information....................................................42
GOVERNMENT REGULATION...................................................42
General..............................................................42
Holding Company Structure............................................42
Dividend Restrictions................................................43
FDIC Insurance.......................................................44
Capital Requirements.................................................44
Federal Deposit Insurance Corporation
Improvement Act of 1991 ...........................................46
Interstate Branching and Consolidations..............................47
Gramm-Leach-Bliley Act of 1999.......................................47
EXPERTS.................................................................49
LEGAL OPINIONS..........................................................49
OTHER MATTERS...........................................................49
WHERE YOU CAN FIND MORE INFORMATION.....................................49
Exhibit A - Merger Agreement
Exhibit B - Supplemental Agreement
Exhibit C - Opinion of McConnell, Budd & Downes, Inc.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT US THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS
DOCUMENT. THIS INFORMATION IS DESCRIBED ON PAGE 49 UNDER THE HEADING "WHERE YOU
CAN FIND MORE INFORMATION." YOU MAY REQUEST A COPY OF THESE FILINGS AT NO COST
(EXCEPT THAT THERE WILL BE A CHARGE FOR ANY EXHIBIT TO THESE FILINGS UNLESS WE
HAVE SPECIFICALLY INCORPORATED BY REFERENCE THAT EXHIBIT IN THIS PROXY
STATEMENT/PROSPECTUS). FOR HUNTINGTON FILINGS, CONTACT CHERI GRAY, INVESTOR
RELATIONS ANALYST, HUNTINGTON BANCSHARES INCORPORATED, HUNTINGTON CENTER, 41
SOUTH HIGH STREET, COLUMBUS, OHIO 43287 (614-480-3803). FOR EMPIRE FILINGS,
CONTACT WILLIAM T. FITZGERALD, JR., SECRETARY/TREASURER, EMPIRE BANC
CORPORATION, P.O. BOX 1944, TRAVERSE CITY, MICHIGAN 49685-1944 (231-922-2111).
IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM US, PLEASE DO SO BY _________, 2000,
TO RECEIVE THEM BEFORE THE EMPIRE SPECIAL MEETING.
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QUESTIONS AND ANSWERS ABOUT THE MERGER
Q. WHY DO HUNTINGTON AND EMPIRE WANT TO MERGE?
A. Empire's directors believe that you will benefit by becoming a shareholder
of Huntington which has a strong financial performance record. The Empire
board also believes that you will benefit from the potential future
appreciation of Huntington common stock. Huntington wants to expand its
banking and related activities in Michigan and considers Empire an
attractive partner because of its strong financial performance and emphasis
on high asset quality.
Q. WHAT WILL I RECEIVE FOR MY EMPIRE SHARES?
A. You will receive 2.0355 shares of Huntington common stock for each share of
Empire common stock that you own at the time the merger becomes effective.
This exchange ratio reflects a substantial premium for your shares compared
to their market price prior to the public announcement of the merger.
Huntington will not issue any fractional shares. Instead, you will receive
cash in lieu of any fractional share owed to you. As of ________ __, 2000,
the market value of 2.0355 shares of Huntington common stock was $____. The
market value of the Huntington common stock that you will receive in the
merger will fluctuate both before and after the merger.
Q. WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A. We hope to complete the merger prior to the end of the second quarter,
assuming the required shareholder approval is obtained. The merger is also
subject to the approval of federal banking regulatory authorities and the
satisfaction of other closing conditions.
Q. WHEN AND WHERE WILL THE SPECIAL MEETING TAKE PLACE?
A. The special meeting will be held on _____day, _________, 2000, at ____ _.m.
at Northwestern Michigan College, Dennos Museum Center, 1701 East Front
Street, Traverse City, Michigan.
Q. WHAT DO I NEED TO DO NOW?
A. After carefully reviewing this document, indicate on your proxy card how
you want to vote. Then sign and mail the proxy card in the enclosed return
envelope as soon as possible.
Q. HOW WILL MY SHARES BE VOTED IF I RETURN A BLANK PROXY CARD?
A. If you sign and send in your proxy card and do not indicate how you want to
vote, your proxy will be counted in favor of the merger and the merger
documents at the special meeting.
Q. WHAT WILL BE THE EFFECT IF I DO NOT VOTE?
A. If you do not return your proxy card or otherwise vote at the special
meeting, it will have the same effect as if you voted against the merger
and the merger documents.
Q. CAN I REVOKE MY PROXY AND CHANGE MY MIND?
A. Yes. You may revoke your proxy up to and including the day of the special
meeting. Just send a later dated, signed proxy card or a written notice of
revocation to the Secretary of Empire before the special meeting or attend
the special meeting in person and vote. Your attendance at the meeting
alone will not revoke your proxy. If you have instructed your broker to
vote your shares, you must follow the directions received by the broker to
change those instructions.
Q. IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A. Your broker will vote your shares only if you instruct your broker on how
to vote. Your broker will send you directions on how you can instruct your
broker to vote. Because this is not a "routine" matter, your broker cannot
vote your shares without instructions from you.
Q. SHOULD I SEND MY STOCK CERTIFICATES NOW?
A. No. If the merger is completed, we will send you written instructions for
exchanging your stock certificates.
Q. WHO CAN ANSWER MY QUESTIONS ABOUT THE MERGER?
A. If you have more questions about the merger or the special meeting of
shareholders, you may call William T. Fitzgerald, Jr., at 231-922-2111. If
you have questions about Huntington common stock, you may call Cheri Gray,
Huntington's Investor Relations Analyst, at 614-480-3803.
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<PAGE> 5
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SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the
merger fully, and for a more complete description of the legal terms of the
merger, you should carefully read this document and the attached merger
agreement (Exhibit A) and supplemental agreement (Exhibit B). We use the term
"merger documents" in this proxy statement/prospectus when referring to the
merger agreement, its amendment, the supplemental agreement, and its exhibits.
THE COMPANIES
HUNTINGTON BANCSHARES INCORPORATED
HUNTINGTON CENTER
41 S. HIGH STREET
COLUMBUS, OHIO 43287
(614) 480-3800
WWW.HUNTINGTON.COM
The reference to our website address above does not constitute
incorporation by reference of the information contained on our website.
Huntington Bancshares Incorporated is a multi-state financial holding
company that provides diverse financial services. At December 31, 1999,
Huntington had total assets of approximately $29.0 billion and total deposits of
approximately $19.8 billion.
The Huntington National Bank is Huntington's principal banking subsidiary.
Huntington's subsidiaries conduct a full service commercial and consumer banking
business, and engage in:
- mortgage banking,
- lease financing,
- trust services,
- discount brokerage services,
- credit life and disability insurance underwriting,
- selling other insurance products, and
- issuing commercial paper guaranteed by Huntington.
Huntington's subsidiaries also provide other financial products and
services.
EMPIRE BANC CORPORATION
1227 EAST FRONT STREET
TRAVERSE CITY, MICHIGAN 49686
(231) 922-2111
Empire Banc Corporation is a bank holding company that provides full
service financial services. At December 31, 1999, Empire had total assets of
approximately $505.7 million and total deposits of approximately $418.4 million.
The Empire National Bank of Traverse City is a wholly-owned subsidiary of
Empire. Empire Bank is engaged in the general commercial banking business,
providing a full range of consumer and business loan and deposit products.
Empire Bank also operates a trust department providing fiduciary, investment and
other related trust services. Empire Bank has contracted with a full-service
securities brokerage firm to make available a variety of investment products to
Empire Bank's customers.
At December 31, 1999, Empire operated 10 banking offices in Michigan.
THE MERGER
The merger documents are attached to this proxy statement/prospectus as
Exhibits A and B. We encourage you to read these documents because they are the
legal documents that govern the merger. These documents provide that Empire will
merge into Huntington at the effective time. Huntington will issue shares of its
common stock to the existing shareholders of Empire in exchange for their shares
of Empire common stock. Immediately after the completion of the merger, we plan
to merge The Empire National Bank of Traverse City into The Huntington National
Bank.
YOU WILL RECEIVE HUNTINGTON STOCK IN THE MERGER
If the merger is approved and completed, you will receive 2.0355 shares of
Huntington common stock for each share of Empire stock that you own. This is
sometimes referred to as the "exchange ratio." Based on the closing price per
share of Huntington common stock on the Nasdaq National Market on ________ ____,
2000, the value of 2.0355 shares of Huntington common stock was $_____.
The number of Huntington shares you will receive in the merger will be
subject to adjustments in certain events. For example, if Huntington declares a
stock split or a stock dividend to Huntington shareholders of record prior to
the merger, you will receive a corresponding increase in the number of shares of
Huntington stock in exchange for your shares of Empire stock.
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<PAGE> 6
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If Empire issues additional shares of Empire common stock prior to the
merger and the total number of shares of Empire stock is then more than
3,190,054 shares (plus up to an additional 19,500 shares that are permitted to
be issued under certain director compensation plans), the number of shares of
Huntington common stock you will receive in the merger will be correspondingly
decreased. We do not expect that Empire will issue shares such that the above
adjustment will be triggered.
EXCHANGE OF CERTIFICATES
After completion of the merger, you will receive instructions from
Huntington for submitting your stock certificates to the exchange agent for the
merger. Certificates for Empire shares should not be forwarded to the exchange
agent until after receipt of these instructions. Do not send in your
certificates when you return your proxy card.
NO FRACTIONAL SHARES WILL BE ISSUED
Huntington will not issue any fractional shares. Instead, you will receive
cash in substitution of any fractional share of Huntington common stock owed to
you. The amount of cash for such fractional share will be an amount based on the
average closing price of Huntington common stock for the five trading days
ending on the fifth trading day prior to the merger.
REASONS FOR THE MERGER
The Empire board of directors believes that you will benefit by, among
other things:
- the liquidity and quality of Huntington common stock;
- a higher dividend payout offered by Huntington;
- receiving stock in a high quality company that should achieve enhanced
operating efficiencies; and
- the potential future appreciation of Huntington common stock.
The Huntington board of directors wants to expand Huntington's banking and
related activities in Michigan and considers Empire an attractive partner
because of its strong financial performance and emphasis on high asset quality.
OPINION OF MCCONNELL, BUDD & DOWNES, INC.
In deciding to approve the merger, the Empire board considered an opinion
from McConnell, Budd & Downes, Inc., the financial advisor to Empire, that the
exchange ratio is fair to the shareholders of Empire from a financial viewpoint.
This opinion has been updated to the date of this document and is attached as
Exhibit C to this document. We encourage you to read and consider this opinion.
RECOMMENDATION OF EMPIRE BOARD OF DIRECTORS
The board of directors of Empire unanimously recommends that you vote in
favor of the approval of the merger and the merger documents.
CONDITIONS TO THE MERGER
Huntington and Empire will complete the merger only if certain conditions
are satisfied, including:
- the Empire shareholders approve the merger and the merger documents;
- the opinion of McConnell, Budd & Downes regarding the fairness of the
exchange ratio is not withdrawn prior to the special meeting;
- certain required regulatory approvals are obtained and all applicable
waiting periods expire;
- Empire's shareholders' equity as of the end of the last quarter
preceding the merger is at least $45,886,000 (excluding certain
merger-related charges and expenses); and
- certain legal opinions regarding the tax consequences of the merger
and other matters related to the merger and the parties are obtained.
Huntington or Empire may waive any condition it is entitled to assert so
long as the law does not require the condition to be met.
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<PAGE> 7
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RIGHT TO TERMINATE
We may jointly agree in writing to terminate the merger documents without
completing the merger. Huntington may individually terminate the merger
documents if the Empire board withdraws its recommendation to its shareholders
to approve the merger or if the Empire board authorizes an agreement involving
the acquisition of Empire by someone other than Huntington. In addition, either
one of us can individually terminate the merger documents prior to the
completion of the merger if:
- the other party breaches any of the representations or warranties it
made or fails to comply with any of its obligations under the merger
documents;
- the merger is not completed by January 31, 2001; or
- the regulators do not approve the merger, Empire's shareholders do not
approve the merger documents and the merger, or any other condition
specified in the merger documents cannot be satisfied by January 31,
2001.
TERMINATION FEE AND WARRANT
The merger documents require Empire to pay Huntington a termination fee
equal to $4.5 million plus reimbursement of Huntington's expenses incurred
relating to the merger if the merger is not completed under certain
circumstances and Empire has received a competing offer to acquire Empire from a
third party. In addition, Empire granted to Huntington a warrant to purchase up
to 19.9% of the outstanding shares of Empire common stock at an exercise price
of $29.00 per share. This warrant is exercisable only under certain
circumstances and only if Empire has received a competing offer to acquire
Empire from a third party.
NO DISSENTING SHAREHOLDERS' RIGHTS
Empire is a Michigan corporation. Under Michigan law, you are not entitled
to dissenting shareholders' rights in connection with the merger.
INTERESTS OF MANAGEMENT
You should be aware that a number of executive officers of Empire have
employment agreements and participate in benefit plans that provide them with
interests in the merger that are different from, or in addition, to your rights.
Each of these officers will receive significant compensation if the merger is
completed.
In order to assure their assistance in the transition after the merger,
Huntington has agreed to pay these officers a lump sum amount in place of the
benefits they would have otherwise received under their employment agreements
and benefit plans.
FEDERAL INCOME TAX CONSEQUENCES
We have structured the merger so that you will not recognize any gain or
loss for federal income tax purposes in the merger, except to the extent that
you receive cash in lieu of a fractional share.
You should consult with your own tax advisors as to the particular tax
consequences of the merger, including the applicability and effect on you of
state, local, and foreign tax laws and possible changes in the tax laws.
ACCOUNTING TREATMENT
Huntington intends to treat the merger as a "purchase" for accounting
purposes. This means that Huntington will include the financial results of
Empire in Huntington's consolidated financial statements beginning on the
effective date of the merger.
REGULATORY APPROVALS
Huntington has filed for a waiver from the Federal Reserve Board's general
requirement of an application for bank holding company mergers. We expect that
this waiver will be granted and that only a 10-day prior notice to the Federal
Reserve Bank of Cleveland will be required. The merger of Empire Bank into
Huntington Bank must be approved by the Office of the Comptroller of the
Currency. The required notice and application were submitted to the appropriate
agencies on April 7, 2000.
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MATERIAL DIFFERENCES IN THE RIGHTS OF SHAREHOLDERS
Your rights as an Empire shareholder are governed by Michigan law and
Empire's articles of incorporation and bylaws. The rights of a Huntington
shareholder are governed by Maryland law and Huntington's charter and bylaws.
Upon completion of the merger, you will become a shareholder of Huntington and
your rights will be governed by Maryland law and by Huntington's charter and
bylaws.
THE EMPIRE SPECIAL MEETING
The Empire special meeting will be held on _____day, _________, 2000, at
____ _.m., local time, at Northwestern Michigan College, Dennos Museum Center,
1701 East Front Street, Traverse City, Michigan.
If you owned Empire common stock at the close of business on ________ ___,
2000, you can vote your shares at the Empire special meeting. As of that date,
there were ______________ shares of Empire common stock outstanding. Each share
is entitled to one vote on each matter that is brought before the special
meeting.
At the special meeting, you will be asked to consider and vote on the
following matters:
- the approval of the merger and the merger documents; and
- any other matters as are properly presented at the special meeting.
As of the date of this document, the Empire board does not know of any
other matters that will be presented at the special meeting.
The affirmative vote of the holders of a majority of the outstanding shares
of Empire common stock is required to approve the merger and the merger
documents. You may vote either in person or by proxy. If you abstain from voting
or fail to return your properly executed proxy card, the effect will be a vote
AGAINST approval of the merger and the merger documents.
As of the record date for this special meeting, the directors and executive
officers of Empire (____ persons) and their immediate family members and the
entities that they control owned _______ shares of Empire common stock,
representing _____% of the outstanding common stock.
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<PAGE> 9
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COMPARATIVE PER SHARE INFORMATION
We have summarized below the unaudited per share information for our
respective companies on a historical basis and a combined pro forma basis. In
addition we have summarized the unaudited per share information for Empire on an
equivalent pro forma basis. The Empire equivalent pro forma amounts were
computed by multiplying Huntington's pro forma amounts by the exchange ratio of
2.0355 shares of Huntington common stock for each share of Empire common stock
to be exchanged in the merger. In order to fully understand this data, you
should also review the historical financial statements of our respective
companies which are incorporated by reference in this document. This data has
been adjusted for stock splits and stock dividends, as appropriate.
<TABLE>
<CAPTION>
HUNTINGTON EMPIRE
------------------------------- --------------------------------
EQUIVALENT
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Book value per share(1):
As of March 31, 2000.................... $9.45 $9.80 $14.64 $19.95
As of December 31, 1999................. $9.53 $9.53 $14.49 $19.40
Cash dividends declared per share:
For the quarter ended March 31, 2000.... $0.20 $0.20 $0.30 $0.41
For the year ended December 31, 1999.... $0.76 $0.76 $1.15 $1.55
Basic net income per share:
For the quarter ended March 31, 2000.... $0.46 $0.46 $0.52 $0.94
For the year ended December 31, 1999.... $1.83 $1.81 $2.39 $3.68
Diluted net income per share:
For the quarter ended March 31, 2000.... $0.46 $0.45 $0.52 $0.92
For the year ended December 31, 1999.... $1.82 $1.80 $2.29 $3.66
</TABLE>
(1) During the first quarter 2000, Huntington repurchased shares in the open
market that it expects to be issued to effect the Merger. For purposes of the
pro forma book value, it was assumed that the cost of these repurchased shares
would equal the estimated purchase price to be paid for Empire. The pro forma
book values reflect the applicable repurchase and the subsequent issuance of
Huntington common stock.
Huntington is traded on the Nasdaq National Market under the symbol
"HBAN." Empire is traded on the OTC Bulletin Board under the symbol "EMBM." We
have summarized below the last sale prices per share of Huntington common stock
and Empire common stock on a historical basis and the equivalent per share price
of Empire common stock as of February 4, 2000, the last trading day prior to the
public announcement of the merger, and as of December 31, 1999. Empire's
equivalent pro forma per share price was computed by multiplying the price of
Huntington stock by the exchange ratio of 2.0355 shares of Huntington common
stock for each share of Empire common stock to be exchanged in the merger.
<TABLE>
<CAPTION>
EMPIRE
------------------------------------------
HUNTINGTON EQUIVALENT PRO
HISTORICAL HISTORICAL FORMA
------------------- -------------------- ------------------
<S> <C> <C> <C>
February 4, 2000................................ $21.25 $31.00 $43.25
December 31, 1999............................... $23.88 $28.00 $48.61
</TABLE>
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<PAGE> 10
- --------------------------------------------------------------------------------
SELECTED FINANCIAL DATA
SELECTED FINANCIAL DATA OF HUNTINGTON
The following selected financial data of Huntington for the five years
ended December 31, 1999, have been derived from Huntington's audited
consolidated financial statements. The selected financial data of Huntington for
the three months ended March 31, 2000 and 1999, have been derived from unaudited
consolidated financial statements and reflect all adjustments, consisting only
of normal recurring adjustments, that, in the opinion of Huntington's
management, are necessary for a fair and consistent presentation of such data.
Operating results for the three months ended March 31, 2000, are not necessarily
indicative of results expected for the entire year. This data should be read in
conjunction with the consolidated financial statements, related notes, and other
financial information of Huntington incorporated in this document by reference.
All per share data have been adjusted for stock dividends and stock splits, as
appropriate.
CONSOLIDATED INCOME STATEMENT DATA
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
--------- -------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total interest income....... $515,557 $495,692 $2,026,002 $1,999,364 $1,981,473 $1,775,734 $1,709,627
Total interest expense...... 274,866 236,171 984,240 978,271 954,243 880,648 856,860
Net interest income......... 240,691 259,521 1,041,762 1,021,093 1,027,230 895,086 852,767
Securities gains............ 14,555 2,310 12,972 29,793 7,978 17,620 9,380
Provision for loan losses... 15,701 25,305 88,447 105,242 107,797 76,371 36,712
Net income.................. 104,173 96,572 422,074 301,768 292,663 304,269 281,801
Net income - operating(1)... 104,173 96,572 422,074 362,068 338,897 304,269 281,801
Per common share:
Net income:
Basic.................. 0.46 0.42 1.83 1.30 1.27 1.31 1.17
Diluted................ 0.46 0.41 1.82 1.29 1.25 1.29 1.16
Diluted - operating.... 0.46 0.41 1.82 1.54 1.45 1.29 1.16
Diluted - cash basis(2) 0.49 0.45 1.94 1.64 1.51 1.34 1.20
Cash dividends declared.. 0.20 0.18 0.76 0.68 0.62 0.56 0.51
</TABLE>
CONSOLIDATED BALANCE SHEET DATA
(IN MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
--------- -------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Actual balances at period end:
Total assets............. $28,408 $28,578 $29,037 $28,296 $26,731 $24,372 $23,495
Long-term debt........... 846 707 698 707 499 551 517
Shareholders' equity..... 2,099 2,138 2,182 2,149 2,025 1,786 1,773
Shareholders' equity
per common share....... 9.45 9.25 9.53 9.27 8.73 7.82 7.59
Average balances during the
period:
Total assets............. 28,953 28,422 28,739 26,892 25,151 23,375 22,099
Long-term debt........... 704 707 703 621 526 516 529
Shareholders' equity..... 2,206 2,121 2,147 2,064 1,894 1,776 1,742
</TABLE>
(1) Excludes special charges, net of related taxes.
(2) Tangible or "Cash Basis" net income excludes amortization of goodwill and
other intangibles, net of income taxes.
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<PAGE> 11
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SELECTED FINANCIAL DATA OF EMPIRE
The following selected financial data of Empire for the five years
ended December 31, 1999, have been derived from Empire's audited consolidated
financial statements. The selected financial data of Empire for the three months
ended March 31, 2000 and 1999, have been derived from unaudited consolidated
financial statements and reflect all adjustments, consisting only of normal
recurring adjustments, that, in the opinion of Empire's management, are
necessary for a fair and consistent presentation of such data. Operating results
for the three months ended March 31, 2000, are not necessarily indicative of
results expected for the entire year. This data should be read in conjunction
with the consolidated financial statements, related notes, and other financial
information of Empire incorporated in this document by reference. All per share
data have been adjusted for stock dividends and stock splits, as appropriate.
CONSOLIDATED INCOME STATEMENT DATA
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
--------- -------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total interest income....... $9,924 $9,255 $38,019 $36,559 $33,419 $30,599 $28,606
Total interest expense...... 4,452 4,002 16,441 16,435 15,189 14,066 13,231
Net interest income......... 5,472 5,253 21,578 20,124 18,230 16,533 15,375
Securities gains (losses)... --- --- (138) 143 (6) --- (5)
Provision for loan losses... 116 256 701 1,215 1,459 1,686 745
Net income.................. 1,666 1,610 7,265 6,097 5,245 4,577 4,146
Per common share:
Net income:
Basic.................. 0.52 0.53 2.39 2.06 1.81 1.60 1.46
Diluted................ 0.52 0.51 2.29 1.93 1.68 1.48 1.36
Cash dividends declared.. 0.30 0.25 1.15 0.98 0.87 0.73 0.59
</TABLE>
CONSOLIDATED BALANCE SHEET DATA
(IN MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
--------- -------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Actual balances at period end:
Total assets............. $503 $479 $506 $478 $443 $401 $372
Long-term debt........... 21 13 21 14 7 8 12
Shareholders' equity..... 46 42 46 41 36 33 30
Shareholders' equity 14.64 13.93 14.49 13.78 12.42 11.34 10.50
per common share.......
Average balances during the
period:
Total assets............. 501 479 494 460 415 382 352
Long-term debt........... 22 17 17 17 12 16 12
Shareholders' equity..... 46 42 43 38 34 31 28
</TABLE>
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<PAGE> 12
RISK FACTORS
You should consider the following matters in deciding how to vote. You
should also consider the other information included in this document.
THE EXCHANGE RATIO IS FIXED AND WILL NOT BE ADJUSTED TO REFLECT ANY CHANGES IN
STOCK VALUE PRIOR TO THE EFFECTIVE TIME OF THE MERGER.
At the effective time of the merger, each share of Empire common stock
will be converted into the right to receive 2.0355 shares of Huntington common
stock. This exchange ratio is fixed and will not be adjusted to reflect any
changes in the value of either Empire or Huntington common stock. As a result,
the value of the shares of Huntington common stock received by Empire
shareholders in the merger may be higher or lower than the market value of the
shares of Huntington common stock at the time you vote on the merger.
CHANGES IN INTEREST RATES COULD REDUCE HUNTINGTON'S PROFITABILITY.
Huntington's income and cash flows depend to a great extent on its net
interest income. Net interest income is the difference between earnings from
interest-earning assets, such as loans and investments, and the rates paid for
interest-bearing liabilities, such as deposits and borrowings. These rates are
highly sensitive to many factors beyond Huntington's control, including general
economic conditions, the policies of various governmental and regulatory
agencies, and general interest rate levels. Fluctuations in these areas may
adversely effect Huntington.
EMPIRE'S SHAREHOLDERS WILL HAVE NO CONTROL OF HUNTINGTON'S FUTURE OPERATIONS.
Empire's shareholders have the power to approve or reject any matters
involving Empire requiring the approval of shareholders under Michigan law and
Empire's articles of incorporation. After the merger, Empire's shareholders in
the aggregate will hold approximately 2.7% of the outstanding shares of
Huntington common stock. Even if all of the former Empire shareholders voted
together on all proposals presented to Huntington's shareholders, this aggregate
number of shares of Huntington common stock will not have a major impact on
whether such proposals are approved or rejected.
FUTURE HUNTINGTON ACQUISITIONS INVOLVE RISKS.
Other than Huntington's merger with Empire, Huntington has no other
acquisitions pending as of the date of this proxy statement/prospectus.
Huntington, however, continues to explore other strategic opportunities to
acquire banking and non-banking companies both within and outside of its current
market area. One or more future acquisitions could be material to Huntington.
Acquisitions involve numerous risks, including difficulties in integrating the
operations of the acquired company, risks associated with entering new
geographic markets, the potential loss of customers and key employees of the
acquired company, and the assumption of undisclosed liabilities. There can be no
assurance that Huntington will be able to realize fully the strategic objectives
and operating efficiencies with all of its future acquisitions.
Huntington may need to issue more Huntington common stock to pay for
any future acquisition, which could dilute the ownership interest of all
Huntington shareholders at the time of the acquisition. A material acquisition
could also require Huntington to use a substantial amount of cash or other
liquid assets or incur indebtedness. In addition, as consolidation of the
banking industry continues, the competition for suitable acquisition candidates
is expected to increase.
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<PAGE> 13
THE FINANCIAL SERVICES INDUSTRY IS BECOMING INCREASINGLY COMPETITIVE.
Huntington competes with other commercial banks, savings and loans, and
other financial services providers. Huntington's competitors now include
securities dealers, brokers, mortgage bankers, investment advisors, and finance
and insurance companies who seek to offer one-stop financial services to their
customers that may include services that banks have not been able or permitted
to offer their customers in the past. The increasingly competitive environment
is a result of changes in regulation and technology, and the consolidation of
the banking industry. Huntington's ability to increase shareholder value will
depend, in part, on its ability to offer financial services, products, and
delivery systems that meet the needs and demands of its customers. These
challenges are not exclusive to Huntington. Every financial institution in this
country must continually evaluate and adjust the way it does business in the
changing competitive environment.
GOVERNMENTAL REGULATION AND LEGISLATION COULD LIMIT HUNTINGTON'S FUTURE GROWTH.
Huntington and its subsidiaries are subject to regulation and
supervision by various federal agencies. Regulations issued by these agencies
may change in the future and could negatively influence Huntington's ability to
expand services and increase the value of its business.
Huntington's earnings are affected by the monetary policies of the
Federal Reserve Board. These policies, which include regulating the national
supply of bank reserves and bank credit, can have a major effect upon the source
and cost of funds and the rates of return earned on loans and investments. The
Federal Reserve Board influences the size and distribution of bank reserves
through its open market operations and changes in cash reserve requirements
against member bank deposits. We cannot accurately predict what effect, if any,
these policies will have upon the future business and earnings of Huntington or
Empire.
FORWARD-LOOKING STATEMENTS MAY NOT BE ACCURATE.
In 1995, Congress passed the Private Securities Litigation Reform Act
to encourage corporations to provide investors with information about
anticipated future financial performance, goals, and strategies. This type of
information, known as forward-looking statements, often, although not always,
includes words or phrases such as "will likely result," "expect," "will
continue," "anticipate," "estimate," "intend," "plan," "project," "outlook," or
similar expressions. The Act provides a safe harbor for such disclosure, or in
other words, protection from unwarranted litigation if actual results are not
the same as management's expectations.
This proxy statement/prospectus, particularly the sections entitled
"The Merger - Reasons for the Merger" and "The Merger - Opinion of McConnell,
Budd & Downes, Inc.," contains or incorporates by reference forward-looking
statements. We have based these forward-looking statements on our current plans,
expectations, goals, and projections that are subject to numerous assumptions,
risks, and uncertainties. Actual results could differ materially from those
contained in or implied by our statements due to a variety of factors including:
- changes in economic conditions;
- movement in interest rates;
- competitive pressures on product pricing and services;
- success and timing of business strategies and successful
integration of acquired businesses;
- the nature, extent, and timing of governmental actions and
reforms; and
- extended disruption of vital infrastructure.
We encourage you to understand these forward-looking statements to be
strategic objectives rather than absolute targets of future performance.
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<PAGE> 14
THE SPECIAL MEETING
GENERAL
The Empire special meeting will be held on _____day, _________, 2000,
at ____ _.m., local time, at Northwestern Michigan College, Dennos Museum
Center, 1701 East Front Street, Traverse City, Michigan. Only holders of record
of Empire common stock at the close of business on _____________, 2000, which is
the record date for the special meeting, will be entitled to receive notice of
and to vote at the special meeting.
You have one vote for each share of Empire common stock you own. Your
vote may be exercised in person or by properly executed proxy on each matter
that comes before the shareholders at the meeting. A majority of the outstanding
shares of Empire common stock must be present in person or by proxy in order to
have a quorum to conduct business at the special meeting.
Abstentions and broker non-votes will be counted for purposes of
determining whether there is a quorum at the meeting. A broker non-vote occurs
when a broker or other nominee who holds customers' shares in street name,
submits proxies for such shares on some matters, but not others. Generally, this
would occur when the broker or other nominee has not received any instructions
from his or her customers. In these cases, the broker or nominee, as the holder
of record, is permitted to vote on routine matters, but not on non-routine
matters. Voting to approve the merger and the merger documents is not a routine
matter.
The affirmative vote of the holders of a majority of the outstanding
shares of Empire common stock is required to approve the merger and the merger
documents. Because the approval of the merger and the merger documents requires
the affirmative vote of a particular percentage of the total outstanding shares
of Empire common stock (rather than merely a percentage of those present at a
meeting), an abstention or a broker non-vote with respect to such matter will
have the same effect as a vote against the matter.
As of the record date for the special meeting, Empire had _______
shares of Empire common stock outstanding and entitled to vote at the special
meeting. The shares of Empire common stock outstanding on the record date were
held by approximately _____ holders of record. As of the record date, the
directors and executive officers of Empire and their affiliates owned ________
shares of Empire common stock (excluding shares subject to stock options), which
represent ____% of the total issued and outstanding shares of such stock
entitled to vote at the special meeting. Assuming the directors, executive
officers, their family members, and entities they control vote to approve the
merger and the merger documents, __________ additional shares will be needed to
approve the merger and the merger documents. This number of shares represents
___% of the shares of Empire common stock held by persons other than directors,
executive officers, their family members, and entities they control.
PROXIES
Shares of Empire common stock represented by properly executed proxies
received at or prior to the special meeting will be voted at the special meeting
in the manner specified on the proxy card. If you sign your proxy card and mail
it in but make no voting specification, your proxy will be voted FOR approval
and adoption of the merger and the merger documents. If you abstain from voting
your shares at the special meeting, your shares will be counted for purposes of
determining whether a quorum exists but will not be counted as a vote FOR
approval of the merger and the merger documents. Your failure to vote,
abstention, or failure to direct your broker how to vote if your shares are held
in street name have the same effect as a vote AGAINST the proposal. Thus, your
vote is important and we ask that you complete, date, and sign the accompanying
proxy card and return it promptly to Empire in the enclosed postage prepaid
envelope even if you plan to attend the special meeting in person.
There are no matters known to us that will be presented at the special
meeting other than the matters described in this proxy statement/prospectus. If
other matters do arise at the special meeting, the shares represented by
properly submitted proxy cards will be voted by and at the discretion of the
persons named as proxies.
You may revoke your proxy up to and including the day of the special
meeting. Just send a later dated, signed proxy card or a written notice of
revocation to the Secretary of Empire before the special meeting or attend
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<PAGE> 15
the special meeting in person and vote. Your attendance at the meeting alone
will not revoke your proxy. If you have instructed your broker to vote your
shares, you must follow the directions received by the broker to change those
instructions.
Empire will pay any costs for the solicitation of proxies from its
shareholders, including the charges and expenses of brokerage firms and others,
if any, for forwarding solicitation material to beneficial owners of stock. We
may solicit proxies by mail, telegram, telephone, meetings, or personal
interview. Empire has retained Georgeson Shareholder Communications, Inc. to
assist in the solicitation of proxies and will pay such firm fees of
approximately $4,000 plus expenses and a direct telephone solicitation fee of
$4.00 per completed call.
THE MERGER
The following information summarizes the material terms of the merger
documents. The merger agreement is attached to this document as Exhibit A and
the supplemental agreement is attached as Exhibit B. We urge you to read the
merger documents in order to gain a complete understanding of the merger.
GENERAL
The merger documents set forth the terms of the merger, as well as
certain representations, conditions, and agreements, made by Huntington and
Empire as an inducement to the other party to enter into the merger documents
and to complete the merger. The completion of the merger is conditioned on the
satisfaction of certain conditions. These conditions include the approval of the
shareholders of Empire and the approval of certain regulatory authorities. At
the effective time of the merger, Empire will be merged into Huntington and each
outstanding share of Empire common stock will be converted into the right to
receive 2.0355 shares of Huntington common stock, subject to certain adjustment
described below.
BACKGROUND OF THE MERGER
The Empire board periodically reviews Empire's strategy in light of
general conditions in the banking industry, competitive and economic conditions
in its markets and potential new markets, results of its operations and its
future prospects, legislative changes, regulatory changes, and other
developments affecting the banking industry generally and Empire specifically.
These periodic strategic reviews have focused on potential mergers and
acquisitions involving Empire, including potential merger and acquisition
targets, expansion through the establishment of new branches, and acquisitions
of branches and potential acquirors of Empire.
The Empire board conducted a regular review of Empire's strategic plan
at its October 1998 meeting. Consistent with its past practice, the Empire board
received at that meeting presentations by Empire's legal and financial advisors
analyzing recent merger and acquisition developments and the effects of those
developments on Empire's strategic plan.
At its regular July 1999 meeting, the Empire board was advised by James
E. Dutmers, Jr., Empire's Chairman and Chief Executive Officer, that, based on
his discussions with industry leaders and with Empire's financial advisor and
because of the relative scarcity of opportunities for potential acquisitions by
Empire combined with the attractiveness of Empire as an acquisition target, he
intended that the discussion at the August 1999 meeting would include more
emphasis on potential acquirors of Empire than similar merger and acquisition
strategic reviews conducted in the past.
At its regular meeting held on August 19, 1999, the Empire board
reviewed merger and acquisitions developments in relation to Empire's strategic
plan. At that meeting, McConnell, Budd & Downes, Inc., Empire's financial
advisor, presented an analysis to the Empire board encompassing among other
things:
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<PAGE> 16
- a business review of Empire, including its financial condition
and performance and its stock price performance;
- a review of market conditions and trends in the overall
securities markets and bank stock and bank merger and acquisition
markets in particular;
- a review and analysis of the potential effects on Empire of
various financial alternatives for enhancing shareholder value;
and
- an indication as to the reasonable range of value that could be
expected in the event Empire were acquired and an analysis of
potential acquirors.
Following such presentation, the Empire board began a discussion of the
possibility of exploring a business combination. Such discussion was continued
at the October 1999 regularly scheduled meeting of the Empire board.
As a result of those discussions, at the October 1999 meeting the
Empire board authorized Empire's senior management to explore a possible
business combination with another larger financial institution. It also
authorized the retention of McConnell, Budd & Downes to assist Empire in the
undertaking.
In early December 1999, McConnell, Budd & Downes contacted six
organizations about their interest in exploring a business combination with
Empire. Of the organizations contacted, five entered into confidentiality
agreements with Empire and received materials intended to facilitate their
evaluation of a possible transaction. Two of the organizations which had signed
the confidentiality agreements elected not to proceed with further discussions.
McConnell, Budd & Downes requested that the remaining three organizations
respond with their best proposal for a business combination transaction with
Empire.
As of January 19, 2000, Empire received written proposals from two
organizations, including Huntington, and received a verbal proposal from the
third organization. The Huntington proposal was, on its face, financially
superior to the other proposals.
On January 21, 2000, the Empire merger and acquisition committee, a
standing committee of the board of directors, met to review the proposals.
Following a presentation by McConnell, Budd & Downes regarding the proposals,
the merger and acquisition committee decided to make a recommendation to the
Empire board that it authorize Empire's officers and other representatives to
engage in negotiations with Huntington regarding a possible business combination
agreement.
A meeting of the Empire board was held on January 24, 2000. At that
meeting, McConnell, Budd & Downes compared the three proposals and provided
detailed information on the three companies making the proposals. Empire's legal
counsel made a presentation concerning the Empire board's fiduciary
responsibilities and procedures for responding to acquisition proposals. Mr.
Dutmers also described discussions which management had conducted with each of
the three companies. Following receipt of the recommendation from the merger and
acquisition committee, the Empire board authorized officers of Empire and its
other representatives to engage in negotiations with Huntington concerning the
terms of a business combination agreement.
Between January 24, 2000, and February 4, 2000, representatives of
Huntington and Empire conducted negotiations with respect to the terms of the
merger and the form of the merger documents. Representatives of Huntington
visited Empire's headquarters in Traverse City, Michigan, to conduct due
diligence on January 29 and 30, 2000, and met with management representatives of
Empire.
On February 4, 2000, the merger and acquisition committee met with
Empire's legal counsel and McConnell, Budd & Downes. At that meeting, Empire's
legal counsel reviewed the terms of the proposed merger documents with the
merger and acquisition committee. McConnell, Budd & Downes also reviewed the
proposed exchange ratio. Following such presentations, the merger and
acquisition committee determined to recommend to the Empire board that it
approve the proposed merger documents and that it reject the proposals received
from the other two organizations.
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<PAGE> 17
On February 4, 2000, the Empire board held a special meeting to
consider the proposed merger documents. At that meeting, the Empire board
received recommendations from the merger and acquisition committee and from
Empire's management that the Empire board approve the proposed merger documents.
McConnell, Budd & Downes presented a financial review and analysis of Empire,
the transaction proposed by Huntington, and the proposals made by the other two
organizations. McConnell, Budd & Downes concluded its presentation by delivering
its oral opinion to the Empire board, subsequently confirmed in writing on
________, 2000, and the date of this proxy statement/prospectus, that the
exchange ratio was fair from a financial point of view to the shareholders of
Empire. The Empire board also received a presentation from its legal counsel
regarding the Empire board's fiduciary duties, the terms of the proposed merger
documents, and various employment related and other relevant matters. After a
lengthy discussion of the proposed transaction and the proposed merger documents
and related matters, the Empire board unanimously approved the merger, adopted
the merger documents, and authorized rejection of the proposals received from
the other two other organizations.
The merger documents were signed by Huntington and Empire after closing
of the stock markets on February 4, 2000, and the proposed merger was publicly
announced prior to the opening of the stock markets on February 7, 2000.
REASONS FOR THE MERGER
Empire
THE EMPIRE BOARD OF DIRECTORS BELIEVES THAT THE MERGER IS FAIR TO, AND
IN THE BEST INTERESTS OF, EMPIRE AND EMPIRE'S SHAREHOLDERS. ACCORDINGLY, THE
EMPIRE BOARD HAS UNANIMOUSLY APPROVED THE MERGER DOCUMENTS AND UNANIMOUSLY
RECOMMENDS THAT THE EMPIRE SHAREHOLDERS VOTE FOR THE APPROVAL OF THE MERGER AND
THE MERGER DOCUMENTS.
The Empire board believes that consummation of the merger presents a
unique opportunity to combine with a premier banking and financial services
company with the capability to offer a full range of financial products and
services through an extensive distribution network.
In reaching its decision to approve the merger, the Empire board
consulted with Empire's management, as well as with it's financial and legal
advisors, and considered a variety of factors, including the following:
- information concerning the business, earnings, operations,
financial condition, prospects, capital levels, and asset quality
of Empire and Huntington, both individually and as combined;
- the current and prospective economic and competitive environments
facing Empire and other financial institutions, characterized by
intensifying competition from both banks and nonbank financial
services organizations, the increasing necessity for strong
fee-based income producing components within a bank holding
company, and the growing costs associated with regulatory
compliance in the banking industry;
- the consolidating nature of the banking industry resulting in
fewer potential acquirors;
- the belief that the merger would result in shareholders of Empire
receiving stock in a high quality company that should benefit
shareholders through enhanced operating efficiencies;
- the liquidity and quality of Huntington's common stock, its
higher dividend payout, and the potential for future appreciation
of the Huntington common stock;
- the experience, competence, and integrity of Huntington and its
management;
- the scale, scope, technological strength, and diversity of
operations, product lines, and delivery systems that could be
achieved by combining with Huntington;
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<PAGE> 18
- Empire's various alternatives for enhancing shareholder value,
including acquiring other financial institutions and growth
through the establishment of new branches and acquisitions of
branches;
- the relative scarcity of opportunities of potential acquisitions
by Empire;
- the impact that possible accounting changes regarding mergers
could have on a potential acquisition of Empire in the future;
- opportunities for increased efficiencies and significant cost
savings from a combination with Huntington;
- the financial superiority of the transaction proposed by
Huntington in comparison to remaining independent and the
proposals received from other institutions;
- the social and economic effects of the merger on Empire, its
employees, depositors, creditors, customers, and the communities
in which Empire operates;
- the opinion of McConnell, Budd & Downes that, as of February 4,
2000, the exchange ratio was fair from a financial point of view
to Empire's shareholders;
- the likelihood that the merger will be approved by the
appropriate regulatory authorities; and
- the recommendations of Empire's management and the merger and
acquisition committee.
The foregoing discussion of the information and factors considered by
the Empire board is not intended to be exhaustive, but includes all material
factors considered by the Empire board. In reaching its determination to approve
and recommend the merger, the Empire board did not assign any relative or
specific weights to the foregoing factors, and individual directors may have
given differing weights to different factors. The Empire board is unanimous in
its recommendation that the Empire shareholders vote for approval of the merger
and the merger documents.
Huntington
Huntington considers the merger advantageous principally because the
acquisition of Empire will enable Huntington to expand its banking and related
activities in Michigan. Michigan is viewed as an attractive market for
Huntington. In addition, Huntington considers Empire an attractive partner
because of its strong financial performance and emphasis on high asset quality.
OPINION OF MCCONNELL, BUDD & DOWNES, INC.
On February 4, 2000, McConnell, Budd & Downes, Empire's financial
advisor, delivered its oral opinion to the board of directors of Empire that, as
of that date, the exchange ratio was fair, from a financial point of view to
Empire shareholders. The basis for this opinion has been updated for the
purposes of this proxy statement/prospectus and the opinion remains unchanged.
We have attached as Exhibit C to this proxy statement/prospectus the
full text of the McConnell, Budd & Downes opinion, which describes the
assumptions made, matters considered, and limits on the review undertaken. The
following is a summary of the opinion and matters which McConnell, Budd & Downes
considered. We incorporate the McConnell, Budd & Downes opinion by reference. We
urge you to read the opinion in its entirety.
Empire retained McConnell, Budd & Downes on November 12, 1999, to act
as financial advisor and provide assistance to Empire on the potential sale of
the company. Empire retained McConnell, Budd & Downes based on its
qualifications and experience in the financial analysis of banking and thrift
institutions generally, its knowledge of the Michigan banking markets, and its
experience with merger and acquisition transactions involving banking
institutions. As a part of its investment banking business, which is focused
exclusively on financial services
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<PAGE> 19
industry participants, McConnell, Budd & Downes is regularly engaged in the
valuation of financial institutions and their securities in connection with its
equity brokerage business generally and mergers and acquisitions in particular.
Members of the Corporate Finance Advisory Group of McConnell, Budd &
Downes have extensive experience in advising financial institution clients on
mergers and acquisitions. As part of its business as a NASD broker-dealer,
McConnell, Budd & Downes may, at times, purchase securities from or sell
securities to Empire or Huntington. As a market maker in securities, McConnell,
Budd & Downes may, at times, as part of its business have a long or short
position in, and buy or sell debt or equity securities of, Empire or Huntington
for its own account or for the accounts of its customers. In addition, as part
of its business, the employees of McConnell, Budd & Downes may have direct or
indirect investments in the debt or equity securities of either or both Empire
or Huntington.
With respect to the pending transaction involving Huntington,
McConnell, Budd & Downes advised Empire during the evaluation and negotiation
process leading up to the execution of the merger documents. In rendering its
advice, McConnell, Budd & Downes provided Empire with a number of analyses as to
a range of financially feasible exchange ratios that might be achieved in a
hypothetical transaction. Huntington and Empire arrived at the exchange ratio
through arms-length negotiations in which McConnell, Budd & Downes advised
Empire and participated directly.
The exchange ratio of 2.0355 shares of Huntington common stock in
exchange for each share of Empire common stock, was negotiated based on
consideration of a number of factors including:
- an analysis of the historical and projected future contributions
of recurring earnings by the parties;
- an analysis of the possible future earnings per share results for
the parties on both a combined and a stand-alone basis;
- analysis of the historical trading range, trading pattern, and
relative liquidity of the common shares of each of the parties;
- consideration of the anticipated dilutive or accretive effects of
the prospective transaction to the earnings per share of
Huntington and by extension, through the exchange ratio, to
earnings per share equivalent of Empire;
- consideration of the probable impact on dividends per share to be
received by Empire shareholders as a result of the contemplated
transaction;
- consideration of the relative earning contributions of the
parties;
- an analysis of the potential to realize reductions of recurring
operating expenses by Empire and Huntington;
- consideration of the capitalization, the tangible equity
capitalization, and the market capitalization of each of the
parties; and
- contemplation of other factors, including various intangible
factors.
Based on adjusted fully converted shares and share equivalents
outstanding for the two companies as of December 31, 1999, and the negotiated
exchange ratio of 2.0355 to 1, current Empire shareholders would have owned
approximately 2.7% of the pro forma shares outstanding of Huntington.
The opinion of McConnell, Budd & Downes addresses only the exchange
ratio. It does not constitute a recommendation to any shareholder as to how he
or she should vote at the Empire special meeting. The opinion is necessarily
based upon conditions as of the date of the opinion and upon information made
available to McConnell, Budd & Downes through the date of this proxy
statement/prospectus. Empire's board of directors did not impose any limitations
on McConnell, Budd & Downes with respect to the investigations it made, the
matters it considered, or the procedures it followed in rendering its opinions.
