SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 19, 1995
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FLEET FINANCIAL GROUP, INC.
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(Exact name of registrant as specified in its charter)
RHODE ISLAND
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(State or other jurisdiction of incorporation)
1-6366 05-0341324
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(Commission File Number) (IRS Employer Identification No.)
One Federal Street, Boston, MA 02211
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-292-2000
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
Pursuant to Form 8-K, General Instructions F, Registrant
hereby incorporates by reference the press releases attached
hereto as Exhibits 99(a) and 99(b).
Item 7. Financial Statements and Other Exhibits.
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Exhibit No. Description
Exhibit 2(a) Agreement and Plan of Merger
dated as of December 19, 1995
between Fleet Financial Group, Inc.
and National Westminster Bank Plc
Exhibit 2(b) Exchange Agreement dated as of
December 31, 1995 among Fleet
Financial Group, Inc., Fleet
Banking Group, Inc., Whitehall
Associates, L.P. and KKR Partners
II, L.P.
Exhibit 99(a) Fleet Financial Group,
Inc. Press Release
Dated December 19, 1995
Exhibit 99(b) Fleet Financial Group, Inc. Press
Release Dated January 2, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to
be signed in its behalf by the undersigned hereunto duly
authorized.
FLEET FINANCIAL GROUP, INC.
Registrant
By /s/ William C. Mutterperl
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William C. Mutterperl
Senior Vice President and
General Counsel
Dated: January 5, 1996
Exhibit 2(a)
AGREEMENT AND PLAN OF MERGER
dated as of
December 19, 1995
between
FLEET FINANCIAL GROUP, INC.
and
NATIONAL WESTMINSTER BANK PLC
for the merger of
FLEET BANK OF NEW YORK, NATIONAL ASSOCIATION
with and into
NATWEST BANK N.A.
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
THE MERGER
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.2 Effective Time of the Merger . . . . . . . . . . . . . . . . 14
2.3 Bank Charter . . . . . . . . . . . . . . . . . . . . . . . . 14
2.4 By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.5 Directors and Officers . . . . . . . . . . . . . . . . . . . 14
2.6 Certain Effects of the Merger . . . . . . . . . . . . . . . . 14
2.7 Conversion of Shares of NBNA Common Stock and FBNY Common
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE III
MERGER CONSIDERATION; PAYMENT
3.1 Merger Consideration . . . . . . . . . . . . . . . . . . . . 15
3.2 Delivery of Merger Consideration . . . . . . . . . . . . . . 16
3.3 Closing Balance Sheet . . . . . . . . . . . . . . . . . . . . 17
3.4 Adjustment of Merger Consideration . . . . . . . . . . . . . 21
3.5 Legending of Securities . . . . . . . . . . . . . . . . . . . 21
3.6 Earnout . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NATWEST PLC
4.1 Corporate Existence and Power . . . . . . . . . . . . . . . . 32
4.2 Corporate Authorization . . . . . . . . . . . . . . . . . . . 33
4.3 Consents and Approvals . . . . . . . . . . . . . . . . . . . 33
4.4 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . 33
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4.5 Capitalization . . . . . . . . . . . . . . . . . . . . . . . 34
4.6 Ownership of Shares . . . . . . . . . . . . . . . . . . . . . 34
4.7 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 35
4.8 Financial Statements . . . . . . . . . . . . . . . . . . . . 36
4.9 Absence of Certain Changes or Events . . . . . . . . . . . . 36
4.10 No Undisclosed Material Liabilities . . . . . . . . . . . . . 37
4.11 Intercompany Accounts . . . . . . . . . . . . . . . . . . . . 38
4.12 Material Contracts . . . . . . . . . . . . . . . . . . . . . 38
4.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.14 Compliance with Laws . . . . . . . . . . . . . . . . . . . . 40
4.15 Properties . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.16 Insurance Coverage . . . . . . . . . . . . . . . . . . . . . 41
4.17 Licenses and Permits . . . . . . . . . . . . . . . . . . . . 41
4.18 Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . 41
4.19 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . 41
4.20 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . 41
4.21 Environmental Matters . . . . . . . . . . . . . . . . . . . . 43
4.22 FDIC; Insurance Assessments; Reports . . . . . . . . . . . . 45
4.23 Investment Intent . . . . . . . . . . . . . . . . . . . . . . 45
4.24 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF FFG
5.1 Corporate Existence and Power . . . . . . . . . . . . . . . . 48
5.2 Corporate Authorization . . . . . . . . . . . . . . . . . . . 49
5.3 Consents and Approvals . . . . . . . . . . . . . . . . . . . 49
5.4 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . 49
5.5 Capitalization . . . . . . . . . . . . . . . . . . . . . . . 50
5.6 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.7 Financial Information . . . . . . . . . . . . . . . . . . . . 51
5.8 Absence of Certain Changes . . . . . . . . . . . . . . . . . 51
5.9 No Undisclosed Material Liabilities . . . . . . . . . . . . . 52
5.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . 52
5.12 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.13 Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . 53
5.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . 53
5.15 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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ARTICLE VI
COVENANTS OF NATWEST PLC
6.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . 55
6.2 Forbearances . . . . . . . . . . . . . . . . . . . . . . . . 55
6.3 Access to Information . . . . . . . . . . . . . . . . . . . . 57
6.4 Notices of Certain Events . . . . . . . . . . . . . . . . . . 58
6.5 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . 58
6.6 Transfer of Certain Delaware Bank Assets . . . . . . . . . . 59
6.7 Employee Contracts . . . . . . . . . . . . . . . . . . . . . 59
6.8 Water Street Transaction . . . . . . . . . . . . . . . . . . 60
6.9 NBNA Asset Sale . . . . . . . . . . . . . . . . . . . . . . . 60
6.10 Treatment of NatWest Swap Portfolio . . . . . . . . . . . . . 60
6.11 Transfer of Certain Subsidiaries or Certain Assets and
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.12 Loan Loss Reserves . . . . . . . . . . . . . . . . . . . . . 62
6.13 Financial Information . . . . . . . . . . . . . . . . . . . . 62
6.14 Private Label Agreement . . . . . . . . . . . . . . . . . . . 63
6.15 Non-Solicitation . . . . . . . . . . . . . . . . . . . . . . 63
6.16 Environmental Matters . . . . . . . . . . . . . . . . . . . . 63
6.17 Accrual Policy . . . . . . . . . . . . . . . . . . . . . . . 64
6.18 Non-compete . . . . . . . . . . . . . . . . . . . . . . . . . 64
6.19 Certain Loans . . . . . . . . . . . . . . . . . . . . . . . . 65
6.20 Expatriate Housing . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE VII
COVENANTS OF FFG
7.1 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . 65
7.2 Conduct of FFG . . . . . . . . . . . . . . . . . . . . . . . 66
7.3 Access to Information . . . . . . . . . . . . . . . . . . . . 66
7.4 Notices of Certain Events . . . . . . . . . . . . . . . . . . 66
7.5 Post-Closing Access . . . . . . . . . . . . . . . . . . . . . 67
7.6 InfiNet . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.7 NatWest Directors . . . . . . . . . . . . . . . . . . . . . . 67
7.8 Scranton Guarantee . . . . . . . . . . . . . . . . . . . . . 67
7.9 Capital Requirements . . . . . . . . . . . . . . . . . . . . 67
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ARTICLE VIII
COVENANTS OF FFG AND NATWEST PLC
8.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 69
8.2 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . 69
8.3 Certain Filings and Consents . . . . . . . . . . . . . . . . 70
8.4 Public Announcements . . . . . . . . . . . . . . . . . . . . 70
8.5 Trademarks; Tradenames . . . . . . . . . . . . . . . . . . . 70
8.6 Intercompany Accounts and Agreements . . . . . . . . . . . . 70
8.7 Stockholder Approvals . . . . . . . . . . . . . . . . . . . . 71
8.8 175 Water Street Lease . . . . . . . . . . . . . . . . . . . 71
8.9 Issuance of FFG Preferred Stock. . . . . . . . . . . . . . . 72
9.1 Tax Sharing Agreements . . . . . . . . . . . . . . . . . . . 72
9.2 Returns for Periods Through the Closing Date . . . . . . . . 72
9.3 Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.4 Actions On or After Closing Date . . . . . . . . . . . . . . 73
9.5 Carrybacks . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.6 Retention of Carryovers . . . . . . . . . . . . . . . . . . . 73
9.7 Post-Closing Elections . . . . . . . . . . . . . . . . . . . 73
9.8 Information and Assistance . . . . . . . . . . . . . . . . . 73
9.9 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.10 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE X
EMPLOYEE BENEFITS
10.1 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.2 Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . 75
10.3 Individual Account Plan . . . . . . . . . . . . . . . . . . . 76
ARTICLE XI
CONDITIONS TO CLOSING
11.1 Conditions to Obligations of Each Party . . . . . . . . . . . 77
11.2 Conditions to Obligations of FFG . . . . . . . . . . . . . . 77
11.3 Conditions to Obligations of Natwest Plc . . . . . . . . . . 79
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ARTICLE XII
INDEMNIFICATION; SURVIVAL
12.1 Indemnification by Natwest Plc . . . . . . . . . . . . . . . 81
12.2 Indemnification by FFG . . . . . . . . . . . . . . . . . . . 82
12.3 Termination of Representations and Warranties . . . . . . . . 82
12.4 Notice and Right to Participate in Defense of Third Party
Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
12.5 Purchase Price Adjustments . . . . . . . . . . . . . . . . . 83
ARTICLE XIII
TERMINATION
13.1 Grounds for Termination . . . . . . . . . . . . . . . . . . . 83
13.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . 84
ARTICLE XIV
MISCELLANEOUS
14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
14.2 Amendments and Waivers . . . . . . . . . . . . . . . . . . . 86
14.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 87
14.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . 87
14.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 87
14.6 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . 87
14.7 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . 87
14.8 Counterparts; Third Party Beneficiaries . . . . . . . . . . . 88
14.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 88
14.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . . 88
14.11 Severability . . . . . . . . . . . . . . . . . . . . . . . 88
Exhibit A: Form of FFG Preferred Stock
Exhibit B: Registration Rights Agreement
Exhibit C: Interim Service Agreement
Exhibit D: Standstill Agreement
Exhibit E: Opinion Items to be Covered by Counsel to or of NatWest Plc
Exhibit F: Opinion Items to be Covered by Counsel to or of FFG
Exhibit G: Balance Sheet
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of December 19, 1995 between
Fleet Financial Group, Inc., a Rhode Island corporation ("FFG"), and National
Westminster Bank Plc, an English public limited company ("Natwest Plc").
W I T N E S S E T H :
WHEREAS, Natwest Plc wishes to cause the sale of Natwest Bank N.A.,
a banking association organized under the laws of the United States and a
wholly-owned indirect subsidiary of NatWest Plc ("NBNA"); and
WHEREAS, FFG wishes to cause the purchase of NBNA; and
WHEREAS, the respective Boards of Directors of FFG and Natwest
Plc have approved the purchase and sale of NBNA pursuant to the terms of
this Agreement which provides for the merger of Fleet Bank of New York,
National Association, a banking organization organized under the laws of
the United States and a wholly-owned indirect subsidiary of FFG ("FBNY"),
with and into NBNA (the "Merger") so that NBNA is the surviving corporation
in the Merger; and
WHEREAS, FFG desires to pay NatWest Plc, in addition to the
Merger Consideration, amounts based on the financial performance of NBNA
and its Subsidiaries following the Merger; and
WHEREAS, the parties hereto desire to make certain
representations, warranties and agreements in connection with the Merger
and also to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending
to be legally bound hereby, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms, as used herein, have the
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following meanings:
"Actual Corporate Overhead Expenses" shall have the meaning set
forth in Section 3.6(h) hereof.
"Adjusted Mortgage Loan Value" shall have the meaning set forth
in Section 3.3(b) hereof.
"Adjusted Net Income" shall have the meaning set forth in Section
3.6(g) hereof.
"Adjusted Interest Rate Securities Value" shall have the meaning
set forth in Section 3.3(b) hereof.
"Adverse Consequences" shall mean all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims,
demands, injunctions, judgments, orders, decrees, rulings, damages, dues,
penalties, fines, costs, amounts paid in settlement, Liabilities,
obligations, Taxes, Liens, losses, expenses, and fees, including court
costs and attorneys' fees and expenses.
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with such Person; provided that none of the Included Subsidiaries
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shall be considered an Affiliate of Natwest Plc.
"Affiliated Group" shall mean any affiliated group within the
meaning of Section 1504 of the Code or any similar group defined under a
similar provision of state, local or foreign law.
"Amortized Amount" shall have the meaning set forth in Section
6.10 hereof.
"Ancillary Agreements" shall mean the Registration Rights
Agreement, the Services Agreement and the Standstill Agreement.
"Articles of Merger" shall have the meaning set forth in Section
2.2(a) hereof.
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"Average Closing Price" shall mean the average closing sales
price per share of FFG Common Stock on the New York Stock Exchange (as
reported by The Wall Street Journal or, if not reported thereby, another
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authoritative source) for the five consecutive New York Stock Exchange
trading days immediately preceding (but not including) the Closing Date.
"Average Common Equity" shall have the meaning set forth in
Section 3.6(h) hereof.
"Average Tier 1 Capital" shall have the meaning set forth in
Section 3.6(h) hereof.
"Average Tier 1 Leverage Ratio" shall have the meaning set forth
in Section 3.6(h) hereof.
"Balance Sheet" shall mean the pro forma combined and adjusted
statement of condition of the Included Subsidiaries as of September 30,
1995, a copy of which is attached as Exhibit G hereto.
"Balance Sheet Date" shall mean September 30, 1995.
"Bancorp" shall mean National Westminster Bancorp, Inc., a
Delaware corporation.
"Bancorp Agreements" shall mean the agreements disclosed in
Schedule 4.12(d)(i).
"Bancorp NJ" shall mean National Westminster Bancorp NJ, a New
Jersey corporation.
"Base Tangible Equity" shall mean $2,318,500,000.
"Benefit Arrangement" shall mean any employment, severance or
similar contract, arrangement or policy, or any plan or arrangement
(whether or not written) providing for severance benefits, insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits, deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation rights or other forms of incentive compensation
or post-retirement insurance, compensation or benefits (including without
limitation any "fringe benefit plan," as defined in Section 6039D of the
Code) that (i) is not an Employee Plan, (ii) is entered into or maintained,
as the case may be, by Natwest Plc, Holdings or any of their ERISA
Affiliates and (iii) covers any employee or former employee of the Included
Subsidiaries.
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"Book Value" shall have the meaning set forth in Section 3.3(b)
hereof.
"Buyer Indemnifiable Damages" shall have the meaning set forth in
Section 12.1(a) hereof.
"Buyer Regulatory Approvals" shall mean (i) the approval of the
OCC pursuant to the Bank Merger Act and (ii) any other approvals of any
other Regulatory Agency required to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements.
"Buyer Stockholder Approvals" shall mean any required approval of
the stockholder of FBNY of the transactions contemplated by this Agreement
and the Ancillary Agreements.
"Cash Payment" shall have the meaning set forth in Section 3.1(a)
hereof.
"Cause" shall have the meaning set forth in Section 6.10 hereof.
"Closing" shall have the meaning set forth in Section 2.2(b)
hereof.
"Closing Balance Sheet" shall have the meaning set forth in
Section 3.3(a) hereof.
"Closing Date" shall have the meaning set forth in Section 2.2(b)
hereof.
"Closing Tangible Equity" shall have the meaning set forth in
Section 3.3(a) hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company Contract" shall have the meaning set forth in Section
4.12(b) hereof.
"Company Reports" shall have the meaning set forth in Section
4.22(b) hereof.
"Continuing Employees" shall have the meaning set forth in
Section 10.1(a) hereof.
"Current GAAP" shall have the meaning set forth in Section 3.6(h)
hereof.
"Deferred Intercompany Transaction" shall have the meaning set
forth in
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Treas. Reg. Sec. 1.1502-13.
"Delaware Bank" shall mean NatWest Bank (Delaware), a Delaware
bank.
"Delaware Bank Asset Transfer" shall have the meaning set forth
in Section 6.6 hereof.
"Discounted Prepayment Amount" shall have the meaning set forth
in Section 3.6(e) hereof.
"Dividend Excluded Transactions" shall mean (4) the post-tax gain
on (i) the consummated sale of Tilden Financial Corporation, (ii) the
consummated sale by the Delaware Bank of certain credit card receivables to
Household Bank (Nevada), National Association, (iii) the sale of
approximately $4.2 billion of certain government securities by NBNA and
NatWest Investments (Delaware) Inc. and (iv) the transactions contemplated
by this Agreement and (b) a dividend of approximately $700 million from
NatWest Investments (Delaware) Inc. to Citizens First Investment Corp., a
Subsidiary of NBNA, with a subsequent liquidation of Citizens First
Investment Group.
"Downstate Growth Factor" shall have the meaning set forth in
Section 3.6(g) hereof.
"Earnout Period" shall have the meaning set forth in Section
3.6(h) hereof.
"Earnout Year" shall have the meaning set forth in Section 3.6(h)
hereof.
"Effective Time" shall have the meaning set forth in Section
2.2(a) hereof.
"Employee Plan" shall mean any "employee benefit plan", as
defined in Section 3(3) of ERISA, that (i) is subject to any provision of
ERISA, (ii) is maintained, administered or contributed to by Natwest Plc,
Holdings or any of their respective ERISA Affiliates and (iii) covers any
employees or former employee of the Included Subsidiaries.
"Environmental Laws" shall mean any and all federal, state, local
and foreign statutes, laws, judicial, administrative and regulatory
decisions, regulations, ordinances, rules, judgments, orders, decrees,
codes, licenses, authorizations and approvals which relate to the
protection of the environment or human health or to emissions, discharges,
releases or spills of pollutants, contaminants, Hazardous Substances or
wastes into the environment, including without limitation ambient air,
surface water, ground water or land, or otherwise relating to the
manufacture,
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processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"Environmental Liabilities" shall mean any and all liabilities of
or relating to the Included Subsidiaries which (i) arise under or relate to
matters covered by Environmental Laws and (ii) relate to actions occurring
or conditions existing on or prior to the Closing Date.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor statue thereto, and the rules and
regulations promulgated thereunder.
"ERISA Affiliate" of any entity shall mean any other entity
which, together with such entity, would be treated as a single employer
under Section 414 of the Code.
"Excess Loss Account" shall have the meaning set forth in Treas.
Reg. Sec. 1.1502-19.
"Excluded Employees" shall mean (i) the employees (including
employees on authorized leave of absence, military service or lay-off with
recall rights) of Holdings and its Subsidiaries other than the Included
Subsidiaries and (ii) the Transferred Employees.
"FBNY Common Stock" shall mean the common stock of FBNY, par
value $100 per share.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"FFG Benefit Arrangement" shall mean any employment, severance or
similar contract, arrangement or policy, or any plan or arrangement
(whether or not written) providing for severance benefits, insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits, deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation rights or other forms of incentive compensation
or post-retirement insurance, compensation or benefits (including without
limitation any "fringe benefit plan", as defined in Section 6039D of the
Code) that (i) is not an FFG Employee Plan, (ii) is entered into or
maintained, as the case may be, by any of the FFG Entities or any of their
respective ERISA Affiliates and (iii) covers any employee or former
employee of the FFG Entities.
"FFG Common Stock" shall mean the common stock of FFG, par value
$.01 per share.
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"FFG Common Stock Consideration" shall have the meaning set forth
in Section 3.1(a) hereof.
"FFG Employee Plan" means any "employee benefit plan," as defined
in Section 3(3) of ERISA, that (i) is subject to any provision of ERISA,
(ii) is maintained, administered or contributed to by any of the FFG
Entities or their respective ERISA Affiliates and (iii) covers any employee
or former employee of the FFG Entities.
"FFG Entities" shall mean FFG, SNY and FBNY and its subsidiaries.
"FFG Plans" shall have the meaning set forth in Section 5.14.
"FFG Preferred Stock" shall mean a new series of preferred stock
of FFG to be designated the Series V Preferred Stock of FFG, the terms and
conditions of which, subject to Section 3.1(c), are attached as Exhibit A
hereto.
"FFG Preferred Stock Consideration" shall have the meaning set
forth in Section 3.1(a) hereof.
"FFG Reports" shall have the meaning set forth in Section 5.15(a)
hereof.
"FFG's SEC Documents" shall have the meaning set forth in Section
5.6 hereof.
"Final Tangible Equity" shall have the meaning set forth in
Section 3.4(a) hereof.
"Fleet Downstate Assets" shall have the meaning set forth in
Section 3.6(g) hereof.
"Fleet Downstate Earnings" shall have the meaning set forth in
Section 3.6(g) hereof.
"GAAP" shall mean United States generally accepted accounting
principles as in effect from time to time.
"Governmental Entity" shall mean any court, administrative agency
or commission or other governmental authority or instrumentality.
"Guaranteed Capital Notes" shall mean the $100 million
outstanding principal amount of the 1982 Guaranteed Capital Notes and the
$500 million outstanding principal amount of the 1988 Guaranteed Capital
Notes, in each case
7
<PAGE>
originally issued by NatWest Capital Corporation and guaranteed by NatWest
Plc, and the indentures related thereto.
"Hazardous Substances" shall mean, but shall not be limited to,
any toxic, radioactive, caustic or otherwise hazardous substance, including
petroleum, its derivatives, by-products and other hydrocarbons, friable
asbestos and any substances that are defined or listed in or otherwise
classified pursuant to applicable local, state or federal Environmental
Laws or any substance having any constituent elements displaying any of the
foregoing characteristics, regulated under Environmental Laws.
"Holdings" shall mean NatWest Holdings Inc., a Delaware
corporation.
"Indemnitee" shall have the meaning set forth in Section 12.4
hereof.
"Indemnitor" shall have the meaning set forth in Section 12.4
hereof.
"Indemnity Claim" shall have the meaning set forth in Section
12.4 hereof.
"Identified Assets" shall mean those assets set forth on Schedule
6.9 hereof.
"Identified Transactions" shall have the meaning set forth in
Section 6.10 hereof.
"Included Subsidiaries" shall mean the Delaware Bank, NatWest
Delaware Services, NatWest Pennsylvania, NatWest Services and NBNA and its
Subsidiaries.
"Individual Account Plan" shall have the meaning set forth in
Section 10.3(a) hereof.
"InfiNet" shall mean InfiNet Payment Systems, Inc., a Delaware
corporation.
"Interest Sensitive Securities" shall have the meaning set forth
in Section 3.3(b) hereof.
"ISRA" shall mean the New Jersey Industrial Site Recovery Act,
and the regulations promulgated thereunder.
"Junior Preferred Stock" shall have the meaning set forth in
Section 5.5(b) hereof.
8
<PAGE>
"Liability" shall mean any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether due
or to become due), including any liability for Taxes.
"LIBOR" shall mean, as of any date, the London Interbank Offered
Rate for three-month deposits as shown at 11:00 a.m. London time on such
date on the display screen designated "Page 3750" by Telerate Data Service,
or such other page as may replace such page on that service or such other
service or services as may be nominated by the British Bankers' Association
for the purpose of displaying London interbank offered rates for U.S.
dollar deposits.
"Lien" shall mean, with respect to any property or asset, any
mortgage, lien, pledge, charge, security interest, encumbrance or other
adverse claim of any kind in respect of such property or asset.
"Market Area" shall have the meaning set forth in Section 3.6(f)
hereof.
"Material Adverse Effect" shall mean, with respect to any Person,
a material adverse effect on the condition (financial or otherwise),
business, assets or results of operations of such Person and its
Subsidiaries, taken as whole, it being understood for the purposes hereof
that any reference to a Material Adverse Effect on the Included
Subsidiaries shall mean a Material Adverse Effect on all of such Persons,
taken as a whole.
"Market Value of the Rate Sensitive Portfolio" shall have the
meaning set forth in Section 3.3(b) hereof.
"Merger Consideration" shall have the meaning set forth in
Section 3.1(a) hereof.
"Most Recent Fiscal Month End" shall mean November 30, 1995.
"Multiemployer Plan" shall have the meaning set forth in Section
4.20(a) hereof.
"NatWest Delaware Services" shall mean NatWest (Delaware)
Consumer Services Inc., a Delaware corporation.
"NatWest Directors" shall have the meaning set forth in Section
7.7 hereof.
"NatWest Insurance" shall mean NatWest Insurance Agency Services,
Inc., a Delaware corporation.
9
<PAGE>
"NatWest Mortgage Earnings" shall have the meaning set forth in
Section 3.6(g) hereof.
"NatWest Pennsylvania" shall mean NatWest Pennsylvania
Corporation, a Pennsylvania corporation.
"NatWest Services" shall mean NatWest Services, Inc., a Delaware
corporation.
"NatWest Swap Portfolio" shall have the meaning set forth in
Section 6.10 hereof.
"NBNA Asset Sale" shall have the meaning set forth in Section 6.9
hereof.
"NBNA Common Stock" shall mean the common stock of NBNA, par
value $5 per share.
"NBNA Securities" shall have the meaning set forth in Section
4.5(b) hereof.
"Negotiated Prepayment Amount" shall have the meaning set forth
in Section 3.6(d) hereof.
"New Individual Account Plan" shall have the meaning set forth in
Section 10.3(b) hereof.
"New Pension Plan" shall have the meaning set forth in Section
10.2(c) hereof.
"OCC" shall mean the Office of the Comptroller of the Currency.
"OCC 30-mile Approval" shall have the meaning specified in
Section 6.5(a) hereof.
"Ongoing Swap Pool" shall have the meaning set forth in Section
6.10 hereof.
"Operating Subsidiary Approval" shall have the meaning specified
in Section 6.5(b) hereof.
"Pension Plan" shall have the meaning set forth in Section
10.2(a) hereof.
10
<PAGE>
"Permits" shall have the meaning set forth in Section 4.17
hereof.
"Person" shall mean an individual, corporation, limited liability
company, partnership, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"Plans" shall have the meaning set forth in Section 4.20(a)
hereof.
"Portfolio Securities" shall have the meaning set forth in
Section 3.3(b) hereof.
"Preferred Stock" shall have the meaning set forth in Section
5.5(a) hereof.
"Pre-Closing Dividend" shall have the meaning set forth in
Section 8.9 hereof.
"Pro Forma Statements" shall have the meaning set forth in
Section 4.8(b) hereof.
"Qualified Plan" shall have the meaning set forth in Section
4.20(d) hereof.
"Rate Sensitive Portfolio" shall have the meaning set forth in
Section 3.3(b) hereof.
"Rate Sensitive Portfolio Value" shall have the meaning set forth
in Section 3.3(b) hereof.
"Rate Sensitive Portfolio Adjustment" shall have the meaning set
forth in Section 3.3(b) hereof.
"Rate Sensitive Portfolio Value" shall have the meaning set forth
in Section 3.3(b) hereof.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement to be dated as of the Closing Date between FFG and Natwest
Plc, in substantially the form attached as Exhibit B hereto.
"Regulatory Agency" shall mean the Federal Reserve Board, the
FDIC, the OCC, any other governmental authority charged with the
supervision, regulation or insurance of banking organizations, the SEC, any
state regulatory agency and any self-regulatory organization.
11
<PAGE>
"Residential Mortgage Loan" shall have the meaning set forth in
Section 3.3(b) hereof.
"SEC" shall mean the Securities and Exchange Commission.
"Seller Indemnified Party" shall have the meaning set forth in
Section 12.2 hereof.
"Seller Indemnifiable Damages" shall have the meaning set forth
in Section 12.2 hereof.
"Seller Regulatory Approvals" shall mean (i) the approval of the
OCC, (ii) the approval of the Delaware State Bank Commissioner and (iii)
any other approvals of any other Regulatory Agency required to consummate
the transactions contemplated by this Agreement and the Ancillary
Agreements.
"Seller Stockholder Approvals" shall mean any required approval
of the stockholders of NatWest Plc, Holdings, Bancorp, Bancorp NJ, NBNA and
the Delaware Bank of the transactions contemplated by this Agreement and
the Ancillary Agreements.
"Seller Trademarks and Tradenames" shall have the meanings
specified in Section 8.5(a) hereof.
"Services Agreement" shall mean the Interim Services Agreement to
be dated as of the Closing Date among FFG, NatWest Plc and NBNA, in
substantially the form attached as Exhibit C hereto.
"SNY" shall mean Shawmut New York Corporation, a New York
corporation.
"Standstill Agreement" shall mean the Standstill Agreement to be
dated as of the Closing Date between FFG and Natwest Plc, in substantially
the form attached as Exhibit C hereto.
