<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 13, 1996.
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------
NATIONAL CITY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
Delaware 6712 34-1111088
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
</TABLE>
1900 East Ninth Street
Cleveland, Ohio 44114
(216) 575-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------
DAVID L. ZOELLER, ESQ.
Senior Vice President, General Counsel and Secretary
National City Corporation
1900 East Ninth Street
Cleveland, Ohio 44114
(216) 575-2978
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------
COPIES TO:
ROBERT H. STEVENSON
Senior Vice President
and General Counsel
Integra Financial Corporation
Four PPG Place
Pittsburgh, PA 15722-5408
WILLIAM R. NEWLIN, Esq.
Buchanan Ingersoll Professional Corporation
One Oxford Centre
301 Grant Street, 20th Floor
Pittsburgh, PA 15219-1110
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: MARCH 15, 1996
As soon as practicable after this Registration Statement becomes effective
and all other conditions to the merger of Integra Financial Corporation with the
Registrant, pursuant to an Agreement and Plan of Merger dated as of August 27,
1995, described in the enclosed Prospectus and Joint Proxy Statement, have been
satisfied or waived.
------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
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<CAPTION>
<S> <C> <C> <C> <C>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE AMOUNT TO BE AGGREGATE PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE(2) FEE(3)
- -------------------------
Common Stock, par value
of $4.00 per share..... 67,910,968 $33.00 $2,241,061,944.00 $342,781.00
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Based upon the assumed number of shares that may be issued in the Merger
described herein. Such assumed number is based upon the maximum number of
shares of common stock of Integra Financial Corporation that may be
outstanding immediately prior to the Merger.
(2) Estimated solely for the purpose of computing the registration fee. Computed
in accordance with Rule 457(f)(1) on the basis of the average of the high
and low prices of a share of common stock of Integra Financial Corporation
on the New York Stock Exchange on March 11, 1996 divided by 2.00 the number
of shares of the Registrant's common stock to be exchanged for each share of
common stock of Integra Financial Corporation in the proposed Merger to
which this Registration Statement relates.
(3) In accordance with Rule 457(b), the total registration fee of $772,780 has
been reduced by $429,999.17, which amount has previously been paid with
respect to the Merger pursuant to Section 14(g) of the Securities Act of
1934, as amended.
------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE> 2
NATIONAL CITY CORPORATION
CROSS REFERENCE SHEET PURSUANT TO RULE 404(A) OF THE SECURITIES ACT OF 1933
AND ITEM 501(B) OF REGULATION S-K, SHOWING THE LOCATION IN THE PROSPECTUS AND
JOINT PROXY STATEMENT OF THE INFORMATION REQUIRED BY PART I OF FORM S-4
<TABLE>
<CAPTION>
LOCATION OR CAPTION IN PROSPECTUS
ITEM OF FORM S-4 AND JOINT PROXY STATEMENT
--------------------------------------------- ------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus....... Facing Page of Registration Statement;
Cross Reference Sheet; Outside Front Cover
Page of Prospectus and Joint Proxy
Statement
2. Inside Front and Outside Back Cover Pages of
Prospectus................................... Available Information; Incorporation of
Certain Documents by Reference; Inside
Front Cover Page of Prospectus and Joint
Proxy Statement; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information................ Summary
4. Terms of Transaction......................... Summary; Merger; Certain Regulatory
Considerations; Description of National
City Capital Stock; Description of Integra
Capital Stock; General Comparison of
National City and Integra Capital Stock
5. Pro Forma Financial Information.............. Pro Forma Combined Consolidated Financial
Information (Unaudited)
6. Material Contacts with the Company Being
Acquired..................................... Summary; Merger
7. Additional Information Required for
Reoffering by Persons and Parties Deemed to
Be Underwriters.............................. Not Applicable
8. Interests of Named Experts and Counsel....... Selection of Independent Auditors-National
City; Selection of Independent
Auditors-Integra; Experts; Legal Opinions
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.................................. Not Applicable
10. Information with Respect to S-3
Registrants.................................. Information about National City;
Incorporation of Certain Documents by
Reference
11. Incorporation of Certain Information by
Reference.................................... Incorporation of Certain Documents by
Reference
12. Information with Respect to S-2 or S-3
Registrants.................................. Not Applicable
13. Incorporation of Certain Information by
Reference.................................... Incorporation of Certain Documents by
Reference
14. Information with Respect to Registrants Other
Than S-3 or S-2 Registrants.................. Not Applicable
15. Information with Respect to S-3 Companies.... Information about Integra; Incorporation
of Certain Documents by Reference
16. Information with Respect to S-2 or S-3
Companies.................................... Not Applicable
17. Information with Respect to Companies Other
Than S-3 or S-2 Companies.................... Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited........... Summary; The Annual Meetings
19. Information if Proxies, Consents or
Authorizations are not to be Solicited, or in
an Exchange Offer............................ Not Applicable
</TABLE>
<PAGE> 3
LOGO
------------------
March 15, 1996
Dear Stockholder:
You are invited to attend the Annual Meeting of Stockholders of National
City Corporation, which will be held at National City Bank, Indiana, One
National City Center, Fourth Floor, Indianapolis, Indiana 46255, on Monday,
April 22, 1996, commencing at 9:30 a.m., EASTERN STANDARD TIME ("Local Time").