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Materials reviewed and analyses performed
In connection with rendering and/or updating its opinion, McConnell,
Budd & Downes reviewed the following documents and considered the following
subjects:
- the merger documents;
- the proxy statement/prospectus in substantially the form to be
mailed to Empire shareholders;
- Empire's Annual Reports to Shareholders for 1996, 1997, 1998 and
1999;
- Empire's Annual Reports on Form 10-K for 1996, 1997, 1998 and
1999;
- Empire's Quarterly Report on Form 10-Q and related unaudited
financial information for the first quarter of 2000;
- Empire's press release concerning unaudited results for the first
quarter of 2000;
- Huntington's Annual Reports to Shareholders for 1997, 1998 and
1999;
- Huntington's Annual Reports on Form 10-K and related financial
information for the three calendar years ended December 31, 1999;
- Huntington's Quarterly Reports on Form 10-Q and related unaudited
financial information for the first quarter of 2000;
- Huntington's press release concerning unaudited results for the
first quarter of 2000;
- internal financial information and financial forecasts relating
to the business, earnings, cash flows, assets, and prospects of
the respective companies which Empire furnished to McConnell,
Budd & Downes;
- discussions with members of Empire's senior management and board
of directors concerning Empire's past and current results of
operations, its current financial condition, and management's
opinion of its future prospects;
- discussions with members of the senior management of Huntington
concerning the past and current results of operations of
Huntington, its current financial condition, and management's
opinion of its future prospects;
- the historical record of reported prices, trading volume, and
dividend payments for both Empire and Huntington common stock;
- based primarily on anecdotal information, the current state of
and future prospects for the economy of Michigan generally and
the relevant market areas for Empire and Huntington in
particular;
- the results of specific merger analysis models developed by
McConnell, Budd & Downes to evaluate potential business
combinations of financial institutions using both historical
reported information and projected information for both Empire
and Huntington;
- the reported financial terms of selected recent business
combinations of financial institutions for purposes of comparison
to the pending transaction; and
- such other studies and analyses which McConnell, Budd & Downes
considered appropriate.
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The McConnell, Budd & Downes opinion takes into account its assessment
of general economic, market, and financial conditions and its experience in
other transactions involving participants in the financial services industry, as
well as its experience in securities valuation and its knowledge of the banking
industry generally. For purposes of reaching its opinion, McConnell, Budd &
Downes:
- assumed and relied upon the accuracy and completeness of the
information provided to it or made available by Empire and
Huntington;
- assumed that the financial forecasts made available to it were
prepared on a reasonable basis and reflected the best currently
available estimates and good faith judgments of the management of
Empire, as to the future performance of Empire; and
- relied upon assurances of the management of Empire and Huntington
that they were not aware of any facts or of the omission of any
facts that would make the information or financial forecasts
provided to it incomplete or misleading.
In the course of rendering the opinion, McConnell, Budd & Downes did not
complete any independent valuation or appraisal of any of the assets or
liabilities of either Empire or Huntington and has not been provided with such
valuations or appraisals from any other source.
The preparation of a fairness opinion is a complicated process,
involving a determination as to the most appropriate and relevant methods of
financial analysis and the application of those methods to the particular
circumstances. In arriving at its fairness opinion, McConnell, Budd & Downes did
not attribute any particular weight to any one specific analysis or factor
considered by it and made qualitative as well as quantitative judgments as to
the significance of each analysis and factor. Therefore, McConnell, Budd &
Downes believes that its analyses must be considered as a whole and feels that
attributing undue weight to any single analysis or factor considered could
create a misleading or incomplete view of the process leading to the formation
of its opinion.
In its analyses, McConnell, Budd & Downes made certain assumptions with
respect to banking industry performance, general business and economic
conditions, and other factors, many of which are beyond the control of
management of either Empire or Huntington. Estimates referred to in these
analyses are not necessarily indicative of actual values or predictive of future
results or values, which may vary significantly from those discussed in this
summary. In addition, analyses relating to the values of businesses do not
purport to be appraisals or to reflect the prices at which businesses might
actually be sold. Accordingly, such analyses and estimates are inherently
subject to uncertainty. McConnell, Budd & Downes does not assume responsibility
for the accuracy of such analyses or estimates.
Projected transaction value. Based upon the exchange ratio of 2.0355
for each share of Empire common stock exchanged and the last trade value of
Huntington common stock reported by NASDAQ Stock Market on February 4, 2000,
which was $21.25, the theoretical market value of the anticipated transaction
was approximately $138.6 million as of that date. On a per share basis this is
equivalent to approximately $43.25 per share ($21.25 multiplied by 2.0355). The
transaction was announced after the close of trading on February 4, 2000. Given
that the exchange ratio in this case is fixed, the market value of the exchange
will fluctuate as the market value of Huntington common stock fluctuates. Based
on the last trade value for Huntington common stock reported by NASDAQ as of
____________, 2000, which was ______________, the theoretical market value of
the anticipated transaction was approximately $_________ million as of such
date, based on an updated estimate of approximately _________ million shares of
Huntington common stock to be issued to Empire shareholders. This value will
continue to fluctuate as the value of a share of Huntington common stock
fluctuates in the market.
Multiple of historical and projected earnings for Empire common stock.
The theoretical value of $43.25 per share as of February 4, 2000 noted above,
represents a multiple of 18.9 times reported earnings per share for 1999, which
was $2.29. It represents a multiple of 17.3 times management's internal estimate
of stand alone earnings per share for 2000, which is $2.50. Based on the closing
market value for Huntington common stock as of ________, 2000, which was
$________, and a revised transaction value per share of $_______, the multiples
of earnings were ________ and _______ times for 1999 reported earnings per share
and management's internal estimate for 2000 stand-alone earnings per share,
respectively.
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Multiple of stated book value of Empire common stock. The theoretical
value of $43.25 per share represents a multiple of 2.98 times Empire's $14.52
fully diluted book value per share as of December 31, 1999. The updated value
per share of _____ represents _____ times Empire's unaudited fully diluted book
value per share as of _____, 2000.
Multiple of tangible book value of Empire common stock. The theoretical
value of $43.25 per share represents a multiple of 3.00 times Empire's $14.43
fully diluted tangible book value per share as of December 31, 1999. The updated
value per share of _____ represents _____ times Empire's unaudited fully diluted
tangible book value per share as of _____, 2000.
Percentage of market value of Empire common stock. The theoretical
values of $43.25 per share and $____ per share represent 139.52% (a 39.52%
premium) and ____% (a ____% premium) of the last reported bid prices for Empire
common stock, which was $31.00 on February 4, 2000 and $_____ on _________,
2000.
Specific acquisition analysis. McConnell, Budd & Downes employs a
proprietary analytical model to examine hypothetical transactions involving
banking companies. The model uses forecast earnings data, selected current
period balance sheet and income statement data, current market and trading
information, and a number of assumptions as to interest rates for borrowed
funds, the opportunity costs of funds, discount rates, dividend streams,
effective tax rates, transaction structures (the alternative or combined uses of
common equity, cash, debt, or other securities, to fund a transaction) and the
projected impact (if any) of any required deposit divestitures that might be
necessary to complete in conjunction with obtaining regulatory approval of a
given transaction. The model distinguishes between purchase and pooling
accounting treatments and analyses the economic feasibility of a given
hypothetical transaction at a given price level or specified exchange rate while
employing a specified transaction structure. The model also permits evaluation
of various levels of potential non-interest expense savings that might be
achieved along with various potential implementation timetables for such
savings, as well as the possibility of revenue enhancement opportunities that
may arise in a given hypothetical transaction.
Based on the exchange ratio of 2.0355 to 1, the transaction would
result in an increase of cash dividend payments to Empire from $1.20 to $1.63
based on annualized quarterly cash dividends paid by Huntington and Empire in
the fourth quarter of 1999. Pro forma fully diluted book value for Empire
shareholders would increase by 41.5% to $20.54 at December 31, 1999, and fully
diluted tangible book value would decrease by 3.3% to $13.96 at the same date.
Earnings pass-through analysis. Earnings pass-through analysis is based
on a comparison of anticipated pro forma values to stand-alone values as of a
given point in time. Based on an Empire management internal forecast of $2.50 in
stand-alone earnings per share for 2000, McConnell, Budd & Downes' calculations
suggest that with zero cost savings or revenue enhancements and factoring out
non-recurring and transaction expenses, the earnings associated with 2.0355
shares of Huntington common stock would represent a 54.0% increase over the
earnings associated with one share of Empire or approximately $3.85 per share.
"Cash Earnings" per share (adjusted for the amortization of intangible assets)
at the exchange ratio would increase from $2.51 to $4.09 on a pro forma basis
for 2000. The primary conclusion of this analysis is that an Empire shareholder
who exchanges his or her shares for Huntington common shares at the exchange
ratio of 2.0355 to 1 will then hold a security that, McConnell, Budd & Downes
believes, will generate more earnings per share per future period than the
single share of Empire common stock.
Discounted cash flow analysis. McConnell, Budd & Downes reviewed a
discounted cash flow model that it prepared based on projections provided by
Empire's management. This analysis compares various future cash flow scenarios,
calculating the present value of those cash flows for comparative purposes. The
model employed a projection of estimated earnings and cash dividends for Empire
on an independent stand-alone basis for calendar year 2000. McConnell, Budd &
Downes assumed three growth rates in earnings per share and cash dividends in
2001 through 2004, of 10%, 12% and 14%. Similar exercises were completed for the
hypothetical combination of Empire and Huntington for the same periods
employing, in the case of Huntington, projections for Huntington starting with
the median consensus estimated earnings per share for 2000 of $1.94 and grew
that by 10% annually through 2004, and a 10% growth rate scenario for Empire. As
part of each exercise, a 10% annual growth in hypothetical cash dividends was
used to project dividend streams, which would be available to shareholders.
McConnell, Budd & Downes employed a range of possible future market
price/earnings ratios ranging from a
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minimum of 13 times earnings to a maximum of 21 times earnings in order to
project possible future values for a share of Empire common stock on both an
independent basis and on a pro form basis at the exchange ratio.
Given the model's time horizon and a discount rate range of 10% to 14%,
these assumptions resulted in the range of present discounted values for a share
of Empire common stock on an independent basis of $30.23 to $64.28 and
considered the present discounted value of the projected stream of cash
dividends, which might be received by a shareholder during the period contained
in the model. The same exercise completed for a share of Empire, assuming the
acquisition by Huntington, generated a range of present discounted values (also
using a 10% to 14% range of discount rates) of $44.89 to $84.59. In the event
that there is no difference between the discounted cash flow analyses
represented by two alternatives one could be said to be financially indifferent
between alternatives. In each scenerio, the full range of present discounted
values for the hypothetical combinations of Empire and Huntington exceeded the
full range of present discounted values for Empire on a stand-alone basis.
The point of such a discounted cash flow exercise is not to make a
precise estimate of where Empire on a stand-alone basis will be trading at a
precise point in the future. It is equally not an effort to predict, on a
precise basis, where Huntington, assuming the acquisition of Empire, will be
trading at an exact point in the future. Precise predictions are well beyond the
capability of McConnell, Budd & Downes, Empire, or Huntington due to the large
number of variables involved, many of which are beyond the control of
management. Rather, the point of the exercise is to employ reasonable earnings
estimates to analyze whether one given course of action is likely to be better
over time than another.
The discount factors employed include the concept of (1) the time value
of money and risk factors that reflect the uncertainty of the forecasted cash
flows; and (2) terminal price/earnings multiples. Use of higher discount rates
would result in lower discounted present values. Conversely, use of lower
discount rates would result in higher discounted present values. McConnell, Budd
& Downes advised Empire's board of directors that although discounted cash flow
analysis is a frequently used valuation methodology, it relies on numerous
assumptions, including discount rates, terminal values, future earnings
performance, asset growth rates, and dividend payout ratios. The accuracy of
these assumptions for time periods over one year is very difficult and contains
the possibility of inaccuracy despite McConnell, Budd & Downes' attempts to be
both accurate and conservative in its analysis. Consequently, any or all of
these assumptions may vary from actual future performance. Any variances made in
the selection of assumptions for such an exercise can impact one another and can
lead to conclusions that may not reflect actual results.
Analysis of other comparable transactions. McConnell, Budd & Downes is
reluctant to place emphasis on the analysis of comparable transactions as a
valuation methodology due to what it considers to be inherent limitations of the
application of the results to specific cases. It has observed that such analysis
as routinely employed by some industry observers and financial advisors fails to
adequately take into consideration such factors as:
- material differences in the underlying capitalization of the
comparable institutions which are being acquired;
- differences in the historic earnings (or loss) patterns of the
compared institutions which can depict a very different trend
than might be implied by examining only recent financial results;
- non-recurring profits or losses which can distort earnings
multiples;
- material differences in the form or forms of consideration used
in the transaction;
- differences between the anticipated method of accounting for the
transaction;
- other less accessible factors, such as the relative population,
business, and economic demographics of the acquired entities'
markets as compared to the markets in which the comparable
institutions are doing business.
With these reservations in mind, we nonetheless examined statistics
associated with thirty-five transactions involving financial institutions
located in the Midwest between January 1, 1997, and December 31, 1999. The
median price/stated book value, price/stated tangible book value, and price to
trailing 12 months earnings were 263.81%, 284.28%, and 21.48x respectively. The
comparable price/stated book value, price/stated tangible book value, and
price/trailing 12 months earnings for Empire based on Huntington's closing stock
price on February 4, 2000, were 298%, 300% and 18.9x respectively.
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Compensation of McConnell, Budd & Downes
Empire has agreed to pay McConnell, Budd & Downes an aggregate fee
equivalent to 0.90% of the market value of the consideration to be received by
Empire's shareholders. This aggregate fee is payable in four installments.
Empire paid $25,000 to McConnell, Budd & Downes at the time the engagement
letter was signed, $350,000 at the time the merger documents were signed, and
$350,000 when its opinion included as an exhibit to this proxy statement/
prospectus was issued. The last installment will be paid on the date when the
merger is completed.
The trading value of Huntington common stock impacts the fee payable to
McConnell, Budd & Downes. The fee represents compensation for services rendered
in connection with analyzing the hypothetical transaction, supporting the
negotiations, participating in the drafting of the merger documents, and
rendering and updating the opinion. In addition, Empire will reimburse
McConnell, Budd & Downes for its reasonable out-of-pocket expenses incurred in
connection with the engagement. Empire also has agreed to indemnify McConnell,
Budd & Downes and its directors, officers, and employees against losses, claims,
damages, and liabilities relating to or arising out of the engagement, including
liabilities under the federal securities laws.
EFFECTIVE TIME OF THE MERGER
The merger will be effective at 11:59 p.m., local Ohio time, on the day
articles of merger are filed with the state of Maryland and a certificate of
merger is filed with the state of Michigan, unless a later date is specified in
these documents when they are filed. Before the merger can become effective,
various conditions must be satisfied. For example, the Empire shareholders must
first approve the merger and merger documents, the appropriate regulatory
authorities must also approve the merger, and all required waiting periods must
expire.
Unless we agree to a different date, the merger will be effective on
the fifth business day after the last of the conditions have been satisfied or
waived. We anticipate that, if these conditions are satisfied, the merger will
be effective in June 2000.
TERMS OF THE MERGER
The merger documents provide that, if all the conditions to the merger
are satisfied or waived, Empire will merge into Huntington. At the effective
time of the merger, Huntington will be the surviving entity and Empire's
separate corporate existence will cease. Huntington's charter and bylaws as in
effect immediately prior to the effective time of the merger will govern the
surviving entity.
In the merger, Huntington will exchange each share of Empire common
stock outstanding immediately before the merger for 2.0355 shares of Huntington
common stock. Huntington will pay cash in substitution for any fractional share
of Huntington common stock. Huntington will not pay interest on any cash
payments received by any Empire shareholder.
The number of shares of Huntington common stock you will receive in the
merger will be subject to certain adjustments. If Empire issues additional
shares of stock prior to the merger (other than in cases that were disclosed to
Huntington prior to the time we executed the merger documents), the exchange
ratio will be decreased by the amount necessary so that the number of shares
issued by Huntington in the merger will not exceed 6,533,047 shares. This total
number of shares takes into account the issuance of Empire stock upon exercise
of an outstanding stock option and under the terms of a director compensation
plan. We do not expect that Empire will issue shares such that the above
adjustment will be triggered. On the other hand, if Huntington declares a stock
dividend or stock split and the record date is prior to the merger, the exchange
ratio will be increased so that the Empire stockholders will not be diluted by
the stock split or stock dividend.
When the merger becomes effective, Huntington will convert the
remaining outstanding Empire stock option into an option to purchase the same
number of shares of Huntington common stock as the holder would have been
entitled to receive in the merger if the holder had exercised the option in full
prior to the effective time of the merger. An adjustment will also be made to
the per share exercise price for such option so that the holder
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<PAGE> 25
will be paying the same amount of money in the aggregate for the Huntington
shares as the holder would have paid for the Empire shares if the holder had
exercised the option prior to the merger.
EXCHANGE OF CERTIFICATES
When the merger is completed, Empire common stock will automatically
convert into the right to receive shares of Huntington common stock. Therefore,
you will need to exchange your old Empire stock certificates for new Huntington
stock certificates.
Huntington's transfer agent, Harris Trust and Savings Bank, will
deliver to you a letter of transmittal and instructions to facilitate the
exchange of certificates. If you surrender your stock certificates to Harris
Trust, together with a signed letter of transmittal, you will be entitled to
receive, in exchange, a certificate representing the whole shares of Huntington
common stock. In addition, you will receive a check representing cash in lieu of
any fractional share.
If your certificate representing shares of Empire common stock has been
lost, stolen, or destroyed, you must submit to Harris Trust an affidavit in a
form that Huntington and Harris Trust have approved. Upon receipt of a properly
executed affidavit, Harris Trust will cancel the lost, stolen, or destroyed
certificate on its records. As a condition to issuing a new stock certificate,
however, we may require you to provide us with a bond in the amount specified by
Huntington's policies.
You will not receive any dividend or other distribution declared on
Huntington common stock after completion of the merger until after you have
surrendered your Empire stock certificate for exchange. Promptly upon surrender
of your Empire certificate, you will be paid the amount of dividends or other
distributions, if any, which had become payable with respect to your full shares
of Huntington common stock, but which had not yet been paid on such stock. You
will not be paid any interest with respect to the such dividends or other
distributions. All dividends or other distributions unclaimed at the end of
three years from the effective date of the merger will be repaid to Huntington.
After that time, you will be in the same position as a general creditor of
Huntington for payment of such dividends and distributions, subject to
applicable escheat, unclaimed funds, and other laws.
The stock transfer books of Empire will close as of the close of
business on the second business day prior to the effective date of the merger.
After that date, there will be no further stock transfers registered on the
records of Empire.
Huntington is empowered to adopt additional reasonable rules and
regulations with respect to the matters described above. These additional rules
and regulations cannot be inconsistent with the provisions of the merger
documents.
TERMS OF THE WARRANT
Empire has granted a warrant to Huntington which gives Huntington the
right, under certain specified circumstances, to purchase up to 630,080 shares
of Empire common stock for a purchase price of $29.00 per share. This number of
shares represents 19.9% of the outstanding shares of Empire common stock as of
the date the merger documents were signed. We will make an adjustment to the
number of shares which are subject to the warrant and the purchase price of
those shares if the total number of shares of Empire common stock is increased
or decreased from 3,166,234, so that the number of shares issuable on exercise
of the warrant always will be 19.9% of the total number of outstanding shares of
Empire common stock.
Huntington may not exercise the warrant unless it has obtained all
required regulatory approvals, if any, under applicable laws and regulations.
Further, Huntington generally may not exercise the warrant without the written
consent of Empire unless any of the following triggering events has occurred:
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- Empire materially, willfully, and intentionally breaches the
merger documents:
>> after Empire has received a proposal to engage in an
acquisition transaction with a party other than Huntington,
>> after the announcement by a party other than Huntington of
an intention to engage in an acquisition transaction with
Empire, or
>> in anticipation and for the purpose of engaging in an
acquisition transaction with a party other than Huntington;
or
- a proposal to engage in an acquisition transaction with a party
other than Huntington is approved by Empire's shareholders at any
time prior to January 31, 2001, and the merger with Huntington is
not closed prior to January 31, 2001; or
- a tender offer for 20% or more of Empire's capital stock is
commenced by a party other than Huntington, such tender offer
results in the third party acquiring beneficial ownership of more
than 20% of Empire's capital stock, and the merger with
Huntington is not closed prior to January 31, 2001; or
- a proposal to engage in an acquisition transaction with a party
other than Huntington is announced or received by Empire or a
tender offer for 20% or more of Empire's capital stock is
announced or made directly to the shareholders of Empire prior to
the holding of the Empire special meeting, the merger with
Huntington is not closed prior to January 31, 2001, and, prior to
that time, Empire's board of directors:
>> fails to recommend to the Empire shareholders that they vote
their shares of Empire common stock in favor of the approval
of the merger with Huntington,
>> withdraws such recommendation previously made,
>> fails to solicit the proxies of Empire shareholders to
approve the merger with Huntington, or
>> fails to hold the Empire special meeting for the purpose of
approving the merger with Huntington.
Whether or not one of these triggering events occurs, Huntington cannot
exercise the warrant if the failure to close the merger is solely the result of
the following:
- the applicable regulatory authority does not approve the merger,
so long as this failure to approve was not the result of a third
party's competing acquisition proposal or a breach by Empire of
any of its obligations under the merger documents; or
- the merger documents are terminated in accordance with their
terms, unless the termination is preceded by any of the
triggering events described above or is preceded by the
submission of a third party's competing acquisition proposal.
At the request of Huntington or any subsequent holder of the warrant at
any time within six months after a triggering event, Empire must repurchase the
warrant and/or all shares of Empire common stock issued on exercise of the
warrant. The repurchase price will be based on the highest price paid for shares
of Empire common stock in connection with the triggering event.
The terms of the warrant are governed by and are more fully described
in the warrant itself and a warrant purchase agreement. These documents are
exhibits to the supplemental agreement which is attached to this proxy
statement/prospectus as Exhibit B.
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THE SUBSIDIARY MERGER
We anticipate that Empire Bank will be merged into Huntington Bank
immediately after the closing of the merger. The closing of this subsidiary
merger is not a condition to the closing of the merger of the holding companies;
however, in order to meet the conditions of the regulatory waiver for the
holding company merger, the closings must occur on the same day.
ADDITIONAL AGREEMENTS OF THE PARTIES
The merger documents provide, among other things, that we must:
- use reasonable efforts to take all actions and to do all things
necessary to complete the merger, subject to the terms and
conditions of the merger documents;
- keep each other advised of all material developments relevant to
our respective businesses and the completion of the merger;
- file all reports required to be filed with the applicable
regulatory authorities; ensure that the financial statements
contained in all such reports are prepared in accordance with the
applicable laws; and ensure that all such reports filed with the
SEC comply with all applicable securities laws and do not contain
an untrue or misleading statement or omit information which is
material;
- maintain the confidentiality of all confidential information and
ensure that our advisors maintain this confidentiality; not use
such information other than in furtherance of the merger; and
promptly return or certify the destruction of all documents and
work papers containing confidential information received from the
other party if the merger documents are terminated prior to the
effective time of the merger;
- consult with each other as to the form and substance of any press
release or other public disclosure materially related to the
merger; and
- use reasonable efforts to cause the merger to qualify as a
reorganization within the meaning of the applicable tax law.
Empire has agreed to operate its business in the normal course and take
no action which would adversely affect our ability to obtain any consent from
any regulatory agency or other person required for the merger without any
burdensome condition or restriction. In addition, the merger documents provide
that, Empire cannot do or commit to:
- amend its articles of incorporation, by-laws, or other governing
instruments;
- engage in any acquisition or take any other action that adversely
affects its ability to complete the merger;
- incur any additional debt obligation except in the ordinary
course of business consistent with past practices or impose or
permit to exist on any asset any lien or other encumbrance;
- repurchase or otherwise acquire or exchange (other than in the
ordinary course under employee benefit plans) any shares, or
securities convertible into any shares, of Empire's common stock,
or, except as discussed below, declare or pay any dividend, or
make any other distribution in respect of Empire's common stock;
- issue, sell, or pledge any additional shares of Empire common
stock or any other capital stock or stock rights;
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- split, combine, or reclassify any capital stock or issue or
authorize the issuance of any other securities in respect of
shares of Empire common stock;
- sell, lease, mortgage, or otherwise dispose of any asset other
than in the ordinary course of business for reasonable and
adequate consideration;
- purchase any securities or make any material investments, except
as provided for in the merger documents;
- grant any increase in compensation or benefits to its employees
(except as in accordance with past practices) or officers; pay
any severance or termination pay or any bonus other than as
required by written policies or contracts in effect on the date
of the merger documents; enter into or amend any severance
agreements with officers; grant any increase in compensation or
benefits to directors; voluntarily accelerate the vesting of any
employee benefits; or grant any stock appreciation rights, cash
awards, or any rights to acquire any Empire securities under any
Empire stock option plan;
- enter into or amend any employment contract, other than as
required by law, unless Empire has the unconditional right to
terminate it without liability at any time;
- adopt any new employee benefit plan, or terminate or make any
material change to an existing employee benefit plan, other than
as required by law or deemed advisable by counsel to maintain the
tax qualified status of such plan, or make any distributions from
such employee benefit plans except as required by law, the terms
of such plan, or consistent with past practice;
- make any significant change in any tax or accounting method or
system of internal accounting controls, except as may be
appropriate to conform with changes in the tax laws, regulatory
accounting requirements, or generally accepted accounting
principles;
- commence any litigation other than in accordance with past
practice or settle material litigation; and
- enter into, amend, or terminate any material contract or waive,
compromise, or assign any material rights or claims, except in
the ordinary course of business.
There are certain permissible exceptions to the above limitations.
Generally, Empire is permitted to do any of the above if it disclosed the
circumstances to Huntington prior to date of the merger documents or if it
obtains Huntington's prior written consent (which will not be unreasonably
withheld) after the date of the merger documents. In addition, Empire may, but
is not obligated to, declare and pay its customary quarterly cash dividend on
shares of Empire common stock not in excess of $0.35 per share and otherwise in
accordance with past practices. We will, however, coordinate with each other to
ensure that the holders of Empire common stock will receive at least one
dividend from either Empire or Huntington, but not more than one, for each
calendar quarter through the closing of the merger.
In addition, Empire cannot, directly or indirectly, solicit or
encourage, or, except to the extent necessary to comply with the fiduciary
duties of its board of directors as advised by counsel, entertain any proposal
to engage in any third party acquisition transaction that competes with the
merger with Huntington. Empire also agreed to terminate any discussions
previously initiated, directly or indirectly, with other parties regarding an
acquisition transaction that competes with the merger with Huntington. Except to
the extent necessary to comply with the fiduciary duties of Empire's board of
directors as advised by counsel, Empire cannot:
- fail to recommend that Empire shareholders vote in favor of the
merger or withdraw such a recommendation previously made;
- fail to solicit proxies of the shareholders of Empire;
- fail to hold the Empire special meeting; or
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<PAGE> 29
- furnish any non-public information that it is not legally
obligated to furnish in connection with, or negotiate or enter
into any agreement with respect to, any third party acquisition
transaction that competes with the merger with Huntington.
Empire is required to notify Huntington orally and in writing in the event that
it receives any inquiry or proposal relating to any third party acquisition
transaction that competes with the merger with Huntington.
The merger documents provide that Huntington will not:
- take any action which would adversely affect Huntington's ability
to obtain any consent from any regulatory agency or other person
required for the merger without any burdensome condition or
restriction; or
- without the prior written consent of Empire (which consent cannot
be unreasonably withheld), amend its articles of incorporation,
bylaws, or the Huntington Shareholder Rights Plan in any manner
adverse to the Empire shareholders as compared to the rights of
the Huntington shareholders as of the date of the merger
documents.
CONDITIONS TO COMPLETION OF THE MERGER
The merger will occur only if the merger documents are approved by the
holders of a majority of the outstanding shares of Empire common stock at the
special meeting. In addition, completion of the merger is subject to certain
other conditions:
- We must obtain all required approvals from the applicable
regulatory authorities and any applicable waiting periods must
expire. These regulatory approvals cannot be conditioned or
restricted in a manner which would materially impact the economic
or business assumptions of the merger.
- We must obtain all required third-party consents, if any, to
prevent any material default under any contract, permit, or other
document which, if not received, is reasonably likely to have a
material adverse effect on one of us. These consents cannot be
conditioned or restricted in a manner which would materially
impact the economic or business assumptions of the merger.
- No law, regulation, reporting or licensing requirement, or any
action by any court or regulatory authority may prohibit,
restrict, or make illegal the completion of the merger.
- The shares of Huntington common stock to be issued in the merger
must be approved for quotation on the Nasdaq National Market.
- We must receive an opinion of counsel for Huntington regarding
certain tax aspects of the merger.
The obligations of Huntington to complete the merger are further
conditioned upon certain conditions, including:
- The representations and warranties of Empire in the merger
documents must continue to be true and correct in all material
respects.
- Empire must carry out its agreements in all material respects
that are required to be performed prior to the effective time of
the merger.
- The shareholders' equity of Empire as of the end of the last
fiscal quarter preceding the merger must be not less than
$45,886,000;
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<PAGE> 30
- Empire must deliver to Huntington commitments for owners' title
insurance policies and related documents insuring Empire's
ownership interests in all real estate owned by Empire.
- Empire must deliver to Huntington surveys and environmental
assessments for parcels of real property owned by Empire.
The obligations of Empire to complete the merger are further
conditioned upon certain conditions, including:
- The representations and warranties of Huntington in the merger
documents must continue to be true and correct in all material
respects.
- Huntington must carry out its agreements in all material respects
that are required to be performed prior to the effective time of
the merger.
- The fairness opinion of Empire's financial advisor, McConnell,
Budd & Downes, must not have been withdrawn prior to the date of
the special meeting.
Either of us may waive compliance by the other party with any of the
conditions and agreements contained in the merger documents, except any
condition which, if not satisfied, would result in the violation of any law.
AMENDMENT
We can amend the merger documents before or after approval by the
Empire shareholders, except that, after any such shareholder approval, we must
obtain the further approval of the Empire shareholders if required by Michigan
law.
TERMINATION AND TERMINATION FEE
The merger documents may be terminated and the merger abandoned at any
time prior to the effective time of the merger:
- by our mutual consent;
- by either of us in the event of a material inaccuracy of any
representation of the other party or the material breach of any
agreement by the other party which cannot be cured within 30 days
after written notice was given to the breaching party;
- by either of us in the event any required consent of any
regulatory authority is denied or the shareholders of Empire fail
to vote their approval of the merger;
- by either of us in the event the merger is not completed by
January 31, 2001;
- by either of us in the event that any of the conditions precedent
to the obligations of the terminating party cannot be fulfilled
or satisfied by January 31, 2001; and
- by Huntington, in the event that the directors of Empire fail to
reaffirm their approval of the merger or affirm, recommend, or
authorize any third party acquisition transaction that competes
with the merger with Huntington.
Except when the termination is by mutual consent or involves a
competing acquisition transaction, in order to cause the termination of the
merger documents, the terminating party must not then be in material breach of
any representation, warranty, or other agreement in the merger documents.
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<PAGE> 31
In the event either of us terminates the merger documents, the merger
documents will become void and our respective representations, obligations, and
agreements will not survive such termination, except for certain provisions
involving treatment of confidential information and the payment of expenses and
the termination fee, if applicable.
The merger documents provide that Empire will pay to Huntington a
termination fee in the amount of $4,500,000 plus the direct costs and expenses
incurred by or on behalf of Huntington in connection with the transactions
contemplated under the merger documents if there is:
- any material, willful, and intentional breach of the merger
documents by Empire occurring after the announcement of, or
receipt by Empire of, a proposal involving a third party
acquisition transaction that competes with the merger with
Huntington;
- a proposal involving a third party acquisition transaction that
competes with the merger with Huntington is submitted to the
Empire shareholders and, prior to December 31, 2001, such
transaction is approved by the Empire shareholders;
- a tender offer is commenced by a third party and results in that
third party acquiring beneficial ownership of more than 20% of
the outstanding Empire common stock, and the merger with
Huntington is not completed prior to December 31, 2001; or
- a proposal involving a third party acquisition transaction that
competes with the merger with Huntington is received by Empire or
is made directly to the shareholders of Empire, or the intention
of making such a proposal or tender offer is announced at any
time prior to the Empire special meeting; the directors of Empire
either fail to recommend or withdraw their recommendation to the
Empire shareholders to approve the merger, fail to hold the
special meeting, or fail to solicit proxies for the approval of
the merger with Huntington; and the merger is not completed by
December 31, 2001.
NO DISSENTING SHAREHOLDERS' RIGHTS
Under Michigan law, the holders of Empire common stock are not entitled
to dissenting shareholders' rights in connection with the merger.
INTERESTS OF MANAGEMENT
The directors and executive officers of Empire who are also
shareholders of Empire will have their shares converted into shares of
Huntington common stock on the same basis as the Empire shares held by you and
the other shareholders of Empire. In addition, certain executive officers have
had employment agreements since 1988 and participate in benefit plans that
provide them with interests in the merger that are different from, or in
addition, to your rights.
Each of James E. Dutmers, Jr., William T. Fitzgerald, Jr., Robert L.
Israel, Marilyn J. McCool, James M. Merenda, Bruce W. Reavely, and Daniel G.
Stoudt, is a party to an employment agreement with Empire which provides for the
continuation or acceleration of salary payments and benefits in the event of the
officer's termination of employment following a change in control of Empire. In
addition, the supplemental nonqualified retirement plans of Empire have
acceleration clauses in the event of a change in control of Empire. The merger
of Empire into Huntington will be a "change in control" for purposes of these
agreements and plans.
In order to retain the services of these executive officers during at
least the initial transition period after the merger, Huntington has agreed to
pay a lump sum amount to each such officer in satisfaction of any payment or
benefit payable under any of these executive agreements and plans. The lump sum
amount represents the present value of the sum of all salary and benefits
payable over time which the applicable executive officer would have been
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<PAGE> 32
entitled to if that officer had terminated his or her employment immediately
after the merger. Except in the case of Ms. McCool, the total lump sum payment
will be reduced to the extent necessary so that neither Huntington nor Empire is
required to pay an "excess parachute payment" under federal tax laws. With
respect to Ms. McCool's payment, neither Empire nor Huntington will be able to
deduct the "parachute" portion of the lump sum payment to Ms. McCool which is in
excess of her average taxable compensation over the prior five years.
The following table shows for each executive officer (a) the portion of
the lump sum amount that represents the present value of salary and benefits
other than supplemental nonqualifed retirement benefits payable under the
officer's employment agreement; (b) the portion of the lump sum amount that
represents the supplemental nonqualifed retirement benefits both earned by the
officer over the officer's career with Empire and payable under the officer's
employment agreement; (c) the gross lump sum payment prior to any reduction (the
sum of columns (a) and (b)); (d) the estimated amount that will be subtracted
from the gross lump sum payment in order to keep the total lump sum payment from
being an "excess parachute payment" under federal law; and (e) the total lump
sum payment to the officer after the reduction indicated in column (d).
<TABLE>
<CAPTION>
(B)
(A) SUPPLEMENTAL
SALARY AND NON-QUALIFIED (C) (D) (E)
BENEFIT RETIREMENT GROSS LUMP SUM ESTIMATED TOTAL LUMP SUM
EXECUTIVE OFFICER CONTINUATION BENEFIT PAYMENT REDUCTION(2) PAYMENT
----------------- ------------ -------------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
James E. Dutmers, Jr. $1,368,738 $1,639,388 $3,008,126 $309,700 $2,698,426
William T. Fitzgerald, Jr. 717,124 667,869 1,384,993 0 1,384,993
Robert L. Israel 1,215,510 1,219,927 2,435,437 0 2,435,437
Marilyn J. McCool(1)(2) 582,154 611,642 1,193,796 0 1,193,796
James M. Merenda 719,983 630,613 1,350,596 0 1,350,596
Bruce W. Reavely 722,487 629,328 1,351,815 0 1,351,815
Daniel G. Stoudt 716,497 739,966 1,456,463 25,919 1,430,544
</TABLE>
(1) Ms. McCool will be personally subject to a federal excise tax estimated to
be in the amount of $217,000.
(2) The estimated payment to Ms. McCool that will not be deductible by
Huntington or Empire, the amount of reductions in the lump sum payment
shown in the above table, and the amount of excise taxes payable by Ms.
McCool depend on several factors which can not be determined with certainty
at this time. For example, the interest rate required by federal law to
determine the present value of payments under the employment contracts may
change prior to the completion of the merger. These factors will not be
known until at or about the time the merger of Empire into Huntington is
completed.
Upon receipt of these lump sum payments, the executive officers have
agreed to waive all rights under the employment agreements and supplemental
non-qualified retirement benefit plans. In addition, each of these executive
officers has agreed to remain in the employ of Huntington after the merger
through December 31, 2000, and Huntington has agreed to retain these officers at
their current salary levels and with customary benefits under Huntington's
employee benefit plans during this transition period. On January 1, 2001, these
officers become at will employees of Huntington under mutually agreeable terms.
These officers are not entitled to benefits under Huntington's transition pay
plan.
Upon effectiveness of the merger, Huntington has agreed to provide
generally to the officers and employees of Empire who become officers or
employees of Huntington or its affiliates employee benefits under Huntington
benefit plans currently provided generally by Huntington and its affiliates to
their similarly situated officers and employees. For purposes of participation
and vesting under such Huntington employee benefit plans, the service of Empire
employees prior to the effective time of the merger will be treated as service
with Huntington or one of its affiliates participating in such plan.
One of Empire's officers holds an option to purchase, in the aggregate,
23,820 shares of Empire common stock. At the effective time of the merger,
Huntington will convert this stock option, to the extent it remains
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<PAGE> 33
outstanding, into an option to purchase the same number of shares of Huntington
common stock as the holder would have been entitled to receive in the merger if
the holder had exercised the option in full prior to the effective time of the
merger. An adjustment will also be made to the per share exercise price for such
option so that the holder will be paying the same amount of money in the
aggregate for the Huntington shares as the holder would have paid for the Empire
shares if the holder had exercised the option prior to the merger.
For a period of six years after the effective time of the merger,
Huntington has agreed, to the extent permitted by law, to indemnify each of
Empire's directors, officers, employees, and agents against certain liabilities
arising out of such person's service as a director, officer, employee, or agent
of Empire. This indemnification applies to matters occurring at or prior to the
effective time of the merger and will be provided to the full extent that Empire
would have been permitted under federal or Michigan law, or by its articles of
incorporation or bylaws.
Huntington has agreed that all Empire employees in the Empire bonus
plan on the effective date of the merger will be paid bonuses out of the pool
established for that plan if they are still employed by Huntington or an
affiliate of Huntington on December 31, 2000, or were terminated prior to that
time without cause or due to job elimination. The amount of the entire pool will
be $1,153,000 multiplied by the percentage of the year that has elapsed prior to
the closing of the merger.
Immediately prior to the effective time of the merger, Empire will pay
out or distribute to each participant in the Empire director compensation plans:
- all cash accrued to each participant under the plans (estimated
to be $828,374 in the aggregate at June 30, 2000); and
- all shares of Empire common stock allocated for issuance to each
participant under the plans (which cannot exceed 19,500 shares in
the aggregate).
Empire shall terminate such plans effective as of the effective time of the
merger. The shares of Empire common stock distributed to participants of the
director compensation plans will be converted to shares of Huntington common
stock at the effective time of the merger on the same basis as shares held by
other Empire shareholders.
FEDERAL INCOME TAX CONSEQUENCES
We have summarized below certain material United States federal income
tax consequences of the merger. This summary is based on the Internal Revenue
Code of 1986, as amended, and is for general information only. This summary is
not a complete description of all the possible tax consequences of the merger
and the tax treatment of a particular shareholder will depend upon such
shareholder's particular situation.
Special tax considerations may be applicable to particular classes of
taxpayers, such as foreign citizens, broker-dealers, certain retirement plans,
tax-exempt entities, financial institutions, insurance companies, or persons who
do not hold their Empire common stock as a capital asset. Special tax
considerations may also be applicable to any shareholder who holds Empire common
stock as part of a hedge, appreciated financial position, straddle, or
conversion transaction, or who acquired common stock through the exercise of an
employee stock option or otherwise as compensation. These special tax
considerations are not discussed in this summary. You should consult with your
own tax advisor as to particular tax consequences of the merger to you,
including the applicability and effect of state, local, and foreign tax laws and
possible changes in the tax law.
Completion of the merger is dependent upon our receipt of an opinion of
Porter, Wright, Morris & Arthur LLP, counsel to Huntington, regarding the tax
consequences of the merger. Porter, Wright will opine that, for federal income
tax purposes, the merger will constitute a reorganization within the meaning of
the applicable provisions of the tax code and will result in the tax
consequences described below. Porter, Wright's opinion will rely upon certain
qualifications and assumptions as well as our representations and the
representations of our officers, directors, and shareholders. Porter, Wright
will not independently investigate or verify these assumptions and
representations. The opinion will assume that these assumptions and
representations are true as of the effective time of the merger.
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<PAGE> 34
Based upon these qualifications, assumptions, and representations:
- You will not recognize gain or loss upon your receipt of shares
of Huntington common stock solely in exchange for your shares of
Empire common stock, except to the extent that you receive cash
in substitution of any fractional share.
- Your tax basis in the Huntington common stock you receive in the
merger will be the same as the tax basis of your Empire common
stock you surrendered in exchange (reduced by any amount
allocated to a fractional share of Huntington common stock for
which you will receive cash).
- Your holding period for tax purposes of the Huntington common
stock you receive in the merger will include the holding period
of the shares of Empire common stock you surrender in exchange,
provided that you held your Empire common stock as a capital
asset on the effective date of the merger.
- If you are paid cash in substitution for a fractional share of
Huntington common stock, the transaction will be treated for
federal income tax purposes as if the fractional share had been
distributed as part of the exchange and then redeemed by
Huntington. Your cash payment will be treated as having been
received as a distribution in full payment in exchange for the
fractional share redeemed, subject to the conditions and
limitations of the applicable provisions of the tax code.
- Neither of us will recognize gain or loss (except for the
inclusion in income of amounts resulting from any required
changes in accounting methods or similar items) as a result of
the completion of the merger.
IRS regulations (specifically, Section 1.368-3) require that you retain
records and file a statement describing facts about the merger with your United
States federal income tax return.
You may be subject to the information reporting requirements of the
Internal Revenue Service and to a 31% backup withholding tax with respect to the
cash paid in substitution for any fractional share of Huntington common stock.
You will not, however, be subject to backup withholding if you complete and sign
the substitute Form W-9 that will be included as part of the transmittal letter
or otherwise prove to Huntington and the exchange agent that you are exempt from
backup withholding.
This summary is based on currently existing provisions of the United
States tax code, existing and proposed U.S. Treasury regulations, and current
administrative rulings and court decisions. Porter, Wright's opinion is not
binding on the Internal Revenue Service and we do not intend to seek or obtain a
ruling from the Internal Revenue Service in relation to the merger. If
challenged, we cannot assure you that the Internal Revenue Service or a court
will agree with the tax consequences of the merger described above. This summary
is subject to change and any such change could affect the continuing validity of
the summary.
YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISOR CONCERNING THE SPECIFIC
TAX CONSEQUENCES OF THE MERGER TO YOU, INCLUDING THE APPLICABILITY AND EFFECT OF
FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX LAWS AND ANY PROPOSED CHANGES IN
SUCH TAX LAWS.
ACCOUNTING TREATMENT
We anticipate that the merger will be accounted for by Huntington as a
purchase. Thus, the results of Empire will be included in Huntington's
consolidated financial statements from the date that the merger is effective.
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<PAGE> 35
REGULATORY APPROVALS
The merger of two bank holding companies generally would require an
application for prior approval to be filed with the Federal Reserve Board. Under
federal law applicable to bank holding companies, merger transactions that are
for the purpose of merging subsidiary banks and that require the approval of
another federal bank regulator do not require prior Federal Reserve Board
approval and necessitate only a 10-day prior notice rather than a full
application.
The merger of Empire Bank into Huntington Bank will require the
approval of the Office of the Comptroller of the Currency. Accordingly,
Huntington has filed for a waiver from the Federal Reserve Board's general
application requirement and we anticipate that the merger of Empire into
Huntington will qualify for the exemption from this requirement. An application
to the OCC for the merger of Empire Bank into Huntington Bank was filed on April
7, 2000. On that date, we also submitted a notice to the Federal Reserve Bank of
Cleveland relating to the merger of Empire into Huntington.
Approval of the subsidiary merger by the OCC requires that specified
criteria mandated by federal law be met. In conducting its review of any
application under these federal laws, the OCC is required to take into
consideration:
- the financial and managerial resources (including the competence,
experience and integrity of the officers, directors, and
principal shareholders) of the existing and proposed
institutions,
- the future prospects of the existing and proposed institutions,
and
- the convenience and needs of the communities to be served.
In considering financial resources and future prospects, the OCC will, among
other things, evaluate the adequacy of the capital levels of the parties to a
proposed transaction.
Federal law prohibits the OCC from approving a merger if it would:
- substantially lessen competition,
- result in a restraint of trade,
- result in a monopoly, or
- be in furtherance of a conspiracy or an attempt to monopolize the
business of banking in any part of the United States.
An exception to this prohibition exists if the OCC finds that the
anti-competitive effects of the merger are clearly outweighed in the public
interest by the probable effect of the transaction in meeting the convenience
and needs of the communities to be served. In addition, under the Community
Reinvestment Act of 1977, as amended, the OCC must take into account the record
of performance of the existing institutions in meeting the credit needs of the
entire community, including low- and moderate-income neighborhoods served by
such institutions.
Federal law applicable to financial institution mergers provides for
the publication of notice of the application for approval. There is also an
opportunity for administrative hearings relating to approval of the application.
Interested parties may intervene in the approval proceedings. If an interested
party intervenes, such intervention could substantially delay the regulatory
approvals required for completion of the merger. Any merger approved by the OCC
is subject to a statutory waiting period of 15 to 30 days, during which time the
United States Department of Justice may challenge a merger on antitrust grounds.
The commencement of an antitrust action would delay the effectiveness of the
regulatory agency's approval unless a court specifically ordered otherwise.
We believe that the OCC will approve the application filed with it,
that the Federal Reserve Board will waive any application that would otherwise
be required under the federal law, and that the subsidiary merger will not be
subject to challenge by the Department of Justice under the antitrust laws.
However, we cannot assure you that the OCC's approval will be obtained, the
Federal Reserve Board's waiver will be granted, or the Department of Justice
will not challenge the subsidiary merger under the antitrust laws. In addition,
there is no assurance that the approval by the OCC will not contain conditions
unacceptable to either of us because the conditions materially
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<PAGE> 36
adversely impact the economic or business benefits of the merger. In that event,
either of us may terminate the merger.
RESALES OF HUNTINGTON COMMON SHARES RECEIVED IN THE MERGER
The Huntington common shares that will be issued to you if the merger
is completed have been registered under the Securities Act of 1933. After the
merger, you will be able to freely trade these shares unless you are an
affiliate of Empire. Affiliates of Empire include all directors and executive
officers of Empire.
Affiliates of Empire may not sell Huntington common stock acquired in
the merger, except under an effective registration statement or in compliance
with an applicable exemption from the registration requirements under the
Securities Act of 1933. One such exemption, referred to as Rule 145, allows an
affiliate to resell Huntington common shares received in the merger as long as
Huntington complies with specific reporting requirements and the affiliate
complies with certain volume and manner of sale requirements.
In addition, Huntington has obtained written agreements from each of
Empire's affiliates to the effect that no sale, transfer, or other disposition
will be made of any Huntington common shares received in the merger except in
accordance with the restrictions described above.
COMPARISON OF RIGHTS OF SHAREHOLDERS OF HUNTINGTON AND EMPIRE
Huntington was incorporated under Maryland law and Empire was
incorporated under Michigan law. When the merger is completed, you will become a
shareholder of Huntington. Therefore, your rights will no longer be defined and
governed by Michigan law and Empire's articles of incorporation and bylaws.
Rather, your rights will be defined and governed by Maryland law and
Huntington's charter and bylaws. The chart below summarizes the differences
between your rights as an Empire shareholder and your rights as a Huntington
shareholder.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER RIGHT HUNTINGTON EMPIRE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital stock There are 500,000,000 authorized shares of There are 5,000,000 authorized shares
common stock, without par value, and of common stock, without par value, and
6,617,808 authorized shares of serial 2,000,000 authorized shares of preferred
preferred stock, without par value. stock, without par value.
- ------------------------------------------------------------------------------------------------------------------------------
Shareholder meetings Special meetings may be called by written Special meetings may be called by holders
request of holders of a majority or more of of 66-2/3% or more of the shares entitled
the shares entitled to vote; a quorum to vote; a quorum requires the presence of
requires the presence of a majority of the record holders of a majority of the
outstanding shares entitled to vote. outstanding shares entitled to vote.