"Subsidiary" shall mean, with respect to any Person, any bank,
corporation, partnership or other organization, whether incorporated or
unincorporated, which is consolidated with such Person for financial
reporting purposes.
"Subsidiary Securities" shall have the meaning set forth in
Section 4.7(b) hereof.
"Surviving Bank" shall have the meaning set forth in Section 2.1
hereof.
"Swap Payment" shall have the meaning set forth in Section 6.10
12
<PAGE>
hereof.
"Tax" means any federal, state local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Section 59A of the Code), customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or
other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Title IV Plan" shall have the meaning set forth in Section
4.20(a) hereof.
"Transfer Amount" shall have the meaning set forth in Section
10.2(b) hereof.
"Transferred Assets and Liabilities" shall mean the assets and
liabilities of Bancorp used or held for use primarily in the business of
the Included Subsidiaries as disclosed in Schedule 4.12(d)(i) and Schedule
6.11; provided that such term shall not include (i) the capital stock,
--------
assets and liabilities of NatWest Equity Corporation, and NatWest Leasing
Corporation, (ii) the Guaranteed Capital Notes and commercial paper issued
by Bancorp and, (iii) intercompany account balances.
"Transferred Employees" shall have the meaning set forth in
Section 6.7 hereof.
"Undiscounted Prepayment Amount" shall have the meaning set forth
in Section 3.6(e) hereof.
"Water Street Transaction" shall have the meaning set forth in
Section 6.8 hereof.
ARTICLE II
THE MERGER
13
<PAGE>
2.1 The Merger. Subject to the terms and conditions of this
----------
Agreement, in accordance with the applicable provisions of the National
Bank Act (12 U.S.C. Sections 1 et. seq.), at the Effective Time FBNY shall be
merged with and into NBNA, whereupon the separate existence of FBNY shall
cease, and NBNA, as the surviving bank in the Merger (the "Surviving
Bank"), shall continue its existence under the laws of the United States
under the name Fleet Bank of New York, National Association.
2.2 Effective Time of the Merger. (a) Subject to the terms and
----------------------------
conditions hereof, on the Closing Date, the parties hereto shall cause to
be filed with the OCC articles of merger (the "Articles of Merger"), in
such form as required by, and executed in accordance with, the relevant
provisions of applicable law. The Merger shall become effective on the
Closing Date at the time when such Articles of Merger have been so filed
and the OCC issues a letter certifying the effectiveness of the Merger (the
"Effective Time").
(b) The closing (the "Closing") of the Merger shall take place
at 10:00 a.m. (local time) on such date (the "Closing Date") to be
specified by the parties hereto, which date shall be no later than five
business days after the satisfaction or waiver (subject to applicable law)
of the latest to occur of the conditions set forth in Article XI hereof, at
the offices of Edwards & Angell, 2700 Hospital Trust Tower, Providence,
Rhode Island, or at such other place or on such other date or time as the
parties shall otherwise agree.
2.3 Bank Charter. The Articles of Association of NBNA as in
------------
effect at the Effective Time shall be the Articles of Association of the
Surviving Bank, until thereafter amended as provided therein.
2.4 By-Laws. The By-Laws of NBNA as in effect at the Effective
-------
Time shall be the By-Laws of the Surviving Bank, until thereafter amended
as provided therein.
2.5 Directors and Officers. The directors of the Surviving Bank
----------------------
shall be (i) the directors of FBNY in office immediately prior to the
Effective Time and (ii) the NatWest Directors, to serve in accordance with
the By-Laws of the Surviving Bank and, subject to the provisions of Section
7.7, until their respective successors are duly elected or appointed and
qualified. The officers of FBNY in office immediately prior to the
Effective Time shall be the officers of the Surviving Bank, to serve in
accordance with the By-Laws of the Surviving Bank and until their
respective successors are duly appointed and qualified.
2.6 Certain Effects of the Merger. At the Effective Time, all
-----------------------------
of the rights, privileges, powers, franchises, properties and assets of
FBNY shall pass to and be vested in the Surviving Bank without any
conveyance or other transfer and all of
14
<PAGE>
the debts, liabilities, obligations, restrictions, disabilities and duties
of every kind and description of FBNY shall become the debts, liabilities,
obligations, restrictions and duties of the Surviving Bank.
2.7 Conversion of Shares of NBNA Common Stock and FBNY Common
---------------------------------------------------------
Stock. As of the Effective Time, by virtue of the Merger and without any
- -----
action on the part of NBNA or FBNY or the holders of shares of NBNA Common
Stock or FBNY Common Stock:
(a) All shares of NBNA Common Stock held by NBNA or any
Subsidiary thereof immediately prior to the Effective Time shall be
canceled and retired and no payment shall be made with respect
thereto.
(b) Each share of NBNA Common Stock issued and outstanding
immediately prior to the Effective Time shall be canceled and retired,
and Bancorp NJ or its designee shall be entitled to receive the Merger
Consideration.
(c) Each share of FBNY Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into and
become one fully paid and nonassessable share of common stock, $100
par value per share, of the Surviving Bank.
ARTICLE III
MERGER CONSIDERATION; PAYMENT
3.1 Merger Consideration. (a) Subject to the remaining
--------------------
provisions of this Article III, at the Effective Time, NatWest Plc shall
cause Bancorp NJ or its designee to surrender its certificate(s)
representing the NBNA Common Stock and Bancorp NJ or its designee shall be
entitled to receive cash in an amount equal to $2,700,000,000 (the "Cash
Payment"); provided that FFG may determine, in its sole discretion, on not
--------
less than 20 days written notice to NatWest Plc prior to the Closing Date,
that (i) up to $175,000,000 of the Cash Payment may be made in the form of
shares of FFG Common Stock (the "FFG Common Stock Consideration") and (ii)
up to $300,000,000 of the Cash Payment may be made in the form of shares of
FFG Preferred Stock (the "FFG Preferred Stock Consideration" and,
collectively with the Cash Payment and the FFG Common Stock Consideration,
the "Merger Consideration"). Notwithstanding the foregoing, if, from the
date hereof to and including the Closing Date, FFG shall have issued
preferred stock (other than in connection with a transaction described in
writing to, and acknowledged by, NatWest Plc) in excess of $300,000,000,
FFG shall not have the option to pay that portion of the Cash Payment in
the form of FFG Preferred Stock which equals the amount so
15
<PAGE>
issued over $300,000,000.
(b) The number of shares of FFG Common Stock, if any, to be
issued on the Closing Date as provided in Section 3.1, shall be determined
by the dollar amount of the Cash Payment to be paid in the form of shares
of FFG Common Stock divided by the Average Closing Price of the FFG Common
Stock. Such number of shares shall be rounded up to the nearest whole
number of shares. Notwithstanding the provisions of Section 3.1(a), the
amount of FFG Common Stock, if any, to be issued to Bancorp NJ or its
designee on the Closing Date shall not exceed 4.9% of the FFG Common Stock
issued and outstanding as of such date after giving effect to such
issuance.
(c) The FFG Preferred Stock, if any, to be issued on the Closing
Date as provided in Section 3.1(a), shall contain such provisions as are
set forth in the form of certificate of designations attached as Exhibit A,
except that the dividend rate set forth therein shall be adjusted, if
necessary, to a dividend rate (rounded up or down, as the case may be, to
the nearest five basis points) which, after taking into consideration all
other terms of the FFG Preferred Stock set forth in such certificate of
designations, shall cause each share of FFG Preferred Stock to have a fair
market value on a fully distributed basis equal to its stated liquidation
preference; provided that in no event shall the dividend to be determined
--------
on a basis that would cause the FFG Preferred Stock not to be included as
tier 1 Capital of FFG in accordance with 12 C.F.R. Part 225, Appendix A.
As promptly as practicable after receipt of the written notice referred to
in Section 3.1(a), FFG and NatWest Plc and their respective financial
advisors shall meet to attempt to agree, in good faith, on the dividend
rate of the FFG Preferred Stock. If agreement has not been reached between
FFG and NatWest Plc and their respective financial advisors on or before
the fifth day prior to the Closing Date, FFG and NatWest Plc shall (i)
promptly appoint an independent nationally recognized investment banking
firm to determine the dividend rate of the FFG Preferred Stock, (ii)
instruct such investment banking firm to promptly proceed with its
determination of such dividend rate and (iii) instruct such investment
banking firm to deliver, as promptly as practicable, but in no event later
than the day prior to the Closing Date, its determination of such dividend
rate. The determination of such investment banking firm shall be binding
on FFG and NatWest Plc. FFG and NatWest shall share equally all of the
fees and expenses of such investment banking firm.
(d) At the option of NatWest Plc, the FFG Preferred Stock may be
issued in the form of depositary shares, each such depositary share
representing such fraction of a share of FFG Preferred Stock as may be
reasonably acceptable to FFG. In such event, FFG hereby agrees to give
customary representations and warranties, at the time of issuance of any
such depositary shares, with respect to such depositary shares.
16
<PAGE>
3.2 Delivery of Merger Consideration. On the Closing Date, FFG
--------------------------------
shall:
(i) wire transfer the Cash Payment, in immediately available
funds, to an account of Bancorp NJ or its designee, which account
shall be designated in writing to FFG not less that two days prior to
the Closing Date;
(ii) if applicable, deliver one or more certificate(s) to
Bancorp NJ or its designee representing the FFG Common Stock
Consideration, registered in the name of Bancorp NJ or its designee,
which name shall be designated in writing to FFG not less than two
days prior to the Closing Date; and
(iii) if applicable, deliver one or more certificate(s) to
Bancorp NJ or its designee representing the FFG Preferred Stock
Consideration, registered in the name of Bancorp NJ or its designee,
which name shall be designated in writing to FFG not less than two
days prior to the Closing Date.
3.3 Closing Balance Sheet. (a) As promptly as practicable, but
---------------------
no later than 60 days after the Closing Date, Natwest Plc will cause to be
prepared and delivered to FFG (i) the Closing Balance Sheet (the "Closing
Balance Sheet"), together with an unqualified report of KPMG Peat Marwick
LLP thereon and (ii) a certificate based on such Closing Balance Sheet
setting forth Natwest Plc's calculation of Closing Tangible Equity. The
Closing Balance Sheet shall fairly present the consolidated financial
position of NBNA and its Subsidiaries as at the close of business on the
Closing Date (but as if the Merger had not yet become effective and
disregarding any specific accruals relating solely to phantom or restricted
stock which accelerate by reason of the probability of the Merger) in
accordance with generally accepted accounting principles applied on a
consistent basis. "Closing Tangible Equity" shall mean the consolidated
stockholders' equity (excluding any adjustment for unrealized holding gains
or losses with respect to available-for-sale securities pursuant to
Financial Accounting Standards Board Statement No. 115) less goodwill and
core deposit intangibles of NBNA and its Subsidiaries as shown on the
Closing Balance Sheet, and after making the following adjustments: (i) the
Rate Sensitive Portfolio Adjustment and (ii) plus an amount equal to the
Swap Portfolio Adjustment.
(b) For purposes hereof, the "Rate Sensitive Portfolio
Adjustment" shall be determined as follows:
(i) Certain Sales. (A) From the date hereof to the Closing
-------------
Date, NatWest Plc, in its sole discretion, may cause NBNA to sell any
of the Interest Sensitive Securities; provided that with respect to
--------
the sale of municipal securities, FFG shall have the option to
participate in the bid process relating to such sale by notice to NBNA
no later than 14 days after the date hereof; and
17
<PAGE>
(B) (1) From the date hereof to the Closing Date, NatWest
Plc, in its sole discretion, may cause NBNA to sell any of the pools
of Residential Mortgage Loans; provided that a definitive purchase and
--------
sale agreement relating to the sale of any of the Residential Mortgage
Loans must be executed prior to the Closing Date and such sale must be
consummated within 50 days of the Closing Date; and provided further
-------- -------
that such Residential Mortgage Loans shall be sold (x) with servicing
retained by NBNA except for non-performing Residential Mortgage Loans
which may be sold servicing released, (y) except as provided in clause
(z) below, without recourse to NBNA or any of its Subsidiaries or
Affiliates and (z) pursuant to a purchase and sale agreement
reasonably acceptable to FFG, which purchase and sale agreement shall
include only those representations and warranties relating to the
Residential Mortgage Loans that are standard in such purchase and sale
agreements and which shall contain repurchase obligations that arise
only in the event of a material breach of representation or warranty
and failure to cure after a reasonable cure period.
(2) As soon as practicable after the date hereof NBNA shall
also prepare to sell the Residential Mortgage Loans (with servicing
retained by NBNA except for non-performing Residential Mortgage Loans
which shall be sold servicing released) at auction and (x) except as
provided in clause (y) below, without recourse to NBNA or any of its
Subsidiaries or Affiliates and (y) pursuant to a purchase and sale
agreement reasonably acceptable to FFG, which purchase and sale
agreement shall include only those representations and warranties
relating to the Residential Mortgage Loans that are standard in such
purchase and sale agreements and which shall contain repurchase
obligations that arise only in the event of a material breach of
representation or warranty and failure to cure after a reasonable cure
period. NatWest Plc shall cause NBNA to provide the potential bidders
in the auction complete information about the Residential Mortgage
Loan portfolio via computer tape and give due diligence access to the
loan files for at a reasonable period of time. NatWest Plc hereby
covenants that all necessary legal and credit documentation will be
included in such loan files. NatWest Plc also hereby covenants that
all actions to prepare the Residential Mortgage Loans for sale
pursuant to the auction shall be completed prior to the Closing Date.
In the event that the Residential Mortgage Loans are not sold pursuant
to t he provisions of subsection (B)(1) above, FFG shall cause NBNA to
sell such Residential Mortgage Loans at such auction no later than 50
days following the Closing Date.
(ii) Determination of Rate Sensitive Portfolio Adjustment. The
----------------------------------------------------
Rate Sensitive Portfolio Adjustment shall be equal to (A) the Book
Value of the Rate Sensitive Portfolio less the Market Value of the
----
Rate Sensitive Portfolio multiplied by (B) .58 (the "Rate Sensitive
Portfolio Value"). If the Rate Sensitive
18
<PAGE>
Portfolio Value is a positive number, Closing Tangible Equity shall be
decreased by the Rate Sensitive Portfolio Value. If the Rate
Sensitive Portfolio Value is a negative number, Closing Tangible
Equity shall be increased by the Rate Sensitive Portfolio Value.
(iii) Definitions Relating to the Determination of the Rate
-----------------------------------------------------
Sensitive Portfolio Adjustment.
------------------------------
(A) "Market Value of the Rate Sensitive Portfolio" shall be
equal to the sum of (1) the Adjusted Interest Rate Securities Value
---
and (2) the Adjusted Mortgage Loan Value.
(B) "Adjusted Interest Rate Securities Value" shall be an
amount equal to the following:
(1) with respect to any Interest Sensitive Securities not
sold pursuant to Section 3.3(b)(i)(A), an amount equal
to (x) the mid-point of the bid-offer spread for the
Interest Sensitive Securities offered by a mutually
acceptable nationally recognized securities pricing
firm, or (y) if FFG and NatWest Plc cannot agree on a
securities pricing firm, the mid-point of the bid-offer
spread offered for the Interest Sensitive Securities by
a mutually acceptable nationally recognized securities
dealer, or (z) if FFG and NatWest cannot agree on a
securities dealer, the average of the mid-point of the
bid-offer spread offered by three nationally recognized
securities dealers for the Interest Sensitive
Securities, the first to be selected by FFG, the second
to be selected by Natwest Plc and the third to be
selected by the first two selected securities dealers.
(C) "Adjusted Mortgage Loan Value" shall be an amount equal
to the sum of the following:
(1) the aggregate purchase price paid for all Residential
Mortgage Loans sold at auction pursuant to Section
3.3(b)(i)(B)(2); plus
----
(2) with respect to any Residential Mortgage Loans not sold
pursuant to the provisions of Section 3.3(b)(i)(B)(1)
or (2), an amount determined by using similar
methodology to the methodology set forth in Section
3.3(b)(C)(2).
(D) "Book Value" shall mean the book value as of the
Closing
19
<PAGE>
Date, excluding any adjustment for unrealized holding gains or losses
with respect to available-for-sale securities pursuant to Financial
Accounting Standards Bulletin No. 115 but inclusive of any premium or
discount.
(E) "Interest Sensitive Securities" means all securities
held by NBNA or its Subsidiaries, excluding the securities agreed by
the parties hereto to be unique or hard to value.
(F) "Rate Sensitive Portfolio" shall mean the Interest
Sensitive Securities and the Residential Mortgage Loans not sold
pursuant to the provisions of Sections 3.3(b)(i)(A) and
3.3(b)(i)(B)(1) hereof, respectively.
(G) "Residential Mortgage Loans" means all loans secured by
one-to-four family dwellings held by NBNA or any of its Subsidiaries
as of the date hereof, excluding private banking loans made in the
ordinary course of business, employee loans pursuant to employee
programs existing as of the date hereof which shall not be amended or
changed in any manner after the date hereof and loans to moderate and
low income borrowers pursuant to currently existing Community
Reinvestment Act programs in place as of the date hereof, provided
that NatWest Plc shall not permit any Included Subsidiary to enter
into any new such program after the date hereof.
(H) All expenses incurred in connection with the sale or
valuation of the Portfolio Securities and the Residential Mortgage
Loans shall be borne solely by NatWest Plc; provided that any expenses
--------
incurred by NatWest in connection with the transactions contemplated
in Subsections (B)(1) and (C)(2) hereof shall be borne equally by
NatWest and FFG.
(c) If FFG disagrees with Natwest Plc's calculation of Closing
Tangible Equity delivered pursuant to Section 3.3(a), FFG may, within 60
days after delivery of the documents referred to in Section 3.3(a), deliver
a notice to Natwest Plc disagreeing with such calculation and setting forth
FFG's calculation of Closing Tangible Equity.
(d) If a notice of disagreement shall be delivered pursuant to
Section 3.3(c), FFG and Natwest Plc shall, during the 30 days following
such delivery, use their best efforts to determine the amount of Closing
Tangible Equity. If, during such period, Natwest Plc and FFG are unable to
reach such agreement, they shall promptly thereafter cause Coopers &
Lybrand or other independent accountants of nationally recognized standing
reasonably satisfactory to FFG and Natwest Plc (who shall not have any
material relationship with FFG or Natwest Plc), promptly to review this
Agreement and the disputed items or amounts for the purpose of calculating
Closing Tangible Equity. In making such calculation, such independent
accountants shall consider only those items or amounts in the Closing
Balance Sheet or Natwest Plc's
20
<PAGE>
calculation of Closing Tangible Equity as to which FFG has disagreed. Such
independent accountants shall deliver to Natwest Plc and FFG, as promptly
as practicable, a report setting forth such calculation. Such report shall
be final and binding upon Natwest Plc and FFG. The cost of such review and
report shall be borne (i) by Natwest Plc if the difference between Final
Tangible Equity and Natwest Plc's calculation of Closing Tangible Equity
delivered pursuant to Section 3.3(a) is greater than the difference between
Final Tangible Equity and FFG's calculation of Closing Tangible Equity
delivered pursuant to Section 3.3(c), (ii) by FFG if the first such
difference is less than the second such difference and (iii) otherwise
equally by Natwest Plc and FFG.
(e) Natwest Plc and FFG agree that they will, and agree to cause
their respective independent accountants and their respective Subsidiaries
to, cooperate and assist in the preparation of the Closing Balance Sheet
and the calculation of Closing Tangible Equity and in the conduct of the
audits and reviews referred to in this Section, including without
limitation, the making available to the extent necessary of books, records,
work papers and personnel.
3.4 Adjustment of Merger Consideration. (a) If Base Tangible
----------------------------------
Equity exceeds Final Tangible Equity, NatWest Plc shall cause Bancorp NJ
or its designee to pay to FFG, as an adjustment to the Merger
Consideration, in the manner and with interest as provided in Section
3.4(b), the amount of such excess. If Final Tangible Equity exceeds Base
Tangible Equity, FFG shall pay to Bancorp NJ or its designee, in the manner
and with interest as provided in Section 3.4(b), a sum (not exceeding $600
million) equal to the amount of such excess. "Final Tangible Equity" shall
mean the Closing Tangible Equity (i) as shown in Natwest Plc's calculation
delivered pursuant to Section 3.3(a), if no notice of disagreement with
respect thereto is duly delivered pursuant to Section 3.3(c), or (ii) if
such a notice of disagreement is delivered, (A) as agreed by FFG and
Natwest Plc pursuant to Section 3.3(e) or (B) in the absence of such
agreement, as shown in the independent accountant's calculation delivered
pursuant to Section 3.3(e).
(b) Any payment pursuant to Section 3.4(a) shall be made at a
mutually convenient time and place within 10 days after Final Tangible
Equity has been determined, by delivery by FFG or Bancorp NJ or its
designee, as the case may be, of a wire transfer in immediately available
funds from such party to a designated account of such other party. The
amount of any payment to be made pursuant to this Section 3.4 shall bear
interest from and including the Closing Date to but excluding the date of
payment at a rate per annum equal to LIBOR as of the Closing Date. Such
interest shall be payable at the same time as the payment to which it
relates and shall be calculated daily on the basis of a year of 360 days
and the actual number of days elapsed.
3.5 Legending of Securities. Each certificate representing the FFG
-----------------------
21
<PAGE>
Common Stock and each certificate representing the FFG Preferred Stock to
be issued to Bancorp NJ or its designee as part of the Merger Consideration
shall bear the following legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not
be transferred, sold or otherwise disposed of except while such a
registration is in effect under such act and applicable state
securities laws or pursuant to an exemption from registration under
such act or such laws."
3.6 Earnout. (a) Amount of Earnout. In addition to the Merger
------- -----------------
Consideration payable in respect of the Merger, FFG shall pay or cause to
be paid to NatWest Plc, in respect of each Earnout Year during the Earnout
Period, cash in an amount equal to the following:
(i) if Adjusted Net Income for such Earnout Year is $100,000,000
or less, such amount shall be equal to zero;
(ii) if Adjusted Net Income for such Earnout Year is more than
$100,000,000 but not more than $200,000,000, such amount shall be
equal to the excess of Adjusted Net Income for such Earnout Year over
$100,000,000;
(iii) if Adjusted Net Income for such Earnout Year is more than
$200,000,000 but not more than $300,000,000, such amount shall be
equal to the sum of (A) $100,000,000 and (B) 60% of the excess of
Adjusted Net Income for such Earnout Year over $200,000,000; and
(iv) if Adjusted Net Income for such Earnout Year is more than
$300,000,000, such amount shall be equal to the sum of (A)
$160,000,000 and (B) 50% of the excess of Adjusted Net Income for such
Earnout Year over $300,000,000;
provided that in no event shall the aggregate amount paid to NatWest Plc
- --------
pursuant to this Section 3.6 over the Earnout Period exceed $560,000,000.
(b) Calculation of Earnout. (i) As promptly as practicable, but
----------------------
no later than 45 days after the last day of each Earnout Year in the
Earnout Period, FFG will cause to be prepared and delivered to NatWest Plc
a calculation of Adjusted Net Income for such Earnout Year. No later than
10 days after the delivery of such calculation of Adjusted Net Income,
NatWest Plc may, with written notice to FFG, make a written request to KPMG
Peat Marwick or other independent accountants of nationally recognized
standing reasonably satisfactory to NatWest Plc and FFG (who shall not have
any material relationship with NatWest Plc or FFG) to prepare and
22
<PAGE>
deliver a report verifying such calculation, using procedures agreed upon
by NatWest Plc and such independent accountants with FFG's consent (which
shall not be unreasonably withheld or delayed). The cost of such report
shall be borne equally by NatWest Plc and FFG. The calculation of Adjusted
Net Income resulting from such report (or the calculation of Adjusted Net
Income delivered by FFG, if no report is requested with written notice to
FFG within 10 days after the delivery of such calculation) shall be final
and binding upon NatWest Plc and FFG.
(ii) In connection with any report requested by NatWest Plc
pursuant to paragraph (i) of this subsection (b), upon reasonable notice
and subject to applicable laws relating to the exchange of information, FFG
will (A) give, and will cause the Surviving Bank to give, NatWest Plc, its
employees and its independent accountants access during normal business
hours to the offices, properties, books and records of the Surviving Bank
and to the books and records of FFG relating to the Surviving Bank, (B)
furnish, and will cause the Surviving Bank to furnish, to NatWest Plc, its
employees and its independent accountants such financial information and
data relating to the Surviving Bank as NatWest Plc, its employees or its
independent accountants may reasonably request and (C) instruct the
employees of FFG and the Surviving Bank to cooperate with NatWest Plc, its
employees and its independent accountants in the preparation of such
report.
(c) Earnout Payments. On the fifth business day following the
----------------
delivery by FFG of a calculation of Adjusted Net Income for each Earnout
Year in the Earnout Period in accordance with subsection (b) of this
Section 3.6, the cash payment required under subsection (a) of this Section
3.6 for such Earnout Year shall be due and shall be made by wire transfer,
in immediately available funds, to an account of NatWest Plc or its
designee, which account shall be designated in writing to FFG not less than
three business days prior to the date of payment. In the event that any
independent accountants' report delivered pursuant to subsection (b) of
this Section 3.6 results in a calculation of Adjusted Net Income different
from the calculation previously delivered by FFG, NatWest Plc and FFG agree
that an appropriate adjustment shall be made to the amount paid under this
subsection (c), by wire transfer of immediately available funds, no later
than the fifth business day following the delivery of such independent
accountants' report.
(d) Optional Prepayment of Earnout. FFG shall have the option
------------------------------
at any time during the Earnout Period, upon five business days' prior
written notice to NatWest Plc, to pay or cause to be paid to NatWest Plc
cash equal to the Negotiated Prepayment Amount. On the date specified in
such notice, such cash payment shall be made by wire transfer, in
immediately available funds, to an account of NatWest Plc or its designee,
which account shall be designated in writing to FFG not less than three
business days prior to the date of payment. Upon the making of such
payment, FFG shall be deemed to have satisfied in full its obligations
under this Section 3.6.
23
<PAGE>
For purposes of this subsection (d), "Negotiated Prepayment
Amount" means an amount to be agreed by NatWest Plc and FFG.
(e) Mandatory Prepayment of Earnout. If any one or more of the
-------------------------------
following events shall occur and be continuing for any reason whatsoever:
(i) FFG shall fail, within the period specified in subsection
(b) of this Section 3.6, to cause to be prepared and delivered to
NatWest Plc a calculation of Adjusted Net Income for any Earnout Year
for 30 days after notice of such failure has been given to FFG by
NatWest Plc;
(ii) FFG shall fail to pay or cause to be paid to NatWest Plc
when due any amount payable under this Section 3.6;
(iii) FFG shall fail to observe or perform any covenant set
forth in this Section 3.6 for 90 days after notice of such failure has
been given to FFG by NatWest Plc;
(iv) the Average Tier 1 Leverage Ratio of the Surviving Bank
shall be less than 4.00% for any Earnout Year;
(v) FFG or the Surviving Bank shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment
for the benefit of creditors, or shall fail generally to pay its debts
as they become due, or shall take any corporate action to authorize
any of the foregoing;
(vi) an involuntary case or other proceeding shall be commenced
against FFG or the Surviving Bank seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be
entered against FFG or the Surviving Bank under the federal bankruptcy
laws as now or hereafter in effect;
(vii) from and after January 1, 2000, (A) any person or group of
persons (within the meaning of Section 13 or 14 of the Securities
Exchange
24
<PAGE>
Act of 1934, as amended) shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the SEC under said
Act) of 25% or more of the outstanding shares of common stock of FFG
or (B) during any period of 12 consecutive calendar months,
individuals who were incumbent directors of FFG on the first day of
such period (together with individuals recommended by such incumbent
directors for election to succeed such incumbent directors) shall
cease to constitute a majority of the board of directors of FFG; or,
from and after the Closing Date, either of (A) or (B) shall have
occurred as a result of (x) a publicly disclosed unsolicited
acquisition proposal made to FFG by any Person or (y) a tender offer
for the outstanding common stock of FFG pursuant to which the board of
directors of FFG does not initially recommend in FFG's Tender Offer
Solicitation/Recommendation Statement on Schedule 14D-9 that
stockholders tender their common stock;
(viii) from and after January 1, 2000, FFG shall either (A)
consolidate or merge with or into any other Person (other than
pursuant to a consolidation or merger pursuant to which the common
stockholders of FFG immediately prior to the effective time of such
consolidation or merger own a majority of the issued and outstanding
common stock of the surviving corporation immediately after such
effective time) or (B) sell, lease or otherwise transfer, directly or
indirectly, all or any substantial part of the assets of FFG and its
Subsidiaries, taken as a whole, to any other Person; or, from and
after the Closing Date, either of (A) or (B) shall have occurred as a
result of (x) a publicly disclosed unsolicited acquisition proposal
made to FFG by any Person or (y) a tender offer for the outstanding
common stock of FFG pursuant to which the board of directors of FFG
does not initially recommend in FFG's Tender Offer
Solicitation/Recommendation Statement on Schedule 14D-9 that
stockholders tender their common stock; or
(ix) the Surviving Bank shall (A) consolidate or merge with or
into any other Person (including any Affiliate of FFG) or (B) sell,
lease or otherwise transfer, directly or indirectly, all or
substantially all of the assets of the Surviving Bank to any other
Person (including any Affiliate of FFG);
then NatWest Plc may, by written notice to FFG, require FFG immediately to
pay or cause to be paid to NatWest Plc cash equal to the Undiscounted
Prepayment Amount and, on the date specified in such notice, such cash
payment shall be made by wire transfer, in immediately available funds, to
an account of NatWest Plc or its designee, which account shall be
designated in such notice; provided that in the case of the events
--------
specified in clause (v) or (vi) above with respect to FFG, without any
notice to FFG or any other action by NatWest Plc, the Undiscounted
Prepayment Amount shall become immediately due and payable to NatWest Plc;
and provided further that in the case of the events specified in clause
-------- -------
(vii), (viii) or (ix) above, FFG shall be required to pay or cause to be
paid the Discounted Prepayment Amount in lieu of the
25
<PAGE>
Undiscounted Prepayment Amount. NatWest Plc agrees that its sole remedy
upon the occurrence and continuance of any of the foregoing events shall be
the receipt of the Undiscounted Prepayment Amount or the Discounted
Prepayment Amount, as the case may be.
