SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )
Michigan National Corporation
(Name of issuer)
Common Stock, par value $10 per share
(Title of class of securities)
594563108
(CUSIP number)
Mr. D. M. Bruce
National Australia Bank Limited
Level 24
500 Bourke Street
Melbourne, Victoria 3000,
Australia
011-613-641-3668
With a copy to:
B. Robbins Kiessling, Esq.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, N.Y. 10019
(212) 474-1000
(Name, address and telephone number of person
authorized to receive notices and communications)
February 4, 1995
(Date of events which require filing of this statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of
this Schedule 13D, and is filing this schedule because of
Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the
statement [x].
(Page 1 of 101 Pages)
Exhibit Index is on page 18 of this filing.
<PAGE>2
CUSIP No. 13D 594563108
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
National Australia Bank Limited
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Australia
NUMBER OF 7 SOLE VOTING POWER
SHARES - 0 -
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 2,633,502 (when and if option exercised)
PERSON WITH
9 SOLE DISPOSITIVE POWER
- 0 -
10 SHARED DISPOSITIVE POWER
2,633,502 (when and if option exercised)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
2,633,502 (option to acquire)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
16.6%
14 TYPE OF REPORTING PERSON
HC (BK)
<PAGE>3
CUSIP No. 13D 594563108
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MNC Acquisition Co.
I.R.S. Employer Identification Number:
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Michigan
NUMBER OF 7 SOLE VOTING POWER
SHARES - 0 -
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH 2,633,502 (when and if option exercised
REPORTING by NAB)
PERSON WITH
9 SOLE DISPOSITIVE POWER
- 0 -
10 SHARED DISPOSITIVE POWER
2,633,502 (when and if option exercised
by NAB)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
2,633,502 (option of NAB to acquire)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
16.6%
14 TYPE OF REPORTING PERSON
CO
<PAGE>4
Item 1. Security and Issuer.
This Statement relates to an option to purchase shares
of Common Stock, par value $10 per share ("Common Stock"),
of Michigan National Corporation (the "Issuer"). The
address of the Issuer's principal executive offices is
27777 Inkster Road, Farmington Hills, Michigan 48334.
Item 2. Identity and Background.
(a)-(c) and (f). This Statement is being filed on
behalf of each of National Australia Bank Limited, a
bank organized under the laws of Australia ("NAB"), and MNC
Acquisition Co., a wholly owned subsidiary of NAB
incorporated under the laws of the State of Michigan
("Sub"), pursuant to the agreement to such effect of NAB and
Sub a copy of which is attached as an exhibit hereto and
incorporated herein by reference. The address of the
principal business and principal office of each of NAB and
Sub is Level 24, 500 Bourke Street, Melbourne,
Victoria 3000, Australia.
The names, business addresses, principal occupations
and citizenship of the directors and executive officers of
NAB and Sub are set forth on Annex A hereto and are
incorporated herein by reference.
(d) and (e). During the last five years, NAB has not
and, to the best knowledge of NAB, the executive officers
and directors of NAB have not (i) been convicted in a
criminal proceeding (excluding traffic violations and
similar misdemeanors) or (ii) been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities
subject to, Federal or state securities laws or finding any
violation with respect to such laws.
Sub was incorporated on February 2, 1995. Since the
date of its formation, Sub has not and, during the last five
years to the best knowledge of Sub, the executive officers
and directors of Sub have not (i) been convicted in a
criminal proceeding (excluding traffic violations and
similar misdemeanors) or (ii) been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining
<PAGE>5
future violations of, or prohibiting or mandating activities
subject to, Federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On February 4, 1995, NAB, Sub and the Issuer entered
into a Stock Option Agreement (the "Stock Option
Agreement"), a copy of which is attached as an exhibit
hereto and incorporated herein by reference. Execution and
delivery of the Stock Option Agreement by the Issuer was a
condition to the Agreement and Plan of Merger dated as of
February 4, 1995, among NAB, Sub and the Issuer (the "Merger
Agreement"), a copy of which is attached as an exhibit
hereto and incorporated herein by reference.
Pursuant to the Stock Option Agreement, the Issuer has
granted to NAB, an option (the "Option") to purchase up to
2,633,502 shares of Common Stock, or such greater number as
shall at the time equal 19.9% of the then outstanding shares
of Common Stock (without giving effect to the issuance of
shares of Common Stock pursuant to the exercise of the
Option), subject to anti-dilution adjustments and certain
other limitations set forth therein, at a purchase price of
$89.00 per share.
Pursuant to Section 3 of the Stock Option Agreement,
which is incorporated herein by reference, the Option is
exercisable in whole or in part at any time after the
occurrence of an "Acquisition Event", defined in Section
5.07(b) of the Merger Agreement, which is incorporated
herein by reference, as any of (i) any person or group (as
defined in Section 13(d)(3) of the Securities Exchange Act
of 1934), other than NAB or any of its subsidiaries, having
acquired beneficial ownership (including pursuant to the
acquisition of options) of 20% or more of any class of
equity securities of the Issuer or any of its subsidiaries
or having received approval from the Federal Reserve Board
to acquire such ownership or (ii) the Issuer or Michigan
National Bank ("MNB") having authorized, recommended,
proposed or publicly announced an intention to authorize,
recommend or propose, or having amended its shareholder
rights agreement to facilitate, or having entered into, an
agreement with any person (other than NAB or any of its
subsidiaries) to (w) effect a merger, consolidation,
business combination, sale of substantially all assets, or
similar transaction involving the Issuer or MNB, (x) sell,
lease or otherwise dispose of assets of the Issuer or its
<PAGE>6
subsidiaries representing 15% or more of the consolidated
assets of the Issuer and its subsidiaries, (y) issue, sell
or otherwise dispose of securities representing 20% or more
of any class of equity securities of the Issuer or any of
its subsidiaries or (z) have such person effect a tender
offer or exchange offer that if consummated would result in
any person beneficially owning 20% or more of any class of
equity securities of the Issuer or any of its subsidiaries.
The exercise and purchase of shares of Common Stock pursuant
to the Option is subject to compliance with applicable laws,
including the Bank Holding Company Act of 1956, as amended.
Pursuant to Section 3 of the Stock Option Agreement,
the Option (but not the rights set forth in Sections 8, 9
and 10 of the Stock Option Agreement, described under Items
5 and 6) terminates upon the earliest of (i) the effective
time of the merger of Sub and the Issuer (described under
Item 4), (ii) upon termination of the Merger Agreement under
Section 7.01 thereof (other than for any of the reasons
described in clause (iii) below) or (iii) 18 months after
termination of the Merger Agreement (x) by either party
under Section 7.01(c) or (d) thereof, (y) by NAB under
Section 7.01(b)(ii) thereof or (z) by the Issuer under
Section 7.01(b)(iv) thereof under circumstances where NAB
could effect termination pursuant to Section 7.01(c) thereof
(each of the foregoing provisions of the Merger Agreement
being incorporated herein by reference).
In the event NAB acquires shares of Common Stock
pursuant to the Stock Option Agreement, it is currently
anticipated that the funds required to purchase such shares
would be provided from NAB's working capital or by
borrowings from a source yet to be determined.
Item 4. Purpose of Transaction.
The grant of the Option, exercisable only in certain
circumstances, to acquire shares of Common Stock, was a
condition to the execution of the Merger Agreement pursuant
to which Sub will, subject to certain conditions being
satisfied or waived as set forth in Article VI of the Merger
Agreement, which is incorporated herein by reference, be
merged with and into the Issuer (the "Merger"), and the
separate corporate existence of Sub will cease and the
Issuer will continue as the surviving corporation (the
"Surviving Corporation"). Upon the effectiveness of the
Merger, (i) each issued and outstanding share of Common
Stock (other than certain shares of Common Stock owned by
<PAGE>7
the Issuer, any subsidiary of the Issuer, NAB, Sub or any
other subsidiary of NAB, which shares will be automatically
cancelled and retired) will be converted into the right to
receive U.S. $110.00 in cash, without interest, from the
Surviving Corporation and (ii) each issued and outstanding
share of capital stock of Sub will be converted into and
become one fully paid and nonassessable share of common
stock, par value U.S. $.01 per share, of the Surviving
Corporation. As a result of such conversion, the Issuer
will become a wholly-owned subsidiary of NAB, and all shares
of Common Stock will be delisted from Nasdaq and will not be
listed on any national securities exchange or quoted in any
inter-dealer quotation system.
The Merger Agreement provides that the directors of Sub
at the effective time of the Merger (which may include some
or all of the current directors of the Issuer) will
initially be the directors of the Surviving Corporation and
the executive officers of the Issuer immediately prior to
the effectiveness of the Merger, along with any other
designees of NAB, will initially be the executive officers
of the Surviving Corporation.
Item 5. Interest in Securities of the Issuer.
(a) and (b). Pursuant to the Option, NAB has the
right, exercisable only in certain circumstances as
described under Item 3 above, to acquire up to 2,633,502
shares of Common Stock, or such greater number as shall at
the time equal 19.9% of the then outstanding shares of
Common Stock (without giving effect to the issuance of
shares of Common Stock pursuant to the exercise of the
Option), subject to antidilution adjustments and certain
other limitations set forth therein. Such amount would
currently represent 16.6% of the class (based upon the
13,233,678 outstanding shares of Common Stock as of the
close of business on February 3, 1995, and after giving
effect to the issuance of 2,633,502 shares of Common Stock
pursuant to the exercise of the Option). When and if NAB
acquires such shares, it (and Sub, if the shares are
registered in the name of Sub) will have sole (or shared, if
the shares are registered in the name of Sub) voting and
investment power with respect thereto, subject to certain
transfer restrictions and rights of the Issuer set forth in
Sections 4, 9 and 11 of the Stock Option Agreement and to
certain other limitations set forth in Section 21 of the
Stock Option Agreement, all of which provisions are
<PAGE>8
incorporated herein by reference. NAB and Sub each disclaim
beneficial ownership of such shares.
Other than the Option described above, none of NAB, Sub
or any other subsidiary of NAB beneficially owns any shares
of Common Stock. To the best knowledge of NAB, none of
NAB's directors or executive officers beneficially owns any
shares of Common Stock. To the best knowledge of Sub, none
of Sub's directors or executive officers beneficially owns
any shares of Common Stock.
(c) Except for the acquisition of the Option and as
described in the next sentence, there have been no
transactions in shares of Common Stock by NAB, or, to the
best knowledge of NAB, by any of NAB's directors or
executive officers, during the past 60 days. Disclosed on
Annex B hereto which is incorporated herein by reference are
transactions in shares of Common Stock during the past
60 days by National Australia Bank Superannuation Plan Pty.
Ltd., a pension fund established for the benefit of
employees of NAB (the "Pension Fund"). Such transactions
are disclosed because the trustees of the Pension Fund,
which trustees have the power to cause the acquisition and
disposition of Pension Fund investments, include certain
directors and executive officers of NAB. NAB and Sub each
disclaim beneficial ownership of such shares. There have
been no transactions in shares of Common Stock by Sub, or,
to the best knowledge of Sub, by any of Sub's directors or
executive officers, during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Understandings or Relationships with Respect to
Securities of the Issuer.
Other than the Merger Agreement described in response
to Item 4 (which response is incorporated herein by
reference) and the Stock Option Agreement certain provisions
of which are described in response to Item 3 (which response
is incorporated herein by reference), there are no
contracts, arrangements, understandings or relationships
(i) between NAB and any other person, or, to the best
knowledge of NAB, among any of NAB's directors and executive
officers or between any of NAB's directors and executive
officers and any other person, with respect to securities of
the Issuer or (ii) between Sub and any other person, or, to
<PAGE>9
the best knowledge of Sub, among any of Sub's directors and
executive officers or between any of Sub's directors and
executive officers and any other person, with respect to
securities of the Issuer.
Set forth below is a description of additional selected
provisions of the Stock Option Agreement.
Pursuant to Section 8 of the Stock Option Agreement,
which is incorporated herein by reference, NAB has the
option to cause the Issuer to repurchase the Option and any
shares of Common Stock purchased by NAB pursuant to the
Option, upon the terms set forth in such Section 8 and
subject to certain limitations set forth in the Stock Option
Agreement, at any time during (i) the period during which
the Option is exercisable (as described in response to
Item 3) or (ii) the period of 30 business days immediately
following the failure to receive certain regulatory
approvals in respect of the exercise of the Option.
Pursuant to Section 10 of the Stock Option Agreement,
which is incorporated herein by reference, NAB has been
granted certain registration and listing rights in respect
of securities to be acquired upon exercise of the Option.
Pursuant to Section 7 of the Stock Option Agreement,
which is incorporated herein by reference, upon certain
mergers, consolidations or sale of substantially all of the
assets of the Issuer (other than with or to NAB or Sub or
any other subsidiary of NAB), the Option will be converted
into or exchanged for an option in respect of common stock
of the "Acquiring Corporation" (as defined therein) or any
person that controls the Acquiring Corporation.
The foregoing summary of the terms of the Merger
Agreement and the Stock Option Agreement does not purport to
be complete and is qualified in its entirety by reference to
the full text of the Merger Agreement and the Stock Option
Agreement, copies of which are attached as exhibits hereto.
<PAGE>10
Item 7. Material to be Filed as Exhibits.
(a) Agreement of NAB and Sub dated the date hereof.
(b) Agreement and Plan of Merger dated as of
February 4, 1995, among NAB, Sub and the Issuer.
(c) Stock Option Agreement dated as of February 4,
1995, among NAB, Sub and the Issuer.
<PAGE>11
Signature
After reasonable inquiry, and to the best of my knowledge
and belief, I certify that the information set forth in this
Statement is true, complete and correct.
National Australia Bank Limited,
an Australian corporation,
Dated: 02/13/95 By: /s/ Bruce Sinclair McComish
-------------------------------
Name: Bruce Sinclair McComish
Title: Chief Financial Officer
<PAGE>12
Signature
After reasonable inquiry, and to the best of my knowledge
and belief, I certify that the information set forth in this
Statement is true, complete and correct.
MNC Acquisition Co.,
a Michigan corporation,
Dated: 02/13/95 By: /s/ Bruce Sinclair McComish
------------------------------
Name: Bruce Sinclair McComish
Title: Chairman, President and
Chief Executive Officer
<PAGE>13
ANNEX A
IDENTITY AND BACKGROUND
Following are the names, business addresses, principal occupations
and citizenships of the Directors and Executive Officers of NAB.
Principal
Name & Position Business Address Occupation Citizenship
William Robert Mitchel National Australia Chairman, NAB Australian
Irvine Bank Limited
Director 500 Bourke Street
MELBOURNE VIC 3000
AUSTRALIA
Brian Thorley Loton AC The Broken Hill Vice Chairman, Australian
Director Proprietary Company NAB
Limited Chairman, The
600 Bourke Place, Broken Hill
49th Floor Proprietary
MELBOURNE VIC 3000 Company Limited
AUSTRALIA (exploration,
mining and
manufacturing)
David Kennedy National Australia Vice Chairman, Australian
Macfarlane Bank Limited NAB Director
500 Bourke Street
MELBOURNE VIC 3000
AUSTRALIA
Donald Robert Argus National Australia Chief Executive Australian
Director and Bank Limited Officer, NAB
Executive Officer 500 Bourke Street
MELBOURNE VIC 3000
AUSTRALIA
David Charles Keith Woodside Petroleum Managing British
Allen AO Limited Director,
Director 386 Bourke Street, Woodside
40th Floor Petroleum
MELBOURNE VIC 3000 Limited
AUSTRALIA (oil and gas
exploration)
Peter John Waraker O'Connell Street Chairman, Email Australian
Cottrell AO Association Pty Limited
OBE Ltd. (whitegoods
Director 2 O'Connell Street, manufacturer)
6th Floor
SYDNEY NSW 2000
AUSTRALIA
<PAGE>14
Principal
Name & Position Business Address Occupation Citizenship
Dr. Christopher North Limited Chairman, North British
Michael Deeley 7th Floor, 476 St. Limited
Director Kilda Road (industrial and
MELBOURNE VIC 3000 mining
AUSTRALIA operations)
David Alexander Tange National Australia Director, NAB Australian
Dickins Bank Limited
Director 500 Bourke Street
MELBOURNE VIC 3000
AUSTRALIA
The Lord Nickson KBE Clydesdale Bank PLC Director British
DL 30 St. Vincent Clydesdale Bank
Director Place PLC (NAB)
GLASGOW G12HL
SCOTLAND
Mark Richard Rayner CRA Limited Director and Australian
Director 55 Collins Street, Group
35th Floor Executive, CRA
MELBOURNE VIC 3000 Limited
AUSTRALIA (mining and
processing of
mineral
resources)
Joseph Charles National Australia Director, NAB Australian
Trethowan AM Bank Limited
Director 500 Bourke Street
MELBOURNE VIC 3000
AUSTRALIA
Andrew Turnbull Burns Philip & Chairman, Burns Australian/
Director Company Limited Philip & Company British
7 Bridge Street Limited
SYDNEY NSW 2000 (manufacturing
AUSTRALIA of food
ingredients,
hardware,
retailing and
shipping)
Sir Bruce Dunstan MIM Holdings Chairman and Australian
Watson Limited Chief Executive,
Director 410 Anne Street, MIM Holdings
1st Floor Limited
BRISBANE QLD 4000 (international
AUSTRALIA metal and
mineral
processing)
<PAGE>15
Principal
Name & Position Business Address Occupation Citizenship
Allan William Diplock National Australia Chief General Australian
Executive Officer Bank Limited Manager,
500 Bourke Street Australian Bank
MELBOURNE VIC 3000 of NAB
AUSTRALIA
Robert Malcolm Charles Bank of New Zealand Managing Australian
Prowse BNZ Centre, 1 Director,
Executive Officer Willis Street Bank of New
WELLINGTON Zealand (NAB)
NEW ZEALAND
John Kelvin Dawson National Australia Managing Australian
Executive Officer Group (UK) Limited Director,
6-8 Tokenhouse Yard National
LONDON EC2R 7AJ Australia Group
(UK) Limited
(NAB)
Bruce Sinclair National Australia Chief Financial New
McComish Bank Limited Officer, NAB Zealander
Executive Officer 500 Bourke Street
MELBOURNE VIC 3000
AUSTRALIA
Clifford William National Australia Group General Australian
Breeze Bank Limited Manager
Executive Officer 500 Bourke Street Asia, Americas,
MELBOURNE VIC 3000 Subsidiaries &
AUSTRALIA Technology, NAB
Roland Frank Matrenza National Australia Group General Australian
Executive Officer Bank Limited Manager
500 Bourke Street Group Strategic
MELBOURNE VIC 3000 Development, NAB
AUSTRALIA
Leslie Raymond Ryan National Australia Group General Australian
Executive Officer Bank Limited Manager
500 Bourke Street Group Risk
MELBOURNE VIC 3000 Management, NAB
AUSTRALIA
Gordon John Wheaton National Australia Group General Australian
Executive Officer Bank Limited Manager
500 Bourke Street Group Human
MELBOURNE VIC 3000 Resources, NAB
AUSTRALIA
<PAGE>16
Following are the names, business addresses, principal occupations
and citizenships of the Directors and Executive Officers of Sub.
Principal
Name & Position Business Address Occupation Citizenship
Bruce Sinclair National Australia Chief Financial New Zealander
McComish Bank Limited Officer, NAB
Director and 500 Bourke Street
Executive MELBOURNE VIC 3000
Officer AUSTRALIA
Raymond Peter National Australia Executive Vice Australian
McCracken Bank Limited President, New York
Director and 200 Park Avenue Branch of NAB
Executive New York, NY 10166
Officer
Alan Frankenburg National Australia General Manager, Australian
Executive Bank Limited South Australia
Officer 22 King William Region, NAB
Street
Adelaide, South
Australia
Richard McKinnon National Australia Head of Investment Australian
Executive Bank Limited and Advisory
Officer 500 Bourke Street Services, NAB
MELBOURNE VIC 3000
AUSTRALIA
<PAGE>17
ANNEX B
On December 16, 1994, the Pension Fund sold 338
shares of Common Stock for $78.00 per share. On
December 28, 1994, the Pension Fund sold 462 shares of
Common Stock for $74.875 per share. Each trade was settled
by Brown Brothers Harriman New York through the Depository
Trust Company New York.