- ------------------------------------------------------------------------------------------------------------------------------
Shareholder proposals Shareholder nominations for directors and Shareholder nominations for directors and
shareholder proposals must be made by shareholder proposals must be made by
written notice to Huntington's corporate written notice to Empire's corporate
secretary and received at least 30 days but secretary and received at least 30 days but
not more than 60 days prior to the not more than 90 days before the
shareholders meeting; certain form and anniversary of the record date of the prior
substance requirements must be met for year's annual meeting; certain form and
these shareholder notices. substance requirements must be met for
shareholder notices.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 37
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER RIGHT HUNTINGTON EMPIRE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Special voting The affirmative vote of holders of 2/3 of The affirmative vote of holders of a
requirements for certain Huntington's outstanding shares is required majority of Empire's outstanding shares is
transactions to approve charter amendments, merger, required for merger, sale of assets other
consolidation, sale of assets other than in than in the ordinary course, or
the ordinary course, or dissolution; dissolution; generally, the affirmative
generally, the affirmative vote of at least vote of at least 80% of shares entitled to
80% of shares entitled to vote (voting as a vote is required for approval or
single class) and the affirmative vote of authorization of a business combination
2/3 of shares other than shares of an transaction with a related person or in
interested party is required for approval which a related person has an interest.
of any business combination between
Huntington and the interested party.
- ----------------------------------------------------------------------------------------------------------------------------
Board of Directors Huntington has a classified board of Empire has a classified board of directors;
directors; directors are elected for directors are elected for three-year terms;
three-year terms; directors may be removed directors may be removed for cause only by
for cause only by a 2/3 vote of all shares the affirmative vote of at least a majority
entitled to vote at the election of of the shares then entitled to vote at an
directors. election of directors.
- ----------------------------------------------------------------------------------------------------------------------------
Evaluation of Mergers and Huntington's board must consider, in Empire's board must consider, in addition
Consolidations addition to adequacy of the consideration, to adequacy of the consideration, other
other relevant factors such as (1) relevant factors such as (1) social and
shareholders' interests; (2) interests of economic effects on Empire, its
depositors of banks affiliated with subsidiaries, employees, depositors,
Huntington and of other Huntington creditors, customers, and the communities
creditors; and (3) social, legal, and in which Empire operates; (2) the business,
economic effects on employees, customers, financial condition, and earnings prospects
suppliers, and the communities in which of the potential acquiring person; and (3)
Huntington operates. the competence, experience, and integrity
of the acquiring person and its management.
- ----------------------------------------------------------------------------------------------------------------------------
Amendments to Amendments to Huntington's charter require Amendment or repeal of the provision of
Charter/Articles and and Bylaws the affirmative vote of at Empire's articles governing merger/
Bylaws least 2/3 of the outstanding shares entitled business combinations requires an 80%
to vote. Adoption, amendment, or repeal of affirmative vote; amendment or repeal of
Huntington's bylaws requires at least the provisions of Empire's articles
2/3 vote of outstanding shares entitled to involving director liabiity, director
vote or by the board of directors at any removal, director authority to manage, and
regular or special meeting. amendments to the articles or bylaws
requires the affirmative vote of 66-2/3% of
the shares entitled to vote; all other
provisions of the articles require the
affirmative vote of a majority of the shares
entitled to vote. Empire's bylaws may be
amended or repealed and new bylaws adopted
by a majority of the board of directors or
by a majority of the shares entitled to vote
(although some provisions require vote of
66-2/3% of voting shares).
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 38
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER RIGHT HUNTINGTON EMPIRE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase of stock The repurchase of Huntington shares is The repurchase of Empire shares is
permitted to the extent not prohibited by permitted to the extent not prohibited by
law. law.
- ----------------------------------------------------------------------------------------------------------------------------
Indemnification The current and former Huntington officers Current and former Empire officers and
of officers and directors and directors will, and other employees, directors will be indemnified in
agents, and those serving at Huntington's threatened, pending, or completed actions
request may, be indemnified by Huntington arising in connection with their
in threatened, pending, or completed civil performance of duties for Empire against
or criminal actions arising in connection reasonable expenses incurred in such action
with their performance of duties for if the officer or director acted in good
Huntington, unless it is established that: faith and in a manner reasonably believed
- the person's act or omission was to be in or not opposed to the best
material and was committed in bad interest of Empire or its shareholders.
faith or was the result of active and
deliberate dishonesty; or
- the person received an improper
personal benefit in money, property,
or services; or
- in a criminal proceeding, the
person had reasonable cause to believe
that the act or omission was unlawful.
- ----------------------------------------------------------------------------------------------------------------------------
Liability of officers and Huntington's directors and officers are not Empire's directors are not liable to Empire
directors personally liable to Huntington or its or its shareholders for any action taken or
shareholders for money damages to the the failure to take any action as a
fullest extent permitted by Maryland law. director, except for:
Under Maryland law, a director must perform - the receipt by the director of a
his or her duties in good faith, in a financial benefit to which he or she
manner the director reasonably believes to is not entitled,
be in the best interests of the - the authorization of improper
corporation, and with the care that an distributions or dividends to Empire's
ordinarily prudent person in a similar shareholders or improper loans to any
position would use under similar Empire director, officer, or employee,
circumstances. A director's duties are - the intentional infliction of
limited by Maryland law under certain harm on Empire or its shareholders, or
circumstances involving an acquisition of - an intentional criminal act.
the corporation.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 39
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER RIGHT HUNTINGTON EMPIRE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Rights Plan Each Huntington shareholder has one right Each Empire shareholder has one right for
for each outstanding share of Huntington each outstanding share of Empire common
stock owned. Generally, if a person stock owned. Generally, if a person
acquires or announces a tender offer to acquires or announces a tender offer to
acquire 10% or more of Huntington's acquire 20% or more of Empire's outstanding
outstanding common stock, each right will common stock, each right held by the
become exercisable and entitle its holder acquiring person will be null and void and
to purchase 1/100 share of Series A Junior each right held by any other holder will
Participating Preferred Stock (the become exercisable and entitle its holder
practical equivalent of one share of to purchase 1/100 of a share of Series A
Huntington common stock) for $66.12. This Junior Participating Preferred Stock (the
exercise price is subject to adjustment for practical equivalent of one share of Empire
stock dividends and splits. Once the common stock) for $50.00. This exercise
acquiring person acquires 10% or more of price is subject to adjustment for stock
Huntington's outstanding common stock, each dividends and splits. If Empire merges with
right held by such acquiring person will an acquiring person, an acquiring person
become null and void and each right will engages in certain "self-dealing"
entitle all other holders to purchase the transactions, or a transaction occurs that
number of Huntington Series A Preferred increases the acquiring person's ownership
Shares having a value equal to twice the interest by more than 1%, each holder may
exercise price. In general, if Huntington purchase, for the exercise price, the
is acquired in a merger or other business number of shares of Empire common stock
combination or a significant portion of its that have a market value of twice the
assets are sold or transferred, each holder exercise price. If Empire is acquired in a
will be entitled to purchase shares of the merger or other business combination or 50%
acquiring company that have a market value or more of its assets are sold or
of twice the exercise price (or twice the transferred, each holder (except for the
book value, if the acquiring company's acquiring person) will have the right to
shares are not publicly traded). These receive common stock of the acquiring
rights expire on August 16, 2005, unless company at a value of two times the
earlier redeemed by Huntington. exercise price of the right. The rights
Huntington's board of directors may redeem expire December 19, 2000, unless earlier
the rights for $.01 per right under certain redeemed by Empire. Empire's board of
circumstances. directors may redeem the rights for $.01
per right under certain circumstances.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 40
HUNTINGTON BANCSHARES INCORPORATED
GENERAL
Huntington, incorporated in Maryland in 1966, is a multi-state
financial holding company headquartered in Columbus, Ohio. At December 31, 1999,
Huntington had total assets of approximately $29.0 billion and total deposits of
approximately $19.8 billion.
Huntington's affiliates conduct a full-service commercial and consumer
banking business, engage in mortgage banking, lease financing, trust services,
discount brokerage services, underwriting credit life and disability insurance,
and issuing commercial paper guaranteed by Huntington, and provide other
financial products and services. At December 31, 1999, Huntington's subsidiaries
had 182 banking offices in Ohio, 125 banking offices in Michigan, 137 banking
offices in Florida, 36 banking offices in West Virginia, 23 banking offices in
Indiana, 12 banking offices in Kentucky, one foreign office in the Cayman
Islands, and one foreign office in Hong Kong. The Huntington Mortgage Company (a
wholly owned subsidiary) has loan origination offices throughout the Midwest and
East Coast. Foreign banking activities, in total or with any individual country,
are not significant to the operations of Huntington. At December 31, 1999,
Huntington and its subsidiaries had 9,516 full-time equivalent employees.
Competition in the form of price and service is intense in most of the
markets served by Huntington and its subsidiaries. Competitors include other
banks and financial companies such as savings and loans, credit unions, finance
companies, and brokerage firms. Mergers between and the expansion of financial
institutions both within and outside Huntington's market area have provided
significant competitive pressure in major markets. In 1995, federal interstate
banking legislation became effective that made it permissible for bank holding
companies in any state to acquire banks in any other state. Since that time
actual or potential competition in each of Huntington's markets has been
intensified. The same federal legislation permits further competition through
interstate branching, subject to certain limitations by individual states.
Internet banking, offered both by established traditional institutions
and by start-up internet-only banks, constitutes another significant form of
competitive pressure on Huntington's business. Finally, financial services
reform legislation enacted in November 1999 (see "Gramm-Leach-Bliley Act of
1999" below) eliminates the long-standing Glass-Steagall Act restrictions on
securities activities of bank holding companies and banks. The new legislation
permits bank holding companies that elect to become financial holding companies
to engage in defined securities and insurance activities as well as to affiliate
with securities and insurance firms. The same legislation allows banks to have
financial subsidiaries that may engage in certain activities not otherwise
permissible for banks.
THE HUNTINGTON NATIONAL BANK
Effective as of June 30, 1997, all but one of Huntington's banking
subsidiaries were merged into The Huntington National Bank. In January 1999,
Huntington completed the merger of The Huntington State Bank, its state bank
subsidiary in Ohio, into The Huntington National Bank, an interstate national
bank. As a result, The Huntington National Bank is Huntington's sole bank
subsidiary.
As of December 31, 1999, Huntington Bank operated 125 banking offices
in Michigan, with total assets in Michigan of $4.3 billion, and total deposits
in its Michigan banking offices of $4.2 billion. The principal executive offices
of Huntington Bank are located at Huntington Center, 41 South High Street,
Columbus, Ohio 43287 (telephone number 614-480-8300). The principal executive
offices of the Huntington Michigan Region are located at 801 West Big Beaver
Road, Troy, Michigan 48099-5823 (telephone number 248-362-5000).
After completion of the merger, Huntington, through Huntington Bank,
will have 135 banking offices in Michigan, with approximately $4.9 billion in
assets.
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<PAGE> 41
DIVIDENDS AND PRICE RANGE OF HUNTINGTON COMMON STOCK
Huntington common stock is traded on the Nasdaq National Market under
the symbol "HBAN" and is listed as "HuntgBcshr" or "HuntBanc" in most
newspapers. The following table provides information regarding the cash
dividends declared and the high and low last sale prices for Huntington common
stock on the Nasdaq National Market during the periods indicated.
<TABLE>
<CAPTION>
PRICE RANGE
DIVIDEND PER -------------------------------------------
SHARE HIGH LOW
-------------------- -------------------- -------------------
<S> <C> <C> <C>
1998:
First Quarter......................... $0.16 $31.13 $26.44
Second Quarter....................... 0.16 31.44 26.88
Third Quarter........................ 0.18 30.82 20.00
Fourth Quarter....................... 0.18 28.63 21.50
1999:
First Quarter........................ 0.18 30.44 27.19
Second Quarter....................... 0.18 34.00 27.69
Third Quarter........................ 0.20 33.88 24.69
Fourth Quarter....................... 0.20 30.75 21.44
2000:
First Quarter........................ 0.20 22.44 17.81
Second Quarter (through
__________, 2000..............
</TABLE>
On February 4, 2000, the last trading day prior to the public
announcement of the proposed merger, the high and low sales prices per share of
Huntington common stock on the Nasdaq National Market were $22.00 and $20.75,
respectively. On _________, 2000, such prices were $____ and $____,
respectively.
Huntington has declared regular cash dividends on its common stock in
each quarter since Huntington was organized in 1966. Huntington has increased
its cash dividend every year since that time. Huntington's board of directors
presently intends to continue to consider the payment of regular quarterly cash
dividends on Huntington common stock. The amount and timing of any future
dividends will depend upon the earnings of Huntington and its subsidiaries,
their financial condition, need for funds, and other relevant factors.
Huntington has also issued either a stock dividend or stock split every year for
26 straight years.
OTHER INFORMATION
Huntington common stock is actively traded in the Nasdaq National
Market under the Nasdaq symbol "HBAN." Because information regarding Huntington
is readily available to investors, the SEC permits this document to be
abbreviated by incorporating certain information regarding Huntington by
reference to certain reports and other documents filed with the SEC. A list of
those reports and documents is included under the heading "Where You Can Find
More Information" on page 49 of this document. Other than as described in this
document, there have been no material changes in the affairs of Huntington since
the filing of its Annual Report on Form 10-K for the year ended December 31,
1999, that have not been described in a subsequent report filed with the SEC.
-40-
<PAGE> 42
EMPIRE BANC CORPORATION
GENERAL
Empire, headquartered in Traverse City, Michigan, is a bank holding
company registered with the Federal Reserve under the Bank Holding Company Act.
Empire conducts a complete range of commercial and personal banking activities
and offers trust and investment services through its wholly-owned bank
subsidiary, The Empire National Bank of Traverse City, a national banking
association with its main office located in Traverse City, Michigan. Empire Bank
operates ten full service offices, provides drive-through convenience at seven
locations, and has automatic teller machines operating at eleven locations.
Empire is a Michigan corporation which was incorporated to become the
bank holding company for Empire Bank. As of March 31, 2000, Empire had total
consolidated assets of approximately $503.4 million, total consolidated loans of
approximately $378.5 million, total consolidated deposits of approximately
$424.1 million and total consolidated shareholders' equity of approximately
$46.4 million.
DIVIDENDS AND PRICE RANGE OF EMPIRE COMMON STOCK
Empire Common Stock is traded on the OTC Bulletin Board under the
symbol "EMBM." The following table sets forth the cash dividends declared and
the high and low last sales prices for Empire common stock on the OTC Bulletin
Board during the periods indicated. The dividends and price ranges have been
adjusted to reflect stock dividends and stock splits, as appropriate.
<TABLE>
<CAPTION>
PRICE RANGE
DIVIDEND PER -------------------------------------------
SHARE HIGH LOW
-------------------- -------------------- -------------------
<S> <C> <C> <C>
1998:
First Quarter......................... $0.233 $35.50 $30.67
Second Quarter....................... .25 45.00 35.50
Third Quarter........................ .25 45.00 37.25
Fourth Quarter....................... .25 39.50 39.13
1999:
First Quarter........................ .25 39.50 37.00
Second Quarter....................... .30 37.00 34.75
Third Quarter........................ .30 34.75 31.50
Fourth Quarter....................... .30 31.50 27.50
2000:
First Quarter........................ .30 43.50 26.00
Second Quarter (through
__________, 2000..............
</TABLE>
On February 4, 2000, the last trading day prior to the announcement of
the proposed merger, both the high and low sales prices per share of Empire
common stock on the OTC Bulletin Board were $31.00. On ________ ___, 2000, such
prices were $____ and $____, respectively.
-41-
<PAGE> 43
OTHER INFORMATION
Because information regarding Empire is readily available to investors,
the SEC permits this document to be abbreviated by incorporating certain
information regarding Empire by reference to certain reports and other documents
filed with the SEC. A list of those reports and documents is included under the
heading "Where You Can Find More Information" on page 49 of this document. Other
than as described in this document, there have been no material changes in the
affairs of Empire since the filing of its Annual Report on Form 10-K for the
year ended December 31, 1999, that have not been described in a subsequent
report filed with the SEC.
GOVERNMENT REGULATION
To the extent that the following information describes statutory or
regulatory provisions, it is qualified in its entirety by reference to such
statutory or regulatory provisions.
GENERAL
We are subject to the supervision of the Federal Reserve Board and are
required to file with the Federal Reserve Board reports and other information
regarding our business operations and the business operations of our
subsidiaries. We are also subject to examination by the Federal Reserve Board.
We are required to obtain Federal Reserve Board approval prior to acquiring
direct or indirect ownership or control of voting shares of any bank, if after
such acquisition, either of us would own or control more than 5% of the voting
stock of such bank.
Under legislation effective March 11, 2000 (see "Gramm-Leach-Bliley Act
of 1999" below), bank holding companies may elect to become financial holding
companies. A financial holding company may engage in activities that are
financial in nature, incidental to such financial activities, or complementary
to a financial activity and do not pose safety and soundness risks. A financial
holding company may, in general, engage in these activities with only a 30 day
after-the-fact notice to the Federal Reserve Board.
Huntington's election to become a financial holding company was
approved by the Federal Reserve Board on March 13, 2000. Empire has not elected
to become a financial holding company. As a bank holding company, Empire may
only engage in, or own or control companies that engage in, activities deemed by
the Federal Reserve Board to be closely related to banking. Empire may, in most
cases, commence permissible new non-banking business activities from a start-up
stage with only subsequent notice to the Federal Reserve Board. In addition,
Empire may acquire, subject to regulatory constraints, smaller companies that
engage in permissible non-banking activities under an expedited procedure
requiring only 12 business days notice to the Federal Reserve Board.
Our respective national bank subsidiaries are subject to supervision,
examination, and regulation by the Office of the Comptroller of the Currency.
Both Huntington Bank and Empire Bank have deposits insured by the Bank Insurance
Fund of the Federal Deposit Insurance Corporation. Certain deposits of
Huntington Bank were acquired from savings associations and are insured by the
Savings Association Insurance Fund of the FDIC.
Our respective non-bank subsidiaries are also subject to supervision,
examination, and regulation by the Federal Reserve Board and examination by
applicable federal and state banking agencies. Certain securities activities of
Huntington as a financial holding company are subject to oversight and
regulation by the Securities and Exchange Commission. In addition to the impact
of federal and state supervision and regulation, our subsidiaries are affected
significantly by the actions of the Federal Reserve Board as it attempts to
control the money supply and credit availability in order to influence the
economy.
HOLDING COMPANY STRUCTURE
Our depository institution subsidiaries are subject to affiliate
transaction restrictions under federal law which limit the transfer of funds by
a subsidiary bank to the parent or any subsidiaries of the parent. The transfer
of
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<PAGE> 44
funds may take the form of loans, extensions of credit, investments, or asset
purchases. Such transfers by a subsidiary bank to its parent corporation or to
any individual subsidiary of the parent are limited in amount to:
- with respect to any single subsidiary bank, 10% of the subsidiary
bank's capital and surplus and,
- with respect to the parent together with all its subsidiaries, an
aggregate of 20% of the subsidiary bank's capital and surplus.
Such loans and extensions of credit are also required to be secured in
specified amounts. In addition, all affiliate transactions must be conducted on
terms and under circumstances that are substantially the same as such
transactions with unaffiliated entities. Although a financial institution's
non-bank subsidiaries are not counted as affiliates for purposes of analyzing
restrictions on affiliate transactions, under the Gramm-Leach-Bliley Act, any
financial subsidiary of Huntington Bank will be considered an affiliate subject
to these rules. Under applicable regulations, at December 31, 1999,
approximately $217.5 million was available for loans to Huntington from
Huntington Bank, and approximately $4.1 million was available for loans to
Empire from Empire Bank.
The Federal Reserve Board has a policy to the effect that a bank
holding company is expected to act as a source of financial and managerial
strength to each of its subsidiary banks and to commit resources to support each
such subsidiary bank. Under the source of strength doctrine, the Federal Reserve
Board may require a financial or bank holding company to make capital injections
into a troubled subsidiary bank. The Federal Reserve Board may also charge such
holding company with engaging in unsafe and unsound practices for failure to
commit resources to such a subsidiary bank. This capital injection may be
required at times when we do not have the resources to provide it.
Any loans by a holding company to its subsidiary banks are subordinate
in right of payment to deposits and to certain other indebtedness of such
subsidiary bank. Moreover, in the event of a financial or bank holding company's
bankruptcy, any commitment by such holding company to a federal bank regulatory
agency to maintain the capital of a subsidiary bank will be assumed by the
bankruptcy trustee and entitled to a priority of payment.
Moreover, the claims of an insured depository institution's receiver
for administrative expenses and the claims of holders of deposit liabilities of
such an institution are accorded priority over the claims of general unsecured
creditors of such an institution, in the event of a liquidation or other
resolution of such institution. As a result of such legislation, claims of a
receiver for administrative expenses and claims of holders of deposit
liabilities of our respective depository subsidiaries (including the FDIC, as
the subrogee of such holders) would receive priority over the holders of notes
and other senior debt of such subsidiary in the event of a liquidation or other
resolution and over our respective interests as the sole shareholder of our
banking subsidiary.
Federal law permits the OCC to order the pro rata assessment of
shareholders of a national bank whose capital stock has become impaired, by
losses or otherwise, in order to relieve a deficiency in such national bank's
capital stock. This statute also provides for the enforcement of any such pro
rata assessment to cover such impairment of capital stock by sale, to the extent
necessary, of the capital stock of any assessed shareholder failing to pay the
assessment. We, as the sole shareholder of our respective subsidiary banks, are
subject to such provisions.
DIVIDEND RESTRICTIONS
Dividends from our respective subsidiary banks are a significant source
of funds for payment of dividends to our respective shareholders. In the year
ended December 31, 1999, Huntington declared cash dividends to its shareholders
of approximately $175.8 million, and Empire declared cash dividends to its
shareholders of approximately $3.5 million. There are, however, statutory limits
on the amount of dividends that our respective depository institution
subsidiaries can pay to us without regulatory approval.
Our respective subsidiary banks may not pay a dividend in an amount
greater than such bank's undivided profits. In addition, the prior approval of
the OCC is required for the payment of a dividend by a national bank if the
total of all dividends declared by the bank in a calendar year would exceed the
total of its retained net income for the year combined with its retained net
income for the two preceding years. Further, unless a national bank's capital
-43-
<PAGE> 45
surplus equals or exceeds the capital stock of the bank, before the bank can
declare an annual dividend, it must transfer 10% of its net income for the
preceding four quarters to capital surplus. In the case of a semi-annual or
special dividend, the required time period is shortened to the preceding two
quarters. Under these provisions, Huntington Bank could, without regulatory
approval, declare dividends to Huntington in 2000 of approximately $317.0
million plus an additional amount equal to its net profits during 2000. Under
these provisions, Empire Bank could, without regulatory approval, declare
dividends to Empire in 2000 of approximately $7.3 million plus an additional
amount equal to its net profits during 2000.
If, in the opinion of the applicable regulatory authority, a bank under
its jurisdiction is engaged in or is about to engage in an unsafe or unsound
practice (which, depending on the financial condition of the bank, could include
the payment of dividends), such regulatory authority may require, after notice
and hearing, that such bank cease and desist from such practice. The Federal
Reserve Board and the OCC have issued policy statements that provide that
insured banks and bank holding companies should generally only pay dividends out
of current operating earnings.
FDIC INSURANCE
Under the current FDIC risk-based deposit insurance premium schedule,
neither Huntington Bank nor Empire Bank will be required to pay deposit
insurance premiums during 2000. However, each bank subsidiary will be required
to make payments for the servicing of obligations of the Financing Corporation
issued in connection with the resolution of savings and loan associations, so
long as such obligations remain outstanding.
CAPITAL REQUIREMENTS
The Federal Reserve Board has issued risk-based capital ratio and
leverage ratio guidelines for financial and bank holding companies. These
guidelines are applicable to both Huntington and Empire. The risk-based capital
ratio guidelines:
- establish a systematic analytical framework that make regulatory
capital requirements more sensitive to differences in risk
profiles among banking organizations,
- take off-balance sheet exposures into explicit account in
assessing capital adequacy, and
- minimize disincentives to holding liquid, low-risk assets.
Under the guidelines and related policies, holding companies must
maintain capital sufficient to meet both a risk-based capital ratio test and a
leverage ratio test on a consolidated basis. The risk-based ratio is determined
by allocating assets and specified off-balance sheet commitments into four
weighted categories, with higher weighting being assigned to categories
perceived as representing greater risk. A bank holding company's capital (as
described below) is then divided by total risk weighted assets to yield the
risk-based ratio. The leverage ratio is determined by relating core capital (as
described below) to total assets adjusted as specified in the guidelines. Each
of Huntington Bank and Empire Bank is subject to substantially similar capital
requirements.
Generally, under the applicable guidelines, a financial institution's
capital is divided into two tiers. Institutions that must incorporate market
risk exposure into their risk-based capital requirements may also have a third
tier of capital in the form of restricted short-term subordinated debt. "Total
capital" is the sum of Tier 1 and Tier 2 capital. "Tier 1", or core capital,
includes:
- common shareholders' equity,
- noncumulative perpetual preferred stock (including related
surplus) subject to specified limitations, and
- minority interests in equity accounts of consolidated
subsidiaries,
less goodwill and, with certain limited exceptions, all other intangible assets.
Holding companies, however, may include cumulative preferred stock in their Tier
1 capital, up to a limit of 25% of such Tier 1 capital. "Tier 2", or
supplementary capital, includes, among other things:
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<PAGE> 46
- perpetual preferred stock and related surplus,
- hybrid capital instruments,
- mandatory convertible securities,
- qualifying subordinated debt, and
- the allowance for loan and lease losses, subject to certain
limitations.
The Federal Reserve Board and the other federal banking regulators
require that all intangible assets, with certain limited exceptions, be deducted
from Tier 1 capital. Under the Federal Reserve Board's rules, the only types of
intangible assets that may be included in (i.e., not deducted from) a holding
company's capital are originated or purchased mortgage servicing rights,
non-mortgage servicing assets, and purchased credit card relationships, which we
refer to as MSRs, NMSAs, and PCCRs, respectively. In the aggregate, however, the
total amount of MSRs, NMSAs, and PCCRs included in capital cannot exceed 100% of
Tier 1 capital. NMSAs and PCCRs are subject to a separate aggregate sublimit of
25% of Tier 1 capital.
The amount of MSRs, NMSAs, and PCCRs that a holding company may include
in its capital, which is determined on a quarterly basis, is limited to the
lesser of:
- 90% of such assets' fair market value (as determined under the
guidelines), or
- 100% of such assets' book value.
Intangible assets other than goodwill and other than MSRs, NMSAs, and
PCCRs, including core deposit intangibles, acquired on or before February 19,
1992 (the date the Federal Reserve Board issued its original proposal for public
comment), generally will not be deducted from capital for supervisory purposes.
These identifiable intangible assets will continue to be deducted for purposes
of evaluating applications filed by financial and bank holding companies.
Under the risk-based guidelines, financial institutions are required to
maintain a risk-based ratio (total capital to risk-weighted assets) of 8%, of
which 4% must be Tier 1 capital. The appropriate regulatory authority may set
higher capital requirements when an institution's circumstances warrant.
Under the leverage guidelines, financial institutions are required to
maintain a leverage ratio (Tier 1 capital to adjusted total assets, as specified
in the guidelines) of at least 3%. The 3% minimum ratio is applicable only to
financial institutions that meet certain specified criteria, including:
- excellent asset quality,
- high liquidity,
- low interest rate exposure, and
- the highest regulatory rating.
Financial institutions not meeting these criteria are required to maintain a
leverage ratio that exceeds 3% by a cushion of at least 100 to 200 basis points.
The guidelines also provide that financial institutions experiencing
internal growth or making acquisitions will be expected to maintain strong
capital positions substantially above the minimum supervisory level.
Furthermore, the Federal Reserve Board's guidelines indicate that the Federal
Reserve Board will continue to consider a "tangible Tier 1 leverage ratio" in
evaluating proposals for expansion or new activities. The tangible Tier 1
leverage ratio is the ratio of an institution's Tier 1 capital, less all
intangibles, to total assets, less all intangibles.
Failure to meet applicable capital guidelines could subject the
financial institution to a variety of enforcement remedies available to the
federal regulatory authorities, including:
- limitations on the ability to pay dividends,
- the issuance by the regulatory authority of a capital directive
to increase capital,
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<PAGE> 47
- the termination of deposit insurance by the FDIC, and
- other measures described below under "Federal Deposit Insurance
Corporation Improvement Act of 1991" as applicable to
undercapitalized institutions.
As of March 31, 2000, our Tier 1 risk-based capital ratios, total
risk-based capital ratios, and Tier 1 leverage ratios were as follows:
<TABLE>
<CAPTION>
Huntington
-----------------------------------
Requirement Historical Pro Forma(1) Empire
---------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Tier 1 Risk-Based Capital Ratio 4.00% 7.22% 6.75% 11.62%
Total Risk-Based Capital Ratio 8.00% 10.89% 10.38% 12.87%
Tier 1 Leverage Ratio 3.00% 6.45% 6.01% 9.40%
</TABLE>
- ------------------------
(1) Includes Huntington and Empire on a pro forma combined basis.
As of March 31, 2000, our respective bank subsidiaries also had capital
in excess of the minimum requirements. The risk-based capital standards of the
Federal Reserve Board and the OCC specify that evaluations by the banking
agencies of a bank's capital adequacy will include an assessment of the exposure
to declines in the economic value of the bank's capital due to changes in
interest rates. These banking agencies issued a joint policy statement on
interest rate risk describing prudent methods for monitoring such risk that rely
principally on internal measures of exposure and active oversight of risk
management activities by senior management.
FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991
The Federal Deposit Insurance Corporation Improvement Act of 1991,
which we refer to as FDICIA, substantially revised the bank regulatory and
funding provisions of the Federal Deposit Insurance Act and made revisions to
several other federal banking statutes. Among other things, FDICIA requires
federal banking regulatory authorities to take "prompt corrective action" with
respect to depository institutions that do not meet minimum capital
requirements. For these purposes, FDICIA establishes five capital tiers:
- well capitalized,
- adequately capitalized,
- undercapitalized,
- significantly undercapitalized, and
- critically undercapitalized.
The federal banking regulatory agencies have adopted regulations to
implement the prompt corrective action provisions of FDICIA. Among other things,
the regulations define the relevant capital measures for the five capital
categories:
- An institution is deemed to be "well capitalized" if it has a
total risk-based capital ratio of 10% or greater, a Tier 1
risk-based capital ratio of 6% or greater, and a Tier 1 leverage
ratio of 5% or greater and is not subject to a regulatory order,
agreement, or directive to meet and maintain a specific capital
level for any capital measure.
- An institution is deemed to be "adequately capitalized" if it has
a total risk-based capital ratio of 8% or greater, a Tier 1
risk-based capital ratio of 4% or greater, and, generally, a Tier
1 leverage ratio of 4% or greater and the institution does not
meet the definition of a "well capitalized" institution.
- An institution that does not meet one or more of the "adequately
capitalized" tests is deemed to be "undercapitalized".
- If the institution has a total risk-based capital ratio that is
less than 6%, a Tier 1 risk-based capital ratio that is less than
3%, or a Tier 1 leverage ratio that is less than 3%, it is deemed
to be "significantly undercapitalized".
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<PAGE> 48
- Finally, an institution is deemed to be "critically
undercapitalized" if it has a ratio of tangible equity (as
defined in the regulations) to total assets that is equal to or
less than 2%.
FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of a cash dividend) or paying any
management fee to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized institutions are subject to
growth limitations and are required to submit a capital restoration plan. If any
depository institution subsidiary of a holding company is required to submit a
capital restoration plan, the holding company would be required to provide a
limited guarantee regarding compliance with the plan as a condition of approval
of such plan by the appropriate federal banking agency. If an undercapitalized
institution fails to submit an acceptable plan, it is treated as if it is
significantly undercapitalized.
Significantly undercapitalized institutions may be subject to a number
of requirements and restrictions, including orders to sell sufficient voting
stock to become adequately capitalized, requirements to reduce total assets, and
cessation of receipt of deposits from correspondent banks. Critically
undercapitalized institutions may not, beginning 60 days after becoming
critically undercapitalized, make any payment of principal or interest on their
subordinated debt. In addition, critically undercapitalized institutions are
subject to appointment of a receiver or conservator within 90 days of becoming
critically undercapitalized.
Under FDICIA, a depository institution that is not well capitalized is
generally prohibited from accepting brokered deposits and offering interest
rates on deposits higher than the prevailing rate in its market. We expect that
the FDIC's brokered deposit rule will not adversely affect the ability of our
depository institution subsidiaries to accept brokered deposits. Under the
regulatory definition of brokered deposits, Huntington's depository subsidiary
had $530.0 million of brokered deposits at December 31, 1999. Empire Bank had no
brokered deposits as of the same date.
FDICIA, as amended, directs that each federal banking regulatory agency
prescribe standards, by regulation or guideline, for depository institutions
relating to internal controls, information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth,
compensation, asset quality, and earnings. The Federal Reserve Board and other
federal banking agencies have adopted a regulation in the form of guidelines
covering most of these items. We believe that the regulation and guidelines will
not have a material effect on the operations of our respective depository
institution subsidiaries.
INTERSTATE BRANCHING AND CONSOLIDATIONS
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
provides for nationwide interstate banking and branching. Under the law,
interstate acquisitions of banks or bank holding companies in any state by bank
holding companies in any other state became permissible in 1995. Interstate
branching and consolidations of existing bank subsidiaries in different states
became permissible in 1997. On June 30, 1997, Huntington availed itself of the
interstate branching and consolidation authority by merging into its lead
national bank subsidiary all of its other bank subsidiaries, except The
Huntington State Bank. The Huntington State Bank was subsequently merged into
Huntington's lead national bank subsidiary on January 29, 1999. As of that date,
The Huntington National Bank was Huntington's sole bank subsidiary. Future bank
acquisitions, if any, in states where Huntington formerly had a separate bank
subsidiary, will not require compliance with Riegle-Neal entry provisions.
GRAMM-LEACH-BLILEY ACT OF 1999
The United States Congress in 1999 enacted major financial services
modernization legislation, known as the "Gramm-Leach-Bliley Act of 1999". This
Act was signed into law on November 12, 1999. Under the new law, banks are no
longer prohibited by the Glass-Steagall Act from associating with, or having
management interlocks with, a business organization engaged principally in
securities activities. By qualifying as a new entity known as a "financial
holding company", a bank holding company may acquire new powers not otherwise
available to it. The repeal of the Glass-Steagall Act and the availability of
new powers became effective on March 11, 2000.
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In order for a bank holding company to qualify as a financial holding
company, all of its depository subsidiaries must be both well capitalized and
well managed, and must be meeting their Community Reinvestment Act obligations.
The bank holding company must also declare its intention to become a financial
holding company to the Federal Reserve Board and certify that its depository
subsidiaries meet the capitalization and management requirements.
A depository institution is well capitalized if it has a Tier 1
risk-based capital ratio of at least 6%, a total risk-based capital ratio of at
least 10%, a leverage ratio of at least 5%, and is not subject to any formal
supervisory action. A depository institution is well managed if it has received
a satisfactory rating in its most recent supervisory examination or subsequent
review and at least a "satisfactory" rating for management, if such a rating is
given. A depository institution is deemed to be meeting its CRA obligations if
it has received a rating of "satisfactory" or better in its most recent
examination for compliance with the Community Reinvestment Act. Depository
institutions acquired by the financial holding company within twelve months
prior to the date on which the election is filed will be excluded from this test
even if they have less than a satisfactory CRA rating as long as the financial
holding company has submitted a plan to the applicable federal banking agency to
improve the acquired depository institution's CRA rating and the federal banking
agency has accepted such plan.
Financial holding company powers relate to "financial activities" that
are either specified in a statute or are determined by the Federal Reserve
Board, in coordination with the Secretary of the Treasury, to be financial in
nature, incidental to an activity that is financial in nature, or complementary
to a financial activity (provided that the complementary activity does not pose
a safety and soundness risk). Activities defined in the statute as financial in
nature include:
- underwriting insurance or annuities;
- providing financial or investment advice;
- underwriting, dealing in, or making markets in securities;
- merchant banking, subject to significant limitations;
- insurance portfolio investing, subject to significant
limitations; and
- any activities previously found by the Federal Reserve Board to
be closely related to banking.
Other provisions of the new Act:
- establish a system of functional regulation for financial holding
companies and banks involving the Securities and Exchange
Commission, the Commodity Futures Trading Commission, and state
securities and insurance regulators;
- deal with bank insurance sales and title insurance activities in
relation to state insurance regulation;
- prescribe consumer protection standards for insurance sales; and
- establish minimum federal standards of privacy to protect the
confidentiality of the personal financial information of
consumers and regulate its use by financial institutions.
A financial holding company's depository institution subsidiaries must
continue to meet the well capitalized and well managed tests in order to
continue engaging in the full range of financial and incidental activities
permitted by the new Act. If the Federal Reserve Board determines that a
financial holding company no longer satisfies the well capitalized and well
managed tests, it will be required to enter into an agreement within 45 days
with the Federal Reserve Board to correct these conditions. If the conditions
are not corrected within 180 days after the Federal Reserve Board first notified
the financial holding company of its failure to meet the well capitalized or
well managed tests, the Federal Reserve Board may require the financial holding
company to either divest any depository institution subsidiaries it controls or
cease to engage in any financial or incidental activity that is not permissible
for bank holding companies. The new Act permits the financial holding company to
elect which of the two alternative courses of action it will pursue, and also
permits the Federal Reserve Board to extend the 180 day cure period indefinitely
if the Federal Reserve Board, in its discretion, determines such extensions to
be appropriate.
In addition, the new Act provides that a financial holding company may
not commence any new financial activity or activity incidental to such financial
activity, or acquire any company engaged in such financial or incidental
activities (other than investments made in connection with certain previously
commenced merchant banking and insurance company portfolio investment
activities), if any insured depository institution subsidiary of
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such financial holding company has received a rating of less than satisfactory
in its last CRA examination. A similar restriction applies to insured depository
institutions that conduct financial and incidental activities through financial
subsidiaries permitted by the new Act in the event such institution receives
less than a satisfactory CRA examination rating.
In January 2000, the Federal Reserve Board and the OCC issued,
respectively, an interim and a proposed rule governing the application process
for becoming a financial holding company or a financial subsidiary. Additional
regulations are expected from these agencies during the year 2000 for the
implementation of the new Act. Huntington filed an election in February 2000 to
become a financial holding company. Huntington's election was approved by the
Federal Reserve Board on March 13, 2000.
EXPERTS
Ernst & Young LLP, independent auditors, have audited Huntington's
consolidated financial statements included in Huntington's Annual Report on Form
10-K for the year ended December 31, 1999, as set forth in their report, which
is incorporated by reference in this proxy statement/prospectus and elsewhere in
the registration statement. Huntington's financial statements are incorporated
by reference in reliance on Ernst & Young LLP's report, given on their authority
as experts in accounting and auditing.
Crowe, Chizek and Company LLP, independent auditors, have audited
Empire's consolidated financial statements included in Empire's Annual Report on
Form 10-K for the year ended December 31, 1999, as set forth in their report,
which is incorporated by reference in this proxy statement/prospectus and
elsewhere in the registration statement. Empire's financial statements are
incorporated by reference in reliance on Crowe, Chizek and Company LLP 's
report, given on their authority as experts in accounting and auditing.
LEGAL OPINIONS
The validity of the Huntington common stock to be issued to Empire
shareholders pursuant to the merger and certain other legal matters in
connection with the merger will be passed upon for Huntington by Porter, Wright,
Morris & Arthur LLP, Columbus, Ohio. Certain legal matters in connection with
the merger will be passed on for Empire by Howard & Howard Attorneys, P.C.,
Kalamazoo, Michigan.
OTHER MATTERS
As of the date of this proxy statement/prospectus, management of Empire
knows of no business other than that described in this document that will come
before the Empire special meeting. Should any other matters properly come before
the Empire special meeting, the enclosed proxy confers upon the person or
persons designated to vote the shares discretionary authority to vote the same
with respect to any such other matter in accordance with their judgment, except
that no proxy that is voted against the approval of the merger documents will be
voted in favor of any adjournment or postponement of the meeting for the purpose
of soliciting additional proxies.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and current reports, proxy statements, and
other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC's web site at http://www.sec.gov. You can also
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read and copy any document we file with the SEC at the SEC's public reference
rooms. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. You can also obtain copies of our SEC filings at
prescribed rates by writing to the Public Reference Section of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549.
Huntington's common stock is listed on the Nasdaq National Market under
the symbol "HBAN." Therefore, reports and other information concerning
Huntington also should be available for inspection and copying at the Nasdaq
Stock Market at 1735 K Street, N.W., Washington, D.C. 20006-1504.
Huntington filed a registration statement on Form S-4 to register with
the SEC the Huntington common stock to be issued to Empire shareholders in the
merger. This proxy statement/prospectus is part of that registration statement
and constitutes a prospectus of Huntington in addition to being a proxy
statement for Empire. As allowed by SEC rules, this proxy statement/prospectus
does not contain all of the information you can find in the registration
statement or the exhibits to the registration statement.
The SEC allows us to "incorporate by reference" certain information
that we file with the SEC into this proxy statement/prospectus. This means that
we can disclose important information to you by referring you to other documents
filed separately with the SEC. The information incorporated by reference is
deemed to be a part of this proxy statement/ prospectus. Later information that
we file with the SEC will automatically update and supersede this information.
This proxy statement/prospectus incorporates by reference the following
documents previously filed by us with the SEC:
HUNTINGTON SEC FILINGS (FILE NO. 0-2525)
- Annual Report on Form 10-K for the year ended December 31, 1999
- Current Report on Form 8-K filed on January 21, 2000, March 6,
2000, and March 28, 2000
- Proxy Statement, dated February 25, 2000
- Forms 8-A filed with the SEC pursuant to Section 12 of the
Securities Exchange Act of 1934, describing Huntington common
stock and the rights issued under a certain Rights Agreement,
dated February 22, 1990, as amended August 16, 1995, between
Huntington and Huntington Bank, which rights are attached to all
shares of Huntington common stock
- Current Report on Form 8-K, dated August 16, 1995, filed for the
purpose of updating the description of the rights which are
attached to all shares of Huntington common stock
EMPIRE SEC FILINGS (FILE NO. 0-15839)
- Annual Report on Form 10-K for the year ended December 31, 1999
- Current Report on Form 8-K filed on February 9, 2000
We are also incorporating by reference additional documents that we
file with the SEC between the date of this proxy statement/prospectus and the
date of the Empire special meeting of shareholders. These include periodic
reports, such as the Annual Report on Form 10-K, Quarterly Report on Form 10-Q,
or Current Reports on Form 8-K, as well as proxy statements.
Huntington has supplied all information contained or incorporated by
reference in this document relating to Huntington. Empire has supplied all
information contained or incorporated by reference in this document relating to
Empire and McConnell, Budd & Downes, Inc., Empire's financial advisor. Although
neither of us has any knowledge that would indicate that any statement or
information relating to the other party contained in this document is inaccurate
or incomplete, neither of us can warrant the accuracy or completeness of such
statements or information as they relate to the other party.
WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS
DIFFERENT FROM THE INFORMATION THAT IS CONTAINED OR INCORPORATED BY REFERENCE IN
THIS DOCUMENT. YOU SHOULD NOT RELY ON ANY OTHER INFORMATION OR REPRESENTATION AS
HAVING BEEN AUTHORIZED BY HUNTINGTON OR EMPIRE. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN THIS DOCUMENT IS ACCURATE AFTER THE INDICATED DATE ON
THE FIRST PAGE OF THIS PROXY STATEMENT/PROSPECTUS. THIS DOCUMENT IS NOT AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, HUNTINGTON COMMON STOCK IN ANY
JURISDICTION OR TO ANY PERSON IF THAT OFFER OR SOLICITATION IS UNLAWFUL.
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EXHIBIT A
---------
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of
February 4, 2000, between HUNTINGTON BANCSHARES INCORPORATED, a Maryland
corporation ("Huntington"), and EMPIRE BANC CORPORATION, a Michigan corporation
("EMPIRE"). (Huntington and Empire are collectively referred to herein as the
"Constituent Corporations.")
RECITALS:
---------
A. Huntington is a corporation organized and existing under the laws of
the State of Maryland and its principal office in the State of Maryland is
located in Baltimore County.
B. Huntington is authorized to issue a total of 506,617,808 shares of
capital stock, consisting of (1) 500,000,000 shares of common stock, without par
value ("Huntington Common"), of which 227,992,927 shares were issued and
outstanding on January 31, 2000 (exclusive of treasury shares), and (2)
6,617,808 shares of serial preferred stock, without par value, none of which was
issued and outstanding on the date of this Agreement.
C. Empire is a corporation organized and existing under the Michigan
Business Corporation Act and its principal office in the State of Michigan is
located in Grand Traverse County.
D. Empire is authorized to issue 7,000,000 shares of capital stock,
consisting of (1) 5,000,000 shares of common stock, without par value ("Empire
Common"), of which 3,166,234 shares were issued and outstanding on the date of
this Agreement all of which shares are entitled to vote on the "Merger," as such
term is defined in Article 1 below, with an additional 23,820 shares of Empire
Common, in the aggregate, being subject to outstanding stock options previously
issued (collectively, the "Empire Stock Options" and individually, an "Empire
Stock Option") under the Empire Banc Corporation Stock Option Plan (the "Empire
Stock Option Plan"), and with an additional 19,500 shares of Empire Common, in
the aggregate, subject to issuance pursuant to the Empire National Bank
Directors Deferred Compensation Plan and the Empire National Bank Directors
Deferred Income Plan (collectively the "Director Plans"), and (2) 2,000,000
shares of preferred stock, without par value, none of which was issued and
outstanding the date of this Agreement
E. The respective Boards of Directors of Huntington and Empire have
approved the merger of Empire into Huntington upon and subject to the terms and
conditions contained herein.
AGREEMENT:
----------
NOW, THEREFORE, in consideration of the foregoing recitals, which shall
constitute a part of this Agreement, and the mutual promises contained herein,
the parties agree as follows:
ARTICLE 1
THE MERGER
----------
Subject to the terms and conditions of this Agreement, and the terms
and conditions contained in a certain Supplemental Agreement, of even date
herewith, among Huntington and Empire (the "Supplemental Agreement"), which is
incorporated by reference in this Agreement, at the "Effective Time" (as such
term is defined in Article 2), Empire shall be merged into Huntington (the
"Merger"). Huntington shall be the surviving corporation in the Merger (the
"Surviving Corporation"), which shall continue its corporate existence under the
laws of Maryland following the consummation of the Merger. At the Effective
Time, the separate existence and corporate organization of Empire shall cease.
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ARTICLE 2
EFFECTIVE TIME
--------------
The Merger shall be effective at 11:59 p.m., local Ohio time (the
"Effective Time"), on the "Effective Date," which date shall be the latest of
(1) the day on which Articles of Merger with respect to the Merger have been
filed with the Maryland State Department of Assessments and Taxation in
accordance with the requirements of the laws of the State of Maryland, (2) the
day on which a Certificate of Merger with respect to the Merger has been filed
with the Administrator of the Corporation, Securities and Land Development
Bureau of the Michigan Department of Consumer and Industry Services, in
accordance with the requirements of the laws of the State of Michigan, or (3)
such later date as may be specified in such Articles and Certificate of Merger;
provided, however, that the Effective Date shall not be earlier than the date of
the expiration of the last required waiting period following receipt of the last
regulatory approval required in order to consummate the Merger. Unless the
parties shall agree otherwise in writing, the Effective Date shall be the same
day as the "Closing Date," as such term is defined in the Supplemental
Agreement.
ARTICLE 3
EFFECT OF THE MERGER
--------------------
3.1 NAME. The name of the Surviving Corporation shall be "Huntington
Bancshares Incorporated."