For purposes of this subsection (e), "Discounted Prepayment
Amount" means, at any time during any Earnout Year set forth below, the
Undiscounted Prepayment Amount at such time multiplied by the discount rate
set forth opposite such Earnout Year:
Earnout Year Rate
------------ ----
ending in 1997 0.85
ending in 1998 0.92
ending in 1999 0.95
ending thereafter 1.00
For purposes of this subsection (e), "Undiscounted Prepayment
Amount" means, at any time, the excess of (i) $560,000,000 over (ii) the
sum of all amounts paid to NatWest Plc under this Section 3.6 prior to such
time.
(f) Certain Covenants of FFG. FFG agrees that, during the
------------------------
period beginning on the Closing Date and ending on the last day of the
Earnout Period:
(i) all interest-earning assets acquired by FFG and its
Subsidiaries that would, consistent with FFG's past practices, be
attributed to the Market Area shall be recorded on the books of the
Surviving Bank; provided that interest-earning assets related to any
--------
credit cards issued by FFG and its Subsidiaries shall be recorded on
the books of the Surviving Bank to the extent such credit cards have a
billing address in the Market Area;
(ii) all deposits and customer relationships (including, without
limitation, core deposit relationships) acquired by FFG and its
Subsidiaries that would, consistent with FFG's past practices, be
attributed to the Market Area shall be for the benefit of and, as
appropriate, shall be recorded on the books of the Surviving Bank;
(iii) the interest rate sensitivity position of the Surviving
Bank shall be maintained on a basis consistent, in all material
respects, with FFG's asset/liability management policy as in effect
from time to time; provided that the assets and liabilities of the
--------
Surviving Bank shall be managed so that the Surviving Bank is not
materially more interest rate sensitive than any other bank Subsidiary
of FFG;
26
<PAGE>
(iv) Actual Corporate Overhead Expenses shall be the only
corporate overhead and operating expenses allocated to the Surviving
Bank and, in any event, shall be allocated to the Surviving Bank on a
basis at least as favorable to the Surviving Bank as the basis on
which corporate overhead and operating expenses are allocated to any
other Subsidiary of FFG from time to time; and
(v) FFG shall, within 45 days after the end of each fiscal
quarter of the Surviving Bank during the Earnout Period, furnish
NatWest Plc with its customary quarterly management financial package
for the Surviving Bank, which shall include the Surviving Bank's
Consolidated Report of Condition and Income (Call Report) for such
fiscal quarter.
Together with each delivery of a calculation of Adjusted Net
Income pursuant to subsection (b) of this Section 3.6, FFG shall deliver a
certificate of its chief financial officer or corporate controller
certifying compliance with the covenants set forth in this subsection (f).
For purposes of this subsection (f), "Market Area" means the
State of New Jersey, the City of New York and the Counties of Nassau,
Rockland, Suffolk and Westchester in the State of New York.
(g) Definition of Adjusted Net Income. For purposes of this
---------------------------------
Section 3.6, "Adjusted Net Income" means, for any Earnout Year, the
consolidated net income of the Surviving Bank and its consolidated
Subsidiaries for such Earnout Year, after all expenses and other proper
charges, including income and franchise taxes, determined in accordance
with Current GAAP applied on a basis consistent with the FFG accounting
policies and procedures set forth in Schedule 3.6, with the following
special provisions (i) through (x) to be applied in lieu of Current GAAP.
(i) If, for any Earnout Year, the Average Tier 1 Leverage Ratio
is less than 6.50% or Average Common Equity is less than
$1,900,000,000, then (A) the amount of additional Average Tier 1
Capital that would be necessary for the Average Tier 1 Leverage Ratio
to equal 6.50% for such Earnout Year or (B) the amount of additional
Average Common Equity that would be necessary for Average Common
Equity to equal $1,900,000,000 for such Earnout Year, whichever of (A)
or (B) is greater, shall be deemed, for purposes of calculating
Adjusted Net Income for such Earnout Year, to be invested capital of
the Surviving Bank earning interest (on a before-tax basis) at the
rate per annum equal to the sum of (x) the average of the five-year
Treasury bill rate on the last day of each fiscal quarter during such
Earnout Year plus (y) 0.50%.
(ii) For purposes of calculating Adjusted Net Income for any
Earnout Year, the provision for loan losses of the Surviving Bank for
such Earnout Year (on a before-tax basis) shall be deemed to equal the
excess (whether positive
27
<PAGE>
or negative) of (A) the aggregate charge-offs (net of recoveries) of
the Surviving Bank for such Earnout Year over (B) the aggregate
charge-offs (net of recoveries) in respect of the Fleet Downstate
Assets; provided that for purposes of calculating Adjusted Net Income
--------
for each of the first three Earnout Years in the Earnout Period, the
provision for loan losses of the Surviving Bank for such Earnout Year
(on a before-tax basis) shall be deemed to equal the foregoing amount
plus (x) in the case of the first Earnout Year in the Earnout Period,
----
$20,000,000, (y) in the case of the second Earnout Year in the Earnout
Period, $30,000,000, and (z) in the case of the third Earnout Year in
the Earnout Period, $30,000,000.
"Fleet Downstate Assets" means the loans and leases set forth in
a schedule to be delivered by FFG on the Closing Date.
(iii) For purposes of calculating Adjusted Net Income for any
Earnout Year, net losses of the Surviving Bank and its consolidated
Subsidiaries for such Earnout Year (on a before-tax basis) that are
fairly attributable to any Excluded Business Line (including, without
limitation, corporate overhead and operating expenses) shall be
excluded from the consolidated net income of the Surviving Bank and
its consolidated Subsidiaries for such Earnout Year.
"Excluded Business Line" means, in any Earnout Year, any new line
of business acquired or established by the Surviving Bank after the
Closing Date that (A) was not engaged in by the Surviving Bank
immediately after giving effect to the Merger and is not engaged in
generally by other Subsidiaries of FFG and (B) has fairly attributable
to it a net loss for such Earnout Year (including, without limitation,
corporate overhead and operating expenses) in excess of $25,000,000
(on a before-tax basis).
(iv) For purposes of calculating Adjusted Net Income for any
Earnout Year, Fleet Downstate Earnings for such Earnout Year shall be
deducted from the consolidated net income of the Surviving Bank and
its consolidated Subsidiaries for such Earnout Year.
"Fleet Downstate Earnings" means, for any Earnout Year, the
product of (i) Fleet Downstate Earnings for the previous Earnout Year
times (ii) a percentage, which shall be the sum of 100% and the
Downstate Growth Factor for such Earnout Year; provided that, subject
--------
to the following paragraph, Fleet Downstate Earnings for the first
Earnout Year in the Earnout Period shall be deemed to be $25,000,000.
As promptly as possible, but no later than 60 days after the
Closing Date, FFG will cause to be prepared and delivered to NatWest
Plc a recalculation of the amount of deemed Fleet Downstate Earnings
for the first Earnout Year in the
28
<PAGE>
Earnout Period from then-current financial information (including,
without limitation, yields on the Fleet Downstate Assets and rates on
the Fleet Downstate Liabilities), using the same assumptions and
methodology as used by FFG for the initial calculation of such amount.
No later than 10 days after the delivery of such recalculation,
NatWest Plc may, with written notice to FFG, make a written request to
KPMG Peat Marwick or other independent accountants of nationally
recognized standing reasonably satisfactory to NatWest Plc and FFG
(who shall not have any material relationship with NatWest Plc or FFG)
to prepare and deliver a report verifying such recalculation, using
the same assumptions and methodology as used by FFG for the initial
calculation of deemed Fleet Downstate Earnings for the first Earnout
Year in the Earnout Period and any other procedures agreed upon by
NatWest Plc and such independent accountants with FFG's consent (which
shall not be unreasonably withheld or delayed). The cost of such
report shall be borne equally by NatWest Plc and FFG. The
recalculation of the amount of deemed Fleet Downstate Earnings for the
first Earnout Year in the Earnout Period resulting from such report
(or the recalculation of such amount delivered by FFG, if no report is
requested with written notice to FFG within 10 days after the delivery
of such recalculation) shall be final and binding upon NatWest Plc and
FFG and, in the event that such recalculation results in an amount
that is more than $5,000,000 higher or lower than $25,000,000, NatWest
Plc and FFG agree that Fleet Downstate Earnings for the first Earnout
Year in the Earnout Period shall be deemed to be such higher or lower
amount.
"Fleet Downstate Liabilities" means the deposits and other
obligations set forth in a schedule to be delivered by FFG on the
Closing Date.
"Downstate Growth Factor" means, for any Earnout Year, a
percentage equal to the lesser of (i) 5% and (ii) the percentage
change (whether positive or negative) in the consolidated net income
of the Surviving Bank and its consolidated Subsidiaries for such
Earnout Year as compared to the previous Earnout Year, in each case
determined in accordance with Current GAAP.
(v) For purposes of calculating Adjusted Net Income for any
Earnout Year, NatWest Mortgage Earnings for such Earnout Year shall be
added to the consolidated net income of the Surviving Bank and its
consolidated Subsidiaries for such Earnout Year.
"NatWest Mortgage Earnings" means, for any Earnout Year set forth
below, the amount set forth opposite such Earnout Year:
29
<PAGE>
Earnout Year Amount
------------ ------
ending in 1997 $ 4,400,000
ending in 1998 $ 5,600,000
ending in 1999 $ 7,100,000
ending in 2000 $ 8,500,000
ending in 2001 $ 9,800,000
ending in 2002 $11,300,000
ending in 2003 $13,000,000
ending in 2004 $15,000,000
(vi) For purposes of calculating Adjusted Net Income for any
Earnout Year set forth below, (i) Actual Corporate Overhead Expenses
of the Surviving Bank or any of its consolidated Subsidiaries for such
Earnout Year (on a before-tax basis) shall be excluded from the
consolidated net income of the Surviving Bank and its consolidated
Subsidiaries for such Earnout Year and (ii) corporate overhead
expenses charged to the Surviving Bank for such Earnout Year shall be
deemed to be the lesser of (x) the amount set forth opposite such
Earnout Year and (y) the amount of Actual Corporate Overhead Expenses
of the Surviving Bank and its consolidated Subsidiaries for such
Earnout Year (on a before-tax basis) and, in either case, such amount
shall be included in the consolidated net income of the Surviving Bank
and its consolidated Subsidiaries for such Earnout Year:
Earnout Year Amount
------------ ------
ending in 1997 $320,000,000
ending in 1998 $253,000,000
ending in 1999 $244,000,000
ending in 2000 $247,000,000
ending in 2001 $254,000,000
ending in 2002 $265,000,000
ending in 2003 $275,000,000
ending in 2004 $286,000,000
(vii) For purposes of calculating Adjusted Net Income for any
Earnout Year, an amount shall be added to the consolidated net income
of the Surviving Bank and its consolidated Subsidiaries equal (on a
before-tax basis) to 1.25% of the excess, if any, of (x) the amount
set forth below opposite such Earnout Year over (y) the daily average
net balance of the residential mortgage loan portfolio of the
Surviving Bank and its consolidated Subsidiaries for such Earnout
Year:
30
<PAGE>
Earnout Year Amount
------------ ------
ending in 1997 $3,000,000,000
ending in 1998 $2,200,000,000
ending in 1999 $2,000,000,000
ending in 2000 $1,900,000,000
ending in 2001 $1,800,000,000
ending in 2002 $1,800,000,000
ending in 2003 $1,700,000,000
ending in 2004 $1,600,000,000
(viii) For purposes of calculating Adjusted Net Income for any
Earnout Year, to the extent the net loss (if any) of the Surviving
Bank and its consolidated Subsidiaries for such Earnout Year resulting
from all nonrecurring items not in the normal course of business
(other than one-time charges related to the Merger) exceeds
$25,000,000 (on a before-tax basis), the amount of such excess shall
be reversed and added to the consolidated net income of the Surviving
Bank and its consolidated Subsidiaries for such Earnout Year.
(ix) For purposes of calculating Adjusted Net Income for any
Earnout Year set forth below, one-time charges of the Surviving Bank
related to the Merger for such Earnout Year (on a before-tax basis)
shall be deemed to be the lesser of (x) the amount set forth opposite
such Earnout Year and (y) actual one-time charges of the Surviving
Bank related to the Merger for such Earnout Year (on a before-tax
basis):
Earnout Year Amount
------------ ------
ending in 1997 $24,000,000
ending in 1998 $ 9,000,000
ending in 1999 $ 9,000,000
ending in 2000 $ 9,000,000
ending in 2001 $ 9,000,000
ending in 2002 $ 9,000,000
ending in 2003 $ 9,000,000
ending in 2004 $ -0-
(x) Expenses for income and franchise taxes in respect of any
Earnout Year shall be calculated in accordance with Current GAAP
applied on a basis consistent with the FFG accounting policies and
procedures set forth in Schedule 3.6, as if such calculations were
being made on a stand alone basis with respect to the consolidated
group consisting of the Surviving Bank and its consolidated
31
<PAGE>
Subsidiaries; provided that the dollar effect of each of the foregoing
--------
special provisions (i) through (iii) and (vi) through (ix) on the
consolidated net income of the Surviving Bank and its consolidated
Subsidiaries for such Earnout Year shall be adjusted for applicable
income and franchise taxes by multiplying such dollar effect (whether
positive or negative) by 60%.
(h) Additional Definitions. For purposes of this Section 3.6,
----------------------
the following terms shall have the following meanings:
"Actual Corporate Overhead Expenses" means (a) all corporate
overhead and operating expenses allocated to the Surviving Bank by Fleet
Services Corp. ("FSC"), Fleet Corporate Administration ("FCA") (a division
of FSC) or any Subsidiary or division of FFG succeeding to the operations
of FSC or FCA and (b) any corporate management fee allocated to the
Surviving Bank by FFG.
"Average Common Equity" means, for any Earnout Year, the monthly
average common equity of the Surviving Bank during such Earnout Year,
determined in accordance with Current GAAP.
"Average Tier 1 Capital" means, for any Earnout Year, the monthly
average tier 1 capital of the Surviving Bank during such Earnout Year,
determined in accordance with 12 C.F.R. Part 3, Appendix A, Section 2, as
in effect on the date hereof.
"Average Tier 1 Leverage Ratio" means, for any Earnout Year, the
ratio, expressed as a percentage, of (i) Average Tier 1 Capital for such
Earnout Year to (ii) the excess of (x) the average total assets of the
Surviving Bank during such Earnout Year (as derived from the Surviving
Bank's Consolidated Reports of Condition and Income (Call Reports) for such
Earnout Year) over (y) goodwill and other intangible assets of the
Surviving Bank (to the extent such assets are required to be deducted from
tier 1 capital pursuant to 12 C.F.R. Part 3, Appendix A, Section 2, as in
effect on the date hereof) at the end of such Earnout Year.
"Current GAAP" means United States generally accepted accounting
principles as in effect on the date hereof.
"Earnout Period" means (i) if the Closing Date is on or before
June 30, 1996, the period beginning on July 1, 1996 and ending on June 30,
2004 or (ii) if the Closing Date is after June 30, 1996, the period
beginning on the first day of the fiscal quarter immediately following the
Closing Date (the "Earnout Commencement Date") and ending on the day
immediately preceding the eighth anniversary of the Earnout Commencement
Date.
"Earnout Year" means (i) if the Closing Date is on or before June
30, 1996, any period of four consecutive fiscal quarters
32
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ending on June 30 or (ii) if the Closing Date is after June 30, 1996, any
period of four consecutive fiscal quarters ending on the day immediately
preceding an anniversary of the Earnout Commencement Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NATWEST PLC
Natwest Plc hereby represents and warrants to FFG, as of the date
hereof and as of the Closing Date, as follows:
4.1 Corporate Existence and Power. (a) NatWest Plc is a public
-----------------------------
limited company duly organized and validly existing under the laws of
England. Each of Holdings, Bancorp and Bancorp NJ is a corporation, duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and authority,
and has all material governmental licenses, authorizations, permits,
consents and approvals required, to own or lease all of its properties and
assets and to carry on its business as now conducted.
(b) NBNA is a bank duly incorporated, validly existing and in
good standing under the laws of the United States and has all powers and
authority, and has all governmental licenses, authorizations, permits,
consents and approvals required, to own or lease all of its properties and
assets and to carry on its business as now conducted, except for those
licenses, authorizations, permits, consents and approvals the absence of
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Included Subsidiaries. Natwest Plc has heretofore delivered
to FFG true and complete copies of the articles of association and bylaws
of NBNA as currently in effect.
(c) The minute books of Holdings, Bancorp, Bancorp NJ and the
Included Subsidiaries accurately reflect in all material respects all
corporate actions held or taken since January 1, 1994 of their respective
stockholders and Boards of Directors (including committees thereof).
4.2 Corporate Authorization. (a) The execution, delivery and,
-----------------------
subject only to receipt of the Seller Regulatory Approvals and the Seller
Stockholder Approvals, performance by Natwest Plc of this Agreement and
each Ancillary Agreement to which NatWest Plc is a party are within its
corporate powers and have been duly authorized by all necessary corporate
action on the part of Natwest Plc, and no other corporate proceedings on
the part of Natwest Plc are required to authorize the execution and
delivery by NatWest Plc of this Agreement or any of the Ancillary
Agreements to which it is a party, the performance of its obligations
hereunder and thereunder and the consummation by Natwest Plc of the
transactions contemplated hereby and thereby. This Agreement has
been duly and validly executed and delivered
33
<PAGE>
by Natwest Plc and constitutes, and when executed and delivered each
Ancillary Agreement to which Natwest Plc is a party will constitute,
a valid and binding agreement of Natwest Plc, enforceable in accordance
with its terms, except as (i) the enforceability hereof and thereof may
be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (ii) the
enforceability of equitable remedies may be limited by equitable
principles of general applicability.
(b) To the extent the transactions contemplated hereby or by any
Ancillary Agreement require any corporate action on the part of Holdings,
Bancorp or Bancorp NJ, such action is within the corporate power and
authority of Holdings, Bancorp and Bancorp NJ, as the case may be.
4.3 Consents and Approvals. The execution, delivery and
----------------------
performance by Natwest Plc of this Agreement and each Ancillary Agreement
to which it is a party require no action by or in respect of, or filing
with, or consent of any Governmental Entity or any third party other than
(i) the Seller Regulatory Approvals, (ii) the Seller Stockholder Approvals
and (iii) any such action or filing as to which the failure to make, or any
such consent as to which the failure to obtain, would not, individually or
in the aggregate, have a Material Adverse Effect on the Included
Subsidiaries.
4.4 Non-Contravention. The execution, delivery and performance
-----------------
by Natwest Plc of this Agreement and each Ancillary Agreement to which it
is a party and the consummation of the transactions contemplated hereby and
thereby do not and will not (i) violate the memorandum or articles of
association of the Delaware Bank, NBNA or NatWest Plc or the certificate of
incorporation or bylaws of Holdings, Bancorp, Bancorp NJ, NatWest Insurance
or any of the Included Subsidiaries (other than NBNA and the Delaware
Bank), (ii) assuming compliance with the matters referred to in Section
4.3, violate any material law, statute, code, ordinance, rule, regulation,
judgment, injunction, order or decree applicable to Holdings, Bancorp,
Bancorp NJ, NatWest Insurance or any of the Included Subsidiaries or their
respective properties or assets, (iii) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or give rise to any termination or right of
termination, cancellation or acceleration of any right or obligation of
Holdings, Bancorp, Bancorp NJ, NatWest Insurance or any of the Included
Subsidiaries or a loss of any benefit to which Holdings, Bancorp, Bancorp
NJ, NatWest Insurance or any of the Included Subsidiaries is entitled to
under any agreement or other instrument or obligation to which Holdings,
Bancorp, Bancorp NJ, Holdings, Bancorp, Bancorp NJ, NatWest Insurance or
NatWest Insurance any of the Included Subsidiaries is a party or by which
they or any of their respective properties or assets may be bound or
affected or any license, franchise, permit or other similar authorization
held by Holdings, Bancorp, Bancorp NJ, Holdings,
34
<PAGE>
Bancorp, Bancorp NJ, NatWest Insurance or NatWest Insurance or any of the
Included Subsidiaries or (iv) result in the creation or imposition of any
Lien on any asset of Holdings, Bancorp, Bancorp NJ, NatWest Insurance or
any of the Included Subsidiaries except, in the case of clauses (iii) and
(iv), to the extent that any such violation, default, right, loss or Lien
would not, individually or in the aggregate, have a Material Adverse Effect
on the Included Subsidiaries.
4.5 Capitalization. (a) The authorized capital stock of NBNA
--------------
consists of 10,000,000 shares of NBNA Common Stock. As of the date hereof,
there are issued and outstanding 9,129,743 shares of NBNA Common Stock.
(b) All of the issued and outstanding shares of NBNA Common
Stock have been duly authorized and validly issued and are fully paid and
(except to the extent set forth in 12 U.S.C. Sec. 55) non-assessable and free
of pre-emptive rights, with no personal liability attaching to the
ownership thereof. Except as set forth in this Section 4.5, as of the date
hereof there are no outstanding (i) shares of capital stock or voting
securities of NBNA, (ii) securities of or other ownership interests in NBNA
convertible into or exchangeable for shares of capital stock or voting
securities of or other ownership interests in NBNA or (iii) options,
warrants, calls or other rights, agreements, commitments of any character
to acquire from Natwest Plc or any of its Subsidiaries, or other
obligations of Natwest Plc or any of its Subsidiaries, to issue any capital
stock or other voting securities or ownership interests in, or securities
convertible into or exchangeable for any capital stock or other voting
securities or ownership interests in NBNA (the items in clauses (i), (ii)
and (iii) being referred to collectively as the "NBNA Securities"). There
are no outstanding obligations of NBNA or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any NBNA Securities.
4.6 Ownership of Shares. As of the date hereof, Bancorp NJ is
-------------------
the record and beneficial owner of the NBNA Common Stock, free and clear of
any Lien and any other limitation or restriction (including any restriction
on the right to vote, sell or otherwise dispose of the NBNA Common Stock
other than pursuant to generally applicable regulatory requirements).
4.7 Subsidiaries. (a) Delaware Bank is a duly organized and
------------
validly existing bank in good standing under the laws of the State of
Delaware. Delaware Bank has all powers and authority and has all
licenses, authorizations, permits, consents and approvals required to own
or lease all of its properties and assets and to carry on its business as
now conducted, except for those licenses, authorizations, permits, consents
and approvals the absence of which would not, individually or in the
aggregate, have a Material Adverse Effect on the Included Subsidiaries. To
the extent the transactions contemplated hereby require any corporate
action on the part of the Delaware Bank, such action is within its
corporate power and authority. Each Included Subsidiary (other than the
Delaware Bank and NBNA) is a corporation duly
35
<PAGE>
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, has all corporate powers and authority and
has all licenses, authorizations, permits, consents and approvals required
to own or lease all of its properties and assets and to carry on its
business as now conducted, except for those licenses, authorizations,
permits, consents and approvals the absence of which would not,
individually or in the aggregate, have a Material Adverse Effect on the
Included Subsidiaries. Except as disclosed in writing to, and acknowledged
by, FFG, each Included Subsidiary (other than the Delaware Bank and NBNA)
is duly licensed or qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where such licensing or
qualification is necessary, except for those jurisdictions where failure to
be so licensed or qualified would not, individually or in the aggregate,
have a Material Adverse Effect on the Included Subsidiaries. All Included
Subsidiaries (other than NBNA and the Delaware Bank) and their respective
jurisdictions of incorporation are identified on Schedule 4.7.
(b) Except as disclosed in Schedule 4.7, all of the outstanding
capital stock of, or other voting securities or ownership interests in,
each Included Subsidiary (other than NBNA) are validly issued, fully paid
and non-assessable and are free of pre-emptive rights with no personal
liability attaching thereto and are owned by Holdings, directly or
indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other voting securities or
ownership interests other than pursuant to generally applicable regulatory
requirements). There are no outstanding (i) securities of any of the
Included Subsidiaries (other than NBNA) convertible into or exchangeable
for shares of capital stock or other voting securities or ownership
interests in any of the Included Subsidiaries (other than NBNA) or (ii)
options, warrants, calls or other rights, agreements, commitments of any
character to acquire from NatWest Plc, Holdings or any of its Subsidiaries,
or other obligation of NatWest Plc, Holdings or any of its Subsidiaries to
issue, any capital stock or other voting securities or ownership interests
in, or any securities convertible into or exchangeable for any capital
stock or other voting securities or ownership interests in, any Included
Subsidiary (other than NBNA) (the items in clauses (i) and (ii) being
referred to collectively as the "Subsidiary Securities"). There are no
outstanding obligations of Holdings or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any outstanding Subsidiary
Securities.
4.8 Financial Statements. (a) The consolidated balance sheet of
--------------------
Holdings and its Subsidiaries as of December 31, 1992, December 31, 1993
and December 31, 1994 and the related consolidated statements of income and
cash flows for each of the years ended December 31, 1992, December 31, 1993
and December 31, 1994, in each case accompanied by the audit report of KPMG
Peat Marwick, and the unaudited consolidated balance sheet of Holdings and
its Subsidiaries as of March 31, 1995, June 30, 1995, and September 30,
1995, and the related consolidated statements of income for the three
months, six months and nine
36
<PAGE>
months ended March 31, 1995, June 30, 1995, and September 30, 1995,
respectively, previously delivered to FFG, present fairly in all material
respects the consolidated financial position of Holdings and its
Subsidiaries as of the dates thereof and their consolidated results of
operations and changes in consolidated financial position for the periods
then ended in conformity with GAAP (subject to normal year-end adjustments
in the case of any unaudited interim financial statements). The books and
records of Holdings and its Subsidiaries have been at all times, and are
currently being, maintained in all material respects in accordance with
GAAP and any other applicable legal and accounting requirements.
(b) The Balance Sheet and the related unaudited pro forma
consolidating statements of income and cash flows for nine-month period
ended September 30, 1995, previously delivered to FFG (the "Pro Forma
Statements") present fairly in all material respects the pro forma
consolidating financial position of the Included Subsidiaries and the
Transferred Assets and Liabilities as of the date thereof and the pro forma
consolidated results of operations and changes in financial position for
the period then ended in conformity with GAAP (subject to normal year-end
adjustments).