<PAGE>18
EXHIBIT INDEX
Exhibit No. Description Page Number
(a) Agreement of NAB 19
and Sub dated the
date hereof.
(b) Agreement and Plan 20
of Merger dated as
of February 4,
1995, among NAB,
Sub and the
Issuer.
(c) Stock Option 83
Agreement dated as
of February 4,
1995, among NAB,
Sub and the
Issuer.
<PAGE>19
Exhibit (a) to Schedule 13D
Each of the undersigned hereby agree that the Statement on
Schedule 13D dated 02/13/95, with respect to the Stock
Option Agreement dated as of February 4, 1995, among each of
the undersigned and Michigan National Corporation, is filed
on behalf of each of them.
National Australia Bank
Limited,
an Australian corporation,
Dated: 02/13/95 By: /s/ Bruce Sinclair McComish
------------------------------
Name: Bruce Sinclair McComish
Title: Chief Financial Officer
MNC Acquisition Co.,
a Michigan corporation,
Dated: 02/13/95 By: /s/ Bruce Sinclair McComish
------------------------------
Name: Bruce Sinclair McComish
Title: Chairman, President and
Chief Executive Officer
<PAGE>20
Exhibit (b) to Schedule 13D
============================================================
AGREEMENT AND PLAN OF MERGER
Dated as of February 4, 1995
among
NATIONAL AUSTRALIA BANK LIMITED A.C.N. 004044937,
MNC ACQUISITION CO.
and
MICHIGAN NATIONAL CORPORATION
============================================================
<PAGE>21
TABLE OF CONTENTS
Page
Parties and Recitals . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
The Merger
SECTION 1.01. The Merger . . . . . . . . . . . . 2
SECTION 1.02. Closing . . . . . . . . . . . . . . 2
SECTION 1.03. Effective Time . . . . . . . . . . 3
SECTION 1.04. Effects of the Merger . . . . . . . 3
SECTION 1.05. Articles of Incorporation
and By-laws . . . . . . . . . . . 3
SECTION 1.06. Directors . . . . . . . . . . . . . 3
SECTION 1.07. Officers . . . . . . . . . . . . . 3
SECTION 1.08. Principal Place of Business . . . . 4
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock . . . . . . 4
SECTION 2.02. Exchange of Certificates . . . . . 5
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company . . . . . . . . . . . 7
SECTION 3.02. Representations and Warranties of
Parent and Sub . . . . . . . . . 25
ARTICLE IV
Covenants Relating to Conduct of the Company's Business
SECTION 4.01. Covenants of the Company . . . . . 29
SECTION 4.02. No Solicitation . . . . . . . . . . 35
<PAGE>22
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Proxy
Statement . . . . . . . . . . . . 38
SECTION 5.02. Access to Information . . . . . . . 38
SECTION 5.03. Company Stockholders Meeting . . . 39
SECTION 5.04. Legal Conditions to Merger . . . . 40
SECTION 5.05. Employee Benefit Plans . . . . . . 41
SECTION 5.06. Stock Options and the ESOP . . . . 42
SECTION 5.07. Fees and Expenses . . . . . . . . . 43
SECTION 5.08. Indemnification, Exculpation
and Insurance . . . . . . . . . . 44
SECTION 5.09. Company Accruals and Reserves . . . 45
SECTION 5.10. Rights Agreement . . . . . . . . . 46
SECTION 5.11. Company Debentures . . . . . . . . 46
SECTION 5.12. Additional Agreements . . . . . . . 46
SECTION 5.13. Parent Covenants . . . . . . . . . 47
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's
Obligation To Effect the Merger . 48
SECTION 6.02. Conditions to Obligations
of Parent . . . . . . . . . . . . 49
SECTION 6.03. Conditions to Obligations of the
Company . . . . . . . . . . . . . 50
ARTICLE VII
Termination and Amendment
SECTION 7.01. Termination . . . . . . . . . . . . 51
SECTION 7.02. Effect of Termination . . . . . . . 53
SECTION 7.03. Amendment . . . . . . . . . . . . . 53
SECTION 7.04. Extension; Waiver . . . . . . . . . 53
SECTION 7.05. Procedure for Termination,
Amendment, Extension or Waiver . 54
<PAGE>23
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties . . . . . . . . . . . 54
SECTION 8.02. Notices . . . . . . . . . . . . . . 54
SECTION 8.03. Definitions; Interpretation . . . . 56
SECTION 8.04. Counterparts . . . . . . . . . . . 57
SECTION 8.05. Entire Agreement; No Third-Party
Beneficiaries; Rights of
Ownership . . . . . . . . . . . . 57
SECTION 8.06. Governing Law . . . . . . . . . . . 57
SECTION 8.07. Limitations on Remedies . . . . . . 57
SECTION 8.08. Publicity . . . . . . . . . . . . . 58
SECTION 8.09. Assignment . . . . . . . . . . . . 58
SECTION 8.10. Enforcement . . . . . . . . . . . . 58
EXHIBIT A Form of Stock Option Agreement
<PAGE>24
AGREEMENT AND PLAN OF MERGER dated as of
February 4, 1995, among NATIONAL AUSTRALIA
BANK LIMITED A.C.N. 004044937, an Australian
corporation ("Parent"), MNC ACQUISITION CO.,
a Michigan corporation and a wholly owned
subsidiary of Parent ("Sub"), and MICHIGAN
NATIONAL CORPORATION, a Michigan corporation
(the "Company").
WHEREAS the Company is a registered bank holding
company under the Bank Holding Company Act of 1956, as
amended (the "BHC Act");
WHEREAS Parent is a commercial bank under
Australian law and is a foreign bank within the meaning of
the International Banking Act of 1978, as amended (the
"IBA");
WHEREAS the respective Boards of Directors of
Parent, Sub and the Company have approved the merger of Sub
into the Company, or the Company into Sub, at the election
of Parent as set forth below (the "Merger"), upon the terms
and subject to the conditions set forth in this Agreement,
whereby each issued and outstanding share of common stock,
par value U.S. $10 per share, of the Company ("Company
Common Stock"), not owned directly or indirectly by Parent
or the Company, will be converted into the right to receive
U.S. $110.00 in cash;
WHEREAS, as a condition and inducement to Parent's
and Sub's willingness to enter into this Agreement, Parent,
Sub and the Company are entering into a Stock Option
Agreement dated as of the date hereof in the form of
Exhibit A attached hereto (the "Stock Option Agreement")
pursuant to which the Company has granted to Parent an
option to purchase shares of Company Common Stock;
WHEREAS the Merger requires the approval by an
affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock entitled to vote
thereon ("Company Stockholder Approval"); and
WHEREAS Parent, Sub and the Company desire to make
certain representations, warranties, covenants and
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agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing
and the respective representations, warranties, covenants
and agreements set forth herein and in the Stock Option
Agreement, the parties hereto agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and
subject to the conditions set forth in this Agreement, and
in accordance with the Michigan Business Corporation Act
(the "MBCA"), Sub shall be merged with and into the Company
at the Effective Time (as defined in Section 1.03).
Following the Merger, the separate corporate existence of
Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations
of Sub in accordance with the MBCA. Notwithstanding the
foregoing, Parent may elect at any time prior to the mailing
of the Proxy Statement (as defined herein), instead of
merging Sub into the Company as provided above, to merge the
Company with and into Sub; provided, however, that the
Company shall not be deemed to have breached any of its
representations, warranties, covenants or agreements set
forth in this Agreement solely by reason of such election;
provided, further, that no such election may be made if it
would alter or change the amount or kind of Merger
Consideration (as defined in Section 2.01(c)) to be received
by holders of Company Common Stock pursuant to Article II,
or be reasonably likely to materially delay or impede
consummation of the transactions contemplated hereby. In
such event, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect the
foregoing and, where appropriate, to provide that Sub shall
be the Surviving Corporation and shall continue under the
name "Michigan National Corporation".
SECTION 1.02. Closing. The closing of the Merger
(the "Closing") will take place at 10:00 a.m. on a date to
be specified by the parties, which shall be no later than
the later of (i) the third business day or (ii) the first
business day of the month, in either case following the
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satisfaction (or waiver) of all the conditions set forth in
Article VI (the "Closing Date"), at the offices of Cravath,
Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New
York, NY 10019, unless another time, date or place is agreed
to in writing by the parties hereto.
SECTION 1.03. Effective Time. Subject to the
provisions of this Agreement, as soon as practicable on the
Closing Date, a certificate of merger or other appropriate
documents (in any such case, the "Certificate of Merger")
shall be duly prepared, executed, acknowledged and filed by
the parties in accordance with the relevant provisions of
the MBCA with the Department of Commerce of the State of
Michigan. The Merger shall become effective upon the filing
of the Certificate of Merger with the Department of Commerce
of the State of Michigan or at such time thereafter as is
provided in the Certificate of Merger (the time the Merger
becomes effective being hereinafter referred to as the
"Effective Time").
SECTION 1.04. Effects of the Merger. The Merger
shall have the effects set forth in Section 724 of the MBCA.
SECTION 1.05. Articles of Incorporation and By-
laws. (a) The articles of incorporation of the Company as
in effect immediately prior to the Effective Time shall be
the articles of incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or
by applicable law.
(b) The by-laws of the Company as in effect
immediately prior to the Effective Time shall be the by-laws
of the Surviving Corporation, until thereafter changed or
amended as provided therein or by applicable law.
SECTION 1.06. Directors. The directors of Sub at
the Effective Time and the persons listed on Schedule 1.06
shall be the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the
case may be.
SECTION 1.07. Officers. The officers of the
Company immediately prior to the Effective Time shall be the
officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective
successors are duly elected and qualified, as the case may
be.
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SECTION 1.08. Principal Place of Business.
Parent currently intends to maintain the Surviving
Corporation's headquarters and its principal place of
business at the Company's existing headquarters.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. As of the
Effective Time, by virtue of the Merger and without any
action on the part of the holder of any shares of Company
Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and
outstanding share of capital stock of Sub shall be
converted into and become one fully paid and
nonassessable share of Common Stock, par value U.S.
$.01 per share, of the Surviving Corporation.
(b) Cancellation of Company and Parent Owned
Stock. Each share of Company Common Stock that is
owned by the Company or by any subsidiary of the
Company (which shall not include any shares owned by
the Company's Employee Stock Ownership Plan and Trust
(the "ESOP")) and each share of Company Common Stock
that is owned by Parent, Sub or any other subsidiary of
Parent (other than, in each case, shares in trust
accounts, managed accounts, custodial accounts and the
like that are beneficially owned by third parties (any
such shares, "Trust Account Shares")) shall be
automatically cancelled and retired and shall cease to
exist, and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Company Common Stock. Each
issued and outstanding share of Company Common Stock
(other than shares to be cancelled in accordance with
Section 2.01(b)) shall be converted into the right to
receive from the Surviving Corporation in cash, without
interest, U.S. $110.00 (the "Merger Consideration").
As of the Effective Time, all such shares of Company
Common Stock shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease
to exist, and each holder of a certificate previously
representing any such shares shall cease to have any
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rights with respect thereto, except the right to
receive the Merger Consideration, without interest.
SECTION 2.02. Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent
shall designate Michigan National Bank, a national banking
association and a wholly owned subsidiary of the Company
("MNB"), or such other bank or trust company reasonably
acceptable to the Company, to act as paying agent (the
"Paying Agent") for the payment of the Merger Consideration
upon surrender of certificates representing Company Common
Stock.
(b) Parent To Provide Funds. Parent shall take
all steps necessary to enable and cause Sub, or the
Surviving Corporation, to provide to the Paying Agent on a
timely basis, as and when needed on and after the Effective
Time, funds necessary to pay for the shares of Company
Common Stock as part of the Merger pursuant to Section 2.01.
(c) Exchange Procedures. As soon as reasonably
practicable (and in any event no later than 10 days) after
the Effective Time, Parent shall cause the Paying Agent to
mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the
"Certificates") whose shares were converted into the right
to receive the Merger Consideration pursuant to Section 2.01
(i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to
the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form
and have such other customary provisions as Parent may
reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for
the Merger Consideration. Upon surrender of a Certificate
for cancellation to the Paying Agent or to such other agent
or agents as may be appointed by Parent, together with such
letter of transmittal, duly executed, and such other
customary documents as may be reasonably required by the
Paying Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor the amount of cash
into which the shares of Company Common Stock theretofore
represented by such Certificate shall have been converted
pursuant to Section 2.01, and the Certificate so surrendered
shall forthwith be cancelled. In the event of a transfer of
ownership of Company Common Stock which is not registered in
the transfer records of the Company, payment may be made to
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a person other than the person in whose name the Certificate
so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay
any transfer or other taxes required by reason of the
payment to a person other than the registered holder of such
Certificate or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered as contemplated by this
Section 2.02, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to
receive upon such surrender the amount of cash, without
interest, into which the shares of Company Common Stock
theretofore represented by such Certificate shall have been
converted pursuant to Section 2.01. No interest will be
paid or will accrue on the cash payable upon the surrender
of any Certificate.
(d) No Further Ownership Rights in Company Common
Stock. All cash paid upon the surrender of Certificates in
accordance with the terms hereof shall be deemed to have
been paid in full satisfaction of all rights pertaining to
the shares of Company Common Stock theretofore represented
by such Certificates, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any
other distributions with a record date prior to the
Effective Time which may have been declared or made by the
Company on such shares of Company Common Stock in accordance
with the terms of this Agreement on or prior to the
Effective Time and which remain unpaid at the Effective
Time, and there shall be no further registration of
transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be
cancelled and exchanged as provided in this Article II.
(e) No Liability. None of Parent, Sub, the
Company or the Paying Agent shall be liable to any person in
respect of any cash delivered to a public official pursuant
to any applicable abandoned property, escheat or similar
law. If any Certificates shall not have been surrendered
prior to seven years after the Effective Time (or
immediately prior to such earlier date on which any payment
pursuant to this Article II would otherwise escheat to or
become the property of any Governmental Entity (as defined
in Section 3.01(c))), the cash payment in respect of such
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Certificate shall, to the extent permitted by applicable
law, become the property of the Surviving Corporation, free
and clear of all claims or interests of any person
previously entitled thereto.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company. Except as set forth on the Disclosure Schedule
delivered by the Company to Parent prior to the execution of
this Agreement (the "Company Disclosure Schedule"), the
Company represents and warrants to Parent and Sub as
follows:
(a) Organization and Authority. The Company is a
bank holding company duly registered under the BHC Act. MNB
is a directly held wholly owned (other than any directors'
qualifying shares) subsidiary of the Company. Each of the
Company and its subsidiaries is a bank or corporation duly
organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization,
has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its
business as now being conducted and is duly qualified and in
good standing to do business in each jurisdiction in which
the nature of its business or the ownership or leasing of
its properties makes such qualification necessary except
where the failure so to qualify would not have a Material
Adverse Effect (as defined in Section 8.03(a)) on the
Company.
(b) Capital Structure. (i) The authorized
capital stock of the Company consists of 50,000,000 shares
of Company Common Stock and 6,000,000 shares of preferred
stock, par value U.S.$10 per share, of the Company ("Company
Preferred Stock"). At the close of business on February 3,
1995, (A) (1) 13,233,678 shares of Company Common Stock were
outstanding, (2) 2,633,502 shares of Company Common Stock
were reserved for issuance under the Stock Option Agreement,
(3) 441,942 shares of Company Common Stock were reserved for
issuance with respect to outstanding options issued under
the Company's stock option, stock bonus and incentive plans,
including the ESOP (the "Company Stock Plans"), a list of
which is set forth on the Company Disclosure Schedule
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and (4) 665,419 shares of Company Common Stock were reserved
for issuance in connection with the Company's Cancelable
Mandatory Stock Purchase Contracts issued and outstanding as
of the date hereof (the "Equity Contracts") in connection
with the Company's 8% Redeemable Subordinated Debentures due
November 10, 1998 issued and outstanding as of the date
hereof (the "Company Debentures"), (B) no shares of Company
Preferred Stock were outstanding and (C) 500,000 shares of
Series B Junior Participating Preferred Stock (the "Company
Series B Preferred") were reserved for issuance upon
exercise of the rights (the "Rights") distributed to the
holders of Company Common Stock pursuant to the Rights
Agreement dated as of April 25, 1988, between the Company
and Mellon Bank, N.A., as Rights Agent (the "Rights
Agreement"). Except as set forth above, at the close of
business on February 3, 1995, no shares of capital stock or
other voting securities of the Company were issued, reserved
for issuance or outstanding.
(ii) As of the date hereof, other than the Company
Debentures and the related Equity Contracts referred to in
paragraph (i) above, no bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into
or exchangeable for securities having the right to vote) on
any matters on which stockholders may vote ("Voting Debt")
of the Company were issued or outstanding. All outstanding
shares of the Company capital stock are, and any shares of
Company Common Stock which may be issued pursuant to the
Stock Option Agreement or upon exercise of Company Stock
Options (as defined in Section 5.06) will be, validly
issued, fully paid and nonassessable and will be delivered
free and clear of all claims, liens, encumbrances, charges,
pledges or security interests of any kind or nature
whatsoever (collectively, "Liens") and not subject to
preemptive rights.
(iii) As of the date of this Agreement, except for
this Agreement, the Company Stock Plans, the Company Stock
Options, the Rights Agreement, the Equity Contracts and the
Stock Option Agreement, there are no outstanding securities,
options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the
Company or any subsidiary of the Company is a party or by
which it is bound obligating the Company or any subsidiary
of the Company to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital
stock or any Voting Debt of the Company or of any subsidiary
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of the Company or obligating the Company or any subsidiary
of the Company to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. As of the date
hereof, there are no outstanding contractual obligations
(A) of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of
the Company or any of its subsidiaries, other than the Stock
Option Agreement, or (B) of the Company to vote or to
dispose of any shares of the capital stock of any of its
subsidiaries.
(c) Authorization. (i) The Company has all
requisite corporate power and authority to enter into this
Agreement and the Stock Option Agreement and, subject in the
case of this Agreement to the Company Stockholder Approval,
to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and
the Stock Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of
the Company, subject in the case of this Agreement to the
Company Stockholder Approval. Without limiting the
foregoing, the Company has taken all necessary corporate
action to authorize and reserve for issuance that number of
shares of Company Common Stock equal to the maximum number
of shares of Company Common Stock issuable upon exercise of
the option granted pursuant to the Stock Option Agreement.
This Agreement and the Stock Option Agreement have been duly
executed and delivered by the Company and each constitutes a
valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
(ii) The execution and delivery of this Agreement
and the Stock Option Agreement do not, and the consummation
of the transactions contemplated hereby and thereby will
not, and compliance by the Company with any of the
provisions hereof or thereof will not, (A) conflict with, or
result in any breach or violation of, or default (with or
without notice or lapse of time or both) under, or result in
the termination of, or accelerate the performance required
by, or give rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a material
benefit under, or the creation of a Lien (any such conflict,
breach, violation, default, termination, acceleration, right
of termination, cancellation or acceleration, loss or
creation, a "Violation") pursuant to, any provision of the
articles of incorporation or by-laws of the Company, MNB or
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any other subsidiary of the Company or (B) subject to
obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings
referred to in paragraph (iii) below, result in any
Violation of any loan or credit agreement, note, mortgage,
indenture, lease, Company Benefit Plan (as defined in
Section 3.01(k)) or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation
applicable to the Company, MNB or any other subsidiary of
the Company or their respective properties or assets, which
Violation under this clause (B) could reasonably be expected
to have, individually or in the aggregate with other such
Violations, a Material Adverse Effect on the Company.