3.2 ARTICLES OF INCORPORATION. The Charter of Huntington in effect at
the Effective Time shall be the charter of the Surviving Corporation, until
amended in accordance with law.
3.3 SEPARATE CORPORATE EXISTENCE; ASSETS; LIABILITIES. At the Effective
Time, the effect of the Merger shall be as provided by the applicable provisions
of the laws of Maryland. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, (1) the separate existence of Empire
shall cease; (2) all assets and property then owned by each Constituent
Corporation, or which would inure to either of them, including all real,
personal, and mixed property, tangible and intangible assets, choses in action,
rights, and credits, and any legacies which either such Constituent Corporation
would have been capable of taking, shall immediately, by operation of law,
transfer to, vest in, and devolve upon the Surviving Corporation, without any
conveyance or further act or deed; (3) the Surviving Corporation shall be liable
for all the debts and obligations of each Constituent Corporation; and (4) the
rights of creditors and any liens on the property or assets of either
Constituent Corporation shall not be impaired.
3.4 FURTHER ACTIONS. From time to time, as and when requested by the
Surviving Corporation or by its successors, the officers and directors of Empire
in office at the Effective Time shall execute and deliver such instruments and
shall take or cause to be taken such further or other action as shall be
necessary in order to vest or perfect in the Surviving Corporation, or to
confirm of record or otherwise, title to, and possession of, all the assets,
property, interests, rights, privileges, immunities, powers, franchises, and
authority of Empire and otherwise to carry out the purposes of this Agreement.
ARTICLE 4
CONVERSION OF SHARES
--------------------
4.1 HUNTINGTON COMMON. All shares of Huntington Common that are issued
and outstanding immediately prior to the Effective Time shall continue to be
issued and outstanding shares of Huntington Common at and after the Effective
Time.
4.2 EMPIRE COMMON.
(a) At the Effective Time, the shares of Empire Common issued
and outstanding immediately prior to the Effective Time shall be converted, by
virtue of the Merger and without further action on the part of the holders of
Empire Common (collectively, the "Empire Shareholders" and, individually, a
"Empire Shareholder"), into the right to receive shares of the Huntington
Common, as follows:
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(1) Subject to adjustment in accordance with Sections (2) and
(3) below, each outstanding share of Empire Common shall be converted
into the right to receive 2.0355 shares of Huntington Common (the
"Conversion Ratio").
(2) If the sum (the "Actual Outstanding Empire Common") of (a)
the number of shares of Empire Common outstanding at the Effective Time
plus (b) the number of shares of Empire Common that are subject to
outstanding Empire Stock Options as of the Effective Time plus (c) the
number of shares of Empire Common that have been accrued under the
Director Plans as of the Effective Time is greater than the sum (the
"Anticipated Outstanding Empire Common") of (x) 3,190,054 shares plus
(y) the number of shares of Empire Common (not to exceed 19,500 shares)
that have been accrued under the Directors Plans as of the Effective
Time, the Conversion Ratio will be automatically adjusted by
multiplying the original Conversion Ratio by the quotient obtained by
dividing the Anticipated Outstanding Empire Common by the Actual
Outstanding Empire Common; provided, however, that, in performing any
such adjustment, the Conversion Ratio will be rounded to the nearest
hundredth of a share of Huntington Common.
(3) In the event that Huntington changes (or establishes a
record date for changing) the number of shares of Huntington Common
issued and outstanding as a result of a stock dividend, stock split,
recapitalization, or similar transaction with respect to the
outstanding shares of Huntington Common (collectively, a "Huntington
Recapitalization"), and the record date for such Huntington
Recapitalization shall be after the date of this Agreement and prior to
the Effective Time, then the Conversion Ratio shall be adjusted
appropriately. In the event of a reclassification of the outstanding
shares of Huntington Common or a consolidation or merger of Huntington
with or into another corporation, other than a merger in which
Huntington is the surviving corporation and which does not result in
any reclassification, conversion, or exchange of shares of Huntington
Common, holders of Empire Common shall receive, in lieu of each share
of Huntington Common to be issued in exchange for each share or portion
of a share of Empire Common pursuant to the terms hereof, the kind and
amount of securities, money, property, or other consideration
receivable upon such reclassification, consolidation, or merger by
holders of Huntington Common with respect to shares of Huntington
Common outstanding immediately prior to such reclassification,
consolidation, or merger.
(4) No fractional shares of Huntington Common shall be issued.
Each holder of Empire Common who would otherwise be entitled to receive
a fractional part of a share of Huntington Common shall instead be
entitled to receive cash in an amount equal to the product resulting
from multiplying such fraction by the Average Closing Sale Price. No
interest shall be payable with respect to such cash payment.
(b) Any and all shares of Empire Common held by Empire, Huntington, or
any direct or indirect majority-owned subsidiary of either of them, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
(c) Each unexercised Empire Stock Option that is outstanding
immediately prior to the Effective Time shall be converted automatically at the
Effective Time into an option to purchase shares of Huntington Common under the
Huntington Amended and Restated 1994 Stock Option Plan or similar Huntington
plan (a "Huntington Stock Option"), with the number of shares of Huntington
Common to be subject to a particular Huntington Stock Option to be determined by
converting the number of shares of Empire Common subject to the Empire Stock
Option into a number of Huntington Common shares in accordance with the
procedure for converting outstanding Empire Common shares into Huntington Common
shares as set forth in Section 4.2(a) above, except that all fractional shares
will be rounded to the nearest whole share, and with the exercise price for each
share of Huntington Common subject to a particular Huntington Stock Option to be
equal to the exercise price per Empire Common share under the Empire Stock
Option divided by the Conversion Ratio determined in accordance with Section
4.2(a)(1) above; provided, however, that, in the case of any Empire Stock Option
to which Section 421 of the Internal Revenue Code of 1986, as amended (the
"Code"), applies by reason of its qualification under Section
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<PAGE> 56
422 of the Code, the terms of the Huntington Stock Option into which such Empire
Stock Option is to be converted, including the option price, the number of
shares of Huntington Common purchasable pursuant to such option, and the terms
and conditions of exercise of such option, shall be determined so as to comply
with Section 424(a) of the Code. Upon such conversion, all rights under any and
all stock options and stock option plans previously granted or adopted by Empire
shall terminate.
ARTICLE 5
EXCHANGE OF CERTIFICATES
------------------------
(a) As promptly as practicable after the Effective Date but not later
than ten business days after the Effective Date, Huntington shall cause The
Huntington National Bank or its nominee (the "Exchange Agent") to prepare and
mail to each holder of record on the Effective Date of any shares of Empire
Common a letter of transmittal containing instructions for the surrender of all
certificates for shares of Empire Common. Upon the surrender by such holder of a
certificate or certificates for shares of Empire Common standing in such
holder's name to the Exchange Agent in accordance with the instructions set
forth in the letter of transmittal, such holder shall be entitled to receive in
exchange a certificate representing the number of whole shares of Huntington
Common into which the shares represented by the certificate or certificates so
surrendered shall have been converted and, if applicable, a check payable to
such holder in the amount necessary to pay for any fractional shares of
Huntington Common which such holder would otherwise have been entitled to
receive, in accordance with Section 4.2(a)(4). Huntington shall deliver to the
Exchange Agent such share certificates for whole shares of Huntington Common and
the amount of cash necessary to pay for all fractional shares of Huntington
Common in accordance with Section 4.2(a)(4) in order to permit the Exchange
Agent to promptly deliver such certificates and cash to the holders of shares of
Empire Common upon its receipt of certificates representing shares of Empire
Common. No interest shall be payable with respect to either the whole shares of
Huntington Common or the cash payable in lieu of fractional shares. Immediately
after the third anniversary of the Effective Date, the Exchange Agent shall
deliver to the Surviving Corporation any unclaimed balance of cash owing with
respect to fractional shares and such cash shall be retained by, and become the
property of the Surviving Corporation, free and clear of any claims whatsoever.
(b) Neither the Surviving Corporation nor the Exchange Agent shall be
obligated to deliver a certificate for Huntington Common or a check for cash in
lieu of fractional shares to a former shareholder of Empire until such former
shareholder surrenders the certificate or certificates representing shares of
Empire Common standing in such former shareholder's name or, if such former
shareholder is unable to locate such certificate or certificates, an appropriate
affidavit of loss and indemnity agreement and bond as may be required by
Huntington. Until so surrendered, each outstanding certificate for shares of
Empire Common shall be deemed for all corporate purposes (except the payment of
dividends) to evidence ownership of the number of whole shares of Huntington
Common into which the shares of Empire Common represented thereby shall have
been converted.
(c) After the Effective Date, no dividends or distributions payable to
holders of record of Huntington Common shall be paid to any holder of an
outstanding certificate or certificates formerly representing shares of Empire
Common until such certificate(s) are surrendered by such holder in accordance
with the terms of this Agreement. Promptly upon surrender of such outstanding
certificate(s), there shall be paid to such holder of the certificate or
certificates for Huntington Common issued in exchange the amount of dividends
and other distributions, if any, which theretofore became payable with respect
to such full shares of Huntington Common, but which have not theretofore been
paid on such stock. No interest shall be payable with respect to the payment of
any dividends or other distributions. All such dividends or other distributions
unclaimed at the end of three years from the Effective Date shall, to the extent
such dividends have been previously paid to the Exchange Agent, be repaid by the
Exchange Agent to Huntington, and thereafter the holders of such outstanding
certificates for Empire Common shall look, subject to applicable escheat,
unclaimed funds, and other laws, only to Huntington as general creditors for
payment thereof.
(d) The stock transfer books of Empire shall be closed as of the close
of business on the day that is two business days prior to the Effective Date.
After such date, there shall be no further registration on the records of Empire
of transfers of outstanding certificates formerly representing shares of Empire
Common.
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(e) Huntington is empowered to adopt additional reasonable rules and
regulations with respect to the matters referred to in this Article 5 not
inconsistent with the provisions of this Agreement.
(f) Adoption of this Agreement by the shareholders of Empire shall
constitute ratification of the appointment of the Exchange Agent.
ARTICLE 6
SHAREHOLDER APPROVAL
--------------------
This Agreement shall be submitted to the shareholders of Empire for
approval in accordance with applicable law and its Governing Documents as soon
as reasonably practicable following the execution of this Agreement.
ARTICLE 7
MISCELLANEOUS PROVISIONS
------------------------
7.1 AMENDMENT. At any time prior to the Effective Time, the parties may
amend, modify, or supplement this Agreement by mutual agreement authorized by
their respective boards of directors, whether before or after the shareholders
of Empire have adopted this Agreement, provided that the number of shares of
Huntington Common into which shares of Empire Common are to be converted as
determined in Section 4.2(a) shall not be changed after the shareholders of
Empire have adopted this Agreement without the approval of such shareholders in
the same manner as required for the adoption of this Agreement; and provided,
further, that this Agreement may not be amended, modified, or supplemented,
except by an instrument in writing executed and delivered by each of the
parties.
7.2 TERMINATION. Unless extended by the mutual agreement of the
parties, this Agreement may be terminated, notwithstanding the adoption thereof
by the shareholders of Huntington or Empire in the manner and under the
circumstances set forth in the Supplemental Agreement.
7.3 ENTIRE AGREEMENT. This Agreement, together with the Supplemental
Agreement and any exhibits hereto or thereto, constitutes the entire agreement
among the parties with respect to the subject matter hereof and thereof and
supersedes all prior agreements and understandings, oral or written, among the
parties with respect to such subject matter and no party shall be liable or
bound to the others in any manner by any covenants, representations, or
warranties except as specifically set forth herein or therein.
7.4 CAPTIONS. The captions used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
7.5 ASSIGNMENT. Neither this Agreement nor any rights, interests, or
obligations under this Agreement shall be assigned or transferred by operation
of law or otherwise by any party without the prior written consent of the other
party.
7.6 BENEFIT. Nothing in this Agreement, express or implied, is intended
to confer upon any person or entity other than the parties and their successors
in interest any rights or remedies under or by reason of this Agreement.
7.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original for all purposes, but
such counterparts taken together shall constitute one and the same instrument.
7.8 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Ohio without regard to its conflict of
laws principles, except to the extent that Maryland law governs certain aspects
of the Merger as it relates to Huntington or Michigan law governs certain
aspects of the Merger as it relates to Empire.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
HUNTINGTON BANCSHARES INCORPORATED
By: /s/ Richard A. Cheap
-----------------------------------
Richard A. Cheap
General Counsel and Secretary
EMPIRE BANC CORPORATION
By: /s/ James E. Dutmers, Jr.
-----------------------------------
James E. Dutmers, Jr.
Chairman and Chief Executive Officer
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AMENDMENT TO AGREEMENT AND PLAN OF MERGER
-----------------------------------------
THIS AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this "Amendment") is
made as of April 12, 2000, between HUNTINGTON BANCSHARES INCORPORATED, a
Maryland corporation ("Huntington"), and EMPIRE BANC CORPORATION, a Michigan
corporation ("Empire").
RECITALS
--------
A. Huntington and Empire are parties to a certain Agreement and Plan of
Merger, dated February 4, 2000 (the "Merger Agreement").
B. Huntington and Empire desire to amend the Merger Agreement as
provided for in this Amendment.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing recitals, which shall
constitute a part of this Amendment, and the mutual promises contained herein,
the parties agree that the Merger Agreement shall be amended as follows:
1. "Average Closing Sale Price," as referred to in Section 4.2(a)(4) of
the Merger Agreement, shall mean the average of the closing sale prices for a
share of Huntington common stock on the five trading days immediately preceding
the date that is five trading days prior to the Effective Date, as reported on
the Nasdaq National Market.
2. This Amendment shall be effective as of the date set forth above.
Except as set forth in this Amendment, the Merger Agreement shall continue in
full force and effect without modification or change.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first written above.
HUNTINGTON BANCSHARES INCORPORATED
By: /s/ Richard A. Cheap
-----------------------------------
Richard A. Cheap
General Counsel and Secretary
EMPIRE BANC CORPORATION
By: /s/ James E. Dutmers, Jr.
-----------------------------------
James E. Dutmers, Jr.
Chairman and Chief Executive Officer
<PAGE> 60
EXHIBIT B
---------
SUPPLEMENTAL AGREEMENT
----------------------
THIS SUPPLEMENTAL AGREEMENT (this "Agreement") is made and entered into
as of February 4, 2000, between EMPIRE BANC CORPORATION ("Empire"), a Michigan
corporation having its principal office located in Traverse City, Michigan; and
HUNTINGTON BANCSHARES INCORPORATED ("Huntington"), a Maryland corporation having
its principal office located in Columbus, Ohio.
RECITALS:
---------
A. Huntington is a registered bank holding company under the BHC Act.
B. Empire is a registered bank holding company under the BHC Act.
C. Concurrently with the execution and delivery of this Agreement, the
Parties are entering into (1) an Agreement and Plan of Merger (the "Merger
Agreement"), which provides for the merger of Empire into Huntington in
accordance with the terms and conditions contained in the Merger Agreement and
in this Agreement (the "Merger"), and (2) a certain Warrant Purchase Agreement,
in the form attached as Exhibit 1 (the "Warrant Purchase Agreement"), and Empire
is issuing to Huntington a certain Warrant, in the form attached as Attachment A
to the Warrant Purchase Agreement (the "Warrant"). This Agreement, together with
the Merger Agreement, the Warrant Purchase Agreement, and the Warrant are
sometimes collectively referred to as the "Merger Documents."
D. The Parties desire to enter into this Agreement for the purpose of
setting forth certain representations, warranties, and covenants made by each
party as an inducement to the other party to execute and deliver the Merger
Agreement and to consummate the Merger and to set forth certain additional terms
and conditions applicable to the Merger.
AGREEMENT:
----------
NOW, THEREFORE, in consideration of the above recitals and the mutual
warranties, representations, covenants, and agreements set forth herein, the
Parties agree as follows:
ARTICLE 1
DEFINITIONS
-----------
1.1 DEFINITIONS CONTAINED ELSEWHERE IN THIS AGREEMENT. For purposes of
this Agreement, the following terms shall have the meanings ascribed to them in
the Preamble or Recitals of this Agreement:
this "AGREEMENT";
"EMPIRE";
"HUNTINGTON";
the "MERGER";
the "MERGER AGREEMENT";
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the "MERGER DOCUMENTS";
the "WARRANT";
the "WARRANT PURCHASE AGREEMENT";
1.2 DEFINITIONS CONTAINED IN THE MERGER AGREEMENT. For purposes of this
Agreement, the following terms shall have the meanings ascribed to them in the
Merger Agreement:
the "DIRECTOR PLANS";
the "EFFECTIVE DATE";
the "EFFECTIVE TIME";
"EMPIRE COMMON";
the "EMPIRE STOCK OPTION PLAN";
the "EMPIRE STOCK OPTIONS";
"HUNTINGTON COMMON"; and
the "SURVIVING CORPORATION";
1.3 ADDITIONAL DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
"401(k) PLAN" shall mean the Empire National Bank Savings, Investment
and Retirement Plan.
"ACQUISITION TRANSACTION" shall mean a transaction involving (A) the
sale or other disposition of more than 20% of the shares of the capital stock or
any other class of voting securities of Empire, including, but not limited to, a
Tender Offer, involving any Person other than Huntington or a Huntington
Affiliate, (B) the sale or other disposition of 15% or more of the consolidated
assets or deposits of Empire or of the bank owned by Empire, to any Person other
than Huntington or a Huntington Affiliate, or (C) a merger or consolidation
involving Empire and any Person other than Huntington or a Huntington Affiliate,
other than a transaction pursuant to which Empire will be the surviving
corporation and the current shareholders of Empire will be the owners of a
majority of the stock of the surviving corporation following the transaction.
"AFFILIATE" of a Person shall mean: (A) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by, or
under common control with such Person; (B) any officer, director, partner,
employer, or direct or indirect beneficial owner of any 10% or greater equity or
voting interest of such Person; or (C) any other Person for which a Person
described in clause (B) acts in any such capacity.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character, and
description, whether real, personal, or mixed, tangible or intangible, accrued
or contingent, or otherwise relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether or not carried on the books
and records of such Person, and whether or not owned in the name of such Person
or any Affiliate of such Person and wherever located.
"BHC ACT" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"CERCLA" shall mean the Comprehensive Environmental Response
Compensation and Liability Act, as amended, 42 U.S.C. 9601, et seq.
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"CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding, or undertaking of any kind or
character, or other document to which any Person is a party or that is binding
on any Person or its capital stock, Assets, or business.
"DEFAULT" shall mean (A) any breach or violation of or default under
any Contract, Order, or Permit, (B) any occurrence of any event that with the
passage of time or the giving of notice or both would constitute a breach or
violation of or default under any Contract, Order, or Permit, or (C) any
occurrence of any event that with or without the passage of time or the giving
of notice would give rise to a right to terminate or revoke, change the current
terms of, or renegotiate, or to accelerate, increase, or impose any Liability
under, any Contract, Order, or Permit, where, in any such event, such Default is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on a Party.
"DISCLOSURE MEMORANDUM" shall mean the written information entitled
"Disclosure Memorandum" delivered by Empire to Huntington prior to the date of
this Agreement identifying the matters contained therein and, with respect to
each disclosure made, specifically referencing each Section of this Agreement
under which such disclosure is being made. Information disclosed with respect to
one Section shall not be deemed to be disclosed for purposes of any other
Section not specifically referenced with respect thereto.
"EMPIRE BANK" shall mean The Empire National Bank of Traverse City, a
wholly owned subsidiary of Empire.
"EMPIRE BONUS PLAN" shall mean the Empire Profit Sharing and Incentive
Plan, as in effect as of the date of this Agreement.
"EMPIRE BONUS PLAN PARTICIPANTS" shall mean all employees of Empire who
are listed in Section 6.3(c) of the Disclosure Memorandum as participants in the
Empire Bonus Plan on the Effective Date (which list may be updated on the day
immediately preceding the Effective Date).
"EMPIRE BONUS POOL" shall mean the estimated aggregate dollar amount
that would be or become payable under the Empire Bonus Plan for the entire 2000
calendar year, in the agreed amount of $1,153,000 (which amount was calculated
without regard to any accounting or accrual adjustments that may be required
under or resulting from the Merger Documents or the transactions contemplated
thereby), multiplied by a fraction, the numerator of which is the number of days
between January 1, 2000, and the Effective Date (inclusive), and the denominator
of which is 366.
"EMPIRE COMPANIES" shall mean Empire and all Empire Subsidiaries.
"EMPIRE COMPANY" shall mean Empire and/or any Empire Subsidiary.
"EMPIRE FINANCIAL STATEMENTS" shall mean (A) the consolidated balance
sheets of Empire (including related notes and schedules, if any) as of December
31, 1998 and 1997, and the related consolidated statements of income, changes in
shareholders' equity, and cash flows (including related notes and schedules, if
any) for each of the three years ended December 31, 1998, 1997, and 1996, with
the report thereon of Crowe, Chizek and Company LLP, as filed by Empire in SEC
Documents; (B) the audited or unaudited consolidated balance sheets of Empire
(including related notes and schedules, if any), and the related consolidated
statements of income and cash flows (including related notes and schedules, if
any) included in SEC Documents filed by Empire with respect to periods ended
subsequent to December 31, 1998; and (C) the financial information included in
the "Report to Management December 1999" previously delivered to Huntington (the
"December Report").
"EMPIRE RIGHTS AGREEMENT" shall mean the Rights Agreement, dated
December 19, 1990, as amended, between Empire and Empire Bank, as Rights Agent.
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"EMPIRE SUBSIDIARIES" shall mean the Subsidiaries of Empire, which
shall include the Empire Subsidiaries described in Section 2.4 of the Disclosure
Memorandum and any corporation, bank, savings association, or other organization
acquired as a Subsidiary of Empire after the date of this Agreement and owned by
Empire at the Effective Time.
"EMPLOYEE BENEFIT PLAN" or "BENEFIT PLAN" of a Party shall mean any and
all employee benefit plans of such Party, including, but not limited to, all
ERISA Plans and all pension, retirement, profit-sharing, deferred compensation,
stock option, employee stock ownership, severance pay, vacation, bonus, or other
incentive plans, all other written employee programs, arrangements, or
agreements, all medical, vision, dental, or other health plans, all life
insurance plans, and all other employee benefit plans or fringe benefit plans,
currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by a Party or any Subsidiary of that Party for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface or subsurface strata) and which are
administered, interpreted, or enforced by the United States Environmental
Protection Agency and state and local agencies with jurisdiction over, and
including common law in respect of, pollution or protection of the environment,
including CERCLA, RCRA, and other Laws relating to emissions, discharges,
releases, or threatened releases of any Hazardous Substance, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of any Hazardous Substance.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA AFFILIATE" shall have the meaning provided in Section 2.13 of
this Agreement.
"ERISA PLAN" of a Party shall mean an Employee Benefit Plan of that
Party or any Subsidiary of such Party which is an "employee pension benefit
plan," as that term is defined in Section 3(2) of ERISA.
"ESOP" shall mean the Empire National Bank Employee Stock Ownership
Plan.
"EXHIBITS" 1 through 3, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are incorporated
by reference in, and made a part of, this Agreement and may be referred to in
this Agreement and any other related instrument or document without being
attached to this Agreement.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GOVERNING DOCUMENTS" of a Person shall mean, collectively, the
charter, articles of incorporation, certificate of incorporation, bylaws, and
regulations, as applicable, of such Person and any and all other documents
governing the internal affairs of such Person.
"HAZARDOUS SUBSTANCE" shall mean (A) any hazardous substance, hazardous
material, hazardous waste, regulated substance, or toxic substance (as those
terms are defined by any applicable Environmental Laws) and (B) any chemicals,
pollutants, contaminants, petroleum, petroleum products, or oil (and
specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities and any
polychlorinated biphenyls).
"HUNTINGTON CAPITAL STOCK" shall mean, collectively, the Huntington
Common, the Huntington Preferred Stock, and any other class or series of capital
stock of Huntington.
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"HUNTINGTON COMPANIES" shall mean, collectively, Huntington and all
Huntington Subsidiaries.
"HUNTINGTON FINANCIAL STATEMENTS" shall mean (A) the consolidated
balance sheets of Huntington (including related notes and schedules, if any) as
of December 31, 1998 and 1997, and the related statements of income, changes in
shareholders' equity, and cash flows (including related notes and schedules, if
any) for each of the three years ended December 31, 1998, 1997, and 1996, with
the report thereon of Ernst & Young LLP, as filed by Huntington in SEC
Documents, and (B) the unaudited consolidated balance sheets of Huntington
(including related notes and schedules, if any) and related statements of
income, changes in shareholders' equity, and cash flows (including related notes
and schedules, if any) included in SEC Documents filed with respect to periods
ended subsequent to December 31, 1998.
"HUNTINGTON PREFERRED STOCK" shall mean the "blank" serial preferred
stock of Huntington, without par value.
"HUNTINGTON RIGHTS" shall mean the preferred stock purchase rights
issued pursuant to the Huntington Rights Agreement.
"HUNTINGTON RIGHTS AGREEMENT" shall mean that certain Rights Agreement;
dated as of February 22, 1990, as amended, between Huntington and The Huntington
Trust Company, N.A., as Rights Agent.
"HUNTINGTON SUBSIDIARIES" shall mean the Subsidiaries of Huntington,
whether currently a Subsidiary of Huntington or acquired as a Subsidiary of
Huntington after the date of this Agreement and owned by Huntington at the
Effective Time.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"KNOWLEDGE" as used with respect to a Person (including references to
such Person being aware of a particular matter) shall mean those facts that are
known or should have been known after reasonable investigation by the Chairman,
President, Chief Financial Officer, Chief Accounting Officer, Chief Credit
Officer, ("in-house") General Counsel, any ("in-house") Assistant or Deputy
General Counsel, or any Senior or Executive Vice President of such Person.
"LAW" shall mean any code, law, ordinance, regulation, reporting, or
licensing requirement, rule, or statute applicable to a Person or its Assets,
Liabilities, or business, including those promulgated, interpreted, or enforced
by any Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including costs
of investigation, collection, and defense), claim, deficiency, guaranty, or
endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention,
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature whatsoever of, on, or with respect to any property or
property interest, other than (A) Liens for current property Taxes not yet due
and payable, (B) for depository institution Subsidiaries of a Party, pledges to
secure deposits and other Liens incurred in the ordinary course of banking
business, and (C) Liens which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on a Party.
"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, governmental, or other examination or
investigation, hearing, inquiry, administrative, or other proceeding, by any
Person alleging potential Liability, but shall not include regular, periodic
examinations of depository institutions and their Affiliates by Regulatory
Authorities.
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"LOAN PROPERTY" shall mean any property owned by the Party in question
or by any of its Subsidiaries or in which such Party or Subsidiary holds a
security interest, and, where required by the context, includes the owner or
operator of such property, but only with respect to such property.
"MATERIAL" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine materiality in
that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change, or
occurrence which, individually or together with any other event, change, or
occurrence, has a material adverse impact on (A) the financial position,
business, or results of operations of such Party and its Subsidiaries, taken
individually (except with respect to the Empire Companies, such impact shall be
measured individually only as to Empire and Empire Bank),or as a whole, or (B)
the ability of such Party to perform its obligations under the Merger Documents
or to consummate the Merger or the other transactions contemplated by the Merger
Documents.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ NATIONAL MARKET" shall mean the National Market System of the
National Association of Securities Dealers Auto-mated Quotations System.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
"OCC" shall mean the Office of the Comptroller of the Currency.
"OPERATIONAL REAL PROPERTY" shall mean the Real Property owned or
leased by any Empire Company and used in the operation of its business.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any federal, state, local, or foreign or other court, arbitrator, mediator,
tribunal, administrative agency, or Regulatory Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in which
the Party in question or any of its Subsidiaries participates in the
"management," as such term is defined in CERCLA, and, where required by the
context, said term means the owner or operator of such facility or property, but
only with respect to such facility or property.
"PARTY" shall mean either Empire or Huntington, and "Parties" shall
mean both Empire and Huntington.
"PENSION PLAN" of a Party shall mean any ERISA Plan of that Party or
any Subsidiary of such Party which is also a "defined benefit plan" (as defined
in Section 414(j) of the Internal Revenue Code).
"PERMIT" shall mean any federal, state, local, and foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
notice, permit, or right to which any Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its securities, Assets, or
business.
"PERSON" shall mean a natural person or any legal, commercial, or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"PROXY STATEMENT" shall mean the proxy statement used by Empire to
solicit the approval of its shareholders of the transactions contemplated by the
Merger Documents which shall include the prospectus of Huntington relating to
the issuance of shares of Huntington Common to holders of shares of Empire
Common.
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"RABBI TRUSTS" shall mean collectively, the Director Trust Agreement,
dated December 1, 1995, as amended, and the Executive Trust Agreement, dated
December 1, 1995, as amended.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. 6901, et seq.
"REAL PROPERTY" shall mean any and all real property owned or leased by
any Empire Company.
"REGISTRATION STATEMENT" shall mean the Registration Statement on Form
S-4, or other appropriate form, including any pre-effective or post-effective
amendments or supplements, filed with the SEC by Huntington under the 1933 Act
with respect to the shares of Huntington Common to be issued to the shareholders
of Empire in the Merger.
"REGULATORY AUTHORITIES" shall mean, collectively, the United States
Department of Justice, the Board of the Governors of the Federal Reserve System,
the FDIC, the OCC, all state regulatory agencies, if any, having jurisdiction
over the Parties and their respective Subsidiaries, the NASD, and the SEC.
"REPRESENTATIVE" shall mean any investment banker, financial advisor,
attorney, accountant, consultant, or other representative of a Person.
"RIGHTS" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock of a
Person or by which a Person is or may be bound to issue additional shares of its
capital stock or other Rights.
"SEC" shall mean the Securities and Exchange Commission.
"SEC DOCUMENTS" shall mean all forms, proxy statements, registration
statements, reports, schedules, and other documents filed, or required to be
filed, by a Party or any of its Subsidiaries with any Regulatory Authority
pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the Investment
Company Act of 1940, as amended, the Investment Advisors Act of 1940, as
amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder, and the blue
sky, securities, or similar laws of the various states, as applicable.
"SERP" shall mean the Empire National Bank Supplemental Executive
Retirement Plan, dated December 1, 1999.
"SHAREHOLDERS' MEETING" shall mean the meeting of the shareholders of
Empire to be held pursuant to Section 4.3 of this Agreement, including any
adjournment or adjournments thereof.
"SUBSIDIARIES" of a Party shall mean all those corporations, banks,
associations, or other entities of which the Party owns or controls 50% or more
of the outstanding equity securities either directly or through an unbroken
chain of entities as to each of which 50% or more of the outstanding equity
securities is owned directly or indirectly by its parent; provided, there shall
not be included any such entity acquired through foreclosure or any such entity
the equity securities of which are owned or controlled in a fiduciary capacity.
"TAX" or "TAXES" shall mean any federal, state, county, local, or
foreign income, profits, franchise, gross receipts, payroll, sales, employment,
use, property, withholding, excise, occupancy, and other taxes, assessments,
charges, fares, or impositions, including interest, penalties, and additions
imposed thereon or with respect thereto.
"TENDER OFFER" shall mean a tender or exchange offer made by any Person
other than Huntington or an Affiliate of Huntington to acquire equity securities
of Empire if, upon the completion of the transactions proposed in
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such offer, such Person would own or have the right to acquire beneficial
ownership of more than 20 percent of the capital stock or any other class of
voting securities of Empire.
1.4 INTERPRETATIONS. Any singular term in this Agreement shall be
deemed to include the plural, and any plural term the singular. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed followed by the words "without limitation."
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF EMPIRE
----------------------------------------
Empire hereby represents and warrants to Huntington as follows:
2.1 ORGANIZATION, STANDING, AND POWER.
(a) Empire is duly registered as a bank holding company under the BHC
Act. Each of the Empire Companies is organized, validly existing, and in good
standing under the Laws of the United States or its respective state of
incorporation or formation and has the corporate power and authority necessary
to carry on its business as now conducted and to own, lease, and operate its
material Assets. Each Empire Company is duly qualified or licensed to transact
business as a foreign corporation in good standing in the States of the United
States and foreign jurisdictions where the character of its Assets or the nature
or conduct of its business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so qualified or licensed is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Empire.
(b) Section 2.1 of the Disclosure Memorandum contains true and complete
copies of all of the Governing Documents of each Empire Company.
(c) Except as disclosed in Section 2.1(c) of the Disclosure Memorandum,
the minute books of Empire accurately reflect in all material respects all
corporate meetings held or actions taken since January 1, 1995, by the
shareholders or Board of Directors of Empire.
2.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Empire has the corporate power and authority necessary to execute,
deliver, and perform its obligations under the Merger Documents and to
consummate the transactions contemplated thereby. The execution, delivery, and
performance of the Merger Documents and the consummation of the transactions
contemplated therein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
Empire, subject to the approval of the Merger Documents by a majority of the
outstanding shares of Empire Common, which is the only shareholder vote required
for approval of the Merger Documents and the consummation of the Merger by
Empire. Subject to such requisite shareholder approval, the Merger Documents
represent the legal, valid, and binding obligations of Empire, enforceable
against Empire in accordance with their respective terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
receivership, conservatorship, reorganization, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Except as disclosed in Section 2.2 of the Disclosure Memorandum,
neither the execution and delivery of the Merger Documents by Empire nor the
consummation by Empire of the transactions contemplated thereby, nor compliance
by Empire with any of the provisions thereof, will (A) conflict with or result
in a breach of any provision of Empire's Governing Documents, or (B) constitute
or result in a Default under, or require any Consent pursuant to, or result in
the creation of any Lien on any Asset of any Empire Company, under any Contract
or Permit of any Empire Company, or (C) subject to receipt of the requisite
approvals referred to in Section 7.1(a) and (b) of this Agreement, violate any
Law or Order applicable to any Empire Company or any of their respective
material Assets.
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(c) Other than in connection or compliance with the provisions of
applicable state corporate and Securities Laws and rules of the NASD, and other
than Consents required from Regulatory Authorities, and other than notices to or
filings with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any Employee Benefit Plan of any Empire Company, no
notice to, filing with, or Consent of, any public body or authority is necessary
for the consummation by Empire of the Merger and the other transactions
contemplated in the Merger Documents.
2.3 CAPITAL STOCK.
(a) The authorized capital stock of Empire consists of 5,000,000 shares
of Empire Common, 3,166,234 of which are issued and outstanding as of the date
of this Agreement and 2,000,000 shares of preferred stock, without par value,
none of which was outstanding on the date of this Agreement. All of the issued
and outstanding shares of Empire Common are duly and validly issued and
outstanding and are fully paid and nonassessable. None of the outstanding shares
of capital stock of Empire has been issued in violation of any preemptive rights
of the current or past shareholders of Empire. Empire has reserved 23,820 shares
of Empire Common for issuance under the Empire Stock Option Plan, pursuant to
which options to purchase not more than 23,820 shares of Empire Common are
outstanding. As of December 31, 1999, approximately 14,500 shares of Empire
Common were reserved for issuance to satisfy obligations Empire had under the
Director Plans and an additional 5,000 shares of Empire Common have been
reserved for issuance pursuant to the Director Plans during 2000.
(b) Except for the Warrant, the Warrant Purchase Agreement, and the
Empire Rights Agreement, and except as set forth in Section 2.3(a) of this
Agreement or as disclosed in Section 2.3 of the Disclosure Memorandum, there are
no shares of capital stock or other equity securities of Empire outstanding and
no outstanding Rights relating to the capital stock of Empire. The execution and
delivery of the Merger Documents does not, and the consummation of the Merger
and the other transactions contemplated by the Merger Documents will not (A)
result in the grant of any Rights to any Person under the Empire Rights
Agreement, (B) result in separation from the shares of Empire Common of the
Rights granted under the Empire Rights Agreement, (C) permit any holder of any
of the Rights under the Empire Rights Agreement to exercise any such Rights, or
(D) give any Person any Right to purchase any securities issued by Huntington.
Empire and Empire Bank, as Rights Agent, have properly authorized and executed a
certain Amendment to Empire Rights Agreement, dated as of the date of this
Agreement, but executed prior to the execution of this Agreement, a copy of
which has been furnished to Huntington.
2.4 EMPIRE SUBSIDIARIES. Section 2.4 of the Disclosure Memorandum
contains a true and complete list of all Empire Subsidiaries as of the date of
this Agreement. Empire Bank is a national bank chartered under laws of the
United States. Except as disclosed in Section 2.4 of the Disclosure Memorandum,
Empire owns all of the issued and outstanding shares of capital stock of each
Empire Subsidiary. No equity securities of any Empire Subsidiary are or may
become required to be issued by reason of any Rights, and there are no Contracts
by which any Empire Subsidiary is bound to issue additional shares of its
capital stock or Rights. There are no Contracts relating to the rights of any
Empire Company to vote or to dispose of any shares of the capital stock of any
Empire Subsidiary. All of the shares of capital stock of each Empire Subsidiary
held by an Empire Company are fully paid and, except pursuant to 12 U.S.C.
Section 55 in the case of Empire Bank, non-assessable and are owned by the
Empire Company free and clear of any Lien. Empire Bank is an "insured
institution," as defined in the Federal Deposit Insurance Act and applicable
regulations thereunder, the deposits in which are insured by the Bank Insurance
Fund or the Savings Association Insurance Fund.
2.5 FINANCIAL STATEMENTS. Empire has delivered to Huntington copies of
all Empire Financial Statements and will deliver to Huntington copies of all
Empire Financial Statements prepared subsequent to the date hereof. The Empire
Financial Statements (as of the dates thereof and for the periods covered
thereby) (A) are, or if dated after the date of this Agreement, will be, in
accordance with the books and records of Empire, which are or will be, as the
case may be, complete and correct in all material respects and which have been
or will have been, as the case may be, maintained in accordance with good
business practices, and (B) present or will present, as the case may be, fairly
the consolidated financial position of Empire as of the dates indicated and the
consolidated results of operations, changes in shareholders' equity, and cash
flows of Empire for the periods indicated, in accordance with GAAP (except with
respect to the December Report which has not been prepared in accordance with
GAAP) or, as
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applicable, regulatory accounting principles applicable to bank holding
companies generally (subject to any exceptions as to consistency specified
therein or as may be indicated in the notes thereto or, in the case of interim
financial statements, subject to normal recurring year-end and audit adjustments
that are not material in amount or effect).
2.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in Section
2.6 of the Disclosure Memorandum, as of December 31, 1998, no Empire Company had
any Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Empire, except Liabilities which were
accrued or reserved against in the consolidated balance sheets of Empire as of
December 31, 1998, included in the Empire Financial Statements. Except as
disclosed in Section 2.6 of the Disclosure Memorandum, no Empire Company has
incurred or paid any Liability since December 31, 1998, except for (A) such
Liabilities incurred or paid in the ordinary course of business consistent with
past business practice and which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Empire, (B) such Liabilities
that are expressly permitted hereunder, and (C) such Liabilities incurred in
connection with the negotiation and consummation of the transactions
contemplated hereunder.
2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Empire Financial Statements delivered prior to the date of this Agreement or as
disclosed in Section 2.7 of the Disclosure Memorandum, since December 31, 1998,
(A) there have been no events, changes, or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Empire, and (B) Empire has not taken any action, or failed to take any
action, prior to the date of this Agreement, which action or failure, if taken
or occurring after the date of this Agreement, would represent or result in a
material breach or violation of any of the covenants or agreements of Empire
provided in this Agreement. Specifically, but without in any way limiting the
foregoing, except as described in Section 2.7 of the Disclosure Memorandum,
since December 31, 1998, no Empire Company has:
(a) merged with any other corporation or bank, or permitted any other
corporation or bank to merge into or consolidate with it; acquired control over
any other firm, bank, corporation, or organization;
(b) incurred any indebtedness, obligations, or liabilities, whether
absolute, accrued, contingent, or otherwise, including, without limitation,
liabilities as guarantor under any guaranty, other than indebtedness,
obligations, and liabilities incurred in the ordinary course of its business or
incurred under the Empire Contracts (as that term is defined in Section 2.14);
(c) forgiven or cancelled any indebtedness or contractual obligation,
other than in the ordinary course of business;
(d) purchased, sold, transferred, liquidated, or otherwise acquired or
disposed of any material Assets or properties, or entered into any contract for
any such purchase, sale, transfer, liquidation, acquisition, or disposition,
other than in the ordinary course of business;
(e) entered into any material lease of real or personal property other
than in the ordinary course of business;
(f) declared, paid, made, or set apart any sum or property for, any
dividend or other distribution, or otherwise paid or transferred any funds or
property to its shareholders;
(g) made any loans or loan commitments, other than in the ordinary
course of business, to any Affiliate of Empire (or any person or business entity
controlled by or affiliated with such an Affiliate);
(h) entered into any transaction involving the expenditure of more than
$50,000, other than in the ordinary course of business, except pursuant to and
in accordance with the terms of the contracts and commitments referred to in
Section 2.14;
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(i) adopted any change in any accounting policy or method, except as
appropriate to conform to changes in Tax Laws or regulatory accounting
requirements or GAAP; or
(j) revalued any asset or adjusted any reserve other than in the
ordinary course of business.
2.8 TAX MATTERS. Except as may be disclosed in Section 2.8 of the
Disclosure Memorandum:
(a) All Tax returns required to be filed by or on behalf of any Empire
Company have been timely filed or requests for extensions have been timely
filed, granted, and have not expired for periods ended on or before December 31,
1998, and on or before the date of the most recent fiscal year end immediately
preceding the Effective Time and all returns filed are complete and accurate,
except for failures, if any, which, taken together, would not have a Material
Adverse Effect on Empire. All Taxes shown on filed returns have been paid or
adequate provision therefor has been made in the Empire Financial Statements. As
of the date of this Agreement, there is no audit examination, deficiency, or
refund Litigation with respect to any Taxes that is reasonably likely to result
in a determination that would have, individually or in the aggregate, a Material
Adverse Effect on Empire, except as reserved against in the Empire Financial
Statements delivered prior to the date of this Agreement or as disclosed in
Section 2.8 of the Disclosure Memorandum. All Taxes and other Liabilities due
with respect to completed and settled Tax examinations or concluded Tax
Litigation have been paid or adequate provision therefor has been made in the
Empire Financial Statements.
(b) None of the Empire Companies has executed an extension or waiver of
any statute of limitations on the assessment or collection of any Tax due
(excluding such statutes that relate to years currently under examination by the
Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) Adequate provision for any Taxes due or to become due for any of
the Empire Companies for the period or periods through and including the date of
the respective Empire Financial Statements has been made and is reflected on
such Empire Financial Statements in accordance with GAAP.
(d) Deferred Taxes of the Empire Companies have been provided for in
accordance with GAAP.
(e) Each of the Empire Companies is in material compliance with, and
its records contain all information and documents (including properly completed
IRS Forms W-9) necessary to comply with, all applicable information reporting
and Tax withholding requirements under federal, state, and local Tax Laws, and
such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code.
(f) Empire has not received any notification of an audit of its federal
income tax returns for any tax years since 1992.
(g) Except as described in Section 2.8 of the Disclosure Memorandum,
the Empire Companies have not made any payments, are not obligated to make any
payments, and are not a party to any agreement that under certain circumstances
could obligate them to make any payments, that will not be deductible under the
Internal Revenue Code Sections 280G or 162(m).
2.9 ASSETS AND INSURANCE.
(a) Except as disclosed in Section 2.9 of the Disclosure Memorandum or
as disclosed or reserved against in the Empire Financial Statements delivered
prior to the date of this Agreement, Empire has good and marketable title, free
and clear of all Liens, to all of its Assets which are material to the operation
of its business. All Assets which are material to Empire's business and that are
held under leases or subleases by Empire, are held under valid Contracts
enforceable in accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or other Laws affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceedings may be brought), and each such Contract is in full force and effect.
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(b) To its Knowledge, Empire currently maintains insurance and blanket
bonds (collectively, "Insurance") similar in amounts, scope, and coverage to
that customarily maintained by other bank organizations comparable in size and
operation to Empire. Empire has not received notice from any Insurance carrier
that (A) such Insurance will be canceled or that coverage thereunder will be
reduced or eliminated, or (B) premium costs with respect to such policies of
insurance will be substantially increased. Except as set forth in Section 2.15
of the Disclosure Memorandum, there are presently no material claims pending
under such policies of Insurance and no notices have been given by Empire under
such policies with respect to any material potential or actual claims and Empire
has no Knowledge of any events that require any such notice to be given. All
premiums due under the policies of Insurance have been paid and Empire has not
failed to give any notice or to present a material claim in due and timely
fashion under any such policy of Insurance.
(c) Section 2.9 of the Disclosure Memorandum sets forth a list of the
addresses all Operational Real Property. To the Knowledge of Empire, the
Operational Real Property and the use of such Operational Real Property by
Empire does not violate zoning, land use laws, governmental regulations, or
restrictive covenants, except where such violation would not have a Material
Adverse Effect on Empire. To the Knowledge of Empire, (A) the Operational Real
Property and the use thereof by Empire do not encroach upon any property owned
by any other person, and (B) no property owned by any other person encroaches
upon any of the Operational Real Property, except where such encroachment would
not have a Material Adverse Effect on Empire.
2.10 ENVIRONMENTAL MATTERS. Except as disclosed in Section 2.10 of the
Disclosure Memorandum:
(a) To the Knowledge of Empire, each Empire Company's Participation
Facilities, and its Loan Properties are, and have been, in compliance with all
Environmental Laws, except for violations which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Empire.
(b) There is no Litigation pending or, to the Knowledge of Empire,
threatened before any court, governmental agency, or authority or other forum in
which any Empire Company or any of its Participation Facilities has been or,
with respect to threatened Litigation, may be named as a defendant (A) for
alleged noncompliance (including by any predecessor) with any Environmental Law
or (B) relating to the release into the environment of any Hazardous Substance,
whether or not occurring at, on, under, or involving a site owned, leased, or
operated by any Empire Company or any of its Participation Facilities, except
for such Litigation, pending or threatened, that, if a judgment adverse to an
Empire Company were to be rendered in such Litigation, would not have,
individually or in the aggregate, a Material Adverse Effect on Empire.
(c) There is no Litigation pending or, to the Knowledge of Empire,
threatened before any court, governmental agency, or board or other forum in
which any Empire Company or any of its Loan Properties has been or, with respect
to threatened Litigation, may be named as a defendant or potentially responsible
party (A) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (B) relating to the release into the environment of any
Hazardous Substance, whether or not occurring at, on, under, or involving a Loan
Property, except for such Litigation, pending or threatened, that, if a judgment
adverse to an Empire Company were to be rendered in such Litigation, would not
have, individually or in the aggregate, a Material Adverse Effect on Empire.
(d) To the Knowledge of Empire, there is no reasonable basis for any
Litigation of a type described in subsections (b) or (c) above, except such as
is not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Empire.
(e) During the period of (A) any Empire Company's ownership or
operation of any of their respective current Real Property, (B) any Empire
Company's participation in the management of any Participation Facility, or (C)
to the Knowledge of Empire, any Empire Company's holding of a security interest
in a Loan Property, there have been no releases of Hazardous Substance in, on,
under, or affecting such properties, except such as are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Empire.
Prior to the period of (A) any Empire Company's ownership or operation of any of
their respective current Real Property, (B) any Empire Company's participation
in the management of any Participation Facility, or (C) any Empire Company's
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holding of a security interest in a Loan Property, to the Knowledge of Empire,
there were no releases of Hazardous Substance in, on, under, or affecting any
such property, Participation Facility or Loan Property, except such as are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Empire.
(f) (A) No claims have been made or, to the Knowledge of Empire,
threatened at any time by any third Person against any Empire Company relating
to damage, contribution, cost recovery, compensation, loss, or injury resulting
from any Hazardous Substance; (B) none of the Real Property has been used by any
Empire Company for the storage or disposal of Hazardous Substances, except in
compliance with applicable Law, nor, to the Knowledge of Empire, is any of the
Real Property contaminated by any Hazardous Substance; and (C) to the Knowledge
of Empire, none of the Real Property has in the past contained or presently
contains any underground storage tanks; except to the extent that any of the
matters set forth in items (A), (B), and (C) above would not have a Material
Adverse Effect on Empire.