4.9 Absence of Certain Changes or Events. Except as disclosed
------------------------------------
in Schedule 4.9, as reflected in the Pro Forma Statements or as
contemplated by this Agreement, since June 30, 1995, the businesses of
Bancorp and its Subsidiaries have been conducted in the ordinary course
consistent with past practices and there has not been:
(i) any event, occurrence, development or state of circumstances
or facts which has had or would reasonably be expected to have a
Material Adverse Effect on the Included Subsidiaries, other than any
resulting from or attributable to (A) the transactions contemplated by
this Agreement and (B) changes in general conditions (including laws
and regulations) applicable to the banking industry or general
economic conditions that, in either case, have not had a materially
more adverse effect on the Included Subsidiaries, taken as a whole,
than on similar banking organizations;
(ii) any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with
respect to any shares of capital stock of the Included Subsidiaries
(other than in connection with or relating to the Dividend Excluded
Transactions) or any repurchase, redemption or other acquisition by
Holdings or any of its Subsidiaries of any outstanding shares of
capital stock or other securities of, or other ownership interests in,
any of the Included Subsidiaries;
(iii) any change in the credit policies or procedures of any of
the Included Subsidiaries, the effect of which change was or is to
make any such
37
<PAGE>
policy or procedure less restrictive in any material respect;
(iv) any incurrence, assumption or guarantee by any of the
Included Subsidiaries of any indebtedness for borrowed money other
than in the ordinary course of business and in amounts and on terms
consistent with past practices;
(v) any transaction or commitment made, or any contract or
agreement entered into, by any of the Included Subsidiaries relating
to their respective assets or businesses (including the acquisition or
disposition of any assets) or any relinquishment by any of the
Included Subsidiaries of any contract or other right, in either case,
material to the Included Subsidiaries, taken as a whole, other than
those contemplated by the Ancillary Agreements;
(vi) any change in any method of accounting or accounting
practice by any of Bancorp and its Subsidiaries, except (i) for any
such change after the date hereof required by reason of a concurrent
change in GAAP and (ii) with respect to the reclassification of
certain securities from held to maturity to held for sale during the
Financial Accounting Standards Board Statement No. 115 window period
and certain changes in the application of Financial Accounting
Standards Board Statement No. 91 as it relates to consumer loans; or
(vii) any (A) employment, deferred compensation, severance,
retirement or other similar agreement entered into with any director,
officer or employee of any of the Included Subsidiaries (or any
amendment to any such existing agreement), (B) grant of any severance
or termination pay to, or any contract to make or grant any severance
or termination pay entered into with, any director, officer or
employee of any of the Included Subsidiaries, (C) increase in
compensation, wages, salaries, pension or other benefits payable to
any director, officer or employee of any of the Included Subsidiaries,
except in the ordinary course of business consistent with past
practice, or (D) payment of any bonus other than in the ordinary
course of business consistent with past practice.
4.10 No Undisclosed Material Liabilities. There are no
-----------------------------------
liabilities of any of the Included Subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or
otherwise and whether due or to become due, and there is no existing
condition, situation or set of circumstances which could reasonably be
expected to result in such a liability, other than:
(a) liabilities provided for in the Balance Sheet or disclosed
in the notes thereto;
(b) liabilities disclosed in Schedule 4.10; and
38
<PAGE>
(c) other undisclosed liabilities which, individually or in the
aggregate, are not material to the Included Subsidiaries, taken as a
whole.
4.11 Intercompany Accounts. Schedule 4.11 contains a list of all
---------------------
intercompany balances as of the Balance Sheet Date between Natwest Plc and
its Affiliates, on the one hand, and the Included Subsidiaries, on the
other hand, other than bank deposits. Since the Balance Sheet Date, there
has not been any accrual of liability by any of the Included Subsidiaries
to Natwest Plc or any of its Affiliates or other transaction between any of
the Included Subsidiaries and Natwest Plc and any of its Affiliates, except
(i) bank deposits, (ii) as disclosed in Schedule 4.11 or (iii) as
contemplated by this Agreement.
4.12 Material Contracts. (a) Except as disclosed in Schedule
------------------
4.12, none of the Included Subsidiaries is a party to or bound by, and the
Transferred Assets and Liabilities do not include:
(i) any lease of real property providing for annual rentals
payable of $100,000 or more;
(ii) any agreement for the purchase or rental of materials,
supplies, goods, services, equipment or other assets that provides for
either (A) annual payments by any of the Included Subsidiaries of
$1,000,000 or more or (B) aggregate payments by any of the Included
Subsidiaries of $5,000,000 or more;
(iii) any sales, distribution or other similar agreement
providing for the sale by any of the Included Subsidiaries of
materials, supplies, goods, services, equipment or other assets that
provides for either (A) annual payments to Subsidiaries of $1,000,000
or more or (B) aggregate payments to any of the Included Subsidiaries
of $5,000,000 or more;
(iv) any partnership, joint venture or other similar agreement
or arrangement;
(v) any agreement relating to the acquisition or disposition of
any business (whether by merger, sale of stock, sale of assets or
otherwise);
(vi) any agreement relating to indebtedness of any of the
Included Subsidiaries for borrowed money with an aggregate outstanding
principal amount in excess of $5,000,000 other than (A) bank deposits
or (B) indebtedness with an original maturity of less than one year;
(vii) any agreement that prohibits any of the Included
Subsidiaries from competing in any line of business or with any Person
or in any area or which
39
<PAGE>
would so prohibit any of the Included Subsidiaries after the Closing
Date; or
(viii) any agreement with Natwest Plc or an Affiliate of Natwest Plc.
(b) Natwest Plc has previously delivered to FFG true and correct
copies of all agreements set forth on Schedule 4.12, other than leases
providing for annual rentals payable of less than $500,000, true and
correct copies of which shall be delivered upon request to FFG as promptly
as practicable after the date of such request. Each contract, arrangement,
commitment or understanding set forth on Schedule 4.12 is referred to
herein as a "Company Contract", and none of NatWest Plc, Bancorp or any of
its Subsidiaries knows of, or has received written notice of, any violation
of any of the Company Contracts by any of the other parties thereto which,
individually or in the aggregate, would have a Material Adverse Effect on
the Included Subsidiaries.
(c) (i) Each Company Contract is valid and binding and in full
force and effect, (ii) each of the Included Subsidiaries has in all
material respects performed all obligations required to be performed by it
to date under each Company Contract, except where such noncompliance,
individually or in the aggregate, would not have a Material Adverse Effect
on the Included Subsidiaries and (iii) no event or condition exists which
constitutes or, after notice or lapse of time or both, would constitute, a
material default on the part of any of the Included Subsidiaries under any
such Company Contract, except where such default, individually or in the
aggregate, would not have a Material Adverse Effect on the Included
Subsidiaries.
(d) (i) Each Bancorp Agreement is valid and binding and in full
force and effect, (ii) Bancorp has in all material respects performed all
obligations required to be performed by it to date and each such contract,
except where such noncompliance, individually or in the aggregate, would
not have a Material Adverse Effect on the Included Subsidiaries, and (iii)
no event or condition exists which constitutes or, after notice or lapse of
time or both, would constitute, a material default on the part of Bancorp
under any such contract, except where such default, individually or in the
aggregate, would not have a Material Adverse Effect on the Included
Subsidiaries.
4.13 Litigation. (a) Except as disclosed in writing to, and
----------
acknowledged by, FFG, none of NatWest Plc or Holdings or any of its
Subsidiaries is a party to, nor is there pending against, or to the
knowledge of any of NatWest Plc, Holdings or any of the Included
Subsidiaries threatened against, any of the Included Subsidiaries or any of
their respective properties or assets, any action, suit, investigation or
administrative, arbitral or other proceeding, claim or governmental or
regulatory investigation at law or in equity or before any court or
arbitrator or any Governmental Entity, in which there is a reasonable
probability of an adverse decision which would reasonably be expected to
have a Material Adverse Effect on the Included
40
<PAGE>
Subsidiaries, or which in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the transactions contemplated by this
Agreement and the Ancillary Agreements.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed on any of NatWest Plc or Holdings or any of
its Subsidiaries or the assets of any of NatWest Plc or Holdings or any of
its Subsidiaries which has had or would reasonably be expected to have a
Material Adverse Effect on the Included Subsidiaries.
4.14 Compliance with Laws. Except as disclosed in writing to,
--------------------
and acknowledged by, FFG, none of NatWest Plc or Holdings or any of its
Subsidiaries is in violation of, or in default in any respect under, any
applicable law, statute, rule, regulation, policy, guideline, judgment,
injunction, order or decree, except for violations and defaults that have
not had and would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Included Subsidiaries, and
none of Holdings, Bancorp or any of its Subsidiaries knows of, or has
received written notice of, and none of the responsible Senior Vice
Presidents, or Vice Presidents responsible for compliance, of Holdings,
Bancorp or any of its Subsidiaries has received oral notice of, any
material violations or defaults relating to the Included Subsidiaries of
any of the above.
4.15 Properties. The Included Subsidiaries have good title to,
----------
or in the case of leased property have valid leasehold interests in, all
personal property and assets (whether tangible or intangible) reflected on
the Balance Sheet and owned by such Included Subsidiaries or acquired after
the Balance Sheet Date, except for property and assets sold, repaid or
otherwise disposed of since the Balance Sheet Date in the ordinary course
of business consistent with past practices. The Included Subsidiaries have
good and marketable, indefeasible, fee simple title to, or in the case of
leased real property have valid leasehold interests in, all real property
reflected on the Balance Sheet and owned by such Included Subsidiaries or
acquired after the Balance Sheet Date, except for real estate acquired upon
foreclosure and any such real property sold since the Balance Sheet Date in
the ordinary course of business consistent with past practices. None of
such property or assets (whether real or personal) is subject to any Liens,
except:
(i) Liens disclosed on the Balance Sheet;
(ii) Liens for taxes not yet due or being contested in good
faith (and for which adequate accruals or reserves have been
established on the Balance Sheet); or
(iii) Liens which do not materially detract from the value or
materially interfere with any present or intended use of such property
or assets.
41
<PAGE>
4.16 Insurance Coverage. Natwest Plc has furnished to FFG a list
------------------
of, and true and complete copies of, all material insurance policies and
fidelity bonds relating to the assets, business, operations, employees,
officers or directors of the Included Subsidiaries. All premiums payable
under all such policies and bonds have been paid and Holdings and its
Subsidiaries have otherwise complied in all material respects with the
terms and conditions of all such policies and bonds. Such policies of
insurance and bonds (or other policies and bonds providing substantially
similar insurance coverage) are in full force and effect. Such policies
and bonds provide coverage that is of the type and in amounts customarily
carried by Persons conducting businesses similar to those of the Included
Subsidiaries.
4.17 Licenses and Permits. Schedule 4.17 correctly describes
--------------------
each material license, franchise, permit or other similar authorization
affecting, or relating in any way to, the assets or businesses of the
Included Subsidiaries (the "Permits") together with the name of the
government agency or entity issuing such Permit. Except as disclosed in
Schedule 4.17 and except as disclosed in writing to, and acknowledged by,
FFG, such Permits are valid and in full force and effect, each of the
Included Subsidiaries is in full compliance with the material terms of all
Permits and none of the Permits will be terminated or impaired or become
terminable or impaired, in whole or in part, as a result of the
transactions contemplated hereby or by the Ancillary Agreements.
4.18 Finders' Fees. Except for Goldman, Sachs & Co., whose fees
-------------
and expenses will be paid by Natwest Plc, there is no investment banker,
broker, finder or other intermediary which has been retained by Natwest Plc
or any of its Subsidiaries, or any of their respective officers or
directors, or is authorized to act on behalf of Natwest Plc or any of its
Subsidiaries who might be entitled to any fee or commission in connection
with the transactions contemplated by this Agreement and the Ancillary
Agreements.
4.19 Labor Matters. Holding and its Subsidiaries are in
-------------
compliance with all currently applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and
hours, and are not engaged in any unfair labor practice, failure to comply
with which or engagement in which, as the case may be, would reasonably be
expected to have a Material Adverse Effect on the Included Subsidiaries.
There is no unfair labor practice complaint pending or, to the knowledge of
any of Natwest Plc, Holdings or any of its Subsidiaries, threatened against
any of the Included Subsidiaries before the National Labor Relations Board.
None of Bancorp or any of its Subsidiaries is a party to any contract,
arrangement, commitment or understanding (whether written or oral) with or
to a labor union or guild, including any collective bargaining agreement.
4.20 Employee Benefit Plans. (a) Schedule 4.20 identifies each
----------------------
Employee Plan and each Benefit Arrangement (referred to collectively as the
42
<PAGE>
"Plans"). Copies or descriptions of each such Plan or Arrangement have
been furnished or made available to FFG (together with the most recent
annual report prepared in connection therewith). Each of the Plans (other
than a Multiemployer Plan as hereinafter defined) has been maintained in
all material respects in compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and
regulations, including but not limited to ERISA and the Code, that are
applicable to such Plan. Schedule 4.20 identifies each Employee Plan which
is (i) a multiemployer plan, as defined in Sections 3(37) or 4001(a)(3) of
ERISA (a "Multiemployer Plan"), (ii) subject to Title IV of ERISA,
excluding for these purposes any Multiemployer Plan (a "Title IV Plan") or
(iii) maintained in connection with any trust described in Section
501(c)(9) of the Code. Natwest Plc will, upon request of FFG, promptly
provide FFG with complete age, salary, service and related data as of the
most recent practicable date for all employees and former employees covered
under any Title IV Plan.
(b) As of December 31, 1994, the fair market value of the assets
of each Title IV Plan exceeded the present value of all benefits accrued
under such Title IV Plan, applying the assumptions used by the Plan's
actuaries for purposes of Plan funding. All contributions and other
payments required to be made to the Plans have been made or reserves
adequate for such purposes have been set aside and reflected on Holding's
consolidated financial statements in accordance with GAAP.
(c) No "prohibited transaction", as defined in Section 406 of
ERISA or Section 4975 of the Code, has occurred with respect to any
Employee Plan (excluding Multiemployer Plans) or any other employee benefit
plan or arrangement maintained by Natwest Plc or any of its respective
Affiliates which is covered by Title I of ERISA, except for transactions
effected pursuant to a statutory or administrative exemption and such
transactions which, individually or in aggregate, would not have a Material
Adverse Effect on NBNA. No "accumulated funding deficiency", as defined in
Section 412 of the Code, has been incurred with respect to any Employee
Plan (excluding Multiemployer Plans) subject to such Section 412, whether
or not waived. No "reportable event", within the meaning of Section 4043
of ERISA and regulations promulgated thereunder, other than a "reportable
event" that will not have a Material Adverse Effect on NBNA, and no event
described in Section 4062 or 4063 of ERISA, has occurred in connection with
any Employee Plan (excluding Multiemployer Plans). No condition exists
which could constitute grounds for termination by the Pension Benefit
Guaranty Corporation of any Title IV Plan or, with respect to any
Multiemployer Plan, presents a material risk of complete or partial
withdrawal under Title IV of ERISA by Natwest Plc or any of its respective
ERISA Affiliates. Neither Natwest Plc nor any of its respective ERISA
Affiliates has incurred, or reasonably expects to incur prior to the
Closing Date, any liability under Title IV of ERISA arising in connection
with the termination of, or complete or partial withdrawal from, any plan
covered or previously covered by Title IV of ERISA, which liability could
become a liability of NBNA or any of its Affiliates after the Closing Date.
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(d) Each Employee Plan that is intended to be qualified under
Section 401(a) of the Code (a "Qualified Plan") has been determined by the
Internal Revenue Service to be so qualified and, to the knowledge of
NatWest Plc, Holdings, Bancorp and the Included Subsidiaries, no event or
circumstance has occurred or obtained since the date of such determination
that would adversely affect such qualification. Each Qualified Plan
satisfies in operation all applicable requirements of the Code, ERISA and
other applicable law and regulations. Natwest Plc has provided FFG with
the most recent determination letters of the Internal Revenue Service
relating to each such Employee Plan. There has been no reduction or
curtailment of accrued benefits with respect to any Qualified Plan.
(e) Except as disclosed in Schedule 4.20 to this Agreement,
neither the execution or delivery of this Agreement or the Ancillary
Agreements nor the consummation of the transactions contemplated hereby or
thereby will (i) result in any material payment (including, without
limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or any employee of the Natwest
Entities or any of their Affiliates, (ii) materially increase any benefits
otherwise payable under any Plan, or (iii) otherwise result in any
acceleration of the time of payment or vesting of such other benefits to
any material extent.
(f) Except as disclosed in Schedule 4.20, there are no pending
or, to the knowledge of NatWest Plc, Holdings or the Included Subsidiaries,
threatened, claims, lawsuits or arbitrations which have been asserted or
instituted with respect to the Plans or against any fiduciaries thereof
with respect to their duties to the Plans or the assets of any of the
trusts under any of the Plans (other than pursuant to Section 4980B of the
Code or applicable state law).
(g) Except as disclosed on Schedule 4.20, no Plan provides
medical or death benefit coverage to employees or their dependents
following termination of employment (other than routine claims for
benefits).
4.21 Environmental Matters. Except as disclosed in Schedule
---------------------
4.21:
(a) No notice, demand, request for information, citation, claim,
action, proceeding, summons or complaint has been received by any of the
Included Subsidiaries, no penalty has been assessed or threatened against
any of the Included Subsidiaries and, to the knowledge of NatWest Plc,
Holdings and the Included Subsidiaries, no investigation is pending or
threatened by any governmental entity or instrumentality with respect to
any (i) alleged violation by any of the Included Subsidiaries of any
Environmental Law with respect to any owned or leased property, (ii)
alleged failure by any of the Included Subsidiaries to have any permit,
certificate, license or authorization required under any Environmental Law
in connection with the conduct of its business or (iii) release, disposal,
transportation or storage of any Hazardous Substance by any of the Included
Subsidiaries, except for any notice,
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demand, request for information, citation, summons, complaint, penalty or
investigation that would not reasonably be expected to result in a material
liability to the Included Subsidiaries, taken as a whole.
(b) Except as disclosed in Schedule 4.21, none of the Included
Subsidiaries has been a party to any claim, action, suit, proceeding or
investigation during the past two years arising under any Environmental Law
involving its business, assets or properties which suit, claim, action,
proceeding or investigation is reasonably likely to result in or has
resulted in the imposition of damages, fines and other amounts, against any
of the Included Subsidiaries in excess of $1,000,000 in each case, nor, to
the knowledge of NatWest Plc, Holdings and the Included Subsidiaries has
any such suit, claim, action, proceeding or investigation been threatened.
Except as set forth in Schedule 4.21, none of the Included Subsidiaries is
a party to or subject to any judgment, order, writ, injunction or decree
arising under any Environmental Law affecting it or any of its assets or
properties and no such judgment, decree or order of any court, board or
other governmental or administrative agency or arbitrator arising under any
Environmental Law is currently outstanding against the Included
Subsidiaries or their respective properties or assets, except for any
judgment, decree, writ, order or injunction that would not reasonably be
expected to result in a material liability to the Included Subsidiaries,
taken as a whole.
(c) Except as disclosed in Schedule 4.21 hereto, (i) none of the
Included Subsidiaries has generated, used, transported, treated, stored,
released or disposed of any Hazardous Substance in violation of any
Environmental Laws on or from any real property owned, leased or operated
by any of the Included Subsidiaries, (ii) there has not been any
generation, use, transportation, treatment, storage, release or disposal of
any Hazardous Substance in connection with the conduct of any of the
Included Subsidiaries or the use of any owned or leased property or
facility of any of the Included Subsidiaries in violation of any
Environmental Law and (iii) no friable asbestos or polychlorinated
biphenyls or underground storage tanks are contained in or located at any
owned or operated facility of any of the Included Subsidiaries, except, in
each case, for matters that would not reasonably be expected to result in a
material liability to the Included Subsidiaries, taken as a whole.
(d) Except as disclosed in Schedule 4.21 and to the knowledge of
NatWest Plc, Holdings and its Subsidiaries, none of the Included
Subsidiaries is in violation of any Environmental Law, including without
limitation, ISRA, except for any violations that would not reasonably be
expected to result in a material liability to the Included Subsidiaries,
taken as a whole.
(e) There are no Environmental Liabilities that have had or may
reasonably be expected to have a Material Adverse Effect on the Included
Subsidiaries.
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4.22 FDIC; Insurance Assessments; Reports. (a) NBNA and the
------------------------------------
Delaware Bank each maintain in full force and effect deposit insurance
through the FDIC and have fully paid to the FDIC as and when due all
assessments with respect to its deposits as are required to maintain such
deposit insurance in full force and effect.
(b) (i) Holdings and its Subsidiaries have timely filed, and
subsequent to the date hereof will file, all material reports,
registrations, applications and statements of or relating to the Included
Subsidiaries, together with any amendments required to be made with respect
thereto, that were and are required to be filed with the Federal Reserve
Board, the FDIC, the OCC and any other applicable Regulatory Agency (all
such filings and reports are referred to collectively as the "Company
Reports"), and have paid all fees and assessments due and payable in
connection therewith.
(ii) As of its filing date, each such Company Report complied
and will comply in all material respects with all of the statutes, rules
and regulations enforced or promulgated by the Regulatory Agency with which
they were filed.
(iii) Schedule 4.22 sets forth a list of all material Company
Reports dated as of or subsequent to January 1, 1994, true and correct
copies of which have been delivered to FFG.
(c) Except as disclosed in writing to, and acknowledged by, FFG
and except for normal examinations conducted by a Regulatory Agency in the
regular course of business of Holdings and its Subsidiaries relating to the
Included Subsidiaries, no Regulatory Agency has initiated any proceedings,
or to the knowledge of any of NatWest Plc, Holdings or any of its
Subsidiaries, investigated into the business or operations of Holdings
relating to the Included Subsidiaries or the business or operations of the
Included Subsidiaries since January 1, 1994. There is no material
unresolved violation, criticism, or exception by any Regulatory Agency with
respect to any report or statement relating to the examinations of the
Included Subsidiaries. Except as disclosed in the manner referred to in
the first sentence of this Section 4.22(c), none of the Included
Subsidiaries is a party to any cease-and-desist order, written agreement,
consent agreement, commitment letter or similar undertaking or memorandum
of understanding with, or subject to any written order or directive from,
or is the recipient of any extraordinary supervisory letter from, or has
adopted any resolutions at the request of any Regulatory Agency, nor has
any of NatWest Plc, Bancorp or any of its Subsidiaries been advised in
writing, nor has any of the responsible Senior Vice Presidents, or Vice
Presidents responsible for compliance, of Bancorp or any of its
Subsidiaries been advised orally, that any Regulatory Agency is
contemplating issuing or requesting any such order, written agreement,
memorandum of understanding or written directive relating to the Included
Subsidiaries.
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4.23 Investment Intent. Natwest Plc or its designee will hold
-----------------
any FFG Common Stock and the FFG Preferred Stock for investment for its own
account and not with a view to, or for sale in connection with, any
distribution thereof. Natwest Plc or such designee (either alone or
together with its advisors) has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits
and risks of its investments in the FFG Common Stock and the FFG Preferred
Stock and is capable of bearing the economic risks of such investment.
4.24 Tax Matters. (a) Each of the Included Subsidiaries has
-----------
duly filed all Tax Returns required to be filed by it on or prior to the
date hereof. All such Tax Returns were correct and complete in all
respects. All Taxes owed by the Included Subsidiaries (whether or not
shown on any Tax Return) have been paid, or provisions for the payment of
all Taxes have been made. None of the Included Subsidiaries currently is
the beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction
where any of the Included Subsidiaries does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction. There are no Liens
on any of the assets of the Included Subsidiaries that arose in connection
with any failure (or alleged failure) to pay any Tax that is due and
payable.
(b) Each of the Included Subsidiaries has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(c) Neither Natwest Plc nor any of its Subsidiaries, nor any
director or officer (or employee responsible for Tax matters) of Natwest
Plc or its Subsidiaries expects any authority to assess any additional
Taxes of any of the Included Subsidiaries for any period for which Tax
Returns have been filed. There is no dispute or claim concerning any Tax
Liability of any of the Included Subsidiaries either (a) claimed or raised
by any authority in writing or (b) as to which Natwest Plc or any of its
Subsidiaries or any of the directors and officers (or employees responsible
for Tax matters) of Natwest Plc or any of its Subsidiaries has knowledge.
Schedule 4.24 lists all federal, state, local, and foreign income Tax
Returns filed with respect to each of the Included Subsidiaries for taxable
periods ended on or after December 31, 1988, indicates those Tax Returns
that have been audited, and indicates those Tax Returns that currently are
the subject of audit. Natwest Plc has delivered to FFG correct and
complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by each of the
Included Subsidiaries since December 31, 1988.
(d) None of the Included Subsidiaries has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
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(e) None of the Included Subsidiaries has filed a consent under
Code Sec. 341(f) concerning collapsible corporations. Neither the
execution or delivery of this Agreement or the Ancillary Agreements nor the
consummation of the transactions contemplated hereby or thereby will
obligate (i) Holdings or any of its Subsidiaries to make any payments that
will not be deductible under Code Sec. 280G or (ii) obligate any of the
Included Subsidiaries to make any such payments following the Closing Date.
None of the Included Subsidiaries has been a United States real property
holding corporation within the meaning of Code Sec. 897(c)(2) during the
applicable period specified in Code Sec. 897(c)(1)(A)(ii). Each of the
Included Subsidiaries has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code Sec. 6662.
None of the Included Subsidiaries is a party to any Tax allocation or
sharing agreement other than the tax sharing agreement referred to in
Section 9.1. None of the Included Subsidiaries has been a member of an
Affiliated Group filing a consolidated federal income Tax Return other than
a group (i) the common parent of which is a member of Holding's Affiliated
Group or (ii) the common parent of which was a predecessor of a member of
Holdings' Affiliated Group.
(f) The unpaid Taxes of the Included Subsidiaries (A) did not,
as of the Most Recent Fiscal Month End, exceed the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set forth on the
face of the Balance Sheet (rather than in any notes thereto) and (B) do not
exceed that reserve as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of each of the
Included Subsidiaries in filing their Tax Returns.
(g) Each Affiliated Group has filed all income Tax Returns that
it was required to file for each taxable period during which any of the
Included Subsidiaries was a member of the group. All such Tax Returns were
correct and complete in all respects. All income Taxes owed by any
Affiliated Group (whether or not shown on any Tax Return) have been paid
for each taxable period during which any of the Included Subsidiaries was a
member of the group or provisions for all Taxes have been made.
(h) Neither Natwest Plc nor any of its Subsidiaries, nor any
director or officer (or employee responsible for Tax matters) of Natwest
Plc or any of its Subsidiaries expects any authority to assess any
additional income Taxes against any Affiliated Group for any taxable period
during which any of the Included Subsidiaries was a member of the group.
There is no dispute or claim concerning any income Tax liability of any
Affiliated Group for any taxable period during which any of the Included
Subsidiaries was a member of the group either (A) claimed or raised by any
authority in writing or (B) as to which Natwest Plc or any of its
Subsidiaries or any of the directors or officers (or any of the employees
responsible for Tax matters) of
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Natwest Plc or any of its Subsidiaries has knowledge. No Affiliated Group
has waived any statute of limitations in respect of any income Taxes or
agreed to any extension of time with respect to an income Tax assessment or
deficiency for any taxable period during which any of the Included
Subsidiaries was a member of the group.
(i) None of the Included Subsidiaries has any liability for the
Taxes of any Person (A) under Treas. Reg. Sec. 1.1502-6 (or any similar
provision of state, local, or foreign law), (B) as a transferee or
successor, (C) by contract, or (D) otherwise, other than the proviso in
-------
Section 9.1.
(j) There is no Section 382 or Section 383 of the Code
limitation from a prior change of ownership applicable to any Affiliated
Group of which any Included Subsidiary is or was a member or to any of the
Included Subsidiaries.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF FFG
FFG represents and warrants to Natwest Plc, as of the date hereof
and as of the Closing Date, as follows:
5.1 Corporate Existence and Power. (a) FFG is a corporation
-----------------------------
duly incorporated, validly existing and in good standing under the laws of
the State of Rhode Island and has all corporate powers and authority and
has all governmental licenses, authorizations, permits, consents and
approvals required to own or lease all of its properties or assets and to
carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would
not, individually or in the aggregate, have a Material Adverse Effect on
FFG. FFG is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where such qualification is
necessary, except for those jurisdictions where failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect
on FFG. FFG has heretofore delivered to Natwest Plc true and complete
copies of its restated articles of incorporation and bylaws as currently in
effect.
(b) SNY is a corporation, duly incorporated, validly existing
and in good standing under the laws of the State of New York and has all
corporate powers and authority, and has all material governmental licenses,
authorizations, permits, consents and approvals required, to own or lease
all of its properties and assets and to carry on its business as now
conducted.
(c) FBNY is a national banking association duly organized,
validly existing and in good standing under the laws of the United States.
The deposit
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<PAGE>
accounts of FBNY are insured through the FDIC to the fullest extent
permitted by law and all premiums and assessments required in connection
therewith have been paid by FBNY. FBNY has the power and authority to own
or lease all of its properties and assets and to carry on its business as
presently conducted. The articles of association and bylaws of FBNY,
copies of which have previously been made available to Natwest Plc, are
true and complete copies of such documents as currently in effect.
