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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
August 29, 1995
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(Date of Report)
National City Corporation
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(Exact name of registrant as specified in its charter)
Delaware 1-10074 34-1111088
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1900 East Ninth Street, Cleveland, Ohio 44114
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(Address of principal executive offices) (Zip Code)
216-575-2000
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(Registrant's telephone number, including area code)
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Item 5. Other Events
------------
National City Corporation (the "Registrant") and Integra
Financial Corporation ("ITG") jointly announced on August 28, 1995, that they
had entered into a definitive Agreement and Plan of Merger (the "Merger
Agreement") providing for a merger of ITG into Registrant. Under the terms of
the Merger Agreement, the shareholders of ITG will receive two shares of
Registrant's Common Stock per share of ITG Common Stock.
Completion of the Merger is subject to certain conditions,
including (i) the approval of the shareholders of ITG, (ii) the approval of the
stockholders of Registrant, (iii) the approval of the appropriate state and
federal bank regulators and other government agencies, (iv) the receipt by
Registrant and ITG of a letter from Ernst & Young that the transaction
contemplated by the Merger Agreement qualifies for pooling-of-interest
accounting treatment, (v) the receipt by registrant and ITG of an opinion from
Buchanan, Ingersoll Professional Corporation that the merger will be treated
for federal income tax purposes as a tax free organization and (vi) other
conditions to closing customary of a transaction of this type.
Contemporaneously with the execution of the Merger Agreement,
Registrant and ITG entered into two option agreements. The first option
agreement provides Registrant the right to purchase a number of shares of ITG
Common Stock equal to 19.9% of ITG's outstanding Common Stock. The price per
share of ITG Common Stock upon exercise of the option is $51.875. The other
option grants to ITG the right to purchase a number of shares of Registrant's
Common Stock equal to 8.2% of Registrant's outstanding Common Stock. The price
per share of Registrant's Common Stock upon exercise of the option is $31.625.
The options granted under the above option agreements are exercisable only upon
the occurrence of certain triggering events which are defined in the respective
stock option agreements. No triggering event has occurred at this time for
either stock option.
References made to the news release, dated August 28, 1995, a
copy of which is filed as Exhibit 99.1 to this current report on Form 8-K and
is incorporated herein by reference. Reference is also made to the Agreement
and Plan of Merger, dated August 27, 1995, and the two stock option agreements,
dated as of August 27, 1995, composite conformed copies of which are filed as
exhibits 2.1, 2.2, and 2.3, respectively, to this report on Form 8-K for a
complete description of the terms of the merger.
The above summary descriptions of the Merger Agreement and the
stock option agreements are qualified in their entirety by reference to the
text of the documents, which are included as exhibits to this Form 8-K and are
incorporated herein by reference.
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Item 7. Financial Statements, Pro Forma Financial Information and
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Exhibits
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a) Financial Statements of business acquired: None.
-----------------------------------------
b) Pro forma financial information: None.
-------------------------------
c) Exhibits:
--------
2.1 Agreement and Plan of Merger, dated as of
August 27, 1995 by and between National City Corporation and
Integra Financial Corporation.
2.2 Stock Option Agreement, dated as of August 27,
1995 by and between National City Corporation and Integra
Financial Corporation.
2.3 Stock Option Agreement, dated as of August 27,
1995 by and between National City Corporation and Integra
Financial Corporation.
99.1 Press Release dated August 28, 1995
incorporated herein by reference.
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 29, 1995 By \s\ David L. Zoeller
--------------------------
David L. Zoeller
Senior Vice President and
General Counsel
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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
----------------------------
by and between
NATIONAL CITY CORPORATION,
and
INTEGRA FINANCIAL CORPORATION
dated as of August 27, 1995
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TABLE OF CONTENTS
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I. THE MERGER
1.1 Merger 1
1.2 Effective Time 1
1.3 Effect of Merger 2
1.4 Certificate of Incorporation and By-laws 2
1.5 Directors and Officers 2
(a) Surviving Corporation 2
(b) NCC 2
1.6 Additional Actions 2
II. CONVERSION OF SHARES
2.1 Conversion of Shares 3
2.2 Assumption of Employee Stock Options 4
2.3 Exchange of Certificates
(a) Exchange Agent 5
(b) Notice of Exchange 5
(c) Transfer 5
(d) Right to Merger Consideration 6
(e) Distribution with Respect to Unexchanged
Certificates 6
(f) Voting With Respect to Unexchanged Certificates 7
(g) No Fractional Shares 7
2.4 Closing of the Company's Transfer Books 7
2.5 Changes in NCC Common Stock 7
III. REPRESENTATIONS AND WARRANTIES OF NCC
3.1 Corporate Organization 8
3.2 Authority 8
3.3 Capitalization 8
3.4 Subsidiaries 9
3.5 Information in Disclosure Documents,
Registration Statement, Etc. 10
3.6 Consents and Approvals; No Violation 11
3.7 Reports and Financial Statements 12
3.8 Taxes 12
3.9 Employee Plans 13
3.10 Material Contracts 14
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3.11 Absence of Certain Changes or Events 15
3.12 Litigation 15
3.13 Compliance with Laws and Orders 15
3.14 Agreements with Bank Regulators, Etc. 15
3.15 NCC Ownership of Stock 16
3.16 Accounting Matters 16
3.17 Fees 16
3.18 NCC and Acquisition Action 16
3.19 Vote Required 16
3.20 Material Interests of Certain Persons 17
3.21 Environmental Matters 17
IV. REPRESENTATIONS AND WARRANTIES OF IFC
4.1 Corporate Organization 19
4.2 Authority 19
4.3 Capitalization 20
4.4 Subsidiaries 20
4.5 Information in Disclosure Documents,
Registration Statement, Etc. 21
4.6 Consent and Approvals; No Violation 21
4.7 Reports and Financial Statements 22
4.8 Taxes 22
4.9 Employee Plans 23
4.10 Material Contracts 24
4.11 Absence of Certain Changes or Events 25
4.12 Litigation 25
4.13 Compliance with Laws and Orders 25
4.14 Agreements with Bank Regulators, Etc. 26
4.15 Accounting Matters 26
4.16 Fees 26
4.17 Company Action 26
4.18 Vote Required 27
4.19 Material Interests of Certain Persons 27
4.20 Environmental Matters 27
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V. COVENANTS
5.1 Acquisition Proposals 27
5.2 Interim Operations of IFC 28
(a) Conduct of Business 28
(b) Articles and By-laws 28
(c) Capital Stock 28
(d) Dividends 29
(e) Employee Plans, Compensation, Etc. 29
(f) Certain Policies 30
5.3 Interim Operations of NCC 30
5.4 Employee Matters 30
(a) Benefit Agreements 30
(b) Retirement Plans 30
(c) General 30
5.5 Access and Information 31
5.6 Certain Filings, Consents and Arrangements 31
5.7 State Takeover Statutes 32
5.8 Indemnification and Insurance 32
(a) Indemnification 32
(b) Insurance 32
5.9 Additional Agreements 32
5.10 Publicity 33
5.11 Registration Statement 33
5.12 Securities Act; Pooling-of-Interests 33
5.13 Stock Exchange Listings 34
5.14 Proxy 34
5.15 Stockholders' Meetings 35
5.16 Pooling-of-Interests and Tax-Free Reorganization Treatment 35
5.17 Provision of Shares 35
VI. CLOSING MATTERS
6.1 The Closing 35
6.2 Documents and Certificates 36
VII. CONDITIONS
7.1 Conditions to Each Party's Obligations to Effect the Merger 37
7.2 Conditions to Obligation of IFC to Effect the Merger 38
7.3 Conditions to Obligation of NCC to Effect the
Merger 38
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VIII. MISCELLANEOUS
8.1 Termination 39
8.2 Non-Survival of Representations, Warranties and
Agreements 39
8.3 Waiver and Amendment 40
8.4 Entire Agreement 40
8.5 Applicable Law; Consent to Jurisdiction 40
8.6 Certain Definitions; Headlines 40
8.7 Notices 41
8.8 Counterparts 43
8.9 Parties in Interest; Assignment 43
8.10 Expenses 43
8.11 Enforcement of the Agreement 44
8.12 Severability 44
Signatures 44
Index to Definitions i
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INDEX TO DEFINITIONS
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DEFINITIONS SECTIONS
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Acquisition Transaction Section 5.1
Affiliate Section 5.12
Agreement Introduction
Articles of Merger Section 1.2
BCL Section 1.1
BHCA Section 3.1
Benefit Agreements Section 3.10
Certificate Section 2.3(a)
Closing Section 6.1
Closing Date Section 6.1
Code Introduction
Commission Section 3.5
Consents Section 7.1(c)
Constituent Corporations Section 1.2
Control Section 8.6(ii)
Certificate of Merger Section 1.2
DGCL Section 1.1
DPC Shares Section 2.1(a)
ERISA Section 3.9
Effective Time Section 1.3
Environmental Law Section 3.21
Exchange Act Section 3.5
Exchange Agent Section 2.3(a)
FRB Section 3.6
Fed Approval Date Section 8.6
Governmental Entity Section 3.6
HSR Act Section 3.6
Hazardous Substance Section 3.21
IRS Section 3.9
Indemnitees Section 5.8
Loan Portfolio Properties and Other Properties Owned Section 3.21
IFC Introduction
IFC Common Stock Section 2.1(a)
IFC Contracts Section 4.10
IFC Disclosure Letter Section 4.3
IFC Employee Plans Section 4.9
IFC Meeting Section 5.15(a)
IFC Option Plans Section 2.2
IFC Reports Section 4.7
IFC Retirement Plan Section 5.4(b)
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DEFINITIONS SECTIONS
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IFC Subsidiaries Section 4.4
Market Price Section 2.3(g)
Material Adverse Effect Section 3.1
Merger Section 1.1
Merger Consideration Section 2.1(a)
NCC Introduction
NCC Common Stock Section 2.1(a)
NCC Contracts Section 3.10
NCC Disclosure Letter Section 1.4
NCC Employee Plans Section 3.9
NCC Meeting Section 5.15
NCC Preferred Stock Section 3.3
NCC Reports Section 3.7
NCC Retirement Plan Section 5.4(b)
Option Agreement Section 4.3
PBGC Section 3.9
Person Section 8.6
Plan of Merger Section 1.2
Pooling-of-Interests Introduction
Proxy Statement Section 3.5
Registration Statement Section 3.5
SBIA Section 3.6
Securities Act Section 3.5
Significant Subsidiaries Section 3.4
State Entities Section 3.6
Subsidiary Section 8.6
Surviving Corporation Section 1.3
Trust Account Shares Section 2.1(a)
Unexercised Options Section 2.2
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of August 27, 1995
("Agreement"), is made by and between National City Corporation, a Delaware
corporation ("NCC") and Integra Financial Corporation, a Pennsylvania
corporation ("IFC").
WHEREAS, NCC and IFC have each determined that it is in the best
interests of their respective stockholders for IFC to merge with and into NCC
upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the respective Boards of Directors of NCC and IFC have each
approved this Agreement and the consummation of the transactions contemplated
hereby and approved the execution and delivery of this Agreement;
WHEREAS, for Federal income tax purposes, it is intended that the
merger shall qualify as a reorganization under the provisions of Section 368
of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, for accounting purposes, it is intended that the merger shall
be accounted for as a "pooling-of-interests"; and
WHEREAS, as a condition to, and contemporaneously with the
execution of this Agreement, the parties have entered into the Option
Agreement (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, the parties
hereto hereby agree as follows:
I. THE MERGER
----------
1.1 MERGER. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 1.3), IFC will be merged with
and into NCC and the separate corporate existence of the IFC will thereupon
cease (the "Merger") in accordance with the applicable provisions of the
Pennsylvania Business Corporation Law ("BCL") and the Delaware General
Corporation Law ("DGCL").
1.2 EFFECTIVE TIME. As soon as practicable after satisfaction
or waiver of all conditions to the Merger, NCC and IFC (the "Constituent
Corporations") shall cause a certificate of merger complying with the
requirements of the DGCL (the " Certificate of Merger") to be filed with the
Secretary of State of the State of Delaware and the Articles of Merger to be
filed with the
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Secretary of State of the Commonwealth of Pennsylvania ("Articles of Merger")
pursuant to the BCL. The Merger will become effective at the time the later
of the following to occur: (a) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware and (b) the filing of the
Articles of Merger with Secretary of State of the Commonwealth of Pennsylvania
or such later time as shall be specified in such filings ("Effective Time").
1.3 EFFECT OF MERGER. The Merger will have the effects specified in
BCL and DGCL. Without limiting the generality of the foregoing, NCC will be
the surviving corporation in the Merger (sometimes hereinafter referred to as
the "Surviving Corporation") and will continue to be governed by the laws of
the State of Delaware, and the separate corporate existence of NCC and all
of its rights, privileges, powers and franchises, public as well as
private, and all its debts, liabilities and duties as a corporation
organized under the DGCL, will continue unaffected by the Merger.
1.4 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Certificate of
Incorporation and By-laws of NCC in effect immediately prior to the Effective
Time, which shall be in the form set forth in a disclosure letter executed by
NCC and dated and delivered by NCC to IFC as of the date hereof ("NCC
Disclosure Letter"), shall be the Certificate of Incorporation and By-laws of
the Surviving Corporation, until amended in accordance with applicable law.
1.5 DIRECTORS AND OFFICERS.
(a) SURVIVING CORPORATION. The directors and officers of NCC
immediately prior to the Effective Time will be the directors and
officers, respectively, of the Surviving Corporation, from and
after the Effective Time, until their successors have been duly
elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the terms of the
Surviving Corporation's Certificate of Incorporation
and By-laws and the DGCL.
(b) NCC. Promptly after the Effective Time, in accordance
with the Bylaws of NCC, the Board of Directors of NCC shall increase
its size to such number as is necessary to create 4 vacancies and
shall elect 4 IFC directors to fill such vacancies. The identity of
the IFC directors to be elected to NCC's Board of Directors shall be
mutually agreed upon by IFC and NCC prior to the Effective
Time.
1.6 ADDITIONAL ACTIONS. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any further
deeds, assignments or assurances in law or any other acts are necessary or
desirable to (i) vest, perfect or confirm, of record or otherwise,
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in the Surviving Corporation its right, title or interest in, to or under
any of the rights, properties or assets of IFC, or (ii) otherwise carry out
the purposes of this Agreement, IFC and its officers and directors shall be
deemed to have granted to the Surviving Corporation an irrevocable power of
attorney to execute and deliver all such deeds, assignments or assurances in
law or any other acts as are necessary or desirable to (i) vest, perfect or
conform, of record or otherwise, in the Surviving Corporation its right,
title or interest in, to or under any of the rights, properties or assets of
IFC or (ii) otherwise carry out the purposes of this Agreement, IFC and its
officers and directors shall be deemed to have granted to the Surviving
Corporation an irrevocable power of attorney to execute and deliver all
such deeds, assignments or assurances in law and to all acts necessary or
proper to vest, perfect or confirm title to and possession of such rights,
properties or assets in the Surviving Corporation and otherwise to carry out
the purposes of this Agreement, and the officers and directors of the
Surviving Corporation are authorized in the name of IFC or otherwise to take
any and all such action.
II. CONVERSION OF SHARES
--------------------
2.1 CONVERSION OF SHARES. Subject to Section 2.3, at the Effective
Time,
(a) each then-outstanding share of common stock, par value
$1.00 per share, of IFC ("IFC Common Stock") not owned by NCC or any
direct or indirect wholly-owned subsidiary of NCC (except for any
such shares of IFC Common Stock held in trust accounts, managed
accounts or in any similar manner as trustee or in a fiduciary
capacity ("Trust Account Shares") or acquired in satisfaction of debts
previously contracted ("DPC Shares")) other than those shares of IFC
Common Stock held in the treasury of the IFC, will be canceled,
retired and converted into two shares of common stock, par value
$4.00 per share, of NCC ("NCC Common Stock"). The number of shares
of NCC Common Stock that each share of IFC Common Stock will be
converted into is sometimes referred to herein as the "Merger
Consideration";
(b) each then-outstanding share of IFC Common Stock owned
by NCC or any direct or indirect wholly-owned subsidiary of NCC
(except for any shares that are Trust Account Shares or DPC Shares)
will be canceled and retired;
(c) each share of IFC Common Stock issued and held in IFC's
treasury will be canceled and retired; and
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(d) each share of common stock, par value $4.00 per share,
of NCC issued and outstanding immediately prior to the Effective
Time shall continue to be an issued and outstanding share of common
stock, par value $4.00 per share, of the Surviving Corporation from
and after the Effective Time.
2.2 ASSUMPTION OF EMPLOYEE AND DIRECTOR STOCK OPTIONS. Except as
expressly provided in this Section 2.2, all rights under any stock option
granted by IFC or its predecessors pursuant to Integra Management Incentive
Plan, Integra Employee Stock Option Plan, Equimark's 1986 Stock Option Plan,
(Equimark's)1987 Performance Stock Option Plan, (Equimark's) 1987
Non-Qualified Stock Option Plan the Equimark Executive Officer Non-Qualified
Stock Option Plan Union National Corporation Employee Stock Option Plan and
Pennbancorp Employee Stock Option Plan, (collectively, the "IFC Option
Plans") that remains unexercised immediately prior to the Effective Time
("Unexercised Options") shall be assumed by NCC, but shall thereafter
represent the right to acquire that number of shares of NCC Common Stock to
which the optionee would have been entitled pursuant to the conversion ratio
provided for in Section 2.1(a) ("Conversion Ratio") if immediately prior to
the Merger the optionee had fully exercised the option and had been a
shareholder of record of IFC. The option price per share of NCC Common Stock
shall be equal to the exercise price per share of the IFC Common Stock
under each option divided by the Conversion Ratio necessary to assure that the
rights and benefits of the optionee under such option shall not be increased
or decreased by reason of this Section 2.2, and, in addition, each option which
is an incentive stock option shall be adjusted as required by section 424 of
the Internal Revenue Code of 1986 (the "Code"), and the regulations
promulgated thereunder so as not to constitute a modification, extension or
renewal of the option within the meaning of section 424(h) of the Code. On
or before the Effective Time NCC shall file, and maintain the effectiveness
of, a registration statement with the Securities and Exchange Commission
covering the Unexercised Options and the sale of the NCC Common Stock issued
upon exercise of Unexercised Options. At the Effective Time all IFC Option
Plans shall be terminated with respect to the granting of any additional
options or option rights. The duration and other terms of the options shall
be the same as the original IFC options, except that reference to IFC shall
be deemed to be references to NCC.
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2.3 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Effective Time, NCC
shall designate National City Bank to act as exchange agent (the
"Exchange Agent") and Integra Trust Company National Association to
act as forwarding agent in connection with the Merger pursuant to
an exchange agent agreement providing for, among other things, the
matters set forth in this Section 2.3. Except as set forth herein,
from and after the Effective Time each holder of a certificate that
immediately prior to the Effective Time represented outstanding shares
of IFC Common Stock ("Certificate") shall be entitled to receive in
exchange therefor, upon surrender thereof to the Exchange Agent, the
Merger Consideration for each share of IFC Common Stock so
represented by the Certificate surrendered by such holder thereof.
The certificates representing shares of NCC Common Stock which
constitute the Merger Consideration shall be properly issued and
countersigned and executed and authenticated, as appropriate.