2.11 COMPLIANCE WITH LAWS. Each Empire Company has in effect all
Permits necessary for it to own, lease, or operate its material Assets and to
carry on its business as now conducted, except for those Permits, the absence of
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Empire, and there has occurred no Default under any
such Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Empire. Except as
disclosed in Section 2.11 of the Disclosure Memorandum, no Empire Company:
(a) is in Default under its Governing Documents;
(b) is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business, except for violations which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Empire;
(c) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory Authority or
the staff thereof (A) asserting that any such entity is not in compliance with
any of the Laws or Orders which such governmental authority or Regulatory
Authority enforces, where such noncompliance is reasonably likely to have a
Material Adverse Effect on Empire, (B) threatening to revoke any Permits, the
revocation of which is reasonably likely to have a Material Adverse Effect on
Empire, or (C) requiring any such entity to enter into or consent to the
issuance of a cease and desist order, supervisory letter, formal agreement,
directive, commitment, or memorandum of understanding, or to adopt any
resolution of the Board of Directors of such entity or similar undertaking,
which restricts the conduct of its business, or in any manner relates to its
capital adequacy, its credit or reserve policies, its management, or the payment
of dividends, and is subject to any such agreement under, letter of
understanding; or
(d) directly or indirectly engages in any material activity prohibited
to be conducted by such entity, or owns any material Assets prohibited to be
held by such entity.
2.12 LABOR RELATIONS. Except as set forth in Section 2.12 of the
Disclosure Memorandum, no Empire Company is the subject of any Litigation
asserting that it has committed an unfair labor practice (within the meaning of
the National Labor Relations Act or comparable state law) or seeking to compel
it to bargain with any labor organization as to wages or conditions of
employment, nor is there any strike or other labor dispute involving any Empire
Company, pending or, to the Knowledge of Empire, threatened, or, to the
Knowledge of Empire, is there any activity involving any Empire Company's
employees seeking to certify a collective bargaining unit or engaging in any
other organization activity.
2.13 EMPLOYEE BENEFIT PLANS.
(a) Empire has disclosed in Section 2.13 of the Disclosure Memorandum,
and has delivered or made available to Huntington prior to the execution of this
Agreement copies of each Employee Benefit Plan of the Empire Companies.
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(b) No Empire Company Pension Plan is or has been a "multiemployer
plan" within the meaning of Section 3(37) of ERISA.
(c) Except as disclosed in Section 2.13 of the Disclosure Memorandum,
all Employee Benefit Plans of the Empire Companies are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, including the 1986
amendments thereto, and any other applicable Laws, the breach or violation of
which are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Empire or Empire Bank.
(d) Except as disclosed in Section 2.13 of the Disclosure Memorandum,
each Empire Company ERISA Plan which is intended to be qualified under Section
401(a) of the Internal Revenue Code has received a favorable determination
letter which takes into account the Tax Reform Act of 1986 and subsequent
legislation for which a determination letter is available from the Internal
Revenue Service, and Empire is not aware of any circumstances likely to result
in revocation of any such favorable determination letter. To the Knowledge of
Empire, no Empire Company has engaged in a transaction with respect to any
Employee Benefit Plan that, assuming the taxable period of such transaction has
not expired as of the date hereof, would subject any Empire Company to a Tax
imposed by either Section 4975 of the Internal Revenue Code or Section 502(i) of
ERISA in amounts which are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Empire.
(e) Except as disclosed in Section 2.13 of the Disclosure Memorandum,
no Empire Company Pension Plan has any "unfunded current liability," as that
term is defined in Section 302(d)(8)(A) of ERISA, and the fair market value of
the assets of any such plan exceeds the plan's "benefit liabilities," as that
term is defined in Section 4001(a)(16) of ERISA, when determined under actuarial
factors that would apply if the plan terminated in accordance with all
applicable legal requirements and assuming the adoption of interest rates and
mortality tables described in Section 417(e)(3)(A)(i) and the use of such
interest rates published in January 1999, and assuming that all participants
take a lump sum distribution of their vested accrued benefits on January 1,
1999.
(f) Except as disclosed in Section 2.13 of the Disclosure Memorandum,
since the date of the most recent actuarial valuation, there has been (A) no
material change in the financial position of any Empire Company Pension Plan,
(B) no change in the actuarial assumptions with respect to any Empire Company
Pension Plan, and (C) no increase in benefits under any Empire Company Pension
Plan as a result of plan amendments or changes in applicable Law which is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on any Empire Company or materially adversely affect the funding status
of any such plan.
(g) Except as disclosed in Section 2.13 of the Disclosure Memorandum,
neither any Empire Company Pension Plan nor any "single-employer plan," within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any Empire Company, or the single-employer plan of any entity which is
considered one employer with Empire under Section 4001 of ERISA or Section 414
of the Internal Revenue Code or Section 302 of ERISA (whether or not waived) (an
"ERISA Affiliate") has an "accumulated funding deficiency" within the meaning of
Section 412 of the Internal Revenue Code or Section 302 of ERISA. No Empire
Company has provided, or is required to provide, security to an Empire Company
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Internal Revenue Code.
(h) Except as disclosed in Section 2.13 of the Disclosure Memorandum,
within the six-year period preceding the Effective Time, no Liability under
Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by
any Empire Company with respect to any ongoing, frozen, or terminated
single-employer plan or the single-employer plan of any ERISA Affiliate, which
Liability is reasonably likely to have a Material Adverse Effect on Empire or
Empire Bank. No Empire Company has incurred any withdrawal Liability with
respect to a multi-employer plan under Subtitle B of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate), which
Liability is reasonably likely to have a Material Adverse Effect on an Empire
Company. No notice of a "reportable event," within the meaning of Section 4043
of ERISA for which the 30-day reporting requirement has not been waived, has
been required to be filed for any Empire Company Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof.
(i) Except as disclosed in Section 2.13 of the Disclosure Memorandum,
no Empire Company has any Liability for retiree health and life benefits under
any Empire Company's Employee Benefit Plans and there are no
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restrictions on the rights of such Empire Company to amend or terminate any such
Employee Benefit Plan without incurring any Liability thereunder, which
Liability is reasonably likely to have a Material Adverse Effect on Empire or
Empire Bank.
(j) Except as disclosed in Section 2.13 of the Disclosure Memorandum,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated by the Merger Documents, will (A) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director, officer, or employee of any Empire
Company from any Empire Company under any Employee Benefit Plan or otherwise,
(B) increase any benefits otherwise payable under any Employee Benefit Plan of
any Empire Company, or (C) result in any acceleration of the time of payment or
vesting of any such benefit.
(k) All liabilities under any Empire Company's Employee Benefit Plans,
other than benefits accrued pursuant to funded retirement plans subject to the
provisions of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
have been fully reflected on the audited Empire Financial Statements to the
extent required by and in accordance with GAAP.
(l) Empire Bank is the sponsor of the ESOP and 401(k) Plan. Empire as
parent of Empire Bank will require that the Trustees of the ESOP and the 401(k)
when implementing this Agreement, as it impacts the ESOP and 401(k), comply with
all material and applicable provisions of ERISA and the Internal Revenue Code.
The fiduciary liability insurance issued to Empire applicable to its Employee
Benefit Plans as further described on Section 2.13 of the Disclosure Memorandum
is in full force and effect on the date hereof and will continue to be in full
force and effect through and including the Effective Date.
2.14 MATERIAL CONTRACTS.
(a) Section 2.14 of the Disclosure Memorandum contains a complete and
correct list of all material Contracts to which any Empire Company is a party,
by which any Empire Company or any of its property is bound, or which has been
authorized by any such Empire Company, of the following types (collectively, the
"Empire Contracts"):
(1) promissory notes, guaranties, mortgages, security agreements, or
other evidences of indebtedness of Empire, other than (A) Contracts
evidencing deposit liabilities, purchases of federal funds, secured
repurchase agreements, Federal Reserve Bank advances, Federal Home Loan
Bank advances, trade payables incurred in the ordinary course of
business, (B) Contracts relating to borrowings or guarantees made in
the ordinary course of business, or (D) Contracts that are terminable
without penalty on 60 or fewer days' notice or that involve less than
$50,000 in the aggregate;
(2) employment, bonus, compensation, severance, or consulting
agreements;
(3) any Rights plan of Empire, including any stock option plan, stock
appreciation rights plan, restricted stock option plan or stock
purchase plan;
(4) collective bargaining agreements or other agreement with or to a
labor union or guild;
(5) any contract, arrangement, commitment, or understanding which is a
"material contract" as such term is defined in Item 601(b)(10) of the
Regulation S-K of the Securities and Exchange Commission; and
(6) any contract, arrangement, commitment, or understanding which would
prohibit or materially delay the consummation of the Merger or any of
the transactions contemplated by the Merger Documents.
(b) With respect to each Empire Contract and except as disclosed in
Section 2.14 of the Disclosure Memorandum: (A) the Contract is in full force and
effect; (B) Empire is not in Default thereunder, other than
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Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Empire; (C) Empire has not repudiated or
waived any material provision of any such Contract; and (D) no other party to
any such Contract is, to the knowledge of Empire, in Default in any respect,
other than Defaults which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Empire, or has repudiated or waived
any material provision thereunder.
2.15 LEGAL PROCEEDINGS. Except as disclosed in Section 2.15 of the
Disclosure Memorandum, there is no Litigation instituted or pending or, to the
Knowledge of Empire, threatened (or unasserted but considered probable of
assertion) against any Empire Company, or against any Asset, interest, or right
of any of them, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any Empire Company.
Section 2.15 of the Disclosure Memorandum contains a copy of each audit letter
response received by Empire from attorneys for any Empire Company in connection
with the preparation of the Financial Statements of Empire or otherwise since
December 31, 1998, relating to any Litigation pending as of the date of this
Agreement to which any Empire Company is a party and which names any Empire
Company as a defendant or cross-defendant, and a brief summary report of any
such Litigation that is not discussed in such audit letter responses.
2.16 REPORTS. Since January 1, 1995, or the date of organization if
later, each Empire Company has timely filed all material reports and statements,
together with any amendments required to be made with respect thereto, that it
was required to file with any applicable federal or state securities or bank
authorities, except failures to file which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Empire. As of
their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report
and document did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
2.17 STATEMENTS TRUE AND CORRECT. None of the information supplied or
to be supplied by any Empire Company or any Affiliate thereof for inclusion in
the Registration Statement to be filed by Huntington with the SEC will, when the
Registration Statement becomes effective, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any Empire Company or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to Empire's shareholders in connection with the
Shareholders' Meeting and any other documents to be filed by Empire or any
Affiliate thereof with the SEC or any other Regulatory Authority in connection
with the transactions contemplated by the Merger Documents, will, at the
respective time such documents are filed, and with respect to the Proxy
Statement, when first mailed to the shareholders of Empire, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or, in the case of the Proxy Statements or
any amendment thereof or supplement thereto, at the time of the Shareholders'
Meeting, as applicable, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of any proxy for the
Shareholders' Meeting. All documents that any Empire Company or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated by the Merger Documents will comply as to
form in all material respects with the provisions of applicable Law.
2.18 TAX AND REGULATORY MATTERS. No Empire Company nor, to the
Knowledge of Empire, any Affiliate thereof, has taken any action or has any
Knowledge of any fact or circumstance that is reasonably likely to (A) prevent
the transactions contemplated by the Merger Documents, including the Merger,
from qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (B) materially impede or delay receipt of any Consents
of Regulatory Authorities referred to in Section 7.1(b) of this Agreement or
result in the imposition of a condition or restriction of the type referred to
in the last sentence of such Section.
2.19 STATE TAKEOVER LAWS. Each Empire Company has taken all necessary
steps to exempt the transactions contemplated by the Merger Documents from any
applicable state takeover Law.
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2.20 CHARTER PROVISIONS. Empire has taken all action so that the
entering into of the Merger Documents and the consummation of the Merger and the
other transactions contemplated by the Merger Documents do not and will not
result in the grant of any rights to any Person under the Governing Documents of
any Empire Company or restrict or impair the ability of Huntington or any of its
Subsidiaries to vote, or otherwise to exercise the rights of a shareholder with
respect to, shares of Empire that may be directly or indirectly acquired or
controlled by Huntington or any of its Subsidiaries.
2.21 COMPLIANCE WITH CERTAIN LAWS. Except as disclosed in Section 2.21
of the Disclosure Memorandum, Empire is in compliance with all currently
applicable capital requirements and guidelines prescribed by all appropriate
federal or state Regulatory Authorities.
2.22 COMMUNITY REINVESTMENT ACT COMPLIANCE. No Empire Company has
received any notice of non-compliance with the applicable provisions of the CRA
and the regulations promulgated thereunder, and Empire Bank has received a CRA
rating of satisfactory or better from the OCC. Empire knows of no fact or
circumstance or set of facts or circumstances which would cause Empire to fail
to comply with such provisions or to cause the CRA rating of Empire to fall
below satisfactory.
2.23 ACQUISITION TRANSACTIONS. Except with respect to the Merger
Documents, there are no proposals or offers to engage in an Acquisition
Transaction previously received by Empire which remain outstanding as of the
close of business on February 4, 2000. Any breach of this representation by
Empire will cause any such proposal or offer, whether in its original form or as
amended, to be deemed to be received by Empire after February 4, 2000, for
purposes of Section 1 of the Warrant and Section 10.2 of this Agreement.
2.24 LUMP SUM PAYMENT, RELEASE, AND WAIVER AGREEMENTS. Huntington,
Empire, and each of the executives officers of Empire listed in Section
2.14(a)(2) of the Disclosure Memorandum (the "Executives"), have entered into
Lump Sum Payment, Release, and Waiver Agreements regarding, among other things,
the payment of cash in lieu of benefits otherwise payable to the Executives upon
a change in control of Empire. Empire has the corporate power and authority
necessary to execute, deliver, and perform its obligations under such Lump Sum
Payment, Release, and Waiver Agreements and the execution, delivery, and
performance of the such Lump Sum Payment, Release, and Waiver Agreement have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of Empire. Each Lump Sum Payment, Release, and Waiver
Agreement represents the legal, valid, and binding obligation of Empire and the
relevant Executive, enforceable against Empire and the relevant Executive in
accordance with its terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, receivership, conservatorship,
reorganization, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF HUNTINGTON
--------------------------------------------
Huntington hereby represents and warrants to Empire as follows:
3.1 ORGANIZATION, STANDING, AND POWER. Huntington is duly registered as
a bank holding company under the BHC Act. Huntington is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Maryland, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its material Assets. Huntington is
duly qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Huntington.
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3.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Huntington has the corporate power and authority necessary to
execute, deliver and perform its obligations under the Merger Documents and to
consummate the transactions contemplated thereby. The execution, delivery and
performance of the Merger Documents and the consummation of the transactions
contemplated herein and therein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Huntington. The Merger Documents represent the legal, valid, and binding
obligations of Huntington, enforceable against Huntington in accordance with
their respective terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar Laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought).
(b) Neither the execution and delivery of the Merger Documents by
Huntington, nor the consummation by Huntington of the transactions contemplated
thereby, nor compliance by Huntington with any of the provisions thereof or
hereof, will (A) conflict with or result in a breach of any provision of
Huntington's Governing Documents, or (B) constitute or result in a Default
under, or, subject to receipt of the requisite approval referred to in Section
7.1(b) of this Agreement, require any Consent pursuant to, or result in the
creation of any Lien on any Asset of any Huntington Company under, any Contract
or Permit of any Huntington Company, or, (C) subject to receipt of the requisite
approvals referred to in Section 7.1(b) of this Agreement, violate any Law or
Order applicable to any Huntington Company or any of their respective material
Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and Securities Laws, and rules of
the NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, no notice to, filing with, or Consent of, any public body
or authority is necessary for the consummation by Huntington of the Merger and
the other transactions contemplated in the Merger Documents.
3.3 CAPITAL STOCK.
(a) The authorized capital stock of Huntington consists of (A)
500,000,000 shares of Huntington Common, of which 227,992,927 shares were issued
and outstanding as of January 31, 2000, and (B) 6,617,808 shares of Huntington
Preferred Stock, none of which are issued or outstanding. Huntington has taken
all corporate action necessary to reserve for issuance a sufficient number of
shares of Huntington Common for delivery in exchange for shares of Empire Common
upon consummation of the Merger. All of the issued and outstanding shares of
Huntington Common are, and all of the shares of Huntington Common to be issued
in exchange for shares of Empire Common upon consummation of the Merger, when
issued in accordance with the terms of this Agreement, will be, duly and validly
issued and outstanding and fully paid and nonassessable. None of the outstanding
shares of Huntington Capital Stock has been, and none of the shares of
Huntington Common to be issued in exchange for shares of Empire Common upon
consummation of the Merger will be, issued in violation of any preemptive rights
of the current or past shareholders of Huntington.
(b) There are no Rights relating to the outstanding shares of
Huntington Common other than those provided under the Huntington Rights
Agreement and each outstanding share of Huntington Common, including those to be
issued to the shareholders of Empire in the Merger will have the Rights provided
under the Huntington Rights Agreement. The execution and delivery of the Merger
Documents does not, and the consummation of the Merger and the other
transactions contemplated by the Merger Documents will not, (A) result in the
grant of any Rights to any Person under the Huntington Rights Agreement, (B)
result in separation from the shares of Huntington Common of the Rights granted
under the Huntington Rights Agreement, (C) permit any holder of any of the
Rights under the Huntington Rights Agreement to exercise any such Rights, or (D)
give any Person any Right to purchase any securities issued by Huntington (other
than to Empire's shareholders as contemplated in the Merger Agreement).
(c) Huntington has taken all corporate action necessary to reserve for
issuance a sufficient number of shares of Huntington Common for delivery upon
the exercise of the Empire Stock Options to be converted in
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accordance with the terms of the Merger Agreement, and the shares of Huntington
Common issuable upon the exercise of the Empire Stock Options so converted shall
be included under an existing effective registration statement with respect to
such shares of Huntington Common
3.4 HUNTINGTON SUBSIDIARIES. Huntington or one of its Subsidiaries owns
all of the issued and outstanding shares of capital stock of each material
Huntington Subsidiary. No equity securities of any material Huntington
Subsidiary are or may become required to be issued by reason of any Rights, and
there are no Contracts by which any material Huntington Subsidiary is bound to
issue additional shares of its capital stock or Rights. There are no Contracts
relating to the rights of any Huntington Company to vote or to dispose of any
shares of the capital stock of any material Huntington Subsidiary. All of the
shares of capital stock of each Huntington Subsidiary held by a Huntington
Company are fully paid and, except pursuant to 12 U.S.C. Section 55 in the case
of The Huntington National Bank, non-assessable and are owned by a Huntington
Company free and clear of any Lien. Each material Huntington Subsidiary is a
corporation or national bank and is duly organized, validly existing, and (as to
corporations) in good standing under the Laws of the jurisdiction in which it is
incorporated or organized, and has the corporate power and authority necessary
for it to own, lease, and operate its Assets and to carry on its business as now
conducted. Each Huntington Subsidiary is duly qualified or licensed to transact
business as a foreign corporation in good standing in the States of the United
States and foreign jurisdictions where the character of its Assets or the nature
or conduct of its business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so qualified or licensed is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Huntington. The Huntington National Bank is an "insured
institution," as defined in the Federal Deposit Insurance Act and applicable
regulations thereunder, the deposits in which are insured by the Bank Insurance
Fund.
3.5 FINANCIAL STATEMENTS. Huntington has delivered to Empire all
Huntington Financial Statements and will deliver to Empire copies of all
Huntington Financial Statements prepared subsequent to the date hereof. The
Huntington Financial Statements (as of the dates thereof and for the periods
covered thereby) (A) are in accordance with the books and records of the
Huntington Companies, which are or will be, as the case may be, complete and
correct and which have been or will have been, as the case may be, maintained in
accordance with good business practices, and (B) present or will present, as the
case may be, fairly the consolidated financial position of the Huntington
Companies as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flows of the Huntington Companies for
the periods indicated, in accordance with GAAP (subject to exceptions as to
consistency specified therein or as may be indicated in the notes thereto or, in
the case of interim financial statements, to normal recurring year-end
adjustments that are not material in amount or effect).
3.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Huntington Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Huntington, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Huntington as
of December 31, 1998, included in the Huntington Financial Statements delivered
prior to the date of this Agreement or reflected in the notes thereto.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Huntington Financial Statements delivered prior to the date of this Agreement,
since December 31, 1998, (A) there have been no events, changes or occurrences
which have had, or are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Huntington, and (B) Huntington has not
taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken or occurring after the date of this
Agreement, would represent or result in a material breach or violation of any of
the covenants or agreements of Huntington provided in this Agreement.
3.8 TAX MATTERS.
(a) All Tax returns required to be filed by or on behalf of any of the
Huntington Companies have been timely filed or requests for extensions have been
timely filed, granted, and have not expired for periods ended on or before
December 31, 1998, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time and all returns filed are complete and
accurate, except for failures, if any, which, taken together,
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would not have a Material Adverse Effect on Huntington. All Taxes shown on filed
returns have been paid or adequate provision therefor has been made in the
Huntington Financial Statements. As of the date of this Agreement, there is no
audit examination, deficiency, or refund Litigation with respect to any Taxes
that is reasonably likely to result in a determination that would have,
individually or in the aggregate, a Material Adverse Effect on Huntington,
except as reserved against in the Huntington Financial Statements. All Taxes and
other Liabilities due with respect to completed and settled Tax examinations or
concluded Tax Litigation have been paid or adequate provision therefor has been
made in the Huntington Financial Statements.
(b) None of the Huntington Companies has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due (excluding such statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) Adequate provision for any Taxes due or to become due for any of
the Huntington Companies for the period or periods through and including the
date of the respective Huntington Financial Statements has been made and is
reflected on such Huntington Financial Statements.
(d) Deferred Taxes of the Huntington Companies have been provided for
in accordance with GAAP.
(e) Each of the Huntington Companies is in material compliance with,
and its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and Tax withholding requirements under federal, state, and local Tax
Laws, and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code.
3.9 ASSETS AND INSURANCE. Except to the extent that an exception to any
of the matters described below would not be reasonably likely to have a Material
Adverse Effect on Huntington:
(a) Except as disclosed or reserved against in the Huntington Financial
Statements, Huntington has good and marketable title, free and clear of all
Liens, to all of its Assets which are material to the operation of its business.
All Assets which are material to Huntington's business and that are held under
leases or subleases by Huntington, are held under valid Contracts enforceable in
accordance with their respective terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect.
(b) To its Knowledge, Huntington currently maintains insurance and
blanket bonds (collectively, "Insurance") similar in amounts, scope, and
coverage to that customarily maintained by other bank organizations comparable
in size and operation to Huntington. Huntington has not received notice from any
Insurance carrier that (A) such Insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or (B) premium costs with respect to
such policies of insurance will be substantially increased. All premiums due
under the policies of Insurance have been paid.
3.10 COMPLIANCE WITH LAWS. Each Huntington Company has in effect all
Permits necessary for it to own, lease or operate its material Assets and to
carry on its business as now conducted, except for those Permits the absence of
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Huntington, and there has occurred no Default under
any such Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Huntington. No
Huntington Company:
(a) is in Default under its Governing Documents;
(b) is in violation of, or in Default under, any Laws, Order or Permits
applicable to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Huntington;
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(c) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory Authority or
the staff thereof (A) asserting that any Huntington Company is not in compliance
with any of the Laws or Orders, including CRA, which such governmental authority
or Regulatory Authority enforces, where such noncompliance is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on
Huntington or which would prevent or delay the consummation of the transactions
contemplated under the Merger Documents, (B) threatening to revoke any Permits,
the revocation of which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Huntington, (C) requiring any Huntington
Company to enter into or consent to the issuance of a cease and desist order,
formal agreement, directive, commitment or memorandum of understanding, or to
adopt any resolution of the Board of Directors of such entity, or similar
undertaking, which restricts materially the conduct of its business, or in the
payment of dividends, or which are reasonably likely to delay or prevent the
consummation of the transactions contemplated herein; or
(d) directly or indirectly engages in any material activity prohibited
to be conducted by such entity, or owns any material Assets prohibited to be
held by such entity.
3.11 EMPLOYEE BENEFIT PLANS.
(a) Huntington has delivered or made available to Empire prior to the
execution of this Agreement copies of all Huntington Employee Benefit Plans
currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by any Huntington Company which are applicable to employees
generally of the Huntington Companies.
(b) All Huntington Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code including the 1986 amendments thereto
and any other applicable Laws, the breach or violation of which are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Huntington.
(c) Each Huntington ERISA Plan which is intended to be qualified under
Section 401(a) of the Internal Revenue Code has received a favorable
determination letter which takes into account the Tax Reform Act of 1986 and
subsequent legislation for which a determination letter is available from the
Internal Revenue Service, and Huntington is not aware of any circumstances
likely to result in revocation of any such favorable determination letter.
3.12 LEGAL PROCEEDINGS. There is no Litigation instituted or pending
or, to the Knowledge of Huntington, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any Huntington Company, or
against any Asset, interest, or right of any of them, that seeks to enjoin,
delay or prevent the execution, delivery, or performance of the Merger Documents
or the completion of the transactions contemplated therein, or that, if a
judgment adverse to a Huntington Company were to be rendered in such Litigation,
would have, individually or in the aggregate, a Material Adverse Effect on
Huntington, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any Huntington
Company, that would have, individually, or in the aggregate, a Material Adverse
Effect on Huntington.
3.13 REPORTS. Since January 1, 1995, Huntington has filed all reports
and statements, together with any amendments required to be made with respect
thereto, that it was required to file with (A) the SEC, including, but not
limited to, Forms 10-K, Forms 10-Q, Forms 8-K, and proxy statements, (B) other
Regulatory Authorities, and (C) any applicable state securities or bank
authorities (except, in the case of state securities authorities, failures to
file which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Huntington). As of their respective dates, each of
such reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all applicable Laws.
As of its respective date, each such report and document did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading.
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3.14 STATEMENTS TRUE AND CORRECT. None of the information supplied or
to be supplied by Huntington or any Affiliate thereof for inclusion in the
Registration Statement to be filed by Huntington with the SEC, will, when the
Registration Statement becomes effective, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by Huntington or any Affiliate thereof for inclusion in the Proxy
Statement to be mailed to Empire's shareholders in connection with the
Shareholders' Meeting, and any other documents to be filed by Huntington or any
Affiliate thereof with the SEC or any other Regulatory Authority in connection
with the transactions contemplated by the Merger Documents, will, at the
respective time such documents are filed, and with respect to the Proxy
Statement, when first mailed to the shareholders of Empire, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or, in the case of the Proxy Statement or
any amendment thereof or supplement thereto, at the time of the Shareholders'
Meeting, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the
Shareholders' Meeting. All documents that Huntington or any Affiliate thereof is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated by the Merger Documents will comply as to form in all
material respects with the provisions of applicable Law.
3.15 TAX AND REGULATORY MATTERS. No Huntington Company or any Affiliate
thereof has taken any action or has any Knowledge of any fact or circumstance
that is reasonably likely to (A) prevent the transactions contemplated by the
Merger Documents, including the Merger, from qualifying as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (B)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 7.1(b) of this Agreement or result in the imposition of a
condition or restriction of the type referred to in the last sentence of such
Section.
3.16 COMMUNITY REINVESTMENT ACT COMPLIANCE. The Huntington National
Bank has received a CRA rating of satisfactory or better from the OCC.
Huntington knows of no fact or circumstance or set of facts or circumstances
which would cause the CRA rating of The Huntington National Bank to fall below
satisfactory.
ARTICLE 4
MUTUAL COVENANTS OF THE PARTIES
-------------------------------
4.1 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (A) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (B) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
4.2 REPORTS. Empire and each Empire Subsidiary shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to Huntington copies of all
such reports promptly after the same are filed. Huntington shall file all
reports required to be filed by it with Regulatory Authorities between the date
of this Agreement and the Effective Time and shall deliver to Empire copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end and audit adjustments that are not material). As of
their respective dates, such reports filed with the SEC will comply in all
material respects with the Securities Laws and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to another Regulatory Authority shall
be prepared in accordance with Laws applicable to such reports.
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4.3 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL. As
soon as practicable after execution of this Agreement, Huntington shall file the
Registration Statement with the SEC, and shall use its reasonable efforts to
cause the Registration Statement to become effective under the 1933 Act and take
any action required to be taken under the applicable state Blue Sky or
Securities Laws in connection with the issuance of the shares of Huntington
Common upon consummation of the Merger. Empire shall furnish all information
concerning it and the holders of its capital stock as Huntington may reasonably
request in connection with such action. Empire shall call a Shareholders'
Meeting, to be held as soon as reasonably practicable after the Registration
Statement is declared effective by the SEC, for the purpose of voting upon
approval of the Merger Documents, the Merger, and such other related matters as
it deems appropriate. In connection with the Shareholders' Meeting, (A) Empire
shall assist Huntington in the preparation, as part of the Registration
Statement filed with the SEC, of a Proxy Statement and mail such Proxy Statement
to Empire shareholders following the review and clearance of such Proxy
Statement and related proxy materials by the Regulatory Authorities, (B) Empire
shall furnish to Huntington all information concerning Empire that Huntington
may reasonably request in connection with such Proxy Statement, (C) the Board of
Directors of Empire shall recommend (subject to compliance with their fiduciary
duties as advised by counsel) to Empire's shareholders the approval of the
Merger Documents, and (D) the Board of Directors and officers of Empire shall
(subject to compliance with their fiduciary duties as advised by counsel) use
their reasonable efforts to obtain such shareholders' approval.
4.4 APPLICATIONS. Huntington shall promptly prepare and file, and
Empire shall cooperate in the preparation and, where appropriate, the filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by the Merger Documents, seeking the requisite
Consents necessary to consummate the transactions contemplated by the Merger
Documents.
4.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
the Merger Documents, including using its reasonable efforts to lift or rescind
any Order adversely affecting its ability to consummate such transactions and to
cause to be satisfied the conditions referred to in Article 7 of this Agreement;
provided, that nothing herein shall preclude either Party from exercising its
rights under this Agreement. Each Party shall use, and shall cause each of its
Subsidiaries to use, its reasonable efforts to obtain all Consents necessary or
desirable for the consummation of the transactions contemplated by the Merger
Documents. The Parties shall deliver to each other, copies of all filings,
correspondence, and orders to and from all Regulatory Authorities in connection
with the transactions contemplated by the Merger Documents.
4.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep the other Party
advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be made after
reasonable prior notice and during regular business hours, shall be reasonably
related to the transactions contemplated by the Merger Documents, and shall not
interfere unnecessarily with normal operations. No investigation by a Party
shall affect the representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and agents to,
maintain the confidentiality of all confidential information furnished to it by
the other Party concerning its and its Subsidiaries' businesses, operations, and
financial positions and shall not use such information for any purpose except in
furtherance of the transactions contemplated by the Merger Documents. If this
Agreement is terminated prior to the Effective Time, each Party shall promptly
return or certify the destruction of all documents and copies thereof, and all
work papers containing confidential information received from the other Party.
(c) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other Party which it has discovered through the course of its investigation
and which represents, or is reasonably likely to represent, either a material
breach of any representation, warranty,
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covenant, or agreement of the other Party or which has had or is reasonably
likely to have a Material Adverse Effect on the other Party.
(d) Promptly after the execution of this Agreement, Empire will use its
best efforts to make available to Huntington complete and correct copies of all
deeds and leases in the possession of any Empire Company relating to the Real
Property.
4.7 PRESS RELEASES. Prior to the Effective Time, Empire and Huntington
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to the Merger Documents or any
other transaction contemplated thereby; provided, that nothing in this Section
4.7 shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
4.8 TAX TREATMENT. Each of the Parties undertakes and agrees to use its
reasonable efforts to cause the Merger, and to take no action which would cause
the Merger not, to qualify for treatment as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code for federal income tax
purposes.
4.9 NO RIGHTS TRIGGERED. Each Party shall take all reasonable steps
necessary to ensure that entering into the Merger Documents and the consummation
of the transactions contemplated thereby do not and will not (A) result in the
grant of any Rights to any Person under its respective Governing Documents, (B)
result in the grant of any Rights to any Person under the Empire Rights
Agreement or the Huntington Rights Agreement, (C) result in separation from the
shares of Empire Common of the Rights granted under the Empire Rights Agreement
or separation from the shares of Huntington Common of the Rights granted under
the Huntington Rights Agreement, (D) permit any holder of any of the Rights
under the Empire Rights Agreement or the Huntington Rights Agreement to exercise
any such Rights, or (E) give any Person any Right to purchase any securities
issued by Huntington except as contemplated by the Merger.
ARTICLE 5
COVENANTS OF EMPIRE
-------------------
5.1 CONDUCT OF THE BUSINESS. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, unless the
prior written consent of Huntington shall have been obtained, and except as
otherwise expressly contemplated herein, Empire shall and shall cause each of
its Subsidiaries to (A) operate its business only in the usual, regular, and
ordinary course, and (B) preserve intact its business organization and Assets
and maintain its rights and franchises.
5.2 NEGATIVE COVENANTS OF EMPIRE. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, Empire
covenants and agrees that it will not do or agree or commit to do, or permit any
of its Subsidiaries to do or agree or commit to do, any of the following without
the prior written consent of the chief executive officer, president, or chief
financial officer of Huntington:
(a) take any action which to its Knowledge at the time of such action,
would (A) materially adversely affect the ability of any Party to consummate the
transactions contemplated under the Merger Documents, (B) materially adversely
affect the ability of any Party to obtain any Consents required for the
consummation of the transactions contemplated under the Merger Documents without
imposition of a condition or restriction of the type referred to in the last
sentences of Section 7.1(b) or 7.1(c) of this Agreement, or (C) materially
adversely affect the ability of any Party to perform its covenants and
agreements under the Merger Documents.
(b) amend the Governing Documents of any Empire Company;
(c) engage in any acquisition, or take any other action, that adversely
affects the ability of Empire to consummate the transactions contemplated by the
Merger Documents;
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(d) take any action that is intended to result in or actually results
in (A) 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, (B) any of the conditions to the Merger set forth in Article 7
hereof not being satisfied, or (C) a violation of any provisions of the Merger
Documents, except, in every case, as may be required by applicable Law.
(e) incur any additional debt obligation or other obligation for
borrowed money (except in the ordinary course of the business of Empire and its
Subsidiaries consistent with past practices and involving the creation of
deposit liabilities, purchases of federal funds, advances from the Federal
Reserve Bank or Federal Home Loan Bank, and entry into repurchase agreements
fully secured by U.S. government or agency securities), or impose, or suffer the
imposition, on any Asset of Empire of any Lien or permit any such Lien to exist
(other than in connection with deposits, repurchase agreements, bankers
acceptances, "treasury tax and loan" accounts established in the ordinary course
of business, the satisfaction of legal requirements in the exercise of trust
powers, and Liens in effect as of the date hereof that are disclosed in the
Disclosure Memorandum);
(f) repurchase, redeem, or otherwise acquire or exchange (other than
purchases or exchanges in the ordinary course under its Employee Benefit Plans),
directly or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of Empire, or declare or pay any dividend, in cash
or in any other property of any kind, including, but not limited to, shares of
the capital stock of any class of any Empire Company, or make any other
distribution in respect of Empire's capital stock, provided that Empire may (to
the extent legally and contractually permitted to do so), but is not obligated
hereunder to do so, declare and pay its regular quarterly cash dividends on the
shares of Empire Common, in an amount or amounts not in excess of $0.30 per
share of Empire Common for the regular dividend which is expected to be declared
in March 2000 and paid in April 2000 and in an amount not in excess of $0.35 per
share of Empire Common per quarter thereafter, with usual and regular record and
payment dates in accordance with past practices, as disclosed in the Empire
Financial Statements or in Section 5.2(f) of the Disclosure Memorandum; provided
that Huntington and Empire shall coordinate with each other regarding the
declaration of any dividends in respect of shares of Empire Common and
Huntington Common, and the record and payment dates relating thereto, so that
the holders of Empire Common shall receive at least one dividend, but not more
than one dividend, for any calendar quarter with respect to their shares of
Empire Common or the shares of Huntington Common to be issued in exchange for
such shares of Empire Common in the Merger.
(g) except pursuant to the exercise of the Empire Stock Options
outstanding as of the date hereof, the exercise price of which has been
established and provided to Huntington prior to the date hereof, and pursuant to
the terms thereof in existence on the date hereof, and except with respect to
the reservation and issuance of shares of Empire Common pursuant to the Director
Plans (in amounts which will not exceed the amounts described in Section 2.3(a)
hereof), issue, sell, pledge, encumber, authorize the issuance of, enter into
any Contract to issue, sell, pledge, encumber, or authorize the issuance of, or
otherwise permit to become outstanding, any additional shares of Empire Common
or any other capital stock of any Empire Company, or any Rights with respect
thereto;
(h) adjust, split, combine, or reclassify any capital stock of any
Empire Company, or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of Empire Common, or sell, lease,
mortgage, or otherwise dispose of any Asset (other than Assets acquired as a
result of debts previously contracted) other than in the ordinary course of
business for reasonable and adequate consideration;
(i) except for purchases of U.S. Treasury securities or U.S. Government
agency securities, which in either case have maturities of three years or less,
purchase any securities or make any material investment, either by purchase of
stock of securities, contributions to capital, Asset transfers, or purchase of
any Assets, in any Person other than a wholly owned Empire Subsidiary, or
otherwise acquire direct or indirect control over any Person, other than in
connection with (A) foreclosures in the ordinary course of business, or (B)
acquisitions of control by a depository institution Subsidiary in its fiduciary
capacity;
(j) (A) grant any increase in compensation or benefits to the employees
(except increases in compensation to non-officer employees pursuant to Empire's
normal salary programs, consistent with past practices) or officers of any
Empire Company; (B) fund any Rabbi Trust or pay any severance or termination pay
or any bonus, except as disclosed in Section 5.2(j) of the Disclosure
Memorandum; (C) enter into, extend, or amend any severance agreements with
officers of Empire; (D) grant any increase in fees or other increases in
compensation or
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other benefits to the directors of Empire; (E) voluntarily accelerate the
vesting of any employee benefit, other than pursuant to written policies or
written Contracts in effect on the date of this Agreement; or (F) grant any
stock appreciation rights, cash awards, or any Rights to acquire Empire
securities under any Empire Stock Option Plan;
(k) enter into, extend, or amend any employment Contract between Empire
and any Person (unless such amendment is required by Law);
(l) except as contemplated by this Agreement, adopt any new Empire
Benefit Plan for any Empire Company or terminate or withdraw from, or make any
material change in or to, any existing Empire Benefit Plan other than any such
change that is required by Law or that, in the opinion of counsel, is necessary
or advisable to maintain the tax qualified status of any such plan, or make any
distributions from or contribution or payment to such Empire Benefit Plans
except as required by Law or the terms of such plans and consistent with
Empire's past practice;
(m) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to conform
to changes in Tax Laws or regulatory accounting requirements or GAAP;
(n) commence any Litigation, other than in the ordinary course of
business in accordance with past practice, or settle any Litigation involving
any Liability of Empire for material money damages or restrictions upon the
operations of Empire;
(o) except in the ordinary course of business and consistent with past
practice, (A) enter into, modify, amend or terminate any material Contract (B)
waive, release, compromise or assign any material rights or claims, or (C) incur
any capital expenditures, obligations or liabilities;
(p) enter into any agreement or commitment of the character referred to
in Section 2.14 hereof; or
(q) take or permit to be taken any action of a character which is
otherwise listed in Section 2.14 hereof.
5.3 CERTAIN ACTIONS. Except with respect to the Merger Documents and
the transactions contemplated thereby, neither Empire nor any Affiliate or any
Representatives thereof retained by Empire shall directly or indirectly solicit,
encourage, or, except to the extent necessary to comply with the fiduciary
duties of Empire's Board of Directors, as advised by counsel, entertain, any
proposal to engage in an Acquisition Transaction by any Person. Except to the
extent necessary to comply with the fiduciary duties of Empire's Board of
Directors, as advised by counsel, neither Empire nor any Affiliate or
Representative thereof shall fail to recommend that Empire shareholders vote in
favor of the Merger or withdraw such as recommendation previously made, fail to
solicit proxies of the shareholders of Empire, or fail to hold the Shareholders'
Meeting, or shall furnish any non-public information that it is not legally
obligated to furnish in connection with, negotiate with respect to, or enter
into any Contract with respect to, any Acquisition Transaction, but Empire may
communicate and disclose information about such a proposal to engage in an
Acquisition Transaction to its shareholders if and to the extent that it is
required to do so in order to comply with its legal obligations as advised by
counsel. Empire shall promptly notify Huntington orally and in writing in the
event that it receives any inquiry or proposal relating to any Acquisition
Transaction. Empire shall (A) immediately cease and cause to be terminated any
existing activities, discussions, or negotiations with any Persons conducted
heretofore with respect to any of the foregoing, and (B) direct and use its
reasonable efforts to cause all of its Representatives not to engage in any of
the foregoing. Notwithstanding anything contained in the Merger Documents to the
contrary, any action taken by Empire or its Affiliates or Representatives which
is permitted under this Section 5.3 by virtue of such action being necessary to
comply with the fiduciary duties of Empire's Board of Directors, as advised by
counsel, shall not constitute a breach of any of the Merger Documents by Empire.
5.4 AGREEMENTS WITH RESPECT TO AFFILIATES. Empire has disclosed in
Section 5.4 of the Disclosure Memorandum all Persons whom it reasonably believes
is an "affiliate" of Empire for purposes of Rule 145 under the 1933 Act. Empire
shall use its reasonable efforts to cause each such Person to deliver to
Huntington not later than
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30 days prior to the Effective Time, a written agreement, in a form reasonably
satisfactory to both parties, providing that such Person will not sell, pledge,
transfer, or otherwise dispose of the shares of Empire Common held by such
Person except as contemplated by such agreement or by the Merger Documents and
will not sell, pledge, transfer, or otherwise dispose of the shares of
Huntington Common to be received by such Person upon consummation of the Merger
except in compliance with applicable provisions of the 1933 Act.
5.5 CERTAIN POLICIES OF EMPIRE. At the request of Huntington, Empire
shall use its best efforts to modify and change its loan, litigation, and real
estate valuation policies and practices (including loan classifications and
levels of reserves) prior to the Effective Time so as to be consistent on a
mutually satisfactory basis with those of Huntington and GAAP. Empire shall not
be required to modify or change any such policies or practices, however, until
such time as (A) the conditions set forth in Sections 7.1(a), 7.1(b), and 7.1(c)
of this Agreement have been satisfied, (B) Empire and Huntington agree that the
Effective Time will occur prior to the public disclosure of such modifications
or changes in regular periodic earnings releases or periodic reports filed with
the Regulatory Authorities, and (C) Huntington acknowledges in writing that all
conditions to its obligation to consummate the Merger (and Huntington's rights
to terminate this Agreement) have been waived or satisfied; provided, that in
all circumstances Empire shall make such modifications and changes not later
than immediately prior to the Effective Time. Empire's representations,
warranties, covenants, and agreements contained in this Agreement shall not be
deemed to be untrue or breached in any respect for any purpose as a consequence
of any modifications or changes undertaken solely on account of this Section
5.5.
5.6 TITLE INSURANCE. For each parcel of Operational Real Property
described in the Disclosure Memorandum as being owned by an Empire Company,
Empire shall deliver to Huntington, at Empire's expense, no later than 60 days
after the date of this Agreement, a title insurance commitment (ALTA 1966 form
or its equivalent) for a fee owner's title insurance policy, each in an amount
equal to the carrying cost of the premises or leasehold interest to be insured
(including all improvements thereon), on the books of Empire as of December 31,
1998. Each title insurance commitment shall show that marketable fee simple
title to the owned premises is in the name of an Empire Company, and that the
owned premises are free and clear of any Liens and encumbrances which would have
a Material Adverse Effect on Empire except taxes and assessments not delinquent
and utility and other easements that do not interfere with the use of the
property for the business being conducted thereon. Each such commitment shall
provide that such fee owners policy committed for therein shall be an ALTA 1970
form, revised in 1984, or other form acceptable to Huntington.
5.7 SURVEYS. Within 60 days after the date of this Agreement, Empire
shall provide to Huntington, at Empire's expense, current land surveys of those
parcels of the Operational Real Property specifically designated by Huntington.
Each survey shall be conducted and prepared by a duly licensed land surveyor
approved by Huntington and, unless otherwise agreed by Huntington in writing,
shall be a duly certified ALTA/ACSM field survey, which shall comply with the
requirements set forth in Huntington's Standard Survey Requirements, a copy of
which has been furnished to Empire prior to the execution of this Agreement, and
shall confirm that the Operational Real Property is not subject to any
easements, restrictions, set backs, encroachments, or other limitations which
would have a Material Adverse Effect on Empire except for utility and other
easements that do not interfere with the use of the Operational Real Property
for the business then being conducted thereon, and that the Operational Real
Property is not located in any flood hazard area.
5.8 ENVIRONMENTAL ASSESSMENT. Empire shall obtain and deliver to
Huntington, at Empire's expense, on or before the date which is 60 days after
the date of this Agreement, a Phase I Environmental Site Assessment (the "Phase
I Assessment") for each tract of Operational Real Property from a consultant
acceptable to Huntington. The Phase I Assessment shall be performed in
accordance with the requirements of The Huntington National Bank Phase I (ESA)
Checklist - Minimum Requirements, a copy of which has been furnished to Empire
prior to the execution of this Agreement. Each Phase I Assessment shall reveal
no facts that establish a reason to believe that any Hazardous Substances have
been treated, stored, managed, or disposed of on the Operational Real Property
as would be reasonably likely to have a Material Adverse Effect on Empire.
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ARTICLE 6
COVENANTS OF HUNTINGTON
-----------------------
6.1 NEGATIVE COVENANTS OF HUNTINGTON. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
Huntington covenants and agrees that it will not do or agree or commit to do, or
permit any of its Subsidiaries to do or agree or commit to do, any of the
following without the prior written consent of the chief executive officer of
Empire, which consent shall not be unreasonably withheld:
(a) take any action which to its Knowledge at the time of such action,
would (A) materially adversely affect the ability of any Party to consummate the
transactions contemplated under the Merger Documents, (B) materially adversely
affect the ability of any Party to obtain any Consents required to consummate
the transactions contemplated under the Merger Documents without imposition of a
condition or restriction of the type referred to in the last sentences of
Section 7.1(b) or 7.1(c) of this Agreement, or (C) materially adversely affect
the ability of any Party to perform its covenants and agreements under the
Merger Documents;
(b) amend the Governing Documents of Huntington or the Huntington
Rights Agreement, in each case, in any manner adverse to the holders of Empire
Common as compared to rights of holders of Huntington Common generally as of the
date of this Agreement;
(c) take any action that is intended or may reasonably be expected to
result in (A) 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, (B) any of the conditions to the Merger set forth in Article
7 hereof not being satisfied, or (C) a violation of any provisions of the Merger
Documents, except, in every case, as may be required by applicable Law.
6.2 NASDAQ LISTING. Huntington shall use its reasonable efforts to
provide, prior to the Effective Time, for quotation on the Nasdaq National
Market the shares of Huntington Common to be issued to the holders of shares of
Empire Common pursuant to the Merger, and Huntington shall give all notices and
make all filings with the NASD, required in connection with the transactions
contemplated herein.