(iii) No consent, approval, order or authorization
of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a
"Governmental Entity"), is required by or with respect to
the Company, MNB or any other subsidiary of the Company in
connection with the execution and delivery of this Agreement
and the Stock Option Agreement by the Company, or the
consummation by the Company of the transactions contemplated
hereby and thereby, the failure to obtain which could,
individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on the Company, except for
(A) the filing of applications with the Board of Governors
of the Federal Reserve System (the "Federal Reserve") under
the BHC Act and with the Office of Thrift Supervision (the
"OTS") and approval of the same, (B) the filing with the SEC
of (1) a proxy statement in definitive form (as amended or
supplemented from time to time, the "Proxy Statement")
relating to the meeting of the Company's stockholders at
which a vote is held on the Merger (the "Company
Stockholders Meeting") and (2) such reports under
Sections 13(a), 13(d), 13(g) and 16(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as
may be required in connection with this Agreement, the Stock
Option Agreement and the transactions contemplated hereby
and thereby and the obtaining from the SEC of such orders as
may be required in connection therewith, (C) the filing of
the Certificate of Merger with the Department of Commerce of
the State of Michigan and appropriate documents with the
relevant authorities of other states in which the Company is
qualified to do business, (D) the filing of such
applications, filings, authorizations, orders and approvals
as may be required under state banking laws, and with and of
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state banking authorities and approval of same
(collectively, the "State Banking Approvals"), (E) consents,
authorizations, approvals, filings or exemptions in
connection with compliance with the applicable provisions of
Federal and state securities laws relating to the regulation
of broker-dealers or investment advisers, and Federal
commodities laws relating to the regulation of futures
commission merchants and the rules and regulations
thereunder and of any applicable industry self-regulatory
organization, and the rules of the Nasdaq over-the-counter
market, or which are required under consumer finance,
mortgage banking and other similar laws, (F) notices, if
any, under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), (G) such filings,
authorizations, orders and approvals as may be required
under foreign laws and (H) filings, notifications and
approvals under state insurance laws and regulations.
(d) SEC Documents; Financial Statements; Reports.
(i) The Company has made available to Parent a true and
complete copy of each report, schedule, registration
statement and definitive proxy statement filed by the
Company with the SEC (other than reports filed pursuant to
Section 13(d) or 13(g) of the Exchange Act) since January 1,
1994 (the "Company SEC Documents"), which are all the
documents (other than preliminary material and reports
required pursuant to Section 13(d) or 13(g) of the Exchange
Act) that the Company was required to file with the SEC
since such date. As of their respective dates, the Company
SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, as the case may be,
and the rules and regulations of the SEC thereunder
applicable to such Company SEC Documents. All material
agreements, contracts and other documents required to be
filed as exhibits to any of the Company SEC Documents have
been so filed. Except to the extent that information
contained in any Company SEC Document has been revised or
superseded by a later Company Filed SEC Document (as defined
in Section 3.01(f)), none of the Company SEC Documents
contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(ii) The financial statements of the Company
included in the Company SEC Documents comply as to form in
all material respects with applicable accounting
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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 ("GAAP") during the periods
involved (except as may be indicated in the notes thereto
or, in the case of the unaudited statements, as permitted by
Form 10-Q of the SEC) and fairly present the consolidated
financial position of the Company and its consolidated
subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows for the periods
then ended.
(iii) Since January 1, 1994, each of the Company
and its subsidiaries, including MNB, has filed all material
reports, registrations and statements, together with any
required material amendments thereto ("Company Regulatory
Reports"), and has paid all fees and assessments due and
payable therewith, that it was required to file with the
Federal Reserve, the Federal Deposit Insurance Corporation
(the "FDIC"), the U.S. Comptroller of the Currency (the
"OCC"), the OTS, all applicable state banking and other
regulatory authorities and other relevant Governmental
Entities charged with the supervision or regulation of the
Company or any of its subsidiaries (collectively,
"Regulatory Authorities"). As of their respective dates,
each such Company Regulatory Report complied in all material
respects with all the rules and regulations promulgated by
the applicable Regulatory Authority (including regulatory
accounting practices) and, except as revised or superseded
by a later filed Company Regulatory Report, does not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
The Company has made available to Parent true and complete
copies of MNB's most recent annual and quarterly
Consolidated Reports of Condition and Income ("Call
Reports") filed with the OCC.
(e) Information Supplied. None of the
information supplied or to be supplied by the Company for
inclusion or incorporation by reference in the Proxy
Statement will, at the date of mailing to stockholders and
at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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The Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the
rules and regulations thereunder, except that no
representation or warranty is made by the Company with
respect to statements made or incorporated by reference
therein based on information supplied by Parent or Sub
specifically for inclusion or incorporation by reference
therein.
(f) Compliance with Applicable Laws. (i) The
Company and its subsidiaries hold all permits, licenses,
variances, exemptions, authorizations, orders and approvals
of all Governmental Entities (the "Company Permits") that
are required for them to own, lease or operate their
properties and assets and to carry on their businesses as
presently conducted, and there has occurred no default under
any such Company Permit, except for the lack of Company
Permits and for defaults under Company Permits which lack or
default individually or in the aggregate would not have a
Material Adverse Effect on the Company. Except as disclosed
in the Company SEC Documents filed and publicly available
prior to the date of this Agreement (the "Company Filed SEC
Documents"), the Company and its subsidiaries are in
compliance in all material respects with all applicable
statutes, laws, ordinances, rules, orders and regulations of
any Governmental Entity, and with their internal policies
and procedures.
(ii) Neither the Company nor any of its
subsidiaries has received any notification or communication
which has not been fully and finally resolved from any
Regulatory Authorities (A) asserting that any of the Company
or any of its subsidiaries is not in substantial compliance
with any of the statutes, regulations, ordinances or
guidelines which such Regulatory Authority enforces or
administers, or the internal policies and procedures of such
company, (B) threatening to revoke any material Company
Permit, including such company's status as an insured
depositary institution under the Federal Deposit Insurance
Act ("FDIA"), (C) requiring or threatening to require the
Company or any of its subsidiaries, or indicating that the
Company or any of its subsidiaries may be required, to enter
into a cease and desist order, agreement or memorandum of
understanding or any other agreement, to be subject to any
directive or supervisory letter, or to adopt resolutions of
its board of directors, in each case restricting or limiting
or purporting to restrict or limit in any manner the
operations of the Company or any of its subsidiaries,
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including any restriction on the payment of dividends, or
relating to its capital adequacy, its credit policies or its
management, or (D) directing, restricting or limiting, or
purporting to direct, restrict or limit, in any manner the
operations of the Company or any of its subsidiaries,
including any restriction on the payment of dividends, or
relating to its capital adequacy, its credit policies or its
management (any such notification, communication, order,
agreement, memorandum of understanding, directive,
supervisory letter or required board resolutions being
referred to herein as a "Regulatory Agreement"). Neither
the Company nor any of its subsidiaries has received,
consented to or entered into, or is subject to, any
Regulatory Agreement, nor has the Company or any of its
subsidiaries been advised by any Regulatory Authority that
such Regulatory Authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing
or requesting) any such Regulatory Agreement. True and
complete copies of all Regulatory Agreements have been
delivered by the Company to Parent.
(iii) Except as may be required by virtue of the
Merger, neither the Company nor any of its subsidiaries is
required by Section 32 of the FDIA to give prior notice to a
Regulatory Authority of the proposed addition of an
individual to its board of directors or the employment of an
individual as a senior executive officer.
(iv) To the knowledge of the Company, each of the
Company and its subsidiaries is, and has been, and each of
the Company's former subsidiaries, while subsidiaries of the
Company, was in compliance with all applicable Environmental
Laws (as defined below), except for possible noncompliance
which individually or in the aggregate would not have a
Material Adverse Effect on the Company. The term
"Environmental Laws" means any Federal, state, local or
foreign statute, ordinance, rule, regulation, policy,
permit, consent, approval, license, judgment, order, decree,
injunction or other authorization relating to: (A) Releases
(as defined in 42 U.S.C. Section 9601(22)) or threatened Releases
of Hazardous Material (as defined below) into the
environment; or (B) the generation, treatment, storage,
disposal, use, handling, manufacturing, transportation or
shipment of any Hazardous Material. The term "Hazardous
Material" means (1) hazardous substances (as defined in 42
U.S.C. Section 9601(14)), (2) petroleum, including crude oil and
any fractions thereof, (3) natural gas, synthetic gas and
any mixtures thereof, (4) asbestos and/or asbestos-
<PAGE>38
15
containing material and (5) polychlorinated biphenyls
("PCBs"), or materials containing PCBs in excess of 50 ppm.
(v) During the period of ownership or operation
by the Company and its subsidiaries of any of their
respective current or previously owned or leased properties
(including for purposes of this paragraph any such
properties acquired in foreclosures or otherwise in
connection with extensions of credit), to the knowledge of
the Company, there have been no Releases of Hazardous
Material in, on, under or affecting such properties or any
surrounding site, and none of the Company or its
subsidiaries have disposed of any Hazardous Material or any
other substance in a manner that has led, or could
reasonably be anticipated to lead, to a Release, except in
each case for those which individually or in the aggregate
would not have a Material Adverse Effect on the Company.
Prior to the period of ownership or operation by the Company
and its subsidiaries of any of their respective current or
previously owned or leased properties, to the knowledge of
the Company, no Hazardous Material was generated, treated,
stored, disposed of, used, handled or manufactured at, or
transported, shipped or disposed of from, such current or
previously owned properties, and there were no Releases of
Hazardous Material in, on, under or affecting any such
property or any surrounding site, except in each case for
those which individually or in the aggregate would not have
a Material Adverse Effect on the Company.
(vi) The Company and its subsidiaries are not
subject to any judgment, decree or order relating to
compliance with any Environmental Law or to investigation or
cleanup under any Environmental Law (collectively,
"Environmental Enforcement Actions"), except with respect to
Environmental Enforcement Actions which, individually or in
the aggregate, would not have a Material Adverse Effect on
the Company. Neither the Company nor any of its
subsidiaries has any contingent liabilities in connection
with any Hazardous Materials, including claims of liability
for cleanup of Hazardous Materials related to any of the
Company, its subsidiaries or any of the Company's former
subsidiaries that, individually or in the aggregate, would
have a Material Adverse Effect on the Company.
(g) Litigation. Except as disclosed in the
Company Filed SEC Documents, there is no suit, action or
proceeding pending or, to the knowledge of the Company or
any subsidiary of the Company, threatened, against or
<PAGE>39
16
affecting the Company or any subsidiary of the Company
(including any such suit, action or proceeding under the
Securities Act, the Exchange Act, the Community Reinvestment
Act of 1977, as amended, or fair lending laws or by any
stockholder or former stockholder of the Company or any
subsidiary of the Company) that could reasonably be expected
to have, individually or in the aggregate, a Material
Adverse Effect on the Company or that could reasonably be
expected to threaten, impede or delay the consummation of
the Merger, nor is there any judgment, decree, injunction,
rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any subsidiary of the
Company having, or which could reasonably be expected to
have, individually or in the aggregate, a Material Adverse
Effect on the Company or that could reasonably be expected
to threaten, impede or delay the consummation of the Merger.
(h) Taxes. (i) (A) The Company and its
subsidiaries have filed, been included in or sent all
returns, declarations and reports and information returns
and statements required to be filed or sent (including in
each case extensions) by or relating to any of them relating
to any taxes with respect to any income, properties or
operations of the Company or any such subsidiary prior to
the Effective Time (collectively, "Company Returns"), (B) as
of the time of filing, the Company Returns correctly
reflected in all material respects the facts regarding the
income, business, assets, operations, activities and status
of the Company and its subsidiaries and any other
information required to be shown therein, (C) the Company
and its subsidiaries have timely paid or made provision for
all taxes that have been shown as due and payable on the
Company Returns that have been filed, (D) the Company and
its subsidiaries have made or will make provision for all
taxes payable for any periods that end before the Effective
Time for which no Company Returns have yet been filed and
for any periods that begin before the Effective Time and end
after the Effective Time to the extent such taxes are
attributable to the portion of any such period ending at the
Effective Time, (E) the charges, accruals and reserves for
taxes reflected on the books of the Company and its
subsidiaries are adequate to cover the tax liabilities
accruing or payable by the Company and its subsidiaries in
respect of periods prior to the date hereof, (F) neither the
Company nor any subsidiary is delinquent in the payment of
any taxes or has requested any extension of time within
which to file or send any Company Return, which Company
Return has not since been filed or sent, (G) no deficiency
<PAGE>40
17
for any taxes has been proposed, asserted or assessed in
writing against the Company or any of its subsidiaries other
than those taxes being contested in good faith, (H) the
Federal income tax returns of the Company or any
consolidated group to which it belongs have been examined by
and settled with the United States Internal Revenue Service
(the "IRS") for all years through December 31, 1987,
(I) neither the Company nor any subsidiary has granted any
extension of the limitation period applicable to any tax
claims (which period has not since lapsed), other than those
taxes being contested in good faith, and (J) neither the
Company nor any subsidiary has any contractual obligations
under any tax sharing agreement with any corporation which,
as of the Effective Time, is not a member of a consolidated
group of which all of and only the Company and its
subsidiaries are members.
(ii) Any amount that could be received (whether in
cash or property or the vesting of property) as a result of
any of the transactions contemplated by this Agreement by
any employee, officer or director of the Company or any of
its affiliates who is a "disqualified individual" (as such
term is defined in proposed Treasury Regulation
Section 1.280G-1) under any employment, severance or
termination agreement, other compensation arrangement or
Company Benefit Plan currently in effect would not be
characterized as an "excess parachute payment" (as such term
is defined in Section 280G(b)(1) of the Code).
(iii) The disallowance of a deduction under
Section 162(m) of the Code for employee remuneration will
not apply to any amount paid or payable by the Company or
any subsidiary of the Company under any contract, plan,
program, arrangement or understanding.
(iv) For the purpose of this Agreement, the term
"tax" (including, with correlative meaning, the terms
"taxes" and "taxable") shall include, except where the
context otherwise requires, all Federal, state, local and
foreign income, profits, franchise, gross receipts, payroll,
sales, employment, use, property, withholding, excise,
occupancy and other taxes, duties or assessments of any
nature whatsoever (including the Michigan single business
tax), together with all interest, penalties and additions
imposed with respect to such amounts.
(i) Certain Agreements. (A) Except as disclosed
in the Company Filed SEC Documents, as of the date of this
<PAGE>41
18
Agreement, neither the Company nor any of its subsidiaries
is a party or subject to, or has amended or waived any
rights under, any of the following (whether written or oral,
express or implied):
(i) any agreement, arrangement or commitment not
made in the ordinary course of business consistent with
past practice that is material to the Company on a
consolidated basis, or any contract, agreement or
understanding relating to the sale or disposition by
the Company or any of its subsidiaries of any
significant assets or businesses of the Company or any
of its subsidiaries;
(ii) any material agreement, indenture, credit
agreement or other instrument relating to the borrowing
of money by the Company or any of its subsidiaries
(other than certificates of deposit and customary bank
funding instruments) or the guarantee by the Company or
any such subsidiary of any such obligation;
(iii) any contract containing covenants which limit
the ability of the Company or any of its subsidiaries
to compete in any line of business or with any person
or which involve any restriction of the geographical
area in which, or method by which, the Company and its
subsidiaries may carry on their respective businesses
(other than as may be required by law or applicable
Regulatory Authorities); or
(iv) any other contract or agreement that would be
required to be disclosed as an exhibit to the Company's
annual report on Form 10-K and which has not been so
disclosed.
(B) Neither the Company nor any of its
subsidiaries is in default under any material agreement,
commitment, arrangement, lease, insurance policy or other
instrument, whether entered into in the ordinary course of
business or otherwise and whether written or oral, and there
has not occurred any event that, with the giving of notice
or the lapse of time or both, would constitute such a
default, except in all cases where such default would not,
individually or in the aggregate, have a Material Adverse
Effect on the Company.
(j) Absence of Changes in Benefit Plans. Except
as disclosed in the Company Filed SEC Documents, since the
<PAGE>42
19
date of the most recent audited financial statements
included in the Company Filed SEC Documents, there has not
been any adoption or amendment in any material respect by
the Company or any of its subsidiaries of any bonus,
pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option,
phantom stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical or other plan,
arrangement or understanding (whether or not legally
binding) providing benefits to any current or former
employee, officer or director of the Company or any of its
subsidiaries. Except as disclosed in the Company Filed SEC
Documents, there exist no employment, consulting, severance,
termination or indemnification agreements, arrangements or
understandings between the Company or any of its
subsidiaries and any current or former employee, officer or
director of the Company or any of its subsidiaries.
(k) ERISA Compliance. (i) The Company
Disclosure Schedule contains a list and brief description of
each "employee pension benefit plan" (as defined in
Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) (sometimes referred to herein
as a "Pension Plan"), each "employee welfare benefit plan"
(as defined in Section 3(1) of ERISA) and each stock option,
stock purchase, deferred compensation plan or arrangement
and each other employee fringe benefit plan or arrangement
maintained, contributed to or required to be maintained or
contributed to by the Company, any of its subsidiaries or
any other person or entity that, together with the Company,
is treated as a single employer under Section 414(b), (c),
(m) or (o) of the Internal Revenue Code of 1986, as amended
(the "Code"), (each, a "Commonly Controlled Entity"), for
the benefit of any current or former employees, officers,
agents, directors or independent contractors of the Company
or any of its subsidiaries (collectively, "Company Benefit
Plans"). The Company has delivered or made available to
Parent true, complete and correct copies of (A) each Company
Benefit Plan (or, in the case of any unwritten Company
Benefit Plans, descriptions thereof), (B) the most recent
annual report on Form 5500 filed with the IRS with respect
to each Company Benefit Plan (if any such report was
required) and (C) the most recent summary plan description
(or similar document) for each Company Benefit Plan for
which such summary plan description is required or was
provided to plan participants or beneficiaries.
<PAGE>43
20
(ii) Each Company Benefit Plan has been
administered in all material respects in accordance with its
terms. The Company, its subsidiaries and all the Company
Benefit Plans are all in compliance in all material respects
with the applicable provisions of ERISA and the Code. To
the best knowledge of the Company, there are no
investigations, proceedings or other claims involving any
Company Benefit Plan that could give rise to any material
liability.
(iii) All Pension Plans intended to be qualified
under Section 401(a) of the Code have been the subject of
determination letters from the IRS to the effect that such
Pension Plans are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively, of the
Code, and, to the knowledge of the Company, all such letters
are valid and effective as of the date hereof.
(iv) No Pension Plan, other than any Pension Plan
that is a "multiemployer plan" (as such term is defined in
Section 4001(a)(3) of ERISA; collectively, the
"Multiemployer Pension Plans"), had, as of the respective
last annual valuation date for each such Pension Plan, an
"unfunded benefit liability" (as such term is defined in
Section 4001(a)(18) of ERISA), based on actuarial
assumptions which have been furnished to Parent and neither
the Company nor any of its subsidiaries is aware of any
facts or circumstances that would materially change the
funded status of any such Company Benefit Plans. None of
the Pension Plans has an "accumulated funding deficiency"
(as such term is defined in Section 302 of ERISA or
Section 412 of the Code), and there has been no application
for a waiver of the minimum funding standards imposed by
Section 412 of the Code with respect to any Company Benefit
Plan that is a Pension Plan. No Commonly Controlled Entity
has incurred any material liability to a Pension Plan (other
than for contributions not yet due) or to the Pension
Benefit Guaranty Corporation (other than for premiums not
yet due).
(v) There have been no non-exempt "prohibited
transactions" (as such term is defined in Section 406 of
ERISA or Section 4975 of the Code) or any other breach of
fiduciary responsibility with respect to the Company Benefit
Plans that could subject the Company, any of its
subsidiaries or any officer of the Company or any of its
subsidiaries to tax or penalty under ERISA, the Code or
other applicable law. Neither any of such Company Benefit
<PAGE>44
21
Plans nor any of such trusts has been terminated, nor has
there been any "reportable event" (as that term is defined
in Section 4043 of ERISA) with respect thereto, during the
last five years.
(vi) Neither the Company nor any Commonly
Controlled Entity (A) maintains or contributes to a
"multiemployer plan" (as defined in Section 4001(a)(3) of
ERISA) or has maintained, contributed to or had an
obligation to maintain or contribute to such a plan within
the five full plan years of any such plan immediately prior
to the date hereof, or (B) has incurred any liability to the
PBGC or a Company Benefit Plan upon the termination of or
withdrawal from a Company Benefit Plan, which liability
remains unpaid as of the date hereof.