(b) NOTICE OF EXCHANGE. Promptly after the Effective Time,
NCC and the Surviving Corporation shall cause the Exchange Agent to
mail and/or make available to each record holder of a Certificate a
notice and letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificate
shall pass, only upon proper delivery of the Certificate to the
Exchange Agent or its forwarding agent) advising such holder of the
effectiveness of the Merger and the procedures to be used in
effecting the surrender of the Certificate for exchange therefor.
Upon surrender to the Exchange Agent of a Certificate, together
with such letter of transmittal duly executed and completed in
accordance with the instructions thereon, and such other documents as
may reasonably be requested, the Exchange Agent shall promptly deliver
to the person entitled thereto the appropriate Merger Consideration
for each share of IFC Common Stock so represented by the Certificate
surrendered by such holder thereof, and such Certificate shall
forthwith be canceled.
(c) TRANSFER. If delivery of all or part of the Merger
Consideration is to be made to a person other than the person in
whose name a surrendered Certificate is registered, it shall be a
condition to such delivery or exchange that the Certificate
surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the person requesting such
delivery or exchange shall have paid any transfer and other taxes
required by reason of such delivery or exchange in a name other
than that of the registered holder
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of the Certificate surrendered or shall have established to the
reasonable satisfaction of the Exchange Agent that such tax either
has been paid or is not payable.
(d) RIGHT TO MERGER CONSIDERATION. Subject to Subsection
2.3(e), until surrendered and exchanged in accordance with this
Section 2.3, each Certificate shall, after the Effective Time,
represent solely the right to receive the Merger Consideration,
multiplied by the number of shares of IFC Common Stock evidenced by
such Certificate, together with any dividends or other
distributions as provided in Sections 2.3(e) and 2.3(f), and shall
have no other rights. From and after the Effective Time, NCC and
Surviving Corporation shall be entitled to treat such Certificates
that have not yet been surrendered for exchange as evidencing the
ownership of the aggregate Merger Consideration into which the shares
of IFC Common Stock represented by such Certificates may be
converted, notwithstanding any failure to surrender such
Certificates. One hundred eighty (180) days following the Effective
Time, the Exchange Agent shall deliver to the Surviving Corporation
any shares of NCC Common Stock and funds (including any interest
received with respect thereto) which NCC has made available to the
Exchange Agent and which have not been disbursed to holders of
Certificates, and thereafter such holders shall be entitled to
look to the Surviving Corporation (subject to abandoned property,
escheat or other similar laws) with respect to the shares of NCC
Common Stock and cash in lieu of fractional shares deliverable or
payable upon due surrender of their Certificates. Neither Exchange
Agent nor any party hereto shall be liable to any holder of shares
of IFC Common Stock for any Merger Consideration (or dividends,
distributions or interest with respect thereto) delivered to a public
official pursuant to any applicable abandoned property, escheat
or similar law.
(e) DISTRIBUTION WITH RESPECT TO UNEXCHANGED CERTIFICATES.
Whenever a dividend or other distribution is declared by NCC on the
NCC Common Stock, the record date for which is at or after the
Effective Time, the declaration shall include dividends or other
distributions on all shares issuable pursuant to this Agreement,
provided that no dividends or other distributions declared or made
with respect to NCC Common Stock shall be paid to the holder of
any unsurrendered Certificate with respect to the share of NCC
Common Stock represented thereby until the holder of such Certificate
shall surrender such Certificate in accordance with this Article II.
The Surviving Corporation shall pay any dividends or make any other
distributions with a record date prior to the
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Effective Time which may have been declared or made by the IFC on
IFC 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.
(f) LOST OR DESTROYED EXCHANGED CERTIFICATES. In the event
that any Certificate shall have been lost, stolen or destroyed, the
Exchange Agent shall deliver in exchange for such lost, stolen or
destroyed certificate, upon the making of an affidavit of that fact
by the holder thereof in form satisfactory to the Exchange Agent, the
Merger Consideration, as may be required pursuant to this Agreement;
provided, however, that the Exchange Agent may, in its sole
discretion and as a condition precedent to the delivery of the Merger
Consideration to which the holder of such certificate is entitled as
a result of the Merger, require the owner of such lost, stolen or
destroyed certificate to deliver a bond in such sum as it may direct
as indemnity against any claim that may be made against IFC, NCC or
the Exchange Agent or any other party with respect to the certificate
alleged to have been lost, stolen or destroyed.
(g) VOTING WITH RESPECT TO UNEXCHANGED CERTIFICATES. Holders
of unsurrendered Certificates will not be entitled to vote at any
meeting of NCC stockholders.
(h) NO FRACTIONAL SHARES. No certificates or scrip
representing fractional shares of NCC Common Stock shall be issued
upon the surrender for exchange of a Certificate or Certificates.
No dividends or distributions of NCC shall be payable on or with
respect to any fractional share and any such fractional share interest
will not entitle the owner thereof to vote or to any rights of
stockholders of NCC. In lieu of any such fractional shares, holders
of Certificates otherwise entitled to fractional shares shall be
entitled to receive promptly from the Exchange Agent a cash payment in
an amount equal to the fraction of such share of NCC Common Stock to
which such holder would otherwise be entitled multiplied by the
Market Price.
2.4 CLOSING OF THE COMPANY'S TRANSFER BOOKS. The stock transfer
books of IFC shall be closed at the close of business on the business day
immediately preceding the date of the Effective Time. In the event of a
transfer of ownership of IFC Common Stock which is not registered in the
transfer records of IFC, the Merger Consideration to be distributed pursuant
to this Agreement may be delivered to a transferee, if a Certificate is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by payment of any applicable stock
transfer taxes. NCC and The Exchange Agent shall be entitled
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to rely upon the stock transfer books of IFC to establish the identity of
those persons entitled to receive the Merger Consideration specified in this
Agreement for their shares of IFC Common Stock, which books shall be
conclusive with respect to the ownership of such shares. In the event of a
dispute with respect to the ownership of any such shares, the Surviving
Corporation and the Exchange Agent shall be entitled to deposit any Merger
Consideration represented thereby in escrow with an independent party and
thereafter be relieved with respect to any claims to such Merger
Consideration.
2.5 CHANGES IN NCC COMMON STOCK. If between the date of this
Agreement and the Effective Time, the shares of NCC Common Stock shall be
changed into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or if a stock
dividend thereon shall be declared with a record date within said period, the
Merger Consideration shall be adjusted accordingly.
III. REPRESENTATIONS AND WARRANTIES OF NCC
-------------------------------------
NCC hereby represents and warrants to IFC that:
3.1 CORPORATE ORGANIZATION.
NCC is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is duly qualified
to do business as a foreign corporation in each jurisdiction in which its
ownership or lease of property or the nature of the business conducted by
it makes such qualification necessary, except for such jurisdictions in which
the failure to be so qualified would not have a Material Adverse Effect.
NCC is registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended (the "BHCA"). NCC has the requisite corporate power
and authority to own, lease and operate its properties and assets and to carry
on its business as it is now being conducted. NCC has heretofore delivered to
IFC true and complete copies of its certificate of incorporation and by-laws.
3.2 AUTHORITY. NCC has the requisite corporate power and authority
to execute and deliver this Agreement and, except for any required approval of
NCC's stockholders, to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation
of the transactions contemplated herein have been duly approved by the Board
of Directors of NCC and no other corporate proceedings on the part of NCC
are necessary to authorize this Agreement or to consummate the transactions
so contemplated, subject only to approval by the stockholders of NCC as
provided in Subsection
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5.15(b). This Agreement has been duly executed and delivered by, and
constitutes valid and binding obligations of NCC enforceable against NCC in
accordance with its terms, except as enforceability thereof may be limited
by applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar laws affecting the enforcement of creditors'
rights generally and except that the availability of the equitable remedy of
specific performance or injunctive relief is subject to the discretion of the
court before which any proceedings may be brought.
3.3 CAPITALIZATION. As of the date hereof, the authorized
capital stock of NCC consists of 350,000,000 shares of NCC Common Stock and
5,000,000 shares of NCC preferred stock. As of the close of business on
August 25, 1995 (i) 147,543,325 shares of NCC Common Stock were validly
issued and outstanding, fully paid and nonassessable and (ii) 744,160
shares of eight percent (8%) Cumulative Convertible Preferred Stock (issued
as 3,720,800 Depository Shares) no par of NCC ("NCC Preferred Stock") were
validly issued and outstanding, fully paid and nonassessable. As of the date
hereof, except as set forth in this Section 3.3, pursuant to the exercise of
employee stock options under NCC's various stock option plans in effect, NCC's
dividend reinvestment plan and stock grants made pursuant to the NCC 1991
Restricted Stock Plan, or set forth in the NCC Disclosure Letter, there are no
other shares of capital stock of NCC authorized, issued or outstanding and
there are no outstanding subscriptions, options, warrants, rights,
convertible securities or any other agreements or commitments of any
character relating to the issued or unissued capital stock or other securities
of NCC obligating NCC to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of NCC or obligating
NCC to grant, extend or enter into any subscription, option, warrant,
right, convertible security or other similar agreement or commitment. As of
the date hereof, except as provided in this Agreement or as set forth in the
NCC Disclosure Letter, there are no voting trusts or other agreements or
understandings to which NCC or any NCC Subsidiary (as defined herein) is a
party with respect to the voting of the capital stock of NCC. All of the
shares of NCC Common Stock issuable in exchange for the IFC Common Stock
at the Effective Time in accordance with this Agreement and all of the
shares of NCC Common Stock issuable upon exercise of Unexercised Options
will be, when so issued, duly authorized, validly issued, fully paid and
nonassessable and will not be subject to preemptive rights.
3.4 SUBSIDIARIES. The name and state of incorporation of each
significant subsidiary (as defined herein) of NCC (collectively, the
"Significant Subsidiaries") is set forth in the NCC
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Disclosure Letter. Each of the NCC Subsidiaries is a bank or a corporation
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation or organization and is duly
qualified to do business as a foreign corporation in each jurisdiction in
which its ownership or lease of property or the nature of the business
conducted by it makes such qualification necessary, except for such
jurisdictions in which the failure to be so qualified would not have a
Material Adverse Effect. Each of NCC's subsidiaries has the requisite
corporate power and authority to own, lease and operate its properties and
assets and to carry on its businesses as they are now being conducted. Except
as set forth in the NCC Disclosure Letter, all outstanding shares of capital
stock of each of NCC's subsidiaries are owned by NCC or another of NCC's
subsidiaries and are validly issued, fully paid and (except pursuant to 12
USC Section 55 in the case of each national bank subsidiary and applicable
state law in the case of each state bank subsidiary) nonassessable, are not
subject to preemptive rights and are owned free and clear of all liens, claims
and encumbrances. There are no outstanding subscriptions, options, warrants,
rights, convertible securities or any other agreements or commitments of any
character relating to the issued or unissued capital stock or other
securities of any NCC subsidiary obligating any of NCC subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold
additional shares of its capital stock or obligating any of NCC's
subsidiaries to grant, extend or enter into any subscription, option,
warrant, right, convertible security or other similar agreement or commitment.
3.5 INFORMATION IN DISCLOSURE DOCUMENTS, REGISTRATION STATEMENT, ETC.
None of the information with respect to NCC or any of NCC's subsidiaries
provided by NCC for inclusion in (i) the Registration Statement to be filed
with the Securities and Exchange Commission (the "Commission") by NCC on
Form S-4 under the Securities Act of 1933, as amended (the "Securities
Act"), for the purpose of registering the shares of NCC Common Stock to be
issued in the Merger (the "Registration Statement") and (ii) any joint proxy
statement of IFC and NCC ("Proxy Statement") required to be mailed to IFC's
and NCC's stockholders in connection with the Merger will, in the case of the
Proxy Statement or any amendments or supplements thereto, at the time of the
mailing of the Proxy Statement and any amendments or supplements thereto,
and at the time of the IFC Meeting and the NCC Meeting (as defined herein),
or, in the case of the Registration Statement, at the time it becomes
effective, 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
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they are made, not misleading. The Registration Statement will comply as
to form in all material respects with the provisions of the Securities
Act and the rules and regulations promulgated thereunder. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder.
3.6 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth in
the NCC Disclosure Letter, neither the execution and delivery of this
Agreement by NCC or the transactions contemplated hereby will (a)
conflict with or result in any breach of any provision of its certificate
of incorporation or by-laws, (b) violate, conflict with, constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in the creation of any lien or other encumbrance upon
any of the properties or assets of NCC or any of NCC's subsidiaries under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which NCC or any of NCC's subsidiaries is a party or to which they or any
of their respective properties or assets are subject, except for such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens or other encumbrances, which are set forth in the NCC
Disclosure Letter or which, individually or in the aggregate, will not have a
Material Adverse Effect or (c) require any consent, approval, authorization
or permit of or from, or filing with or notification to, any court,
governmental authority or other regulatory or administrative agency or
commission, domestic or foreign ("Governmental Entity"), except (i) pursuant
to the Exchange Act and the Securities Act, (ii) filing the Certificate of
Merger and a designation pursuant to the DGCL, (iii) filing the Articles
of Merger, (iv) filings required under the securities or blue sky laws of
the various states, (v) filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (vi) filings with, and
approval by, the Federal Reserve Board (the "FRB"), (vii) filings with,
and approvals by, the Ohio Superintendent of Banks, the Pennsylvania
Department of Financial Institutions, and the Arizona Director of Insurance
(collectively, the "State Entities"), (viii) filings and approvals pursuant to
any applicable state takeover law, (ix) filings and approvals under the
Small Business Investment Act of 1958 and the rules and regulations
thereunder ("SBIA") or (x) consents, approvals, authorizations, permits,
filings or notifications which, if not obtained or made will not, individually
or in the aggregate, have a Material Adverse Effect.
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3.7 REPORTS AND FINANCIAL STATEMENTS. Since January 1, 1990, NCC and
each of NCC's subsidiaries have filed all reports, registrations and
statements, together with any required amendments thereto, that they were
required to file with the Commission under Section 12(b), 12(g), 13(a) or
14(a) of the Securities Exchange Act of 1934, including, but not limited to
Forms 10-K, Forms 10-Q and proxy statements (the "NCC Reports"). NCC has
previously furnished or will promptly furnish IFC with true and complete
copies of each of NCC's annual reports on Form 10-K for the years 1990
through 1994 and its quarterly reports on Form 10-Q for March 31, 1995 and
June 30, 1995. As of their respective dates, the NCC Reports complied with
the requirements of the Commission and did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstance
under which they were made, not misleading. The audited consolidated
financial statements and unaudited interim financial statements of NCC included
in the NCC Reports have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and fairly present the consolidated
financial position of NCC and NCC's subsidiaries as of the dates thereof and
the results of their operations and changes in cash flows for the periods then
ended subject, in the case of the unaudited interim financial statements, to
normal year-end and audit adjustments and any other adjustments
described therein. There exist no material liabilities of NCC and its
consolidated subsidiaries, contingent or otherwise of a type required to be
disclosed in accordance with generally accepted accounting practices, except
as disclosed in the NCC Reports. NCC's reserve for possible loan losses as
shown in its Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 1995 was adequate, within the meaning of generally accepted accounting
principles and safe and sound banking practices.
3.8 TAXES. NCC will promptly make available to IFC, upon request
by IFC, true and correct copies of the federal, state and local income tax
returns, and state and local property and sales tax returns and any other tax
returns filed by NCC and any of NCC's subsidiaries for each of the fiscal
years that remains open, for examination or assessment of tax. NCC and each
NCC subsidiary have prepared in good faith and duly and timely filed, or
caused to be duly and timely filed, all federal, state, local and foreign
income, estimated tax, withholding tax, franchise, sales and other tax returns
or reports required to be filed by them on or before the date hereof, except to
the extent that all such failures to file, taken together, would not have a
Material Adverse Effect. NCC and each of its subsidiaries have paid, or have
made adequate provision or set up an
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adequate accrual or reserve for the payment of, all taxes, shown or required
to be shown to be owing on all such returns or reports, together with any
interest, additions or penalties related to any such taxes or to any open
taxable year or period. Except as set forth in the NCC Disclosure Letter,
neither NCC nor any of NCC's subsidiaries has consented to extend the statute
of limitations with respect to the assessment of any tax. Except as set
forth in the NCC Disclosure Letter, neither NCC nor any of NCC's
subsidiaries is a party to any action or proceeding, nor to the best of
NCC's knowledge is any such action or proceeding threatened, by any
Governmental Entity in connection with the determination, assessment or
collection of any taxes, and no deficiency notices or reports have been
received by NCC or any of NCC's subsidiaries in respect of any material
deficiencies for any tax, assessment, or government charges.
3.9 EMPLOYEE PLANS. All employee benefit, welfare, bonus,
deferred compensation, pension, profit sharing, stock option, employee stock
ownership, consulting, severance, or fringe benefit plans, formal or informal,
written or oral, and all trust agreements related thereto, relating to any
present or former directors, officers or employees of NCC or its
subsidiaries ("NCC Employee Plans") have been maintained, operated, and
administered in substantial compliance with their terms and currently comply,
and have at all relevant times complied, in all material respects with the
applicable requirements of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), the Code, and any other applicable laws. With
respect to each NCC Employee Plan which is a pension plan (as defined in
Section 3(2) of ERISA): (a) except for recent amendment(s) to the plans not
materially affecting the qualified status of the plans (which are disclosed
in, and copies of which are attached to, the NCC Disclosure Letter), each
pension plan as amended (and any trust relating thereto) intended to be a
qualified plan under Section 401(a) of the Code either: (i) has been
determined by the Internal Revenue Service ("IRS") to be so qualified, (ii)
is the subject of a pending application for such determination that was timely
filed, or (iii) will be submitted for such a determination prior to end of the
"remedial amendment period" within the meaning of Section 401(b) of the Code,
(b) there is no accumulated funding deficiency (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived, and no waiver of
the minimum funding standards of such sections has been requested from the
IRS, (c) neither NCC nor any of its subsidiaries has provided, or is required
to provide, security to any pension plan pursuant to Section 401(a)(29) of
the Code, (d) the fair market value of the assets of each defined benefit
plan (as defined in Section 3(35) of ERISA) exceeds the value of the "benefit
liabilities" within the meaning of Section 4001(a)(16)
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of ERISA under such defined benefit plan as of the end of the most recent
plan year thereof ending prior to the date hereof, calculated on the basis of
the actuarial assumptions used in the most recent actuarial valuation for
such defined benefit plan as of the date hereof, (e) no reportable event
described in Section 4043 of ERISA for which the 30 day reporting requirement
has not been waived has occurred, (f) except as disclosed in the NCC
Disclosure Letter, no defined benefit plan has been terminated, nor has the
Pension Benefit Guaranty Corporation ("PBGC") instituted proceedings to
terminate a defined benefit plan or to appoint a trustee or administrator
of a defined benefit plan, and no circumstances exist that constitute
grounds under Section 4042(a)(2) of ERISA entitling the PBGC to institute any
such proceedings and (g) no pension plan is a "multiemployer plan" within the
meaning of Section 3(37) of ERISA. Neither NCC nor any of its subsidiaries
has incurred any liability to the PBGC with respect to any "single-employer
plan" within the meaning of Section 4001(a)(15) of ERISA currently or
formerly maintained by any entity considered one employer with it under
Section 4001 of ERISA or Section 414 of the Code, except for premiums all of
which have been paid when due. Neither NCC nor any of its subsidiaries has
waived any withdrawal liability with respect to a multiemployer plan under
Subtitle E of Title IV of ERISA. Neither NCC nor any of its subsidiaries has
any obligations for retiree health and life benefits under any NCC Employee
Plan, except as set forth in the NCC Disclosure Letter. There are no
restrictions on the rights of NCC or its subsidiaries to amend or terminate
any such NCC Employee Plan without incurring any liability thereunder.