6.3 EMPLOYEE BENEFITS AND CONTRACTS.
(a) Except as set forth in this Agreement, or in Section 4.2(c) of the
Merger Agreement relating to the conversion of Empire Stock Options, following
the Effective Time, Huntington shall provide to officers and employees of Empire
who become officers or employees of any Huntington Company after the Effective
Time employee benefits under Huntington Benefit Plans, and stock option and
other plans involving the potential issuance of Huntington Common Stock, on
terms and conditions which when taken as a whole are substantially similar to
those currently provided generally by Huntington and its Affiliates to their
similarly situated officers and employees. For purposes of participation and
vesting under such Huntington Benefit Plans, the service of the employees of the
Empire Companies (calculated pursuant to applicable Empire Benefit Plans) prior
to the Effective Time shall be treated as service with a Huntington Company
participating in such Huntington Benefit Plans. Furthermore, officers and
employees of Empire Companies (and their spouses and dependents, if applicable)
may, upon the cessation of their participation in an Empire Benefit Plan,
immediately participate in the corresponding Employee Benefit Plan maintained by
Huntington without regard to pre-existing conditions or waiting periods. Benefit
accruals under any Huntington Pension Plan will not be offset by benefit
accruals under any Empire Pension Plan; however, in the event the Empire Pension
Plan merges with the Huntington Pension Plan, and if benefit accruals under the
Empire Pension Plan cease, the Huntington Pension Plan will provide future
benefit accruals under the Huntington Pension Plan that are no less than those
benefits that would accrue assuming the Huntington Pension Plan implements a
"fresh start formula without wear away" (as described in Treasury Regulation
Section 1.401(a)(4)-13(c)(4)(i)).
(b) Huntington undertakes and agrees to provide all persons who are
employed by Empire immediately prior to the Effective Time with severance
benefits consistent with Huntington's Transition Pay Plan as in effect as of the
Effective Time, which benefits will not be less than those provided under such
plan as of the date of this Agreement. For purposes of calculating benefits and
determining an individual's years of service under Huntington's Transition Pay
Plan, the service of an Empire Company's employee prior to the Effective Time
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commencing with that employee's most recent hire date by the Empire Company
shall be treated as service with a Huntington Company. Notwithstanding the
foregoing, during the 12-month period following the Effective Time, those
officers and employees of the Empire Companies listed in Sections 6.3(a) and
6.3(b) of the Disclosure Memorandum whose employment with an Empire Company or a
Huntington Company, as the case may be, is terminated due to job elimination or
is terminated by Huntington or its Affiliates without cause, shall be paid
severance benefits upon termination of not less than 50% of their annual base
salary without offset with respect to compensation or other benefits received
from a subsequent employer. Huntington further agrees to provide out-placement
services for a period of six months following such termination to those persons
identified in Section 6.3(a) of the Disclosure Memorandum.
(c) Huntington agrees that bonuses in an aggregate amount not to exceed
the Empire Bonus Pool shall be paid to the Empire Bonus Plan Participants in the
amounts to be listed on a supplement to Section 6.3(c) of the Disclosure
Memorandum (the "Section 6.3(c) Supplement") which shall be delivered to
Huntington on or before the Effective Date; provided, however, that such bonus
payments will only be made to Empire Bonus Plan Participants who are employed by
Empire or Huntington or their Affiliates on December 31, 2000, or who were
terminated by Huntington or its Affiliates prior to December 31, 2000, without
cause or due to job elimination, in which event the aggregate Empire Bonus Pool
shall be reduced by the amount of payments allocated to such Empire Bonus Plan
Participants who are no longer eligible to receive the bonus payments.
Huntington shall pay any and all such bonus payments to such eligible Empire
Bonus Pool Participants on or before February 15, 2001. The Section 6.3(c)
Supplement will update the list of Empire Bonus Plan Participants and confirm
their eligibility pursuant to the Empire Bonus Plan as of the Effective Date and
will indicate the allocation of the Empire Bonus Pool among such Empire Bonus
Plan Participants, which allocation shall be consistent with past practices.
(d) Immediately prior to the Effective Time, Empire will pay out to
each participant in the Director Plans all cash accrued to such participant
under the Director Plans (estimated to be $828,374 in the aggregate at June 30,
2000) and distribute to each participant in the Director Plans all shares of
Empire Common allocated for issuance to such participant under such Director's
Plans up to 19,500 shares and Empire shall terminate such Plans effective as of
the Effective Time.
6.4 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) For a period of six years after the Effective Time, to the fullest
extent permitted by applicable Law, Huntington shall, and shall cause its
Subsidiaries to, indemnify, defend, and hold harmless the present and former
directors, officers, employees, and agents of the Empire Companies (each, an
"Indemnified Party") against all Liabilities arising out of actions or omissions
arising out of the Indemnified Party's service or services as directors,
officers, employees, or agents of Empire or, at Empire's request, of another
corporation, partnership, joint venture, trust, or other enterprise occurring at
or prior to the Effective Time (including the transactions contemplated by the
Merger Documents), including provisions relating to advances of expenses
incurred in the defense of any Litigation, with respect to any Liability, claim,
demand, action, or Litigation asserted or made prior to or at any time after the
Effective Time. All such rights to indemnification with respect to any such
Liability, claim, demand, or action shall continue until the final disposition
of such Litigation and/or Liability; provided, however, that nothing contained
herein shall increase or lengthen the duration of obligations with respect to
such indemnification by the Huntington or any other Huntington Company over that
to which Empire would have been subject had the Merger not been consummated. All
rights to exculpation from liability and limitation of liability provided by
this Section 6.4 shall survive the Effective Time and the consummation of the
Merger. Without limiting the foregoing, in any case in which approval by
Huntington is required to effectuate any indemnification, Huntington shall
direct, at the election of the Indemnified Party, that the determination of any
such approval shall be made by independent counsel mutually agreed upon between
Huntington and the Indemnified Party.
(b) The provisions of this Section 6.4 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and each
Indemnified Party's heirs and representatives.
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6.5 STOCK OPTIONS.
(a) At the Effective Time, each outstanding Empire Stock Option shall
be converted into an option to purchase shares of Huntington Common in
accordance with the terms of the Merger Agreement.
(b) As soon as practicable after the Effective Time, Huntington shall
deliver to the holders of such converted Empire Stock Options appropriate
notices setting forth such holders' rights pursuant to the Huntington Stock
Option Plan and the agreements evidencing such converted Empire Stock Options.
(c) Huntington shall use all reasonable efforts to maintain the
effectiveness of the registration statement(s) described in Section 3.3(c) for
so long as the Empire Stock Options to be converted under the terms of the
Merger Agreement to options to purchase shares of Huntington Common remain
outstanding.
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
-------------------------------------------------
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations
of each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated by the Merger Documents are subject to the
satisfaction of the following conditions, unless waived by both Parties pursuant
to Section 10.6 of this Agreement:
(a) Shareholder Approval. The shareholders of Empire shall have
approved this Agreement, and the consummation of the transactions contemplated
by the Merger Documents, including the Merger, as and to the extent required by
Law and by the provisions of its Governing Documents.
(b) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for consummation
of the Merger shall have been obtained or made and shall be in full force and
effect and all waiting periods required by Law shall have expired. No Consent
obtained from any Regulatory Authority which is necessary to consummate the
transactions contemplated by the Merger Documents shall be conditioned or
restricted in a manner (including requirements relating to the raising of
additional capital or the disposition of Assets) which in the reasonable
judgment of either Party would so materially adversely impact the economic or
business benefits of the transactions contemplated by the Merger Documents so as
to render inadvisable the consummation of the Merger.
(c) Consents and Approvals. Each Party shall have obtained any and all
Consents required for consummation of the Merger (other than those referred to
in Section 7.1(b) of this Agreement) or for the preventing of any Default under
any Contract or Permit of such Party which, if not obtained or made, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on such Party. No Consent so obtained which is necessary to consummate
the transactions contemplated by the Merger Documents shall be conditioned or
restricted in a manner which in the reasonable judgment of either Party would so
materially adversely impact the economic or business benefits of the
transactions contemplated by the Merger Documents so as to render inadvisable
the consummation of the Merger.
(d) Legal Proceedings. No court or governmental authority or Regulatory
Authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, restricts or makes illegal
consummation of the transactions contemplated by the Merger Documents.
(e) Registration Statement. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness of the
Registration Statement shall have been issued, no action, suit, proceeding or
investigation by the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, and all necessary approvals under state securities
Laws or the 1933 Act or 1934 Act relating to the issuance or trading of the
shares of Huntington Common issuable pursuant to the Merger shall have been
received.
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(f) Nasdaq National Market Listing. The shares of Huntington Common
issuable pursuant to the Merger shall have been approved for quotation on the
Nasdaq National Market.
(g) Tax Matters. Each Party shall have received a written opinion of
counsel from Huntington's Counsel, in form reasonably satisfactory to such
Parties and dated as of the Effective Time (the "Tax Opinion"), to the effect
that (A) the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, (B) the exchange in the Merger of
shares of Empire Common for shares of Huntington Common will not give rise to
gain or loss to the shareholders of Empire with respect to such exchange (except
to the extent of any cash received), and (C) neither Empire nor Huntington will
recognize gain or loss as a consequence of the Merger. Huntington shall also
cause Huntington's Counsel to provide such tax opinion(s) as are required to be
filed with the SEC as an exhibit to the Registration Statement, and any
amendments thereto. In rendering such opinions, such counsel shall be entitled
to rely upon representations of Empire's officers, directors, and shareholders
holding in excess of five percent (5%) of the outstanding shares of Empire
Common and representations of officers of Huntington, in each case reasonably
satisfactory in form and substance to such counsel.
7.2 CONDITIONS TO OBLIGATIONS OF HUNTINGTON. The obligations of
Huntington to perform this Agreement and consummate the Merger and the other
transactions contemplated by the Merger Documents are subject to the
satisfaction of the following conditions, unless waived by Huntington pursuant
to Section 10.6(a) of this Agreement:
(a) Representations and Warranties. The representations and warranties
of Empire set forth in this Agreement shall be true and correct in all material
respects on the Effective Date with the same force and effect as though such
representations and warranties had been made on and as of such date.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of Empire to be performed and complied with pursuant to
this Agreement and the other agreements contemplated by the Merger Documents
prior to the Effective Time shall have been duly performed and complied with in
all material respects.
(c) Certificates. Empire shall have delivered to Huntington (A) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions of its obligations set forth in Section 7.2(a) and 7.2(b) of this
Agreement have been satisfied, and (B) certified copies of resolutions duly
adopted by Empire's Board of Directors and shareholders evidencing the taking of
all corporate action necessary to authorize the execution, delivery, and
performance of the Merger Documents and the consummation of the transactions
contemplated thereby, all in such reasonable detail as Huntington and its
counsel shall request.
(d) Opinion of Counsel. Huntington shall have received an opinion of
Howard & Howard Attorneys, P.C, counsel to Empire, dated as of the Effective
Date, in form reasonably satisfactory to Huntington, as to the matters set forth
in Exhibit 2.
(e) Accountant's Letters. Huntington shall have received from Empire's
auditors letters (A) dated not more than three days prior to the date of the
Proxy Statement and (B) dated as of the Effective Date, in each case with
respect to certain financial information regarding Empire, in form and substance
reasonably satisfactory to Huntington, which letters shall be based upon
customary specified procedures undertaken by such firm in accordance with
Statement of Auditing Standard No. 72.
(f) Affiliates' Agreements. Huntington shall have received from each
Affiliate of Empire the affiliate's agreement as and to the extent specified in
Section 5.4 of this Agreement.
(g) Shareholders' Equity. Empire's shareholders' equity as of the end
of last fiscal quarter preceding the Effective Date shall not be less than
$45,886,000, excluding for purposes of the calculation of such shareholders'
equity, the effects of: (A) any reductions in Empire's shareholders' equity
resulting from any actions or changes in policies of Empire taken at the request
of Huntington, including those described in Section 5.5 of this Agreement;
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and (B) all costs, fees and charges, including fees and charges of Empire's
accountants, counsel, and investment bankers, whether or not accrued or paid,
that are related to the negotiation and consummation of the Merger.
(h) Warrant. Empire shall have executed and delivered to Huntington the
Warrant Purchase Agreement and the Warrant.
(i) Dissenting Shareholders. The total number of dissenting shares, if
any, as to which the right to dissent has been properly asserted under the
Dissenters' Rights Law shall not exceed five percent of the total number of
outstanding shares of Empire Common.
(j) Title to Real Property. Empire shall have delivered to Huntington
copies of all fee owner's and leasehold owner's title insurance commitments for
policies in accordance with the requirements of Section 5.6, together with such
updating endorsements and other endorsements as Huntington may reasonable
require. All updating endorsements shall show no change in the record title
since the preceding effective dates of the respective commitments.
(k) Survey. Empire shall have delivered to Huntington the surveys in
accordance with the requirements of Section 5.7.
(l) Environmental Assessments. Empire shall have complied in all
material respects with its obligations under Section 5.8.
7.3 CONDITIONS TO OBLIGATIONS OF EMPIRE. The obligations of Empire to
perform this Agreement and consummate the Merger and the other transactions
contemplated by the Merger Documents are subject to the satisfaction of the
following conditions, unless waived by Empire pursuant to Section 10.6(b) of
this Agreement:
(a) Representations and Warranties. The representations and warranties
of Huntington set forth in this Agreement shall be true and correct in all
material respects on the Effective Date with the same force and effect as though
such representations and warranties had been made on and as of such date.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of Huntington to be performed and complied with
pursuant to this Agreement and the other agreements contemplated by the Merger
Documents prior to the Effective Time shall have been duly performed and
complied with in all material respects, and the Registration Statement shall
have been declared and shall remain effective.
(c) Certificates. Huntington shall have delivered to Empire (A) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer or an executive vice president and its chief financial
officer, to the effect that the conditions of its obligations set forth in
Section 7.3(b) of this Agreement have been satisfied, and (B) certified copies
of resolutions duly adopted by Huntington's Board of Directors evidencing the
taking of all corporate action necessary to authorize the execution, delivery,
and performance of the Merger Documents and the consummation of the transactions
contemplated thereby, all in such reasonable detail as Empire and its counsel
shall request.
(d) Opinion of Counsel. Empire shall have received an opinion of
Porter, Wright, Morris & Arthur LLP, counsel to Huntington, dated as of the
Effective Time, in form reasonably acceptable to Empire, as to the matters set
forth in Exhibit 3.
(e) Fairness Opinion. Empire shall have received a letter from
McConnell, Budd & Downes, Inc., dated not more than five business days prior to
the date of the Empire Proxy Statement, to the effect that, in the opinion of
such firm, the Conversion Ratio in connection with the Merger is fair, from a
financial point of view, to the shareholders of Empire, and such opinion shall
not have been withdrawn prior to the date of the Shareholders' Meeting.
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ARTICLE 8
CLOSING
-------
The closing of the Merger and the other transactions contemplated under
the Merger Documents shall take place at the offices of Porter, Wright, Morris &
Arthur LLP, in Columbus, Ohio, at 10:00 a.m., local time, on the date that is
five business days after the last of the conditions specified in Article 7
hereof shall have been satisfied or waived, in accordance with the terms of this
Agreement, or at such other place or time as the parties shall hereafter agree
in writing. Notwithstanding the foregoing, the Merger will become effective as
of the Effective Time.
ARTICLE 9
TERMINATION
-----------
9.1 TERMINATION. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of the Merger Documents by the shareholders of
Empire, this Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time:
(a) By mutual consent of the respective Boards of Directors of
Huntington and Empire;
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
of the inaccuracy of any representation or warranty contained in this Agreement
of the other Party which cannot be or has not been cured within 30 days after
the giving written notice to such other Party of such inaccuracy and which
inaccuracy would provide the terminating Party the ability to refuse to
consummate the Merger under the applicable standard set forth in Section 7.2(a)
of this Agreement in the case of any termination by Huntington and Section
7.3(a) of this Agreement in the case of any termination by Empire;
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
of a material breach by the other Party of any covenant or agreement contained
in this Agreement which cannot be or has not been cured within 30 days after the
giving of written notice to the breaching Party of such breach;
(d) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
(A) any Consent of any Regulatory Authority required for consummation of the
Merger and the other transactions contemplated by the Merger Documents shall
have been denied by final nonappealable action of such authority or if any
action taken by such authority is not appealed within the time limit for appeal,
or (B) the shareholders of Empire fail to vote their approval of this Agreement
and the transactions contemplated by the Merger Documents as required by the
Laws of the State of Michigan, or by Empire's Governing Documents, at the
Shareholders' Meeting where the Merger was presented to such shareholders for
approval and voted upon;
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated by January 31, 2001, if the failure to
consummate the transactions contemplated by the Merger Documents on or before
such date is not caused by any breach of this Agreement by the Party electing to
terminate pursuant to this Section 9.1(e);
(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
that any of the conditions precedent to the obligations of such Party to
consummate the Merger cannot be satisfied or fulfilled by the date specified in
Section 9.1(e) of this Agreement; or
(g) By Huntington, in the event that the Board of Directors of Empire
fails to recommend to the shareholders of Empire that they vote their shares of
Empire Common in favor of the Merger, or withdraws such recommendation
previously made, or fails to solicit proxies of shareholders of Empire to
approve the Merger, or
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shall have affirmed, recommended, or authorized entering into any Acquisition
Transaction or other transaction involving a merger, share exchange,
consolidation, or transfer of substantially all of the Assets of Empire.
9.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 9.1 of this Agreement, the
Merger Agreement and this Agreement shall become void and have no effect, except
that (A) the provisions of this Section 9.2 and Articles 1 and 10 and Section
4.6(b) of this Agreement shall survive any such termination and abandonment, and
(B) a termination pursuant to Sections 9.1(b), (c), (d), (f), or (g) of this
Agreement shall not relieve the breaching Party from Liability for an uncured
willful breach of a representation, warranty, covenant, or agreement giving rise
to such termination. Upon a termination of this Agreement, the Warrant and the
Warrant Purchase Agreement shall terminate in accordance with the express
provisions of those documents.
9.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time, except this Section 9.3 and
Articles 1 and 10 and Sections 4.6, 4.8, 5.4, 6.3, 6.4, and 6.5 of this
Agreement.
ARTICLE 10
MISCELLANEOUS
-------------
10.1 EXPENSES. Except as otherwise provided in Section 10.2, each of
the Parties shall bear and pay all direct costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and fees and
expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that each of the Parties shall bear and pay
one-half of the filing fees payable in connection with the Registration
Statement and the Proxy Statement and printing costs incurred in connection with
the printing of the Registration Statement and the Proxy Statement.
10.2 TERMINATION FEE.
(a) If any of the following events (a "Triggering Event") occurs:
(1) any material, willful, and intentional breach of the Merger
Documents by Empire that would permit Huntington to terminate the Merger
Documents (A) occurring after the receipt by Empire after February 4, 2000, of a
proposal to engage in an Acquisition Transaction, (B) occurring after the
announcement by any other Person of an intention to engage in an Acquisition
Transaction, or (C) in anticipation and for the purpose of engaging in an
Acquisition Transaction;
(2) (A) a proposal to engage in an Acquisition Transaction is submitted
to and approved by the shareholders of Empire at any time prior to December 31,
2001, or (B) a Tender Offer is commenced and the transactions contemplated in
the Tender Offer are completed in such a manner that the Person making the
Tender Offer acquires beneficial ownership of more than 20 percent of the
capital stock or any other class of voting securities of Empire, and the Merger
is not consummated prior to December 31, 2001;
(3) (A) a proposal to engage in an Acquisition Transaction is received
by Empire after February 4, 2000, or a Tender Offer is made directly to the
shareholders of Empire or the intention of making an Acquisition Transaction or
Tender Offer is announced at any time prior to the holding of the Shareholders'
Meeting; (B) the Board of Directors of Empire (1) fails to recommend to the
shareholders of Empire that they vote their shares of Empire Common in favor of
the approval of the Merger, (2) withdraws such recommendation previously made,
(3) fails to solicit proxies of shareholders of Empire to approve the Merger, or
(4) fails to hold the Empire Shareholders' Meeting; and (C) the Merger is not
consummated by December 31, 2001;
Empire shall pay to Huntington an amount in cash equal to the sum of
(A) the direct costs and expenses or portion thereof referred to in Section
10.1, incurred by or on behalf of Huntington in connection with the transactions
contemplated by the Merger Documents, and (B) $4,500,000; which sum represents
additional
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compensation for Huntington's loss as the result of the transactions
contemplated by the Merger Documents not being consummated. The amounts shall be
an obligation of Empire and shall be paid by Empire promptly upon notice to
Empire by Huntington.
(b) Notwithstanding the foregoing, no amount will be due Huntington
pursuant to Section 10.2(a) in the event of the failure to consummate the Merger
solely as a result of any of the following: (1) the failure of any Regulatory
Authority to provide any required Consent to the Merger, which failure was not
the result of the existence of a proposal to engage in an Acquisition
Transaction or a breach by Empire of any of its obligations under any of the
Merger Documents; or (2) the Merger Documents are terminated pursuant to Section
9.1, unless the event giving rise to the right to terminate is preceded by a
Triggering Event or the receipt by Empire after February 4, 2000, of a proposal
to engage in an Acquisition Transaction, or the announcement by another Person
of a proposal involving an Acquisition Transaction.
(c) Nothing contained in this Section 10.2 shall constitute or shall be
deemed to constitute liquidated damages for the willful breach by a Party of the
terms of this Agreement or otherwise limit the rights of the nonbreaching Party.
10.3 BROKERS AND FINDERS. Except for the engagement of McConnell, Budd
& Downes, Inc. by Empire, each of the Parties represents and warrants that
neither it nor any of its officers, directors, employees, or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment banker's fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions contemplated
by the Merger Documents. In the event of a claim by any broker or finder based
upon his or its representing or being retained by or allegedly representing or
being retained by Empire or Huntington, each of Empire and Huntington, as the
case may be, agrees to indemnify and hold the other Party harmless of and from
any Liability in respect of any such claim.
10.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein,
the Merger Documents (including the documents and instruments referred to
herein) constitute the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersede all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement
thereunder expressed or implied, is intended to confer upon any Person, other
than the Parties or their respective successors, any rights, remedies,
obligations, or liabilities under or by reason of the Merger Documents.
10.5 AMENDMENTS. To the extent permitted by Law, the Merger Documents
may be amended by a subsequent writing signed by each of the Parties upon the
approval of the Boards of Directors of each of the Parties, whether before or
after shareholder approval of the Merger Documents has been obtained; provided,
that after any such approval by the holders of shares of Empire Common, there
shall be made no amendment that pursuant to Michigan law requires further
approval by such shareholders without the further approval of such shareholders.
10.6 WAIVERS.
(a) Prior to or at the Effective Time, Huntington, acting through its
Board of Directors, chief executive officer or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by Empire, to waive or extend the time for the compliance or
fulfillment by Empire of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
Huntington under this Agreement, except any condition which, if not satisfied,
would result in the violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of Huntington.
(b) Prior to or at the Effective Time, Empire, acting through its Board
of Directors, chief executive officer or other authorized officer, shall have
the right to waive any Default in the performance of any term of this Agreement
by Huntington, to waive or extend the time for the compliance or fulfillment by
Huntington of any and all of its obligations under this Agreement, and to waive
any or all of the conditions precedent to the obligations of Empire under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing signed
by a duly authorized officer of Empire.
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(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
10.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. 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.
10.8 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
Empire: Empire Banc Corporation
1227 E. Front Street
Traverse City, Michigan 49684
Attention: James E. Dutmers, Jr,
Chairman and Chief Executive Officer
Telecopy number: (231) 922-7247
Copy to Counsel: Howard & Howard Attorneys, P.C.
100 Portage Street, Suite 200
Kalamazoo, Michigan 49007
Attention: Joseph Hemker, Esq.
Telecopy number: (616) 382-1568
Huntington: Richard A. Cheap
General Counsel and Secretary
Huntington Bancshares Incorporated
41 South High Street
Columbus, Ohio 43287
Telecopy number: (614) 480-5485
Copy to Counsel: Mary Beth M. Clary, Esq.
Porter, Wright, Morris & Arthur LLP
5801 Pelican Bay Blvd., Suite 300
Naples, Florida 43108
Telecopy number: (941) 593-2959
10.9 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Ohio, without regard to any
applicable conflicts of Laws, except to the extent that Maryland law governs
certain aspects of the Merger as it relates to Huntington or Michigan law
governs certain aspects of the Merger as it relates to Empire.
10.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
10.11 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
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10.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
10.13 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
10.14 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.
10.15 BENEFIT. Nothing in this Agreement, express or implied, is
intended to confer upon any Person other than the Parties and their successors
in interest any rights or remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
HUNTINGTON BANCSHARES INCORPORATED
By: /s/ Richard A. Cheap
-----------------------------------
Richard A. Cheap
General Counsel and Secretary
EMPIRE BANC CORPORATION
By: /s/ James E. Dutmers, Jr.
-----------------------------------
James E. Dutmers, Jr.,
Chairman and Chief Executive Officer
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EXHIBIT 1 TO SUPPLEMENTAL AGREEMENT
WARRANT PURCHASE AGREEMENT
THIS WARRANT PURCHASE AGREEMENT (this "Agreement") is made as of
February 4, 2000, between HUNTINGTON BANCSHARES INCORPORATED, a Maryland
corporation ("Huntington"), and EMPIRE BANC CORPORATION, a Michigan corporation
("Empire").
RECITALS:
---------
A. Concurrently herewith, Huntington and Empire have entered into (1) a
certain Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides for the merger of Empire into Huntington (the
"Merger"), and (2) a certain Supplemental Agreement, dated as of the date
hereof, which contains certain additional terms and conditions relating to the
Merger (the "Supplemental Agreement"). The Merger Agreement and the Supplemental
Agreement are sometimes hereinafter collectively referred to as the "Merger
Documents." All capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Merger Documents.
B. As a condition to Huntington's entering into the Merger Agreement
and the Supplemental Agreement, and in consideration therefor, Empire has agreed
to issue to Huntington a warrant or warrants entitling Huntington to purchase up
to a total of 630,080 shares of Empire Common, on the terms and conditions set
forth herein.
AGREEMENT:
----------
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
SECTION 1. ISSUANCE, DELIVERY, AND EXERCISE OF THE WARRANT.
Concurrently with the execution of the Merger Documents and this Agreement,
Empire shall execute a warrant in favor of Huntington in the form attached as
Attachment A hereto (the "Warrant") to purchase up to a total of 630,080 shares
of Empire Common at a purchase price equal to $29.00 per share (the "Exercise
Price"), subject to adjustments as provided in the Warrant. (The holder of the
Warrant from time to time is referred to as the "Holder.") The Warrant shall be
exercisable in accordance with the terms and conditions set forth in this
Agreement.
SECTION 2. REGISTRATION RIGHTS. If, at any time after the Warrant
becomes exercisable in accordance with its terms, Empire shall receive a written
request therefor from the Holder, Empire shall prepare and file a registration
statement under the 1933 Act covering such number of shares of Empire Common as
the Holder shall specify in the request and shall use its best efforts to cause
such registration statement to become effective; provided, however, that the
Holder shall only have the right to request three such registrations. Without
the written consent of the Holder, neither Empire nor any other holder of
securities of Empire may include any other securities in such registration.
SECTION 3. "PIGGYBACK" RIGHTS. If, at any time after the Warrant
becomes exercisable in accordance with its terms, Empire shall determine to
proceed with the preparation and filing of a registration statement under the
1933 Act in connection with the proposed offer and sale for money of any of its
securities (other than in connection with a dividend reinvestment, employee
stock purchase, stock option, or similar plan or a registration statement on
Form S-4) by it or any of its security holders, Empire shall give written notice
thereof to the Holder. Upon the written request of the Holder given within ten
days after receipt of any such notice from Empire, Empire shall, except as
herein provided, cause all shares of Empire Common which the Holder shall
request be included in such registration statement to be so included; provided,
however, that nothing herein shall prevent Empire from abandoning or delaying
any registration at any time; and provided, further, that if Empire decides not
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to proceed with a registration after the registration statement has been filed
with the SEC and Empire's decision not to proceed is primarily based upon the
anticipated public offering price of the securities to be sold by Empire, Empire
shall promptly complete the registration for the benefit of the Holder if the
Holder agrees to bear all additional and incremental expenses incurred by Empire
as the result of such registration after Empire has decided not to proceed. If
any registration pursuant to this Section shall be underwritten in whole or in
part, the Holder may require that any shares of Empire Common requested for
inclusion pursuant to this Section be included in the underwriting on the same
terms and conditions as the securities otherwise being sold through the
underwriters. In the event that the shares of Empire Common requested for
inclusion pursuant to this Section would constitute more than 25 percent of the
total number of shares to be included in a proposed underwritten public
offering, and if in the good faith judgment of the managing underwriter of such
public offering the inclusion of all of such shares would interfere with the
successful marketing of the shares of being offered by Empire, the number of
shares otherwise to be included in the underwritten public offering hereunder
may be reduced; provided, however, that after any such required reduction, the
shares of Empire Common to be included in such offering for the account of the
Holder shall constitute at least 25 percent of the total number of shares to be
included in such offering.
SECTION 4. OBLIGATIONS OF EMPIRE IN CONNECTION WITH A REGISTRATION. If
and whenever Empire is required by the provisions of Sections 2 or 3 hereof to
effect the registration of any shares of Empire Common under the 1933 Act,
Empire shall:
(a) prepare and file with the SEC a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for such period as may be
reasonably necessary to effect the sale of such securities, not to exceed nine
months;
(b) prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for such period
as may be reasonably necessary to effect the sale of such securities, not to
exceed nine months;
(c) furnish to the Holder and to the underwriters of the
securities being registered such reasonable number of copies of the registration
statement, amendments thereto, preliminary prospectus, final prospectus, and
such other documents as the Holder or such underwriters may reasonably request
in order to facilitate the public offering of such securities;
(d) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue sky
laws of such jurisdictions as the Holder or such underwriters may reasonably
request; provided that Empire shall not be required by virtue hereof to submit
to the general jurisdiction of any state;
(e) notify the Holder, promptly after Empire shall receive
notice thereof, of the time when such registration statement or any
post-effective amendment thereof has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
(f) notify the Holder promptly of any request by the SEC for
the amending or supplementing of such registration statement or prospectus or
for additional information;
(g) prepare and file with the SEC, promptly upon the request
of the Holder, any amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for the Holder (and concurred in by
counsel for Empire), is required under the 1933 Act or the rules and regulations
promulgated thereunder in connection with the distribution of the shares of
Empire Common by the Holder;
(h) prepare and promptly file with the SEC such amendment or
supplement to such registration statement or prospectus as may be necessary to
correct any statements or omissions if, at the time when a prospectus is
required to be delivered under the 1933 Act, any event shall have occurred as
the result of which such prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances in which they
were made, not misleading;
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(i) advise the Holder, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued; and
(j) at the request of the Holder, furnish on the date or dates
provided for in the underwriting agreement: (1) an opinion or opinions of the
counsel representing Empire for the purposes of such registration, addressed to
the underwriters and to the Holder, covering such matters as such underwriters
and the Holder may reasonably request and as are customarily covered by issuer's
counsel at that time; and (2) a letter or letters from the independent certified
public accountants of Empire, addressed to the underwriters and to the Holder,
covering such matters as such underwriters or the Holder may reasonably request,
in which letters such accountants shall state (without limiting the generality
of the foregoing) that they are independent certified public accountants within
the meaning of the 1933 Act and that, in the opinion of such accountants, the
financial statements and other financial data of Empire included in the
registration statement or any amendment or supplement thereto comply in all
material respects with the applicable accounting requirements of the 1933 Act.
SECTION 5. EXPENSES OF REGISTRATION. With respect to a registration
requested pursuant to Section 2 hereof and with respect to each inclusion of
shares of Empire Common in a registration statement pursuant to Section 3
hereof, Empire shall bear the following fees, costs, and expenses: all
registration, stock exchange listing or NASD fees, printing expenses, fees and
disbursements of counsel and accountants for Empire, fees and disbursements of
counsel for the underwriter or underwriters of such securities (if Empire and/or
the Holder are required to bear such fees and disbursements), and all legal fees
and disbursements and other expenses of complying with state securities or blue
sky laws of any jurisdictions in which the securities to be offered are to be
registered or qualified. Fees and disbursements of counsel and accountants for
the Holder, underwriting discounts and commissions and transfer taxes relating
to the Empire Common being sold for the Holder, and any other expenses incurred
by the Holder not expressly included above shall be borne by the Holder.
SECTION 6. INDEMNIFICATION.
(a) Empire shall indemnify and hold harmless the Holder, any
underwriter (as defined in the 1933 Act) for the Holder, and each person, if
any, who controls the Holder or such underwriter within the meaning of the 1933
Act, from and against any and all loss, damage, liability, cost, and expense to
which the Holder or any such underwriter or controlling person may become
subject under the 1933 Act or otherwise, insofar as such losses, damages,
liabilities, costs, or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
filed pursuant to Section 4 hereof, any prospectus or preliminary prospectus
contained therein, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they are made, not misleading; provided,
however, that Empire will not be liable in any such case to the extent that any
such loss, damage, liability, cost, or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by the Holder, such underwriter,
or such controlling persons in writing specifically for use in the preparation
thereof.
(b) Promptly after receipt by an indemnified party pursuant to
the provisions of paragraph (a) of this Section 6 of notice of the commencement
of any action involving the subject matter of the foregoing indemnity
provisions, such indemnified party shall, if a claim thereof is to be made
against Empire pursuant to the provision of such paragraph (a), promptly notify
Empire of the commencement thereof; but the omission to so notify Empire will
not relieve it from any liability which it may have to any indemnified party
otherwise hereunder. In case such action is brought against any indemnified
party and such indemnified party notifies Empire of the commencement thereof,
Empire shall have the right to participate in and, to the extent that it may
wish to do so, to assume the defense thereof, with counsel satisfactory to such
indemnified party; provided, however, if the defendants in any action include
both the indemnified party and Empire and there is a conflict of interest which
would prevent counsel for Empire from also representing the indemnified party,
the indemnified party or parties shall have the right to select one separate
counsel to participate in the defense of such
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action on behalf of such indemnified party or parties. After notice from Empire
to such indemnified party of its election so to assume the defense of any such
action, the indemnified party shall have the right to participate in such action
and to retain its own counsel, but Empire shall not be required to indemnify and
hold harmless the indemnified party pursuant to the provisions of such paragraph
(a) for any legal fees or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof, other than reasonable
costs of investigation, unless (1) the indemnified party shall have employed
separate counsel in accordance with the provisions of the preceding sentence of
this paragraph (b), (2) Empire shall not have employed counsel satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after the notice of the commencement of the action, or (3) Empire has
authorized the employment of counsel for the indemnified party at the expense of
Empire.
(c) If recovery is not available under the foregoing
indemnification provisions, for any reason other than as specified therein, the
parties entitled to indemnification by the terms thereof shall be entitled to
contribution to liabilities and expenses, except to the extent that contribution
is not permitted under Section 11(f) of the 1933 Act. In determining the amount
of contribution to which the respective parties are entitled, there shall be
considered the parties' relative knowledge and access to information concerning
the matter with respect to which the claim was asserted, the opportunity to
correct and prevent any statement or omission, and any other equitable
considerations appropriate under the circumstances.
SECTION 7. REPURCHASE RIGHTS.
(a) At any time after the Warrant becomes exercisable and
prior to the expiration of the Warrant, in accordance with the terms thereof:
(1) Empire may, and upon the written request of the
Holder, Empire shall, repurchase the Warrant from the Holder at a price (the
"Warrant Repurchase Price") equal to the difference between the "Market/Offer
Price" (as defined in paragraph (b) below) and the Exercise Price, multiplied by
the number of shares for which the Warrant may then be exercised, in the
aggregate, but only if the Market/Offer Price is greater than the Exercise
Price; and
(2) Empire may, and upon the written request of the
owner (the "Owner") of any shares of Empire Common purchased pursuant to an
exercise of the Warrant ("Warrant Stock"), Empire shall, repurchase all of the
shares of Warrant Stock held by such Owner at a price (the "Warrant Stock
Repurchase Price") equal to the number of shares to be repurchased hereunder
multiplied by the greater of the Exercise Price and the Market/Offer Price.
(b) For purposes of Section 7(a), the "Market/Offer Price"
shall mean the highest of (1) the price per share at which a tender offer or
exchange offer for shares of Empire Common has been made, (2) the price per
share of Empire Common to be paid by any third party pursuant to an agreement
with Empire, and (3) the highest closing price for shares of Empire Common
within the 4-month period immediately preceding the date the Holder gives notice
of the required repurchase of the Warrant or the Owner gives notice of the
required repurchase of Warrant Stock, as appropriate. In the event that an
exchange offer is made or an agreement is entered into for a merger or
consolidation involving consideration other than cash, the value of the
securities or other property issuable or deliverable in exchange for Empire
Common shall be determined by a nationally recognized investment banking firm
mutually acceptable to the parties hereto.
(c) The Holder and the Owner may exercise their respective
rights to require Empire to repurchase the Warrant or the Warrant Stock pursuant
to this Section 7 by surrendering for such purpose to Empire, at its principal
office, the Warrant or certificates for shares of Warrant Stock, as the case may
be, free and clear of any liens, claims, encumbrances, or rights of third
parties of any kind, accompanied by a written notice or notices stating that the
Holder or the Owner, as the case may be, requests Empire to repurchase such
Warrant or Warrant Stock in accordance with the provisions of this Section 7.
Subject to the last proviso of Section 7(d) below, as promptly as practicable,
and in any event within five business days after the surrender of the Warrant or
certificates representing shares of Warrant Stock and the receipt of such notice
or notices relating thereto, Empire shall deliver or cause to be delivered to
the Holder or Owner the Warrant Repurchase Price or the Warrant Stock Repurchase
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Price therefor, as applicable, or the portion thereof which Empire is not then
prohibited under applicable law and regulation from so delivering.
(d) To the extent that Empire is prohibited under applicable
law or regulation, or as a result of administrative or judicial action, from
repurchasing the Warrant and/or the Warrant Stock in full at any time that it
may be required to do so hereunder, Empire 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
Warrant Repurchase Price and the Warrant Stock Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five business days
after the date on which Empire is no longer so prohibited. Upon receipt of such
notice from Empire and for a period of 15 days thereafter, the Holder and/or
Owner may revoke its notice of repurchase of the Warrant and/or Warrant Stock by
written notice to Empire at its principal office stating that the Holder and/or
the Owner elects to revoke its election to exercise its right to require Empire
to repurchase the Warrant and/or Warrant Stock, whereupon Empire will promptly
deliver to the Holder and/or Owner the Warrant and/or certificates representing
shares of Warrant Stock surrendered to Empire for purposes of such repurchase.
Whether or not such election is revoked, Empire hereby agrees to use its best
efforts to obtain all required legal and regulatory approvals necessary to
permit Empire to repurchase the Warrant and/or the Warrant Stock as promptly as
practicable.
SECTION 8. ASSUMPTION OF OBLIGATIONS UNDER THIS AGREEMENT. Empire will
not enter into any transaction described in Section 5(a) of the Warrant unless
the "Acquiring Corporation" (as that term is defined in the Warrant) assumes in
writing all the obligations of Empire hereunder.
SECTION 9. REMEDIES. Without limiting the foregoing or any remedies
available to the Holder, Empire specifically acknowledges that neither
Huntington nor any successor holder of the Warrant would have an adequate remedy
at law for any breach of this Warrant Purchase Agreement and Empire hereby
agrees that Huntington and any successor holder of the Warrant shall be entitled
to specific performance of the obligations of Empire hereunder and injunctive
relief against actual or threatened violations of the provisions hereof.
SECTION 10. TERMINATION. This Agreement will terminate upon a
termination of the Warrant in accordance with Section 9 thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant
Purchase Agreement as of the day and year first above written.
HUNTINGTON BANCSHARES
INCORPORATED
By:
-----------------------------------
Richard A. Cheap
General Counsel and Secretary
EMPIRE BANC CORPORATION
By:
-----------------------------------
James E. Dutmers, Jr.,
Chairman and Chief Executive Officer
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ATTACHMENT A TO WARRANT PURCHASE AGREEMENT
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED WITHOUT BEING SO REGISTERED OR QUALIFIED UNLESS AN EXEMPTION OR
EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS ARE AVAILABLE.
WARRANT
-------
TO PURCHASE 630,080 COMMON SHARES
OF
EMPIRE BANC CORPORATION
This is to certify that, for value received, HUNTINGTON BANCSHARES
INCORPORATED, a Maryland corporation ("Huntington"), is entitled to purchase
from EMPIRE BANC CORPORATION, a Michigan corporation ("Empire"), at any time on
or after the date hereof, an aggregate of up to 630,080 common shares, without
par value, of Empire ("Empire Common"), at a price of $29.00 per share (the
"Exercise Price"), subject to the terms and conditions of this Warrant and a
certain Warrant Purchase Agreement, of even date herewith, between Huntington
and Empire (the "Warrant Purchase Agreement"). The number of shares of Empire
Common which may be received upon the exercise of this Warrant and the Exercise
Price are subject to adjustment from time to time as hereinafter set forth. The
terms and conditions set forth in this Warrant and the Warrant Purchase
Agreement shall be binding upon the respective successors and assigns of both of
the parties hereto. This Warrant is issued in connection with a certain
Agreement and Plan of Merger, dated as of the date hereof, between Huntington
and Empire (the "Merger Agreement"), which provides for the merger of Empire
into Huntington (the "Merger"), and a certain Supplemental Agreement between
Huntington and Empire, which provides certain additional terms and conditions
relating to the Merger (the "Supplemental Agreement"). (The Merger Agreement and
the Supplemental Agreement are sometimes hereinafter collectively referred to as
the "Merger Documents.") All capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Merger Documents.
The term "Holder" shall mean and refer to Huntington or any successor holder of
this Warrant.
SECTION 1. EXERCISE OF THE WARRANT.
(a) The Holder will not exercise this Warrant unless it has
obtained all required approvals, if any, of appropriate regulatory authorities
having jurisdiction, including the Federal Reserve Board, pursuant to all
applicable laws and regulations. Further, subject to the terms and conditions
set forth in this Warrant and in the Warrant Purchase Agreement and the
provisions of applicable law, the Holder will not exercise this Warrant without
the written consent of Empire except upon the occurrence of any of the following
events (a "Triggering Event"):
(1) any material, willful, and intentional breach of the Merger
Documents by Empire that would permit Huntington to terminate
the Merger Documents (A) occurring after the receipt by Empire
after February 4, 2000, of a proposal to engage in an
Acquisition Transaction, (B) occurring after the announcement
by any other Person of an intention to engage in an
Acquisition Transaction, or (C) in anticipation and for the
purpose of engaging in an Acquisition Transaction;
(2) (A) a proposal to engage in an Acquisition Transaction is
submitted to and approved by the shareholders of Empire at any
time prior to January 31, 2001, or (B) a Tender Offer is
commenced and the transactions contemplated in the Tender
Offer are completed in such a manner that the Person making
the Tender Offer acquires beneficial ownership of more
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than 20 percent of the capital stock or any other class of
voting securities of Empire, and the Merger is not consummated
prior to January 31, 2001; or
(3) (A) a proposal to engage in an Acquisition Transaction is
received by Empire after February 4, 2000, or a Tender Offer
is made directly to the shareholders of Empire or the
intention of making an Acquisition Transaction or a Tender
Offer is announced at any time prior to the holding of the
Empire Shareholders' Meeting; (B) the Board of Directors of
Empire (1) fails to recommend to the shareholders of Empire
that they vote their shares of Empire Common in favor of the
approval of the Merger, (2) withdraws such recommendation
previously made, (3) fails to solicit proxies of shareholders
of Empire to approve the Merger, or (4) fails to hold the
Empire Shareholders' Meeting; and (C) the Merger is not
consummated by January 31, 2001.
(b) Notwithstanding the foregoing, this Warrant shall not be
exercisable in the event of the failure to consummate the Merger solely as a
result of any of the following: (1) the failure of any Regulatory Authority to
provide any required Consent to the Merger, which failure was not the result of
the existence of the Acquisition Proposal or a breach by Empire of any of its
obligations under any of the Merger Documents; or (2) the Merger Documents are
terminated pursuant to Section 9.1 of the Supplemental Agreement, unless the
event giving rise to the right to terminate is preceded by a Triggering Event or
the receipt by Empire after February 4, 2000, of an Acquisition Transaction
proposal, or the announcement by another Person of a proposal involving an
Acquisition Transaction. For purposes of this Section 1, a Tender Offer which is
contingent upon the expiration of the Warrant is deemed to commence when it is
announced. Empire represents to the Holder that, except with respect to the
Merger Documents, there are no proposals or offers to engage in an Acquisition
Transaction previously received by Empire which remain outstanding as of the
close of business on February 4, 2000. Any breach of this representation by
Empire will cause any such proposal or offer, whether in its original form or as
amended, to be deemed to be received by Empire after February 4, 2000, for
purposes of this Section 1.
(c) This Warrant shall be exercised by presentation and
surrender hereof to Empire at its principal office accompanied by (1) a written
notice of exercise for a specified number of shares of Empire Common, (2)
payment to Empire, for the account of Empire, of the Exercise Price for the
number of shares specified in such notice, and (3) a certificate of the Holder
indicating the Triggering Event that has occurred which entitles the Holder to
exercise this Warrant. The Exercise Price for the number of shares of Empire
Common specified in the notice shall be payable in immediately available funds.
(d) Upon such presentation and surrender, Empire shall issue
promptly (and within three business days if requested by the Holder) to the
Holder, or any assignee, transferee, or designee permitted by Section 1(f), the
shares to which the Holder is entitled hereunder.
(e) If this Warrant should be exercised in part only, Empire
shall, upon surrender of this Warrant for cancellation, execute and deliver a
new Warrant evidencing the rights of the Holder thereof to purchase the balance
of the shares purchasable hereunder. Upon receipt by Empire of this Warrant, in
proper form for exercise, the Holder shall be deemed to be the holder of record
of the shares of Empire Common issuable upon such exercise, notwithstanding that
the stock transfer books of Empire shall then be closed or that certificates
representing such shares of Empire Common shall not then be actually delivered
to the Holder. Empire shall pay all expenses, and any and all 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 1 in
the name of the Holder or of any assignee, transferee, or designee permitted by
Section 1(f).
(f) This Warrant, once exercisable, or any warrant shares
acquired by the Holder by its exercise, may be sold or transferred in whole or
in part to any person, subject to the receipt by such person of approvals of
appropriate regulatory authorities having jurisdiction, including the Federal
Reserve Board, pursuant to all applicable laws and regulations, to the extent
required.
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SECTION 2. CERTAIN COVENANTS AND REPRESENTATIONS OF EMPIRE.
(a) Empire shall at all times maintain sufficient authorized
but unissued shares of Empire Common so that this Warrant may be exercised
without additional authorization of the holders of Empire Common, after giving
effect to all other options, warrants, convertible securities, and other rights
to purchase Empire Common.
(b) Empire represents and warrants to the Holder that the
shares of Empire Common issued upon an exercise of this Warrant will be duly
authorized, fully paid, non-assessable, and subject to no preemptive rights.
(c) Empire agrees (1) 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 Empire; (2) promptly to take all action as may from
time to time be required, including, without limitation (A) complying with all
pre-merger notification, reporting, and waiting period requirements specified in
15 U.S.C. Section18a and regulations promulgated thereunder, and (B) in the
event, under the Bank Holding Company Act of 1956, as amended (the "Bank
Holding Company Act"), or the Change in Bank Control Act of 1978, or other
statute, the prior approval of the Federal Reserve Board or other regulatory
agency (collectively, the "Agencies"), is necessary before the Warrant may be
exercised or transferred, cooperate fully with the Holder in preparing such
applications and providing such information to the Agencies as the Agencies may
require in order to permit the Holder to exercise or transfer this Warrant and
Empire duly and effectively to issue shares pursuant to the exercise hereof;
and (3) promptly to take all action provided herein to protect the rights of
the Holder against dilution.
SECTION 3. FRACTIONAL SHARES. Empire shall not be required to issue
fractional shares of Empire Common upon an exercise of this Warrant but shall
pay for such fraction of a share in cash or by certified or official bank check
at the Exercise Price.
SECTION 4. EXCHANGE OR LOSS OF WARRANT. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
hereof at the principal office of Empire for other Warrants of different
denominations entitling the Holder thereof to purchase in the aggregate the same
number of shares of Empire Common purchasable hereunder. The term "Warrant" as
used herein includes any warrants for which this Warrant may be exchanged. Upon
receipt by Empire of evidence reasonably satisfactory to it of the loss, theft,
destruction, or mutilation of this Warrant, and (in the case of loss, theft, or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Warrant, if mutilated, Empire will execute and deliver a
new Warrant of like tenor and date. Any such new Warrant executed and delivered
shall constitute an additional contractual obligation on the part of Empire,
whether or not the Warrant so lost, stolen, destroyed, or mutilated shall at any
time be enforceable by anyone.