(vii) With respect to any Company Benefit Plan that
is an employee welfare benefit plan, (A) no such Company
Benefit Plan is funded through a "welfare benefit fund", as
such term is defined in Section 419(e) of the Code, (B) each
such Company Benefit Plan that is a "group health plan", as
such term is defined in Section 5000(b)(1) of the Code,
complies in all material respects with the applicable
requirements of Section 4980B(f) of the Code and (C) each
such Company Benefit Plan (including any such Plan covering
retirees or other former employees) may be amended or
terminated without material liability to the Company or any
of its subsidiaries on or at any time after the consummation
of the Merger.
(viii) No employee of the Company or any subsidiary
of the Company will be entitled to any additional benefits
or any acceleration of the time of payment or vesting of any
benefits under any Company Benefit Plan as a result of the
transactions contemplated by this Agreement or by the Stock
Option Agreement.
(l) Subsidiaries. The Company Disclosure
Schedule sets forth all the subsidiaries of the Company as
of the date of this Agreement and indicates for each such
subsidiary as of such date the jurisdiction of
incorporation. Each of the Company's subsidiaries that is a
bank (as defined in the BHC Act) is an "insured bank" as
defined in the FDIA and applicable regulations thereunder.
Except as provided in Section 55 of the National Bank Act in
the case of subsidiaries that are national banks, all the
shares of capital stock of each of the subsidiaries of the
Company are fully paid and nonassessable and (except for
<PAGE>45
22
directors' qualifying shares, if any) are owned by the
Company or another subsidiary of the Company free and clear
of all Liens. Except for the capital stock of its
subsidiaries, the Company does not own, directly or
indirectly, any capital stock or other ownership interest in
any corporation, bank, partnership, joint venture or other
entity.
(m) Absence of Certain Changes or Events. Except
as disclosed in the Company Filed SEC Documents, since
December 31, 1993, the Company and its subsidiaries have
conducted their businesses only in the ordinary course of
business consistent with past practice and have not incurred
any material liability, except in the ordinary course of
their business consistent with their past practices, nor has
there been any change, or any event involving a prospective
change, in the business, assets, financial condition or
results of operations of the Company or any of its
subsidiaries, which in any such case has had, or is
reasonably likely to have, a Material Adverse Effect on the
Company.
(n) Article SEVENTH of the Charter; State
Takeover Statutes. The Board of Directors of the Company
has approved the Merger, this Agreement and the Stock Option
Agreement and/or has taken such other action, and such
approval and/or action is sufficient, to render inapplicable
to the Merger, this Agreement, the Stock Option Agreement
and the transactions contemplated by this Agreement and the
Stock Option Agreement the provisions of Article SEVENTH of
the Company's articles of incorporation and the provisions
of Chapters 7A and 7B of the MBCA. To the best of the
Company's knowledge, no other state takeover statute or
similar statute or regulation applies or purports to apply
to the Merger, this Agreement, the Stock Option Agreement
and the transactions contemplated by this Agreement and the
Stock Option Agreement.
(o) Vote Required. The Company Stockholder
Approval is the only vote of the holders of any class or
series of the Company capital stock necessary to approve
this Agreement and the transactions contemplated hereby
(assuming for purposes of this representation the accuracy
of the representations contained in Section 3.02(d)).
(p) Rights Agreement. The Company and the Board
of Directors of the Company have taken all necessary action
to (i) render the Rights Agreement inapplicable with respect
<PAGE>46
23
to the Merger and the other transactions contemplated by
this Agreement and the Stock Option Agreement and
(ii) ensure that (1) neither Parent nor Sub nor any of their
affiliates is considered to be an "Acquiring Person" or an
"Adverse Person" (as such terms are defined in the Rights
Agreement) and (2) no "Stock Acquisition Date" or
"Distribution Date" (as such terms are defined in the Rights
Agreement) occurs by reason of announcement, approval,
execution or delivery of this Agreement or the Stock Option
Agreement or the consummation of the transactions
contemplated hereby and thereby.
(q) Properties. Except as disclosed in the
Company Filed SEC Documents, the Company and its
subsidiaries (i) have good, clear and marketable title to
all the properties and assets which are material to the
Company's business on a consolidated basis and are reflected
in the latest audited statement of condition included in the
Company Filed SEC Documents as being owned by the Company
and its subsidiaries or acquired after the date thereof
(except properties sold or otherwise disposed of since the
date thereof), free and clear of all Liens except
(A) statutory Liens securing payments not yet due, (B) Liens
on assets of subsidiaries of the Company incurred in the
ordinary course of their business and (C) such imperfections
or irregularities of title or Liens as do not affect the use
of the properties or assets subject thereto or affected
thereby or otherwise materially impair business operations
at such properties, in either case in such a manner as to
have a Material Adverse Effect on the Company, and (ii) are
collectively the lessee of all leasehold estates which are
material to the Company's business on a consolidated basis
and are reflected in the latest audited financial statements
included in the Company Filed SEC Documents or acquired
after the date thereof (except for leases that have expired
by their terms or as to which the Company has agreed to
terminate or convey since the date thereof) and is in
possession of the properties purported to be leased
thereunder, and each such lease is valid without default
thereunder by the lessee or, to the Company's knowledge, the
lessor, other than defaults that would not have a Material
Adverse Effect on the Company. Each of the Company and each
of its subsidiaries enjoys peaceful and undisturbed
possession under all such leases. Substantially all the
Company's and its subsidiaries' owned buildings, structures
and equipment have been well maintained and are in good and
serviceable condition, normal wear and tear excepted.
<PAGE>47
24
(r) Insurance. The Company and its subsidiaries
are presently insured, and during each of the last five
years have been insured, for reasonable amounts against such
risks as companies engaged in similar businesses would, in
accordance with good business practice, customarily be
insured. The Company Disclosure Schedule sets forth a true
and complete list and brief description of all insurance
policies maintained by or for the benefit of the Company,
its subsidiaries or their directors, officers, employees or
agents.
(s) Labor Matters. No work stoppage involving
the Company or any of its subsidiaries is pending or, to the
best knowledge of the Company or its subsidiaries,
threatened. Neither the Company nor any of its subsidiaries
is involved in, or to the best knowledge of the Company or
its subsidiaries, threatened with or affected by any labor
dispute, arbitration, lawsuit or administrative proceeding
which could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company.
Employees of the Company or of any of its subsidiaries are
not represented by any labor union or any collective
bargaining organization and, to the best knowledge of the
Company or its subsidiaries, no labor union is attempting to
organize employees of the Company or any of its
subsidiaries.
(t) Material Interests of Certain Persons.
Except as disclosed in the Company's Proxy Statement for its
1994 Annual Meeting of Stockholders, no executive officer or
director of the Company or any "associate" (as such term is
defined in Rule 14a-1 under the Exchange Act) of any such
executive officer or director has any material interest in
any material contract or property, real or personal,
tangible or intangible, that is used in or pertains to the
business of the Company or any of its subsidiaries.
(u) Brokers and Finders; Schedule of Fees and
Expenses. No broker, investment banker, financial advisor
or other person, other than Keefe, Bruyette & Woods, Inc.,
the fees and expenses of which will be paid by the Company,
is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The
estimated fees and expenses incurred and to be incurred by
the Company in connection with this Agreement and the Stock
Option Agreement and the transactions contemplated by this
<PAGE>48
25
Agreement and the Stock Option Agreement (including the fees
of the Company's legal counsel) are set forth in the Company
Disclosure Schedule.
(v) Opinion of Financial Advisor. The Company
has received the opinion of Keefe, Bruyette & Woods, Inc.,
dated the date of this Agreement, to the effect that, as of
such date, the Merger Consideration to be received by the
Company's stockholders is fair to the Company's stockholders
from a financial point of view, and a signed copy of such
opinion has been delivered to Parent.
(w) Allowance for Loan Losses. The allowance for
loan losses shown on the consolidated statement of condition
of the Company and its subsidiaries reflected in the
Company's latest audited financial statements included in
the Company Filed SEC Documents was, and the allowance for
loan losses shown on the consolidated statements of
condition of the Company and its subsidiaries reflected in
the Company's audited financial statements as of dates
subsequent to the date hereof will be, in each case as of
the dates thereof, adequate to provide for losses relating
to or inherent in the loan and lease portfolios (including
accrued interest receivables) of the Company and its
subsidiaries and other extensions of credit (including
letters of credit and commitments to make loans or extend
credit) by the Company and its subsidiaries.
SECTION 3.02. Representations and Warranties of
Parent and Sub. Parent and Sub represent and warrant to the
Company as follows:
(a) Organization and Authority. Each of Parent
and Sub is a bank or corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction in which it is incorporated or organized and
has the requisite power and authority to own, lease and
operate its properties and to carry on its business as now
being conducted. Each of Parent and Sub and each of
Parent's other subsidiaries is duly qualified and in good
standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its
properties makes such qualification necessary except where
the failure so to qualify would not have a Material Adverse
Effect on Parent. Sub is a direct or indirect wholly owned
(other than any directors' qualifying shares) subsidiary of
Parent.
<PAGE>49
26
(b) Authorization. (i) Parent and Sub have all
requisite corporate power and authority to enter into this
Agreement and the Stock Option Agreement and to consummate
the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Stock
Option Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of Parent and
Sub. This Agreement and the Stock Option Agreement have
been duly executed and delivered by Parent and Sub and each
constitutes a valid and binding obligation of Parent and
Sub, enforceable against Parent and Sub in accordance with
its terms.
(ii) The execution and delivery of this Agreement
and the Stock Option Agreement do not, and the consummation
of the transactions contemplated hereby and thereby will
not, and compliance by Parent and Sub with any of the
provisions hereof or thereof will not, (A) result in any
Violation pursuant to any provision of the articles of
incorporation (or similar constitutive document) or by-laws
of Parent, Sub or any other subsidiary of Parent or
(B) subject to obtaining or making the consents, approvals,
orders, authorizations, registrations, declarations and
filings referred to in paragraph (iii) below, result in any
Violation of any loan or credit agreement, note, mortgage,
indenture, lease, benefit plan or other agreement,
obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Parent, Sub or any other
subsidiary of Parent or their respective properties or
assets which Violation under this clause (B) could
reasonably be expected to have, individually or in the
aggregate with other such Violations, a Material Adverse
Effect on Parent.
(iii) No consent, approval, order or authorization
of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to
Parent, Sub or any other subsidiary of Parent in connection
with the execution and delivery of this Agreement and the
Stock Option Agreement by Parent and Sub, or the
consummation by Parent and Sub of the transactions
contemplated hereby and thereby, the failure to obtain which
could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent, except
for (A) the filing of applications with the Federal Reserve
under the BHC Act and with the OTS and approval of the same,
<PAGE>50
27
(B) the filing with the SEC of the Proxy Statement and such
reports under Sections 13(a), 13(d), 13(g) and 16(a) of the
Exchange Act, as may be required in connection with this
Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby and the obtaining from the
SEC of such orders as may be required in connection
therewith, (C) such filings and approvals as are required to
be made or obtained under the securities or blue sky laws of
various states in connection with the transactions
contemplated by this Agreement, (D) the filing of the
Certificate of Merger with the Department of Commerce of the
State of Michigan and appropriate documents with the
relevant authorities of other states in which Parent is
qualified to do business, (E) the State Banking Approvals,
(F) consents, authorizations, approvals, filings or
exemptions in connection with compliance with the applicable
provisions of Federal and state securities laws relating to
the regulation of broker-dealers or investment advisers and
Federal commodities laws relating to the regulation of
futures commission merchants and the rules and regulations
thereunder and of any applicable industry self-regulatory
organization, and the rules of the New York Stock Exchange
("NYSE"), or which are required under consumer finance,
mortgage banking and other similar laws, (G) notices under
the HSR Act, (H) notifications to the Australian Stock
Exchange and advice to the Reserve Bank of Australia and, if
applicable, to the Bank of England and (I) filings,
notifications and approvals under state insurance laws and
regulations.
(c) Information Supplied. None of the
information supplied or to be supplied by Parent or Sub for
inclusion or incorporation by reference in the Proxy
Statement will, at the date of mailing to stockholders and
at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
The Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the
rules and regulations thereunder, except that no
representation or warranty is made by Parent or Sub with
respect to statements made or incorporated by reference
therein based on information supplied by the Company
specifically for inclusion or incorporation by reference
therein.
<PAGE>51
28
(d) Ownership of Company Common Stock. Other
than pursuant to the Stock Option Agreement, as of the date
hereof, neither Parent nor any of its affiliates (as such
term is defined under the Exchange Act), (i) beneficially
owns, directly or indirectly, or (ii) is party to any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case,
shares of capital stock of the Company, which in the
aggregate represent 10% or more of the outstanding shares of
Company Common Stock entitled to vote generally in the
election of directors (other than Trust Account Shares).
(e) Brokers and Finders. No broker, investment
banker, financial advisor or other person, other than
CS First Boston Corporation and Morgan Stanley & Co.
Incorporated, the fees and expenses of each of which will be
paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this
Agreement and the Stock Option Agreement based upon
arrangements made by or on behalf of Parent or Sub.
(f) Financing. Parent has available funds
sufficient to consummate the Merger on the terms
contemplated by this Agreement, and at the Effective Time,
Parent will have available all the funds necessary to
perform its obligations under this Agreement, including
consummating the Merger on the terms contemplated hereby.
(g) Litigation. There is no suit, action or
proceeding pending or, to the knowledge of Parent,
threatened against or affecting Parent or any of its
subsidiaries that individually or in the aggregate could
reasonably be expected to (i) impair the ability of Parent
to perform its obligations under this Agreement or
(ii) threaten, impede or delay the consummation of the
Merger, nor is there any judgment, decree, injunction, rule
or order of any Governmental Entity or arbitrator
outstanding against Parent or any of its subsidiaries
having, or which is reasonably likely to have, individually
or in the aggregate, any effect referred to in clause (i) or
(ii) above.
<PAGE>52
29
ARTICLE IV
Covenants Relating to Conduct of the Company's Business
SECTION 4.01. Covenants of the Company. During
the period from the date of this Agreement until the
Effective Time, the Company agrees as to itself and its
subsidiaries that (except as expressly contemplated or
permitted by this Agreement or the Stock Option Agreement or
as set forth in the Company Disclosure Schedule):
(a) Ordinary Course. The Company and its
subsidiaries shall carry on their respective businesses
in the usual, regular and ordinary course consistent
with sound banking practices and use their best efforts
to preserve intact their present business
organizations, maintain their rights and franchises,
keep available the services of their current officers
and employees and preserve their relationships with
customers, suppliers and others having business
dealings with them to the end that their goodwill and
ongoing businesses shall not be impaired in any
material respect at the Effective Time. The Company
shall not, nor shall it permit any of its subsidiaries
to, (i) enter into any new material line of business;
(ii) except as required by law, regulation, GAAP or
regulatory policies or guidelines, change its or its
subsidiaries' lending, credit, investment, liability
management and other material banking policies in any
respect which is material to the Company; or
(iii) except as required by any applicable regulatory
authorities, incur or commit to any capital
expenditures, or any obligations or liabilities in
connection therewith, other than capital expenditures
and obligations or liabilities incurred or committed to
that are approved in accordance with the Company's
capital expenditure approval policies (as adopted by
the Company's board of directors pursuant to
resolutions adopted on January 20, 1993, February 23,
1994, and May 18, 1994) and that are not (A)
individually in excess of U.S. $250,000 and (B) in the
aggregate in excess of the amount identified as capital
expenditures in the Company's 1995 operating budget as
in effect on the date hereof, which budget shall not be
amended without the prior written consent of Parent and
which amount shall in no event exceed U.S. $10,000,000.
<PAGE>53
30
(b) Dividends; Changes in Stock. The Company
shall not, nor shall it permit any of its subsidiaries
to, nor shall it propose to, (i) declare, set aside or
pay any dividends on or make other distributions in
respect of, directly or indirectly, any of its capital
stock, except (A) the Company may continue the
declaration and payment of regular quarterly cash
dividends not in excess of U.S. $.55 per share of
Company Common Stock, with usual record and payment
dates for such dividends in accordance with the
Company's past dividend practice, and (B) for dividends
by a direct or indirect wholly owned (other than
directors' qualifying shares) subsidiary of the
Company, (ii) adjust, split, combine or reclassify any
of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital
stock or (iii) repurchase, redeem or otherwise acquire,
or permit any subsidiary to purchase or otherwise
acquire (except for the acquisition of Trust Account
Shares and the acquisition of shares to be used to
satisfy obligations under Company Stock Plans), any
shares of its capital stock or any securities
convertible into or exchangeable for any shares of its
capital stock, except that the Company shall redeem the
Company Debentures and cancel the Equity Contracts in
accordance with Section 5.11.
(c) Issuance of Securities. The Company shall
not, nor shall it permit any of its subsidiaries to,
issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its or any
of its subsidiaries' capital stock of any class, any
Voting Debt or any securities convertible into or
exchangeable for, or any rights, warrants or options to
acquire, any such shares or Voting Debt, or enter into
any agreement with respect to any of the foregoing,
other than (i) the issuance of Company Common Stock
pursuant to the terms of the Equity Contracts and the
Company Debentures or upon the exercise of Company
Stock Options referred to in this Agreement that are
outstanding on the date of this Agreement in accordance
with their present terms or pursuant to the Stock
Option Agreement, (ii) issuances by a direct or
indirect wholly owned (other than directors' qualifying
shares) subsidiary of its capital stock to its parent
and (iii) issuance of Company Series B Preferred upon
exercise of the Rights in accordance with their present
<PAGE>54
31
terms and reservation for issuance of shares of Company
Series B Preferred in addition to those presently
reserved for issuance.
(d) Governing Documents. The Company shall not
amend or propose to amend, nor shall it permit any of
its subsidiaries to amend, the articles of
incorporation (or similar constitutive documents) or
by-laws of the Company or any of its subsidiaries nor
shall the Company amend the Rights Agreement other than
in accordance with Sections 3.01(p) and 5.10.
(e) No Acquisitions. The Company shall not, nor
shall it permit any of its subsidiaries to, acquire or
agree to acquire by merging or consolidating with, or
by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership,
association or other business organization or division
thereof or otherwise acquire or agree to acquire any
assets, in each case which are material, individually
or in the aggregate, to the Company and its
subsidiaries taken as a whole. Without limiting the
generality of the foregoing, the Company shall not, nor
shall it permit any of its subsidiaries to, make any
investment either by purchase or 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, except for
transactions in the ordinary course of business
consistent with sound banking practice.
(f) No Dispositions. Other than (i) activities
in the ordinary course of business consistent with
sound banking practice or (ii) as set forth on the
Company Disclosure Schedule, the Company shall not, nor
shall it permit any of its subsidiaries to, sell,
lease, mortgage, encumber or otherwise dispose of, any
of its assets (including capital stock of
subsidiaries), which are material, individually or in
the aggregate, to the Company and its subsidiaries
taken as a whole.
(g) Indebtedness. The Company shall not, nor
shall it permit any of its subsidiaries to, incur any
indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or
<PAGE>55
32
warrants or rights to acquire any debt securities of
the Company or any of its subsidiaries or guarantee any
debt securities of others, other than (i) short-term
indebtedness incurred to refinance existing short-term
indebtedness, (ii) indebtedness of any subsidiary of
the Company to the Company or another subsidiary of the
Company or (iii) in the case of bank subsidiaries,
indebtedness incurred in the ordinary course of
business consistent with sound banking practice.
(h) Other Actions. The Company shall not, nor
shall it permit any of its subsidiaries to, take any
action that would, or reasonably could be expected to,
result in any of its representations and warranties set
forth in this Agreement that are qualified as to
materiality being or becoming untrue, any of such
representations and warranties that are not so
qualified being or becoming untrue in any material
respect, any of the conditions to the Merger set forth
in Article VI not being satisfied or a material
Violation of any provision of the Stock Option
Agreement, or (unless such action is required by
applicable law or sound banking practice) which could
reasonably be expected to adversely affect or delay the
ability of any of Parent, Sub or the Company or their
subsidiaries to obtain any of the Requisite Regulatory
Approvals (as defined in Section 6.01(b)) without
imposition of a condition or restriction of the type
referred to in Section 6.02(c).