3.10 MATERIAL CONTRACTS. Except as set forth in the NCC Disclosure
Letter or disclosed in the NCC Reports, neither NCC nor any of its subsidiaries
is a party to, or is bound or affected by, or receives benefits under (a)
any employment, severance, termination, consulting or retirement agreement
(collectively, "Benefit Agreements") providing for aggregate payments to any
person in any calendar year in excess of $100,000, (b) any material
agreement, indenture or other instrument relating to the borrowing of money by
NCC or any of its subsidiaries or the guarantee by NCC or any of its
subsidiaries of any such obligation (other than trade payables and
instruments relating to borrowings or guaranties made in the ordinary course
of business) or (c) any other contract or agreement or amendment thereto that
would be required to be filed as an exhibit to a Form 10-K filed by NCC with
the Commission as of the date of this Agreement (collectively, the "NCC
Contracts"). Neither NCC nor any of NCC's subsidiaries is in default under
any of the NCC Contracts, which default is reasonably likely to have, either
individually or
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in the aggregate, a Material Adverse Effect and there has not occurred any
event that with the lapse of time or the giving of notice or both would
constitute such a default. Except as set forth in the NCC Disclosure Letter,
neither NCC nor any of NCC's subsidiaries is a party to, or is bound by, any
collective bargaining agreement, contract, or other agreement or
understanding with a labor union or labor organization, nor is NCC or any of
NCC's subsidiaries the subject of a proceeding asserting that it or any such
subsidiary has committed an unfair labor practice or seeking to compel it or
such subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike or other labor dispute
involving it or any of its subsidiaries pending or threatened.
3.11 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the NCC Disclosure Letter or disclosed in the NCC Reports filed by NCC with
the Commission prior to the date of this Agreement, since December 31, 1994,
there has not been any change in the financial condition, results of
operations or business of NCC and its subsidiaries which would or in the future
will have a Material Adverse Effect.
3.12 LITIGATION. Except as disclosed in the NCC Reports filed by
NCC with the Commission prior to the date of this Agreement, there is no suit,
action or proceeding pending, or, to the knowledge of NCC, threatened against
or affecting NCC or any of NCC's subsidiaries which, if decided adversely to
NCC, would be reasonably expected to result in a Material Adverse
Effect, nor is there any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator, outstanding against NCC or any of
NCC's subsidiaries having, or which, insofar as reasonably can be foreseen, in
the future would have, a Material Adverse Effect.
3.13 COMPLIANCE WITH LAWS AND ORDERS. Except as set forth in the NCC
Disclosure Letter or disclosed in the NCC Reports filed by NCC with the
Commission prior to the date of this Agreement, the businesses of NCC and of
NCC's subsidiaries are not being conducted in violation of any law, ordinance,
regulation, judgment, order, decree, license or permit of any Governmental
Entity (including, without limitation, in the case of NCC's subsidiaries that
are banks, all statutes, rules and regulations pertaining to the conduct of
the banking business and the exercise of trust powers), except for violations
which individually or in the aggregate do not, and, insofar as reasonably can
be foreseen, in the future will not, have a Material Adverse Effect. Except
as set forth in the NCC Disclosure Letter, no investigation or review by
any Governmental Entity with respect to NCC or any of NCC's subsidiaries
is pending or, to the knowledge of NCC, threatened, nor has any
Governmental Entity indicated an intention to
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conduct the same in each case other than those the outcome of which will not
have a Material Adverse Effect.
3.14 AGREEMENTS WITH BANK REGULATORS, ETC. Neither NCC nor any NCC
subsidiary is a party to any written agreement or memorandum of understanding
with, or a party to any commitment letter, board resolution or similar
undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, any Governmental
Entity which restricts materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit or reserve policies or its
management, nor has NCC been advised by any Governmental Entity that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or similar
submission. Neither NCC nor any of NCC's subsidiaries is required by
Section 32 of the Federal Deposit Insurance Act ("FDIA") to give prior
notice to a Federal banking agency of the proposed addition of an individual
to its board of directors or the employment of an individual as a senior
executive officer. NCC knows of no reason why the regulatory approvals referred
to in Subsection 3.6(c) should not be obtained.
3.15 NCC OWNERSHIP OF STOCK. As of the date of this Agreement,
neither NCC nor any of its affiliates or associates (i) beneficially owns,
directly or indirectly, or (ii) are parties to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of,
IFC Common Stock (other than DPC Shares or Trust Account Shares), which
in the aggregate, represent 5% or more of the outstanding shares of IFC
Common Stock.
3.16 ACCOUNTING MATTERS. Neither NCC nor, to its best knowledge,
any of its affiliates, has, through the date of this Agreement, taken or
agreed to take any action or knows of any reason that with respect to NCC and
its affiliates would prevent NCC from accounting for the business combination
to be effected by the Merger as a "pooling-of-interests."
3.17 FEES. Except for the fees paid and payable to Merrill Lynch &
Co., neither NCC nor any of NCC's subsidiaries has paid or will become
obligated to pay any fee or commission to any broker, finder or intermediary
in connection with the transactions contemplated by this Agreement.
3.18 COMPANY ACTION. The Board of Directors of NCC (at a meeting
duly called, constituted and held) has by the requisite vote of all directors
present (a) determined that the Merger is advisable and in the best interests
of NCC and its stockholders and (b) approved this
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Agreement and the transactions contemplated by this Agreement and has
directed that the Merger be submitted for consideration by NCC's
stockholders at the NCC Meeting. The Board of Directors of NCC has approved
the transactions contemplated by this Agreement and the Option Agreement such
that the provisions of Section 203 of the DGCL any other applicable state
business combination or anti-takeover provisions of NCC Certificate of
Incorporation or By-laws shall not be triggered by the Merger or any
transactions contemplated by this Agreement.
3.19 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of NCC Common Stock entitled to vote
thereon is the only vote of the holders of any class or series of NCC
capital stock necessary to approve this Agreement and the transactions
contemplated herein.
3.20 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as disclosed in
NCC's Proxy Statement for its 1995 Annual Meeting of Stockholders, no officer
or director of NCC, or any "associate" (as such term is defined in Rule 14a-1
under the 1934 Act) of any such officer or director, has any material
interest in any material contract or property (real or personal), tangible
or intangible, used in or pertaining to the business of NCC or any of its
subsidiaries.
3.21 ENVIRONMENTAL MATTERS. For purposes of this Agreement, the
following terms shall have the indicated meanings:
"ENVIRONMENTAL LAW" means any federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, determination, judgment,
decree, injunction or agreement with any governmental entity relating
to (1) the health, protection, preservation or restoration of the
environment including, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, surface soil,
subsurface soil, wetlands, plant and animal life or any other natural
resource, conservation, and/or (2) the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Substances. The term
Environmental Law includes without limitation (1) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42
U.S.C. Section 9601, ET SEQ.; the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. 9601(2)(D); the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901, ET
SEQ.; the Clean Air Act, as amended, 42 U.S.C. Section 7401, ET SEQ.;
the Federal Water Pollution Control Act, as amended by the Clean Water
Act, 33 U.S.C. Section 1251, ET SEQ.; the Toxic Substances
Control Act, as amended, 15 U.S.C. Section
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9601, ET SEQ.; the Emergency Planning and Community Right to Know
Act, 42 U.S.C. Section 11001, ET SEQ.; the Safe Drinking Water Act, 42
U.S.C. Section 300f, ET SEQ.; and all comparable state and local
laws, and (2) any common law (including without limitation common law
that may impose strict liability) that may impose liability for
injuries or damages due to the release of any Hazardous Substance.
"HAZARDOUS SUBSTANCE" means (i) any hazardous wastes, toxic
chemicals, materials, substances or wastes as defined by or for the
purposes of any Environmental Law; (ii) any "oil", as defined by the
Clean Water Act, as amended from time to time, and regulations
promulgated thereunder (including crude oil or any fraction thereof
and any petroleum products or derivatives thereof); (iii) any
substance, the presence of which is prohibited, regulated or
controlled by any applicable federal, state or local laws,
regulations, statutes or ordinances now in force or hereafter
enacted relating to waste disposal or environmental protection with
respect to the exposure to, or manufacture, possession, presence, use,
generation, storage, transportation, treatment, release, emission,
discharge, disposal, abatement, cleanup, removal, remediation or
handling of any such substance; (iv) any asbestos or
asbestos-containing materials, polychlorinated biphenyls ("PCBs") in
the form of electrical equipment, fluorescent light fixtures with
ballasts, cooling oils or any other form, urea formaldehyde,
atmospheric radon; (v) any solid, liquid, gaseous or thermal
irritant or contaminant, such as smoke, vapor, soot, fumes,
alkalis, acids, chemicals, pesticides, herbicides, sewage,
industrial sludge or other similar wastes; (vi) industrial, nuclear
or medical by-products; (vii) any lead based paint or coating and
(viii) any underground storage tank(s).
"LOAN PORTFOLIO PROPERTIES, TRUST PROPERTIES AND OTHER
PROPERTIES" means any real property, appurtenances, rights and
personal property attendant thereto, which is owned, leased as a
landlord or a tenant, managed or operated or upon which is held a
mortgage, deed of trust or other security interest by NCC or IFC, as
the case may be, or any of their subsidiaries whether directly, as
an agent, as trustee or other fiduciary or otherwise.
Except as set forth in the NCC Disclosure Letter, (i) to the
best of NCC's knowledge, neither NCC nor any of its subsidiaries is
in violation of or has any liability, absolute or contingent, in
connection with or under any Environmental Law, except any such
violations or liabilities which would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect; (ii) to the best of NCC's knowledge,
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none of the Loan Portfolio Properties, Trust Properties and
Other Properties of NCC or its subsidiaries is in violation of or
has any liability, absolute or contingent, under any Environmental
Law, except any such violations or liabilities which, individually
or in the aggregate would not have a Material Adverse Effect; and
(iii) to the best of NCC's knowledge, there are no actions, suits,
demands, notices, claims, investigations or proceedings pending or
threatened relating to any Loan Portfolio Properties, Trust
Properties and Other Properties including, without limitation any
notices, demand letters or requests for information from any federal
or state environmental agency relating to any such liability under
or violation of Environmental Law, which would impose a liability
upon NCC or its subsidiaries pursuant to any Environmental Law,
except such as would not, individually or in the aggregate have a
Material Adverse Effect.
IV. REPRESENTATIONS AND WARRANTIES OF IFC
-------------------------------------
IFC hereby represents and warrants to NCC that:
4.1 CORPORATE ORGANIZATION. IFC is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth
of Pennsylvania and is duly qualified to do business as a foreign corporation
in each jurisdiction in which its ownership or lease of property or the
nature of the business conducted by it makes such qualification necessary,
except for such jurisdictions in which the failure to be so qualified would
not have a Material Adverse Effect. IFC is registered as a bank holding
company under the BHCA. IFC has the requisite corporate power and authority
to own, lease and operate its properties and assets and to carry on its
business as it is now being conducted. IFC has heretofore delivered to NCC
true and complete copies of its Articles of Incorporation and By-laws.
4.2 AUTHORITY. IFC has the requisite corporate power and
authority to execute and deliver this Agreement and, except for any
required approval of IFC's shareholders, to consummate the transactions
contemplated by such. The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein have been duly approved
by the Board of Directors of IFC and no other corporate proceedings on the
part of IFC are necessary to authorize this Agreement or to consummate the
transactions so contemplated, subject only to approval by the shareholders of
IFC as provided in Section 5.15. This Agreement has been duly executed and
delivered by, and constitute valid and binding obligations of IFC, enforceable
against IFC in accordance with its terms, except as the enforceability thereof
may be
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limited by applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium and other similar laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceedings may be brought.
4.3 CAPITALIZATION. As of the date hereof, the authorized capital
stock of IFC consists of 100,000,000 shares of IFC Common Stock and 19,642,631
shares of preferred stock, no par value. As of the close of business on August
25, 1995, 32,913,023 shares of IFC Common Stock were validly issued and
outstanding, fully paid and nonassessable and no shares of preferred stock
were issued or outstanding. As of the date of this Agreement except as set
forth in this Section 4.3 or in a disclosure letter executed by IFC and
dated and delivered by IFC to NCC as of the date hereof ("IFC Disclosure
Letter"), and except for a Stock Option Agreement by and between NCC and IFC,
dated August 27, 1995 ("Option Agreement") or pursuant to IFC's Option Plans,
there are no shares of capital stock of IFC authorized, issued or outstanding
and there are no outstanding subscriptions, options, warrants, rights,
convertible securities or any other agreements or commitments of any character
relating to the issued or unissued capital stock or other securities of IFC
obligating IFC to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of IFC or obligating IFC to grant,
extend or enter into any subscription, option, warrant, right, convertible
security or other similar agreement or commitment. Except as set forth in the
IFC Disclosure Letter, there are no voting trusts or other agreements or
understandings to which IFC or any of IFC's subsidiaries is a party with
respect to the voting of the capital stock of IFC. As of the date of this
Agreement, there were outstanding under the IFC Option Plans options to
purchase 999,330 shares of IFC Common Stock, which IFC stock options had an
average exercise price of $33.31 and for which adequate shares of IFC
Common Stock have been reserved for issuance under the IFC Option Plans.
Since January 31, 1995, IFC has not granted or awarded any IFC Stock Options.
4.4 SUBSIDIARIES. The IFC Disclosure Letter sets forth the name
and state of incorporation of each subsidiary of IFC (collectively, "IFC
Subsidiaries"). Each of IFC Subsidiaries is a bank or a corporation duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation or organization and is duly
qualified to do business as a foreign corporation in each jurisdiction in
which its ownership or lease of property or the nature of the business
conducted by it makes such qualification necessary, except for such
jurisdictions in which the failure to be so qualified would not have a Material
Adverse
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Effect. Each of IFC Subsidiaries has the requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its businesses as they are now being conducted. Except as set forth in the
IFC Disclosure Letter, all outstanding shares of capital stock of each IFC
Subsidiary is owned by IFC or another IFC Subsidiary and are validly issued,
fully paid and nonassessable, are not subject to preemptive rights and are
owned free and clear of all liens, claims and encumbrances. There are no
outstanding subscriptions, options, warrants, rights, convertible securities
or any other agreements or commitments of any character relating to the
issued or unissued capital stock or other securities of any IFC Subsidiary
obligating any IFC Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold additional shares of its capital stock or obligating
any IFC Subsidiary to grant, extend or enter into any subscription, option,
warrant, right, convertible security or other similar agreement or commitment.
4.5 INFORMATION IN DISCLOSURE DOCUMENTS, REGISTRATION STATEMENT,
ETC. None of the information with respect to IFC or any IFC Subsidiary
provided by IFC for inclusion in the Proxy Statement or the Registration
Statement will, in the case of the Proxy Statement or any amendments or
supplements thereto, at the time of the mailing of the Proxy Statement and any
amendments or supplements thereto, and at the time of the IFC Meeting and the
NCC Meeting, or, in the case of the Registration Statement, at the time it
becomes effective, contain any untrue statement of 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 are 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 promulgated thereunder.
4.6 CONSENT AND APPROVALS; NO VIOLATION. Except as set forth in the
IFC Disclosure Letter neither the execution and delivery of this Agreement by
IFC nor the consummation by IFC of the transactions contemplated hereby will
(a) conflict with or result in any breach of any provision of its Articles
of Incorporation or By-laws, (b) violate, conflict with, constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate
the performance required by, or result in the creation of any lien or other
encumbrance upon any of the properties or assets of IFC or any of IFC
Subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which IFC or any IFC Subsidiary is a party
or to which they or any of their respective properties or assets are subject,
except for such violations, conflicts, breaches, defaults, terminations,
accelerations or
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creations of liens or other encumbrances, which are set forth in the IFC
Disclosure Letter or which, individually or in the aggregate, will not have a
Material Adverse Effect or (c) require any consent, approval, authorization or
permit of or from, or filing with or notification to, any Governmental Entity,
except (i) pursuant to the Exchange Act and the Securities Act, (ii) filing
the Certificate of Merger pursuant to the DGCL, (iii) filing the Articles of
Merger, (iv) filings required under the securities or blue sky laws of the
various states, (v) filing under the HSR Act, (vi) filings with, and
approval by, the FRB, (vii) filings with, and approvals by, the State
Entities, (viii) filings and approvals pursuant to any applicable state
takeover law, (ix) filings and approvals under the SBIA or (x) consents,
approvals, authorizations, permits, filings or notifications which, if not
obtained or made will not, individually or in the aggregate, have a Material
Adverse Effect.
4.7 REPORTS AND FINANCIAL STATEMENTS. Since January 1, 1990, IFC
and each IFC Subsidiary have filed all reports, registrations and statements,
together with any required amendments thereto, that they were required to
file with the Commission under Sections 12(b), 12(g), 13(a) or 14(a) of the
Securities Exchange Act of 1934, including, but not limited to Forms 10-K,
Forms 10-Q and proxy statements (the "IFC Reports"). IFC has previously
furnished or will promptly furnish NCC with true and complete copies of each
of IFC annual reports on Form 10-K for the years 1990 through 1994 and its
quarterly reports on Form 10-Q for March 31, 1995 and June 30, 1995. As of
their respective dates, IFC Reports complied with the requirements of the
Commission and did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstance under which they
were made, not misleading. The audited consolidated financial statements
and unaudited interim financial statements of IFC included in the IFC
Reports have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and fairly present the financial
position of IFC and IFC Subsidiaries taken as a whole as at the dates
thereof and the consolidated results of their operations and changes in cash
flows for the periods then ended subject, in the case of the unaudited interim
financial statements, to normal year-end and audit adjustments and any other
adjustments described therein. There exist no material liabilities of IFC
and its consolidated subsidiaries, contingent or otherwise of a type required
to be disclosed in accordance with generally accepted accounting practices,
except as disclosed in the IFC Reports. IFC's reserve for possible loan
losses as shown in its Quarterly Report on Form
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10-Q for the fiscal quarter ended June 30, 1995 was adequate, within the
meaning of generally accepted accounting principles and safe and sound banking
practices.
4.8 TAXES. IFC will promptly make available to NCC, upon request by
NCC, true and correct copies of the federal income tax returns, state income
tax returns, and state sales tax returns filed by IFC and IFC Subsidiaries
for each of the fiscal years that remains open, as of the date hereof, for
examination or assessment of tax. IFC and each IFC Subsidiary have prepared
in good faith and duly and timely filed, or caused to be duly and timely
filed, all federal, state, local and foreign income, franchise, sales and
other tax returns or reports required to be filed by them on or before the
date hereof, except to the extent that all failures to file, taken
together, would not have a Material Adverse Effect. IFC and each IFC
Subsidiary have paid, or have made adequate provision or set up an adequate
accrual or reserve for the payment of, all taxes shown or required to be
shown to be owing on all such returns or reports, together with any
interest, additions or penalties related to any such taxes or to any open
taxable year or period. Except as set forth in the IFC Disclosure Letter,
neither IFC nor any IFC Subsidiary has consented to extend the statute of
limitations with respect to the assessment of any tax. Except as set forth
in the IFC Disclosure Letter, neither IFC nor any of IFC Subsidiaries is a
party to any action or proceeding, nor to the best of IFC's knowledge is any
such action or proceeding threatened, by any Governmental Entity in
connection with the determination, assessment or collection of any taxes, and
no deficiency notices or reports have been received by IFC or any of IFC
Subsidiaries in respect of any material deficiencies for any tax, assessment,
or government charge.