SECTION 5. CERTAIN TRANSACTIONS.
(a) In case Empire shall (1) consolidate with or merge into
any Person, other than Huntington or one of its Affiliates, and shall not be the
continuing or surviving corporation of such consolidation or merger, (2) permit
any Person, other than Huntington or one of its Affiliates, to merge into Empire
and Empire shall be the continuing or surviving corporation, but, in connection
with such merger, the then outstanding shares of Empire Common shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, or (3) sell or otherwise transfer all or substantially all
of its assets to any Person, other than Huntington or one of its Affiliates,
then, and in any such case, the agreement governing such transaction shall make
proper provision so that this Warrant shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, a warrant, at the option of the Holder, of either (A)
the Acquiring Corporation (as hereinafter defined), (B) any company which
controls the Acquiring Corporation, or (C) in the case of a merger described in
clause (a)(2) above, Empire, in which case such warrant shall be a newly issued
warrant (in any such case, the "Substitute Warrant").
(b) For purposes of this Section 5, the following terms have
the meanings indicated:
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<PAGE> 105
(1) "Acquiring Corporation" shall mean (A) the
continuing or surviving corporation of a consolidation or merger with
Empire (if other than Empire), (B) the corporation merging into Empire
in a merger in which Empire is the continuing or surviving person and
in connection with which the then outstanding shares of Empire Common
are changed into or exchanged for stock or other securities of any
other Person or cash or any other property, or (C) the transferee of
all or substantially all of Empire's assets;
(2) "Substitute Common" shall mean the common stock
issued by the issuer of the Substitute Warrant;
(3) "Assigned Value" shall mean the Market/Offer
Price as determined pursuant to paragraph 7(b) of the Warrant Purchase
Agreement; provided, however, that in the event of a sale of all or
substantially all of Empire's assets, the Assigned Value shall be the
sum of the price paid in such sale for such assets and the current
market value of the remaining assets of Empire as determined by a
recognized investment banking firm selected by the Holder, divided by
the number of shares of Empire Common outstanding at the time of such
sale;
(4) "Average Price" shall mean the average closing
price of a share of Substitute Common 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
on the day preceding such consolidation, merger, or sale; provided that
if Empire is the issuer of the Substitute Warrant, the Average Price
shall be computed with respect to a share of the common stock issued by
the Person merging into Empire or by any company which controls such
Person, as the Holder may elect;
(5) A "Person" shall mean any individual, firm,
corporation, or other entity and include as well any syndicate or group
deemed to be a "person" by Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended; and
(6) "Affiliate" shall have the meaning ascribed to
such term in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended.
(c) The Substitute Warrant shall have the same terms as this
Warrant, provided that, if the terms of the Substitute Warrant cannot, for legal
reasons, be the same as this Warrant, such terms shall be as similar as possible
and in no event less advantageous to the Holder. The issuer of the Substitute
Warrant shall also enter into an agreement with the then Holder of the
Substitute Warrant in substantially the same form as the Warrant Purchase
Agreement, which shall be applicable to the Substitute Warrant.
(d) The Substitute Warrant shall be exercisable for such
number of shares of Substitute Common as is equal to the Assigned Value
multiplied by the number of shares of Empire Common for which this Warrant is
then exercisable, divided by the Average Price. The exercise price of the
Substitute Warrant per share of Substitute Common shall be equal to the Exercise
Price multiplied by a fraction in which the numerator is the number of shares of
Empire Common for which this Warrant is then exercisable and the denominator is
the number of shares of Substitute Common for which the Substitute Warrant is
exercisable.
SECTION 6. RIGHTS OF THE HOLDER; REMEDIES.
(a) The Holder shall not, by virtue hereof and prior to the
exercise hereof, be entitled to any rights of a holder of Empire Common.
(b) Without limiting the foregoing or any remedies available
to the Holder, Empire specifically acknowledges that neither Huntington nor any
successor Holder of this Warrant would have an adequate remedy at law for any
breach of this Warrant and Empire hereby agrees that Huntington and any
successor Holder
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<PAGE> 106
shall be entitled to specific performance of the obligations of Empire hereunder
and injunctive relief against actual or threatened violations of the provisions
hereof.
SECTION 7. ANTIDILUTION PROVISIONS. The number of shares of Empire
Common purchasable upon the exercise hereof shall be subject to adjustment from
time to time as provided in this Section 7.
(a) In the event that Empire issues any additional shares of
Empire Common at any time after the date hereof (including pursuant to stock
option plans), the number of shares of Empire Common which can be purchased
pursuant to this Warrant shall be increased by an amount equal to 19.9 percent
of the additional shares so issued.
(b) (1) In the event that, after the date hereof, Empire pays
or makes a dividend or other distribution of any class of capital stock of
Empire in Empire Common, the number of shares of Empire Common purchasable upon
exercise hereof shall be increased by multiplying such number of shares by a
fraction of which the denominator shall be the number of shares of Empire Common
outstanding at the close of business on the day immediately preceding the date
of such distribution and the numerator shall be the sum of such number of shares
and the total number of shares constituting such dividend or other distribution,
such increase to become effective immediately after the opening of business on
the day following such distribution.
(2) In the event that, after the date hereof, outstanding
shares of Empire Common are subdivided into a greater number of shares of Empire
Common, the number of shares of Empire Common purchasable upon exercise hereof
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately increased, and,
conversely, in the event that, after the date hereof, outstanding shares of
Empire Common are combined into a smaller number of shares of Empire Common, the
number of shares of Empire Common purchasable upon exercise hereof at the
opening of business on the day following the day upon which such combination
becomes effective shall be proportionately decreased, such increase or decrease,
as the case may be, to become effective immediately after the opening of
business on the day following the day upon which such subdivision or combination
becomes effective.
(3) The reclassification (including any reclassification upon
a merger in which Empire is the continuing corporation) of Empire Common into
securities including other than Empire Common shall be deemed to involve a
subdivision or combination, as the case may be, of the number of shares of
Empire Common outstanding immediately prior to such reclassification into the
number of shares of Empire Common outstanding immediately thereafter and the
effective date of such reclassification shall be deemed to be the day upon which
such subdivision or combination becomes effective, as the case may be, within
the meaning of clause (2) above.
(c) Whenever the number of shares of Empire Common purchasable
upon exercise hereof is adjusted pursuant to paragraph (b) above, the Exercise
Price shall be adjusted by multiplying the Exercise Price by a fraction the
numerator of which is equal to the number of shares of Empire Common purchasable
prior to the adjustment and the denominator of which is equal to the number of
shares of Empire Common purchasable after the adjustment.
(d) For the purpose of this Section 7, the term "Empire
Common" shall include any shares of Empire of any class or series which has no
preference or priority in the payment of dividends or in the distribution of
assets upon any voluntary or involuntary liquidation, dissolution, or winding up
of Empire and which is not subject to redemption by Empire.
SECTION 8. NOTICE.
(a) Whenever the number of shares of Empire Common for which
this Warrant is exercisable is adjusted as provided in Section 7 hereof, Empire
shall promptly compute such adjustment and mail to the Holder a certificate,
signed by a principal financial officer of Empire, setting forth the number of
shares of Empire Common for which this Warrant is exercisable and the adjusted
Exercise Price as a result of such adjustment, a brief statement of the facts
requiring such adjustment, the computation thereof, and when such adjustment
will become effective.
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(b) Upon the occurrence of a Triggering Event, Empire shall
(1) promptly notify the Holder and/or the "Owner" (as that term is defined in
the Warrant Purchase Agreement) of such event, (2) promptly compute the "Warrant
Repurchase Price" and the "Warrant Stock Repurchase Price" (as such terms are
defined in the Warrant Purchase Agreement), and (3) furnish to the Holder and/or
the Owner a certificate, signed by the chief financial officer of Empire setting
forth the Warrant Repurchase Price and/or the Warrant Stock Repurchase Price and
the basis and computation thereof.
(c) Upon the occurrence of an event which results in this
Warrant becoming convertible into, or exchangeable for, the Substitute Warrant,
as provided in Section 5 hereof, Empire and the Acquiring Corporation shall
promptly notify the Holder of such event; and, upon receipt from the Holder of
its choice as to the issuer of the Substitute Warrant, the Acquiring Corporation
shall promptly compute the number of shares of Substitute Common for which the
Substitute Warrant is exercisable and furnish to the Holder a certificate,
signed by a principal financial officer of the Acquiring Corporation, setting
forth the number of shares of Substitute Common for which the Substitute Warrant
is exercisable, the Substitute Warrant exercise price, a computation thereof,
and when such adjustment will become effective.
SECTION 9. TERMINATION. This Warrant and the rights conferred hereby
shall terminate upon the earliest of (1) six months after the occurrence of a
Triggering Event, (2) the Effective Date of the Merger, (3) the date of
termination of the Merger Documents unless the event giving rise to the right to
terminate is preceded by a Triggering Event or the receipt by Empire, or the
announcement by another Person, of a proposal involving an Acquisition
Transaction or Tender Offer, or (4) March 31, 2001.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of
this 4th day of February, 2000.
ATTEST: EMPIRE BANC CORPORATION
By: By:
---------------------------------- ------------------------------------
James E. Dutmers, Jr.,
Title: Chairman and Chief Executive Officer
-------------------------------
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EXHIBIT 2 TO SUPPLEMENTAL AGREEMENT
MATTERS AS TO WHICH HOWARD & HOWARD ATTORNEYS, P.C. SHALL OPINE
---------------------------------------------------------------
1. Empire is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Michigan with full corporate power
and authority to carry on the business in which it is engaged and to own and use
its material Assets.
2. Each of the Empire Subsidiaries is duly organized, validly existing,
and in good standing under the Laws of the United States or its state of
incorporation, with full corporate power and authority to carry on the business
in which it is engaged and to own and use its material Assets.
3. The execution and delivery of the Merger Documents and compliance
with their respective terms by Empire do not and will not violate or contravene
any provision of the Articles of Incorporation or Bylaws of Empire nor, to our
knowledge but without any independent investigation, any Law, Order, Permit or
Contract to which Empire is a party or by which Empire or any of its material
Assets is bound.
4. The Merger Documents have been duly and validly executed and
delivered by Empire and assuming valid authorization, execution, and delivery by
Huntington, constitute the valid and binding agreements of Empire enforceable in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, or similar laws affecting creditors'
rights generally, provided, however, that we express no opinion as to the
availability of the equitable remedy of specific performance.
5. Empire has the corporate power and authority to own its properties
and assets and to carry on its business within the State of Michigan. To our
Knowledge, Empire is not required to be qualified to do business in any
jurisdiction other than Michigan.
6. All corporate actions required to be taken by the directors and
shareholders of Empire to authorize the Merger Documents and the transactions
contemplated thereby have been taken.
7. All eligible accounts of deposit in all Empire Subsidiaries that are
depository institutions are insured by the Federal Deposit Insurance Corporation
to the fullest extent permitted by Law.
8. The Merger shall be exempted from the requirements of Section 780 of
Chapter 7A of the Michigan Business Corporation Act, as amended.
9. The execution and delivery of the Merger Documents does not, and the
consummation of the Merger and the other transactions contemplated by the Merger
Documents will not (a) result in the grant of any Rights to any Person under the
Empire Rights Agreement, (b) result in separation from the shares of Empire
Common of the Rights granted under the Empire Rights Agreement, (c) permit any
holder of any of the Rights under the Empire Rights Agreement to exercise any
such Rights, or (d) give any Person any Right to purchase any securities issued
by Huntington under the Empire Rights Agreement.
<PAGE> 109
EXHIBIT 3 TO SUPPLEMENTAL AGREEMENT
MATTERS AS TO WHICH PORTER, WRIGHT, MORRIS & ARTHUR LLP SHALL OPINE
-------------------------------------------------------------------
1. Huntington is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Maryland with full corporate power
and authority to carry on the business in which it is engaged and to own and use
its material Assets.
2. The execution and delivery of the Merger Documents and compliance
with their respective terms by Huntington do not and will not violate or
contravene any provision of the Articles of Incorporation or Bylaws of
Huntington or, to our knowledge but without any independent investigation, any
Law, Order, or Permit to which Huntington is a party or by which Huntington is
bound.
3. The Merger Documents have been duly and validly executed and
delivered by Huntington and, assuming valid authorization, execution and
delivery by Empire, constitute the valid and binding agreements of Huntington
enforceable in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, or similar laws
affecting creditors' rights generally, provided, however, that we express no
opinion as to the availability of the equitable remedy of specific performance.
4. All corporate action required to be taken by the directors of
Huntington to authorize the Merger Documents and the transactions contemplated
thereby have been taken and the shareholders of Huntington are not required to
take any action with respect to the Merger Documents.
5. The shares of Huntington Common to be issued to the shareholders of
Empire as contemplated by the Merger Documents have been registered under the
Securities Act of 1933, as amended, and when properly issued and delivered
following consummation of the Merger will be duly authorized, validly issued,
fully paid, and non-assessable under the Maryland Business Corporation Act.
<PAGE> 110
[MCBD letterhead] Exhibit C
The Board of Directors
Empire Banc Corporation
1227 East Front Street
Traverse City, MI 49686
The Board of Directors:
You have requested our opinion as to the fairness, from a financial
point of view, to the shareholders of Empire Banc Corporation ("EBC") of the
exchange ratio of shares of the common stock of EBC for shares of common stock
of Huntington Bancshares Incorporated ("HBAN") in connection with the proposed
acquisition of EBC by HBAN pursuant to an Agreement and Plan of Merger, as
amended, and Supplemental Agreement, both dated February 4, 2000 (the "Merger
Documents") by and between EBC and HBAN. Pursuant to the Merger Documents, EBC
will merge with and into HBAN, with HBAN being the surviving corporation.
As is more specifically set forth in the Merger Documents, upon
consummation of the merger, each outstanding share of EBC common stock, except
for shares held by HBAN and its subsidiaries or by EBC and its subsidiaries (in
both cases, other than shares held in a fiduciary capacity or as a result of
debts previously contracted), will be converted into and exchangeable for 2.0355
shares of HBAN common stock (subject to adjustment under certain defined
circumstances). The exchange ratio referenced is a fixed exchange ratio and
consequently the market value of the consideration to be received by EBC
shareholders will fluctuate with changes in HBAN's stock price. The Merger
Documents may be terminated under certain conditions prior to the effective time
of the merger by the Board of Directors of either party based on defined
criteria.
McConnell, Budd & Downes, Inc., as part of its investment banking
business, is regularly engaged in the valuation of bank holding companies and
banks, thrift holding companies and thrifts and their securities in connection
with mergers and acquisitions, negotiated underwritings, private placements,
competitive bidding processes, market making as a NASD market maker, secondary
distributions of listed securities and valuations for corporate, estate and
other purposes. Our experience and familiarity with EBC includes our
participation in the process and negotiations leading up to the proposed merger
with HBAN. In the course of our role as financial advisor to EBC in connection
with the merger, we have received fees for our services and will receive
additional fees contingent on the occurrence of certain defined events. While
the payment of all or a significant portion of fees related to financial
advisory services provided in connection with arm's-length mergers and other
business combination transactions upon consummation of such transactions, as is
the case with this transaction, might be viewed as giving such financial
advisors a financial interest in the successful completion of such transactions,
such compensation arrangements are standard and customary for transactions of
the size and type of this transaction.
<PAGE> 111
In arriving at our opinion, we have reviewed the Merger Documents. We
have also reviewed publicly available business, financial and shareholder
information relating to EBC and its subsidiaries and certain publicly available
financial and shareholder information relating to HBAN.
In connection with the foregoing, we have (i) reviewed EBC's Annual
Reports to Shareholders, Annual Reports on Form 10-K and related financial
information for the four calendar years ended December 31, 1999 and EBC's
Quarterly Report on Form 10-Q and related unaudited financial information for
the first quarter of 2000; (ii) reviewed HBAN's Annual Reports to Shareholders,
Annual Reports on Form 10-K and related financial information for the three
calendar years ended December 31, 1999 and HBAN's Quarterly Report on Form 10-Q
and related unaudited financial information for the first quarter of 2000; (iii)
reviewed certain internal financial information and financial forecasts,
relating to the business, earnings, cash flows, assets and prospects furnished
to McConnell, Budd & Downes, Inc. by; (iv) held discussions with members of the
senior management and board of EBC concerning the past and current results of
operations of EBC, its current financial condition and management's opinion of
its future prospects; (v) held discussions with members of senior management of
HBAN concerning the past and current results of operations of HBAN, its current
financial condition and management's opinion of its future prospects; (vi)
reviewed the historical record of reported prices, trading volume and dividend
payments for both EBC and HBAN common stock; (vii) considered the current state
of and future prospects for the economy of Michigan generally and the relevant
market areas for EBC and HBAN in particular; (viii) reviewed specific merger
analysis models employed by McConnell, Budd & Downes, Inc. to evaluate potential
business combinations of financial institutions; (ix) reviewed the reported
financial terms of selected recent business combinations in the banking
industry; and (x) performed such other studies and analyses as McConnell, Budd &
Downes, Inc. considered appropriate under the circumstances associated with this
particular transaction.
In the course of our review and analysis we considered, among other
things, such topics as the historical and projected future contributions of
recurring earnings by the parties, the anticipated future earnings per share
results for the parties on both a combined and stand-alone basis, the potential
to realize significant recurring operating expense reductions and the impact
thereof on projected future earnings per share, the relative capitalization and
capital adequacy of each of the parties, the relative asset quality and apparent
adequacy of the reserve for loan losses for each of the parties. We also
considered the composition of deposits and the composition of the loan portfolio
of each of EBC and HBAN. In addition, we considered the historical trading
range, trading pattern and relative market liquidity of the common shares of
each of the parties. In the conduct of our review and analysis we have relied
upon and assumed, without independent verification, the accuracy and
completeness of the financial information provided to us by EBC and HBAN and or
otherwise publicly obtainable. In reaching our opinion we have not assumed any
responsibility for the independent verification of such information or any
independent valuation or appraisal of any of the assets or the liabilities of
either EBC or HBAN, nor have we obtained from any other source, any current
appraisals of the assets or liabilities of either EBC or HBAN. We have also
relied on the management of EBC as to the reasonableness of various financial
and operating forecasts and of the assumptions on which they are based, which
were provided to us for use in our analyses.
2
<PAGE> 112
In the course of rendering this opinion, which is being rendered prior
to the receipt of certain required regulatory approvals necessary before
consummation of the merger, we assume that no conditions will be imposed by any
regulatory agency in connection with its approval of the merger that will have a
material adverse effect on the results of operations, the financial condition or
the prospects of HBAN following consummation of the merger.
Based upon and subject to the foregoing, it is our opinion, that as of
the date of this letter, the exchange ratio is fair to the shareholders of EBC
from a financial point of view.
Very truly yours,
McConnell, Budd & Downes, Inc.
3
<PAGE> 113
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Articles of Incorporation, as amended, provide that it
shall indemnify its directors to the fullest extent under the general laws of
the State of Maryland now or hereafter in force, including the advance of
expenses to directors subject to procedures provided by such laws; its officers
to the same extent it shall indemnify its directors; and its officers who are
not directors to such further extent as shall be authorized by the Board of
Directors and be consistent with Maryland law.
Section 2-418 of the Maryland general corporation law provides, in
substance, that a corporation may indemnify any director made a party to any
proceeding by reason of service in that capacity against judgments, penalties,
fines, settlements, and reasonable expenses actually incurred by the director in
connection with the proceeding, unless it is proved that the act or omission of
the director was material to the cause of action adjudicated in the proceeding
and was committed in bad faith or was the result of active and deliberate
dishonesty; or the director actually received an improper personal benefit in
money, property, or services; or, in the case of any criminal proceeding, the
director had reasonable cause to believe that the act or omission was unlawful.
Notwithstanding the above, a director may not be indemnified in respect of any
proceeding, by or in the right of the corporation, in which such director shall
have been adjudged liable to the corporation or in respect of any proceeding
charging improper receipt of a personal benefit.
Termination of any proceeding by judgment, order, or settlement does
not create a presumption that the director did not meet the requisite standard
of conduct. Termination of any proceeding by conviction, plea of nolo contendere
or its equivalent, or entry of an order of probation prior to judgment, creates
a rebuttable presumption that the director did not meet the requisite standard
of conduct. Indemnification is not permitted unless authorized for a specific
proceeding, after a determination that indemnification is permissible because
the requisite standard of conduct has been met (1) by a majority of a quorum of
directors not at the time parties to the proceeding (or a majority of a
committee of two or more such directors designated by the full board); (2) by
special legal counsel selected by the board of directors; or (3) by the
stockholders.
Section 2-418 provides that a director who has been successful, on the
merits or otherwise, in the defense of any proceeding shall be indemnified
against reasonable expenses incurred by the director in connection with the
proceeding. A court of appropriate jurisdiction upon application of a director
and such notice as the court shall require may order indemnification in the
following circumstances: (1) if it determines a director is entitled to
reimbursement pursuant to a director's success, on the merits or otherwise, in
the defense of any proceeding, the court shall order indemnification, in which
case the director shall be entitled to recover the expenses of securing such
reimbursement; or (2) if it determines that director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances, the court
may order such indemnification as the court shall deem proper. However,
indemnification with respect to any proceeding by or in the right of the
corporation or in which liability shall have been adjudged in the case of a
proceeding charging improper personal benefit to the director, shall be limited
to expenses.
The reasonable expenses incurred by a director who is a party to a
proceeding may be paid or reimbursed by the corporation in advance of the final
disposition of the proceeding upon receipt by the corporation of both a written
affirmation by the director of his good faith belief that the standard of
conduct necessary for indemnification by the corporation has been met, and a
written undertaking by or on behalf of the director to repay the amount if it
shall be ultimately determined that the standard of conduct has not been met.
The indemnification and advancement of expenses provided or authorized
by Section 2-418 are not exclusive of any other rights to which a director may
be entitled both as to action in his official capacity and as to action in
another capacity while holding such office.
<PAGE> 114
Pursuant to Section 2-418, a corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee,
or agent of the corporation, or who, while serving in such capacity, is or was
at the request of the corporation serving as a director, officer, partner,
trustee, employee, or agent of another corporation or legal entity or of an
employee benefit plan, against liability asserted against and incurred by such
person in any such capacity or arising out of such person's position, whether or
not the corporation would have the power to indemnify against liability under
Section 2-418. A corporation may provide similar protection, including a trust
fund, letter of credit, or surety bond, which is not inconsistent with Section
2-418. A subsidiary or an affiliate of the corporation may provide the insurance
or similar protection.
Subject to certain exceptions, the directors and officers of the
Registrant and its affiliates are insured to the extent of 100% of loss up to a
maximum of $35,000,000 (subject to certain deductibles) in each policy year
because of any claim or claims made against them by reason of their wrongful
acts while acting in their capacities as such directors or officers and up to a
maximum of $10,000,000 (subject to certain deductibles) in each policy year
because of any claim or claims made against them by reason of their wrongful
acts while acting in their capacities as fiduciaries in the administration of
certain of the Registrant's employee benefit programs. The Registrant is
insured, subject to certain retentions and exceptions, to the extent it shall
have indemnified the directors and officers for such loss.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS.
EXHIBIT
NO. DESCRIPTION
2(a) Agreement and Plan of Merger, dated February 4, 2000,
between Huntington Bancshares Incorporated and Empire
Banc Corporation and Amendment to Agreement and Plan
of Merger, dated April 12, 2000, between Huntington
Bancshares Incorporated and Empire Banc Corporation
(attached as Exhibit A to the proxy
statement/prospectus filed as a part of this
Registration Statement).
2(b) Supplemental Agreement, dated February 4, 2000,
between Huntington Bancshares Incorporated and Empire
Banc Corporation (attached as Exhibit B to the
Prospectus filed as a part of this Registration
Statement).
2(c) * Warrant Purchase Agreement, dated February 4, 2000,
between Huntington Bancshares Incorporated and Empire
Banc Corporation.
2(d) * Warrant to Purchase 630,080 shares of Empire Banc
Corporation common stock, dated February 4, 2000.
3(i)(a) Articles of Restatement of Charter, Articles of
Amendment to Articles of Restatement of Charter, and
Articles Supplementary -- previously filed as Exhibit
3(i) to Annual Report on Form 10-K for the year ended
December 31, 1993, and incorporated herein by
reference.
3(i)(b) Articles of Amendment to Articles of Restatement of
Charter -- previously filed as Exhibit 3(i)(b) to
Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996, and incorporated herein by reference.
<PAGE> 115
3(i)(c) Articles of Amendment to Articles of Restatement of
Charter -- previously filed as Exhibit 3(i)(c) to
Quarter Report on Form 10-Q for the quarter ended
March 31, 1998, and incorporated herein by reference.
3(ii) Amended and Restated Bylaws -- previously filed as
Exhibit 3(ii) to Quarterly Report on Form 10-Q for
the quarter ended September 30, 1999, and
incorporated herein by reference.
4(a) Instruments defining the Rights of Security Holders
-- reference is made to Articles Fifth, Eighth, and
Tenth of Articles of Restatement of Charter, as
amended and supplemented. Instruments defining the
rights of holders of long-term debt will be furnished
to the Securities and Exchange Commission upon
request.
4(b) Rights Plan, dated February 22, 1990, between
Huntington Bancshares Incorporated and The Huntington
Trust Company, National Association, -- previously
filed as Exhibit 1 to Registration Statement on Form
8-A, filed with the Securities and Exchange
Commission on February 22, 1990, and incorporated
herein by reference.
4(c) Amendment No. 1 To Rights Plan, dated August 16,
1995, between Huntington Bancshares Incorporated and
The Huntington Trust Company, National Association --
previously filed as Exhibit 4(b) to Current Report on
Form 8-K, filed with the Securities and Exchange
Commission on August 28, 1995, and incorporated
herein by reference.
5 * Opinion of Porter, Wright, Morris & Arthur LLP
regarding legality.
8 * Opinion of Porter, Wright, Morris & Arthur LLP
regarding tax matters.
10(a) Employment Agreement, dated April 25, 1996, between
Huntington Bancshares Incorporated and Frank Wobst --
previously filed as Exhibit 10(a) to Quarterly Report
on Form 10-Q for the quarterly period ended June 30,
1996, and incorporated herein by reference.
10(b) Form of Tier I Executive Agreement for certain
executive officers -- previously filed as Exhibit
10(b) to Annual Report on Form 10-K for the year
ended December 31, 1998, and incorporated herein by
reference.
10(c) Form of Tier II Executive Agreement for certain
executive officers -- previously filed as Exhibit
10(c) to Annual Report on Form 10-K for the year
ended December 31, 1998, and incorporated herein by
reference.
10(d) Schedule identifying material details of Executive
Agreements, substantially similar to Exhibits 10(b)
and 10(c) -- previously filed as Exhibit 10(d) to
Annual Report on Form 10-K for the year ended
December 31, 1999, and incorporated herein by
reference
10(e) Huntington Bancshares Incorporated Amended and
Restated Incentive Compensation Plan, effective for
performance cycles beginning on or after January 1,
1999 -- previously filed as Exhibit 10(e) to Annual
Report on Form 10-K for the year ended December 31,
1998, and incorporated herein by reference.
10(f) Amended and Restated Long-Term Incentive Compensation
Plan, effective for performance cycles beginning on
or after January 1, 1999 -- previously filed as
Exhibit 10(f) to Annual Report on Form 10-K for the
year ended December 31, 1998, and incorporated herein
by reference.
<PAGE> 116
10(g)(1) Supplemental Executive Retirement Plan with First and
Second Amendments -- previously filed as Exhibit
10(g) to Annual Report on Form 10-K for the year
ended December 31, 1987, and incorporated herein by
reference.
10(g)(2) Third Amendment to Supplemental Executive Retirement
Plan -- previously filed as Exhibit 10(k)(2) to
Annual Report on Form 10-K for the year ended
December 31, 1997, and incorporated herein by
reference.
10(g)(3) Fourth Amendment to Supplemental Executive Retirement
Plan -- previously filed as an Exhibit 10(g)(3) to
Annual Report on Form 10-K for the year ended
December 31, 1999, and incorporated herein by
reference.
10(h) Deferred Compensation Plan and Trust for Directors --
reference is made to Exhibit 4(a) of Post-Effective
Amendment No. 2 to Registration Statement on Form
S-8, Registration No. 33-10546, filed with the
Securities and Exchange Commission on January 28,
1991, and incorporated herein by reference.
10(i)(1) Huntington Bancshares Incorporated 1983 Stock Option
Plan -- reference is made to Exhibit 4A of
Registration Statement on Form S-8, Registration No.
2-89672, filed with the Securities and Exchange
Commission on February 27, 1984, and incorporated
herein by reference.
10(i)(2) Huntington Bancshares Incorporated 1983 Stock Option
Plan -- Second Amendment -- previously filed as
Exhibit 10(j)(2) to Annual Report on Form 10-K for
the year ended December 31, 1987, and incorporated
herein by reference.
10(i)(3) Huntington Bancshares Incorporated 1983 Stock Option
Plan -- Third Amendment -- previously filed as
Exhibit 10(j)(3) to Annual Report on Form 10-K for
the year ended December 31, 1987, and incorporated
herein by reference.
10(i)(4) Huntington Bancshares Incorporated 1983 Stock Option
Plan -- Fourth Amendment -- previously filed as
Exhibit 10(m)(4) to Annual Report on Form 10-K for
the year ended December 31, 1993, and incorporated
herein by reference.
10(i)(5) Huntington Bancshares Incorporated 1983 Stock Option
Plan -- Fifth Amendment -- previously filed as
Exhibit 10(m)(5) to Annual Report on Form 10-K for
the year ended December 31, 1996, and incorporated
herein by reference.
10(j)(1) Huntington Bancshares Incorporated 1990 Stock Option
Plan -- reference is made to Exhibit 4(a) of
Registration Statement on Form S-8, Registration No.
33-37373, filed with the Securities and Exchange
Commission on October 18, 1990, and incorporated
herein by reference.
10(j)(2) First Amendment to the Huntington Bancshares
Incorporated 1990 Stock Option Plan -- previously
filed as Exhibit 10(q)(2) to Annual Report on Form
10-K for the year ended December 31, 1991, and
incorporated herein by reference.
10(j)(3) Second Amendment to the Huntington Bancshares
Incorporated 1990 Stock Option Plan -- previously
filed as Exhibit 10(n)(3) to Annual Report on Form
10-K for the year ended December 31, 1996, and
incorporated herein by reference.
10(k)(1) The Huntington Supplemental Stock Purchase and Tax
Savings Plan and Trust (as amended and restated as of
February 9, 1990) -- previously filed as Exhibit 4(a)
to Registration Statement on Form S-8, Registration
No. 33-44208, filed with the Securities and Exchange
Commission on November 26, 1991, and incorporated
herein by reference.
<PAGE> 117
10(k)(2) First Amendment to the Huntington Supplemental Stock
Purchase and Tax Savings Plan and Trust -- previously
filed as Exhibit 10(o)(2) to Annual Report on Form
10-K for the year ended December 31, 1997, and
incorporated herein by reference.
10(l) Huntington Bancshares Incorporated Deferred
Compensation Plan and Trust for Huntington Bancshares
Incorporated Directors -- reference is made to
Exhibit 4(a) of Registration Statement on Form S-8,
Registration No. 33-41774, filed with the Securities
and Exchange Commission on July 19, 1991, and
incorporated herein by reference.
10(m) Huntington Bancshares Incorporated Retirement Plan
For Outside Directors -- previously filed as Exhibit
10(t) to Annual Report on Form 10-K for the year
ended December 31, 1992, and incorporated herein by
reference.
10(n) Restated Huntington Supplemental Retirement Income
Plan -- previously filed as Exhibit 10(n) to Annual
Report on Form 10-K for the year ended December 31,
1999, and incorporated herein by reference.
10(o) Huntington Bancshares Incorporated Amended and
Restated 1994 Stock Option Plan -- reference is made
to Exhibit 10(r) to Annual Report on Form 10-K for
the year ended December 31, 1996, and incorporated
herein by reference.
21 Subsidiaries of the Registrant -- previously filed as
previously filed as Exhibit 21 to Annual Report on
Form 10-K for the year ended December 31, 1999, and
incorporated herein by reference
23(a) Consent of Porter, Wright, Morris & Arthur LLP
(included in Exhibits 5 and 8 filed herewith).
23(b) * Consent of Ernst & Young LLP regarding the report on
financial statements of Huntington Bancshares
Incorporated.
23(c) * Consent of Crowe, Chizek and Company LLP regarding
the report on financial statements of Empire Banc
Corporation.
23(d) * Consent of McConnell, Budd & Downes, Inc.
24 * Powers of Attorney.
99(a) * Form of Proxy Card for Special Meeting of
Shareholders of Empire Banc Corporation.
99(b) * Notice of Special Meeting of Shareholders of Empire
Banc Corporation.
- ---------------------
* Filed herewith
(b) FINANCIAL STATEMENT SCHEDULES
None.
(c) REPORT, OPINION, OR APPRAISAL
The opinion of McConnell, Budd & Downes, Inc., Empire's
financial advisor, is attached as Exhibit C to the proxy
statement/prospectus filed as a part of this Registration
Statement.
<PAGE> 118
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of the Rule 145(c),
the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
The Registrant undertakes that every prospectus (i) that is filed
pursuant to the immediately preceding paragraph, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the Registration Statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Registration Statement, within one business
day of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
<PAGE> 119
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Columbus,
State of Ohio, on April 19, 2000.
HUNTINGTON BANCSHARES INCORPORATED
By: /s/ Richard A. Cheap
-----------------------------------
Richard A. Cheap
Secretary and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
*Frank Wobst Chairman and Chief Executive Officer )
- ----------------------------- )
Frank Wobst (Principal Executive Officer) )
)
)
*Anne Creek Executive Vice President, Treasurer, and )
- ----------------------------- Chief Financial Officer )
Anne Creek (Principal Financial Officer and Principal )
Accounting Officer) )
)
)
*Don M. Casto, III Director )
- ----------------------------- )
Don M. Casto, III )
)
)
Director ) April 19, 2000
- ----------------------------- )
Don Conrad )
)
)
*Patricia T. Hayot Director )
- ----------------------------- )
Patricia T. Hayot )
)
)
*Wm. J. Lhota Director )
- ----------------------------- )
Wm. J. Lhota )
)
)
*Robert H. Schottenstein Director )
- ----------------------------- )
Robert H. Schottenstein )
)
)
*George A. Skestos Director )
- ----------------------------- )
George A. Skestos )
)
)
</TABLE>
<PAGE> 120
<TABLE>
<S> <C> <C>
*Lewis R. Smoot, Sr. Director )
- ----------------------------- )
Lewis R. Smoot, Sr. )
)
)
*Timothy P. Smucker Director )
- ----------------------------- )
Timothy P. Smucker )
)
)
*William J. Williams Director ) April 19, 2000
- ----------------------------- )
William J. Williams )
)
)
*John B. Gerlach, Jr. Director )
- ----------------------------- )
John B. Gerlach, Jr. )
)
)
*Peter Geier Director )
- ----------------------------- )
Peter Geier )
</TABLE>
*By: /s/ Richard A. Cheap
---------------------
Richard A. Cheap, attorney-in-fact
for each of the persons indicated
<PAGE> 121
EXHIBIT INDEX
-------------
EXHIBIT
NO. DESCRIPTION
2(a) Agreement and Plan of Merger, dated February 4, 2000,
between Huntington Bancshares Incorporated and Empire
Banc Corporation and Amendment to Agreement and Plan
of Merger, dated April 12, 2000, between Huntington
Bancshares Incorporated and Empire Banc Corporation
(attached as Exhibit A to the proxy
statement/prospectus filed as a part of this
Registration Statement).
2(b) Supplemental Agreement, dated February 4, 2000,
between Huntington Bancshares Incorporated and Empire
Banc Corporation (attached as Exhibit B to the
Prospectus filed as a part of this Registration
Statement).
2(c) * Warrant Purchase Agreement, dated February 4, 2000,
between Huntington Bancshares Incorporated and Empire
Banc Corporation.
2(d) * Warrant to Purchase 630,080 shares of Empire Banc
Corporation common stock, dated February 4, 2000.
3(i)(a) Articles of Restatement of Charter, Articles of
Amendment to Articles of Restatement of Charter, and
Articles Supplementary -- previously filed as Exhibit
3(i) to Annual Report on Form 10-K for the year ended
December 31, 1993, and incorporated herein by
reference.
3(i)(b) Articles of Amendment to Articles of Restatement of
Charter -- previously filed as Exhibit 3(i)(b) to
Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996, and incorporated herein by reference.
3(i)(c) Articles of Amendment to Articles of Restatement of
Charter -- previously filed as Exhibit 3(i)(c) to
Quarter Report on Form 10-Q for the quarter ended
March 31, 1998, and incorporated herein by reference.
3(ii) Amended and Restated Bylaws -- previously filed as
Exhibit 3(ii) to Quarterly Report on Form 10-Q for
the quarter ended September 30, 1999, and
incorporated herein by reference.
4(a) Instruments defining the Rights of Security Holders
-- reference is made to Articles Fifth, Eighth, and
Tenth of Articles of Restatement of Charter, as
amended and supplemented. Instruments defining the
rights of holders of long-term debt will be furnished
to the Securities and Exchange Commission upon
request.
4(b) Rights Plan, dated February 22, 1990, between
Huntington Bancshares Incorporated and The Huntington
Trust Company, National Association, -- previously
filed as Exhibit 1 to Registration Statement on Form
8-A, filed with the Securities and Exchange
Commission on February 22, 1990, and incorporated
herein by reference.
4(c) Amendment No. 1 To Rights Plan, dated August 16,
1995, between Huntington Bancshares Incorporated and
The Huntington Trust Company, National Association --
previously filed as Exhibit 4(b) to Current Report on
Form 8-K, filed with the Securities and Exchange
Commission on August 28, 1995, and incorporated
herein by reference.
5 * Opinion of Porter, Wright, Morris & Arthur LLP
regarding legality.
<PAGE> 122
8 * Opinion of Porter, Wright, Morris & Arthur LLP
regarding tax matters.
10(a) Employment Agreement, dated April 25, 1996, between
Huntington Bancshares Incorporated and Frank Wobst --
previously filed as Exhibit 10(a) to Quarterly Report
on Form 10-Q for the quarterly period ended June 30,
1996, and incorporated herein by reference.
10(b) Form of Tier I Executive Agreement for certain
executive officers -- previously filed as Exhibit
10(b) to Annual Report on Form 10-K for the year
ended December 31, 1998, and incorporated herein by
reference.
10(c) Form of Tier II Executive Agreement for certain
executive officers -- previously filed as Exhibit
10(c) to Annual Report on Form 10-K for the year
ended December 31, 1998, and incorporated herein by
reference.
10(d) Schedule identifying material details of Executive
Agreements, substantially similar to Exhibits 10(b)
and 10(c) -- previously filed as Exhibit 10(d) to
Annual Report on Form 10-K for the year ended
December 31, 1999, and incorporated herein by
reference
10(e) Huntington Bancshares Incorporated Amended and
Restated Incentive Compensation Plan, effective for
performance cycles beginning on or after January 1,
1999 -- previously filed as Exhibit 10(e) to Annual
Report on Form 10-K for the year ended December 31,
1998, and incorporated herein by reference.
10(f) Amended and Restated Long-Term Incentive Compensation
Plan, effective for performance cycles beginning on
or after January 1, 1999 -- previously filed as
Exhibit 10(f) to Annual Report on Form 10-K for the
year ended December 31, 1998, and incorporated herein
by reference.
10(g)(1) Supplemental Executive Retirement Plan with First and
Second Amendments -- previously filed as Exhibit
10(g) to Annual Report on Form 10-K for the year
ended December 31, 1987, and incorporated herein by
reference.
10(g)(2) Third Amendment to Supplemental Executive Retirement
Plan -- previously filed as Exhibit 10(k)(2) to
Annual Report on Form 10-K for the year ended
December 31, 1997, and incorporated herein by
reference.
10(g)(3) Fourth Amendment to Supplemental Executive Retirement
Plan -- previously filed as an Exhibit 10(g)(3) to
Annual Report on Form 10-K for the year ended
December 31, 1999, and incorporated herein by
reference.
10(h) Deferred Compensation Plan and Trust for Directors --
reference is made to Exhibit 4(a) of Post-Effective
Amendment No. 2 to Registration Statement on Form
S-8, Registration No. 33-10546, filed with the
Securities and Exchange Commission on January 28,
1991, and incorporated herein by reference.
10(i)(1) Huntington Bancshares Incorporated 1983 Stock Option
Plan -- reference is made to Exhibit 4A of
Registration Statement on Form S-8, Registration No.
2-89672, filed with the Securities and Exchange
Commission on February 27, 1984, and incorporated
herein by reference.
10(i)(2) Huntington Bancshares Incorporated 1983 Stock Option
Plan -- Second Amendment -- previously filed as
Exhibit 10(j)(2) to Annual Report on Form 10-K for
the year ended December 31, 1987, and incorporated
herein by reference.
<PAGE> 123
10(i)(3) Huntington Bancshares Incorporated 1983 Stock Option
Plan -- Third Amendment -- previously filed as
Exhibit 10(j)(3) to Annual Report on Form 10-K for
the year ended December 31, 1987, and incorporated
herein by reference.
10(i)(4) Huntington Bancshares Incorporated 1983 Stock Option
Plan -- Fourth Amendment -- previously filed as
Exhibit 10(m)(4) to Annual Report on Form 10-K for
the year ended December 31, 1993, and incorporated
herein by reference.
10(i)(5) Huntington Bancshares Incorporated 1983 Stock Option
Plan -- Fifth Amendment -- previously filed as
Exhibit 10(m)(5) to Annual Report on Form 10-K for
the year ended December 31, 1996, and incorporated
herein by reference.
10(j)(1) Huntington Bancshares Incorporated 1990 Stock Option
Plan -- reference is made to Exhibit 4(a) of
Registration Statement on Form S-8, Registration No.
33-37373, filed with the Securities and Exchange
Commission on October 18, 1990, and incorporated
herein by reference.
10(j)(2) First Amendment to the Huntington Bancshares
Incorporated 1990 Stock Option Plan -- previously
filed as Exhibit 10(q)(2) to Annual Report on Form
10-K for the year ended December 31, 1991, and
incorporated herein by reference.
10(j)(3) Second Amendment to the Huntington Bancshares
Incorporated 1990 Stock Option Plan -- previously
filed as Exhibit 10(n)(3) to Annual Report on Form
10-K for the year ended December 31, 1996, and
incorporated herein by reference.
10(k)(1) The Huntington Supplemental Stock Purchase and Tax
Savings Plan and Trust (as amended and restated as of
February 9, 1990) -- previously filed as Exhibit 4(a)
to Registration Statement on Form S-8, Registration
No. 33-44208, filed with the Securities and Exchange
Commission on November 26, 1991, and incorporated
herein by reference.
10(k)(2) First Amendment to the Huntington Supplemental Stock
Purchase and Tax Savings Plan and Trust -- previously
filed as Exhibit 10(o)(2) to Annual Report on Form
10-K for the year ended December 31, 1997, and
incorporated herein by reference.
10(l) Huntington Bancshares Incorporated Deferred
Compensation Plan and Trust for Huntington Bancshares
Incorporated Directors -- reference is made to
Exhibit 4(a) of Registration Statement on Form S-8,
Registration No. 33-41774, filed with the Securities
and Exchange Commission on July 19, 1991, and
incorporated herein by reference.
10(m) Huntington Bancshares Incorporated Retirement Plan
For Outside Directors -- previously filed as Exhibit
10(t) to Annual Report on Form 10-K for the year
ended December 31, 1992, and incorporated herein by
reference.
10(n) Restated Huntington Supplemental Retirement Income
Plan -- previously filed as Exhibit 10(n) to Annual
Report on Form 10-K for the year ended December 31,
1999, and incorporated herein by reference.
10(o) Huntington Bancshares Incorporated Amended and
Restated 1994 Stock Option Plan -- reference is made
to Exhibit 10(r) to Annual Report on Form 10-K for
the year ended December 31, 1996, and incorporated
herein by reference.
21 Subsidiaries of the Registrant -- previously filed as
previously filed as Exhibit 21 to Annual Report on
Form 10-K for the year ended December 31, 1999, and
incorporated herein by reference.
<PAGE> 124
23(a) Consent of Porter, Wright, Morris & Arthur LLP
(included in Exhibits 5 and 8 filed herewith).
23(b) * Consent of Ernst & Young LLP regarding the report on
financial statements of Huntington Bancshares
Incorporated.
23(c) * Consent of Crowe, Chizek and Company LLP regarding
the report on financial statements of Empire Banc
Corporation.
23(d) * Consent of McConnell, Budd & Downes, Inc.
24 * Powers of Attorney.
99(a) * Form of Proxy Card for Special Meeting of
Shareholders of Empire Banc Corporation.
99(b) * Notice of Special Meeting of Shareholders of Empire
Banc Corporation.
- ---------------------
* Filed herewith
<PAGE> 1
EXHIBIT 2(C)
------------
WARRANT PURCHASE AGREEMENT
--------------------------
THIS WARRANT PURCHASE AGREEMENT (this "Agreement") is made as of
February 4, 2000, between HUNTINGTON BANCSHARES INCORPORATED, a Maryland
corporation ("Huntington"), and EMPIRE BANC CORPORATION, a Michigan corporation
("Empire").
RECITALS:
---------
A. Concurrently herewith, Huntington and Empire have entered into (1) a
certain Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides for the merger of Empire into Huntington (the
"Merger"), and (2) a certain Supplemental Agreement, dated as of the date
hereof, which contains certain additional terms and conditions relating to the
Merger (the "Supplemental Agreement"). The Merger Agreement and the Supplemental
Agreement are sometimes hereinafter collectively referred to as the "Merger
Documents." All capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Merger Documents.
B. As a condition to Huntington's entering into the Merger Agreement
and the Supplemental Agreement, and in consideration therefor, Empire has agreed
to issue to Huntington a warrant or warrants entitling Huntington to purchase up
to a total of 630,080 shares of Empire Common, on the terms and conditions set
forth herein.
AGREEMENT:
----------
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
SECTION 1. ISSUANCE, DELIVERY, AND EXERCISE OF THE WARRANT.
Concurrently with the execution of the Merger Documents and this Agreement,
Empire shall execute a warrant in favor of Huntington in the form attached as
Attachment A hereto (the "Warrant") to purchase up to a total of 630,080 shares
of Empire Common at a purchase price equal to $29.00 per share (the "Exercise
Price"), subject to adjustments as provided in the Warrant. (The holder of the
Warrant from time to time is referred to as the "Holder.") The Warrant shall be
exercisable in accordance with the terms and conditions set forth in this
Agreement.
SECTION 2. REGISTRATION RIGHTS. If, at any time after the Warrant
becomes exercisable in accordance with its terms, Empire shall receive a written
request therefor from the Holder, Empire shall prepare and file a registration
statement under the 1933 Act covering such number of shares of Empire Common as
the Holder shall specify in the request and shall use its best efforts to cause
such registration statement to become effective; provided, however, that the
Holder shall only have the right to request three such registrations. Without
the written consent of the Holder, neither Empire nor any other holder of
securities of Empire may include any other securities in such registration.