(i) Advice of Changes; Government Filings. The
Company shall confer on a regular and frequent basis
with Parent, report on operational matters and promptly
advise Parent orally and in writing of any change or
event having, or which, insofar as can reasonably be
foreseen, could have, individually or in the aggregate
a Material Adverse Effect on the Company or which would
cause or constitute a material breach of any of the
representations, warranties or covenants of the Company
contained herein. The Company shall file all reports
required to be filed by it with the SEC or Nasdaq
between the date of this Agreement and the Effective
Time and shall deliver to Parent copies of all such
reports promptly after the same are filed. The Company
and each subsidiary of the Company that is a bank shall
file all Call Reports with the appropriate Regulatory
Authorities and all other reports, applications and
other documents required to be filed with the Federal
<PAGE>56
33
Reserve and the other Regulatory Authorities between
the date hereof and the Effective Time and shall make
available to Parent copies of all such reports promptly
after the same are filed. Except where prohibited by
applicable statutes and regulations, the Company shall
promptly provide Parent (or its counsel) with copies of
all other filings made by the Company with any state or
Federal Governmental Entity in connection with this
Agreement, the Stock Option Agreement or the
transactions contemplated hereby or thereby.
(j) Accounting Methods. Except as contemplated
by Section 5.09, the Company shall not change its
fiscal year or its methods of accounting in effect at
January 1, 1994, except as required by changes in GAAP
or regulatory accounting practices as concurred in by
the Company's independent auditors.
(k) Compensation; Benefit Plans. Neither the
Company nor any of its subsidiaries will (i) enter
into, adopt, amend or terminate any Company Benefit
Plan or any other employee benefit plan or any
agreement, arrangement, plan or policy between such
party and one or more of its directors or officers, in
each case so as to increase benefits thereunder,
(ii) increase in any manner the compensation or fringe
benefits of any of its directors, officers or employees
or provide any other benefit not required by any plan
and arrangement as in effect as of the date hereof
(including the granting of stock options, stock appre-
ciation rights, restricted stock, restricted stock
units or performance units or shares), except for nor-
mal salary compensation increases, benefit changes or
cash bonus payments in the ordinary course of business
consistent with past practice, and, in the case of
those executive officers referred to in Section 4.01(k)
of the Company Disclosure Schedule, as set forth
therein, (iii) create or amend any Company Stock Plan
or grant any equity based award pursuant to any Company
Stock Plan or otherwise or (iv) enter into or renew any
<PAGE>57
34
contract, agreement, commitment or arrangement
providing for the payment to any director, officer or
employee of such party of compensation or benefits
contingent, or the terms of which are materially
altered, upon the occurrence of any of the transactions
contemplated by this Agreement or the Stock Option
Agreement; provided, however, that the Company shall,
at the request of Parent, use its reasonable efforts to
enter into employment agreements, in form and substance
satisfactory to Parent, with those executive officers
of the Company designated by Parent, which employment
agreements shall be effective on and after (and subject
to the occurrence of) the Effective Time and shall be
assumed by the Surviving Corporation.
(l) Tax Matters. From the date hereof until the
Effective Time, (i) the Company and its subsidiaries
will file all Company Returns required to be filed with
any taxing authority in accordance with all applicable
laws, (ii) the Company and its subsidiaries will timely
pay all taxes shown as due and payable on the
respective Company Returns that are so filed and as of
the time of filing, the Company Returns will correctly
reflect the facts regarding the income, business,
assets, operations, activities and the status of the
Company and its subsidiaries in all material respects,
and (iii) the Company and its subsidiaries will
promptly notify Parent of any action, suit, proceeding,
investigation, audit or claim pending against or with
respect to the Company or any subsidiary in respect of
any tax where there is a reasonable possibility of a
determination or decision which would reasonably be
expected to have a significant adverse effect on the
Company's tax liabilities or other tax attributes. The
Company shall not, nor shall it permit any of its
subsidiaries to, make any tax election or settle or
compromise any income tax liability.
(m) Settlements, etc. The Company shall not, nor
shall it permit any of its subsidiaries to, pay,
discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment,
discharge, settlement or satisfaction, in the ordinary
course of business consistent with sound banking
practice or in accordance with their terms, of
liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial
<PAGE>58
35
statements (or the notes thereto) of the Company
included in the Company Filed SEC Documents or incurred
since the date of such financial statements in the
ordinary course of business consistent with sound
banking practice.
(n) Material Contracts. Except in the ordinary
course of business consistent with sound banking
practice, the Company shall not, nor shall it permit
any of its subsidiaries to, modify, amend or terminate
any material contract, lease or agreement to which the
Company or any subsidiary is a party or waive, release
or assign any material rights or claims thereunder.
Without limiting the generality of the foregoing,
without the prior written consent of Parent, the
Company shall not waive any standstill provision
contained in any confidentiality agreement in existence
as of the date hereof between the Company and any other
person. Without the prior written consent of Parent
(which shall not be unreasonably withheld), the Company
shall not, nor shall it permit any of its subsidiaries
to, enter into any contract, agreement or arrangement
which, if entered into prior to the date hereof, would
have been covered by clause (i), (ii), (iii) or (iv) of
Section 3.01(i)(A).
(o) General. The Company shall not, nor shall it
permit any of its subsidiaries to, authorize any of, or
commit or agree to take any of, the foregoing actions
described in this Section 4.01.
SECTION 4.02. No Solicitation. (a) The Company
shall not, nor shall it permit any of its subsidiaries to,
nor shall it authorize or permit any officer, director or
employee of or any investment banker, attorney or other
advisor or representative of, the Company or any of its
subsidiaries to, (i) solicit, initiate or encourage the
submission of any takeover proposal or (ii) participate in
any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other
action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to
lead to, any takeover proposal; provided, however, that
prior to receipt of the Company Stockholder Approval, to the
extent required by the fiduciary obligations of the Board of
Directors of the Company, as determined in good faith by the
Board of Directors based on the advice of independent
counsel, the Company may, (A) in response to an unsolicited
<PAGE>59
36
takeover proposal and subject to compliance with
Section 4.02(c), furnish information with respect to the
Company and its subsidiaries to any person pursuant to a
customary confidentiality agreement (as determined by the
Company's independent counsel) and discuss such information
(but not the terms of any possible takeover proposal) with
such person and (B) upon receipt by the Company of an
unsolicited takeover proposal and subject to compliance with
Section 4.02(c), participate in negotiations regarding such
takeover proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth
in the preceding sentence by any executive officer of the
Company or any of its subsidiaries or any investment banker,
attorney or other advisor or representative of the Company
or any of its subsidiaries, whether or not such person is
purporting to act on behalf of the Company or any of its
subsidiaries or otherwise, shall be deemed to be a breach of
this Section 4.02(a) by the Company. For purposes of this
Agreement, "takeover proposal" means any inquiry, proposal
or offer from any person relating to any direct or indirect
acquisition or purchase of a substantial amount of the
assets of the Company or any of its subsidiaries, other than
the transactions contemplated by this Agreement and the
Stock Option Agreement, or of 20% or more of any class of
equity securities of the Company or any of its subsidiaries
or any tender offer or exchange offer that if consummated
would result in any person beneficially owning 20% or more
of any class of equity securities of the Company or any of
its subsidiaries, or any merger, consolidation, business
combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its subsidiaries
other than the transactions contemplated by this Agreement
and the Stock Option Agreement.
(b) Except as set forth herein, neither the Board
of Directors of the Company nor any committee thereof shall
(i) withdraw or modify, or propose to withdraw or modify, in
a manner adverse to Parent or Sub, the approval or
recommendation by such Board of Directors or any such
committee of this Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any takeover
proposal or (iii) enter into any agreement with respect to
any takeover proposal. Notwithstanding the foregoing, prior
to the receipt of the Company Stockholder Approval, the
Board of Directors of the Company, to the extent required by
its fiduciary obligations, as determined in good faith by
the Board of Directors based on the advice of independent
<PAGE>60
37
counsel, may (subject to the following sentences) withdraw
or modify its approval or recommendation of this Agreement
or the Merger, approve or recommend any superior proposal
(as defined below), enter into an agreement with respect to
such superior proposal or terminate this Agreement, in each
case at any time after the second business day following
Parent's receipt of written notice advising Parent that the
Board of Directors has received a superior proposal,
specifying the material terms and conditions of such
superior proposal and identifying the person making such
superior proposal (it being understood that any amendment to
a superior proposal shall necessitate an additional two
business day period). In addition, if the Company proposes
to enter into an agreement with respect to any takeover
proposal, it shall concurrently with entering into such
agreement pay, or cause to be paid, to Parent the Expenses
and the Termination Fee (each as defined in Section 5.07(b))
in accordance with the provisions of Section 5.07(b). For
purposes of this Agreement, "superior proposal" means any
bona fide takeover proposal made by a third party to
acquire, directly or indirectly, for consideration
consisting of cash and/or securities, more than 50% of the
shares of Company Common Stock then outstanding or all or
substantially all the assets of the Company and otherwise on
terms which the Board of Directors of the Company determines
in its good faith judgment (based on the advice of a
financial advisor of nationally recognized reputation) to be
more favorable to the Company's stockholders than the Merger
and for which financing, to the extent required, is then
committed or which, in the good faith judgment of such Board
of Directors, is reasonably capable of being financed by
such third party.
(c) In addition to the obligations of the Company
set forth in paragraph (b) above, the Company promptly shall
advise Parent orally and in writing of any request for
information or of any takeover proposal, or any inquiry with
respect to or which could lead to any takeover proposal, the
material terms and conditions of such request, takeover
proposal or inquiry and the identity of the person making
any such request, takeover proposal or inquiry. The Company
will keep Parent fully informed of the status and details
(including amendments or proposed amendments) of any such
request, takeover proposal or inquiry.
(d) Nothing contained in this Section 4.02 shall
prohibit the Company from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a)
<PAGE>61
38
promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good
faith judgment of the Board of Directors of the Company
based on the recommendation of independent counsel, failure
to do so would be inconsistent with applicable laws;
provided that the Company does not, except as permitted by
Section 4.02(b), withdraw or modify, or propose to withdraw
or modify, its position with respect to the Merger or
approve or recommend, or propose to approve or recommend, a
takeover proposal.
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Proxy Statement.
The Company will, as soon as practicable following the date
of this Agreement, prepare and file a preliminary Proxy
Statement with the SEC and will use all reasonable efforts
to respond to any comments of the SEC or its staff and to
cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable after responding to
all such comments to the satisfaction of the SEC or its
staff. The Company will notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional
information and will supply Parent with copies of all
correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff,
on the other hand, with respect to the Proxy Statement or
the Merger. If at any time prior to the Company
Stockholders Meeting there shall occur any event that should
be set forth in an amendment or supplement to the Proxy
Statement, the Company will promptly prepare and mail to its
stockholders such an amendment or supplement. The Company
will not mail any Proxy Statement, or any amendment or
supplement thereto, to which Parent reasonably objects.
SECTION 5.02. Access to Information. The Company
shall, and shall cause each of its subsidiaries to, afford
to Parent and to the officers, employees, accountants,
counsel and other representatives of Parent, reasonable
access, during normal business hours during the period prior
to the Effective Time, to all their respective properties,
books, contracts, commitments, personnel and records and,
during such period, the Company shall, and shall cause each
<PAGE>62
39
of its subsidiaries to, furnish promptly to Parent (a) a
copy of each report, schedule, registration statement and
other document filed or received by it during such period
pursuant to the requirements of Federal or state securities
laws or Federal or state banking laws (other than reports or
documents which the Company or subsidiary is not permitted
to disclose under applicable law) and (b) all other
information concerning its business, properties and
personnel as Parent may reasonably request. Parent will,
and will cause its advisors and representatives to, hold any
such information which is nonpublic in confidence to the
extent required by, and in accordance with, the terms of the
Confidentiality Agreement dated as of January 11, 1995,
between the Company and Parent (the "Confidentiality
Agreement"). No investigation by either Parent or Sub shall
affect the representations and warranties of the Company,
and each such representation and warranty shall survive such
investigation. During the period from the date of this
Agreement to the Effective Time, the Company shall promptly
furnish to Parent copies of all monthly and quarterly
interim financial statements (including any budgets and
variances from budgets) as the same become available and
shall cause one or more of its designated representatives to
confer on a regular and frequent basis with Parent. The
Company shall promptly notify Parent of any material change
in its business or operations and of any complaints,
investigations or hearings (or communications indicating
that the same may be contemplated) by any Governmental
Entity, or the institution of the threat of material
litigation involving the Company or its subsidiaries, and
shall keep Parent fully informed of all such events.
SECTION 5.03. Company Stockholders Meeting. The
Company shall duly call, give notice of, convene and hold
the Company Stockholders Meeting for the purpose of
obtaining the Company Stockholder Approval as soon as
practicable after the date on which the definitive Proxy
Statement has been mailed to the Company's stockholders.
Subject to Section 4.02, the Company will, through its Board
of Directors, recommend to its stockholders that they grant
the Company Stockholder Approval. Without limiting the
generality of the foregoing, the Company agrees that,
subject to its right to terminate this Agreement pursuant to
Section 7.01(d), its obligations pursuant to the first
sentence of this Section 5.03 shall not be affected by
(a) the commencement, public proposal, public disclosure or
communication to the Company of any takeover proposal or
(b) the withdrawal or modification by the Board of Directors
<PAGE>63
40
of the Company of its approval or recommendation of this
Agreement or the Merger in accordance with Section 4.02(b).
SECTION 5.04. Legal Conditions to Merger.
Subject to the terms and conditions of this Agreement, each
of the Company and Parent shall, and shall cause its
subsidiaries to, use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions
contemplated by this Agreement, including (a) the obtaining
of any necessary consent, authorization, order or approval
of, or any exemption by, any Governmental Entity and/or any
other public or private third party which is required to be
obtained by such party or any of its subsidiaries in
connection with the Merger and the other transactions
contemplated by this Agreement and the Stock Option
Agreement (including the redemption of the Company
Debentures and the cancellation of the Equity Contracts in
accordance with Section 5.11), and the making or obtaining
of all necessary filings and registrations with respect
thereto, (b) the defending of any lawsuits or other legal
proceedings, whether judicial, administrative or regulatory,
challenging this Agreement or the Stock Option Agreement,
including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity
vacated or reversed, and (c) the execution and delivery of
any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the
purposes of, this Agreement and the Stock Option Agreement;
provided, however, that a party shall not be obligated to
take any action pursuant to the foregoing if the taking of
such action or such compliance or the obtaining of such
consent, authorization, order, approval or exemption would,
in such party's reasonable opinion, (A) be materially
burdensome to such party and its subsidiaries taken as a
whole in the context of the transactions contemplated by
this Agreement or impact in such a materially adverse manner
the economic or business benefits of the transactions
contemplated by this Agreement as to render inadvisable the
consummation of the Merger or (B) result in the imposition
of a condition or restriction on such party or on the
Surviving Corporation of the type referred to in
Section 6.02(c). Each of the Company and Parent will
promptly cooperate with and furnish information to the other
in connection with any such burden suffered by, or
<PAGE>64
41
requirement imposed upon, any of them or any of their
subsidiaries in connection with the foregoing. In
connection with and without limiting the foregoing, the
Company and its Board of Directors shall (x) take all action
necessary to ensure that neither Article SEVENTH of the
Company's articles of incorporation nor any state takeover
statute or similar statute or regulation (including
Chapters 7A and 7B of the MBCA) is or becomes applicable to
the Merger, this Agreement, the Stock Option Agreement or
any of the other transactions contemplated by this Agreement
or the Stock Option Agreement and (y) if Article SEVENTH or
any state takeover statute or similar statute or regulation
becomes applicable to the Merger, this Agreement, the Stock
Option Agreement or any of the other transactions
contemplated by this Agreement or the Stock Option
Agreement, take all action necessary to ensure that the
Merger and the other transactions contemplated by this
Agreement and the Stock Option Agreement may be consummated
as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such
Article, statute or regulation on the Merger, this
Agreement, the Stock Option Agreement or any of the other
transactions contemplated by this Agreement or the Stock
Option Agreement. Notwithstanding the foregoing, the Board
of Directors of the Company shall not be prohibited from
taking any action permitted by the terms of this Agreement.
SECTION 5.05. Employee Benefit Plans.
(a) Except as provided in Section 5.06, Parent shall cause
the Surviving Corporation and its subsidiaries to maintain
for a period of at least one year after the Effective Time
the Company Benefit Plans in effect on the date of this
Agreement or to provide, pursuant to benefit plans of the
Surviving Corporation or of Parent, benefits to employees of
the Surviving Company and its subsidiaries that are at least
generally comparable in the aggregate to those benefits
provided under the Company Benefit Plans in effect on the
date of this Agreement.
(b) Parent shall cause the Surviving Corporation
to honor in accordance with their terms the employment,
severance and supplemental pension contracts to which
employees of the Company are a party that are set forth on
the Company Disclosure Schedule, and honor all provisions
for vested benefits and other vested amounts earned or
accrued through the Effective Time under the Company Benefit
Plans.
<PAGE>65
42
SECTION 5.06. Stock Options and the ESOP.
(a) As soon as practicable following the date of this
Agreement, the Board of Directors of the Company (or, if
appropriate, any committee administering the Company Stock
Plans) shall adopt such resolutions or take such other
actions as are required to provide for the cancellation of
all outstanding employee stock options to purchase shares of
Company Common Stock ("Company Stock Options") heretofore
granted under the Company Stock Plans to provide that each
Company Stock Option, whether vested or not, outstanding
immediately prior to the Effective Time, in exchange for a
cash payment by the Company of an amount equal to (i) the
excess, if any, of (x) the Merger Consideration per share
over (y) the exercise price per share of Company Common
Stock subject to such Company Stock Option, multiplied by
(ii) the number of shares of Company Common Stock subject to
such Company Stock Options for which such Company Stock
Option shall not theretofore have been exercised. The
Company shall use its best efforts to obtain all consents of
the holders of the Company Stock Options as shall be
necessary to effectuate the foregoing. Notwithstanding
anything to the contrary contained in this Agreement,
payment shall, at Parent's request, be withheld in respect
of any Company Stock Option until all necessary consents
with respect to such Company Stock Options are obtained.
(b) All amounts payable pursuant to this
Section 5.06 shall be subject to any required withholding of
taxes and shall be paid without interest.
(c) The Board of Directors of the Company (or, if
appropriate, any committee administering the Company Stock
Plans) shall adopt such resolutions or take such actions as
are required to terminate the Company Stock Plans other than
the ESOP as of the Effective Time, to delete as of the
Effective Time the provision in any other Company Benefit
Plan providing for the issuance, transfer or grant of any
capital stock of the Company or any interest in respect of
any capital stock of the Company and to ensure that
following the Effective Time no holder of a Company Stock
Option or any participant in any Company Stock Plan or other
Company Benefit Plan shall have any right thereunder to
acquire any capital stock of the Company or the Surviving
Corporation.
(d) If Parent so requests, the Board of Directors
of the Company (or, if appropriate, any committee
administering the ESOP) shall give due consideration to any
<PAGE>66
43
request by Parent to cause the ESOP to continue following
the Effective Time, and shall give due consideration to any
request by Parent to take, in accordance with the terms of
the ESOP and pursuant to the Michigan National Corporation
Employee Stock Ownership Trust Agreement (the "Trust
Agreement"), such actions as are necessary (including
amendment of the ESOP and the Trust Agreement) to cause the
trustee thereunder to reinvest the Merger Consideration in
common stock of the Parent (or any equivalent equity
security) designated by Parent that constitutes, if any, a
"qualifying employer security" (as defined in Section
4975(e)(8) and Section 409(l) of the Code).