4.9 EMPLOYEE PLANS. Except as set forth in the IFC Disclosure
Letter, all employee benefit, welfare, bonus, deferred compensation, pension,
profit sharing, stock option, employee stock ownership, consulting,
severance, or fringe benefit plans, formal or informal, written or oral and
all trust agreements related thereto, relating to any present or former
directors, officers or employees of IFC or IFC Subsidiaries ("IFC Employee
Plans") have been maintained, operated, and administered in substantial
compliance with their terms and currently comply, and have at all relevant
times complied, in all material respects with the applicable requirements of
ERISA, the Code, and any other applicable laws. Except as set forth in the
IFC Disclosure Letter, with respect to each IFC Employee Plan which is a
pension plan (as defined in Section 3(2) of ERISA): (a) except for recent
amendment(s) to the plans not materially affecting the qualified status of
the plans (which are disclosed in the IFC Disclosure Letter, and copies of
which were previously made available to NCC), each pension plan as amended (and
any trust
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relating thereto) intended to be a qualified plan under Section 401(a) of the
Code either has been determined by the IRS to be so qualified or is the
subject of a pending application for such determination that was timely
filed, (b) there is no accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, and no
waiver of the minimum funding standards of such sections has been requested
from the IRS, (c) neither IFC nor any of the IFC Subsidiaries has provided,
or is required to provide, security to any pension plan pursuant to Section
401(a)(29) of the Code, (d) the fair market value of the assets of each
defined benefit plan (as defined in Section 3(35) of ERISA) exceeds the value
of the "benefit liabilities" within the meaning of Section 4001(a)(16) of ERISA
under such defined benefit plan as of the end of the most recent plan year
thereof ending prior to the date hereof, calculated on the basis of the
actuarial assumptions used in the most recent actuarial valuation for such
defined benefit plan as of the date hereof, (e) no reportable event described
in Section 4043 of ERISA for which the 30 day reporting requirement has not
been waived has occurred, (f) no defined benefit plan has been terminated,
nor has the Pension Benefit Guaranty Corporation ("PBGC") instituted
proceedings to terminate a defined benefit plan or to appoint a trustee or
administrator of a defined benefit plan, and no circumstances exist that
constitute grounds under Section 4042(a)(2) of ERISA entitling the PBGC to
institute any such proceedings and (g) no pension plan is a "multiemployer
plan" within the meaning of Section 3(37) of ERISA. Neither IFC nor any IFC
Subsidiary has incurred any liability to the PBGC with respect to any
"single-employer plan" within the meaning of action 4001(a)(15) of ERISA
currently or formerly maintained by any entity considered one employer with
it under Section 4001 of ERISA or Section 414 of the Code, except for
premiums all of which have been paid when due. Neither IFC nor any of its
subsidiaries has incurred any withdrawal liability with respect to a
multiemployer plan under Subtitle E of Title IV of ERISA. Neither IFC nor
any IFC Subsidiary has any obligations for retiree health and life benefits
under any IFC Employee Plan, except as set forth in the IFC Disclosure
Letter. There are no restrictions on the rights of IFC or IFC Subsidiaries
to amend or terminate any such IFC Employee Plan without incurring any
liability thereunder.
4.10 MATERIAL CONTRACTS. Except as set forth in the IFC Disclosure
Letter or disclosed in the IFC Reports, neither IFC nor any IFC Subsidiary is
a party to, or is bound or affected by, or receives benefits under (a) any
Benefit Agreements providing for aggregate payments to any person in any
calendar year in excess of $100,000, (b) any material agreement, indenture or
other
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instrument relating to the borrowing of money by IFC or any IFC Subsidiary or
the guarantee by IFC or any IFC Subsidiary of any such obligation (other than
trade payables and instruments relating to transactions entered into in the
ordinary course of business) or (c) any other contract or agreement or
amendment thereto that would be required to be filed as an exhibit to a Form
10-K filed by IFC with the Commission as of the date of this Agreement
(collectively, the "IFC Contracts"). Neither IFC nor any IFC Subsidiary is
in default under any IFC Contract, which default is reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect, and there
has not occurred any event that with the lapse of time or the giving of notice
or both would constitute such a default. Except as set forth in the IFC
Disclosure Letter, neither IFC nor any of IFC Subsidiary is a party to, or
is bound by, any collective bargaining agreement, contract, or other
agreement or understanding with a labor union or labor organization, nor is
IFC or any IFC Subsidiary the subject of a proceeding asserting that is or
any IFC Subsidiary has committed an unfair labor practice or seeking to compel
it or such subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike or other labor dispute
involving it or any IFC Subsidiary pending or threatened.
4.11 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the IFC Disclosure Letter or disclosed in IFC Reports filed by IFC with the
Commission prior to the date of this Agreement, since December 31, 1994,
there has not been any change in the financial condition, results of
operations or business of IFC and IFC Subsidiaries which would or in the future
will have a Material Adverse Effect.
4.12 LITIGATION. Except as disclosed in IFC Reports filed by IFC
with the Commission prior to the date of this Agreement, there is no suit,
action or proceeding pending, or, to the knowledge of IFC, threatened against
or affecting IFC or any IFC Subsidiary which, if determined adversely to IFC,
would be reasonably expected to have a Material Adverse Effect, nor is there
any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator, outstanding against IFC or any IFC Subsidiary having, or
which, insofar as reasonably can be foreseen, in the future would have, a
Material Adverse Effect.
4.13 COMPLIANCE WITH LAWS AND ORDERS. Except as set forth in the
IFC Disclosure Letter or as disclosed in IFC Reports filed by IFC with the
Commission prior to the date of this Agreement, the businesses of IFC and IFC
Subsidiaries are not being conducted in violation of any law, ordinance,
regulation, judgment, order, decree, license or permit of any Governmental
Entity (including, without limitation, in the case of IFC Subsidiaries that
are banks, all statutes,
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rules and regulations pertaining to the conduct of the banking business
and the exercise of trust powers), except for violations which individually
or in the aggregate do not, and, insofar as reasonably can be foreseen, in
the future will not, have a Material Adverse Effect. Except as set forth in
the IFC Disclosure Letter, no investigation or review by any Governmental
Entity with respect to IFC or any IFC Subsidiary is pending or, to the
knowledge of IFC threatened, nor has any Governmental Entity indicated an
intention to conduct the same in each case other than those the outcome of
which will not have a Material Adverse Effect.
4.14 AGREEMENTS WITH BANK REGULATORS, ETC. Neither IFC nor any IFC
Subsidiary is a party to any written agreement or memorandum of understanding
with, or a party to any commitment letter, board resolution or similar
undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, any Governmental
Entity which restricts materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit or reserve policies or its
management, except for those the existence of which has been disclosed in the
IFC Disclosure Letter, nor has IFC been advised by any Governmental Entity
that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment
letter or similar submission, except as set forth in the IFC Disclosure
Letter. Neither IFC nor any IFC Subsidiary is required by Section 32 of
the Federal Deposit Insurance Act to give prior notice to a Federal banking
agency of the proposed addition of an individual to its board of directors or
the employment of an individual as a senior or executive officer. IFC knows
of no reason why the regulatory approvals referred to in Subsections 4.6(c)
should not be obtained.
4.15 ACCOUNTING MATTERS. Neither IFC nor, to its best knowledge,
any of its affiliates, has, through the date of this Agreement, taken or
agreed to take any action or knows of any reason that with respect to IFC and
its affiliates would prevent NCC from accounting for the business combination
to be effected by the Merger as a "pooling-of-interests."
4.16 FEES. Except for fees paid and payable to Morgan and Stanley &
Co., neither IFC nor any IFC Subsidiary has paid or will become obligated to
pay any fee or commission to any broker, finder or intermediary in
connection with the transactions contemplated by this Agreement.
4.17 COMPANY ACTION. The Board of Directors of IFC (at a meeting
duly called, constituted and held) has by the requisite vote of all directors
present (a) determined that the
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Merger is advisable and in the best interests of IFC and its shareholders,
(b) approved this Agreement and the transactions contemplated hereby,
including the Merger, and (c) has directed that the Merger be submitted for
consideration by the IFC's shareholders at the IFC Meeting.
4.18 VOTE REQUIRED. The affirmative votes of a majority of the votes
cast of IFC Common Stock entitled to vote thereon are the only votes of the
holders of any class or series of IFC capital stock necessary to approve this
Agreement and the transactions contemplated by the Agreement.
4.19 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as disclosed in
IFC's Proxy Statement for its 1995 Annual Meeting of Shareholders or as set
forth in the IFC Disclosure Letter, no officer or director of IFC, or any
"associate" (as such term is defined in Rule 14a-1 under the 1934 Act) of any
such officer or director, has any material interest in any material contracts
or property (real or personal), tangible or intangible, used in or pertaining
to the business of IFC or any IFC Subsidiaries.
4.20 ENVIRONMENTAL MATTERS. (i) To the best of IFC's knowledge, neither
IFC nor any of its subsidiaries is in violation of or has any liability,
absolute or contingent, in connection with or under any Environmental Law,
except any such violations or liabilities which would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect;
(ii) to the best of IFC's knowledge, none of the Loan Portfolio Properties,
Trust Properties and Other Properties of IFC or its subsidiaries is in
violation of or has any liability, absolute or contingent, under any
Environmental Law, except any such violations or liabilities which,
individually or in the aggregate would not have a Material Adverse Effect; and
(iii) to the best of IFC's knowledge, there are no actions, suits, demands,
notices, claims, investigations or proceedings pending or threatened
relating to any Loan Portfolio Properties, Trust Properties and Other
Properties including, without limitation any notices, demand letters or
requests for information from any federal or state environmental agency
relating to any such liability under or violation of Environmental Law, which
would impose a liability upon IFC or its subsidiaries pursuant to any
Environmental Law, except such as would not, individually or in the aggregate
have a Material Adverse Effect.
V. COVENANTS
---------
5.1 ACQUISITION PROPOSALS. Each of IFC and IFC Subsidiaries shall
not, directly or indirectly, and shall instruct and otherwise use its best
efforts to cause their respective officers,
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directors, employees, agents or advisors or other representatives or
consultants not to, directly or indirectly, (i) solicit or initiate any
proposals or offers from any person relating to any acquisition or purchase
of all or a material amount of the assets of, or any securities of, or any
merger, consolidation or business combination with, IFC or any of IFC
Subsidiaries (such transactions are referred to herein as "Acquisition
Transactions") or (ii) except to the extent that the Board is required, in
a written opinion of counsel to the Board, in the exercise of its fiduciary
duties in accordance with applicable law, to participate in any discussions
or negotiation regarding, or furnish to any other person any information with
respect to, an Acquisition Transaction; PROVIDED, HOWEVER, that nothing
contained in this Section 5.1 shall restrict or prohibit any disclosure by
IFC that is required in any document to be filed with the Commission after
the date of this Agreement or any disclosure that, in the written opinion
of counsel to the Board of Directors of the Company, is otherwise required
under applicable law. IFC will immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. IFC will notify
NCC immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with IFC.
5.2 INTERIM OPERATIONS OF IFC. During the period from the date
of this Agreement to the Effective Time, except as specifically
contemplated by this Agreement, set forth in the IFC Disclosure Letter or as
otherwise approved expressly in writing by NCC (which approval will not be
unreasonably withheld):
(a) CONDUCT OF BUSINESS. IFC shall, and shall cause each of
IFC Subsidiaries to, conduct their respective businesses only in, and
not take any action except in, the ordinary course of business
consistent with past practice. IFC shall use reasonable efforts to
preserve intact the business organization of IFC and each of IFC
Subsidiaries, to keep available the services of its and their present
key officers and employees and to preserve the goodwill of those
having business relationships with IFC or IFC Subsidiaries. Other
than in the ordinary course of business consistent with past
practice, IFC shall not (i) incur any indebtedness for borrowed money
(it being understood and agreed that incurrence of indebtedness in the
ordinary course of business shall include, without limitation, the
creation of deposit liabilities, purchases of federal funds, sales
of certificates of deposit and entering into repurchase agreements),
(ii) assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any
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other individual, corporation or other entity, or (iii) make any loan
or advance other than in the ordinary course of business consistent
with past practice;
(b) ARTICLES AND BY-LAWS. IFC shall not and shall not
permit any IFC Subsidiary to make any change or amendment to their
respective articles of incorporation or by-laws (or comparable
governing instruments).
(c) CAPITAL STOCK. IFC shall not, and shall not permit any
IFC Subsidiary to, issue or sell any shares of capital stock or any
other securities of any of them (other than pursuant to outstanding
exercisable stock options granted pursuant to one of the IFC Option
Plans) or issue any securities convertible into or exchangeable
for, or options, warrants to purchase, scrip, rights to subscribe
for, calls or commitments of any character whatsoever relating to,
or enter into any contract, understanding or arrangement with respect
to the issuance of, any shares of capital stock or any other
securities of any of them (other than pursuant to the IFC Option
Plans) or enter into any arrangement or contract with respect to the
purchase or voting of shares of their capital stock, or adjust,
split, combine or reclassify any of their capital stock or other
securities or make any other changes in their capital structures.
Neither IFC nor any IFC Subsidiaries shall grant any additional stock
options under any IFC Option Plans. Subject to any restrictions
imposed by applicable law or regulations IFC will use its best
efforts to purchase in the open market an equivalent number of shares
as are issued in connection with outstanding stock options which are
exercised between the date of the Agreement and the Closing Date.
(d) DIVIDENDS. IFC shall not and shall not permit any IFC
Subsidiary to, declare, set aside, pay or make any dividend or other
distribution or payment (whether in cash, stock or property) with
respect to, or purchase or redeem, any shares of the capital stock of
any of them other than (a) regular quarterly cash dividends in an
amount not to exceed $.50 per share of IFC Common Stock payable on the
regular historical payment dates and (b) dividends paid by any IFC
Subsidiary to another IFC Subsidiary or IFC with respect to its
capital stock between the date hereof and the Effective Time. It
is agreed by the parties hereto that they will cooperate to assure
that, during any quarter, there shall not be a duplication of nor
omission of payment of dividends to shareholders of IFC.
(e) EMPLOYEE PLANS, COMPENSATION, ETC. Without NCC's prior
consent, which consent shall not be unreasonably withheld, IFC
shall not, and shall not permit any IFC Subsidiary to, adopt or amend
(except as required by law) any bonus, profit sharing,
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compensation, severance, termination, stock option, pension,
retirement, deferred compensation, employment or other
employee benefit agreements, trusts, plans, funds or other
arrangements for the benefit or welfare of any director, officer or
employee, or (except for normal merit increases in the ordinary
course of business consistent with past practice) increase the
compensation or fringe benefits of any director, officer or employee
or pay any benefit not required by any existing plan or arrangement
(including, without limitation, the granting of stock options or
stock appreciation rights) or take any action or grant any benefit
not required under the terms of any existing agreements, trusts,
plans, funds or other such arrangements or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing.
(f) CERTAIN POLICIES. IFC will modify and change its loan,
litigation, real estate valuation asset, liquidity and investment
portfolio policies and practices (including loan classifications and
level of reserves) prior to the Effective Time so as to be consistent
on a mutually satisfactory basis with those of NCC and generally
accepted accounting principles, at the earlier of (i) such time as
NCC acknowledges that all conditions to its obligations to
consummate the Merger set forth in Sections 7.1 and 7.3 have been
waived or satisfied or (ii) immediately prior to the Effective
Time. IFC's representations, warranties or covenants contained in
this Agreement shall not be deemed to be untrue or breached in any
respect for any purpose as a consequence of any such
modifications or changes.
5.3 INTERIM OPERATIONS OF NCC. During the period from the date of
this Agreement to the Effective Time, without the prior written consent of
IFC, NCC will not declare or pay any extraordinary or special dividend on
the NCC Common Stock or take any action that would (a) materially delay or
adversely affect the ability of NCC to obtain any approvals of Governmental
Authorities required to permit consummation of the Merger or (b) materially
adversely affect its ability to perform its obligations under this Agreement
or to consummate the transaction contemplated hereby.
5.4 EMPLOYEE MATTERS.
(a) BENEFIT AGREEMENTS. Surviving Corporation agrees that
it shall honor, on and after the Effective Time, without deduction,
counterclaims, interruptions or deferment (other than withholding
under applicable law), all vested benefits of any person under all
plans or agreements.
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(b) RETIREMENT PLANS. NCC shall credit employees of IFC
and IFC Subsidiaries who become employees of NCC or Surviving
Corporation as a result of the Merger with all service with IFC or
any of IFC Subsidiaries for purposes of eligibility and vesting as
if such service had been performed for NCC but not for purposes of
benefit accrual, provided, however, that this provision shall not
change the treatment under the National City Non-Contributory
Retirement Plan and Trust of service with NCC or any of NCC's
subsidiaries prior to the Closing Date.
(c) GENERAL. Upon and after the Merger, IFC employees shall
have benefits that in the aggregate are no less favorable than the
benefits enjoyed generally by NCC employees working in similar
business lines.
5.5 ACCESS AND INFORMATION. Upon reasonable notice, each of the
parties shall (and shall cause each of the parties' subsidiaries to) afford to
the other parties and their representatives (including, without limitation,
directors, officers and employees of the parties and their affiliates, and
counsel, accountants and other professionals retained) such access during
normal business hours throughout the period prior to the Effective Time to
the books, records (including, without limitation, tax returns and work
papers of independent auditors), properties, personnel and to such other
information as any party may reasonably request; PROVIDED, HOWEVER, that no
party shall be required to provide access to any such information if the
providing of such access (i) would be reasonably likely, in the written
opinion of counsel, to result in the loss or impairment of any privilege
generally recognized under law with respect to such information or (ii) would
be precluded by any law, ordinance, regulation, judgment, order, decree,
license or permit of any Governmental Entity. All information furnished by
one party to any of the others in connection with this Agreement or the
transactions contemplated hereby shall be kept confidential by such other
party (and shall be used by it only in connection with this Agreement and the
transactions contemplated hereby) except to the extent that such information
(i) already is known to such other party when received from a source not known
by the receiving party to be under an obligation of confidentiality, (ii)
thereafter becomes lawfully obtainable from other sources or (iii) is
required to be disclosed in any non-confidential document filed with the
Commission, the FRB, the Department of Justice or any other agency or
any government. In the event that the transactions contemplated by this
Agreement shall fail to consummate, each party shall promptly cause all
copies of documents or extracts thereof containing information and data as to
another party hereto to be returned to the party which furnished the same or
destroyed.
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5.6 CERTAIN FILINGS, CONSENTS AND ARRANGEMENTS. NCC and IFC
shall (a) as soon as practicable make any required filings and
applications required to be filed with Governmental Authorities between the
date of this Agreement and the Effective Time, (b) cooperate with one another
(i) in promptly determining whether any other filings are required to be made
or consents, approvals, permits or authorizations are required to be obtained
under any other relevant federal, state or foreign law or regulation and
(ii) in promptly making any such filings, furnishing information required in
connection therewith and seeking timely to obtain any such consents,
approvals, permits or authorizations and (c) deliver to the other parties to
this Agreement copies of the publicly available portions of all such reports
promptly after they are filed.
5.7 STATE TAKEOVER STATUTES. IFC shall take all reasonable steps to
(i) exempt IFC and the Merger from the requirements of any state takeover law
by action of the Company's Board of Directors or otherwise and (ii), upon the
request of NCC, assist in any challenge by NCC to the applicability to the
Merger of any state takeover law.