(d) The minute books of FFG, SNY and FBNY accurately reflect in
all material respects all corporate actions held or taken since January 1,
1994 by their respective stockholders and Boards of Directors (including
committees thereof).
5.2 Corporate Authorization. (a) The execution, delivery and,
-----------------------
subject only to receipt of the Buyer Regulatory Approvals and the Buyer
Stockholder Approvals, performance by FFG of this Agreement and each
Ancillary Agreement to which FFG is a party are within its corporate powers
and have been duly authorized by all necessary corporate action on the part
of FFG. This Agreement has been duly executed and delivered by FFG and
constitutes, and when executed and delivered each Ancillary Agreement to
which FFG is a party will constitute, a valid and binding agreement of FFG,
enforceable in accordance with its terms, except as (i) the enforceability
hereof and thereof may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting the enforcement of creditors' rights generally
and (ii) the enforceability of equitable remedies may be limited by
equitable principles of general applicability.
(b) To the extent the transactions contemplated hereby require
any corporate action on the part of SNY or FBNY, such action is within the
corporate power and authority of SNY and FBNY, as the case may be.
5.3 Consents and Approvals. The execution, delivery and
----------------------
performance by FFG of this Agreement and each Ancillary Agreement to which
it is a party require no action by or in respect of, or filing with, or
consent of any Governmental Entity or any third party other than (i)
compliance with any applicable requirements of the Securities Exchange Act
of 1934, as amended, (ii) the Buyer Regulatory Approvals, (iii) the Buyer
Stockholder Approvals and (iv) such filings and approvals as are required
to be made or obtained under the "Blue Sky" laws of various states in
connection with the issuance of any shares of FFG Common Stock or FFG
Preferred Stock.
5.4 Non-Contravention. The execution, delivery and performance
-----------------
by FFG of this Agreement and each Ancillary Agreement to which it is a
party and consummation of the transactions permitted hereby and thereby do
not and will not (i) violate the restated articles of incorporation or
bylaws of FFG or SNY or the articles of association and bylaws of FBNY,
(ii) assuming compliance with the matters referred to in Section 5.3,
violate any material law, statute, code, ordinance, rule, regulation,
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judgment, injunction, order or decree applicable to FFG or any of its
material Subsidiaries or their respective properties or assets, (iii)
violate, conflict with result in the breach of any provision of or the loss
of any benefit under, constitute a default under, or give rise to any
termination or right of termination, cancellation or acceleration of any
right or obligation of any of the FFG Entities or to a loss of any benefit
to which any of the FFG Entities is entitled under any material agreement
or other instrument or obligation to which any of the FFG Entities is a
party or by which they or any of their respective properties or assets may
be bound or affected or any license, franchise, permit or other similar
authorization held by any of the FFG Entities or (iv) result in the
creation or imposition of any Lien on any asset of any of the FFG Entities
except, in the case of clauses (iii) and (iv), to the extent that any such
violation, failure to obtain any such consent or other action, default,
right, loss or Lien would not, individually or in the aggregate, have a
Material Adverse Effect on FFG.
5.5 Capitalization. (a) The authorized capital stock of FFG
--------------
consists of 600,000,000 shares of FFG Common Stock and 16,000,000 shares of
Preferred Stock, $1.00 par value (the "Preferred Stock").
(b) At September 30, 1995, 141,527,125 shares of FFG Common
Stock were issued and outstanding and FFG had outstanding Preferred Stock
as follows: (i) 1,100,000 shares of Series III Perpetual Preferred Stock
were designated and 519,758 shares were issued and outstanding, (ii)
1,000,000 shares of Series IV Perpetual Preferred Stock were designated and
478,838 shares were issued and outstanding, (iii) 1,415,000 shares of Dual
Convertible Preferred Stock were designated and 1,415,000 shares were
issued and outstanding and (iv) 1,500,000 shares of Cumulative
Participating Junior Preferred Stock (the "Junior Preferred Stock") were
designated and no shares were issued and outstanding.
(c) In connection with the merger of Shawmut National
Corporation with and into FFG, FFG issued up to 104,847,665 shares of FFG
Common Stock and designated three additional series of Preferred Stock as
follows: (i) 688,700 shares of Preferred Stock with Cumulative and
Adjustable Dividends were designated and 688,700 were issued, (ii) 575,000
shares of 9.30% Cumulative Preferred Stock were designated and 575,000 were
issued and (iii) 500,000 shares of 9.35% Cumulative Preferred Stock were
designated and 500,000 were issued. In addition, in connection with such
merger, (x) the number of shares of Junior Preferred Stock designated was
increased to 3,000,000, (y) the number of shares of Series III Perpetual
Preferred Stock was reduced to 519,758 and (z) the number of shares of
Series IV Perpetual Preferred Stock designated was reduced to 478,838.
(d) All of the issued and outstanding shares of FFG Common Stock
and Preferred Stock have been duly authorized and validly issued and are
fully paid,
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nonassessable and free of preemptive rights, with no personal liability
attached to the ownership thereof. As of the date of this Agreement,
except as set forth in Schedule 5.5, FFG does not have and is not bound by
any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any
shares of FFG Common Stock or Preferred Stock or any other equity
securities of FFG or any securities representing the right to purchase or
otherwise receive any shares of FFG Common Stock or Preferred Stock. As of
September 30, 1995, 40,601,688 shares of FFG Common Stock were reserved for
issuance pursuant to outstanding warrants, rights, options and employee
benefit plans and no shares of Preferred Stock were reserved for issuance.
In connection with the merger of Shawmut National Corporation with and into
FFG, FFG issued warrants and options to purchase up to 2,975,839 shares of
FFG Common Stock.
(e) The shares of FFG Common Stock and FFG Preferred Stock, if
any, to be issued as Merger Consideration will be duly authorized and
validly issued and, at the Effective Time, all such shares will be fully
paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof.
5.6 SEC Filings. FFG has delivered to Natwest Plc true and
-----------
complete copies of (i) its annual reports on Form 10-K for its fiscal years
ended 1992, 1993 and 1994, (ii) its quarterly reports on Form 10-Q for its
fiscal quarters ended March 31, 1995, June 30, 1995, and September 30, 1995
and (iii) proxy statements or information statements relating to meetings
of, or actions taken without a meeting by, FFG's stockholders held since
January 1, 1995 (collectively, "FFG's SEC Documents"). As of its filing
date, each of FFG's SEC Documents complied in all material respects with
the requirements of the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, as the case may be, and the
applicable rules and regulations of the SEC promulgated thereunder, and did
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading,
except that information as of a later date shall be deemed to modify
information as of an earlier date.
5.7 Financial Information. The audited consolidated financial
---------------------
statements and unaudited interim consolidated financial statements of FFG
and its Subsidiaries included in its annual reports on Form 10-K and the
quarterly reports on Form 10-Q referred to in Section 5.6 complied as to
form, as of their respective dates of filing with the SEC, in all material
respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes thereto or, in
the case of unaudited interim financial statements, as permitted by Form
10-Q of the SEC) and present fairly, in all material respects, the
consolidated financial position of FFG and
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its Subsidiaries as of the dates thereof and their consolidated results of
operations and changes in consolidated financial position for the periods
then ended in conformity with GAAP. All material agreements, contracts and
other documents required to be filed as exhibits to any of FFG's SEC
Documents have been so filed. The books and records of FFG have been and
are being maintained in all material respects in accordance with GAAP and
any other applicable legal and accounting requirements.
5.8 Absence of Certain Changes. Except as disclosed in FFG's
--------------------------
SEC Documents filed prior to the date of this Agreement, since September
30, 1995 and other than the merger of Shawmut National Corporation with and
into FFG, effective November 30, 1995, the business of the FFG Entities has
been conducted in the ordinary course of business consistent with past
practices and there has not been any event, occurrence, development or
state of circumstances or facts which has had or could reasonably be
expected to have a Material Adverse Effect on FFG other than any resulting
from or attributable to the transactions contemplated hereby, or any
resulting from changes in general conditions (including laws and
regulations) applicable to the banking industry or general economic
conditions that, in either case, have not had a materially worse effect on
FFG than on similar banking institutions.
5.9 No Undisclosed Material Liabilities. Except for those
-----------------------------------
liabilities that are fully reflected or reserved against on the September
30, 1995 unaudited consolidated balance sheet of FFG contained in FFG's SEC
Documents and for liabilities incurred in the ordinary course of business
consistent with past practice, since September 30, 1995, neither FFG nor
any of its Subsidiaries has incurred any liability of any kind whatsoever
(whether accrued, contingent, absolute, determined, determinable or
otherwise and whether due or to become due) that, either alone or when
combined with all similar liabilities, has had, or could reasonably be
expected to have, a Material Adverse Effect on FFG.
5.10 Litigation. (a) Except as disclosed in FFG's SEC Documents
----------
filed prior to the date of this Agreement, there is no action, suit,
investigation or administrative, arbitral or other proceeding, claim or
governmental or regulatory investigation pending against, or to the
knowledge of FFG threatened against, FFG or any of its Subsidiaries at law
or in equity or before any court or arbitrator or any Governmental Entity,
in which there is a reasonable probability of an adverse decision which
would reasonably be expected to have a Material Adverse Effect on FFG or
which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by this Agreement and the
Ancillary Agreements.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed on FFG or any of its Subsidiaries or the
assets of FFG or any of its Subsidiaries which has had, or would reasonably
be expected to have, a Material Adverse Effect on FFG.
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5.11 Compliance with Laws. None of the FFG Entities is in
--------------------
violation of any, or in default in any respect under any, applicable law,
statute, rule, regulation, judgment, injunction, order or decree, except
for violations and defaults that have not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect on FFG and none of the FFG Entities knows of, or has received
written notice of, and none of the Senior Vice Presidents, or the director
of compliance, of the FFG Entities has received oral notice of, any
material violations or defaults of any of the above.
5.12 Financing. FFG has, or will have prior to the Effective
---------
Time, sufficient cash, available lines of credit or other sources of
immediately available funds to enable it to make payment of that portion of
the Merger Consideration to be paid in cash and any other amounts to be
paid by it hereunder.
5.13 Finders' Fees. Except for Merrill Lynch, Pierce Fenner and
-------------
Smith and UBS Securities, Inc., whose fees and expenses will be paid by
FFG, there is no investment banker, broker, finder or other intermediary
which has been retained by FFG or any of its Subsidiaries, or any of their
respective officers or directors, or is authorized to act on behalf of FFG
or any of its Subsidiaries who might be entitled to any fee or commission
from Natwest Plc or any of its Affiliates in connection with of the
transactions contemplated by this Agreement and the Ancillary Agreements.
5.14 Employee Benefit Plans. (a) Schedule 5.14 identifies each
----------------------
FFG Employee Plan and each FFG Benefit Arrangement (referred to
collectively as the "FFG Plans"). Copies or descriptions of each such FFG
Plan have been furnished or made available to Natwest Plc. Each of the FFG
Plans (other than a Multiemployer Plan as hereinafter defined) has been
maintained in all material respects in compliance with its terms and with
the requirements prescribed by any and all statutes, orders, rules and
regulations, including but not limited to ERISA and the Code, that are
applicable to such Plan. Schedule 5.14 identifies each FFG Employee Plan
which is (i) a Multiemployer Plan, (ii) a Title IV Plan or (iii) maintained
in connection with any trust described in Section 501(c)(9) of the Code.
(b) As of December 31, 1994, the fair market value of the assets
of each Title IV Plan exceeded the present value of all benefits accrued
under such Title IV Plan, applying the assumptions used by the Plan's
actuaries for purposes of Plan funding. All contributions and other
payments required to be made to the Plans have been made or reserves
adequate for such purposes have been set aside and reflected on FFG's
consolidated financial statements in accordance with GAAP.
(c) No "prohibited transaction", as defined in Section 406 of
ERISA or Section 4975 of the Code, has occurred with respect to any FFG
Employee Plan (excluding Multiemployer Plans) or any other employee benefit
plan or arrangement maintained by FFG or any of its respective Affiliates
which is covered by Title I of
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ERISA, except for transactions effected pursuant to a statutory or
administrative exemption and such transactions which, individually or in
aggregate, would not have a Material Adverse Effect on FFG. No
"accumulated funding deficiency", as defined in Section 412 of the Code,
has been incurred with respect to any FFG Employee Plan (excluding
Multiemployer Plans) subject to such Section 412, whether or not waived.
No "reportable event", within the meaning of Section 4043 of ERISA and
regulations promulgated thereunder, other than a "reportable event" that
will not have a Material Adverse Effect on FFG, and no event described in
Section 4062 or 4063 of ERISA, has occurred in connection with any Employee
Plan (excluding Multiemployer Plans). No condition exists which could
constitute grounds for termination by the Pension Benefit Guaranty
Corporation of any Title IV Plan or, with respect to any Multiemployer
Plan, presents a material risk of complete or partial withdrawal under
Title IV of ERISA by FFG or any of its respective ERISA Affiliates. None
of the FFG Entities nor any of their respective Affiliates has incurred, or
reasonably expects to incur prior to the Closing Date, any liability under
Title IV of ERISA arising in connection with the termination of, or
complete or partial withdrawal from, any plan covered or previously covered
by Title IV of ERISA.
(d) Each FFG Employee Plan that is a Qualified Plan has been
determined by the Internal Revenue Service to be so qualified and, to the
knowledge of the FFG Entities, no event or circumstance has occurred or
obtained since the date of such determination that would adversely affect
such qualification. Each Qualified Plan satisfies in operation all
applicable requirements of the Code, ERISA and other applicable law and
regulations. FFG has provided NatWest Plc with the most recent
determination letters of the Internal Revenue Service relating to each such
FFG Employee Plan. There has been no reduction or curtailment of accrued
benefits with respect to any Qualified Plan.
(e) There are no pending or threatened claims, lawsuits or
arbitrations which have been asserted or instituted with respect to the FFG
Plans or against any fiduciaries thereof with respect to their duties to
the FFG Plans or the assets of any of the trusts under any of the FFG Plans
(other than routine claims for benefits).
5.15 Reports. (a) (i) FFG and its Subsidiaries have timely
-------
filed, and subsequent to the date hereof will file, all material reports,
registrations, applications and statements, together with any amendments
required to be made with respect thereto, that were and are required to be
filed with the Federal Reserve Board, the FDIC, the OCC and any other
applicable Regulatory Agency (all such filings and reports are referred to
collectively as the "FFG Reports"), and have paid all fees and assessments
due and payable in connection therewith.
(ii) As of its filing date, each such FFG Report complied and
will comply in all material respects with all of the statutes, rules and
regulations enforced or promulgated by the Regulatory Agency with which
they were filed.
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(b) Except as disclosed in Schedule 5.15 and except for normal
examinations conducted by a Regulatory Agency in the regular course of
business of FFG and its Subsidiaries, no Regulatory Agency has initiated
any proceedings, or to the knowledge of any of FFG or any of its
Subsidiaries, investigated into the business or operations of FFG and its
Subsidiaries since January 1, 1994. There is no material unresolved
violation, criticism, or exception by any Regulatory Agency with respect to
any report or statement relating to the examinations of FFG and its
Subsidiaries. None of FFG or any of its Subsidiaries is a party to any
cease-and-desist order, written agreement, consent agreement, commitment
letter or similar undertaking or memorandum of understanding with, or
subject to any written order or directive from, or is the recipient of any
extraordinary supervisory letter from, or has adopted any resolutions at
the request of any Regulatory Agency, nor has FFG or any of its
Subsidiaries been advised in writing, and nor has any of the responsible
Senior Vice Presidents, or Vice Presidents responsible for compliance, of
the FFG Entities been advised orally, that any Regulatory Agency is
contemplating issuing or requesting any such order, written agreement,
memorandum of understanding or written directive.
ARTICLE VI
COVENANTS OF NATWEST PLC
Natwest Plc agrees that:
6.1 Conduct of Business. During the period from the date of
-------------------
this Agreement to the Effective Time, except as expressly contemplated or
permitted by this Agreement, (i) NatWest Plc shall cause Bancorp and the
Included Subsidiaries to conduct their respective businesses in the
ordinary course consistent with past practice, (ii) Natwest Plc shall, and
shall cause Holdings, Bancorp, Bancorp NJ and the Included Subsidiaries to,
use their reasonable best efforts to (x) maintain and preserve intact the
business organizations, employees and advantageous business relationships
of Bancorp and the Included Subsidiaries and (y) retain the services of the
officers and key employees of Bancorp and the Included Subsidiaries and
(iii) Natwest Plc shall, and shall cause Holdings and its Subsidiaries to,
take no action which would adversely affect or delay the ability of FFG to
obtain the Buyer Regulatory Approvals or to perform its covenants and
agreements under this Agreement.
6.2 Forbearances. During the period from the date of this
------------
Agreement to the Effective Time, except as (i) expressly contemplated or
permitted by this Agreement or (ii) required by applicable law or any
Regulatory Agency, NatWest Plc shall not permit any of the Included
Subsidiaries to, without the prior written consent of FFG:
(a) incur any indebtedness for borrowed money (other than
short-term
56
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indebtedness incurred to refinance short-term indebtedness and
indebtedness of NatWest Plc or any of its Affiliates to any of the
Included Subsidiaries), assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other
individual, corporation or other entity, or make any loan or advance,
other than in the ordinary course of business consistent with past
practice (it being understood and agreed that (i) incurrence of
indebtedness in the ordinary course of business shall include, without
limitation, the creation of deposit liabilities, purchases of federal
funds, sales of certificates of deposit and entering into repurchase
agreements and (ii) any such indebtedness must have a final maturity
date of no later than June 30, 1996; provided that, if the Closing
--------
shall not have occurred prior to April 30, 1996, any such indebtedness
incurred thereafter must have a final maturity date of no later than
60 days from the date of such incurrence);
(b) adjust, split, combine or reclassify any capital stock or
make, declare or pay any dividend or make any other distribution
(other than in connection with or relating to the Dividend Excluded
Transactions) on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its capital stock or any securities
or obligations convertible into or exchangeable for any shares of its
capital stock, or grant any stock appreciation rights or grant any
individual, corporation or other entity any right to acquire any
shares of its capital stock;
(c) sell, transfer, mortgage, encumber or otherwise dispose of
any of its properties or assets to any individual, corporation or
other entity other than a direct or indirect wholly-owned Subsidiary,
or cancel, release or assign any indebtedness to any such person or
any claims held by any such person, except in the ordinary course of
business consistent with the past practice or pursuant to contracts or
agreements in force at the date of this Agreement;
(d) make any material investment either by purchase of stock or
securities, contributions to capital, property transfers, or purchase
of any property or assets of any other individual, corporation or
other entity other than a wholly-owned Subsidiary thereof;
(e) (A) enter into or terminate any material contract or
agreement, other than, in prior consultation with FFG to the extent
such consideration is reasonably practicable, to renew or replace an
existing material contract necessary to the conduct of the business of
the Included Subsidiaries on commercially reasonable terms, or (B)
make any change in any of its material leases or contracts that would
make such lease or contract materially more burdensome;
(f) increase in any manner the compensation or fringe benefits
of any
57
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of its employees or pay any pension or retirement allowance not
required by any existing plan or agreement to any such employees or
become a part to, amend or commit itself to any pension, retirement,
profit-sharing or welfare benefit plan or agreement or employment
agreement with or for the benefit of any employee other than in the
ordinary course of business consistent with past practice or
accelerate the vesting of any stock options or other stock-based
compensation, it being understood solely for purposes hereof that any
such actions taken by Bancorp or its Subsidiaries since June 30, 1995
shall be deemed not to have been in the ordinary course of business
consistent with past practice (unless such actions were also taken in
prior periods in the ordinary course of business);
(g) solicit, encourage or authorize any individual, corporation
or other entity to solicit from any third party any inquiries or
proposals relating to the disposition of its business of assets, or
the acquisition of its voting securities, or the merger of it or any
of its Subsidiaries with any corporation or other entity other than as
provided by this Agreement (and Natwest Plc shall promptly notify FFG
of all of the relevant details relating to all inquiries and proposals
which it may receive relating to any of such matters);
(h) settle any claim, action or proceeding involving any amount
of money damages, except in the ordinary course of business consistent
with past practice;
(i) amend its certificate or articles or incorporation or
articles of association, as the case may be, or its bylaws; or
(j) restructure or materially change (other than as contemplated
by or resulting from the transactions contemplated by this Agreement)
its investment securities portfolio or mortgage loan portfolio or its
gap position, through purchases, sales or otherwise, or the manner in
which such portfolio is classified or reported;
(k) enter into any derivative transaction or extend or modify
any current derivatives transactions other than (A) transactions with
third party customers of NBNA as long as an immediate offsetting
transaction is executed and (B) transactions (other than swaps)
irrespective of maturity so long as any such positions are liquidated
on or prior to the Closing Date;
(l) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set
forth in this Agreement being or becoming untrue in any material
respect at any time prior to the Effective Time, or in any of the
conditions to the Merger set forth in Article XI not being satisfied
or in a violation of any provision of this Agreement, except,
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in every case, as may be required by applicable law; or
(m) agree to, or make any commitment to, take any of the action
prohibited by this Section 6.2.
6.3 Access to Information. From the date hereof until the
---------------------
Closing Date, upon reasonable notice and subject to applicable laws
relating to the exchange of information, Natwest Plc shall (i) give, and
will cause the Included Subsidiaries to give, FFG, its counsel, financial
advisors, auditors and other authorized representatives access during
normal business hours to the offices, properties, books and records of the
Included Subsidiaries and to the books and records of Natwest Plc, Holdings
and its Subsidiaries relating to the Included Subsidiaries or the
Transferred Assets and Liabilities, (ii) furnish, and will cause Holdings
and its Subsidiaries to furnish, to FFG, its counsel, financial advisors,
auditors and other authorized representatives such financial and operating
data and other information relating to the Included Subsidiaries or the
Transferred Assets and Liabilities as such Persons may reasonably request
and (iii) instruct the employees, counsel and financial advisors of NatWest
Plc, Holdings and its Subsidiaries to cooperate with FFG in its
investigation of the Included Subsidiaries or the Transferred Assets and
Liabilities. Notwithstanding the foregoing, FFG shall not have access to
(i) personnel records of Bancorp and its Subsidiaries relating to
individual performance or evaluation records or medical histories and (ii)
any other information where such access to or disclosure of such
information would violate or prejudice the rights of NatWest Plc's or its
Affiliates' customers, jeopardize the attorney-client privilege of the
institution in possession or control of such information or contravene any
law, rule, regulation, order judgment, decree, fiduciary duty or binding
agreement entered into prior to the date hereof.
6.4 Notices of Certain Events. Natwest Plc shall, and shall
-------------------------
cause Holdings and its Subsidiaries to, promptly notify FFG of:
(i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement and the Ancillary
Agreements;
(ii) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements; and
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or
involving or otherwise affecting NatWest Plc, Holdings or any of its
Subsidiaries that, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant to Section 4.13 or
that relate to the consummation of the transactions contemplated by
this Agreement and the Ancillary
59
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Agreements.
6.5 Regulatory Matters. (a) NatWest Plc shall, and shall cause
------------------
Holdings and its Subsidiaries to, prepare and file all applications,
notices, consents and other documents necessary or advisable to obtain
regulatory approval from the OCC to move the headquarters of NBNA from its
current location to a location in New York within 30 miles of its current
location and to establish a branch at its current location (the "OCC
30-mile Approval"), promptly file all supplements or amendments thereto and
use all reasonable efforts to obtain the OCC 30-mile Approval as promptly
as practicable. As promptly as practicable after receipt of the OCC 30-
mile Approval, NatWest Plc shall cause the headquarters of NBNA to be moved
and the new branch to be established, in accordance with the OCC 30-mile
Approval.
(b) Subject to the provisions of Section 6.11, NatWest Plc
shall, and shall cause Holdings and its Subsidiaries to, promptly prepare
and file all applications, notices, consents, and other documents necessary
or advisable to obtain regulatory approval from the OCC to make all of the
Included Subsidiaries (other than NBNA and its Subsidiaries) Subsidiaries
of NBNA (the "Operating Subsidiary Approval"), promptly file all amendments
and supplements thereto and use all reasonable efforts to obtain the
Operating Subsidiary Approval as promptly as practicable. As promptly as
practicable after receipt of the Operating Subsidiary Approval but prior to
the Closing, NatWest Plc shall cause all of the Included Subsidiaries
(other than NBNA and its Subsidiaries) to be made Subsidiaries of NBNA;
provided that, to the extent any such action is prohibited by applicable
- --------
law or regulations, FFG and NatWest Plc shall use their best efforts to
implement any lawful arrangement designed to effect the intent of the
parties hereunder.
(c) Natwest Plc shall cause Holdings and its Subsidiaries to,
(i) provide FFG and its counsel with an opportunity to review in advance
and comment on all filings made pursuant to this Section 6.5 and Section
6.6 hereof and (ii) keep FFG informed of the status of matters relating to
obtaining the OCC 30-mile Approval, any Operating Subsidiary Approval and
the transfer of Delaware Bank Assets and furnish FFG with copies of all
written communications with respect thereto.
(d) NatWest Plc shall cause the Included Subsidiaries to comply,
at their own expense, with the filing requirements of ISRA, including, if
reasonably requested by FFG, the obtaining of a letter of non-applicability
or a negative declaration in connection with any or all properties owned or
leased by any of the Included Subsidiaries and located in New Jersey
(excluding residential properties), and to be responsible for any further
actions (whether before or after the Effective Time) as shall be ordered or
agreed to between the Included Subsidiaries and the New Jersey Department
of Environmental Protection in connection with ISRA and
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such properties.
6.6 Transfer of Certain Delaware Bank Assets. NatWest Plc
----------------------------------------
shall, and shall cause Holdings and its Subsidiaries to, promptly take all
actions necessary or desirable to transfer to NBNA (in accordance with
applicable law, either through a sale to NBNA or through a dividend and
subsequent contribution to NBNA), as of or prior to the Closing Date, all
assets held by the Delaware Bank the transfer of which is necessary for the
Delaware Bank to qualify as a credit card bank under Section 2(c)(2)(F) of
the Bank Holding Company Act of 1956, as amended (the "Delaware Bank Asset
Transfer"), and shall promptly prepare and file all applications, notices,
consents, and other documents necessary or advisable to obtain all
regulatory approvals necessary to consummate the Delaware Bank Asset
Transfer, promptly file all supplements or amendments thereto and use all
reasonable efforts to obtain such regulatory approvals as promptly as
practicable.
6.7 Employee Contracts. Set forth on Schedule 6.7 is a list of
------------------
officers, directors, consultants and employees of the Included Subsidiaries
who have been identified by NatWest Plc and who, as of the Effective Time,
will not become officers, directors, consultants or employees of the
Surviving Bank but who will instead become officers, directors, consultants
or employees of Natwest Plc or its Affiliates (the "Transferred
Employees"). On or prior to the Closing Date, NatWest Plc shall cause such
Transferred Employees no longer to be employees of the Included
Subsidiaries.
6.8 Water Street Transaction. Prior to the Closing Date,
------------------------
NatWest Plc shall cause (i) NBNA to transfer its property located at 175
Water Street, New York, New York and any contiguous property thereto,
including, but not limited to the property known as 163 Front Street, New
York, New York, to NatWest Plc or one of its Affiliates or to sell such
property to a third party, (ii) NBNA to transfer the air rights agreement
relating to property(ies) adjacent to 175 Water Street with Janeway
Properties to NatWest Plc or one of its Affiliates and (iii) Bancorp NJ to
contribute to NBNA an amount of cash equal to the book value of the
property net of any (i) Liabilities (including deferred tax Liabilities)
attributable to the property as reflected on the books and records of NBNA
as of the date of transfer and (ii) any proceeds received by NBNA from a
sale of the property to a third party. The transfer and contribution (the
"Water Street Transaction") shall be made on terms and conditions
reasonably acceptable to FFG.
6.9 NBNA Asset Sale. Prior to the Closing Date, Natwest Plc or
---------------
one of its Affiliates shall purchase the Identified Assets from NBNA and
the Delaware Bank for a purchase price equal to at the option of NatWest
Plc the gross or net book value thereof and upon terms and conditions
reasonably acceptable to FFG (the "NBNA Asset Sale").
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6.10 Treatment of NatWest Swap Portfolio. With respect to the
-----------------------------------
NatWest Swap Portfolio, NatWest Plc agrees to take, or shall cause Holdings
and its Subsidiaries to take, the actions set forth below:
(i) On or prior to the date hereof, NatWest Plc shall make a
cash payment to NBNA, which payment shall be recorded by NBNA as a
debit to cash and a credit to deferred revenues (the "Swap Payment"),
equal to the market value of the NatWest Swap Portfolio, such market
value to be determined by construction of a yield curve derived from
the closing prices at 3:00 p.m. for December 18, 1995 futures
contracts listed on the International Money Market and verified by a
mutually acceptable nationally recognized securities dealer.