SECTION 5.07. Fees and Expenses. (a) Whether or
not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement, the Stock Option
Agreement and the transactions contemplated hereby and
thereby shall be paid by the party incurring such expense,
except (i) as otherwise provided below in this Section
5.07 and (ii) that filing fees and expenses incurred in
connection with the filing, printing and mailing of the
Proxy Statement shall be shared equally by Parent and the
Company.
(b) If this Agreement is terminated pursuant to
its terms, other than by Parent or the Company pursuant to
Section 7.01(b)(i) or (iii) or by the Company pursuant to
Section 7.01(b)(ii), and an Acquisition Event shall occur
after the date hereof and prior to the date that is 18
months after the date of such termination, the Company shall
upon demand by Parent, pay or cause to be paid, in same day
funds to Parent the sum of (i) all of Parent's Expenses (as
defined below) in an amount up to but not exceeding U.S.
$10,000,000 and (ii) U.S. $50,000,000 (the "Termination
Fee"). "Acquisition Event" shall mean any of the
following: (i) any person or group (as defined in
Section 13(d)(3) of the Exchange Act), other than Parent or
any of its subsidiaries, shall have acquired, pursuant to a
tender offer, exchange offer or otherwise, beneficial
ownership (including pursuant to the acquisition of options)
of 20% or more of any class of equity securities of the
Company or any of its subsidiaries; (ii) any such person or
group shall have received approval from the Federal Reserve
to acquire ownership of 20% or more of any class of equity
securities of the Company or MNB; or (iii) the Company or
MNB shall have authorized, recommended, proposed or publicly
announced an intention to authorize, recommend or propose,
shall have amended the Rights Agreement to facilitate, or
shall have entered into, an agreement with any person
(other than Parent or a subsidiary
<PAGE>67
44
thereof) to (w) effect a merger, consolidation, business
combination, sale of substantially all assets, or similar
transaction involving the Company or MNB, (x) sell, lease or
otherwise dispose of assets of the Company or its
subsidiaries representing 15% or more of the consolidated
assets of the Company and its subsidiaries, (y) issue, sell
or otherwise dispose of (including by way of merger,
consolidation, share exchange, or any similar transaction)
securities representing 20% or more of any class of equity
securities of the Company or any of its subsidiaries or
(z) have such person effect a tender offer or exchange offer
that if consummated would result in any person beneficially
owning 20% or more of any class of equity securities of the
Company or any of its subdiairies. "Expenses" shall mean
all out-of-pocket fees and expenses incurred or paid by or
on behalf of Parent or any of its affiliates in connection
with the Merger or the consummation of any of the other
transactions contemplated by this Agreement or the Stock
Option Agreement, including all fees and expenses of
counsel, commercial banks, investment banking firms,
accountants, experts and consultants to Parent or any of its
affiliates. The amount of Expenses so payable shall be the
amount set forth in an estimate delivered by Parent, subject
to upward or downward adjustment upon delivery of reasonable
documentation therefor.
(c) Notwithstanding anything to the contrary
contained herein, the aggregate amount of gain realized by
Grantee pursuant to the Stock Option Agreement from the
Company (or the Substitute Option Issuer (as defined in the
Stock Option Agreement)), when added to the Termination Fee,
if any, received by Parent pursuant to Section 5.07(b),
shall not in the aggregate exceed U.S. $75,000,000, and, in
the event Parent realizes gain in excess of such amount
under the Stock Option Agreement from the Company (or the
Substitute Option Issuer) or under the Termination Fee,
Parent hereby undertakes promptly to pay back to the
Company, by wire transfer of immediately available funds,
the amount of such excess.
SECTION 5.08. Indemnification, Exculpation and
Insurance. (a) Parent and Sub agree that, for a period of
six years (or the period of the applicable statute of
limitations, if longer) from the Effective Time, all rights
to indemnification and exculpation from liability for acts
or omissions occurring prior to the Effective Time now
existing in favor of the current or former directors or
officers of the Company and its subsidiaries (such persons,
<PAGE>68
45
"Indemnified Persons") as provided in their respective
articles of incorporation (or similar constitutive docu-
ments) or by-laws shall survive the Merger and shall not be
amended, repealed or otherwise modified in any manner that
would adversely affect the rights thereunder of any such
Indemnified Persons. Parent will cause to be maintained for
a period of six years from the Effective Time the Company's
current directors' and officers' insurance and indemnifica-
tion policy (a copy of which has heretofore been delivered
to Parent) to the extent that it provides coverage for
events occurring prior to the Effective Time (the "D&O
Insurance") for all persons who are directors and officers
of the Company on the date of this Agreement, so long as the
annual premium therefor would not be in excess of (i) until
the third anniversary of the Effective Time, 200%, and (ii)
thereafter, 100%, of the last annual premium paid prior to
the date of this Agreement (in the case of either clause (i)
or (ii) above, the "Maximum Premium"); provided, however,
that Parent may, in lieu of maintaining such existing D&O
Insurance as provided above, cause comparable coverage to be
provided under any policy maintained for the benefit of
Parent or any of its subsidiaries, so long as the material
terms thereof are no less advantageous than the existing D&O
Insurance. If the existing D&O Insurance expires, is termi-
nated or cancelled during such three-year period, Parent
will use all reasonable efforts to cause to be obtained as
much D&O Insurance as can be obtained for the remainder of
such period for an annualized premium not in excess of the
Maximum Premium, on terms and conditions no less advanta-
geous than the existing D&O Insurance. The Company repre-
sents to Parent that the Maximum Premium is U.S. $1,230,000
for the first three years and U.S. $615,000 thereafter.
(b) The provisions of this Section 5.08 are
intended to be for the benefit of, and shall be enforceable
by, each Indemnified Party and each Indemnified Party's
heirs and representatives.
SECTION 5.09. Company Accruals and Reserves.
Prior to the Closing Date, at the request of Parent, the
Company shall review and, to the extent mutually determined
to be necessary or advisable, consistent with GAAP and the
accounting rules, regulations and interpretations of the SEC
and its staff, modify and change its loan, accrual and
reserve policies and practices (including loan
classifications and levels of reserves and accruals to
(a) reflect the Surviving Corporation's plans with respect
to the conduct of the Company's business following the
<PAGE>69
46
Merger and (b) make adequate provision for the costs and
expenses relating thereto) so as to be applied consistently
on a basis that is mutually satisfactory to each of the
Company and Parent. Notwithstanding the foregoing, the
Company shall not be obligated to take in any respect any
such action pursuant to this Section 5.09 unless and until
Parent acknowledges that all conditions to its obligation to
consummate the Merger have been satisfied.
SECTION 5.10. Rights Agreement. The Board of
Directors of the Company shall take all further action (in
addition to that referred to in Section 3.01(p)) requested
in writing by Parent in order to render the Rights
inapplicable to the Merger, the Stock Option Agreement and
the other transactions contemplated by this Agreement and
the Stock Option Agreement. Except as requested in writing
by Parent, during the term of this Agreement, the Board of
Directors of the Company shall not (i) amend the Rights
Agreement or (ii) take any action with respect to, or make
any determination under, the Rights Agreement, including a
redemption of the Rights or any action to facilitate a
takeover proposal; provided that any of such actions may be
taken simultaneously with entering into an agreement in
respect of such takeover proposal pursuant to
Section 4.02(b).
SECTION 5.11. Company Debentures. The Company
shall deliver, as promptly as practicable following receipt
of Federal Reserve approval for such redemption and
cancellation, a notice to holders of the Company Debentures
and the Equity Contracts of the Company's irrevocable
intention to redeem, on a specified date not earlier than
60 days nor later than 90 days following the date of such
notice, all the outstanding Company Debentures in accordance
with their terms and to cause the cancellation of all the
outstanding Equity Contracts in accordance with their terms.
On such specified date, the Company shall duly effect such
redemptions and such cancellations, in each case in
accordance with the respective provisions of the Company
Debentures and the Equity Contracts.
SECTION 5.12. Additional Agreements. In case at
any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full
title to all properties, assets, rights, approvals,
immunities and franchises of either of the Company or
<PAGE>70
47
Parent, the proper officers and directors of each party to
this Agreement shall take all such necessary action.
SECTION 5.13. Parent Covenants. (a) Other
Actions. Parent shall not, nor shall it permit any of its
subsidiaries to, take any action that would, or reasonably
could be expected to, result in any of its representations
and warranties set forth in this Agreement that are
qualified as to materiality being or becoming untrue, any of
such representations and warranties that are not so
qualified being or becoming untrue in any material respect,
any of the conditions to the Merger set forth in Article VI
not being satisfied or a material Violation of any provision
of the Stock Option Agreement, or (unless such action is
required by applicable law or sound banking practice) which
could reasonably be expected to adversely affect or delay
the ability of any of Parent, Sub or the Company or their
subsidiaries to obtain any of the Requisite Regulatory
Approvals without imposition of a condition or restriction
of the type referred to in Section 6.02(c).
(b) Advice of Changes; Government Filings.
Parent shall file all reports required to be filed by it
with the SEC or the applicable self-regulatory organization
between the date of this Agreement and the Effective Time
and shall deliver to the Company copies of all such reports
promptly after the same are filed. Parent and each
subsidiary of Parent that is a bank shall file all Call
Reports with the appropriate Regulatory Authorities and all
other reports, applications and other documents required to
be filed with the Federal Reserve and the other Regulatory
Authorities between the date hereof and the Effective Time
and shall make available to the Company copies of all such
reports promptly after the same are filed. Except where
prohibited by applicable statutes and regulations, Parent
shall promptly provide the Company (or its counsel) with
copies of all other filings made by Parent with any state or
Federal Governmental Entity in connection with this
Agreement, the Stock Option Agreement or the transactions
contemplated hereby or thereby.
<PAGE>71
48
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's
Obligation To Effect the Merger. The respective obligations
of each party to effect the Merger and the other
transactions contemplated hereby shall be subject to the
satisfaction or waiver at or prior to the Effective Time of
the following conditions:
(a) Company Stockholder Approval. The Company
Stockholder Approval shall have been obtained.
(b) Other Approvals. Other than the filing
provided for by Section 1.03, all authorizations,
consents, orders or approvals of, or declarations or
filings with, and all expirations of waiting periods
imposed by, any Governmental Entity (all the foregoing,
"Consents") which are necessary for the consummation of
the Merger, other than Consents the failure to obtain
which would not, individually or in the aggregate, have
a Material Adverse Effect on the Surviving Corporation
or which would not, individually or in the aggregate,
materially adversely affect the consummation of the
transactions contemplated hereby, shall have been
filed, occurred or been obtained (all such Consents and
the lapse of all such waiting periods being referred to
as the "Requisite Regulatory Approvals"), and all such
Requisite Regulatory Approvals shall be in full force
and effect.
(c) No Injunctions or Restraints; Illegality. No
temporary restraining order, preliminary or permanent
injunction or other order or decree issued by any court
of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger
shall be in effect; provided, however, that each of the
parties shall have used reasonable efforts to prevent
the entry of any such injunction or other order or
restraint and to appeal as promptly as possible any
injunction or other order or restraint that may be
entered. There shall not be any action taken, or any
statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Merger, which
makes the consummation of the Merger illegal.
<PAGE>72
49
SECTION 6.02. Conditions to Obligations of
Parent. The obligations of Parent and Sub to effect the
Merger are subject to the satisfaction of the following
conditions unless waived by Parent and Sub:
(a) Representations and Warranties. The
representations and warranties of the Company (i) set
forth in this Agreement (other than those described in
clause (ii) hereof) that are qualified as to
materiality shall be true and correct, and any such
representations and warranties that are not so
qualified shall be true and correct in all material
respects and (ii) set forth in the last sentence of
Section 3.01(f)(i), Section 3.01(f)(ii)(A) and the last
two sentences of Section 3.01(q) except to the extent
that any inaccuracies, either individually or in the
aggregate, could not reasonably be expected to result
in or constitute a Material Adverse Effect on the
Company; in the case of all such representations and
warranties referred to in clause (i) and (ii) hereof
both 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 as otherwise
contemplated by this Agreement, and Parent shall have
received a certificate signed on behalf of the Company
by its Chairman or Chief Executive Officer and its
Chief Financial Officer or other executive officer
performing duties equivalent to those of a "chief
financial officer" to such effect.
(b) Performance of Obligations of the Company.
The Company 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 Parent shall have received a certificate signed on
behalf of the Company by its Chairman or Chief
Executive Officer and its Chief Financial Officer or
other executive officer performing duties equivalent to
these of a "chief financial officer" to such effect.
(c) Burdensome Condition. There shall not be any
action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the
Merger, by any Governmental Entity which, in connection
with the grant of a Requisite Regulatory Approval,
imposes any requirement upon Parent, the Company or the
Surviving Corporation or their respective subsidiaries
<PAGE>73
50
to (i) dispose of any asset which is material to
Parent, the Company or the Surviving Corporation,
(ii) materially restrict or curtail the current
business operations or activities of Parent, or
(iii) raise an amount of capital, the issuance and sale
of which, in the absence of the Merger and the other
transactions contemplated by this Agreement, would in
the good faith judgment of Parent be materially
burdensome in light of such person's capital raising
policies.
(d) Company Debentures and Equity Contracts. The
Company shall have duly effected the redemption of all
the outstanding Company Debentures and the cancellation
of all the outstanding Equity Contracts.
(e) Company Stock Options and Company Stock
Plans. The Company shall have duly effected, as of the
Effective Time, the cancellation of all outstanding
Company Stock Options, whether vested or not (the
holders of which shall then be entitled to receive from
Parent the amounts determined in accordance with
Section 5.06(a)), the termination of the Company Stock
Plans (other than, subject to Section 5.06(d), the
ESOP) and the deletion of any provision in any other
Company Benefit Plan providing for the issuance,
transfer or grant of any capital stock of the Company
or any subsidiary of the Company or any interest in
respect of any capital stock of the Company or any
subsidiary of the Company.
(f) Rights Agreement. The Rights Agreement shall
be inapplicable to the Merger and the other
transactions contemplated by this Agreement.
SECTION 6.03. Conditions to Obligations of the
Company. The obligations of the Company to effect the
Merger are subject to the satisfaction of the following
conditions unless waived by the Company:
(a) Representations and Warranties. The
representations and warranties of Parent and Sub set
forth in this Agreement that are qualified as to
materiality shall be true and correct, and any such
representations and warranties that are not so
qualified shall be true and correct in all material
respects, in either case as of the date of this
Agreement and (except to the extent such
<PAGE>74
51
representations speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing
Date, except as otherwise contemplated by this
Agreement, and the Company shall have received a
certificate signed on behalf of Parent and Sub by their
respective Chairman or Chief Executive Officers and
their respective Chief Financial Officers or other
executive officers performing duties equivalent to
these of a "chief financial officer" to such effect.
(b) Performance of Obligations of Parent and Sub.
Parent and Sub shall have performed in all material
respects all obligations required to be performed by
them under this Agreement and the Stock Option
Agreement at or prior to the Closing Date, and the
Company shall have received a certificate signed on
behalf of Parent and Sub by their respective Chairman
or Chief Executive Officers and their respective Chief
Financial Officers or other executive officers
performing duties equivalent to these of a "chief
financial officer" to such effect.
ARTICLE VII
Termination and Amendment
SECTION 7.01. Termination. This Agreement may be
terminated at any time prior to the Effective Time, whether
before or after the Company Stockholder Approval is
received:
(a) by mutual written consent of Parent and the
Company;
(b) by either Parent or the Company upon written
notice to the other party:
(i) if (1) the Federal Reserve or any other
Governmental Entity the approval of which is
required to permit consummation of the Merger or
the other transactions contemplated hereby shall
have issued an order denying approval of the
Merger or such other transactions or (2) any
Governmental Entity of competent jurisdiction
shall have issued a final permanent order
enjoining or otherwise prohibiting the
consummation of the Merger or the other
<PAGE>75
52
transactions contemplated hereby and in any such
case under either clause (1) or (2) the time for
appeal or petition for reconsideration of such
order shall have expired without such appeal or
petition being granted;
(ii) if the Company, on the one hand, or
Parent or Sub, on the other hand, materially
breaches any of its covenants and obligations
hereunder or under the Stock Option Agreement and
such breach is not cured after 30 days' written
notice thereof is given to the party committing
such breach by the other party;
(iii) if the Merger shall not have been
consummated on or before February 5, 1996, unless
the failure to consummate the Merger is the result
of a willful and material breach of this Agreement
by the party seeking to terminate this Agreement;
or
(iv) if, upon a vote at a duly held Company
Stockholders Meeting, the Company Stockholder
Approval shall not have been obtained;
(c) by either Parent or Sub upon written notice to
the Company:
(i) if, prior to the Company Stockholders
Meeting, a takeover proposal is commenced,
publicly proposed, publicly disclosed or
communicated to the Company (or the willingness of
any person to make a takeover proposal is publicly
disclosed or communicated to the Company) and
(A) the Company Stockholder Approval is not
obtained at the Company Stockholders Meeting,
(B) the Company Stockholders Meeting does not
occur prior to 120 days after the date of this
Agreement or (C) the Board of Directors of the
Company or any committee thereof shall have
withdrawn or modified its approval or
recommendation of the Merger or this Agreement, or
approved or recommended any takeover proposal; or
(ii) if the Company shall have entered into
any agreement with respect to any superior
proposal in accordance with Section 4.02(b); or
<PAGE>76
53
(d) by the Company in connection with entering
into a definitive agreement in accordance with
Section 4.02(b), provided it has complied with all
provisions thereof, including the notice provisions
therein, and that it makes simultaneous payment of the
Expenses and the Termination Fee in accordance with
Section 5.07(b).
SECTION 7.02. Effect of Termination. In the
event of termination of this Agreement by either the Company
or Parent as provided in Section 7.01, this Agreement shall
forthwith become void and have no effect, and there shall be
no liability or obligation on the part of Parent, Sub, the
Company or their respective officers or directors, except
(a) with respect to Section 3.01(u), Section 3.02(e), the
second sentence of Section 5.02, Section 5.07, this
Section 7.02 and Article VIII, (b) with respect to the
representations and warranties contained in Sections 3.01
and 3.02 insofar as such representations and warranties
relate to the Stock Option Agreement (but only until the
termination of the Stock Option Agreement) and (c) to the
extent that such termination results from the willful and
material breach by the other party of any of its
representations, warranties, covenants or agreements set
forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be
amended by the parties hereto at any time before or after
the Company Stockholder Approval is received, but, after
receipt of the Company Stockholder Approval, no amendment
shall be made which by law requires further approval by such
stockholders without such further approval. This Agreement
may not be amended except by an instrument in writing signed
on behalf of each of the parties hereto; provided, however,
that, notwithstanding anything to the contrary contained in
this Section 7.03, Parent may from time to time without the
consent of the Company increase the amount (but not change
the nature) of the Merger Consideration, and any provisions
inconsistent with such right herein or in any agreement
referred to herein are hereby deemed superseded to the
extent of such inconsistency.
SECTION 7.04. Extension; Waiver. At any time
prior to the Effective Time, the parties hereto may, to the
extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the
other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any
<PAGE>77
54
document delivered pursuant hereto and (c) subject to the
proviso of Section 7.03, waive compliance with any of the
agreements or conditions contained herein. Any agreement on
the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument
signed on behalf of such party. The failure of any party to
this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of
those rights.
SECTION 7.05. Procedure for Termination,
Amendment, Extension or Waiver. A termination of this
Agreement pursuant to Section 7.01, an amendment of this
Agreement pursuant to Section 7.03 or an extension or waiver
pursuant to Section 7.04 shall, in order to be effective,
require, in the case of Parent, Sub or the Company, action
by its Board of Directors or the duly authorized designee of
its Board of Directors.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties. None of the representations and warranties in
this Agreement or in any instrument delivered pursuant to
this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of
the parties which by its terms contemplates performance
after the Effective Time.