5.8 INDEMNIFICATION AND INSURANCE.
(a) INDEMNIFICATION. From and after the Effective Time, NCC
will assume and honor any obligation as provided for and permitted by
applicable federal and state law IFC had immediately prior to the
Effective Time with respect to the indemnification of each person who
is now, or has been at any time prior to the date hereof or who
becomes prior to the Effective Time, a director or officer of IFC
or any IFC Subsidiary or was serving at the request of IFC as a
director, officer of any domestic or foreign corporation joint
venture, trust, employee benefit plan or other enterprise
(collectively, the "Indemnitees") arising out of IFC's Articles of
Incorporation or By-Laws or any indemnification (to the maximum
extent available thereunder and permitted by applicable law or
regulation) against any and all Losses in connection with or arising
out of any claim which is based upon, arises out of or in any way
relates to any actual or alleged act or omission occurring at or
prior to the Effective Time in the Indemnitee's capacity as a
director or officer (whether elected or appointed), of IFC or any IFC
Subsidiary. This Section 5.8 will be construed as an agreement, as to
which the Indemnitees are intended to be third-party beneficiaries.
(b) INSURANCE. For a period of three years after the
Effective Time, NCC shall use all reasonable efforts to maintain in
effect current directors' and officers' liability
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insurance in an aggregate limit of $35 million, which will insure
IFC's directors and officers for events which occurred prior to the
Effective Time but were undiscovered at the Effective Time; provided,
however, that in no event shall NCC be obligated to expend, in order
to maintain or provide insurance coverage pursuant to this Subsection
5.8(b), any amount per annum in excess of 150% of the amount of the
annual premium paid as of the date hereof by NCC for its current
director's and officers' liability insurance.
5.9 ADDITIONAL AGREEMENTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its reasonable
efforts to take promptly, or cause to be taken promptly, all actions and to
do promptly, or cause to be done promptly, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement, including using its best efforts to obtain all necessary actions
or non-actions, extensions, waivers, consents and approvals from all
applicable Governmental Entities, effecting all necessary registrations,
applications and filings (including, without limitation, filings under any
applicable state securities laws) and obtaining any required contractual
consents and regulatory approvals.
5.10 PUBLICITY. The initial press release announcing this
Agreement shall be a joint press release and thereafter IFC and NCC shall
consult with each other in issuing any press releases or otherwise making
public statements with respect to the transactions contemplated hereby and in
making any filings with any Governmental Entity or with any national securities
exchange with respect thereto.
5.11 REGISTRATION STATEMENT. NCC shall prepare and file the
Registration Statement with the Commission as soon as is reasonably
practicable following receipt of final comments from the Staff of the
Commission on the Proxy Statement (or advice that such Staff will not review
such filing) and shall use all reasonable efforts to have the Registration
Statement declared effective by the Commission as promptly as practicable and
to maintain the effectiveness of such Registration Statement. NCC shall also
take any action required to be taken under state blue sky or securities laws
in connection with the issuance of the NCC Common Stock pursuant to the
Merger, and IFC shall furnish NCC all information concerning IFC and the
holders of its capital stock and shall take any action as NCC may reasonably
request in connection with any such action.
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5.12 SECURITIES ACT; POOLING-OF-INTERESTS.
(a) Prior to the Effective Time, IFC shall identify to NCC
all persons who were, at the time of the IFC Meeting (as herein
later defined), possible "affiliates" of IFC as that term is used
in paragraphs (c) and (d) of Rule 145 under the Securities Act (at
the minimum, all those persons subject to the reporting requirements
of Rule 16(a) under the Exchange Act) and for purposes of
qualifying for "pooling-of-interests" accounting treatment (the
"Affiliates").
(b) IFC shall use its best efforts to obtain a written
agreement from each person who is identified as a possible
Affiliate pursuant to clause (a) above providing that such person
will not sell, pledge, transfer or otherwise dispose of any shares of
IFC Common Stock held by such "affiliate" and the Merger
Consideration to be received by such "affiliate" in the Merger:
(1) in the case of shares of NCC Common Stock only, except in
compliance with the applicable provisions of the Securities Act and
the rules and regulations thereunder; and (2) during the periods
during which any such sale, pledge, transfer or other disposition
would, under generally accepted accounting principles or the rules,
regulations or interpretations of the Commission, disqualify the
Merger for "pooling-of-interests" accounting treatment. The parties
understand that such periods in general encompass the period
commencing thirty (30) days prior to the Merger and ending at the
time of the publication of financial results covering at least 30
days of combined operations of NCC and IFC within the meaning of
Section 201.01 of the Commission's Codification of Financial
Reporting Policies. NCC shall file such financial results within 90
days of the Effective Time. IFC shall deliver such written agreements
to NCC at or prior to the Effective Time.
5.13 STOCK EXCHANGE LISTINGS. NCC shall use its best efforts to
list on the New York Stock Exchange, upon official notice of issuance, the
NCC Common Stock to be issued pursuant to the Merger.
5.14 PROXY. As soon as practicable after the date hereof, IFC and NCC
shall prepare the Proxy Statement, file it with the Commission, respond to
comments of the Staff of the Commission, clear the Proxy Statement with the
Staff of the Commission and promptly thereafter mail the Proxy Statement to
all holders of shares of IFC Common Stock and NCC Common Stock. NCC and
IFC shall cooperate with each other in the preparation of the Proxy
Statement.
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5.15 STOCKHOLDERS' MEETINGS.
(a) IFC shall take all action necessary, in accordance with
applicable law and its Articles of Incorporation and By-laws, to
convene a special meeting of the holders of IFC Common Stock (the
"IFC Meeting") as promptly as practicable for the purpose of
considering and taking action upon this Agreement. Unless the
Board of Directors of IFC shall have received the written advice
of counsel, reasonably acceptable to NCC, to the effect that making
such a recommendation would cause the Board of Directors of IFC to
violate its fiduciary duty under applicable law and provided that
such advice is not predicated solely upon the price of NCC Common
Stock, the Board of Directors of IFC shall recommend that the holders
of the IFC Common Stock vote in favor of and approve the Merger and
adopt this Agreement at the IFC Meeting.
(b) NCC shall take all action necessary, in accordance with
applicable law and its certificate of incorporation and by-laws, to
convene a meeting of the holders of NCC Common Stock (the "NCC
Meeting") for the purpose of considering and taking action upon this
Agreement. The Board of Directors of NCC shall recommend that holders
of NCC Common Stock vote in favor of and approve the Merger and
adopt this Agreement at the NCC Meeting.
5.16 POOLING-OF-INTERESTS AND TAX-FREE REORGANIZATION TREATMENT.
Neither NCC nor IFC shall intentionally take or cause to be taken any
action, whether before or after the Effective Time, which would disqualify the
Merger as a "pooling of interests" for accounting purposes or as a
"reorganization" within the meaning of Section 368 of the Code.
5.17 PROVISION OF SHARES. NCC shall issue and provide the shares
of NCC Common Stock deliverable upon the conversion of the IFC Common Stock
pursuant to this Agreement, and will provide the cash to be paid in lieu of
fractional shares of NCC Common Stock as provided in Subsection 2.3(f). The
shares of NCC Common Stock to be issued and exchanged for shares of IFC Common
Stock pursuant to this Agreement will, at the Effective Time, be duly
authorized, validly issued, fully paid and nonassessable and subject to no
preemptive rights.
VI. CLOSING MATTERS
---------------
6.1 THE CLOSING. Subject to satisfaction or waiver of all
conditions precedent set forth in Article VII of this Agreement, the closing
("Closing") at such location mutually agreeable to the parties and on a date
("Closing Date") which is the first business day after the later of:
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(a) the first date on which the Merger may be consummated in
accordance with the approvals of any Governmental Entities or
(b) the date the required approvals of IFC's shareholders and
NCC's stockholders have been obtained.
If all conditions are determined to be satisfied in all material respects (or
are duly waived) at the Closing, the Closing shall be consummated by the
making of all necessary filing required by all Governmental Entities.
6.2 DOCUMENTS AND CERTIFICATES. NCC and IFC shall use their
respective best efforts, on or prior to Closing, to execute and deliver all
such instruments, documents or certificates as may be necessary or advisable,
on the advice of counsel, for the consummation at the Closing of the
transactions contemplated by this Agreement to occur as soon as practicable.
VII. CONDITIONS
----------
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) The Merger shall have been approved and adopted by the
requisite vote of the holders of IFC Common Stock and by the
requisite vote of the holders of NCC Common Stock.
(b) The NCC Common Stock issuable in the Merger shall have
been authorized for listing on the New York Stock Exchange, upon
official notice of issuance.
(c) All authorizations, consents, orders or approvals of,
and all expirations of waiting periods imposed by, any Governmental
Entity (collectively, "Consents") which are necessary for the
consummation of the Merger, (other than immaterial Consents, the
failure to obtain which would not be materially adverse to the
combined businesses of NCC, IFC, NCC's subsidiaries and IFC
Subsidiaries taken as a whole) shall have been obtained or shall
have occurred and shall be in full force and effect at the Effective
Time; PROVIDED, HOWEVER, that no such authorization, consent, order
or approval shall be deemed to have been received if it shall include
any conditions or requirements which would so adversely impact the
economic or business benefits of the transactions contemplated by
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this Agreement so as to render inadvisable in the reasonable opinion
of the Board of Directors of NCC the consummation of the Merger.
(d) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act. No stop order
suspending the effectiveness of the Registration Statement shall have
been issued by the Commission and remain in effect.
(e) NCC and IFC shall have received a letter, dated the
date of the Closing, from Ernst and Young, NCC's independent
accountants, to the effect that, for financial reporting purposes,
the Merger qualifies for pooling-of-interests accounting treatment
under generally accepted accounting principles if consummated in
accordance with this Agreement.
(f) No temporary restraining order, preliminary or permanent
injunction or other order by any federal or state court in the
United States which prevents the consummation of the Merger shall have
been issued and remain in effect.
(g) Buchanan Ingersoll Professional Corporation, counsel to
IFC, shall have delivered to IFC and NCC their opinion, dated the
day of the Effective Time, substantially to the effect that, on the
basis of facts, representations and assumptions set forth in such
opinion which are consistent with the state of facts existing at the
Effective Time, the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of
the Code and that, accordingly: (i) no gain or loss will be
recognized by NCC or IFC as a result of the Merger; (ii) no gain or
loss will be recognized by the shareholders of IFC who exchange their
shares of the IFC Common Stock solely for shares of NCC Common Stock
pursuant to the Merger (except with respect to cash received in lieu
of a fractional share interest in NCC Common Stock); (iii) the tax
basis of the shares of NCC Common Stock received by shareholders
who exchange all of their shares of IFC Common Stock solely for
shares of NCC.
Common Stock in the Merger will be the same as the tax basis of the
shares of IFC Common Stock surrendered in exchange therefor (reduced by any
amount allocable to a fractional share interest for which cash is received);
and (iv) the holding period of the shares of NCC Common Stock received in
the Merger will include the period during which the shares of IFC Common Stock
surrendered in exchange therefor were held, provided such shares of IFC Common
Stock were held as capital assets at the Effective
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Time. In rendering such opinion, counsel may require and rely upon
representations contained in certificates of officers of IFC, NCC, and
others.
7.2 CONDITIONS TO OBLIGATION OF IFC TO EFFECT THE MERGER. The
obligation of IFC to effect the Merger shall be subject to the fulfillment
or waiver at or prior to the Effective Time of the additional following
conditions:
(a) NCC shall have performed in all material respects its
covenants contained in this Agreement required to be performed at or
prior to the Effective Time.
(b) The representations and warranties of NCC contained in
this Agreement shall be true in all material respects when made and
the representations and warranties set forth in Article 3 shall be
true in all material respects as of the Effective Time as if made at
and as of such time, except as expressly contemplated or permitted by
this Agreement and except for representations and warranties relating
to a time or times other than the Effective Time which were or will be
true in all material respects at such time or times.
(c) NCC shall have furnished IFC a Certificate dated the date
of the Closing, signed by the Chief Executive Officer and Chief
Financial Officer of NCC that, to the best of their knowledge and
belief after due inquiry, the conditions set forth in Subsections
7.2(a) and 7.2(b) have been satisfied.
(d) IFC and its directors and officers who sign the
Registration Statement shall have received from Ernst and Young,
NCC's independent certified public accountants, "comfort" letters,
dated (i) the date of the mailing of the Proxy Statement to NCC's
shareholders and (ii) shortly prior to the Effective Date, with
respect to certain financial information regarding NCC in the form
customarily issued by such accountants at such time in
transactions of this type.
7.3 CONDITIONS TO OBLIGATION OF NCC TO EFFECT THE MERGER. The
obligation of NCC to effect the Merger shall be subject to the fulfillment
or waiver at or prior to the Effective Time of the additional following
conditions:
(a) IFC shall have performed in all material respects its
covenants contained in this Agreement required to be performed at or
prior to the Effective Time.
(b) The representations and warranties of IFC contained in
this Agreement shall be true in all material respects when made and
the representations and warranties set forth in Article 4 shall be
true in all material respects as of the Effective Time as if made
on and
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as of such time, except as expressly contemplated or permitted by
this Agreement and except for representations and warranties
relating to a time or times other than the Effective Time which were
or will be true in all material respects at such time or times.
(c) IFC shall have furnished NCC a Certificate dated the
date of the Closing signed by the Chief Executive Officer and Chief
Financial Officer of IFC that, to the best of their knowledge and
belief after due inquiry, the conditions set forth in subsections
7.3(a) and 7.3(c) have been satisfied.
(d) NCC and its directors and officers who sign the
Registration Statement shall have received from Coopers & Lybrand
LLP, IFC's independent certified public accountants, "comfort"
letters, dated (i) the date of the mailing of the Proxy
Statement to IFC's shareholders and (ii) shortly prior to the
Effective Date, with respect to certain financial information
regarding IFC in the form customarily issued by such accountants at
such time in transactions of this type.
VIII. MISCELLANEOUS
-------------
8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
shareholders of IFC and/or the stockholders of NCC:
(a) by mutual consent of the Board of Directors of NCC and the
Board of Directors of IFC;
(b) by either NCC or IFC if the Merger shall not have been
consummated on or before August 27, 1996 or if this Agreement was
not approved at either the IFC Meeting or the NCC Meeting
(provided the terminating party is not otherwise in material breach
of its obligations under this Agreement);
(c) by IFC if any of the conditions specified in Sections 7.1
and 7.2 have not been met or waived by IFC at such time as such
condition can no longer be satisfied;
(d) by NCC if any of the conditions specified in Sections 7.1
and 7.3 have not been met or waived by NCC at such time as such
condition can no longer be satisfied;
8.2 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
The representations and warranties or covenants in this Agreement will
terminate at the Effective Time or the earlier termination of this
Agreement pursuant to Section 7.1, as the case may be; PROVIDED, HOWEVER,
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that if the Merger is consummated, Sections 1.6, 2.1 through 2.4, 5.4, 5.5,
5.8, 5.17 and 8.2 hereof will survive the Effective Time to the extent
contemplated by such Sections; PROVIDED, FURTHER, that the last sentence of
Section 5.5 and all of Section 8.10 hereof will in all events survive any
termination of this Agreement.
8.3 WAIVER AND AMENDMENT. Subject to applicable provisions of the
DGCL and BCL, any provision of this Agreement may be waived at any time by the
party which is, or whose stockholders are, entitled to the benefits thereof,
and this Agreement may be amended or supplemented at any time, provided that
no amendment will be made after any stockholder approval of the Merger which
reduces or changes the form of the Merger Consideration without further
stockholder approval. No such waiver, amendment or supplement will be
effective unless in a writing which makes express reference to this Section 8.3
and is signed by the party or parties sought to be bound thereby.
8.4 ENTIRE AGREEMENT. This Agreement together with the Option
Agreement contain the entire agreement among NCC and IFC with respect to the
Merger and the other transactions contemplated hereby and thereby, and
supersedes all prior agreements among the parties with respect to such matters.
8.5 APPLICABLE LAW; CONSENT TO JURISDICTION. This Agreement will
be governed by and construed in accordance with the laws of the State of
Ohio except to the extent laws of the state of Delaware and Commonwealth of
Pennsylvania govern the merger. NCC and IFC consent to personal jurisdiction
in any action brought in any federal or state court within the State of Ohio
having subject matter jurisdiction in the matter for purposes of any action
arising out of this Agreement.
8.6 CERTAIN DEFINITIONS; HEADLINES. (a) For purposes of this
Agreement, the term:
(i) "affiliate", "associate" and "significant
subsidiary" shall have the respective meanings ascribed to such
terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as in effect on the date hereof.
(ii) "control" (including the terms "controlled by"
and "under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause
the direction of the management or policies of a person, whether
through the ownership of stock, as trustee or executor, by
contract or credit arrangement or otherwise;
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(iii) "Fed Approval Date" means the day the FRB issues
order approving consummation of the Merger.
(iv) "Market Price" means the average of the per share
closing prices on the New York Stock Exchange of NCC Common Stock
for the 20 consecutive trading days ending at the end of the third
trading day immediately preceding the Effective Time.
(v) "Material Adverse Effect" means an event,
change or occurrence which has a material negative impact on the
financial condition, businesses or results of operations of IFC and
its subsidiaries, taken as a whole, or NCC and its subsidiaries, taken
as a whole, as the case may be, or the ability of IFC or NCC, as the
case may be, to consummate the transactions contemplated hereby. The
effect of any action taken by IFC solely pursuant to Subsection
5.2(f) shall not be taken into consideration in determining whether
any Material Adverse Effect has occurred.
(vi) "person" means an individual, corporation, partnership,
association, trust or unincorporated organization; and
(vii) "subsidiary" of IFC, NCC or any other person means,
except where the context otherwise requires, any corporation,
partnership, trust or similar association of which IFC, NCC or any
other person, as the case may be (either alone or through or together
with any other subsidiary), owns, directly or indirectly, more than
50% of the stock or other equity interests, the holders of which are
generally entitled to vote for the election of the board of directors
or other governing body of such corporation.
(b) The descriptive headings contained in this Agreement are
for convenience and reference only and will not affect in any way
the meaning or interpretation of this Agreement.
(c) Unless the context of this Agreement expressly indicates
otherwise, (i) any singular term in this Agreement will include the
plural and any plural term will include the singular and (ii) the
term section or schedule will mean a section or schedule of
or to this Agreement.
8.7 NOTICES. All notices, consents, requests, demands and other
communications hereunder will be in writing and will be deemed to have been
duly given or delivered if delivered personally, telexed with receipt
acknowledged, mailed by registered or certified mail return receipt
requested, sent by facsimile with confirmation of receipt, or delivered by a
recognized commercial courier addressed as follows:
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If to IFC to:
Integra Financial Corporation
Four PPG Place
Pittsburgh, Pennsylvania 15222-5408
Fax No. (412) 261-7279
Attention: Chairman of the Board
With copies to:
Integra Financial Corporation
Four PPG Place
Pittsburgh, Pennsylvania 15222-5408
Fax No. (412) 261-7279
Attention: General Counsel
With copies to:
Buchanan Ingersoll P.C.