(ii) From the date hereof to the Closing Date, the Swap Payment
shall be amortized over the life of the underlying transactions in the
NatWest Swap Portfolio in an amount equal to the aggregate net
interest income of each of the underlying transactions in the NatWest
Swap Portfolio (the "Amortized Amount").
(iii) FFG shall pay to NatWest Plc an amount equal to (A) the
Swap Payment less (B) the Amortized Amount as of the Closing Date, net
of tax at the applicable statutory rate. Such amount shall, solely
for purposes hereof, be treated as tangible stockholders' equity, and
the payment of such amount shall be made to NatWest Plc as an
adjustment to Closing Tangible Equity on the Closing Balance Sheet
(the "NatWest Swap Portfolio Adjustment").
(iv) As of the close of business in New York City on the date
hereof, NBNA shall have executed a series of swap transactions (each
such transaction, a "Corresponding Swap Transaction") with NatWest Plc
which are identical, in every respect, including notional amount,
interest rate and contractual terms, to the transactions which
comprise the NatWest Swap Portfolio; provided that the payment
--------
obligations of NBNA thereunder will be the inverse of the current
payment obligations of NBNA with respect to the NatWest Swap
Portfolio, i.e., in a transaction where NBNA receives a fixed rate of
----
interest from the counterparty, NBNA will pay a floating rate of
interest to NatWest Plc or in a transaction where NBNA receives a
floating rate of interest from the counterparty, it will pay a fixed
rate of interest to NatWest Plc.
(v) Within 30 days of the date hereof, FFG will identify those
transactions in the NatWest Swap Portfolio which it desires NBNA to
retain (each such transaction, together with its Corresponding Swap
Transaction, an "Identified Transaction" and, collectively, the
"Identified Transactions").
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With respect to derivatives transactions in the NatWest Swap Portfolio
other than the Identified Transactions, Natwest Plc will use its best
efforts (without the payment of money or other consideration) to cause
the counterparties thereto to consent to an assignment of their
transactions (and the contracts relating thereto) to Natwest Plc on or
prior to the Closing Date. On the Closing Date, FFG and NatWest Plc
shall cause the servicing of the Identified Transactions to be
transferred to a third party servicer chosen by FFG.
(vi) The derivative transactions in respect of which NatWest Plc
is unable to obtain the consent of the counterparty to the assignment
thereof to NatWest Plc shall constitute the "Ongoing Swap Pool".
Following the Closing Date, NatWest Plc shall, or shall cause one of
its Subsidiaries to, service, for the Surviving Bank and at the sole
cost and expense of NatWest Plc, the Ongoing Swap Pool, in accordance
with the servicing standards and procedures customary in the industry
and in compliance with the OCC's regulations and requirements with
respect thereto. NatWest Plc shall, or shall cause one of its
Subsidiaries to, promptly provide FFG with all information reasonably
requested by FFG relating to the servicing of the Ongoing Swap Pool.
(vii) At any time while any transaction which comprises part of
the Ongoing Swap Pool shall remain outstanding, FFG may, for Cause and
without payment of any fee or expense, transfer the servicing of the
Ongoing Swap Pool to FFG or any of its Affiliates or to a third party
servicer chosen by FFG. Natwest Plc, on behalf of itself and its
Subsidiaries, agrees to cooperate with FFG in effecting any such
transfer of servicing of the Ongoing Swap Pool.
(viii) For purposes of this Section 6.10, (A) the "NatWest Swap
Portfolio" shall mean all interest rate swaps, swaptions and over-the-
counter cap and floor positions of NBNA and the Delaware Bank and (B)
"Cause" shall mean (I) the commencement by NatWest Plc or such
Subsidiary of NatWest Plc as may be servicing the Ongoing Swap Pool,
as the case may be, of a case in bankruptcy under applicable law
naming such Person as the debtor, (II) the commencement by a party
other than NatWest Plc or such Subsidiary of NatWest Plc as may be
servicing the Ongoing Swap Pool, as the case may be, of a case in
bankruptcy under applicable law naming such Person as the debtor and
which is not dismissed within 60 days of the commencement thereof,
(III) the making by NatWest Plc or such Subsidiary of NatWest Plc as
may be servicing the Ongoing Swap Pool, as the case may be, of an
assignment or any other arrangement for the benefit of creditors under
any applicable law, and (IV) a failure by NatWest Plc or such
Subsidiary of NatWest Plc as may be servicing the
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Ongoing Swap Pool, as the case may be, to service the Ongoing Swap
Pool in accordance with applicable servicing standards, which failure
is not cured within 10 days of receipt of notice from FFG thereof.
6.11 Transfer of Certain Subsidiaries or Certain Assets and
------------------------------------------------------
Liabilities. Prior to the Closing Date, NatWest Plc shall cause the
- -----------
Transferred Assets and Liabilities to be transferred to and assumed by
either NBNA or a Subsidiary of NBNA, subject to and in accordance with
applicable law and regulations; provided that, to the extent any such
--------
transfer is prohibited by applicable law or regulations, FFG and NatWest
Plc shall use their best efforts to implement any lawful arrangement
designed to effect the intent of such parties hereunder.
6.12 Loan Loss Reserves. As of to the Closing Date, NatWest Plc
------------------
shall cause NBNA to have an allowance for loan and leases in an amount
equal to not less than $333 million.
6.13 Financial Information. NatWest Plc shall cause Bancorp or
---------------------
NBNA to deliver to FFG, as soon as available and in any event within 21
days after the end of each month, an unaudited pro forma consolidating
balance sheet of the Included Subsidiaries and the Transferred Assets and
Liabilities as of the end of such month and the related unaudited pro forma
consolidating statements of income and cash flows for the period then
ended, prepared in conformity with GAAP (subject to normal year-end
adjustments).
6.14 Private Label Agreement. From the date hereof up to and
-----------------------
including to the Closing Date, NatWest Plc shall not, and shall not permit
NBNA to, amend in any material respect that would be adverse to NBNA, the
provisions of the Service Agreement dated as of January 1, 1996 between
NatWest Plc and NBNA relating to, among other things, the provision of
certain wire transfer services. At such time as NatWest Plc determines to
solicit competitive bids for the provision of such services following the
termination of such agreement, NatWest Plc shall use its best efforts to
ensure that NBNA is included in such competitive bid process, along with
third party providers of such services and to negotiate in good faith with
NBNA in respect of a renewal of such Service Agreement through December 31,
1997 on commercially reasonable terms.
6.15 Non-Solicitation. For a period of one year from the Closing
----------------
Date, neither NatWest Plc nor any of its Affiliates shall, directly or
indirectly, (i) solicit for employment any Continuing Employee (other than
secretarial or clerical employees) other than (A) as part of a general
solicitation for employment or (B) Continuing Employees who have been, or
who have received notice that they will be, involuntarily terminated by the
Surviving Bank or any of its Subsidiaries or (ii) encourage any Continuing
Employee (other than secretarial or clerical employees)
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to terminate such employee's relationship with the Surviving Bank or any of
its Subsidiaries.
6.16 Environmental Matters. Subject to the provisions of Section
---------------------
6.3 (and without limiting any rights of FFG provided in such Section):
(a) NatWest Plc shall cause Holdings and its Subsidiaries to use
their reasonable best efforts to make available to FFG environmental
reports and investigations relating to compliance with, or potential
violations of, Environmental Laws prepared in connection with properties
owned or leased by the Included Subsidiaries.
(b) From the date hereof until the Closing Date, upon reasonable
notice and at the expense of FFG, Natwest Plc shall give and shall cause
the Included Subsidiaries to give FFG, its counsel and its authorized
representatives (including environmental consultants) access during normal
business hours to the offices and properties owned or leased by any of the
Included Subsidiaries for the purposes of conducting environmental due
diligence (including Phase I environmental assessments and Phase II
environmental investigations if, in the reasonable judgment of FFG, any
such Phase II investigation is necessary), provided that (i) FFG shall not
--------
have the right to conduct any Phase II investigation (A) of any property
leased by any of the Included Subsidiaries without first getting
appropriate approvals from the landlord, (B) of any property held by any of
the Included Subsidiaries as a fiduciary if in the reasonable judgment of
NatWest Plc such Phase II investigation would result in a breach of the
fiduciary duties of any of the Included Subsidiaries (but provided that,
upon FFG's request, NatWest shall allow FFG to conduct any such Phase II
investigation subject to the obtaining of appropriate approvals from co-
fiduciaries and subject to the obligation of FFG to indemnify NatWest Plc
and its Affiliates for any loss, damages, Liabilities, costs and expenses
incurred in connection with any suits, actions, proceedings, claims,
demands or investigations relating to breach of fiduciary duty) or (C) of
any property located in New Jersey for which a negative declaration or a
remediation agreement has been applied for, issued or approved or the
parties determine is reasonably likely to be applied for, issued or
approved or determined to be necessary by the New Jersey Department of
Environmental Protection in connection with this transaction, (ii) upon
request, FFG shall provide copies of any such Phase I or Phase II report to
NatWest Plc, (iii) FFG shall indemnify NatWest Plc and its Affiliates for
any loss, damages, Liabilities, costs and expenses incurred as a result of
the negligence of FFG or its consultants in the performance of any Phase II
investigation and (iv) no Phase II investigation shall unreasonably
interfere with the business or operations of any of the Included
Subsidiaries. If FFG determines, in its reasonable judgment, that the
costs to remediate any environmental matter identified in any Phase II
investigation conducted pursuant to this Section 6.16(b) are sufficient to
cause a breach of any of the representations
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set forth in Section 4.21, FFG shall immediately notify NatWest Plc of such
matter and NatWest Plc shall have the right, at its option to (x) transfer
the property to itself or a third party unrelated to any of the Included
Subsidiaries, provided that if, in the reasonable judgment of FFG, any such
--------
property is necessary to the continuing business operations of FFG, NatWest
Plc will, at the request of FFG, use best efforts to enter into an
arrangement reasonably satisfactory to FFG to provide FFG with the use of
such property, (y) remediate, or indemnify FFG for any and all expenses it
might incur in remediating, such environmental matter or (z) meet with FFG
to determine what, if any, further action will be taken. In the event that
NatWest Plc chooses to exercise either of the options set forth in clause
(x) or (y) of this Section 6.16(b), the parties shall deem such
environmental matter to be excluded from the representations and warranties
set forth in Article IV.
6.17 Accrual Policy. Prior to the Closing Date, NatWest Plc
--------------
shall cause Bancorp to take all accruals, for periods prior to or ending on
the Closing Date, in accordance with its current accounting policy,
including but not limited to any accruals relating to the National
Westminster Bancorp Management Incentive Plan.
6.18 Non-compete. Until December 19, 1998, NatWest Plc agrees
-----------
that it will not acquire an institution or corporation the principal
business of which is the retail or the retail and commercial banking
business in the Market Area. For the avoidance of doubt, it is understood
that the retail and the retail and commercial banking businesses do not
include, among other things, (i) business which is incidental to (x) a
business or customer relationship which is predominantly outside the Market
Area or (y) a business other than the commercial and retail banking
business, (ii) the private banking, fiduciary or investment management
businesses or similar or related businesses, or (iii) any business which is
incidental to any of the businesses described in any of the preceding
clauses (i) or (ii).
6.19 Certain Loans. From the date hereof to the Closing Date,
-------------
NatWest Plc hereby agrees, and agrees to cause each of the Included
Subsidiaries, to:
(i) make employee loans only in the ordinary course of business
under programs existing on the date hereto;
(ii) (A) make community development loans only pursuant to
programs or commitments existing on the date hereof and (B) except as
required by a Regulatory Agency, not make or commit to make any
community development loans pursuant to new programs without the prior
written consent of FFG; and
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(iii) make corporate accommodation loans only in the ordinary
course of business.
6.20 Expatriate Housing. Prior to the Closing Date, NatWest Plc
------------------
shall cause (i) NBNA to transfer certain expatriate housing described on
Schedule 4.11(c) to NatWest Plc or one of its Affiliates and (ii) cause
Bancorp NJ to contribute to NBNA an amount of cash equal to the book value
of the property net of any Liabilities (including deferred tax liabilities)
attributable to such properties as reflected on the books and records of
NBNA as of the date hereof.
ARTICLE VII
COVENANTS OF FFG
7.1 Regulatory Matters. FFG shall, and shall cause its
------------------
Subsidiaries to, promptly prepare and file all applications, notices,
consents and other documents necessary or advisable to obtain the FFG
Regulatory Approvals, promptly file all supplements or amendments thereto
and use all reasonable efforts to obtain the FFG Regulatory Approvals as
promptly as practicable. FFG will provide Natwest Plc and its counsel the
opportunity to review in advance and comment on all such filings. FFG will
keep Natwest Plc informed of the status of matters relating to obtaining
the Buyer Regulatory Approvals and will furnish Natwest Plc with copies of
all written communications with respect thereto.
7.2 Conduct of FFG. Except as contemplated by this Agreement,
--------------
from the date hereof until the Effective Time, FFG shall conduct its
businesses in the ordinary course consistent with past practice (as
described in writing to, and acknowledged by, NatWest Plc) and take no
action which would adversely affect or delay the ability of NatWest Plc and
its Subsidiaries to obtain the Seller Regulatory Approvals or to perform
its covenants or agreements under this Agreement. Without limiting the
generality of the foregoing and except as contemplated by this Agreement,
from the date hereof until the Effective Time, FFG will not:
(i) create, authorize or issue any capital stock ranking prior
to the FFG Preferred Stock; or
(ii) agree or commit to do any of the foregoing.
7.3 Access to Information. From the date hereof until the
---------------------
Closing Date, upon reasonable notice and subject to applicable laws
relating to the exchange of information and to the extent reasonably
required by Natwest Plc to evaluate the FFG Common Stock and the FFG
Preferred Stock, FFG shall, and shall cause its Subsidiaries to, (i) give
Natwest Plc, its counsel, financial advisors, auditors and other
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authorized representatives access during normal business hours to the
offices, properties, books and records of FFG and its Subsidiaries, (ii)
furnish to Natwest Plc, its counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and other
information relating to FFG or any of its Subsidiaries as such Persons may
reasonably request and (iii) instruct the employees, counsel and financial
advisors of FFG or any of its Subsidiaries to cooperate with Natwest Plc in
its investigation of FFG. Notwithstanding the foregoing, NatWest Plc shall
not have access to information where such access to or disclosure of such
information would violate or prejudice the rights of FFG's or its
Subsidiaries' customers, jeopardize the attorney-client privilege of the
institution in possession or control of such information or contravene any
law, rule, regulation, order, judgment, decree, fiduciary duty or binding
agreement entered into prior to the date hereof.
7.4 Notices of Certain Events. FFG shall, and shall cause its
-------------------------
Subsidiaries to, promptly notify Natwest Plc of:
(i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement and the Ancillary
Agreements;
(ii) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements; and
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or
involving or otherwise affecting FFG or any of its Subsidiaries that,
if pending on the date of this Agreement would have been required to
be disclosed pursuant to Section 5.10 or that relate to the
consummation of the transactions contemplated by this Agreement and
the Ancillary Agreements.
7.5 Post-Closing Access. FFG will cause the Surviving Bank and
-------------------
each of its Subsidiaries, on and after the Effective Time, to afford
promptly to Natwest Plc and its Affiliates and their respective agents
reasonable access to their properties, books, records, employees and
auditors to the extent necessary to permit NatWest Plc or any of its
Affiliates to determine any matter relating to its rights and obligations
hereunder (including but not limited to the provisions of Section 3.6) or
to any period ending on or before the Effective Time. NatWest Plc and its
Affiliates will hold, and will cause their respective officers, directors,
employees, accountants, counsel, consultants, advisors and agents to hold,
in confidence, all confidential documents and information concerning the
Surviving Bank or any of its Subsidiaries in accordance with the provisions
of Section 8.1 hereof.
7.6 InfiNet. Subject to applicable law and the provisions of
-------
any
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agreement among FFG and any of the stockholders of InfiNet, FFG shall take
any and all actions reasonably requested by NatWest Plc to facilitate any
transfer or redemption of any or all shares of InfiNet held by Holdings
(including but not limited to support for any amendment to, or waiver or
consent under, InfiNet's certificate of incorporation or by-laws submitted
for stockholder approval relating to any such transfer or redemption).
7.7 NatWest Directors. From the Effective Time and until such
-----------------
time as all amounts payable under Section 3.6 have been paid in full, FFG
shall cause the board of directors of the Surviving Bank to include two
persons designated by NatWest Plc and reasonably acceptable to FFG (the
"NatWest Directors").
7.8 Scranton Guarantee. On the Closing Date, FFG shall, or
------------------
shall cause SNY or one of its Subsidiaries to, assume all obligations of
Bancorp under (i) the guaranty dated May 13, 1994 of Bancorp relating to
obligations of NatWest Services under a lease dated May 13, 1994 between
NatWest Services, as tenant, and the Scranton Lackawanna Industrial
Building Company, as landlord, and (ii) the guaranty and surety agreement
dated February 28, 1995 of Bancorp relating to obligations of NatWest
Services under a consent, subordination and assumption agreement dated
February 28, 1995 among NatWest Services, the Scranton Lackawanna
Industrial Building Company and the Commonwealth of Pennsylvania; provided
--------
that, to the extent that such obligations cannot be assumed by FFG or one
of its Subsidiaries, FFG shall indemnify Bancorp from and against any
liabilities in connection therewith.
7.9 Capital Requirements. In connection with the transactions
--------------------
contemplated hereby, a relevant Regulatory Agency notifies FFG that it is
required to raise any amount of additional capital, then FFG shall use its
best efforts to issue and sell such amount of additional capital as
promptly as practicable following such notification.
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ARTICLE VIII
COVENANTS OF FFG AND NATWEST PLC
FFG and Natwest Plc agree that:
8.1 Confidentiality. (a) Prior to the Effective Time and at
---------------
all times after any termination of this Agreement, all of the parties
hereto and their respective Affiliates will, and will use their best
efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in
confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law, all documents and information
furnished to each other or their respective Affiliates in connection with
the transactions contemplated by this Agreement and the Ancillary
Agreements, except to the extent that such information can be shown to have
been (a) previously known on a nonconfidential basis by such party, (b) in
the public domain through no fault of such party or (c) later lawfully
acquired by such party from sources other than the parties hereto or any of
their respective Subsidiaries who, to the knowledge of such party, had such
information without any breach of any obligation of confidentiality;
provided that any party may disclose such information to its officers,
- --------
directors, employees, accountants, counsel, consultants, advisors and
agents in connection with the transactions contemplated by this Agreement
and the Ancillary Agreements so long as such Persons are informed by such
party of the confidential nature of such information and are directed by
such party to treat such information confidentially and not to use any of
such confidential documents or information for any reason or purpose other
than to carry out and consummate the transactions contemplated by this
Agreement and the Ancillary Agreements. The obligations of the parties
hereto and their respective Affiliates to hold any such information in
confidence shall be satisfied if they exercise the same care with respect
to such information as they would take to preserve the confidentiality of
their own similar information. If this Agreement is terminated, each of
the parties hereto and their respective Affiliates will, and will use their
best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to, destroy or
deliver to the other party, upon request, all documents and other
materials, and all copies thereof, obtained by such party or its Affiliates
or on their behalf from another party or any of its Subsidiaries.
8.2 Best Efforts. Subject to the terms and conditions of this
------------
Agreement, FFG and Natwest Plc shall, and shall cause their respective
Subsidiaries to, use their best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary or desirable
to obtain all Buyer Regulatory Approvals or Seller Regulatory Approvals, as
applicable, and to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements. Natwest Plc, prior to the Closing,
agrees to cause Holding and each of its Subsidiaries, and FFG, after the
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Closing, agrees to cause NBNA and each of its Subsidiaries to execute and
deliver such other documents, certificates, agreements and other writings
and to take such other actions as may be necessary or desirable in order to
consummate or implement expeditiously the transactions contemplated by this
Agreement and the Ancillary Agreements.
8.3 Certain Filings and Consents. Natwest Plc and FFG shall
----------------------------
cooperate with one another (i) in determining whether any action by or in
respect of, or filing with, any governmental body, agency, official or
authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any Company Contracts, Bancorp
Contracts or the agreements referred to in Section 7.8 in connection with
the consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, and (ii) in taking such actions or making any such
filings, furnishing information required in connection therewith and
seeking timely to obtain any such actions, consents, approvals or waivers;
provided that no Company Contract or Bancorp Contract shall be amended to
- --------
increase materially the amount payable thereunder or to be otherwise
materially more burdensome to the Included Subsidiaries in order to obtain
any such actions, consents, approvals or waivers, without first obtaining
the written approval of FFG, which shall not be unreasonably withheld.
8.4 Public Announcements. As long as this Agreement is in
--------------------
effect, the parties agree to consult with each other before issuing any
press release or making any public statement with respect to this Agreement
or the Ancillary Agreements or the transactions contemplated hereby or
thereby and, except as may be required by applicable law or the
requirements of any stock exchange, will not issue any such press release
or make any such public statement prior to such consultation.
8.5 Trademarks; Tradenames. (a) After the Closing Date, FFG
----------------------
shall not permit the Surviving Bank or any of its Subsidiaries to use any
of the marks or names set forth on Schedule 8.5 (collectively or
individually as the context requires, the "Seller Trademarks and
Tradenames"). Notwithstanding the foregoing, the Surviving Bank and its
Subsidiaries shall not be precluded from permitting their customers to use,
for a period of up to one year following the Closing Date, customer
materials in the possession of, or in transit to, such customers at the
time of the Closing; provided that FFG shall use its best efforts to
--------
provide such customers with replacement customer materials not containing
any of the Seller Trademarks and Tradenames as promptly as practicable
following the Closing Date in a commercially reasonable manner.
(b) Immediately following the Closing Date, the Surviving Bank
and each of its Subsidiaries, to the extent necessary, shall file with the
applicable governmental body, agency or official an amendment to its
articles or certificate of
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incorporation or articles of association to delete from its name any of the
Seller Trademarks and Tradenames or any marks and names derived therefrom
and shall do or cause to be done all other acts, including the payment of
any fees required in connection therewith, to cause such amendment to
become effective.
8.6 Intercompany Accounts and Agreements. (a) Except as
------------------------------------
otherwise provided by this Agreement, all intercompany accounts between
Natwest Plc or its Affiliates, on the one hand, and the Included
Subsidiaries, on the other hand, as of the Effective Time, other than bank
deposits shall be settled at book value in the manner provided in this
Section 8.6. At least five business days prior to the Effective Time,
Natwest Plc shall prepare and deliver to FFG a statement setting out in
reasonable detail the calculation of all such intercompany account balances
based upon the latest available financial information as of such date,
together with supporting documentation to verify the underlying
intercompany charges and transactions. All such intercompany account
balances, other than bank deposits, shall be paid in full in cash on or
prior to Effective Time.
(b) As promptly as practicable, but not later than 60 days after
the Closing Date, Natwest Plc will cause to be prepared and delivered to
FFG a statement setting out in reasonable detail the calculation of such
intercompany account balances as of the Closing Date (giving effect to any
settlement under subsection (a)), together with an unqualified report of
KPMG Peat Marwick LLP thereon. FFG and Natwest Plc shall cooperate in the
preparation of any such calculation including the provision of supporting
documentation to each other to verify the underlying intercompany charges,
transactions and payments. If FFG disagrees with Natwest Plc's calculation
of such intercompany balances, FFG may, within 30 days after delivery of
such statement, deliver a notice to Natwest Plc disagreeing with such
calculation and setting forth FFG's calculation of such amount. Any such
disagreement shall be resolved in the manner provided in Section 3.3(c) and
the net amount of any such intercompany balance shall be paid in cash
promptly thereafter, together with interest thereon from and including the
Closing Date to but excluding the date of payment at a rate per annum equal
to LIBOR as of the date of payment thereof. Such interest shall be payable
at the same time as the payment to which it relates and shall be calculated
daily on the basis of a year of 360 days and the actual number of days
elapsed.
(c) On or prior to the Closing Date, NatWest shall cause
Holdings and its Subsidiaries to terminate all Intercompany Service
Agreements set forth on Schedule 4.12(viii) other than the agreement
referred to in Section 6.14.
8.7 Stockholder Approvals. Each of FFG and NatWest Plc shall
---------------------
take all necessary actions to obtain, as soon as practicable after the date
hereof, the Buyer Stockholder Approvals and the Seller Stockholder
Approvals, respectively.
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8.8 175 Water Street Lease. FFG and NatWest Plc hereby agree to
----------------------
use their respective reasonable best efforts to procure a month-to-month
lease arrangement on commercially reasonable terms to permit the Included
Subsidiaries, from and after the Closing Date, to use and occupy certain
space presently occupied by Bancorp and its Subsidiaries at 175 Water
Street; provided that such month-to-month lease shall not extend beyond
--------
December 31, 1996; and provided further that within two months of the
-------- -------
Closing Date, FFG shall provide to NatWest Plc a detailed plan of FFG's
strategy for vacating any remaining space then occupied by NBNA or any of
its Subsidiaries.
8.9 Issuance of FFG Preferred Stock. Other than in connection
-------------------------------
with a transaction described in writing to, and acknowledged by, NatWest
Plc, FFG agrees not to issue any preferred stock from the Closing Date to
the earlier of the date on which all of the FGG Preferred Stock has been
sold by NatWest Plc or any of its Affiliates or the date six months
following the Closing Date.
ARTICLE IX
TAX MATTERS
9.1 Tax Sharing Agreements. The parties hereto agree that any
----------------------
Tax sharing agreement between Holdings or any of its Subsidiaries and any
of the Included Subsidiaries shall terminate as of the close of business on
the Closing Date and will have no further effect for any taxable year
(whether the current year, a future year, or a past year; provided that FFG
--------
shall cause the Included Subsidiaries to make tax sharing payments in
respect of Taxes for tax periods (or portions thereof) beginning after
December 31, 1994 and ending on or before the Closing Date in accordance
with the Consolidated Income Tax Agreement dated August 10, 1988 between
Holdings and members of its Affiliated Group).
9.2 Returns for Periods Through the Closing Date. Natwest Plc
--------------------------------------------
shall cause Holdings to include the income of the Included Subsidiaries
(including any deferred income triggered into income by Treas. Reg. Sec.
1.1502-13 and Treas. Reg. Sec. 1.1502-14 and any excess loss accounts taken
into income under Treas. Reg. Sec. 1.1502-19) on the Holdings consolidated
federal income Tax Return for all periods through the Closing Date and pay
any federal income Taxes attributable to such income. FFG shall cause the
Included Subsidiaries to furnish Tax information to Holdings for inclusion
in Holdings' federal consolidated income Tax Return for the period which
includes the Closing Date in accordance with the Included Subsidiaries'
past custom and practice. NatWest Plc shall cause Holdings to allow FFG an
opportunity to review and comment upon such Tax Returns (including any
amended returns) to the extent that they relate to any of the
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Included Subsidiaries. NatWest Plc will not permit Holdings to take any
position on such returns that relates to any of the Included Subsidiaries
and would adversely affect any of the Included Subsidiaries after the
Closing Date, except to the extent required by applicable law. The income
of the Included Subsidiaries will be apportioned to the period up to and
including the Closing Date and the period after the Closing Date by closing
the books of the Included Subsidiaries as of the end of the Closing Date.
The foregoing provisions shall also apply to any separate, combined,
unitary or consolidated state Tax Return for such periods and the state
Taxes attributable to income for such periods, except as modified by
applicable state law.
9.3 Audits. NatWest Plc shall cause Holdings and its
------
Subsidiaries to allow FFG and its counsel to participate in any audits of
Holdings' consolidated federal income Tax Returns (or any state separate,
combined, unitary or consolidated Tax Return) to the extent that such Tax
Returns relate to the Included Subsidiaries. NatWest Plc will not permit
Holdings to settle any such audit in a manner which would adversely affect
the Included Subsidiaries after the Closing Date, except to the extent
required by applicable law.
9.4 Actions On or After Closing Date. FFG covenants that it
--------------------------------
will not cause or permit any Included Subsidiary or any Affiliate of FFG
(i) to take any action on or after the Closing Date other than in the
ordinary course of business, including but not limited to the distribution
of any dividend or the effectuation of any reorganization or redemption
that could give rise to any Tax liability of NatWest Plc or its Affiliates,
(ii) to make any election or deemed election under Section 338 of the Code,
or (iii) to make or change any Tax election, amend any Tax Return or take
any Tax position on any Tax Return, take any action, omit to take any
action or enter into any transaction that results in any increased Tax
liability of NatWest Plc or its Affiliates; provided that this Section 9.4
--------
shall not apply to any action or omission described in (i) or (iii) that is
contemplated under this Agreement.