SECTION 8.02. Notices. All notices and other
communications hereunder shall be in writing and shall be
deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail
(return receipt requested) to the parties at the following
<PAGE>78
55
addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent or Sub, to:
National Australia Bank Limited
Level 35
500 Bourke Street
Melbourne, Australia
Attention: Chief Financial Officer
Facsimile: 011-613-641-4902
with copies to:
National Australia Bank Limited
Level 24
500 Bourke Street
Melbourne, Australia
Attention: Group Legal
Facsimile: 011-613-641-4902
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: B. Robbins Kiessling, Esq.
Facsimile: (212) 474-3700; and
(b) if to the Company, to:
Michigan National Corporation
27777 Inkster Road
Farmington Hills, MI 48334
Attention: Robert J. Mylod
Facsimile: (810) 473-3086
<PAGE>79
56
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Edward D. Herlihy, Esq.
Facsimile: (212) 403-2000.
SECTION 8.03. Definitions; Interpretation.
(a) As used in this Agreement, (i) any reference to any
event, change or effect being "material" with respect to any
entity means an event, change or effect which is material in
relation to the businesses, assets, properties, liabilities,
results of operations, financial condition or prospects of
such entity and its subsidiaries taken as a whole, (ii) the
term "Material Adverse Effect" means, with respect to the
Company, Parent or Sub, a material adverse effect on the
business, assets, properties, liabilities, results of
operations, financial condition or prospects of such party
and its subsidiaries taken as a whole or on the ability of
such party to perform its obligations hereunder or, except
for purposes of determining satisfaction of the conditions
set forth in Section 6.02, under the other agreements
contemplated hereby and (iii) the term "person" means an
individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or other
entity.
(b) When a reference is made in this Agreement to
Articles, Sections, Exhibits or Schedules, such reference
shall be to an Article, Section of or Exhibit or Schedule to
this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the
words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words
"without limitation". The words "hereof", "herein" and
"hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement. All terms
defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined herein.
The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms
and to the masculine as well as to the feminine and neuter
<PAGE>80
57
genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified
or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments
incorporated therein. References to a person are also to
its permitted successors and assigns.
SECTION 8.04. Counterparts. This Agreement may
be executed in one or more counterparts, all of which shall
be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 8.05. Entire Agreement; No Third-Party
Beneficiaries; Rights of Ownership. This Agreement
(including the documents and the instruments referred to
herein, including the Stock Option Agreement, the
Confidentiality Agreement, and any other agreement among the
parties entered into contemporaneously herewith
(a) constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof
and of the Confidentiality Agreement, provided that the
Confidentiality Agreement shall survive the execution and
delivery of this Agreement, and (b) other than Sections
5.05, 5.06 and 5.08, is not intended to confer upon any
person other than the parties hereto any rights or remedies
hereunder. The parties hereby acknowledge that, except as
otherwise specifically provided in the Stock Option
Agreement or as hereinafter agreed to in writing, neither
Parent nor Sub shall have the right to acquire or shall be
deemed to have acquired shares of Company Common Stock
pursuant to the Merger until consummation thereof.
SECTION 8.06. Governing Law. This Agreement
shall be governed and construed in accordance with the laws
of the State of Michigan, without regard to any applicable
principles of conflicts of law.
SECTION 8.07. Limitations on Remedies. Each
party agrees that, should any court or other competent
authority hold any provision of this Agreement or the Stock
Option Agreement or part hereof or thereof to be null, void
or unenforceable, or order any party to take any action
<PAGE>81
58
inconsistent herewith or not to take any action required
herein, the other party shall not be entitled to specific
performance of such provision or part hereof or thereof or
to any other remedy, including money damages, for breach
hereof or thereof or of any other provision of this
Agreement or the Stock Option Agreement or part hereof or
thereof as a result of such holding or order. This
provision is not intended to render null or unenforceable
any obligation hereunder that would be valid and enforceable
if this provision were not in this Agreement.
SECTION 8.08. Publicity. Except as otherwise
required by law or the rules of the NYSE or Nasdaq, so long
as this Agreement is in effect, neither the Company nor
Parent shall, or shall permit any of its subsidiaries to,
issue or cause the publication of any press release or other
public announcement with respect to the transactions
contemplated by this Agreement or the Stock Option Agreement
without the consent of the other party, which consent shall
not be unreasonably withheld. The parties agree that the
initial press release to be issued with respect to the
transactions contemplated by this Agreement shall be in the
form heretofore agreed to by the parties.
SECTION 8.09. Assignment. Neither this Agreement
nor any of the rights, interests or obligations hereunder
shall be assigned, in whole or in part, by any of the
parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties, and
any such assignment that is not so consented to shall be
null and void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and
be enforceable by the parties and their respective
successors and assigns.
SECTION 8.10. Enforcement. Subject to
Section 8.07, the parties agree that irreparable damage
would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is
accordingly agreed that, subject to Section 8.07, the
parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in
any Federal court located in the State of New York or in any
New York state court, this being in addition to any other
remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit
<PAGE>82
59
itself to the personal jurisdiction of any Federal court
located in the State of New York or any New York state court
in the event any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement and
(b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave
from any such court.
IN WITNESS WHEREOF, Parent, Sub and the Company
have caused this Agreement to be signed by their respective
officers thereunto duly authorized, all as of the date first
above written.
NATIONAL AUSTRALIA BANK
LIMITED A.C.N. 004044937,
by
/s/ Bruce S. McComish
-----------------------
Name: Bruce S. McComish
Title: Chief Financial
Officer
MNC ACQUISITION CO.,
by
/s/ Bruce S. McComish
-------------------------
Name: Bruce S. McComish
Title: Chairman, President and
Chief Executive Officer
MICHIGAN NATIONAL CORPORATION,
by
/s/ Robert J. Mylod
-------------------------
Name: Robert J. Mylod
Title: Chairman and Chief
Executive Officer
<PAGE>83
Exhibit (c) to Schedule 13D
STOCK OPTION AGREEMENT dated as of
February 4, 1995, among NATIONAL AUSTRALIA
BANK LIMITED A.C.N. 004044937, an Australian
corporation ("Grantee"), MNC ACQUISITION CO.,
a Michigan corporation and a wholly owned
subsidiary of Grantee ("Sub"), and MICHIGAN
NATIONAL CORPORATION, a Michigan corporation
("Issuer").
WHEREAS Issuer is a registered bank holding
company under the Bank Holding Company Act of 1956, as
amended (the "BHC Act");
WHEREAS Grantee is a commercial bank under
Australian law and is a foreign bank within the meaning of
the International Banking Act of 1978, as amended;
WHEREAS Grantee, Sub and Issuer propose to enter
into an Agreement and Plan of Merger dated as of the date
hereof (the "Merger Agreement");
WHEREAS, as a condition and inducement to
Grantee's and Sub's willingness to enter into the Merger
Agreement, Grantee and Sub have required that Issuer grant
to Grantee the Option (as defined in Section 2); and
WHEREAS the Board of Directors of Issuer,
believing it to be in the best interests of Issuer, has
approved this Agreement and the grant by Issuer of the
Option.
NOW THEREFORE, in consideration of the foregoing
and the respective representations, warranties, covenants
and agreements set forth herein and in the Merger Agreement,
the parties hereto agree as follows:
1. Definitions; Interpretation. Capitalized
terms used but not defined herein shall have the meanings
set forth in the Merger Agreement, which also contains in
Section 8.03(b) thereof certain rules of construction and
interpretation that shall be applicable hereto as if set
forth herein.
2. Grant of Option. Issuer hereby grants to
Grantee an unconditional, irrevocable option (the "Option")
to purchase, subject to the terms hereof, up to 2,633,502
<PAGE>84
fully paid and nonassessable shares (such amount, as may be
adjusted from time to time as set forth herein, the "Option
Shares") of Common Stock, par value $10 per share ("Issuer
Common Stock"), of the Issuer at a purchase price of
U.S. $89.00 per Option Share (such price, as may be adjusted
from time to time as set forth herein, the "Option Price").
The number of Option Shares that may be received upon the
exercise of the Option and the Option Price are subject to
adjustment as set forth in Section 6.
3. Exercise of Option. (a) Grantee may exercise
the Option, in whole or part, at any time and from time to
time on or after the date hereof if a Triggering Event (as
defined below) shall have occurred; provided, however, that,
to the extent the Option shall not have been exercised, it
shall terminate and be of no further force and effect upon
the earliest of (i) the Effective Time of the Merger,
(ii) termination of the Merger Agreement pursuant to
Section 7.01 thereof (other than for any of the reasons
described in clause (iii) below) or (iii) 18 months after
termination of the Merger Agreement (x) by either party
under Section 7.01(c) or (d) thereof, (y) by Grantee under
Section 7.01(b)(ii) thereof or (z) by Issuer under
Section 7.01(b)(iv) under circumstances where Grantee could
effect termination pursuant to Section 7.01(c); provided
further that, any such exercise and purchase of Option
Shares shall be subject to compliance with applicable laws,
including the BHC Act. The rights set forth in Sections 8,
9 and 10 shall not terminate when the right to exercise the
option terminates as set forth herein, but shall extend to
such time as is provided in such Sections 8, 9 and 10.
Notwithstanding the termination of the Option, Grantee shall
be entitled to purchase those Option Shares with respect to
which it has exercised the Option in accordance with the
terms hereof prior to the termination of the Option.
(b) A "Triggering Event" means the occurrence of
an Acquisition Event, as defined in Section 5.07(b) of the
Merger Agreement (without regard to whether the Merger
Agreement is terminated).
(c) Issuer shall notify Grantee promptly in
writing of the occurrence of any Triggering Event; provided
that it is understood that the giving of such notice by
<PAGE>85
Issuer shall not be a condition to the right of Grantee to
exercise the Option.
(d) In the event Grantee is entitled to and
wishes to exercise the Option, it shall send to Issuer a
written notice (the date of which being referred to herein
as the "Notice Date") specifying (i) the total number of
Option Shares it will purchase pursuant to such exercise and
(ii) a place and date not earlier than three business days
nor later than 60 business days from the Notice Date for the
closing of such purchase (a "Closing Date"); provided that
if prior notification to or approval of the Federal Reserve
Board (the "Federal Reserve") or any other Governmental
Entity is required in connection with such purchase, Grantee
shall promptly file the required notice or application for
approval and shall expeditiously process the same and the
period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which, as the
case may be, (A) any required notification periods have
expired or been terminated or (B) such approvals have been
obtained and any requisite waiting period or periods shall
have passed.
(e) Notwithstanding Section 3(d), in no event
shall any Closing Date be more than 18 months after the
related Notice Date, and if the Closing Date shall not have
occurred within 18 months after the related Notice Date due
to the failure to obtain any such required approval, the
exercise of the Option effected on the Notice Date shall be
deemed to have expired. In the event (i) Grantee receives
official notice that an approval of the Federal Reserve or
any other Governmental Entity required for the purchase of
the Option Shares would not be issued or granted or (ii) a
Closing Date shall not have occurred within 18 months after
the related Notice Date due to the failure to obtain any
such required approval, Grantee shall nevertheless be
entitled to exercise its right as set forth in Section 8 or
to exercise the Option in connection with the resale of
Issuer Common Stock or other securities pursuant to a
registration statement as provided in Section 10. The
provisions of this Section 3 and Section 4 shall apply with
appropriate adjustments to any such exercise.
4. Payment and Delivery of Certificates. (a) On
each Closing Date referred to in Section 3(d), Grantee shall
pay to Issuer in immediately available funds by a wire
transfer to a bank account designated by Issuer an amount
<PAGE>86
equal to the Option Price multiplied by the number of Option
Shares to be purchased on such Closing Date.
(b) On each Closing Date, simultaneously with the
delivery of immediately available funds as provided in
Section 4(a), Issuer shall deliver to Grantee a certificate
or certificates representing the Option Shares to be
purchased on such Closing Date. If the Option should be
exercised in part only, a new Option evidencing the rights
of Grantee to purchase the balance of the Option Shares
purchasable hereunder shall be issued to Grantee, and
Grantee shall deliver to Issuer a copy of this Agreement and
a letter agreeing that Grantee will not offer to sell or
otherwise dispose of such Option Shares in violation of
applicable law or the provisions of this Agreement.
(c) Certificates for Issuer Common Stock
delivered on a Closing Date hereunder shall be endorsed with
a restrictive legend that shall read substantially as
follows:
THE TRANSFER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO CERTAIN RESALE RESTRICTIONS
ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT
DATED AS OF FEBRUARY 4, 1995, A COPY OF WHICH AGREEMENT
IS ON FILE AT THE PRINCIPAL OFFICE OF ISSUER. A COPY
OF SUCH AGREEMENT WILL BE MAILED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY ISSUER OF A WRITTEN
REQUEST THEREFOR.
It is understood and agreed that: (i) the reference to the
resale restrictions of the Securities Act of 1933, as
amended (the "Securities Act"), in the above legend shall be
removed by delivery of substitute certificate(s) without
such reference if Grantee shall have delivered to Issuer a
copy of a letter from the staff of the Securities and
Exchange Commission, or an opinion of counsel, in form and
substance satisfactory to Issuer, to the effect that such
legend is not required for purposes of the Securities Act;
(ii) the reference to the provisions of this Agreement in
the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the Option Shares
have been sold or transferred in compliance with the
provisions of this Agreement and under circumstances that do
not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in
the preceding clauses (i) and (ii) are both satisfied. In
<PAGE>87
addition, such certificates shall bear any other legend as
may be required by law.
(d) Upon the giving by Grantee to Issuer of the
written notice of exercise of the Option provided for under
Section 3(d), the tender of the applicable purchase price in
immediately available funds and the tender of a copy of this
Agreement to Issuer, Grantee shall be deemed to be the
holder of record of the Option Shares issuable upon such
exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates
representing such Option Shares shall not then be actually
delivered to Grantee. Issuer shall pay all expenses and any
and all United States Federal, state and local taxes and
other charges that may be payable in connection with the
preparation, issue and delivery of stock certificates under
this Section 4 in the name of Grantee or its assignee,
transferee or designee.
(e) If, at the time of issuance of any Option
Shares pursuant to an exercise of all or a portion of the
Option hereunder, Issuer shall not have redeemed the Rights
or shall have issued any similar securities, then each
Option Share issued pursuant to such exercise shall also
represent Rights or new rights with terms substantially
identical to and at least as favorable to Grantee as are
provided under the Rights Agreement or any similar agreement
then in effect.
5. Authorizations, etc. Issuer agrees (i) that
it shall at all times maintain, free from preemptive rights
or Liens, sufficient authorized but unissued shares of
Issuer Common Stock so that the Option may be exercised
without additional authorization of Issuer Common Stock
after giving effect to all other options, warrants,
convertible securities and other rights to purchase Issuer
Common Stock, (ii) that it will not, by charter amendment or
through reorganization, recapitalization, reclassification,
consolidation, merger, dissolution or sale of assets, or by
any other voluntary act, avoid or seek to avoid the
observance or performance of any of the covenants,
stipulations or conditions to be observed or performed
hereunder by Issuer and (iii) promptly to take all action as
may from time to time be required (including, in the event,
under the BHC Act or the Change in Bank Control Act of 1978,
as amended, or a state banking law, prior approval of or
notice to the Federal Reserve or to any state regulatory
authority is necessary before the Option may be exercised,
<PAGE>88
cooperating fully with Grantee in preparing such
applications or notices and providing such information to
the Federal Reserve or such state regulatory authority as
they may require) in order to permit Grantee to exercise the
Option and so that the Option Shares, when issued, shall be
duly authorized, validly issued, fully paid and
nonassessable and free and clear of all Liens and not
subject to any preemptive rights.
6. Adjustments. (a) In the event that any
additional shares of Issuer Common Stock are issued or
otherwise become outstanding after the date of this
Agreement (other than pursuant to an exercise of the Option
or an event described in Section 6(b)), including pursuant
to stock option plans and in connection with acquisitions
and other transactions permitted by the Merger Agreement,
the number of Option Shares shall be increased so that,
after such issuance, it equals 19.9% of the number of shares
of Issuer Common Stock then issued and outstanding (without
giving pro forma effect to the issuance of the Option
Shares). Nothing contained in this Section 6(a) or
elsewhere in this Agreement shall be deemed to authorize
Issuer to issue shares of Issuer Common Stock in breach of,
or otherwise breach any of, the provisions of the Merger
Agreement.
(b) In the event of any change in Issuer Common
Stock by reason of a stock dividend, split-up,
recapitalization, combination, subdivision, conversion,
exchange of shares or similar transaction, the type and
number of Option Shares shall be appropriately adjusted and
proper provision shall be made in the agreements governing
any such transaction, so that Grantee shall receive upon
exercise of the Option the number and class of shares, other
securities, property or cash that Grantee would have
received in respect of Issuer Common Stock if the Option had
been exercised in full and the Option Shares had been issued
to Grantee immediately prior to such event or the record
date therefor, as applicable. Whenever the number of Option
Shares is adjusted as provided in this Section 6(b), the
Option Price shall be adjusted by multiplying the Option
Price by a fraction, the numerator of which is equal to the
number of Option Shares purchasable prior to the adjustment
and the denominator of which is equal to the number of
Option Shares purchasable after the adjustment.
7. Replacement Options. (a) In the event that
Issuer shall enter into an agreement (i) to consolidate with
<PAGE>89
or merge into any person, other than Grantee or one of its
subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit
any person, other than Grantee or one of its subsidiaries,
to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger,
the then outstanding shares of Issuer Common Stock shall be
changed into or exchanged for stock or other securities of
Issuer or any other person or cash or any other property or
the then outstanding shares of Issuer Common Stock shall
after such merger represent less than 50% of the outstanding
shares and share equivalents of the merged company or
(iii) to sell or otherwise transfer all or substantially all
its assets to any person, other than Grantee or one of its
subsidiaries, then, and in each such case, the agreement
governing such transaction shall make proper provision so
that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of Grantee, of either
(A) the Acquiring Corporation (as defined below) or (B) any
person that controls the Acquiring Corporation.
(b) The following terms have the meanings
indicated:
(i) "Acquiring Corporation" shall mean (A) the
continuing or surviving corporation of a consolidation
or merger with Issuer (if other than Issuer),
(B) Issuer in a merger in which Issuer is the
continuing or surviving person or (C) the transferee of
all or substantially all of Issuer's assets.
(ii) "Substitute Common Stock" shall mean the
common stock issued by the issuer of the Substitute
Option upon exercise of the Substitute Option.
(iii) "Average Price" shall mean the average
closing price of a share of the Substitute Common Stock
for the one year immediately preceding the
consolidation, merger or sale in question, but in no
event higher than the closing price of the shares of
the Substitute Common Stock on the day preceding such
consolidation, merger or sale; provided that, if Issuer
is the issuer of the Substitute Option, the Average
Price shall be computed with respect to a share of
common stock issued by the person merging into Issuer
<PAGE>90
or by any company which controls or is controlled by
such person, as Grantee may elect.
(c) The Substitute Option shall have the same
terms as the Option, provided that, if the terms of the
Substitute Option cannot, for legal reasons, be the same as
the Option, such terms shall be as similar as possible and
in no event less advantageous to Grantee. The issuer of the
Substitute Option (the "Substitute Option Issuer") shall
also enter into an agreement with Grantee in substantially
the same form as this Agreement, which shall be applicable
to the Substitute Option. Without limiting the generality
of the foregoing, the provisions of Sections 8, 9, 10, 11
and 12 shall apply with respect to the Substitute Option and
any securities for which the Substitute Option becomes
exercisable with the same effect as if all references to
"Issuer" in such Sections were references to "Substitute
Option Issuer", all references to "Issuer Common Stock" were
references to "Substitute Common Stock", all references to
the "Option" were references to the "Substitute Option" and
all references to "Option Shares" were references to
"Substitute Option Shares".