1 Oxford Center
301 Grant Street, 20th Floor
Pittsburgh, Pennsylvania 15219-1410
Fax No. (412) 562-1041
Attention: William R. Newlin
If to NCC to:
National City Corporation
P. O. Box 5756
Cleveland, Ohio 44101-0756
Attention: Chairman of the Board
Fax No. (216) 575-3332
With a copy to:
National City Corporation
Law Department
P. O. Box 5756
Cleveland, Ohio 44101-0756
Attention: General Counsel
Fax No. (216) 575-3332
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<PAGE> 50
or to such other address as any party may have furnished to the other parties
in writing in accordance with this Section 8.7.
8.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original but all of which
together will constitute but one agreement.
8.9 PARTIES IN INTEREST; ASSIGNMENT. Except for Section 2.2, (which
is intended to be for the benefit of the holders of Outstanding Options under
the IFC Option Plans to the extent contemplated thereby and their
beneficiaries, and may be enforced by such persons) and Sections 5.4 and
5.8 hereof (which are intended to be for the benefit of directors, officers
or employees to the extent contemplated thereby and their beneficiaries, and
may be enforced by such persons), this Agreement is not intended to nor
will it confer upon any other person (other than the parties hereto) any
rights or remedies. Without the prior written consent of the other parties to
this Agreement neither NCC nor IFC shall assign any rights or delegate any
obligations under this Agreement. Any such purported assignment or
delegation made without prior consent of the other parties hereto shall be null
and void.
8.10 EXPENSES.
(a) If the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby will be paid by the Surviving Corporation.
(b) Notwithstanding anything contained in Subsection 8.10(a)
to the contrary, if this Agreement is terminated by IFC or NCC
pursuant to Subsection 8.1(c) or 8.1(d), respectively, because of
the willful breach by the other party of any representation,
warranty, covenant, undertaking or restriction contained in this
Agreement and if the terminating party is not in material breach of
any representation, warranty, covenant, undertaking or restriction
contained in this Agreement, then the breaching party shall pay all
costs and expenses of the terminating party; PROVIDED, HOWEVER, that
if this Agreement is terminated under circumstances other than those
described in this Subsection 8.10(b), all costs and expenses incurred
such costs and expenses. Nothing contained in this Subsection 8.10(b)
shall constitute or shall be deemed to constitute liquidated damages
for the willful breach by a party of the terms of this Agreement or
otherwise limit the rights of the nonbreaching party.
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(c) Final settlement with respect to payment of fees and
expenses by the parties to this Agreement pursuant to Subsection
8.10(b) shall be made within thirty (30) days of the termination
of this Agreement.
8.11 ENFORCEMENT OF THE AGREEMENT. The parties hereto 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 the parties hereto
will be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
8.12 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other terms and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party hereto. Upon any such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto will negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated by this
Agreement are consummated to the extent possible.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute this Agreement as of the date first above
written.
INTEGRA FINANCIAL CORPORATION
Attest Leonard M. Carroll By /s/ William F. Roemer
-------------------- ----------------------------
Its: Chairman & CEO
----------------------------
NATIONAL CITY CORPORATION
Attest David L. Zoeller By /s/ David A. Daberko
-------------------- ----------------------------
Its: President & CEO
----------------------------
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<PAGE> 1
Exhibit 2.2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of August 27, 1995, between
National City Corporation, a Delaware corporation ("Grantee"), and Integra
Financial Corporation, a Pennsylvania corporation ("Issuer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, as a condition to, and contemporaneous with the
execution of this Stock Option Agreement the parties are entering into an
Agreement and Plan of Merger dated August 27, 1995 ("Agreement") and in
consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafer defined):
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 6,501,300 fully paid and nonassessable shares of Common Stock, par value
$1.00 ("Common Stock"), of Issuer at a price of $51.875 share; PROVIDED,
HOWEVER, that in the event Issuer issues or agrees to issue any shares of
Common Stock at a price less than $51.875 per share (as adjusted pursuant to
subsection 5(b)), such price shall be equal to such lesser price (such price,
as adjusted if applicable, the "Option Price"); PROVIDED FURTHER that in no
event shall the number of shares for which this Option is exercisable together
with the number of shares owned by National City Corporation other than Trust
Account Shares (as defined in the Agreement) exceed 19.9% of the Issuer's
issued and outstanding common shares without giving effect to any shares
subject or issued pursuant to the Option. The number of shares of Common Stock
that may be received upon the exercise of the Option and the Option Price are
subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are issued or otherwise become outstanding after the date of this Stock Option
Agreement, the number of shares of Common Stock subject to the Option shall be
increased so that, after such issuance, together with the number of shares
owned by National City Corporation other than Trust Account Shares equals 19.9%
of the number of shares of Common Stock then issued and outstanding without
giving effect to any shares subject or issued pursuant to the Option. Nothing
contained in this Section 1(b) or elsewhere in this Stock Option Agreement
shall be deemed to authorize Issuer or Grantee to breach any provision of the
Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the
Option, in whole or part, if, but only if, both an Initial Triggering Event (as
hereinafter defined) and a Subsequent Triggering Event (as hereinafter defined)
shall have occurred prior to the occurrence of an Exercise Termination Event
(as hereinafter defined), PROVIDED that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2)
within 30 days
<PAGE> 2
following such Subsequent Triggering Event (or such later date as provided in
Section 10). Each of the following shall be an Exercise Termination Event: (i)
immediately prior to the Effective Time of the Merger; (ii) termination of the
Agreement in accordance with the provisions thereof (other than a termination
resulting from a willful breach by Issuer of a provision of the Agreement) if
such termination occurs prior to the occurrence of an Initial Triggering Event;
or (iii) the passage of twelve months after termination of the Agreement if
such termination follows the occurrence of an Initial Triggering Event
(PROVIDED that if an Initial Triggering Event continues or another Initial
Triggering Event occurs beyond such termination, the Exercise Termination Event
shall be twelve months from the expiration of the Last Triggering Event but in
no event more than 18 months after such termination). The "Last Triggering
Event" shall mean the last Initial Triggering Event to occur. The term
"Holder" shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its subsidiaries (each an
"Issuer Subsidiary"), without having received Grantee's prior written
consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person (the
term "person" for purposes of this Stock Option Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934 (the "1934 Act"), and the rules and
regulations thereunder) other than Grantee or any of its subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer shall
have recommended that the shareholders of Issuer approve or accept any
Acquisition Transaction other than as contemplated by the Agreement.
For purposes of this Stock Option Agreement, "Acquisition Transaction"
shall mean (x) a merger or consolidation, or any similar transaction,
involving Issuer or any of Issuer's bank, trust company or finance
company subsidiaries ("Significant Subsidiary"), (y) a purchase, lease
or other acquisition of all or substantially all of the assets of Issuer
or any Significant Subsidiary, or (z) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise)
of securities representing 10% or more of the voting power of Issuer or
Significant Subsidiary; (The term Acquisition Transaction specifically
does not include any merger or consolidation among Issuer and/or Issuer
Subsidiaries.)
(ii) The Board of Directors of Issuer does not
recommend that the shareholders of Issuer approve the Agreement;
(iii) Any person other than Grantee, any shareholder
of Grantee who currently beneficially holds 10% or more of Grantee's
outstanding shares of Common Stock, any Grantee Subsidiary or any Issuer
Subsidiary acting in a fiduciary capacity shall have acquired beneficial
ownership or the right to acquire beneficial ownership of 10% or more of
the outstanding shares of Common Stock (the term "beneficial ownership"
for purposes of this Stock Option Agreement having the meaning assigned
thereto in Section 13(d) of the 1934 Act, and the rules and regulations
thereunder);
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<PAGE> 3
(iv) Any person other than Grantee or any Grantee
Subsidiary shall have made a BONA FIDE proposal to Issuer or its
shareholders by public announcement or written communication that is or
becomes the subject of public disclosure to engage in an Acquisition
Transaction;
(v) After a proposal is made by a third party to
Issuer or its shareholders to engage in an Acquisition Transaction,
Issuer shall have breached any covenant or obligation contained in the
Agreement and such breach (x) would entitle Grantee to terminate the
Agreement and (y) shall not have been cured prior to the Notice Date (as
defined below); or
(vi) Any person other than Grantee or any Grantee
Subsidiary, other than in connection with a transaction to which Grantee
has given its prior written consent, shall have filed an application or
notice with The Board of Governors of the Federal Reserve System (the
"FRB") or other governmental authority or regulatory or administrative
agency or commission, domestic or foreign (each, a "Government Entity"),
for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either
of the following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial
ownership of 15% or more of the then outstanding Common Stock other than
by any person who currently beneficially owns more than 15% of the
outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event
described in clause (i) of subsection 2(b), except that the percentage
referred to in clause (z) shall be 15%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event"), it being understood that the giving of such
notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the date of
which being herein referred to as the "Notice Date") specifying (i) the total
number of shares it will purchase pursuant to such exercise and (ii) a place
and date not earlier than three business days nor later than 60 business days
from the Notice Date for the closing of such purchase (the "Closing Date");
PROVIDED that if prior notification to or approval of the FRB or any other
Governmental Entity is required in connection with such purchase, the Holder
shall promptly file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run from the later of (x) the date on which any
required notification periods have expired or been terminated and (y) the date
on which such approvals have been obtained and any
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<PAGE> 4
requisite waiting period or periods shall have passed. Any exercise of the
option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this
Section 2, the Holder shall pay to Issuer the aggregate purchase price for the
shares of Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated by
Issuer, PROVIDED that failure or refusal of Issuer to designate such a bank
account shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of shares of Common Stock purchased by the Holder and, if the Option
should be exercised in part only, a new Option evidencing the rights of the
Holder thereof to purchase the balance of the shares purchasable hereunder, and
the Holder shall deliver to Issuer a copy of this Stock Option Agreement and a
letter agreeing that the Holder will not offer to sell or otherwise dispose of
such shares in violation of applicable law or the provisions of this Stock
Option Agreement.
(h) Certificates for Common Stock delivered at a closing
hereunder shall be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder
hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file
at the principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written request
therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such
reference if the Holder shall have delivered to Issuer a copy of a letter from
the staff of the Securities and Exchange Commission (the "SEC"), or an opinion
of counsel, in form and substance satisfactory to Issuer, to the effect that
such legend is not required for purposes of the 1933 Act; (ii) the reference to
the provisions of this Stock Option Agreement in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions of this
Stock Option Agreement and under circumstances that do not require the
retention of such reference; and (iii) the legend shall be removed in its
entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend as may
be required by law.
(i) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under subsection (e) of this
Section 2 and the tender of the applicable purchase price in immediately
available funds, the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
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<PAGE> 5
stock transfer books of Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered
to the Holder. Issuer shall pay all expenses, and any and all United States
Federal, state and local taxes and other charges that may be payable in
connection with the preparation, issue and delivery of stock certificates under
this Section 2 in the name of the Holder or its assignee, transferee or
designee.
3. Issuer agrees: (i) that it shall at all times maintain,
free from preemptive rights, sufficient authorized but unissued or treasury
shares of Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended, or the Change in Bank Control Act of 1978, as amended, or
any state banking law, prior approval of or notice to the FRB or to any other
Governmental Entity is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to each such Governmental Entity as they may
require) in order to permit the Holder to exercise the Option and Issuer duly
and effectively to issue shares of Common Stock pursuant hereto; and (iv)
promptly to take all action provided herein to protect the rights of the Holder
against dilution.
4. This Stock Option Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Stock Option Agreement at the principal
office of Issuer, for other agreements providing for Options of different
denominations entitling the holder thereof to purchase, on the same terms and
subject to the same conditions as are set forth herein, in the aggregate the
same number of shares of Common Stock purchasable hereunder. The terms "Stock
Option Agreement" and "Option" as used herein include any Stock Option
Agreements and related options for which this Stock Option Agreement (and the
Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Stock Option Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Stock Option Agreement, if mutilated, Issuer will execute and deliver a
new Stock Option Agreement of like tenor and date. Any such new Stock Option
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Stock Option Agreement so
lost, stolen, destroyed or mutilated shall at any time be enforceable by
anyone.
5. In addition to the adjustment in the number of shares of
Common Stock that are purchasable upon exercise of the Option pursuant to
Section 1 of this Stock Option
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<PAGE> 6
Agreement, the number of shares of Common Stock purchasable upon the exercise
of the Option shall be subject to adjustment from time to time as provided in
this Section 5.
(a) In the event of any change in Common Stock by
reason of stock dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares or the like, the type and number
of shares of Common Stock purchasable upon exercise hereof shall be
appropriately adjusted.
(b) Whenever the number of shares of Common Stock
purchasable upon exercise hereof is adjusted as provided in this Section 5, the
Option Price shall be adjusted by multiplying the Option Price by a fraction,
the numerator of which shall be equal to the number of shares of Common Stock
purchasable prior to the adjustment and the denominator of which shall be equal
to the number of shares of Common Stock purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that
occurs prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee delivered within 30 days (or such later date as may be provided
pursuant to Section 10) of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof)
or any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a shelf registration statement under the 1933 Act
covering any shares issued and issuable pursuant to this Option and shall use
its best efforts to cause such registration statement to become effective and
remain current in order to permit the sale or other disposition of any shares
of Common Stock issued upon total or partial exercise of this option ("Option
Shares") in accordance with any plan of disposition requested by Grantee;
PROVIDED, HOWEVER, that Issuer may postpone filing a registration statement
relating to a registration request by Grantee under this Section 6 for a period
of time (not in excess of 180 days) if in its judgment such filing would
require the disclosure of material information that Issuer has a BONA FIDE
business purpose for preserving as confidential. Issuer will use its best
efforts to cause such registration statement first to become effective and then
to remain effective for such period not in excess of 180 days from the day such
registration statement first becomes effective or such shorter time as may be
reasonably necessary to effect such sales or other dispositions. Grantee shall
have the right to demand two such registrations. If requested by any such
Holder in connection with such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements. The foregoing notwithstanding, if, at the time of any request by
Grantee for registration of Option Shares as provided above, Issuer is in the
process of registration with respect to an underwritten public offering of
shares of Common Stock, and if in the good faith judgment of the managing
underwriter or managing underwriters, or, if none, the sole underwriter or
underwriters, of such offering the offering or inclusion of the Holder's Option
or Option Shares would interfere with the successful marketing of the shares of
Common Stock offered by Issuer, the number of Option Shares otherwise to be
covered in the registration statement contemplated hereby may be reduced;
PROVIDED, HOWEVER, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 25% of the
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<PAGE> 7
total number of shares to be issued by the Holder and Issuer in the aggregate;
PROVIDED FURTHER, however, that if such reduction occurs, then the Issuer shall
file a registration statement for the balance as promptly as practical and no
reduction shall thereafter occur. Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. Upon receiving any request under this Section
6 from any Holder, Issuer agrees to send a copy thereof to any other person
known to Issuer to be entitled to registration rights under this Section 6, in
each case by promptly mailing the same, postage prepaid, to the address of
record of the persons entitled to receive such copies.
7. (a) Upon the occurrence of a Subsequent Triggering Event
that occurs prior to an Exercise Termination Event, (i) at the request of the
Holder, delivered within 30 days of the Subsequent Trigger Event (or such later
period as may be provided pursuant to Section 10), Issuer shall repurchase the
Option from the Holder at a price (the "Option Repurchase Price") equal to (x)
the amount by which (A) the market/offer price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which this Option may
then be exercised plus (y) Grantee's Out-of-Pocket Expenses (as defined below)
(to the extent not previously reimbursed) and (ii) at the request of the owner
of Option Shares from time to time (the "Owner"), delivered within 30 days of a
Subsequent Trigger Event (or such later period as may be provided pursuant to
Section 10), Issuer shall repurchase such number of the Option Shares from the
Owner as the Owner shall designate at a price (the "Option Share Repurchase
Price") equal to (x) the market/offer price multiplied by the number of Option
Shares so designated plus (y) Grantee's Out-of-Pocket Expenses (to the extent
not previously reimbursed). The term "Out-of-Pocket Expenses" shall mean
Grantee's reasonable out-of-pocket expenses incurred in connection with the
transactions contemplated by the Agreement, including, without limitation,
legal, accounting and investment banking fees. The term "market/offer price"
shall mean the highest of (i) the price per share of Common Stock at which a
tender offer or exchange offer therefor has been made after the date hereof,
(ii) the price per share of Common Stock to be paid by any third party pursuant
to an agreement with Issuer, (iii) the highest closing price for shares of
Common Stock within the 30-day period immediately preceding the date the Holder
gives notice of the required repurchase of this Option or the Owner gives
notice of the required repurchase of Option Shares, as the case may be, or (iv)
in the event of a sale of all or substantially all of Issuer's assets, the sum
of the price paid in such sale for such assets and the current market value of
the remaining assets of Issuer as determined by a nationally recognized
investment banking firm selected by the Holder or the Owner, as the case may
be, divided by the number of shares of Common Stock of Issuer outstanding at
the time of such sale. In determining the market/offer price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or Owner, as the case may be,
whose determination shall be conclusive and binding on all parties.
(b) The Holder or the Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Stock Option Agreement or certificates for
Option Shares, as applicable, accompanied by a written notice or notices
stating that the Holder or the Owner, as the case may be, elects to require
Issuer to repurchase this
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<PAGE> 8
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation, or as a consequence of administrative policy, from
repurchasing the Option and/or the Option Shares in full, Issuer shall
immediately so notify the Holder and/or the Owner and thereafter deliver or
cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from
delivering, within five business days after the date on which Issuer is no
longer so prohibited; PROVIDED, HOWEVER, that if Issuer at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this Section 7
is prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Holder and/or the Owner, as
appropriate, the Option Repurchase Price and the Option Share Repurchase Price,
respectively, in full (and Issuer hereby undertakes to use its best efforts to
obtain all required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to accomplish such repurchase), the
Holder or Owner may revoke its notice of repurchase of the Option or the Option
Shares either in whole or to the extent of the prohibition, whereupon, in the
latter case, Issuer shall promptly (i) deliver to the Holder and/or the Owner,
as appropriate, that portion of the Option Purchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Holder, a new Stock Option Agreement
evidencing the right of the Holder to purchase that number of shares of Common
Stock obtained by multiplying the number of shares of Common Stock for which
the surrendered Stock Option Agreement was exercisable at the time of delivery
of the notice of repurchase by a fraction, the numerator of which is the Option
Repurchase Price less the sum of (x) the portion thereof theretofore delivered
to the Holder and (y) Out-of-Pocket Expenses and the denominator of which is
the Option Repurchase Price less Out-of-Pocket Expenses, or (B) to the Owner, a
certificate for the Option Shares it is then so prohibited from repurchasing,
assuming that the portion of the Option Share Repurchase Price theretofore
delivered is first applied to the payment of Out-of-Pocket Expenses and then to
the repurchase of Option Shares.
8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into an agreement (i) to consolidate or merge with
any person, other than Grantee or one of its subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) to
permit any person, other than Grantee or one of its subsidiaries, to merge into
Issuer and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its assets to any person, other than Grantee or one
of its subsidiaries, then, and
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<PAGE> 9
in each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or merger with
Issuer (if other than Issuer), (ii) Issuer in a merger in which Issuer
is the continuing or surviving person, and (iii) the transferee of all
or substantially all of Issuer's assets.
(2) "Substitute Common Stock" shall mean the common
stock to be issued by the issuer of the Substitute Option upon exercise
of the Substitute Option.
(3) "Assigned Value" shall mean the market/offer
price, as defined in Section 7.