9.5 Carrybacks. Natwest Plc will, and will cause its Affiliates
----------
to immediately pay to FFG any Tax refund (or reduction in Tax Liability)
resulting from a carryback of a post-acquisition Tax attribute to any of
the Included Subsidiaries into the Holdings consolidated Tax Return, when
such refund or reduction is realized by the Holdings group. Natwest Plc
will, and will cause its Affiliates to cooperate with the Included
Subsidiaries in obtaining such refunds (or reduction in Tax Liability),
including through the filing of amended Tax Returns or refund claims;
provided that no payment shall be due to the extent that such carryback
- --------
increases any Tax Liability of NatWest Plc or its Affiliates. FFG agrees
to indemnify Natwest Plc for any Taxes resulting from the disallowance of
such post-acquisition Tax attribute on audit or otherwise, but only to the
extent such Taxes relate to a Tax refund (or reduction in Tax Liability)
previously paid to FFG pursuant to this Section 9.5.
9.6 Retention of Carryovers. NatWest Plc will not permit
-----------------------
Holdings to elect to retain any net operating loss carryovers, capital loss
carryovers or other
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carryovers of the Included Subsidiaries.
9.7 Post-Closing Elections. At Holdings' request, FFG will
----------------------
cause the Included Subsidiaries to make and/or join with Holdings in making
elections relating to the Holdings consolidated group after Closing if the
making of such election does not have an adverse impact on FFG (or any of
the Included Subsidiaries) for any post-acquisition Tax period.
9.8 Information and Assistance. Natwest Plc agrees to furnish
--------------------------
or cause to be furnished to FFG, promptly upon request, such information
and assistance relating to any of the Included Subsidiaries as is
reasonably necessary for the filing of any Tax Return of any of the
Included Subsidiaries (or any separate, consolidated, combined or unitary
Tax Return which includes any of the Included Subsidiaries), for the
preparation of any audit relating to any of the Included Subsidiaries, and
for the prosecution or defense of any claim, suit or proceeding relating to
any proposed adjustment to any of the Included Subsidiaries' Tax.
9.9 Leases. The parties agree that the rent payable pursuant to
------
each lease under which any of the Included Subsidiaries is a lessee is not
less than a fair market value rent and that no such lease has a fair market
value greater than zero as of the Closing Date. FFG, NatWest Plc, their
respective Affiliates, and the Included Subsidiaries shall not take any
position inconsistent with the foregoing sentence for any tax, financial
accounting, regulatory, or any other reporting purpose.
9.10 Transfer Taxes. All transfer, documentary, sales, use,
--------------
stamp, registration and other such Taxes and fees (including any penalties
and interest) incurred in connection with this Agreement shall be borne
equally by FFG and NatWest Plc. The party that is required by applicable
law to do so shall file all necessary Tax Returns and other documentation
with respect to all such Taxes and fees, and, if required by applicable
law, the other party will, and will cause its Affiliates to, join in the
execution of any such Tax Returns and other documentation.
ARTICLE X
EMPLOYEE BENEFITS
10.1 Employees. (a) Prior to the Effective Time, NatWest Plc
---------
shall take such action as shall be necessary to cause (i) all employees of
the Included Subsidiaries other than Transferred Employees (the "Continuing
Employees") to become employees of NBNA or its Subsidiaries and (ii) the
sponsorship of all Employee Plans and Benefit Arrangements applicable to
such employees to be assumed by NBNA or one of its Subsidiaries. Effective
at the Effective Time and subject to applicable law, Continuing Employees
shall continue as employees of the
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Surviving Bank or its Subsidiaries, provided that nothing herein shall
--------
create a contract between any Continuing Employee and the Surviving Bank or
its Subsidiaries, give a Continuing Employee the right of employment with
the Surviving Bank or its Subsidiaries or prohibit the Surviving Bank or
its Subsidiaries from discharging any Continuing Employee at any time after
the Effective Time.
(b) For a period of 12 months after the Closing Date, FFG shall,
or shall cause the Surviving Bank to, maintain the severance arrangements
listed in Schedule 10.1 for the benefit of Continuing Employees and provide
outplacement services substantially similar to those provided under the
existing National Westminster Bancorp Officer Outplacement Policy. Except
as provided in the previous sentence, from and after the Effective Time and
subject to applicable law, FFG shall provide the Continuing Employees with
employee benefits, including but not limited to pension plans, thrift
plans, management incentive plans, group life plans, accidental death and
dismemberment plans, travel accident plans, medical and hospital plans and
long term disability plans, on terms and conditions generally applicable to
similarly situated employees of FFG ("FFG Benefits"); provided that FFG, in
--------
its discretion, may provide FFG Benefits to the Continuing Employees
through one or more of the Employee Plans or Benefit Arrangements in effect
for the benefit of Continuing Employees. Subject to restrictions imposed
by law, FFG shall cause the plans, practices and arrangements providing
such FFG Benefits to recognize service of the Continuing Employees with
NatWest Plc and its Subsidiaries for all purposes for which such service
was recognized under the applicable plans, practices and arrangements of
the Included Subsidiaries.
(c) FFG agrees to honor in accordance with applicable law all
contracts, arrangements, commitments, or understandings described in
Schedule 4.20 and all benefits vested thereunder as of the Effective Time
except those contracts, commitments, or understandings with Transferred
Employees; provided that, except as provided in the first sentence of
--------
Section 10.1(b), nothing in this sentence shall be interpreted as
preventing FFG from amending, modifying or terminating any contracts,
commitments or understandings as permitted by applicable law.
(d) The provisions of the first sentence of Sections 10.1(b) and
10.1(d) are intended to be for the benefit for, and enforceable by, the
Continuing Employees covered thereunder and their heirs and
representatives.
(e) For purposes of the Employee Plans and the Benefit
Arrangements, the parties hereto agree that the "purchase price" of Bancorp
shall be $3,260,000,000.
10.2 Pension Plan. (a) With respect to the National Westminster
------------
Bancorp Retirement Plan (the "Pension Plan"), at the Effective Time or as
soon as
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practicable thereafter, the Surviving Bank shall cause the trustee of the
Pension Plan to segregate, in accordance with the provisions set forth
below, the assets of the Pension Plan allocable to Excluded Employees and
shall make any and all filings and submissions to the appropriate
governmental agencies arising in connection with such segregation of assets
and all necessary amendments to the Pension Plan and related trust
agreement to provide for such segregation and the transfer of assets as
described below. The assets of the Pension Plan allocable to Excluded
Employees shall be segregated in the form of cash.
(b) The amount of such assets allocable to Excluded Employees
(the "Transfer Amount") shall be equal to the present value of accrued
benefits under the relevant Title IV Plan for Excluded Employees determined
as of the Closing Date. For purposes of this calculation, the present
value of accrued benefits shall be determined on the basis of the actuarial
assumptions set forth on Schedule 10.2 and participant data available as of
the Closing Date. The calculation of the Transfer Amount shall in all
events comply with the requirements of Section 414(l) of the Code. The
Surviving Bank shall provide the actuary designated by NatWest Plc with all
information necessary to verify and agree with the calculation of the
Transfer Amount.
(c) As soon as practicable after the date hereof and effective
as of the Effective Time, NatWest Plc or one of its Affiliates shall
establish or designate a defined benefit pension plan for the benefit of
Excluded Employees (the "New Pension Plan"). As soon as practicable
following the earlier of the receipt of a favorable determination letter
from the Internal Revenue Service regarding the qualified status of the New
Pension Plan or the issuance of indemnities satisfactory to the Surviving
Bank and NatWest Plc, the Surviving Bank shall cause the trustee of the
Pension Plan to transfer the Transfer Amount, increased by the earnings
attributable to the investment of such assets in short-term investments
during the period from the date of such segregation to the date of transfer
described herein and reduced by any required benefit payments made to or in
respect of any Excluded Employee who retired or otherwise terminated
service prior to the date of transfer described herein, to the appropriate
trustee designated by NatWest under the trust agreement forming a part of
the New Pension Plan.
(d) In consideration for the transfer of assets described
herein, NatWest Plc or one or more of its Affiliates shall, effective as of
the date of transfer described herein, assume all of the obligations of the
Surviving Bank and any of its affiliates in respect of benefits accrued by
Excluded Employees under the Pension Plan at or prior to the Effective
Time, except to the extent satisfied by the payment of benefits prior to
the date of transfer described herein.
10.3 Individual Account Plan. (a) With respect to the National
-----------------------
Westminster Bancorp Savings and Investment Plan (the "Individual Account
Plan"),
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at the Effective Time or as soon as practicable thereafter, the Surviving Bank
shall cause the trustee of such Plan to identify the assets of such Plan
representing the full account balances of Excluded Employees and shall make
any and all filings and submissions to the appropriate governmental
agencies arising in connection therewith and make all necessary amendments
to the Individual Account Plan and related trust agreement to provide for
such identification of assets and the transfer of assets as described
below. The manner in which the account balances of Excluded Employees
under such Plan are invested shall not be affected by such identification
of assets.
(b) As soon as practicable after the date hereof and effective
as of the Closing Date, NatWest Plc shall establish or designate an
individual account plan for the benefit of Excluded Employees (the "New
Individual Account Plan"). As soon as practicable following the earlier of
the receipt of a favorable determination letter from the Internal Revenue
Service regarding the qualified status of the New Individual Account Plan
or the issuance of indemnities satisfactory to the Surviving Bank and
NatWest Plc, the Surviving Bank shall cause the trustee of the Individual
Account Plan to transfer the full account balances of Excluded Employees
under such Plan (which account balances will have been credited with
appropriate earnings attributable to the period prior to the date of
transfer described herein), reduced by any necessary benefit or withdrawal
payments to or in respect of Excluded Employees occurring during the period
prior to the date of transfer described herein, to the appropriate trustee
as designated under the trust agreement forming a part of the New
Individual Account Plan.
(c) In consideration for the transfer of assets described
herein, NatWest Plc or one or more of its Affiliates shall, effective as of
the date of transfer described herein, assume all of the obligations in
respect of the account balances accumulated by Excluded Employees under the
Individual Account Plan on or prior to the Effective Time, except to the
extent satisfied by the payment of benefits prior to the date of transfer
described herein.
ARTICLE XI
CONDITIONS TO CLOSING
11.1 Conditions to Obligations of Each Party. The obligations of
---------------------------------------
each of the parties hereto to consummate the Merger are subject to the
satisfaction at or prior to the Effective Time, or the waiver in writing by
each of the parties hereto, of the following conditions:
(a) Regulatory Approval. All actions by or in respect of or
-------------------
filings with any Regulatory Agency required to permit the consummation
of the Merger (including, without limitation, the Buyer Regulatory
Approvals and the Seller Regulatory Approvals) shall have been taken,
made or obtained.
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(b) Stockholder Approval. FFG shall have obtained the Buyer
--------------------
Stockholder Approvals and NatWest Plc shall have obtained the Seller
Stockholder Approvals.
(c) No Injunctions or Restraints; Illegality. No order,
----------------------------------------
injunction or decree issued by any court or agency of competent
jurisdiction preventing consummation of the Merger or the other
transactions contemplated by this Agreement shall be in effect. No
statute, rule, regulation, order, injunction or decree shall have been
enacted or enforced by any Governmental Entity which prohibits or
makes illegal consummation of the Merger.
11.2 Conditions to Obligations of FFG. The obligations of FFG to
--------------------------------
consummate the Merger are subject to the satisfaction at or prior to the
Effective Time, or the waiver in writing by FFG, of the following further
conditions:
(a) There shall not have been any breaches of the
representations and warranties (other than Section 4.9(i)) of Natwest
Plc set forth in this Agreement, as of the date of this Agreement and
(except to the extent such representations and warranties speak as of
an earlier date) as of the Closing Date as though made on and as of
the Closing Date, except for breaches that, individually or in the
aggregate, have not had or would not reasonably be expected to have a
Material Adverse Effect on the Included Subsidiaries, taken as a
whole, it being understood that, for purposes of this Section 11.2(a),
where any representation or warranty already includes a Material
Adverse Effect or materiality exception, such Material Adverse Effect
or materiality exception shall not apply. FFG shall have received a
certificate signed on behalf of Natwest Plc by the Group Chief
Executive Officer or the Group Chief Financial Officer of NatWest Plc
to the foregoing effect.
(b) There shall not (i) have been a sustained and substantial
impairment of the condition (financial or otherwise), business, assets
or results of operations of the Included Subsidiaries, taken as a
whole, which impairment is not attributable to this Agreement or the
transactions contemplated hereby, or (ii) have occurred and be
continuing a declaration of a banking moratorium or suspension of
payments in respect of banks in the United States that is applicable
to NBNA.
(c) Natwest Plc shall have performed in all material respects
all obligations required to be performed by it under this Agreement at
or prior to the Closing Date, and FFG shall have received a
certificate signed on behalf of Natwest Plc by the Group Chief
Executive Officer or the Group Chief Financial Officer of Natwest Plc
to such effect.
(d) FFG shall have received opinions of counsel to and of
NatWest Plc,
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dated the Closing Date, covering the matters described on Exhibit E
hereto. In rendering such opinions, such counsel may rely upon
certificates of public officials and, as to matters of fact, upon
certificates of officers of Natwest Plc and its Subsidiaries.
(e) FFG shall have received all documents it may reasonably
request relating to the existence of any of NatWest Plc, Holdings
Bancorp, or the Included Subsidiaries and the authority of Natwest Plc
for this Agreement and each Ancillary Agreement to which it is a
party, all in form and substance reasonably satisfactory to FFG.
(f) The Water Street Transaction shall have been consummated.
(g) The OCC 30-mile Approval shall have been obtained and the
headquarters of NBNA shall have been moved and the new branch shall
have been established in accordance therewith.
(h) The Operating Subsidiary Approval shall have been obtained
and all of the Included Subsidiaries (other than NBNA and its
Subsidiaries) shall have been made Subsidiaries of NBNA (or such other
action permitted by Section 6.5(b) shall have been taken).
(i) The Delaware Bank Asset Transfer shall have been
consummated.
(j) The NBNA Asset Sale shall have been consummated.
(k) FFG shall have received a duly executed copy of the
Standstill Agreement.
(l) NBNA shall have delivered a certification to the effect that
NBNA is not nor has it been within 5 years of the date hereof a
"United States real property holding corporation" as defined in
Section 897 of the Code.
(m) The Certificate of Designation relating to the FFG Preferred
Stock, if any, to be issued as part of the Merger Consideration,
having been filed by FFG with the Rhode Island Secretary of State,
shall have been accepted by the Rhode Island Secretary of State.
(n) The transactions contemplated in Section 6.10 to be
consummated on or prior to the Closing Date shall have been
consummated.
(o) The Transferred Assets and Liabilities shall have been
transferred to and assumed by NBNA.
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11.3 Conditions to Obligations of Natwest Plc. The obligations
----------------------------------------
of Natwest Plc to consummate the Merger are subject to the satisfaction at
or prior to the Effective Time, or the waiver in writing by NatWest Plc, of
the following further conditions:
(a) There shall not have been any breaches of the
representations and warranties (other than Section 5.8) of FFG set
forth in this Agreement, as of the date of this Agreement and (except
to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the
Closing Date, except for breaches that, individually or in the
aggregate, have not had or would not reasonably be expected to have a
Material Adverse Effect on the FFG, it being understood that, for
purposes of this subsection (a), where any representation or warranty
already includes a Material Adverse Effect or materiality exception,
such Material Adverse Effect or materiality exception shall not apply.
NatWest Plc shall have received a certificate signed on behalf of FFG
by the Chief Executive Officer or the Chief Financial Officer of FFG
to the foregoing effect.
(b) There shall not (i) have been a sustained and substantial
impairment of the condition (financial or otherwise), business, assets
or results of operations of FFG and its Subsidiaries, taken as a
whole, which impairment is not attributable to this Agreement or the
transactions contemplated hereby, or (ii) have occurred and be
continuing a declaration of a banking moratorium or suspension of
payments in respect of banks in the United States that is applicable
to FFG.
(c) FFG shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or
prior to the Closing Date, and NatWest Plc shall have received a
certificate signed on behalf of FFG by the Chief Executive Officer or
the Chief Financial Officer of FFG to the foregoing effect.
(d) Natwest Plc shall have received opinions of counsel to and
of FFG, dated the Closing Date, covering the matters described in
Exhibit F hereto. In rendering such opinion, such counsel may rely
upon certificates of public officials and, as to matters of fact, upon
certificates of officers of FFG and its Subsidiaries.
(e) Natwest Plc shall have received a duly executed copy of the
Registration Rights Agreement and the Services Agreement.
(f) Natwest Plc shall have received all documents it may
reasonably request relating to the existence of FFG and any of its
Subsidiaries and the authority of FFG for this Agreement and the
Ancillary Agreements to which it
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is a party, all in form and substance reasonably satisfactory to
Natwest Plc.
(g) If FFG Common Stock shall form part of the Merger
Consideration, then except as disclosed in FFG's reports filed with
the SEC pursuant to the Securities Exchange Act of 1934, as amended,
subsequent to the date of this Agreement, there shall have been no
event, occurrence, development or state of circumstances or facts
which has had or could reasonably be expected to have a Material
Adverse Effect on FFG other than any resulting from changes in general
conditions (including laws and regulations) applicable to the banking
industry or general economic conditions that, in either case, have not
had a materially more adverse effect on FFG that on similar banking
organizations.
ARTICLE XII
INDEMNIFICATION; SURVIVAL
12.1 Indemnification by Natwest Plc. (a) Natwest Plc shall
------------------------------
indemnify and hold harmless FFG and its Affiliates (a "Buyer Indemnified
Party"), against and from any and all loss, damage, Liabilities, costs and
expenses in respect of suits, claims, proceedings, demands, judgments,
deficiencies, losses, damages, expenses and costs (including without
limitation, interest, penalties, reasonable counsel fees and costs and
expenses incurred in the investigation, defense or settlement of any claims
covered by this Article XII) (collectively, the "Buyer Indemnifiable
Damages") which any Buyer Indemnified Party may suffer or incur as a result
of:
(i) any misrepresentation or breach of any warranty in Section
4.6 or 4.24;
(ii) any Tax arising out of the Delaware Bank Asset Transfer;
(iii) any agreement, contract, arrangement, commitment or
understanding (whether written or oral) with NatWest Plc or any of its
Subsidiaries relating to the employment of any Transferred Employee;
(iv) any guaranty or other credit enhancement issued by any of
the Included Subsidiaries on behalf of NatWest Plc or any of its
Affiliates or any of their respective customers;
(v) the Ongoing Swap Pool;
(vi) any failure by NatWest Plc or any of its Affiliates to
fulfill any of the covenants, obligations or agreements to be performed by
any such party following
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the Closing Date.
(b) Each Buyer Indemnified Party shall be entitled to indemnity
under Section 12.1(a) for any and all claims made within the period set
forth in Section 12.3, based upon the breach of the representations and
warranties set forth in Section 4.24, whether or not such Buyer Indemnified
Party had knowledge of such breach prior to the Closing Date). The
termination of the representations and warranties in Section 4.24 shall not
affect any Buyer Indemnified Party's right to prosecute to conclusion any
claim resulting from or in respect of any misrepresentation or breach of
warranty with respect to Section 4.24 made in writing by such Buyer
Indemnified Party prior to the termination of such representations and
warranties.
(c) Natwest Plc shall indemnify FFG and its Affiliates from and
against the entirety of any Adverse Consequences FFG or any Included
Subsidiary may suffer resulting from, arising out of, relating to, in the
nature of, or caused by any Liability of any Included Subsidiary for Taxes
of any Person other than an Included Subsidiary as a result of (i) its
membership in a separate, combined, consolidated or unitary group before
the Closing Date, (ii) its becoming a transferee or successor of such
Person before the Closing Date or (iii) its entering into a contract before
the Closing Date including, but not limited to, any contract contemplated
by this Agreement or any of the Ancillary Agreements and entered into
between any of Bancorp or the Included Subsidiaries and an employee
thereof, provided that this clause (c) shall be limited to Adverse
--------
Consequences that arise out of any event or condition occurring prior to
the Closing Date. FFG shall have the option of recouping all or any part
of any Buyer Indemnifiable Damage or Adverse Consequences it may suffer (in
lieu of seeking any indemnification to which it is entitled under this
Section 12.1) by notifying Natwest Plc that FFG is reducing the Contingent
Payment Amount.
12.2 Indemnification by FFG. FFG shall indemnify and hold
----------------------
harmless NatWest Plc and its Affiliates (a "Seller Indemnified Party"),
against and from any and all loss, damage, Liabilities, costs and expenses
in respect of suits, claims, proceedings, demands, judgments, deficiencies,
losses, damages, expenses and costs (including, without limitation,
interest, penalties, reasonable counsel fees and costs and expenses
incurred in the investigation, defense or settlement of any claims covered
by this Article XII) (collectively, the "Seller Indemnifiable Damages")
which any Seller Indemnified Party may suffer or incur as a result of:
(i) any misrepresentation or breach of any representation or
warranty Section 5.5(e);
(ii) any guaranty or other credit enhancement issued by NatWest
Plc or any of its Affiliates on behalf of any of the Included
Subsidiaries or any of their customers; and
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(iii) any failure by FFG or any of its Affiliates (including the
Surviving Bank and its Subsidiaries) to fulfill any of the covenants,
obligation or agreements to be performed by any such party following
the Closing Date.
12.3 Termination of Representations and Warranties. Each of the
---------------------------------------------
representations and warranties made by Natwest Plc or FFG in this Agreement
shall terminate at the Effective Time, except that (i) the representations
and warranties set forth in Section 4.6 and Section 5.5(e) shall survive
indefinitely and (ii) the representations and warranties set forth in
Section 4.24 shall survive until the expiration of the longest period
provided for the assessment or collection of Taxes with respect to any
regulation or statute of limitations, including extensions to such periods
notwithstanding any investigation made by or on behalf of any Buyer
Indemnified Party.
12.4 Notice and Right to Participate in Defense of Third Party
---------------------------------------------------------
Claims. Promptly upon receipt of notice of any claim, demand or assessment
- ------
or the commencement of any suit, action or proceedings in respect of which
indemnity may be sought on account of an indemnity agreement contained in
this Article XII (an "Indemnity Claim"), the party seeking indemnification
(the "Indemnitee") will notify, within sufficient time to respond to such
claim or answer or otherwise plea in such action, the party from whom
indemnification is sought (the "Indemnitor"), in writing, thereof. Except
to the extent that the Indemnitor is prejudiced thereby, the omission of
such Indemnitee so to notify promptly the Indemnitor of any such Indemnity
Claim shall not relieve such Indemnitor from any liability which it may
have to such Indemnitee in connection therewith, on account of the
indemnity agreements contained in this Article XII. If any Indemnity Claim
shall be asserted or commenced, and the Indemnitee shall notify the
Indemnitor of the commencement thereof, the Indemnitee shall have the right
to control the defense thereof, but Indemnitor will be entitled, at its
expense, to participate therein, and in the settlement thereof; provided
--------
that if the Indemnitor shall be fully and unconditionally obligated for the
full amount of such Indemnity Claim, then the Indemnitor shall be entitled,
if it so elects, to take control of the defense and investigation of such
Indemnity Claim and to employ and engage attorneys of its own choice to
handle and defend the same, at the Indemnitor's cost, risk and expense; and
provided further that the Indemnitee may, at its own cost, participate
- -------- -------
therein, and in the settlement thereof, and the Indemnitor shall not have
the right to settle any such Indemnity Claim, without the consent of the
Indemnitee, which consent shall not be unreasonably withheld. Each party
will cooperate with the other party in connection with any such Indemnity
Claim, make personnel, books and records relevant to the Indemnity Claim
available to the other party, and grant such authorizations or limited
powers of attorney to the agents, representatives and counsel of such other
party as such party may reasonably consider desirable in connection with
the defense of any such Indemnity Claim.
12.5 Purchase Price Adjustments. All indemnification payments
--------------------------
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under this Article XII shall be deemed adjustments to the Merger
Consideration.
ARTICLE XIII
TERMINATION
13.1 Grounds for Termination. This Agreement may be terminated
-----------------------
at any time prior to the Effective Time:
(a) by mutual written agreement of Natwest Plc and FFG, if the
Boards of Directors of each of NatWest and FFG so determines by a vote
of the majority of all of the members of each such Board of Directors;
(b) by either Natwest Plc or FFG if the Merger shall not have
been consummated on or before December 31, 1996;
(c) by either Natwest Plc or FFG if there shall be any law or
regulation that makes consummation of the transactions contemplated
hereby illegal or otherwise prohibited or if consummation of the
transactions contemplated hereby would violate any nonappealable final
order, decree or judgment of any court or governmental body having
competent jurisdiction or if any of the Buyer Regulatory Approvals or
Seller Regulatory Approvals are denied and such denial is or becomes
final and non-appealable;
(d) by Natwest Plc, if FFG shall refuse or fail after written
notice to perform any material covenant or agreement required to be
performed by it under this Agreement or if any representation or
warranty of FFG contained in this Agreement shall prove to have been
inaccurate in any material respect at the time when made and FFG shall
refuse or fail after written notice to correct such representation or
warranty within 45 days of such written notice; provided that NatWest
--------
Plc may not terminate this Agreement pursuant to this subsection (d)
if FFG continues in good faith to use its best efforts to perform any
such material covenant or agreement or correct any such representation
or warranty, and such performance, correction or other action is
capable of being performed prior to December 31, 1996; or
(e) by FFG, if Natwest Plc shall refuse or fail after written
notice to perform any material covenant or agreement required to be
performed by it under this Agreement or if any representation or
warranty of Natwest Plc contained in this Agreement shall prove to
have been inaccurate in any material respect at the time when made and
Natwest Plc shall refuse or fail after written notice to correct such
representation or warranty within 45 days of such written notice;
provided that FFG may not terminate this Agreement
--------
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pursuant to this subsection (e) if NatWest Plc continues in good faith
to use its best efforts to perform any such material covenant or
agreement or correct any such representation or warranty, and such
performance, correction or other action is capable of being performed
prior to December 31, 1996.
13.2 Effect of Termination. In the event of termination of this
---------------------
Agreement by either FFG or Natwest Plc as provided in Section 13.1, the
Agreement shall forthwith become void and have no effect and none of
Natwest Plc or FFG or any of their respective directors, officers, or
employees shall have any liability to the other party to this Agreement;
provided that if such termination shall result from the willful failure of
- --------
any party to fulfill a condition to the performance of the obligations of
the other party or to perform a covenant of this Agreement or from a
willful breach by any party to this Agreement, such party shall be fully
liable for any and all Damages incurred or suffered by the other party as a
result of such failure or breach. The provisions (of Section 8.1, Section
13.2 and Section 14.3 shall survive any termination hereof pursuant to
Section 13.1.
ARTICLE XIV
MISCELLANEOUS
14.1 Notices. All notices, requests and other communications to
-------
any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to any of the FFG Entities, to:
c/o Fleet Financial Group, Inc.
One Federal Street
Boston, Massachusetts
Attention: General Counsel
Fax: (617) 556-8004
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with a copy to:
Edwards & Angell
2700 Hospital Trust Tower
Providence, Rhode Island 02903
Attention: V. Duncan Johnson, Esq.
Fax: (401) 276-6611
if to any of the Natwest Entities, to:
c/o National Westminster Bank Plc
41 Lothbury
London EC2P 2BP
United Kingdom
Attention: Group Chief Financial Officer
Fax: (44-171) 726-1511
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Peter R. Douglas, Esq.
Fax: (212) 450-4800
All such notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if received prior
to 5 p.m. in the place of receipt and such day is a business day in the
place of receipt. Otherwise, any such notice, request or communication
shall be deemed not to have been received until the next succeeding
business day in the place of receipt.