(d) The Substitute Option shall be exercisable
for such number of shares of Substitute Common Stock as is
equal to the then-current Applicable Price (as defined in
Section 8(c)) multiplied by the number of shares of Issuer
Common Stock for which the Option is then exercisable,
divided by the then-current Average Price. The exercise
price of the Substitute Option per share of Substitute
Common Stock shall then be equal to the Option Price
multiplied by a fraction in which the numerator is the
number of shares of Issuer Common Stock for which the Option
is then exercisable and the denominator is the number of
shares of the Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for
more than 19.9% of the shares of Substitute Common Stock
outstanding prior to the exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable
for more than 19.9% of the shares of Substitute Common Stock
outstanding prior to such exercise but for the limitation in
this paragraph (e), the Substitute Option Issuer shall make
a cash payment to Grantee equal to the excess of (i) the
value of the Substitute Option without giving effect to the
limitation in this paragraph (e) over (ii) the value of the
<PAGE>91
Substitute Option after giving effect to the limitation in
this paragraph (e). This difference in value shall be
determined by a nationally recognized investment banking
firm selected by Grantee.
(f) Issuer shall not enter into any transaction
described in Section 7(a) unless the Acquiring Corporation
and any person that controls the Acquiring Corporation
assume in writing all the obligations of Issuer hereunder.
8. Repurchase at the Option of Grantee. (a) At
the request of Grantee at any time during (i) the period
during which the Option is exercisable pursuant to Section 3
or (ii) the period of 30 business days immediately following
the occurrence of either of the events set forth in
clauses (i) and (ii) of the second sentence of Section 3(e)
(but solely as to the shares of Issuer Common Stock with
respect to which the required approval was not received)
(either such period being referred to herein as the
"Repurchase Period"), Issuer (or any successor entity
thereof) shall repurchase from Grantee (A) the Option (or,
in the circumstances set forth in clause (ii) above, that
portion thereof relating to shares of Issuer Common Stock
with respect to which required approvals were not received)
unless the Option has expired or been terminated in
accordance with the terms hereof and (B) all Option Shares
purchased by Grantee pursuant hereto with respect to which
Grantee then has beneficial ownership. The date on which
Grantee exercises its rights under this Section 8 is
referred to as the "Request Date". Such repurchase shall be
at an aggregate price (the "Section 8 Repurchase
Consideration") equal to the sum of:
(1) the aggregate exercise price paid by Grantee
for any Option Shares acquired with respect to which
Grantee then has beneficial ownership;
(2) the excess, if any, of (x) the Applicable
Price for shares of Issuer Common Stock over (y) the
Option Price, with such excess multiplied by the number
of Option Shares with respect to which the Option has
not been exercised; and
(3) the excess, if any, of (x) the Applicable
Price over (y) the Option Price paid (or, in the case
of Option Shares with respect to which the Option has
been exercised but the Closing Date has not occurred,
payable) by Grantee for each Option Share with respect
<PAGE>92
to which the Option has been exercised, with such
excess multiplied by the number of such Option Shares.
(b) If Grantee exercises its rights under this
Section 8, Issuer shall, within 10 business days after the
Request Date, pay the Section 8 Repurchase Consideration to
Grantee in immediately available funds, and Grantee shall
surrender to Issuer the Option and the certificates
evidencing the shares of Issuer Common Stock purchased
thereunder with respect to which Grantee then has beneficial
ownership, and Grantee shall warrant that it has sole record
and beneficial ownership of such shares and that the same
are then free and clear of all Liens. Notwithstanding the
foregoing, to the extent that prior notification to or
approval of the Federal Reserve or other Governmental Entity
is required in connection with the payment of all or any
portion of the Section 8 Repurchase Consideration, Issuer
shall deliver from time to time that portion of the
Section 8 Repurchase Consideration that it is not then so
prohibited from paying and shall promptly file the required
notice or application for approval and shall expeditiously
process the same (and Grantee shall cooperate with Issuer in
the filing of any such notice or application and the
obtaining of any such approval), and the period of time that
otherwise would run pursuant to the preceding sentence for
the payment of the portion of the Section 8 Repurchase
Consideration requiring such notification or approval shall
run instead from the date on which, as the case may be,
(i) any required notification period has expired or been
terminated or (ii) such approval has been obtained and, in
either event, any requisite waiting period shall have
passed. If the Federal Reserve or any other Governmental
Entity disapproves of any part of Issuer's proposed
repurchase pursuant to this Section 8, Issuer shall promptly
give notice of such fact to Grantee and redeliver to Grantee
the Option Shares it is then prohibited from repurchasing,
and Grantee shall have the right to exercise the Option as
to the number of Option Shares for which the Option was
exercisable at the Request Date less the number of shares as
to which payment has been made pursuant to Section 8(a)(2);
provided that if the Option shall have terminated prior to
the date of such notice or shall be scheduled to terminate
prior to the date of such notice or shall be scheduled to
terminate at any time before the expiration of a period
ending on the 30th business day after such date, Grantee
shall nonetheless have the right so to exercise the Option
or exercise its rights under Section 10 until the expiration
of such period of 30 business days. Notwithstanding
<PAGE>93
anything herein to the contrary, Grantee shall be entitled
to exercise its right under this Section 8 on only one
occasion.
(c) For purposes of this Agreement, the
"Applicable Price" means the highest of (i) the highest
price per share at which a tender offer or exchange offer
has been made for shares of Issuer Common Stock after the
date hereof and on or prior to the Request Date (or any
other applicable determination date), (ii) the price per
share to be paid by any third party for shares of Issuer
Common Stock or the consideration per share to be received
by holders of Issuer Common Stock, in each case pursuant to
an agreement with Issuer for a merger or other business
combination entered into on or prior to the Request Date (or
any other applicable determination date), (iii) the highest
price per share paid by any third party to acquire from a
stockholder of Issuer, in one transaction or in a series of
related transactions, an aggregate amount of Issuer Common
Stock of 5% or more of the outstanding Issuer Common Stock
or (iv) the highest bid price per share of Issuer Common
Stock as quoted on the Nasdaq over-the-counter quotations
system or, if not so quoted, on the principal trading market
on which such shares are traded as reported by a recognized
source during the 60 business days preceding the Request
Date (or any other applicable determination date). If the
consideration to be offered, paid or received pursuant to a
transaction described in either clause (i) or (ii) above
shall be other than cash, the value of such consideration
shall be determined in good faith by an independent
nationally recognized investment banking firm selected by
Grantee and reasonably acceptable to Issuer, which
determination shall be conclusive for all purposes of this
Agreement.
9. Repurchase at the Option of Issuer.
(a) Except to the extent that Grantee shall have previously
exercised its rights under Section 8, at the request of
Issuer during the six-month period commencing 15 months
following the first occurrence of a Triggering Event, Issuer
may repurchase from Grantee, and Grantee shall sell to
Issuer, all (but not less than all) the shares of Issuer
Common Stock acquired by Grantee pursuant hereto and with
respect to which Grantee has beneficial ownership at the
time of such repurchase at a price equal to the greater of
(i) 110% of the Current Market Price (as defined below) or
(ii) the sum of (A) the Option Price in respect of the
shares so acquired and (B) Grantee's pre-tax per share
<PAGE>94
carrying cost (as defined below), multiplied in the case of
either clause (i) or (ii) above by the number of shares so
acquired (the "Section 9 Repurchase Consideration");
provided that Grantee, within 30 days following Issuer's
notice of its intention to purchase shares pursuant to this
Section 9, may deliver an Offeror's Notice (as defined in
Section 11) pursuant to Section 11, in which case the
provisions of Section 11 and not those of this Section 9
shall control; and provided further that Issuer's rights
under this Section 9 shall be suspended (with any such
rights being extended accordingly) during any period when
the exercise of such rights would subject Grantee to
liability pursuant to Section 16(b) of the Exchange Act by
reason of Grantee's purchase of shares of Issuer Common
Stock pursuant to this Agreement.
(b) If Issuer exercises its rights under this
Section 9 and Grantee does not deliver an Offeror's Notice
or Grantee does not sell the shares to a third party
pursuant thereto, Issuer shall, within 10 business days
after the expiration of the 30-day period referred to in
paragraph (a) above or, if applicable, upon abandonment of
the transaction covered by the Offeror's Notice, pay the
Section 9 Repurchase Consideration in immediately available
funds, and Grantee shall surrender to Issuer the
certificates evidencing the shares of Issuer Common Stock
purchased hereunder with respect to which Grantee then has
beneficial ownership, and Grantee shall warrant that it has
sole record and beneficial ownership of such shares and that
the same are then free and clear of all Liens.
(c) As used herein, (i) "Current Market Price"
means the average closing bid price per share of Issuer
Common Stock as quoted on the Nasdaq over-the-counter
quotations system or, if not so quoted, on the principal
trading market on which such shares are traded as reported
by a recognized source for the 10 business days preceding
the date of the Issuer's request for repurchase pursuant to
this Section 9 and (ii) "Grantee's pre-tax per share
carrying cost" shall be the amount equal to the interest on
the aggregate Option Price paid for the shares of Issuer
Common Stock purchased from the date of purchase to the date
of repurchase at the rate of interest announced by Parent's
New York branch as its prime or base lending or reference
rate during such period, less any dividends received on the
shares so purchased, divided by the number of shares so
purchased.
<PAGE>95
10. Registration Rights; Listing. (a) Issuer
shall, if requested by Grantee at any time and from time to
time (i) within three years of the first exercise of the
Option or (ii) for 30 business days following the occurrence
of either of the events set forth in clauses (i) and (ii) of
the second sentence of Section 3(e) or receipt by Grantee of
official notice that an approval of the Federal Reserve or
any other Governmental Entity required for a repurchase as
contemplated by Section 8(b) would not be issued or granted
(but solely as to the shares of Issuer Common Stock or
portion of the Option with respect to which the required
approval was not received), as expeditiously as practicable
prepare and file up to two registration statements under the
Securities Act if necessary in order to permit the sale or
other disposition of the shares of Issuer Common Stock or
other securities that have been acquired by or are issuable
to Grantee upon exercise of the Option in accordance with
the intended method of sale or other disposition stated by
Grantee, including a "shelf" registration statement under
Rule 415 under the Securities Act or any successor
provision. Issuer shall use its best efforts to cause each
such registration statement to become effective and to
remain effective for such period not in excess of 180 days
from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sale
or other disposition. Issuer shall also use its best
efforts to qualify such shares or other securities under any
applicable state securities laws. Grantee agrees to use all
reasonable efforts to cause, and to cause any underwriters
or agents of any sale or other disposition to cause, any
sale or other disposition pursuant to such registration
statement to be effected on a widely distributed basis so
that upon consummation thereof no purchaser or transferee
shall own beneficially more than 2% of the then outstanding
voting power of Issuer. In the event that Grantee requests
Issuer to file a registration statement following the
failure to obtain a required approval for an exercise of the
Option as described in Section 3(e), the closing of the sale
or other disposition of Issuer Common Stock or other
securities pursuant to such registration statement shall
occur substantially simultaneously with the exercise of the
Option, and Grantee shall be entitled to cause the Option
Shares to be issued directly to the underwriters or agents
named in such registration statement. The obligations of
Issuer hereunder to file a registration statement and to
maintain its effectiveness may be suspended for one or more
periods of time that do not exceed 60 days in the aggregate
for all such periods if the Board of Directors of Issuer
<PAGE>96
shall have determined that the filing of such registration
statement or the maintenance of its effectiveness would
require disclosure of nonpublic information that would
materially and adversely affect Issuer. Any registration
effected under this Section 10 shall be at Issuer's expense,
except for underwriting discounts or commissions, brokers'
fees and the fees and disbursements of Grantee's counsel
related thereto. Grantee shall provide all information
reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. If requested
by Grantee in connection with any such registration, Issuer
shall become a party to any underwriting agreement relating
to the sale of such shares or other securities, but only to
the extent of obligating itself in respect of
representations, warranties, covenants, indemnities,
contribution and other agreements customarily included in
such underwriting agreements for the issuer. If, during the
time periods referred to in the first sentence of this
Section 10, Issuer effects a registration under the
Securities Act of Issuer Common Stock for its own account or
for any other stockholders of Issuer (other than on Form S-4
or S-8, or any successor form), it shall allow Grantee the
right to participate in such registration, and such
participation shall not affect the obligation of Issuer to
effect two registration statements for Grantee under this
Section 10; provided that, if the managing underwriters of
such offering advise Issuer in writing that in their opinion
the number of shares of Issuer Common Stock requested to be
included in such registration exceeds the number which can
be sold in such offering, Issuer shall include the shares
requested to be included therein by Grantee pro rata with
the shares intended to be included therein by Issuer or
other stockholders, taken as a single group.
(b) If Issuer Common Stock or any other
securities to be acquired upon exercise of the Option are
then listed on a national or regional securities exchange or
quoted on a national or regional quotation system, Issuer,
upon request of Grantee, shall use its best efforts to make
any filings and obtain any approvals necessary in order to
cause the Option Shares or other securities acquired upon
exercise of the Option to be so listed or quoted.
11. First Refusal. At any time after the first
occurrence of a Triggering Event and prior to the later of
(a) expiration of 24 months immediately following the first
purchase of shares of Issuer Common Stock pursuant to the
Option and (b) the termination of the Option pursuant to
<PAGE>97
Section 3(a), if Grantee shall desire to sell, assign,
transfer or otherwise dispose of all or any of the shares of
Issuer Common Stock or other securities acquired by it
pursuant to the Option, it shall give Issuer written notice
of the proposed transaction (an "Offeror's Notice"),
identifying the proposed transferee, accompanied by a copy
of a binding offer to purchase such shares or other
securities from such transferee and setting forth the terms
of the proposed transaction. An Offeror's Notice shall be
deemed an offer by Grantee to Issuer, which may be accepted
within 10 business days of the receipt of such Offeror's
Notice, on the same terms and conditions and at the same
price at which Grantee is proposing to transfer such shares
or other securities to such transferee. The purchase of any
such shares or other securities by Issuer shall be settled
within 10 business days of the date of the acceptance of the
offer and the purchase price shall be paid to Grantee in
immediately available funds; provided that, if prior
notification to or approval of the Federal Reserve or any
other Governmental Entity is required in connection with
such purchase, Issuer shall promptly file the required
notice or application for approval and shall expeditiously
process the same (and Grantee shall cooperate with Issuer in
the filing of any such notice or application and the
obtaining of any such approval) and the period of time that
otherwise would run pursuant to this sentence shall run
instead from the date on which, as the case may be, (i) any
required notification period has expired or been terminated
or (ii) such approval has been obtained and, in either
event, any requisite waiting period shall have passed. In
the event of the failure or refusal of Issuer to purchase
all the shares or other securities covered by an Offeror's
Notice or if the Federal Reserve or any other Governmental
Entity disapproves Issuer's proposed purchase of such shares
or other securities, Grantee may, within 60 days from the
date of the Offeror's notice (subject to any necessary
extension for regulatory notification, approval or waiting
periods), sell all, but not less than all, of such shares or
other securities to the proposed transferee at no less than
the price specified, and on terms no more favorable than
those specified, in the Offeror's Notice. The requirements
of this Section 11 shall not apply to (A) any disposition as
a result of which the proposed transferee would own
beneficially not more than 2% of the outstanding voting
power of Issuer, (B) any disposition of Issuer Common Stock
or other securities by a person to whom Grantee has assigned
its rights under the Option with the consent of Issuer,
(C) any sale by means of a public offering registered under
<PAGE>98
the Securities Act in which steps are taken to reasonably
assure that no purchaser will acquire securities
representing more than 2% of the outstanding voting power of
Issuer or (D) any transfer to Sub or to any other wholly
owned subsidiary of Parent that agrees in writing to be
bound by the terms hereof.
12. Division of Option. This Agreement (and the
Option granted hereby) are exchangeable, without expense, at
the option of Grantee, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other
Agreements providing for Options of different denominations
entitling the holder thereof to purchase in the aggregate
the same number of shares of Issuer Common Stock purchasable
hereunder. The terms "Agreement" and "Option" as used
herein include any Stock Option Agreements and related
Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the
case of loss, theft, or destruction) of reasonably
satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date.
Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part
of Issuer, whether or not the Agreement so lost, stolen,
destroyed, or mutilated shall at any time be enforceable by
anyone.
13. Assignment. Neither this Agreement nor any
of the rights, interests or obligations under this Agreement
or the Option shall be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Grantee
may assign in whole or in part its rights and obligations
hereunder to Sub or to any other direct or indirect wholly
owned subsidiary of Grantee without the consent of Issuer.
Subject to the preceding sentence, the terms and conditions
of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective
successors and permitted assigns.
14. Further Assurances. Each party hereto will
use its best efforts to make all filings with, and to obtain
consent of, all third parties and governmental authorities
necessary or advisable to the consummation of the
transactions contemplated by this Agreement, including
<PAGE>99
applying to the Federal Reserve under the BHC Act for
approval to acquire the shares issuable hereunder. In the
event of any exercise of the Option by Grantee, Issuer,
Grantee and Sub shall execute and deliver all other
documents and instruments and take all other action that may
be reasonably necessary or advisable in order to consummate
the transactions provided for by such exercise.
15. Specific Performance. The parties hereto
acknowledge that damages would be an inadequate remedy for a
breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by
either party hereto through specific performance, injunctive
relief or other equitable relief. This provision is without
prejudice to any other rights that the parties hereto may
have for any failure to perform this Agreement.
16. Severability. If any term, provision,
covenant or restriction contained in this Agreement is held
by a court or a Federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in
full force and effect and shall in no way be affected,
impaired or invalidated. If for any reason such court or
regulatory agency determines that Grantee is not permitted
to acquire, or Issuer is not permitted to repurchase
pursuant to Section 8, the full number of Option Shares
provided in Section 1(a) hereof (as adjusted pursuant to
Section 6), it is the express intention of Issuer to allow
Grantee to acquire or to require Issuer to repurchase such
lesser number of Option Shares as may be permissible without
any amendment or modification hereof.
17. Notices. All notices, requests, claims,
demands and other communications hereunder shall be deemed
to have been duly given when delivered in the manner and to
the addresses specified in accordance with Section 8.02 of
the Merger Agreement.
18. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Michigan without regard to any applicable
principles of conflicts of laws.
19. Counterparts. This Agreement may be executed
in one or more counterparts, all of which shall be
considered one and the same agreement and shall become
<PAGE>100
effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
20. Expenses. Except as otherwise expressly
provided herein, each of the parties hereto shall bear and
pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
21. Limitation on Maximum Gain. Notwithstanding
anything to the contrary contained herein or in the Merger
Agreement, the aggregate amount of gain realized by Grantee
pursuant to this Stock Option Agreement from Issuer (or the
Substitute Option Issuer), when added to the Termination Fee
(as defined in Section 5.07(b) of the Merger Agreement), if
any, received by Grantee pursuant to such Section 5.07(b),
shall not in the aggregate exceed U.S. $75,000,000, and, in
the event Grantee realizes gain in excess of such amount
hereunder from Issuer (or the Substitute Option Issuer) or
under the Termination Fee, Grantee hereby undertakes
promptly to pay back to Issuer, by wire transfer of
immediately available funds, the amount of such excess.
22. Waiver and Amendment. Any provision of this
Agreement may be waived at any time by the party that is
entitled to the benefits of such provision. This Agreement
may not be modified, amended, altered or supplemented except
upon the execution and delivery of a written agreement
executed by the parties hereto.
23. Entire Agreement; No Third-Party
Beneficiaries. Except as otherwise expressly provided
herein or in the Merger Agreement, this Agreement (and the
Merger Agreement and the other documents and instruments
referred to herein and therein) contains the entire
agreement between the parties with respect to the
transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written
or oral. Nothing in this Agreement, expressed or implied,
is intended to confer upon any party, other than the parties
hereto, and their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities
<PAGE>101
under or by reason of this Agreement, except as expressly
provided herein.
IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed on its behalf by its officers
thereunto duly authorized, all as of the day and year first
above written.
NATIONAL AUSTRALIA BANK
LIMITED A.C.N. 004044937,
by
/s/ Bruce S. McComish
------------------------
Name: Bruce S. McComish
Title: Chief Financial
Officer
MNC ACQUISITION CO.
by
/s/ Bruce S. McComish
-------------------------
Name: Bruce S. McComish
Title: Chairman, President
and Chief Executive
Officer
MICHIGAN NATIONAL CORPORATION
by
/s/ Robert J. Mylod
----------------------------
Name: Robert J. Mylod
Title: Chairman and Chief
Executive Officer