(4) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in question, but
in no event higher than the closing price of the shares of Substitute
Common Stock on the day preceding such consolidation, merger or sale;
PROVIDED, that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common stock
issued by the person merging into Issuer or by any company which
controls or is controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the
Option, provided, that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to the Holder. The issuer of the Substitute
Option shall also enter into an agreement with the then Holder or Holders of
the Substitute Option in substantially the same form as this Stock Option
Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such
number of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal to
the Option Price multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock for which the Option is then exercisable and
the denominator of which shall be the number of shares of Substitute Common
Stock for which the Substitute Option is exercisable.
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<PAGE> 10
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for a number of shares that together
with the number of shares owned by National City Corporation, other than Trust
Account Shares, is more than 19.9% of the shares of Substitute Common Stock
outstanding prior to exercise of the Substitute Option. In the event that the
Substitute Option would be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise but for this clause (e),
the issuer of the Substitute Option (the "Substitute Option Issuer") shall make
a cash payment to the Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by
a nationally recognized investment banking firm selected by the Holder.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option
(the "Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to (x) the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied
by the number of shares of Substitute Common Stock for which the Substitute
Option may then be exercised plus (y) Grantee's Out-of-Pocket Expenses (to the
extent not previously reimbursed), and at the request of the owner (the
"Substitute Share Owner") of shares of Substitute Common Stock (the "Substitute
Shares"), the Substitute Option issuer shall repurchase the Substitute Shares
at a price (the "Substitute Share Repurchase Price") equal to (x) the Highest
Closing Price multiplied by the number of Substitute Shares so designated plus
(y) Grantee's Out-of-Pocket Expenses (to the extent not previously reimbursed).
The term "Highest Closing Price" shall mean the highest closing price for
shares of Substitute Common Stock within the 30-day period immediately
preceding the date the Substitute Option Holder gives notice of the required
repurchase of the Substitute Option or the Substitute Share Owner gives notice
of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder or the Substitute Share
Owner, as the case may be, may exercise its respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the Substitute
Shares pursuant to this Section 9 by surrendering for such purpose to the
Substitute Option Issuer, at its principal office, the agreement for such
Substitute Option (or, in the absence of such an agreement, a copy of this
Stock Option Agreement) and certificates for Substitute Shares accompanied by a
written notice or notices stating that the Substitute Option Holder or the
Substitute Share Owner, as the case may be, elects to require the Substitute
Option Issuer to repurchase the Substitute Option and/or the Substitute Shares
in accordance with the provisions of this Section 9. As promptly as
practicable, and in any event within five business days after the surrender of
the Substitute Option and/or certificates representing Substitute Shares and
the receipt of such notice or notices relating thereto, the
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<PAGE> 11
Substitute Option Issuer shall deliver or cause to be delivered to the
Substitute Option Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute Share Repurchase Price therefor or the
portion thereof which the Substitute Option Issuer is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer shall
immediately so notify the Substitute Option Holder and/or the Substitute Share
Owner and thereafter deliver or cause to be delivered, from time to time, to
the Substitute Option Holder and/or the Substitute Share Owner, as appropriate,
the portion of the Substitute Share Repurchase Price, respectively, which it is
no longer prohibited from delivering, within five business days after the date
on which the Substitute Option Issuer is no longer so prohibited; PROVIDED,
HOWEVER, that if the Substitute Option Issuer is at any time after delivery of
a notice of repurchase pursuant to subsection (b) of this Section 9 prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from delivering to the Substitute Option Holder and/or the Substitute
Share Owner, as appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the Substitute
Option Issuer shall use its best efforts to receive all required regulatory and
legal approvals as promptly as practicable in order to accomplish such
repurchase), the Substitute Option Holder or Substitute Share Owner may revoke
its notice of repurchase of the Substitute Option or the Substitute Shares
either in whole or to the extent of the prohibition, whereupon, in the latter
case, the Substitute Option Issuer shall promptly (i) deliver to the Substitute
Option Holder or Substitute Share Owner, as appropriate, that portion of the
Substitute Option Repurchase Price or the Substitute Share Repurchase Price
that the Substitute Option Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the sum of (x) the portion thereof theretofore
delivered to the Substitute Option Holder and (y) Out-of-Pocket Expenses and
the denominator of which is the Substitute Option Repurchase Price less
Out-of-Pocket Expenses, or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing,
assuming that the portion of the Substitute Share Repurchase Price theretofore
delivered is first applied to the payment of Out-of-Pocket Expenses and then to
the repurchase of Substitute Shares.
10. The 30-day period for exercise of certain rights under
Sections 2, 6, 7 and 12 shall be extended: (i) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights, and for the
expiration of all statutory waiting periods; and (ii) to the extent necessary
to avoid liability under Section 16(b) of the 1934 Act by reason of such
exercise.
11. Issuer hereby represents and warrants to Grantee as
follows:
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<PAGE> 12
(a) Issuer has full corporate power and authority to execute
and deliver this Stock Option Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Stock Option Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to authorize this Stock Option
Agreement or to consummate the transactions so contemplated. This Stock Option
Agreement has been duly and validly executed and delivered by Issuer. This
Stock Option Agreement is the valid and legally binding obligation of Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Stock Option Agreement in accordance
with its terms will have reserved for issuance upon the exercise of the Option,
that number of shares of Common Stock equal to the maximum number of shares of
Common Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly issued,
fully paid, nonassessable, and will be delivered free and clear of all claims,
liens, encumbrances and security interests and not subject to any preemptive
rights.
12. Neither of the parties hereto may assign any of its
rights and obligations under this Stock Option Agreement or the Option created
hereunder to any other person, without the express written consent of the other
party, except that in the event a Subsequent Triggering Event shall have
occurred prior to an Exercise Termination Event, Grantee, subject to the
express provisions hereof, may assign in whole or in part its rights and
obligations hereunder within 30 days following such Subsequent Triggering Event
(or such later period as may be provided pursuant to Section 10); PROVIDED,
HOWEVER, that until the date 30 days following the date at which the FRB
approves an application by Grantee under the Bank Holding Company Act to
acquire the shares of Common Stock subject to the Option, Grantee may not
assign its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (E.Q., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's behalf, or (iv)
any other manner approved by the FRB.
13. Each of Grantee and Issuer will use its best efforts to
make all filings with, and to obtain consents of, all third parties and
Governmental Entities necessary to the consummation of the transactions
contemplated by this Stock Option Agreement, including without limitation
making application to list the shares of Common Stock issuable hereunder on the
New York Stock Exchange upon official notice of issuance and applying to the
FRB under the Bank Holding Company Act for approval to acquire the shares
issuable hereunder.
14. Notwithstanding anything to the contrary herein, in the
event that the Holder or Owner or any affiliate (as defined in Rule 12b-2 of
the rules and regulations under the 1934 Act) thereof is a person making an
offer or proposal to engage in an Acquisition Transaction
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<PAGE> 13
(other than the Merger), then (i) in the case of a Holder or any affiliate
thereof, the Option held by it shall immediately terminate and be of no further
force or effect, and (ii) in the case of an Owner or any affiliate thereof, the
Option Shares held by it shall be immediately repurchasable by Issuer at the
Option Price.
15. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Stock Option Agreement by either party
hereto and that the obligations of the parties shall hereto be enforceable by
either party hereto through injunctive or other equitable relief.
16. If any term, provision, covenant or restriction contained
in this Stock Option Agreement is held by a court or a federal or state
regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this Stock Option Agreement shall remain in full
force and effect, and shall in no way be affected, impaired or invalidated. If
for any reason such court or regulatory agency determines that the Holder is
not permitted to acquire, or Issuer is not permitted to repurchase pursuant to
Section 7, the full number of shares of Common Stock provided in Section 1(a)
hereof (as adjusted pursuant to Section 1(b) or 5 hereof), it is the express
intention of Issuer to allow the Holder to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
17. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Agreement.
18. This Stock Option Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
19. This Stock Option Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
20. Except as otherwise expressly provided herein, each of
the parties hereto shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
21. Except as otherwise expressly provided herein or in the
Agreement, this Stock Option Agreement contains the entire agreement between
the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereof,
written or oral. The terms and conditions of this Stock Option Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors
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<PAGE> 14
and permitted assigns. Nothing in this Stock Option Agreement, expressed or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors except as assigns, any rights, remedies,
obligations or liabilities under or by reason of this Stock Option Agreement,
except as expressly provided herein.
22. Terms used in this Stock Option Agreement and not defined
herein but defined in the Agreement shall have the meanings assigned thereto in
the Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
NATIONAL CITY CORPORATION
By: /s/ David A. Daberko
--------------------
Title: President & CEO
---------------
INTEGRA FINANCIAL CORPORATION
By: /s/ William F. Roemer
---------------------
Title: Chairman & CEO
--------------
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<PAGE> 1
Exhibit 2.3
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of August 27, 1995, between
National City Corporation, a Delaware corporation ("Issuer"), and Integra
Financial Corporation, a Pennsylvania corporation ("Grantee").
W I T N E S S E T H:
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WHEREAS, as a condition to, and contemporaneous with the
execution of this Stock Option Agreement the parties are entering into an
Agreement and Plan of Merger dated August 27, 1995 ("Agreement") and in
consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafer defined):
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 12,098,600 fully paid and nonassessable shares of Common Stock, no par value
("Common Stock"), of Issuer at a price of $31.625 share; PROVIDED, HOWEVER,
that in the event Issuer issues or agrees to issue any shares of Common Stock
at a price less than $31.625 per share (as adjusted pursuant to subsection
5(b)), such price shall be equal to such lesser price (such price, as adjusted
if applicable, the "Option Price"); PROVIDED FURTHER that in no event shall the
number of shares for which this Option is exercisable exceed 8.2% of the
Issuer's issued and outstanding common shares without giving effect to any
shares subject or issued pursuant to the Option. The number of shares of
Common Stock that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are issued or otherwise become outstanding after the date of this Stock Option
Agreement, the number of shares of Common Stock subject to the Option shall be
increased so that, after such issuance, it equals 8.2% of the number of shares
of Common Stock then issued and outstanding without giving effect to any shares
subject or issued pursuant to the Option. Nothing contained in this Section
1(b) or elsewhere in this Stock Option Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the
Option, in whole or part, if, but only if, both an Initial Triggering Event (as
hereinafter defined) and a Subsequent Triggering Event (as hereinafter defined)
shall have occurred prior to the occurrence of an Exercise Termination Event
(as hereinafter defined), PROVIDED that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2)
within 30 days following such Subsequent Triggering Event (or such later date
as provided in Section 10). Each of the following shall be an Exercise
Termination Event: (i) immediately prior to the Effective
<PAGE> 2
Time of the Merger; (ii) termination of the Agreement in accordance with the
provisions thereof (other than a termination resulting from a willful breach by
Issuer of any provision of the Agreement) if such termination occurs prior to
the occurrence of an Initial Triggering Event; or (iii) the passage of twelve
months after termination of the Agreement if such termination follows the
occurrence of an Initial Triggering Event (PROVIDED that if an Initial
Triggering Event continues or another Initial Triggering Event occurs beyond
such termination, the Exercise Termination Event shall be twelve months from
the expiration of the Last Triggering Event but in no event more than 18 months
after such termination). The "Last Triggering Event" shall mean the last
Initial Triggering Event to occur. The term "Holder" shall mean the holder or
holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its subsidiaries (each an
"Issuer Subsidiary"), without having received Grantee's prior written
consent, shall have engaged in an Acquisition Transaction (as
hereinafter defined) with any person (the term "person" for purposes of
this Stock Option Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934
(the "1934 Act"), and the rules and regulations thereunder) other than
Grantee or any of its subsidiaries (each a "Grantee Subsidiary") other
than as contemplated by the Agreement. For purposes of this Stock
Option Agreement, "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer or any of
Issuer's banking subsidiaries, specifically excluding Madison Bank and
Trust Company and National City Bank, Ashland, ("Significant
Subsidiary"), (y) a purchase, lease or other acquisition of all or
substantially all of the assets of Issuer or any Significant Subsidiary,
or (z) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing
30% or more of the voting power of Issuer; (The term Acquisition
Transaction specifically does not include any merger or consolidation
among Issuer and/or Issuer Subsidiaries.)
(ii) Any person other than Grantee, any Grantee
Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity shall
have acquired beneficial ownership of 30% or more of the outstanding
shares of Common Stock (the term "beneficial ownership" for purposes of
this Stock Option Agreement having the meaning assigned thereto in
Section 13(d) of the 1934 Act, and the rules and regulations
thereunder);
(c) The term "Subsequent Triggering Event" shall mean either
of the following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial ownership of
40% or more of the then outstanding Common Stock; or
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<PAGE> 3
(ii) The occurrence of the Initial Triggering Event described
in clause (i) of subsection 2(b), except that the percentage referred to
in clause (z) shall be 40%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event"), it being understood that the giving of such
notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the date of
which being herein referred to as the "Notice Date") specifying (i) the total
number of shares it will purchase pursuant to such exercise and (ii) a place
and date not earlier than three business days nor later than 60 business days
from the Notice Date for the closing of such purchase (the "Closing Date");
PROVIDED that if prior notification to or approval of the FRB or any other
Governmental Entity is required in connection with such purchase, the Holder
shall promptly file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run from the later of (x) the date on which any
required notification periods have expired or been terminated and (y) the date
on which such approvals have been obtained and any requisite waiting period or
periods shall have passed. Any exercise of the option shall be deemed to occur
on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this
Section 2, the Holder shall pay to Issuer the aggregate purchase price for the
shares of Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated by
Issuer, PROVIDED that failure or refusal of Issuer to designate such a bank
account shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of shares of Common Stock purchased by the Holder and, if the Option
should be exercised in part only, a new Option evidencing the rights of the
Holder thereof to purchase the balance of the shares purchasable hereunder, and
the Holder shall deliver to Issuer a copy of this Stock Option Agreement and a
letter agreeing that the Holder will not offer to sell or otherwise dispose of
such shares in violation of applicable law or the provisions of this Stock
Option Agreement.
(h) Certificates for Common Stock delivered at a closing
hereunder shall be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder
hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file
at the principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written request
therefor."
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<PAGE> 4
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such
reference if the Holder shall have delivered to Issuer a copy of a letter from
the staff of the Securities and Exchange Commission (the "SEC"), or an opinion
of counsel, in form and substance satisfactory to Issuer, to the effect that
such legend is not required for purposes of the 1933 Act; (ii) the reference to
the provisions of this Stock Option Agreement in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions of this
Stock Option Agreement and under circumstances that do not require the
retention of such reference; and (iii) the legend shall be removed in its
entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend as may
be required by law.
(i) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under subsection (e) of this
Section 2 and the tender of the applicable purchase price in immediately
available funds, the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered
to the Holder. Issuer shall pay all expenses, and any and all United States
Federal, state and local taxes and other charges that may be payable in
connection with the preparation, issue and delivery of stock certificates under
this Section 2 in the name of the Holder or its assignee, transferee or
designee.
3. Issuer agrees: (i) that it shall at all times maintain,
free from preemptive rights, sufficient authorized but unissued or treasury
shares of Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section l8a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended, or the Change in Bank Control Act of 1978, as amended, or
any state banking law, prior approval of or notice to the FRB or to any other
Governmental Entity is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to each such Governmental Entity as they may
require) in order to permit the Holder to exercise the Option and Issuer duly
and effectively to issue shares of Common Stock pursuant hereto; and (iv)
promptly to take all action provided herein to protect the rights of the Holder
against dilution.
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<PAGE> 5
4. This Stock Option Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Stock Option Agreement at the principal
office of Issuer, for other agreements providing for Options of different
denominations entitling the holder thereof to purchase, on the same terms and
subject to the same conditions as are set forth herein, in the aggregate the
same number of shares of Common Stock purchasable hereunder. The terms "Stock
Option Agreement" and "Option" as used herein include any Stock Option
Agreements and related options for which this Stock Option Agreement (and the
Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Stock Option Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Stock Option Agreement, if mutilated, Issuer will execute and deliver a
new Stock Option Agreement of like tenor and date. Any such new Stock Option
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Stock Option Agreement so
lost, stolen, destroyed or mutilated shall at any time be enforceable by
anyone.
5. In addition to the adjustment in the number of shares of
Common Stock that are purchasable upon exercise of the Option pursuant to
Section 1 of this Stock Option Agreement, the number of shares of Common Stock
purchasable upon the exercise of the Option shall be subject to adjustment from
time to time as provided in this Section 5.
(a) In the event of any change in Common Stock by
reason of stock dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares or the like, the type and number
of shares of Common Stock purchasable upon exercise hereof shall be
appropriately adjusted.
(b) Whenever the number of shares of Common Stock
purchasable upon exercise hereof is adjusted as provided in this Section 5, the
Option Price shall be adjusted by multiplying the Option Price by a fraction,
the numerator of which shall be equal to the number of shares of Common Stock
purchasable prior to the adjustment and the denominator of which shall be equal
to the number of shares of Common Stock purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that
occurs prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee delivered within 30 days (or such later date as may be provided
pursuant to Section 10) of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof)
or any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a shelf registration statement under the 1933 Act
covering any shares issued and issuable pursuant to this Option and shall use
its best efforts to cause such registration statement to become effective and
remain current in order to permit the sale or other disposition of any shares
of Common Stock issued upon total or partial exercise of this option ("Option
Shares") in accordance with any plan of disposition requested by Grantee;
PROVIDED, HOWEVER, that Issuer may postpone filing a registration statement
relating to a registration request by Grantee under this Section 6 for a period
of time (not in excess of 180 days) if in its judgment such filing would
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<PAGE> 6
require the disclosure of material information that Issuer has a BONA FIDE
business purpose for preserving as confidential. Issuer will use its best
efforts to cause such registration statement first to become effective and then
to remain effective for such period not in excess of 180 days from the day such
registration statement first becomes effective or such shorter time as may be
reasonably necessary to effect such sales or other dispositions. Grantee shall
have the right to demand two such registrations. If requested by any such
Holder in connection with such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements. The foregoing notwithstanding, if, at the time of any request by
Grantee for registration of Option Shares as provided above, Issuer is in the
process of registration with respect to an underwritten public offering of
shares of Common Stock, and if in the good faith judgment of the managing
underwriter or managing underwriters, or, if none, the sole underwriter or
underwriters, of such offering the offering or inclusion of the Holder's Option
or Option Shares would interfere with the successful marketing of the shares of
Common Stock offered by Issuer, the number of Option Shares otherwise to be
covered in the registration statement contemplated hereby may be reduced;
PROVIDED, HOWEVER, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 25% of the total number of shares to be issued by the
Holder and Issuer in the aggregate; PROVIDED FURTHER, however, that if such
reduction occurs, then the Issuer shall file a registration statement for the
balance as promptly as practical and no reduction shall thereafter occur. Each
such Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. Upon receiving
any request under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies.