14.2 Amendments and Waivers. (a) Any provision of this Agreement
----------------------
may be amended or waived prior to the Effective Time if, but only if, such
amendment or waiver is in writing and is signed, in the case of an
amendment, by each of the parties to this Agreement, or in the case of a
waiver, by the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
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14.3 Expenses. Except as otherwise provided herein, all costs
--------
and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
cost or expense; provided that, in respect of fees and expenses incurred by
--------
FFG in connection with the Merger or any financings or acquisitions, (i) in
the event that FFG does not elect to issue any FFG Preferred Stock on the
Closing Date to Bancorp NJ or its designee as part of the Merger
Consideration, NatWest Plc shall cause Bancorp NJ or its designee to pay to
FFG $12,500,000, (ii) in the event that FFG elects to issue any such FFG
Preferred Stock in an amount up to but less than $200,000,000, NatWest Plc
shall cause Bancorp NJ or its designee to pay to FFG an amount equal to (A)
$12,500,000 less (B) (I) $12,500,000 multiplied by (II) the amount of any
such FFG Preferred Stock issued divided by $200,000,000, and (iii) in the
event that FFG elects to issue $200,000,000 or more of such FFG Preferred
Stock, no such amount shall be payable.
14.4 Successors and Assigns. The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns; provided that no party may assign,
--------
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other party hereto, which consent
shall not be unreasonably withheld.
14.5 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the law of the State of New York, without
regard to the conflicts of law rules of such state.
14.6 Jurisdiction. Any suit, action or proceeding seeking to
------------
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby
shall only be brought in the United States District Court for the Southern
District of New York or any New York State court sitting in New York City
with subject matter jurisdiction, and each of the parties hereto hereby
consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to personal jurisdiction
and the laying of the venue of any such suit, action or proceeding in any
such court or that any such suit, action or proceeding which is brought in
any such court has been brought in an inconvenient forum. Process in any
such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court.
Without limiting the foregoing, each party hereto agrees that service of
process on such party as provided in Section 14.1 shall be deemed effective
service of process on such party.
14.7 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
--------------------
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
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LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
14.8 Counterparts; Third Party Beneficiaries. This Agreement may
---------------------------------------
be executed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. Except as provided in Article X, no provision of
this Agreement is intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
14.9 Entire Agreement. This Agreement (including the documents
----------------
and instruments referred to herein) and the Ancillary Agreements constitute
the entire agreement between the parties with respect to the subject matter
hereof and thereof and supersedes all prior agreements and understandings,
both oral and written, between the parties with respect to the subject
matter hereof and thereof.
14.10 Interpretation. When a reference is made in this Agreement
--------------
to Sections, Exhibits or Schedules, such reference shall be to a Section of
or Exhibit or Schedule to this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". No provision of this Agreement
shall be construed to require any of the parties hereto or any of their
respective Subsidiaries or Affiliates to take any action which would
violate any applicable law, rule or regulation.
14.11 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day
and year first above written.
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FLEET FINANCIAL GROUP, INC.
By: /s/ Terrence Murray
--------------------------------
Name: Terrence Murray
Title: President and Chief
Executive Officer
NATIONAL WESTMINSTER BANK PLC
By: /s/ Bernard P. Horn
--------------------------------
Name: Bernard P. Horn
Title: Chief Executive,
International Businesses
90
Exhibit 2(b)
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT is entered into as of the 31st day of
December, 1995 by and among FLEET FINANCIAL GROUP, INC., a Rhode Island
corporation ("Fleet"), FLEET BANKING GROUP, INC., a Rhode Island
corporation ("FBG"), WHITEHALL ASSOCIATES, L.P., a Delaware limited
partnership and KKR PARTNERS II, L.P., a Delaware limited partnership
(collectively, the "Partnerships").
WITNESSETH THAT:
WHEREAS, the Partnerships collectively own 1,415,000 shares of Fleet's
Dual Convertible Preferred Stock (the "DCP Shares") and rights to purchase
(the "Rights") 6,500,000 shares of Fleet's common stock, $.01 par value
(the "Common Stock"); and
WHEREAS, pursuant to the terms of the Stock Purchase Agreement dated
as of July 12, 1991 among Fleet, FBG and the Partnerships (the "Stock
Purchase Agreement"), the Certificate of Designations establishing the DCP
Shares (the "Certificate of Designations") and this Agreement, Fleet and
the Partnerships desire to issue 19,885,890 shares of Common Stock (the
"Exchanged Common Stock") in exchange for the DCP Shares, in accordance
with the terms set forth herein and therein; and
WHEREAS, the parties hereto intend that the transaction contemplated
by this Agreement be treated as a reorganization within the meaning of
Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended; and.
WHEREAS, Fleet, FBG and the Partnerships are entering into this
Agreement to set forth their agreement as to certain matters relating to
the Rights and the Exchanged Common Stock.
NOW, THEREFORE, in consideration of the premises and the agreements
herein contained and intending to be legally bound hereby, the parties
hereby agree as follows:
1. Exchange. The Partnerships hereby exchange the DCP Shares for
--------
the Exchanged Common Stock, and hereby deliver the certificates
representing the DCP Shares to Fleet for cancellation. Fleet hereby agrees
to issue certificates evidencing such Exchanged Common Stock in the names
of the Partnerships in the same proportion as the DCP Shares are currently
held by the Partnerships. The certificates evidencing the Exchanged Common
Stock will be issued the date of this Agreement.
2. Amendment of Stock Purchase Agreement. The Stock Purchase
-------------------------------------
Agreement is hereby amended as follows:
<PAGE>
(a) Section 1.01 of the Stock Purchase Agreement is hereby amended to
add a new definition as follows:
"'Exchange Agreement' shall mean the Exchange Agreement dated December
31, 1995 among the Company, Holding and the Purchasers."
(b) All references in the Stock Purchase Agreement to "Common Stock
received by Purchasers upon conversion of the DCP Shares", or similar
wording, shall be deemed amended to include the Exchanged Common Stock.
(c) Section 4.04(a) of the Stock Purchase Agreement is hereby amended
to read in its entirety as follows:
"Section 4.04. Transfer Restrictions. (a) (i) Purchasers, and
----------------------
any Permitted Transferees, shall not sell, transfer, or otherwise dispose
of beneficial ownership of the Rights to any Person other than a Permitted
Transferee. Purchasers agree that they shall not directly or indirectly
sell, pledge, transfer, or otherwise dispose of or agree to sell, pledge,
transfer or dispose of, all or any portion of the beneficial or economic
ownership of the Exchanged Common Stock or the Common Stock to be issued
upon exercise of the Rights, including in a Distribution (as such term was
defined in the Certificate of Designations), at any time prior to January
22, 1996 (whether directly or indirectly through a put, call, option, short
sale, warrant, convertible security, stock appreciation right, derivative
security or by means of any other agreement, commitment or instrument
having the effect of disposing of an interest in said securities) except to
any Affiliate of the Purchasers, provided that such Affiliate agrees in
writing to be bound by the provisions of this Agreement and the provisions
of the Exchange Agreement. From and after January 22, 1996, Purchasers
shall not sell, transfer, or otherwise dispose of beneficial ownership of
the Exchanged Common Stock or any shares of Common Stock received by
Purchasers upon exercise of the Rights to any Person other than a Permitted
Transferee (each such occurrence, a "Disposition"), in any transaction or
series of transactions, if, at the time of agreement to effect such
Disposition, to such Purchaser's knowledge, such Person and its Affiliates
then beneficially own, or as a result of such Disposition would
beneficially own, as the case may be, 5% or more of the Common Stock,
unless such Purchaser shall have received the prior approval of the Board
of Directors of the Company. NOTWITHSTANDING A PURCHASER' S LACK OF
KNOWLEDGE AS TO A TRANSFEREE'S VIOLATION OF THE PERCENTAGE OWNERSHIP
LIMITATIONS OF THE PRECEDING SENTENCE, ANY PURPORTED TRANSFER IN VIOLATION
OF THESE PROVISIONS SHALL BE VOID AND OF NO FORCE OR EFFECT.
(ii) In making any such sales of Common Stock, the Partnerships shall
give prior notice to, and consult with, Fleet as to the manner and timing
of such sales so as to avoid undue disruption in the trading market for
Fleet's Common Stock.
(d) Section 4.04(d) of the Stock Purchase Agreement is hereby
amended to read in its entirety as follows:
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<PAGE>
"(d) (i) Purchasers covenant to and agree with the Company
that until the later to occur of July 15, 1997 or the date on which the
Purchasers Beneficially Own less than three percent (3%) of the outstanding
Common Stock (the "Standstill Period"), without the Company's prior written
consent, neither the Purchasers nor their respective Affiliates will,
directly or indirectly:
(A) In any way acquire, offer or propose to acquire or agree to
acquire Beneficial Ownership of any Voting Securities or any direct or
indirect rights or options to acquire Beneficial Ownership of any Voting
Securities other than those acquired by Purchasers from the Company
pursuant to the Rights or pursuant to a stock split, stock dividend or
similar corporate action initiated by the Company;
(B) Make any public announcement with respect to (except as
otherwise required by applicable law), or submit to the Company or any of
its directors, officers, representatives, trustees, employees, attorneys,
advisors, agents or Affiliates, any proposal for, the acquisition of any
Voting Securities or with respect to any merger, consolidation, business
combination or purchase of any substantial portion of the assets of the
Company, whether or not any parties other than Purchasers and their
Affiliates are involved, and whether or not such proposal might require the
making of a public announcement by the Company, unless (X) such proposal is
directed and disclosed only to the Board of Directors of the Company, and
(Y) the Company shall have made a prior written request to Purchasers to
submit such proposal;
(C) Make, or in any way participate in, any "solicitation" of
"proxies" (as such terms are defined or used in Regulation 14A under the
Exchange Act) to vote any Voting Securities or become a "participant" in
any "election contest" as such terms are defined and used in Rule 14a-11
under the Exchange Act);
(D) Deposit any Voting Securities in a voting trust or subject
any Voting Securities to any arrangement or agreement (other than this
Agreement) with respect to the voting of such Voting Securities or other
agreement having similar effect, except that the Purchasers may grant any
revocable proxy in connection with proxy solicitations under the Exchange
Act; or
(E) Form or join a partnership, limited partnership, syndicate
or other group (as defined in Section 13 (d) (3) of the Exchange Act) with
respect to any Voting Securities (other than a group of which only the
Purchasers and Purchasers' Affiliates are members).
(ii) Purchasers further covenant to and agree with the Company that
during the Standstill Period, the Purchasers will comply with commitments
numbered 1-7 and 9 made by the Purchasers to the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") and set forth on pages
one and two of the Appendix to the letter of the Federal Reserve Board
dated July 12, 1991 addressed to Lee Meyerson of Simpson Thacher & Bartlett
(the "Passivity Commitments") as if such Passivity Commitments were set
forth in this Agreement, regardless of whether the Passivity Commitments
are terminated by the Federal Reserve Board.
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<PAGE>
(iii) Purchasers further covenant to and agree with the Company that
if, during the Standstill Period, the Purchasers' Beneficial Ownership of
the Common Stock of the Company would be such as to cause the Purchasers to
constitute an "affiliate" for pooling of interests accounting purposes, and
the Company proposes to enter into a business combination to be accounted
for by the pooling of interests accounting method, the Purchasers will
execute and deliver to the Company an affiliate letter pursuant to which
the Purchasers agree not to dispose of their Common Stock in any
disposition which would cause the Company to fail to obtain such accounting
treatment.
(iv) For purposes of this Section 4.01(d), a Person shall be deemed to
"Beneficially Own" any securities of which such Person or any such Person's
Affiliates is considered to be a "Beneficial Owner" under Rule 13(d)-3 of
the Exchange Act as in effect on the date hereof or of which such Person or
any of such Person's Affiliates or associates, directly or indirectly, has
the right to acquire (whether such right is exercisable immediately or only
after the passage of time or upon the satisfaction of conditions) pursuant
to any agreement, arrangement or understanding (whether or not in writing)
or upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise and "Voting Securities" shall mean at any
time shares of any class of capital stock of the Company which are then
entitled to vote generally in the election of directors."
(c) Section 4.08(b) of the Stock Purchase Agreement is hereby amended
to read in its entirety as follows:
"Section 4.08. Legends. (b) Certificates for the Common Stock
to be issued to the Purchasers shall bear legends in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT
WHILE SUCH A REGISTRATION IS IN EFFECT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS. THIS
CERTIFICATE IS ISSUED PURSUANT TO AND SUBJECT TO THE
RESTRICTIONS ON TRANSFER, AND OTHER PROVISIONS OF A STOCK
PURCHASE AGREEMENT DATED AS OF JULY 12, 1991 (AS AMENDED BY
AN EXCHANGE AGREEMENT DATED AS OF DECEMBER 31, 1995) AMONG
THE COMPANY, FLEET BANKING GROUP, INC. (FORMERLY
FLEET/NORSTAR HOLDING COMPANY, INC.) AND THE PURCHASERS
REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE
COMPANY. EXCEPT AS PROVIDED IN SUCH STOCK PURCHASE
AGREEMENT, AS AMENDED, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE NOT TRANSFERABLE AND ANY PURPORTED TRANSFER
IN VIOLATION OF THE PROVISIONS OF SUCH STOCK PURCHASE
AGREEMENT, AS AMENDED, SHALL BE VOID AND OF NO FORCE AND
EFFECT."
(d) Except as amended hereby, the Stock Purchase Agreement shall
remain in full force and effect. The parties hereto confirm that all
matters set forth therein which speak as of a
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<PAGE>
prior date are specifically not brought forward and revived as part of this
Agreement. All references in the Stock Purchase Agreement and the
Ancillary Documents to "this Agreement" or the "Stock Purchase Agreement"
shall be deemed to be references to the Stock Purchase Agreement, as
amended hereby.
3. Amendment of Registration Rights Agreement. The Registration
------------------------------------------
Rights Agreement dated as of July 12, 1991 among Fleet, FBG and the
Partnerships (the "Registration Rights Agreement") is hereby amended to
include the Exchanged Common Stock as Registrable Securities thereunder.
All references in the Registration Rights Agreement, the Stock Purchase
Agreement and the Ancillary Documents to the "Registration Rights
Agreement" shall be deemed to be references to the Registration Rights
Agreement, as amended hereby.
4. Representations and Warranties. (a) Fleet hereby
------------------------------
represents and warrants to the Partnerships that (i) each of Fleet and FBG
has full corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby; (ii) the execution,
delivery and performance of this Agreement by each of Fleet and FBG has
been duly authorized by all necessary corporate action; (iii) this
Agreement has been duly and validly executed and delivered by Fleet and
FBG, and constitutes the valid and binding obligation of Fleet and FBG,
enforceable against them in accordance with its terms, except as (A) the
enforceability hereof may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of creditors' rights
generally and (B) the enforceability of equitable remedies may be limited
by equitable principles of general applicability; (iv) the execution,
delivery and performance of this Agreement, the consummation of the
transactions by Fleet and FBG contemplated hereby and the compliance by
Fleet and FBG with any of the provisions hereof will not conflict with,
violate or result in a breach of any provision of, or constitute a default
(or an event which, with notice or lapse of time or both would constitute a
default) under, or result in the termination of or accelerate the
performance required by, or result in a right of termination or
acceleration under, (1) any provision of the articles of incorporation, by-
laws or other governing instrument of Fleet and FBG or (2)(x) any mortgage,
note, indenture, deed of trust, lease, loan agreement or other agreement or
instrument or, (y) any permit, concession, grant, franchise, license,
judgment, order, decree, ruling, injunction, statute, law, ordinance, rule
or regulation, in the case of (x) or (y), applicable to Fleet, FBG or their
respective properties or assets, except for such conflicts, violations,
breaches, defaults, terminations and accelerations which do not have, or
could not be reasonably expected to have, a Material Adverse Effect (as
defined in the Stock Purchase Agreement); (v) no consent, approval, order
or filing with, any governmental authority is required in connection with
the execution, delivery and performance of this Agreement by Fleet and FBG
and the consummation of the transactions by Fleet and FBG hereunder; and
(vi) the Exchanged Common Stock has been duly authorized by all necessary
corporate action, is validly issued, fully paid and nonassessable, will not
subject the holders thereof to personal liability and will not be subject
to preemptive rights of any other stockholder of Fleet.
(b) The Partnerships hereby represent and warrant to Fleet and FBG
that (i) each of the Partnerships has full partnership power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby; (ii) the execution, delivery and performance of this
Agreement by each of the Partnerships has been duly authorized by all
necessary partnership
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<PAGE>
action; (iii) this Agreement has been duly and validly executed and
delivered by the Partnerships, and constitutes the valid and binding
obligation of the Partnerships, enforceable against them in accordance with
its terms, except as (A) the enforceability hereof may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (B) the enforceability of
equitable remedies may be limited by equitable principles of general
applicability; (iv) the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby and
the compliance by the Partnerships with any of the provisions hereof will
not conflict with, violate or result in a breach of any provision of, or
constitute a default (or an event, which, with notice or lapse of time or
both would constitute a default) under, (1) any organizational document of
the Partnerships or the General Partner (as defined in the Stock Purchase
Agreement) or (2) any mortgage, note, indenture, deed of trust, lease, loan
agreement or other agreement or instrument of the Partnerships or the
General Partner or any permit, concession, grant, franchise, license,
judgment, order, decree, ruling, injunction, statute, law, ordinance, rule
or regulation applicable to the Partnerships or the General Partner or
their respective properties other than any such conflict, violation, breach
or default under clause (2) which will not materially and adversely affect
the consummation of the transactions contemplated hereby; (v) no consent,
approval, order or authorization of, or registration, declaration or filing
with, any governmental authority is required on the part of the
Partnerships or the General Partner in connection with the execution,
delivery and performance of this Agreement by the Partnerships and the
consummation of the transactions by the Partnerships hereunder; (vi) the
Partnerships are acquiring the Exchanged Common Stock solely for the
purpose of investment and not with a view to, or for resale in connection
with, any distribution thereof in violation of the Securities Act; and
(vii) the Partnerships have been provided full access to all information
deemed relevant by the Partnerships relating to their investment in the
Exchanged Common Stock and Fleet has made available to the Partnerships the
opportunity to ask questions and receive answers and to obtain information
which Fleet possesses or can acquire without unreasonable effort or
expense.
5. Miscellaneous.
-------------
a. Notices. All notices and other communications hereunder shall be
-------
in writing and delivered in accordance with the provisions of the Stock
Purchase Agreement.
b. Entire Agreement; Amendments. This Agreement, the Stock Purchase
----------------------------
Agreement (as amended hereby), the Registration Rights Agreement (as
amended hereby), and the Rights and the documents described herein and
therein or attached or delivered pursuant hereto or thereto set forth the
entire agreement between the parties hereto with respect to the
transactions contemplated by this Agreement. Any provision of this
Agreement may be amended or modified in whole or in part at any time by an
agreement in writing among the parties hereto executed in the same manner
as this Agreement. No failure on the part of any party to exercise, and no
delay in exercising, any right shall operate as a waiver thereof nor shall
any single or partial exercise by any party of any right preclude any other
or future exercise thereof or the exercise of any other right. No
investigation by the Partnerships of Fleet or FBG prior to or after the
date hereof shall stop or prevent the Partnerships from exercising any
right hereunder or be deemed to be a waiver of any such right.
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<PAGE>
c. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to constitute an original, but
all of which together shall constitute one and the same document.
d. Governing Law. This Agreement shall be governed by, and
-------------
interpreted in accordance with, the laws of the State of Rhode Island
applicable to contracts made and to be performed in that State.
e. Public Announcements. Subject to each party's disclosure
--------------------
obligations imposed by law and the confidentiality provisions contained in
the Stock Purchase Agreement, each of the parties hereto will cooperate
with each other in the development and distribution of all news releases
and other public information disclosures with respect to this Agreement and
any of the transactions contemplated hereby, and no party hereto will make
any news release or disclosure without first consulting with each other
party hereto.
f. Expenses. Each party hereto shall bear its own costs and
--------
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including the fees and expenses of its financial
advisors, accountants and counsel.
g. Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, Fleet's successors and assigns and each Partnership's successors and
assigns. The provisions hereof shall also inure to the benefit of each
limited and general partner in the Partnerships. Subject to applicable
law, the Partnerships may assign their rights under this Agreement to any
Affiliate, but no such assignment shall relieve such Partnership of its
obligations hereunder.
h. Captions. The captions contained in this Agreement are for
--------
reference purposes only and are not part of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto or by their respective duly authorized officers, all as of the date
first above written.
FLEET FINANCIAL GROUP, INC.
By: /s/ Eugene M. McQuade
-----------------------------
Name: Eugene M. McQuade
Title: EVP AND CFO
FLEET BANKING GROUP, INC.
By:/s/ William C. Mutterpal
-----------------------------
Name: William C. Mutterpal
Title: Secretary
KKR PARTNERS II, L.P.
By: KKR ASSOCIATES, its General Partner
By: /s/ Michael T. Tokarz
-----------------------------
Name: Michael T. Tokarz
Title: General Partner
WHITEHALL ASSOCIATES, L.P.
By: KKR ASSOCIATES, its General Partner
By: /s/ Michael T. Tokarz
-----------------------------
Name: Michael T. Tokarz
Title: General Partner
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EXHIBIT 99(a)
FLEET FINANCIAL GROUP LOGO NATWEST BANK LOGO
NEWS RELEASE
CONTACTS:
- ---------
JAMES MAHONEY TIM CONNOLLY
FLEET COMMUNICATIONS NATWEST BANCORP MEDIA RELATIONS
(617) 292-3553 (201) 547-7533
THOMAS RICE SCOTT PRENTICE
FLEET INVESTOR RELATIONS NATWEST PLC INVESTOR RELATIONS
(617) 423-5198 011-44-171-726-1103
FLEET FINANCIAL GROUP AGREES
TO ACQUIRE NATWEST BANK N.A.
TRANSACTION STRENGTHENS POSITION IN METROPOLITAN NEW YORK REGION
______________________________________________________________________________
Boston and Jersey City, December 19, 1995 -- Fleet Financial Group (NYSE: FLT)
today announced that it has signed a definitive agreement to acquire
New Jersey-based NatWest Bank N.A., a bank operating in New York and New Jersey,
from its parent, National Westminster Bank Plc. Following completion of the
transaction, which has a purchase price of $3.26 billion, Fleet will have a
substantially strengthened market position in metropolitan New York to
complement its leading position in New England.
Terrence Murray, President and Chief Executive Officer of Fleet, stated,
"NatWest Bank is an exciting and logical addition to Fleet; the franchise is
complementary to our own, especially in commercial, retail and government
banking; it strengthens our activities in New York--primarily in the greater
metropolitan area; and it offers us entry into the highly attractive New Jersey
market. The acquisition will provide attractive long-term returns to Fleet
shareholders and will be strongly accretive to per-share earnings in 1997 and
beyond."
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John Tugwell, Chairman, President and Chief Executive Officer of NatWest
Bancorp, added that the acquisition "is a testament to the significant
turnaround that has occurred at NatWest." He said: "As part of Fleet, we'll
continue to pursue very much the same vision that we have now--to become a
leading financial services company to consumers and small- to medium-sized
businesses, as well has to provide outstanding customer service. In short,
we're a good fit with Fleet."
As part of the announcement, Jay Saries, currently a Vice Chairman of
Fleet, has been appointed Chairman of Fleet Bank of New York N.A., as the
combined bank will be called. Tugwell will be named President and Chief
Executive Officer of Fleet Bank of New York N.A.
Terms of the transaction call for a payment of $2.7 billion, plus an
"earnout" of up to $560 million. The earnout involves annual payments equal
to approximately 50 percent of earnings from the NatWest franchise over eight
years. The acquisition will be financed primarily through internal funding
sources. Fleet expects to issue $600 million of preferred stock (of which
NatWest Bank Plc will take up to $300 million) and $400 million of debt
securities. Tangible net worth of NatWest Bank is expected to be $2.32
billion at close.
After consolidation, the combined institution will have approximately
$90 billion in assets, reflecting an expected reduction of Fleet's assets
by $18 billion, and NatWest's by $13 billion as part of this transaction.
"Importantly, this acquisition provides Fleet with a unique opportunity to
liquidate low-return assets and replace them with higher-yielding loans
almost entirely funded with core deposits," stated Eugene M. McQuade, Fleet
Executive Vice President and Chief Financial Officer.
Driving the transaction's financial rationale is substantial cost savings.
By 1997, for instance, Fleet projects a savings of $200 million, or 23 percent,
in operating expenses compared with the 1995 baseline. To achieve the savings,
it is expected that, by 1997, staffing will decline by about 1,800
positions--with attrition expected to account for about one-half of the
total.
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The acquisition, which is subject to regulatory approval, is expected to
close in the second quarter of 1996. Upon completion, Fleet will be the
third-ranked banking institution in New York. It will be the number-four
banking operation in New Jersey (the position NatWest occupies now). In
New England, Fleet--which recently closed its strategic merger with Shawmut
National Corporation--maintains leading market positions in Connecticut,
Maine, Massachusetts, New Hampshire and Rhode Island. In total, Fleet expects
to operate 1,225 branches and 2,000 ATMs in seven states. It also will maintain
NatWest's recently opened customer service and sales operation in Scranton,
Pennsylvania.
"Fleet is a financially stong organization able to make an acquisition
such as this one while maintaining our current high level of community,
charitable and economic development commitments to New England," Murray
stated. "In fact, we believe our customers, communities and employees in
New England will benefit from the synergies we will be achieving through
the acquisition." Noting NatWest's "Outstanding" CRA rating, Murray added
that "Fleet will maintain NatWest's community commitments as well."
Derek Wanless, NatWest Group Chief Executive, said that NatWest Group
Plc will retain a substantial presence in the United States through its
investment banking business, NatWest Markets, and the Coutts Group, its
private banking arm. He added that the sale "reflects our strategic focus
on developing financial services in attractive markets where we can maintain
strong long-term positions." The New York-based U.S. operations together
employ about 1,150 people.
Fleet Financial Group is an $84-billion diversified financial services
company listed on the New York Stock Exchange. Fleet's lines of business
include commercial and consumer banking, mortgage banking, consumer finance,
asset-based lending, equipment leasing, investment management services and
student loan processing.
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NatWest Bancorp, the $35 billion holding company for NatWest N.A. and
NatWest (Delaware), provides banking services through more than 300 branches
in New York and New Jersey. The 31st-largest bank holding company in the
U.S., it is a wholly owned subsidiary of National Westminster Bank Plc, the
London-based international banking and financial services organization.
###
Exhibit 99(b)
FOR IMMEDIATE RELEASE CONTACTS:
January 2, 1996 Media: James Mahoney
617-292-3553
Investors: Tom Rice
617-423-5198
FLEET FINANCIAL GROUP REACHES AGREEMENT
WITH KOHLBERG, KRAVIS AND ROBERTS
KKR Converts Position into 19.9 million shares of Fleet Common Stock
BOSTON, January 2, 1996 -- Fleet Financial Group (NYSE:FLT) announced
today that the $84 billion diversified financial services organization
reached a definitive agreement with Kohlberg, Kravis and Roberts (KKR) to
exchange KKR's ownership interest represented by its holdings of Dual
Convertible Preferred Stock (DCP) into direct ownership of Fleet common
stock. Under the terms of the agreement, KKR exchanged its position into
19.9 million shares of Fleet Financial Group's common stock on December 31,
1995. After the agreement, KKR now holds a 7.5% ownership interest in
Fleet Financial Group. KKR continues to hold the rights to purchase 6.5
million shares of Fleet common stock, such rights were issued during the
1991 agreement between the two companies.
The Dual Convertible Preferred Stock was originally issued to KKR in
1991 to provide capital for Fleet's purchase of the Bank of New England.
As a part of the 1991 agreement, KKR had the option of exchanging those
securities into either Fleet common stock or a 50 percent interest in
Fleet's Connecticut and Massachusetts banks.
"KKR's investment in 1991 was a bellweather event in Fleet's history,"
noted Terrence Murray, president and CEO of Fleet Financial Group. "The
purchase of the Bank of New England established Fleet as the largest bank
holding company in New England and one of the country's top regional banks.
It also created the base for Fleet's recent expansion through the 1995
acquisition of Shawmut National Corporation and our recent agreement to
purchase NatWest Bank."
"The agreement reached with KKR clarifies our ownership structure,
allowing us to focus on the challenges of creating one of the country's
premier financial services companies. Critical to this accomplishment is
our intention to provide total financial solutions to the individuals and
institutions we serve," added Murray.
<PAGE>
According to KKR's Henry Kravis, "Over the past four years, we've
enjoyed a strong relationship with Fleet and are gratified that our
investment has worked so well for both parties. We also believe it is an
appropriate time to reinforce Fleet's efforts to consolidate the Shawmut
and NatWest acquisitions by completing this exchange and making our
interests consistent with that of all Fleet's common shareholders."
Fleet Financial Group (FFG) is a New England-based $84 billion
diversified financial services company listed on the New York Stock
Exchange. FFG's lines of business include commercial and consumer banking,
mortgage banking, consumer finance, asset-based lending, equipment leasing,
investment management services and student loan processing.