SECTION 3. "PIGGYBACK" RIGHTS. If, at any time after the Warrant
becomes exercisable in accordance with its terms, Empire shall determine to
proceed with the preparation and filing of a registration statement under the
1933 Act in connection with the proposed offer and sale for money of any of its
securities (other than in connection with a dividend reinvestment, employee
stock purchase, stock option, or similar plan or a registration statement on
Form S-4) by it or any of its security holders, Empire shall give written notice
thereof to the Holder. Upon the written request of the Holder given within ten
days after receipt of any such notice from Empire, Empire shall, except as
herein provided, cause all shares of Empire Common which the Holder shall
request be included in such registration statement to be so included; provided,
however, that nothing herein shall prevent Empire from abandoning or delaying
any registration at any time; and provided, further, that if Empire decides not
to proceed with a registration after the registration statement has been filed
with the SEC and Empire's decision not
1
<PAGE> 2
to proceed is primarily based upon the anticipated public offering price of the
securities to be sold by Empire, Empire shall promptly complete the registration
for the benefit of the Holder if the Holder agrees to bear all additional and
incremental expenses incurred by Empire as the result of such registration after
Empire has decided not to proceed. If any registration pursuant to this Section
shall be underwritten in whole or in part, the Holder may require that any
shares of Empire Common requested for inclusion pursuant to this Section be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. In the event that the shares of
Empire Common requested for inclusion pursuant to this Section would constitute
more than 25 percent of the total number of shares to be included in a proposed
underwritten public offering, and if in the good faith judgment of the managing
underwriter of such public offering the inclusion of all of such shares would
interfere with the successful marketing of the shares of being offered by
Empire, the number of shares otherwise to be included in the underwritten public
offering hereunder may be reduced; provided, however, that after any such
required reduction, the shares of Empire Common to be included in such offering
for the account of the Holder shall constitute at least 25 percent of the total
number of shares to be included in such offering.
SECTION 4. OBLIGATIONS OF EMPIRE IN CONNECTION WITH A REGISTRATION. If
and whenever Empire is required by the provisions of Sections 2 or 3 hereof to
effect the registration of any shares of Empire Common under the 1933 Act,
Empire shall:
(a) prepare and file with the SEC a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for such period as may be
reasonably necessary to effect the sale of such securities, not to exceed nine
months;
(b) prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for such period
as may be reasonably necessary to effect the sale of such securities, not to
exceed nine months;
(c) furnish to the Holder and to the underwriters of the
securities being registered such reasonable number of copies of the registration
statement, amendments thereto, preliminary prospectus, final prospectus, and
such other documents as the Holder or such underwriters may reasonably request
in order to facilitate the public offering of such securities;
(d) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue sky
laws of such jurisdictions as the Holder or such underwriters may reasonably
request; provided that Empire shall not be required by virtue hereof to submit
to the general jurisdiction of any state;
(e) notify the Holder, promptly after Empire shall receive
notice thereof, of the time when such registration statement or any
post-effective amendment thereof has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
(f) notify the Holder promptly of any request by the SEC for
the amending or supplementing of such registration statement or prospectus or
for additional information;
(g) prepare and file with the SEC, promptly upon the request
of the Holder, any amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for the Holder (and concurred in by
counsel for Empire), is required under the 1933 Act or the rules and regulations
promulgated thereunder in connection with the distribution of the shares of
Empire Common by the Holder;
(h) prepare and promptly file with the SEC such amendment or
supplement to such registration statement or prospectus as may be necessary to
correct any statements or omissions if, at the time when a prospectus is
required to be delivered under the 1933 Act, any event shall have occurred as
the result of which such prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances in which they
were made, not misleading;
2
<PAGE> 3
(i) advise the Holder, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued; and
(j) at the request of the Holder, furnish on the date or dates
provided for in the underwriting agreement: (1) an opinion or opinions of the
counsel representing Empire for the purposes of such registration, addressed to
the underwriters and to the Holder, covering such matters as such underwriters
and the Holder may reasonably request and as are customarily covered by issuer's
counsel at that time; and (2) a letter or letters from the independent certified
public accountants of Empire, addressed to the underwriters and to the Holder,
covering such matters as such underwriters or the Holder may reasonably request,
in which letters such accountants shall state (without limiting the generality
of the foregoing) that they are independent certified public accountants within
the meaning of the 1933 Act and that, in the opinion of such accountants, the
financial statements and other financial data of Empire included in the
registration statement or any amendment or supplement thereto comply in all
material respects with the applicable accounting requirements of the 1933 Act.
SECTION 5. EXPENSES OF REGISTRATION. With respect to a registration
requested pursuant to Section 2 hereof and with respect to each inclusion of
shares of Empire Common in a registration statement pursuant to Section 3
hereof, Empire shall bear the following fees, costs, and expenses: all
registration, stock exchange listing or NASD fees, printing expenses, fees and
disbursements of counsel and accountants for Empire, fees and disbursements of
counsel for the underwriter or underwriters of such securities (if Empire and/or
the Holder are required to bear such fees and disbursements), and all legal fees
and disbursements and other expenses of complying with state securities or blue
sky laws of any jurisdictions in which the securities to be offered are to be
registered or qualified. Fees and disbursements of counsel and accountants for
the Holder, underwriting discounts and commissions and transfer taxes relating
to the Empire Common being sold for the Holder, and any other expenses incurred
by the Holder not expressly included above shall be borne by the Holder.
SECTION 6. INDEMNIFICATION.
(a) Empire shall indemnify and hold harmless the Holder, any
underwriter (as defined in the 1933 Act) for the Holder, and each person, if
any, who controls the Holder or such underwriter within the meaning of the 1933
Act, from and against any and all loss, damage, liability, cost, and expense to
which the Holder or any such underwriter or controlling person may become
subject under the 1933 Act or otherwise, insofar as such losses, damages,
liabilities, costs, or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
filed pursuant to Section 4 hereof, any prospectus or preliminary prospectus
contained therein, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they are made, not misleading; provided,
however, that Empire will not be liable in any such case to the extent that any
such loss, damage, liability, cost, or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by the Holder, such underwriter,
or such controlling persons in writing specifically for use in the preparation
thereof.
(b) Promptly after receipt by an indemnified party pursuant to
the provisions of paragraph (a) of this Section 6 of notice of the commencement
of any action involving the subject matter of the foregoing indemnity
provisions, such indemnified party shall, if a claim thereof is to be made
against Empire pursuant to the provision of such paragraph (a), promptly notify
Empire of the commencement thereof; but the omission to so notify Empire will
not relieve it from any liability which it may have to any indemnified party
otherwise hereunder. In case such action is brought against any indemnified
party and such indemnified party notifies Empire of the commencement thereof,
Empire shall have the right to participate in and, to the extent that it may
wish to do so, to assume the defense thereof, with counsel satisfactory to such
indemnified party; provided, however, if the defendants in any action include
both the indemnified party and Empire and there is a conflict of interest which
would prevent counsel for Empire from also representing the indemnified party,
the indemnified party or parties shall have the right to select one separate
counsel to participate in the defense of such action on behalf of such
indemnified party or parties. After notice from Empire to such indemnified party
of its election so to assume the defense of any such action, the indemnified
party shall have the right to participate in such action and to retain its
3
<PAGE> 4
own counsel, but Empire shall not be required to indemnify and hold harmless the
indemnified party pursuant to the provisions of such paragraph (a) for any legal
fees or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, other than reasonable costs of
investigation, unless (1) the indemnified party shall have employed separate
counsel in accordance with the provisions of the preceding sentence of this
paragraph (b), (2) Empire shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after the notice of the commencement of the action, or (3) Empire has authorized
the employment of counsel for the indemnified party at the expense of Empire.
(c) If recovery is not available under the foregoing
indemnification provisions, for any reason other than as specified therein, the
parties entitled to indemnification by the terms thereof shall be entitled to
contribution to liabilities and expenses, except to the extent that contribution
is not permitted under Section 11(f) of the 1933 Act. In determining the amount
of contribution to which the respective parties are entitled, there shall be
considered the parties' relative knowledge and access to information concerning
the matter with respect to which the claim was asserted, the opportunity to
correct and prevent any statement or omission, and any other equitable
considerations appropriate under the circumstances.
SECTION 7. REPURCHASE RIGHTS.
(a) At any time after the Warrant becomes exercisable and
prior to the expiration of the Warrant, in accordance with the terms thereof:
(1) Empire may, and upon the written request of the
Holder, Empire shall, repurchase the Warrant from the Holder at a price (the
"Warrant Repurchase Price") equal to the difference between the "Market/Offer
Price" (as defined in paragraph (b) below) and the Exercise Price, multiplied by
the number of shares for which the Warrant may then be exercised, in the
aggregate, but only if the Market/Offer Price is greater than the Exercise
Price; and
(2) Empire may, and upon the written request of the
owner (the "Owner") of any shares of Empire Common purchased pursuant to an
exercise of the Warrant ("Warrant Stock"), Empire shall, repurchase all of the
shares of Warrant Stock held by such Owner at a price (the "Warrant Stock
Repurchase Price") equal to the number of shares to be repurchased hereunder
multiplied by the greater of the Exercise Price and the Market/Offer Price.
(b) For purposes of Section 7(a), the "Market/Offer Price"
shall mean the highest of (1) the price per share at which a tender offer or
exchange offer for shares of Empire Common has been made, (2) the price per
share of Empire Common to be paid by any third party pursuant to an agreement
with Empire, and (3) the highest closing price for shares of Empire Common
within the 4-month period immediately preceding the date the Holder gives notice
of the required repurchase of the Warrant or the Owner gives notice of the
required repurchase of Warrant Stock, as appropriate. In the event that an
exchange offer is made or an agreement is entered into for a merger or
consolidation involving consideration other than cash, the value of the
securities or other property issuable or deliverable in exchange for Empire
Common shall be determined by a nationally recognized investment banking firm
mutually acceptable to the parties hereto.
(c) The Holder and the Owner may exercise their respective
rights to require Empire to repurchase the Warrant or the Warrant Stock pursuant
to this Section 7 by surrendering for such purpose to Empire, at its principal
office, the Warrant or certificates for shares of Warrant Stock, as the case may
be, free and clear of any liens, claims, encumbrances, or rights of third
parties of any kind, accompanied by a written notice or notices stating that the
Holder or the Owner, as the case may be, requests Empire to repurchase such
Warrant or Warrant Stock in accordance with the provisions of this Section 7.
Subject to the last proviso of Section 7(d) below, as promptly as practicable,
and in any event within five business days after the surrender of the Warrant or
certificates representing shares of Warrant Stock and the receipt of such notice
or notices relating thereto, Empire shall deliver or cause to be delivered to
the Holder or Owner the Warrant Repurchase Price or the Warrant Stock Repurchase
Price therefor, as applicable, or the portion thereof which Empire is not then
prohibited under applicable law and regulation from so delivering.
4
<PAGE> 5
(d) To the extent that Empire is prohibited under applicable
law or regulation, or as a result of administrative or judicial action, from
repurchasing the Warrant and/or the Warrant Stock in full at any time that it
may be required to do so hereunder, Empire 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
Warrant Repurchase Price and the Warrant Stock Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five business days
after the date on which Empire is no longer so prohibited. Upon receipt of such
notice from Empire and for a period of 15 days thereafter, the Holder and/or
Owner may revoke its notice of repurchase of the Warrant and/or Warrant Stock by
written notice to Empire at its principal office stating that the Holder and/or
the Owner elects to revoke its election to exercise its right to require Empire
to repurchase the Warrant and/or Warrant Stock, whereupon Empire will promptly
deliver to the Holder and/or Owner the Warrant and/or certificates representing
shares of Warrant Stock surrendered to Empire for purposes of such repurchase.
Whether or not such election is revoked, Empire hereby agrees to use its best
efforts to obtain all required legal and regulatory approvals necessary to
permit Empire to repurchase the Warrant and/or the Warrant Stock as promptly as
practicable.
SECTION 8. ASSUMPTION OF OBLIGATIONS UNDER THIS AGREEMENT. Empire will
not enter into any transaction described in Section 5(a) of the Warrant unless
the "Acquiring Corporation" (as that term is defined in the Warrant) assumes in
writing all the obligations of Empire hereunder.
SECTION 9. REMEDIES. Without limiting the foregoing or any remedies
available to the Holder, Empire specifically acknowledges that neither
Huntington nor any successor holder of the Warrant would have an adequate remedy
at law for any breach of this Warrant Purchase Agreement and Empire hereby
agrees that Huntington and any successor holder of the Warrant shall be entitled
to specific performance of the obligations of Empire hereunder and injunctive
relief against actual or threatened violations of the provisions hereof.
SECTION 10. TERMINATION. This Agreement will terminate upon a
termination of the Warrant in accordance with Section 9 thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant
Purchase Agreement as of the day and year first above written.
HUNTINGTON BANCSHARES
INCORPORATED
By: /s/ Richard A. Cheap
-----------------------------------
Richard A. Cheap
General Counsel and Secretary
EMPIRE BANC CORPORATION
By: /s/ James E. Dutmers, Jr.
-----------------------------------
James E. Dutmers, Jr.,
Chairman and Chief Executive Officer
5
<PAGE> 1
EXHIBIT 2(D)
------------
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED WITHOUT BEING SO REGISTERED OR QUALIFIED UNLESS AN EXEMPTION OR
EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS ARE AVAILABLE.
WARRANT
-------
TO PURCHASE 630,080 COMMON SHARES
OF
EMPIRE BANC CORPORATION
This is to certify that, for value received, HUNTINGTON BANCSHARES
INCORPORATED, a Maryland corporation ("Huntington"), is entitled to purchase
from EMPIRE BANC CORPORATION, a Michigan corporation ("Empire"), at any time on
or after the date hereof, an aggregate of up to 630,080 common shares, without
par value, of Empire ("Empire Common"), at a price of $29.00 per share (the
"Exercise Price"), subject to the terms and conditions of this Warrant and a
certain Warrant Purchase Agreement, of even date herewith, between Huntington
and Empire (the "Warrant Purchase Agreement"). The number of shares of Empire
Common which may be received upon the exercise of this Warrant and the Exercise
Price are subject to adjustment from time to time as hereinafter set forth. The
terms and conditions set forth in this Warrant and the Warrant Purchase
Agreement shall be binding upon the respective successors and assigns of both of
the parties hereto. This Warrant is issued in connection with a certain
Agreement and Plan of Merger, dated as of the date hereof, between Huntington
and Empire (the "Merger Agreement"), which provides for the merger of Empire
into Huntington (the "Merger"), and a certain Supplemental Agreement between
Huntington and Empire, which provides certain additional terms and conditions
relating to the Merger (the "Supplemental Agreement"). (The Merger Agreement and
the Supplemental Agreement are sometimes hereinafter collectively referred to as
the "Merger Documents.") All capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Merger Documents.
The term "Holder" shall mean and refer to Huntington or any successor holder of
this Warrant.
SECTION 1. EXERCISE OF THE WARRANT.
(a) The Holder will not exercise this Warrant unless it has
obtained all required approvals, if any, of appropriate regulatory authorities
having jurisdiction, including the Federal Reserve Board, pursuant to all
applicable laws and regulations. Further, subject to the terms and conditions
set forth in this Warrant and in the Warrant Purchase Agreement and the
provisions of applicable law, the Holder will not exercise this Warrant without
the written consent of Empire except upon the occurrence of any of the following
events (a "Triggering Event"):
(1) any material, willful, and intentional breach of the Merger
Documents by Empire that would permit Huntington to terminate
the Merger Documents (A) occurring after the receipt by Empire
after February 4, 2000, of a proposal to engage in an
Acquisition Transaction, (B) occurring after the announcement
by any other Person of an intention to engage in an
Acquisition Transaction, or (C) in anticipation and for the
purpose of engaging in an Acquisition Transaction;
(2) (A) a proposal to engage in an Acquisition Transaction is
submitted to and approved by the shareholders of Empire at any
time prior to January 31, 2001, or (B) a Tender Offer is
commenced and the transactions contemplated in the Tender
Offer are completed in such a manner that the Person making
the Tender Offer acquires beneficial ownership of more
1
<PAGE> 2
than 20 percent of the capital stock or any other class of
voting securities of Empire, and the Merger is not consummated
prior to January 31, 2001; or
(3) (A) a proposal to engage in an Acquisition Transaction is
received by Empire after February 4, 2000, or a Tender Offer
is made directly to the shareholders of Empire or the
intention of making an Acquisition Transaction or a Tender
Offer is announced at any time prior to the holding of the
Empire Shareholders' Meeting; (B) the Board of Directors of
Empire (1) fails to recommend to the shareholders of Empire
that they vote their shares of Empire Common in favor of the
approval of the Merger, (2) withdraws such recommendation
previously made, (3) fails to solicit proxies of shareholders
of Empire to approve the Merger, or (4) fails to hold the
Empire Shareholders' Meeting; and (C) the Merger is not
consummated by January 31, 2001.
(b) Notwithstanding the foregoing, this Warrant shall not be
exercisable in the event of the failure to consummate the Merger solely as a
result of any of the following: (1) the failure of any Regulatory Authority to
provide any required Consent to the Merger, which failure was not the result of
the existence of the Acquisition Proposal or a breach by Empire of any of its
obligations under any of the Merger Documents; or (2) the Merger Documents are
terminated pursuant to Section 9.1 of the Supplemental Agreement, unless the
event giving rise to the right to terminate is preceded by a Triggering Event or
the receipt by Empire after February 4, 2000, of an Acquisition Transaction
proposal, or the announcement by another Person of a proposal involving an
Acquisition Transaction. For purposes of this Section 1, a Tender Offer which is
contingent upon the expiration of the Warrant is deemed to commence when it is
announced. Empire represents to the Holder that, except with respect to the
Merger Documents, there are no proposals or offers to engage in an Acquisition
Transaction previously received by Empire which remain outstanding as of the
close of business on February 4, 2000. Any breach of this representation by
Empire will cause any such proposal or offer, whether in its original form or as
amended, to be deemed to be received by Empire after February 4, 2000, for
purposes of this Section 1.
(c) This Warrant shall be exercised by presentation and
surrender hereof to Empire at its principal office accompanied by (1) a written
notice of exercise for a specified number of shares of Empire Common, (2)
payment to Empire, for the account of Empire, of the Exercise Price for the
number of shares specified in such notice, and (3) a certificate of the Holder
indicating the Triggering Event that has occurred which entitles the Holder to
exercise this Warrant. The Exercise Price for the number of shares of Empire
Common specified in the notice shall be payable in immediately available funds.
(d) Upon such presentation and surrender, Empire shall issue
promptly (and within three business days if requested by the Holder) to the
Holder, or any assignee, transferee, or designee permitted by Section 1(f), the
shares to which the Holder is entitled hereunder.
(e) If this Warrant should be exercised in part only, Empire
shall, upon surrender of this Warrant for cancellation, execute and deliver a
new Warrant evidencing the rights of the Holder thereof to purchase the balance
of the shares purchasable hereunder. Upon receipt by Empire of this Warrant, in
proper form for exercise, the Holder shall be deemed to be the holder of record
of the shares of Empire Common issuable upon such exercise, notwithstanding that
the stock transfer books of Empire shall then be closed or that certificates
representing such shares of Empire Common shall not then be actually delivered
to the Holder. Empire shall pay all expenses, and any and all 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 1 in
the name of the Holder or of any assignee, transferee, or designee permitted by
Section 1(f).
(f) This Warrant, once exercisable, or any warrant shares
acquired by the Holder by its exercise, may be sold or transferred in whole or
in part to any person, subject to the receipt by such person of approvals of
appropriate regulatory authorities having jurisdiction, including the Federal
Reserve Board, pursuant to all applicable laws and regulations, to the extent
required.
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<PAGE> 3
SECTION 2. CERTAIN COVENANTS AND REPRESENTATIONS OF EMPIRE.
(a) Empire shall at all times maintain sufficient authorized
but unissued shares of Empire Common so that this Warrant may be exercised
without additional authorization of the holders of Empire Common, after giving
effect to all other options, warrants, convertible securities, and other rights
to purchase Empire Common.
(b) Empire represents and warrants to the Holder that the
shares of Empire Common issued upon an exercise of this Warrant will be duly
authorized, fully paid, non-assessable, and subject to no preemptive rights.
(c) Empire agrees (1) 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 Empire; (2) promptly to take all action as may from
time to time be required, including, without limitation (A) complying with all
pre-merger notification, reporting, and waiting period requirements specified in
15 U.S.C. Section 18a and regulations promulgated thereunder, and (B) in the
event, under the Bank Holding Company Act of 1956, as amended (the "Bank Holding
Company Act"), or the Change in Bank Control Act of 1978, or other statute, the
prior approval of the Federal Reserve Board or other regulatory agency
(collectively, the "Agencies"), is necessary before the Warrant may be exercised
or transferred, cooperate fully with the Holder in preparing such applications
and providing such information to the Agencies as the Agencies may require in
order to permit the Holder to exercise or transfer this Warrant and Empire duly
and effectively to issue shares pursuant to the exercise hereof; and (3)
promptly to take all action provided herein to protect the rights of the Holder
against dilution.
SECTION 3. FRACTIONAL SHARES. Empire shall not be required to issue
fractional shares of Empire Common upon an exercise of this Warrant but shall
pay for such fraction of a share in cash or by certified or official bank check
at the Exercise Price.
SECTION 4. EXCHANGE OR LOSS OF WARRANT. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
hereof at the principal office of Empire for other Warrants of different
denominations entitling the Holder thereof to purchase in the aggregate the same
number of shares of Empire Common purchasable hereunder. The term "Warrant" as
used herein includes any warrants for which this Warrant may be exchanged. Upon
receipt by Empire of evidence reasonably satisfactory to it of the loss, theft,
destruction, or mutilation of this Warrant, and (in the case of loss, theft, or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Warrant, if mutilated, Empire will execute and deliver a
new Warrant of like tenor and date. Any such new Warrant executed and delivered
shall constitute an additional contractual obligation on the part of Empire,
whether or not the Warrant so lost, stolen, destroyed, or mutilated shall at any
time be enforceable by anyone.
SECTION 5. CERTAIN TRANSACTIONS.
(a) In case Empire shall (1) consolidate with or merge into
any Person, other than Huntington or one of its Affiliates, and shall not be the
continuing or surviving corporation of such consolidation or merger, (2) permit
any Person, other than Huntington or one of its Affiliates, to merge into Empire
and Empire shall be the continuing or surviving corporation, but, in connection
with such merger, the then outstanding shares of Empire Common shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, or (3) sell or otherwise transfer all or substantially all
of its assets to any Person, other than Huntington or one of its Affiliates,
then, and in any such case, the agreement governing such transaction shall make
proper provision so that this Warrant shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, a warrant, at the option of the Holder, of either (A)
the Acquiring Corporation (as hereinafter defined), (B) any company which
controls the Acquiring Corporation, or (C) in the case of a merger described in
clause (a)(2) above, Empire, in which case such warrant shall be a newly issued
warrant (in any such case, the "Substitute Warrant").
(b) For purposes of this Section 5, the following terms have
the meanings indicated:
3
<PAGE> 4
(1) "Acquiring Corporation" shall mean (A) the
continuing or surviving corporation of a consolidation or merger with
Empire (if other than Empire), (B) the corporation merging into Empire
in a merger in which Empire is the continuing or surviving person and
in connection with which the then outstanding shares of Empire Common
are changed into or exchanged for stock or other securities of any
other Person or cash or any other property, or (C) the transferee of
all or substantially all of Empire's assets;
(2) "Substitute Common" shall mean the common stock
issued by the issuer of the Substitute Warrant;
(3) "Assigned Value" shall mean the Market/Offer
Price as determined pursuant to paragraph 7(b) of the Warrant Purchase
Agreement; provided, however, that in the event of a sale of all or
substantially all of Empire's assets, the Assigned Value shall be the
sum of the price paid in such sale for such assets and the current
market value of the remaining assets of Empire as determined by a
recognized investment banking firm selected by the Holder, divided by
the number of shares of Empire Common outstanding at the time of such
sale;
(4) "Average Price" shall mean the average closing
price of a share of Substitute Common 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
on the day preceding such consolidation, merger, or sale; provided that
if Empire is the issuer of the Substitute Warrant, the Average Price
shall be computed with respect to a share of the common stock issued by
the Person merging into Empire or by any company which controls such
Person, as the Holder may elect;
(5) A "Person" shall mean any individual, firm,
corporation, or other entity and include as well any syndicate or group
deemed to be a "person" by Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended; and
(6) "Affiliate" shall have the meaning ascribed to
such term in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended.
(c) The Substitute Warrant shall have the same terms as this
Warrant, provided that, if the terms of the Substitute Warrant cannot, for legal
reasons, be the same as this Warrant, such terms shall be as similar as possible
and in no event less advantageous to the Holder. The issuer of the Substitute
Warrant shall also enter into an agreement with the then Holder of the
Substitute Warrant in substantially the same form as the Warrant Purchase
Agreement, which shall be applicable to the Substitute Warrant.
(d) The Substitute Warrant shall be exercisable for such
number of shares of Substitute Common as is equal to the Assigned Value
multiplied by the number of shares of Empire Common for which this Warrant is
then exercisable, divided by the Average Price. The exercise price of the
Substitute Warrant per share of Substitute Common shall be equal to the Exercise
Price multiplied by a fraction in which the numerator is the number of shares of
Empire Common for which this Warrant is then exercisable and the denominator is
the number of shares of Substitute Common for which the Substitute Warrant is
exercisable.
SECTION 6. RIGHTS OF THE HOLDER; REMEDIES.
(a) The Holder shall not, by virtue hereof and prior to the
exercise hereof, be entitled to any rights of a holder of Empire Common.
(b) Without limiting the foregoing or any remedies available
to the Holder, Empire specifically acknowledges that neither Huntington nor any
successor Holder of this Warrant would have an adequate remedy at law for any
breach of this Warrant and Empire hereby agrees that Huntington and any
successor Holder shall be entitled to specific performance of the obligations of
Empire hereunder and injunctive relief against actual or threatened violations
of the provisions hereof.
4
<PAGE> 5
SECTION 7. ANTIDILUTION PROVISIONS. The number of shares of Empire
Common purchasable upon the exercise hereof shall be subject to adjustment from
time to time as provided in this Section 7.
(a) In the event that Empire issues any additional shares of
Empire Common at any time after the date hereof (including pursuant to stock
option plans), the number of shares of Empire Common which can be purchased
pursuant to this Warrant shall be increased by an amount equal to 19.9 percent
of the additional shares so issued.
(b) (1) In the event that, after the date hereof, Empire pays
or makes a dividend or other distribution of any class of capital stock of
Empire in Empire Common, the number of shares of Empire Common purchasable upon
exercise hereof shall be increased by multiplying such number of shares by a
fraction of which the denominator shall be the number of shares of Empire Common
outstanding at the close of business on the day immediately preceding the date
of such distribution and the numerator shall be the sum of such number of shares
and the total number of shares constituting such dividend or other distribution,
such increase to become effective immediately after the opening of business on
the day following such distribution.
(2) In the event that, after the date hereof, outstanding
shares of Empire Common are subdivided into a greater number of shares of Empire
Common, the number of shares of Empire Common purchasable upon exercise hereof
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately increased, and,
conversely, in the event that, after the date hereof, outstanding shares of
Empire Common are combined into a smaller number of shares of Empire Common, the
number of shares of Empire Common purchasable upon exercise hereof at the
opening of business on the day following the day upon which such combination
becomes effective shall be proportionately decreased, such increase or decrease,
as the case may be, to become effective immediately after the opening of
business on the day following the day upon which such subdivision or combination
becomes effective.
(3) The reclassification (including any reclassification upon
a merger in which Empire is the continuing corporation) of Empire Common into
securities including other than Empire Common shall be deemed to involve a
subdivision or combination, as the case may be, of the number of shares of
Empire Common outstanding immediately prior to such reclassification into the
number of shares of Empire Common outstanding immediately thereafter and the
effective date of such reclassification shall be deemed to be the day upon which
such subdivision or combination becomes effective, as the case may be, within
the meaning of clause (2) above.
(c) Whenever the number of shares of Empire Common purchasable
upon exercise hereof is adjusted pursuant to paragraph (b) above, the Exercise
Price shall be adjusted by multiplying the Exercise Price by a fraction the
numerator of which is equal to the number of shares of Empire Common purchasable
prior to the adjustment and the denominator of which is equal to the number of
shares of Empire Common purchasable after the adjustment.
(d) For the purpose of this Section 7, the term "Empire
Common" shall include any shares of Empire of any class or series which has no
preference or priority in the payment of dividends or in the distribution of
assets upon any voluntary or involuntary liquidation, dissolution, or winding up
of Empire and which is not subject to redemption by Empire.
SECTION 8. NOTICE.
(a) Whenever the number of shares of Empire Common for which
this Warrant is exercisable is adjusted as provided in Section 7 hereof, Empire
shall promptly compute such adjustment and mail to the Holder a certificate,
signed by a principal financial officer of Empire, setting forth the number of
shares of Empire Common for which this Warrant is exercisable and the adjusted
Exercise Price as a result of such adjustment, a brief statement of the facts
requiring such adjustment, the computation thereof, and when such adjustment
will become effective.
(b) Upon the occurrence of a Triggering Event, Empire shall
(1) promptly notify the Holder and/or the "Owner" (as that term is defined in
the Warrant Purchase Agreement) of such event, (2) promptly compute the "Warrant
Repurchase Price" and the "Warrant Stock Repurchase Price" (as such terms are
defined in the Warrant Purchase Agreement), and (3) furnish to the Holder and/or
the Owner a certificate, signed by the chief
5
<PAGE> 6
financial officer of Empire setting forth the Warrant Repurchase Price and/or
the Warrant Stock Repurchase Price and the basis and computation thereof.
(c) Upon the occurrence of an event which results in this
Warrant becoming convertible into, or exchangeable for, the Substitute Warrant,
as provided in Section 5 hereof, Empire and the Acquiring Corporation shall
promptly notify the Holder of such event; and, upon receipt from the Holder of
its choice as to the issuer of the Substitute Warrant, the Acquiring Corporation
shall promptly compute the number of shares of Substitute Common for which the
Substitute Warrant is exercisable and furnish to the Holder a certificate,
signed by a principal financial officer of the Acquiring Corporation, setting
forth the number of shares of Substitute Common for which the Substitute Warrant
is exercisable, the Substitute Warrant exercise price, a computation thereof,
and when such adjustment will become effective.
SECTION 9. TERMINATION. This Warrant and the rights conferred hereby
shall terminate upon the earliest of (1) six months after the occurrence of a
Triggering Event, (2) the Effective Date of the Merger, (3) the date of
termination of the Merger Documents unless the event giving rise to the right to
terminate is preceded by a Triggering Event or the receipt by Empire, or the
announcement by another Person, of a proposal involving an Acquisition
Transaction or Tender Offer, or (4) March 31, 2001.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of
this 4th day of February, 2000.
ATTEST: EMPIRE BANC CORPORATION
By: /s/ William T. Fitzgerald, Jr. By:/s/ James E. Dutmers, Jr.
------------------------------- ------------------------------------
William T. Fitzgerald, Jr. James E. Dutmers, Jr.,
Title: Secretary Chairman and Chief Executive Officer
----------------------------
6
<PAGE> 1
EXHIBIT 5
---------
PORTER, WRIGHT, MORRIS & ARTHUR LLP
ATTORNEYS AND COUNSELORS AT LAW
41 SOUTH HIGH STREET
COLUMBUS, OHIO 43215-6194
Telephone: 614-227-2000
Fax: 614-227-2100
April 19, 2000
Huntington Bancshares Incorporated
41 South High Street
Columbus, Ohio 43287
Re: Acquisition of Empire Banc Corporation
Ladies and Gentlemen:
With respect to the Registration Statement on Form S-4 (the
"Registration Statement") to be filed by Huntington Bancshares Incorporated, a
Maryland corporation ("Huntington"), with the Securities and Exchange Commission
relating to the registration of 6,533,047 shares of Huntington's common stock,
without par value (the "Stock"), to be issued in connection with the proposed
merger (the "Merger") of Empire Banc Corporation, a Michigan corporation
("Empire"), with and into Huntington, we advise you as follows:
We are counsel for Huntington and have participated in the preparation
of the Registration Statement. We have reviewed the Agreement and Plan of
Merger, dated February 4, 2000, between Huntington and Empire, the Amendment to
the Agreement and Plan of Merger, dated April 12, 2000, between Huntington and
Empire, and the related Supplemental Agreement, dated February 4, 2000, between
Huntington and Empire (collectively, the "Merger Documents"), Huntington's
Articles of Restatement of Charter, Huntington's Bylaws, the corporate action
taken to date in connection with the Registration Statement and the issuance and
sale of the Stock, and such other documents and authorities as we deem relevant
for the purpose of this opinion.
Based upon the foregoing, we are of the opinion that:
(a) upon the proper approval of the Merger Documents by the
shareholders of Empire;
(b) upon the approval of the Merger by the appropriate regulatory
authorities and the expiration of all applicable waiting periods;
(c) upon compliance with the Securities Act of 1933, as amended, and
with the securities or "blue sky" laws of the states in which the Stock is to be
offered for sale; and
(d) upon the "Effective Time," as defined in the Merger Documents;
the Stock, when issued and delivered as provided in the Merger Documents in
accordance with the resolutions adopted by the Board of Directors of Huntington,
will be legally issued, fully paid, and nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Opinions" in the Prospectus included in the Registration Statement.
Very truly yours,
/s/ PORTER, WRIGHT, MORRIS & ARTHUR LLP
PORTER, WRIGHT, MORRIS & ARTHUR LLP
<PAGE> 1
EXHIBIT 8
---------
PORTER, WRIGHT, MORRIS & ARTHUR, LLP
ATTORNEYS AND COUNSELORS AT LAW
41 SOUTH HIGH STREET
COLUMBUS, OHIO 43215-6194
Telephone: 614-227-2000
Fax: 614-227-2100
April 19, 2000
Huntington Bancshares Incorporated
41 South High Street
Columbus, Ohio 43215
Empire Banc Corporation
1227 East Front Street
Traverse City, Michigan 49686
Gentlemen:
We have acted as counsel to Huntington Bancshares Incorporated, a
Maryland corporation (the "Company") in connection with the proposed statutory
merger (the "Merger") of Empire Banc Corporation, a Michigan corporation
("Empire"), with and into the Company, pursuant to which the shareholders of
Empire will receive common shares, without par value, of the Company ("Company
Shares") subject to the Agreement and Plan of Merger, as amended, and
Supplemental Agreement both dated as of February 4, 2000 between Empire and the
Company (the "Merger Agreement"), in exchange for their outstanding shares of
the capital stock of Empire ("Empire Shares"). At your request, we are rendering
our opinion concerning certain federal income tax consequences of the Merger.
Terms not otherwise defined herein shall have the same meaning as when used in
the Merger Agreement.
In that connection, we have examined and relied upon originals, or
copies certified or otherwise identified to our satisfaction, of such records,
documents, and other instruments, and such other matters of fact and law, as we
have considered necessary or appropriate for the purposes of this opinion,
including an examination of: (i) the Merger Agreement and the other documents
and agreements referred to therein; and (ii) the Proxy Statement/Prospectus (the
"Prospectus") relating to the Merger and included in the Registration Statement
of the Company on Form S-4 (the "Registration Statement") filed by the Company
with the Securities and Exchange Commission. In our examination, we have assumed
the legal capacity of all natural persons, the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the conformity
to the original documents of all documents submitted to us as certified or
photostatic copies, and the authenticity of the originals of such latter
documents.
For purposes of the opinions set forth below, we have assumed and are
relying upon the accuracy and completeness of the statements and representations
(which statements and representations we have neither investigated nor verified,
and upon which we are entitled to rely) contained, respectively, in certain
certificates of the officers of the Company and Empire. We have also assumed
that the transactions contemplated by the Merger Agreement will be consummated
in accordance with the Merger Agreement, the Merger will constitute a statutory
merger pursuant to the applicable provisions of the laws of the States of
Maryland and Michigan, the Subsidiary Merger will be respected as a separate
transaction, and the facts, statements, and other information contained in the
Prospectus relating to the Merger are true, correct, and complete in all
material respects.
The opinions set forth below are based upon, and the section numbers
cited herein refer to, the Internal Revenue Code of 1986, as amended (the
"Code"), the Treasury Regulations promulgated thereunder, the administrative
interpretations thereof and the judicial decisions with respect thereto, all as
currently in effect, and are
<PAGE> 2
Huntington Bancshares Incorporated
Empire Banc Corporation
April 19, 2000
Page 2
further based upon the continued accuracy and completeness of the documents,
certifications, and representations referred to in the two preceding paragraphs
as of the Effective Time.
In reliance on the assumptions and the representations set forth above,
we are of the opinion that:
(1) The Merger of Empire with and into the Company will constitute
a reorganization within the meaning of Section 368(a)(1)(A) of
the Code.
(2) Each of Empire and the Company will be a "party to a
reorganization" within the meaning of Section 368(b) of the
Code.
(3) The discussion contained in the Registration Statement under
the caption "Federal Income Tax Consequences" represents our
opinion as to the material federal income tax consequences of
the Merger.
We have given this opinion in connection with the transactions
contemplated by the Merger Agreement and such opinion is not to be relied upon
for any other purpose. This opinion may not be applicable to all shareholders,
including, without limitation, (1) an Empire shareholder whose Empire Shares are
not held as a capital asset; or (2) an Empire shareholder who is subject to
special treatment under the Code, including without limitation, an insurance
company, a dealer in securities, a financial institution, a tax-exempt investor,
or non-United States citizen. This opinion further assumes no shareholder
acquired Empire Shares in contemplation of or to effectuate the Merger.
In addition to the assumptions and exclusions above, no opinion is
expressed herein concerning the effect of state, local, and foreign tax laws.
Furthermore, no opinion is expressed herein about the tax treatment of the
transaction under other provisions of the Code or the Treasury Regulations
issued thereunder or about the tax treatment of any conditions existing at the
time of, or effects resulting from, the transaction that are not specifically
addressed by the foregoing opinion, including, without limitation, the
capitalization or deduction of payments or expenses relating to the Merger and
the exchange of any Empire Shares in the Merger that were acquired by the holder
pursuant to an employee stock option or employee stock purchase plan or
otherwise as compensation.
You should be aware that this opinion represents our conclusions as to
the application of existing law and is based on the certifications and
representations given as of the date hereof. The statutory provisions,
regulations, interpretations, and other authorities upon which our opinion is
based are subject to change, and such changes could apply retroactively. A
material change in any of the authorities upon which our opinion is based could
affect our conclusions herein. In addition, no advance ruling has been obtained
from the Internal Revenue Service ("Service") regarding the Merger. An opinion
of counsel represents counsel's best legal judgement, but has no binding effect
or official status of any kind. Accordingly, there can be no assurance that the
Service or Courts will not take positions contrary to the opinions stated above.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement. By giving this consent, however, we do not admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Commission thereunder.
Very truly yours,
/s/ PORTER, WRIGHT, MORRIS & ARTHUR LLP
PORTER, WRIGHT, MORRIS & ARTHUR LLP
2
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 and related Proxy Statement/Prospectus of
Huntington Bancshares Incorporated for the registration of 6,533,047 shares of
its common stock and to the incorporation by reference therein of our report
dated January 13, 2000, with respect to the consolidated financial statements of
Huntington Bancshares Incorporated included in its Annual Report (Form 10-K) for
the year ended December 31, 1999, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Columbus, Ohio
April 19, 2000
<PAGE> 1
EXHIBIT 23(c)
-------------
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference, in this Registration Statement of
Huntington Bancshares Incorporated on Form S-4, of our report, dated January 20,
2000, except for Note 19, as to which the date is February 7, 2000, on the
consolidated financial statements of Empire Banc Corporation as of December 31,
1999 and 1998, and for each of the three years in the period ended December 31,
1999, included in Empire Banc Corporation's Annual Report on Form 10-K for the
year ended December 31, 1999.
/s/ Crowe, Chizek and Company LLP
Grand Rapids, Michigan
April 19, 2000
<PAGE> 1
EXHIBIT 23(d)
-------------
CONSENT OF FINANCIAL ADVISOR
We hereby consent to the inclusion of the Opinion of McConnell, Budd &
Downes, Inc. in Exhibit C to the Proxy Statement of Empire Banc Corporation
("EBC") and Prospectus of Huntington Bancshares Incorporated ("HBAN") which
Proxy Statement-Prospectus is part of the Registration Statement on Form S-4 of
HBAN to be filed with the Securities and Exchange Commission in connection with
the proposed merger of HBAN and EBC and and to the references to the work
completed by our firm as financial advisor to EBC, therein. In giving such
consent, we do not thereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission thereunder, nor
do we thereby admit that we are experts with respect to any part of such
Registration Statement within the meaning of the term "expert" as used in the
Securities Act of 1933 as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
/s/ McConnell, Budd & Downes, Inc.
April 19, 2000
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
(Re: Acquisition of Empire Banc Corporation)
Each of the undersigned officers and directors of HUNTINGTON BANCSHARES
INCORPORATED (the "Corporation") hereby appoints RICHARD A. CHEAP, ANNE CREEK,
and MILTON D. BAUGHMAN, as his or her attorneys, and any of them, with power to
act without the others, as his or her attorney, to sign, in his or her name and
on his or her behalf, and in any and all capacities stated below, and to cause
to be filed with the Securities and Exchange Commission (the "Commission"), the
Corporation's Registration Statement on Form S-4 (the "Registration Statement")
for the purpose of registering under the Securities Act of 1933, as amended, a
maximum of 7,000,000 authorized and unissued shares of the common stock, without
par value, of the Corporation (as such number of shares may be adjusted from
time to time for stock dividends, stock splits, or similar transactions
affecting the common stock of the Corporation generally), in connection with the
proposed merger of Empire Banc Corporation into the Corporation, and any and all
amendments, including post-effective amendments, to the Registration Statement,
hereby granting to such attorneys, and to each of them, individually, full power
and authority to do and perform in the name and on behalf of each of the
undersigned, and in any and all such capacities, every act and thing whatsoever
necessary to be done in and about the premises as fully as any of the
undersigned could or might do in person, hereby granting to each such
attorney-in-fact full power of substitution and revocation and hereby ratifying
all that any such attorney-in-fact or his substitute may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have signed these presents as of
the dates indicated next to their respective signatures below.
<TABLE>
<CAPTION>
SIGNATURE: TITLE: DATE:
---------- ------ -----
<S> <C> <C>
/s/ Frank Wobst Chairman, Chief Executive Officer, February 16, 2000
- ----------------------------------------------- and Director
Frank Wobst (principal executive officer)
/s/ Peter E. Geier President, Chief Operating Officer, February 16, 2000
- ----------------------------------------------- and Director
Peter E. Geier
/s/ Anne Creek Executive Vice President and Chief February 16, 2000
- ----------------------------------------------- Financial Officer
Anne Creek (principal financial officer and
principal accounting officer)
Director February 16, 2000
- -----------------------------------------------
Don Conrad
/s/ Don M. Casto III Director February 16, 2000
- -----------------------------------------------
Don M. Casto III
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
/s/ John B. Gerlach, Jr Director February 16, 2000
- -----------------------------------------------
John B. Gerlach, Jr.
/s/ Patricia T. Hayot Director February 16, 2000
- -----------------------------------------------
Patricia T. Hayot
/s/ Wm. J. Lhota Director February 16, 2000
- -----------------------------------------------
Wm. J. Lhota
/s/ Robert H. Schottenstein Director February 16, 2000
- -----------------------------------------------
Robert H. Schottenstein
/s/ George A. Skestos Director February 16, 2000
- -----------------------------------------------
George A. Skestos
/s/ Lewis R. Smoot, Sr. Director February 16, 2000
- -----------------------------------------------
Lewis R. Smoot, Sr.
/s/ Timothy P. Smucker Director February 16, 2000
- -----------------------------------------------
Timothy P. Smucker
/s/ William J. Williams Director February 16, 2000
- -----------------------------------------------
William J. Williams
</TABLE>
<PAGE> 1
Exhibit 99(a)
EMPIRE BANC CORPORATION
PROXY CARD - SPECIAL MEETING OF SHAREHOLDERS
The undersigned hereby constitutes and appoints _________________ and
_______________, or either of them, as proxies, each with full power of
substitution, to vote in the manner specified below the number of shares of
common stock of Empire Banc Corporation which the undersigned would be entitled
to vote if personally present at the special meeting of shareholders of Empire
to be held at Northwestern Michigan College, Dennos Museum Center, 1701 East
Front Street, Traverse City, Michigan, on ______________, 2000, at _____ _.m.,
local time, and at any adjournments or postponements thereof. The undersigned
hereby acknowledges receipt of the Proxy Statement/Prospectus and the Notice of
Special Meeting of Shareholders, both dated ______________, 2000.
1. To approve the Agreement and Plan of Merger, dated February 4, 2000,
between Huntington Bancshares Incorporated and Empire, as amended, and
the related Supplemental Agreement, dated February 4, 2000, between
Huntington and Empire, and the transactions contemplated therein,
including (a) the merger of Empire with and into Huntington, and (b)
the conversion of each share of issued and outstanding Empire common
stock into the right to receive 2.0355 shares of Huntington common
stock (cash will be paid for any fractional shares), all as more fully
described in the accompanying proxy statement/prospectus.
FOR |_| AGAINST |_| ABSTAIN |_|
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the special meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1 ABOVE.
Please sign exactly as your name appears below and return this proxy in
the enclosed postage-paid envelope. When shares are held jointly, each
shareholder must sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by an authorized person. In
addition, please date this proxy.
------------------------------------------------
Signature
------------------------------------------------
Signature of other shareholder (if held jointly)
DATED: _________________, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF EMPIRE BANC CORPORATION
AND MAY BE REVOKED AT ANY TIME PRIOR TO ITS EXERCISE.
<PAGE> 1
Exhibit 99(b)
EMPIRE BANC CORPORATION
1227 East Front Street
Traverse City, Michigan 49686
(231) 922-2111
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
____________________, 2000
________________, 2000
To the Shareholders of Empire Banc Corporation:
We will hold a special meeting of shareholders of Empire Banc
Corporation on __________, ___________, 2000, at ______ __.m., local time. The
meeting will be held at Northwestern Michigan College, Dennos Museum Center,
which is located at 1701 East Front Street, Traverse City, Michigan. The purpose
for the meeting is to:
1. consider and vote upon the approval of the Agreement and Plan
of Merger, dated February 4, 2000, as amended, between
Huntington Bancshares Incorporated and Empire, and the related
Supplemental Agreement, dated February 4, 2000, between
Huntington and Empire, which provide for the merger of Empire
into Huntington; and
2. transact any other business which may properly come before the
meeting. (The Empire Board of Directors is not currently aware
of any other business to come before the special meeting.)
Only shareholders of record at the close of business on ____________,
2000, the record date for the special meeting, are entitled to vote at the
special meeting. The attached proxy statement/prospectus provides additional
information about the meeting and the proposed merger.
The proposed affiliation significantly impacts shareholder value. Each
share of Empire will be exchanged for 2.0355 shares of Huntington common stock,
resulting in a substantial increase in market value for Empire shareholders and
an increase in the indicated annual cash dividend from $1.20 per share to $1.63
per share, a 36% increase. Huntington is a regional bank holding company
headquartered in Columbus, Ohio, with assets of $29 billion. At December 31,
1999, Huntington's subsidiaries had 517 banking offices, including 125 in
Michigan. Huntington common stock is actively traded on the Nasdaq Stock Market
under the symbol "HBAN."
The affirmative vote of the holders of a majority of the outstanding
shares of Empire common stock is required to approve the merger and the merger
documents. We urge you to execute and return the enclosed proxy card as soon as
possible in order to ensure that your shares will be represented at the special
meeting. You may revoke your proxy at any time before it is exercised at the
special meeting by following the instructions on page 3 of the proxy
statement/prospectus. If you attend the special meeting, you may vote in person,
and your proxy will not be used.
THE BOARD OF DIRECTORS OF EMPIRE HAS UNANIMOUSLY APPROVED THE PROPOSED
MERGER AND RECOMMENDS THAT YOU VOTE IN FAVOR OF APPROVAL OF THE MERGER DOCUMENTS
AND THE TRANSACTIONS CONTEMPLATED BY SUCH DOCUMENTS.
By Order of the Board of Directors
William T. Fitzgerald, Jr., Secretary
Dated: __________, 2000
Traverse City, Michigan
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING,
PLEASE SIGN AND MAIL THE ENCLOSED PROXY CARD IN THE ACCOMPANYING ENVELOPE. NO
POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES. PLEASE DO NOT SEND IN YOUR
STOCK CERTIFICATES AT THIS TIME.