7. (a) Upon the occurrence of a Subsequent Triggering Event
that occurs prior to an Exercise Termination Event, (i) at the request of the
Holder, delivered within 30 days of the Subsequent Trigger Event (or such later
period as may be provided pursuant to Section 10), Issuer shall repurchase the
Option from the Holder at a price (the "Option Repurchase Price") equal to (x)
the amount by which (A) the market/offer price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which this Option may
then be exercised plus (y) Grantee's Out-of-Pocket Expenses (as defined below)
(to the extent not previously reimbursed) and (ii) at the request of the owner
of Option Shares from time to time (the "Owner"), delivered within 30 days of a
Subsequent Trigger Event (or such later period as may be provided pursuant to
Section 10), Issuer shall repurchase such number of the Option Shares from the
Owner as the Owner shall designate at a price (the "Option Share Repurchase
Price") equal to (x) the market/ offer price multiplied by the number of Option
Shares so designated plus (y) Grantee's Out-of-Pocket Expenses (to the extent
not previously reimbursed). The term "Out-of-Pocket Expenses" shall mean
Grantee's reasonable out-of-pocket expenses incurred in connection with the
transactions contemplated by the Agreement, including, without limitation,
legal, accounting and investment banking fees. The term "market/offer price"
shall mean the highest of (i) the price per share of Common Stock at which a
tender offer or exchange offer
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<PAGE> 7
therefor has been made after the date hereof, (ii) the price per share of
Common Stock to be paid by any third party pursuant to an agreement with
Issuer, (iii) the highest closing price for shares of Common Stock within the
30-day period immediately preceding the date the Holder gives notice of the
required repurchase of this Option or the Owner gives notice of the required
repurchase of Option Shares, as the case may be, or (iv) in the event of a sale
of all or substantially all of Issuer's assets, the sum of the price paid in
such sale for such assets and the current market value of the remaining assets
of Issuer as determined by a nationally recognized investment banking firm
selected by the Holder or the Owner, as the case may be, divided by the number
of shares of Common Stock of Issuer outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking firm selected
by the Holder or Owner, as the case may be, whose determination shall be
conclusive and binding on all parties.
(b) The Holder or the Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Stock Option Agreement or certificates for
Option Shares, as applicable, accompanied by a written notice or notices
stating that the Holder or the Owner, as the case may be, elects to require
Issuer to repurchase this Option and/or the Option Shares in accordance with
the provisions of this Section 7. As promptly as practicable, and in any event
within five business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or notices relating
thereto, Issuer shall deliver or cause to be delivered to the Holder the Option
Repurchase Price and/or to the Owner the Option Share Repurchase Price therefor
or the portion thereof that Issuer is not then prohibited under applicable law
and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation, or as a consequence of administrative policy, from
repurchasing the Option and/or the Option Shares in full, Issuer shall
immediately so notify the Holder and/or the Owner and thereafter deliver or
cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from
delivering, within five business days after the date on which Issuer is no
longer so prohibited; PROVIDED, HOWEVER, that if Issuer at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this Section 7
is prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Holder and/or the Owner, as
appropriate, the Option Repurchase Price and the Option Share Repurchase Price,
respectively, in full (and Issuer hereby undertakes to use its best efforts to
obtain all required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to accomplish such repurchase), the
Holder or Owner may revoke its notice of repurchase of the Option or the Option
Shares either in whole or to the extent of the prohibition, whereupon, in the
latter case, Issuer shall promptly (i) deliver to the Holder and/or the Owner,
as appropriate, that portion of the Option Purchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Holder, a new Stock Option Agreement
evidencing the right of the Holder to purchase that number of shares of Common
Stock obtained by multiplying the number of shares of Common Stock for which
the
-7-
<PAGE> 8
surrendered Stock Option Agreement was exercisable at the time of delivery of
the notice of repurchase by a fraction, the numerator of which is the Option
Repurchase Price less the sum of (x) the portion thereof theretofore delivered
to the Holder and (y) Out-of-Pocket Expenses and the denominator of which is
the Option Repurchase Price less Out-of-Pocket Expenses, or (B) to the Owner, a
certificate for the Option Shares it is then so prohibited from repurchasing,
assuming that the portion of the Option Share Repurchase Price theretofore
delivered is first applied to the payment of Out-of-Pocket Expenses and then to
the repurchase of Option Shares.
8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into an agreement (i) to consolidate or merge with
any person, other than Grantee or one of its subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) to
permit any person, other than Grantee or one of its subsidiaries, to merge into
Issuer and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its assets to any person, other than Grantee or one
of its subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set
forth herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the Acquiring
Corporation (as hereinafter defined) or (y) any person that controls the
Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or merger with
Issuer (if other than Issuer), (ii) Issuer in a merger in which Issuer
is the continuing or surviving person, and (iii) the transferee of all
or substantially all of Issuer's assets.
(2) "Substitute Common Stock" shall mean the common
stock to be issued by the issuer of the Substitute Option upon exercise
of the Substitute Option.
(3) "Assigned Value" shall mean the market/offer
price, as defined in Section 7.
(4) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in question, but
in no event higher than the closing price of the shares of Substitute
Common Stock on the day preceding such consolidation, merger or sale;
PROVIDED, that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common stock
issued by the person merging into
-8-
<PAGE> 9
Issuer or by any company which controls or is controlled by such person,
as the Holder may elect.
(c) The Substitute Option shall have the same terms as the
Option, provided, that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to the Holder. The issuer of the Substitute
Option shall also enter into an agreement with the then Holder or Holders of
the Substitute Option in substantially the same form as this Stock Option
Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such
number of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal to
the Option Price multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock for which the Option is then exercisable and
the denominator of which shall be the number of shares of Substitute Common
Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 8.2% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than 8.2%
of the shares of Substitute Common Stock outstanding prior to exercise but for
this clause (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to the Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
clause (e) over (ii) the value of the Substitute Option after giving effect to
the limitation in this clause (e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by the
Holder.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option
(the "Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to (x) the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied
by the number of shares of Substitute Common Stock for which the Substitute
Option may then be exercised plus (y) Grantee's Out-of-Pocket
-9-
<PAGE> 10
Expenses (to the extent not previously reimbursed), and at the request of the
owner (the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
(x) the Highest Closing Price multiplied by the number of Substitute Shares so
designated plus (y) Grantee's Out-of-Pocket Expenses (to the extent not
previously reimbursed). The term "Highest Closing Price" shall mean the
highest closing price for shares of Substitute Common Stock within the 30-day
period immediately preceding the date the Substitute Option Holder gives notice
of the required repurchase of the Substitute Option or the Substitute Share
Owner gives notice of the required repurchase of the Substitute Shares, as
applicable.
(b) The Substitute Option Holder or the Substitute Share
Owner, as the case may be, may exercise its respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the Substitute
Shares pursuant to this Section 9 by surrendering for such purpose to the
Substitute Option Issuer, at its principal office, the agreement for such
Substitute Option (or, in the absence of such an agreement, a copy of this
Stock Option Agreement) and certificates for Substitute Shares accompanied by a
written notice or notices stating that the Substitute Option Holder or the
Substitute Share Owner, as the case may be, elects to require the Substitute
Option Issuer to repurchase the Substitute Option and/or the Substitute Shares
in accordance with the provisions of this Section 9. As promptly as
practicable, and in any event within five business days after the surrender of
the Substitute Option and/or certificates representing Substitute Shares and
the receipt of such notice or notices relating thereto, the Substitute Option
Issuer shall deliver or cause to be delivered to the Substitute Option Holder
the Substitute Option Repurchase Price and/or to the Substitute Share Owner the
Substitute Share Repurchase Price therefor or the portion thereof which the
Substitute Option Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer shall
immediately so notify the Substitute Option Holder and/or the Substitute Share
Owner and thereafter deliver or cause to be delivered, from time to time, to
the Substitute Option Holder and/or the Substitute Share Owner, as appropriate,
the portion of the Substitute Share Repurchase Price, respectively, which it is
no longer prohibited from delivering, within five business days after the date
on which the Substitute Option Issuer is no longer so prohibited; PROVIDED,
HOWEVER, that if the Substitute Option Issuer is at any time after delivery of
a notice of repurchase pursuant to subsection (b) of this Section 9 prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from delivering to the Substitute Option Holder and/or the Substitute
Share Owner, as appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the Substitute
Option Issuer shall use its best efforts to receive all required regulatory and
legal approvals as promptly as practicable in order to accomplish such
repurchase), the Substitute Option Holder or Substitute Share Owner may revoke
its notice of repurchase of the Substitute Option or the Substitute Shares
either in whole or to the extent of the prohibition, whereupon, in the latter
case, the Substitute Option Issuer shall promptly (i) deliver to the Substitute
Option Holder or Substitute Share Owner, as appropriate, that portion of the
Substitute Option Repurchase Price or the Substitute Share Repurchase Price
that the Substitute Option Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number
-10-
<PAGE> 11
of shares of the Substitute Common Stock obtained by multiplying the number of
shares of the Substitute Common Stock for which the surrendered Substitute
Option was exercisable at the time of delivery of the notice of repurchase by a
fraction, the numerator of which is the Substitute Option Repurchase Price less
the sum of (x) the portion thereof theretofore delivered to the Substitute
Option Holder and (y) Out-of-Pocket Expenses and the denominator of which is
the Substitute Option Repurchase Price less Out-of-Pocket Expenses, or (B) to
the Substitute Share Owner, a certificate for the Substitute Option Shares it
is then so prohibited from repurchasing, assuming that the portion of the
Substitute Share Repurchase Price theretofore delivered is first applied to the
payment of Out-of-Pocket Expenses and then to the repurchase of Substitute
Shares.
10. The 30-day period for exercise of certain rights under
Sections 2, 6, 7 and 12 shall be extended: (i) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights, and for the
expiration of all statutory waiting periods; and (ii) to the extent necessary
to avoid liability under Section 16(b) of the 1934 Act by reason of such
exercise.
11. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has full corporate power and authority to execute
and deliver this Stock Option Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Stock Option Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to authorize this Stock Option
Agreement or to consummate the transactions so contemplated. This Stock Option
Agreement has been duly and validly executed and delivered by Issuer. This
Stock Option Agreement is the valid and legally binding obligation of Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Stock Option Agreement in accordance
with its terms will have reserved for issuance upon the exercise of the Option,
that number of shares of Common Stock equal to the maximum number of shares of
Common Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly issued,
fully paid, nonassessable, and will be delivered free and clear of all claims,
liens, encumbrances and security interests and not subject to any preemptive
rights.
12. Neither of the parties hereto may assign any of its
rights and obligations under this Stock Option Agreement or the Option created
hereunder to any other person, without the express written consent of the other
party, except that in the event a Subsequent Triggering Event shall have
occurred prior to an Exercise Termination Event, Grantee, subject to the
express provisions hereof, may assign in whole or in part its rights and
obligations hereunder within 30 days following such Subsequent Triggering Event
(or such later period as may be provided pursuant to Section 10); PROVIDED,
HOWEVER, that until the date 30 days following the date at which the FRB
approves an application by Grantee under the Bank Holding Company Act to
-11-
<PAGE> 12
acquire the shares of Common Stock subject to the Option, Grantee may not
assign its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (E.Q., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's behalf, or (iv)
any other manner approved by the FRB.
13. Each of Grantee and Issuer will use its best efforts to
make all filings with, and to obtain consents of, all third parties and
Governmental Entities necessary to the consummation of the transactions
contemplated by this Stock Option Agreement, including without limitation
making application to list the shares of Common Stock issuable hereunder on the
New York Stock Exchange upon official notice of issuance and applying to the
FRB under the Bank Holding Company Act for approval to acquire the shares
issuable hereunder.
14. Notwithstanding anything to the contrary herein, in the
event that the Holder or Owner or any affiliate (as defined in Rule 12b-2 of
the rules and regulations under the 1934 Act) thereof is a person making an
offer or proposal to engage in an Acquisition Transaction (other than the
Merger), then (i) in the case of a Holder or any affiliate thereof, the Option
held by it shall immediately terminate and be of no further force or effect,
and (ii) in the case of an Owner or any affiliate thereof, the Option Shares
held by it shall be immediately repurchasable by Issuer at the Option Price.
15. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Stock Option Agreement by either party
hereto and that the obligations of the parties shall hereto be enforceable by
either party hereto through injunctive or other equitable relief.
16. If any term, provision, covenant or restriction contained
in this Stock Option Agreement is held by a court or a federal or state
regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this Stock Option Agreement shall remain in full
force and effect, and shall in no way be affected, impaired or invalidated. If
for any reason such court or regulatory agency determines that the Holder is
not permitted to acquire, or Issuer is not permitted to repurchase pursuant to
Section 7, the full number of shares of Common Stock provided in Section 1(a)
hereof (as adjusted pursuant to Section 1(b) or 5 hereof), it is the express
intention of Issuer to allow the Holder to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
17. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Agreement.
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<PAGE> 13
18. This Stock Option Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
19. This Stock Option Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
20. Except as otherwise expressly provided herein, each of
the parties hereto shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
21. Except as otherwise expressly provided herein or in the
Agreement, this Stock Option Agreement contains the entire agreement between
the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereof,
written or oral. The terms and conditions of this Stock Option Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing in this Stock Option
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors except as assigns, any
rights, remedies, obligations or liabilities under or by reason of this Stock
Option Agreement, except as expressly provided herein.
22. Terms used in this Stock Option Agreement and not defined
herein but defined in the Agreement shall have the meanings assigned thereto in
the Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
NATIONAL CITY CORPORATION
By: /s/ David A. Daberko
-----------------------------
Title: President & CEO
--------------------------
INTEGRA FINANCIAL CORPORATION
By: /s/ William F. Roemer
-----------------------------
Title: Chairman & CEO
-------------------------
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<PAGE> 1
National City Exhibit 99.1
Corporation
National City Corporation
National City Center
Post Office Box 5756
Cleveland, OH 44101-0756
216 575 2000
FOR MORE INFORMATION CONTACT:
IN CLEVELAND: IN PITTSBURGH:
ANALYST INQUIRIES: MEDIA INDUQIRIES: MEDIA INQUIRIES:
- ------------------ ----------------- ----------------
Janis E. Lyons Mary H. Griffith William S. Eiler
Vice President Senior Vice President, Public Relations Manager
Investor Communications Director Integra Financial
National City Corporation Corporate Communications Corporation
(216) 575-3329 National City Corporation (412) 644-7678
(216) 575-2728
For Immediate Release
NATIONAL CITY CORPORATION TO ACQUIRE
INTEGRA FINANCIAL CORPORATION
CLEVELAND, OHIO -- August 28, 1995 -- National City Corporation
(NYSE:NCC) today announced that it has reached a definitive agreement to
acquire Integra Financial Corporation (NYSE:ITG), a $15 billion in assets bank
holding company headquartered in Pittsburgh, Pennsylvania.
Under the terms of the merger, Integra shareholders will receive 2.00
shares of National City common stock for each share of Integra common stock in
a tax-free exchange. The merger will be accounted for as a
pooling-of-interests. Based on the recent market price of National City stock,
the transaction has a value of $62.75 per share for a total of $2.1 billion, or
1.96 times book value. The combined company would have assets of $50 billion,
deposits of $35 billion and stockholders equity of $4 billion. Subject to
regulatory and shareholder approvals, the transaction
<PAGE> 2
is expected to close in the second quarter of 1996. Integra's units will
ultimately adopt the National City name.
David A. Daberko, president and chief executive officer of National
City, stated, "This acquisition is consistent with our previous stated growth
plans and is a logical and attractive opportunity for National City. It is a
natural extension into an adjacent market that is culturally and
demographically similar to our existing markets. We will now have a significant
presence in nine of the top 100 Metropolitan Statistical Areas (MSAs) -- a
position exceeded by only a handful of banks nationwide.''
William F. Roemer, chairman and chief executive officer of Integra,
stated, "Integra has built a great franchise in western Pennsylvania. This
transaction promises to enhance that position at a much faster face than what
we would have been able to effect on our own. Our customers and employees will
benefit from this transaction due to National City's localized marketing
philosophy coupled with efficient, state-of-the-art back-office support. Our
shareholders have the opportunity to affiliate with one of the country's most
successful banks, one with a long-term record of superb profitability and
outstanding shareholder returns."
Added Mr. Daberko, "The transaction is structured so that both sets of
stockholders stand to benefit. The immediate integration of Integra into
National City will generate cost savings that will readily offset the modest
initial dilution to National City stockholders. We remain dedicated to
enhancing the superior value that National City stockholders have enjoyed over
the years."
The integration of Integra into National City, which will be headed by
Leonard M. Carroll, Integra's president and chief operating officer, will
result in annual cost savings of $85 million as
<PAGE> 3
redundant systems and capacity are eliminated and other merger synergies
realized. Robert G. Siefers, chief financial officer of National City, will
lead the expense reduction process. The two companies expect to incur one-time
charges, aggregating approximately $100 million, to cover the costs of the
integration and other merger-related expenses.
As part of the merger integration plan, a priority posting process to
include Integra employees is being put into effect immediately. Currently,
there are more than 500 openings within the National City system. National City
will work diligently to ensure that employees within the Integra franchise are
offered opportunities within the newly-combined franchise.
In addition to realizing substantial cost savings, Mr. Daberko noted,
"This acquisition offers National City significant opportunities for increased
revenues. We can offer a number of product and service offerings that Integra
currently does not offer its customers, including sophisticated cash
management, consumer and commercial leasing, floor plan, foreign exchange, and
such retail products and services such as database marketing, telephone
banking, retail sweep accounts, and enhanced brokerage services." National City
is consistently ranked among the top five cash management banks within the
United States.
Management Structure
- --------------------
Mr. Roemer, who has served as chairman and chief executive office of
Integra since 1991, will retire from day-to-day mangement following the
completion of the merger, but will remain chairman of the new National City
Pennsylvania bank.
Upon completion of the merger, National City Corporation's Office of
the Chairman will consist of David A. Daberko, president and chief executive
officer (who will be named chairman
<PAGE> 4
upon Edward B. Brandon's retirement in September 1995), William R. Robertson,
deputy chairman, and Leonard M. Carroll, who will become vice chairman.
Profile of Integra Financial Corporation
- ----------------------------------------
Integra Financial Corporation is a $15 billion diversified financial
services company headquartered in Pittsburgh, Pennsylvania. Integra operated
banks and other financial services subsidiaries principally in western
Pennsylvania.
Profile of National City Corporation
- ------------------------------------
National City Corporation is a $35 billion diversified financial
services company based in Cleveland, Ohio. National City operates banks and
other financial services subsidiaries principally in Ohio, Kentucky, and
Indiana.
EDITOR'S NOTE: PHOTOGRAPHS AND BIOGRAPHICAL SKETCHES AVAILABLE BY CALLING (216)
- -------------- 575-2344.
<PAGE> 5
<TABLE>
NATIONAL CITY CORPORATION
INTEGRA FINANCIAL CORPORATION
AUGUST 28, 1995
SUMMARY FACT SHEET
<CAPTION>
DEAL STRUCTURE PRICING
- -------------- -------
<S> <C>
Pooling of interests (based on recent National City closing price of
Tax-free exchange $31 3/8 and on recent Integra closing price of $52.00)
Devinitive agreement signed
Due diligence completed Purchase Price per Share $62.75
Book Value $32.01
TERMS Tangible Book Value $29.49
- -----
2.00 shares of National City stock for Price/Market 121%
each Integra Share Price/Book 196%
Price/Tangible Book 213%
No walkaways Price/96 EPS Consensus 11.9x
Cross-lockups in place Integra shares @ 6/30 32.9 million
Fixed Exchange Ratio 2.00 shares
TIMING National City Shares Issued 65.8 million
- ------ Indicated Deal Value $2.1 billion
Subject to normal regulatory and
shareholder approvals
Expected to close second quarter 1996
</TABLE>
DEAL RATIONALE
- --------------
- -- Logical, contiguous, "close-in" expansion of similar customer base.
- -- Low financial risk. Cost savings alone will keep EPS on track. Systems
conversion complete 30 days after closing. No revenue enhancements assumed.
- -- Another top 50 MSA. Culturally and economically similar to our very
profitable markets in northern Ohio.
- -- Enhances National City's existing customer franchise.
- -- Ability to leverage costs of retail banking franchise over larger base.
- -- Source of stable low-cost core deposits.
- -- Additional synergies in mortgage servicing, consumer finance and trust.