The primary business of the meeting will be the election of directors for
the coming year, the amendment of the National City Corporation 1993 Stock
Option Plan, the adoption of the Agreement and Plan of Merger dated as of August
27, 1995, providing for the merger of Integra Financial Corporation into
National City Corporation (the "Merger"), the approval of the selection of Ernst
& Young LLP as independent auditors for 1996, and to transact such other
business as may properly come before the meeting.
The formal Notice of Annual Meeting and Proxy Statement containing further
information pertinent to the business of the meeting are set forth on the
following pages. Our Annual Report, including financial statements, for the year
1995 was delivered to you previously. We shall report to you at the meeting on
the business and affairs of National City Corporation.
Your vote is important no matter how many shares you own. We hope you will
be able to attend the meeting in person, but, in any event, please sign and date
the enclosed proxy and return it in the accompanying envelope. If you wish to
communicate directly with National City Corporation, the mailing address of the
executive offices of the Corporation is: National City Corporation, 1900 East
Ninth Street, Cleveland, Ohio 44114.
Sincerely,
/s/ David A. Daberko
DAVID A. DABERKO
Chairman and Chief Executive Officer
<PAGE> 4
LOGO
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Stockholders of
NATIONAL CITY CORPORATION
The Annual Meeting of Stockholders of National City Corporation will be
held at National City Bank, Indiana, One National City Center, Fourth Floor,
Indianapolis, Indiana 46255, on Monday, April 22, 1996, at 9:30 a.m., EASTERN
STANDARD TIME ("Local Time"), for the purpose of considering and voting upon the
following matters:
1. The election of directors;
2. The amendment of the National City Corporation 1993 Stock Option
Plan;
3. The adoption of the Agreement and Plan of Merger dated as of August
27, 1995, by and between National City Corporation and Integra
Financial Corporation;
4. The approval of the selection of independent auditors for 1996; and
5. The transaction of such other business as may properly come before
the meeting.
Stockholders of record on February 29, 1996, are entitled to receive notice
of and to vote at the meeting. A list of the stockholders will be available at
the meeting and for the 10 days preceding the meeting at the offices of National
City Corporation, 1900 East Ninth Street, Cleveland, Ohio 44114 and at the
offices of National City Bank, Indiana, One National City Center, Suite 400E,
Indianapolis, Indiana 46255.
All shareholders who are entitled to vote, even if they now plan to attend
the meeting, are requested to execute the enclosed proxy card and return it
without delay in the enclosed postage-paid envelope. You may revoke your proxy
at any time before it is voted by giving written notice to National City. If you
attend the meeting and vote in person, your vote will supersede your proxy.
Please mark, date, and sign the enclosed proxy and return it in the
accompanying envelope.
By Order of the Board of Directors
/s/ David L. Zoeller
DAVID L. ZOELLER
Secretary
March 15, 1996
<PAGE> 5
William F. Roemer
Chairman and
Chief Executive Officer
INTEGRA FINANCIAL CORPORATION
Four PPG Place
LOGO Pittsburgh, PA 15222-5408
(412) 644-7676
March 15, 1996
Dear Shareholder:
You are cordially invited to attend the Special Meeting of the Shareholders
of Integra Financial Corporation ("Integra") to be held in the Wintergarden at
One PPG Place, Pittsburgh, Pennsylvania at 9:30 a.m. Eastern Daylight Savings
Time on Wednesday, April 24, 1996.
The purpose of the meeting is to vote on approval of the Agreement and Plan
of Merger providing for the merger of Integra with and into National City
Corporation ("National City").
The Agreement and Plan of Merger provides that at the effective time of the
merger each share of Integra common stock outstanding will be converted into two
(2) shares of National City common stock. The Agreement and Plan of Merger must
be approved by the holders of a majority of the shares of Integra common stock
voting at the meeting. National City stockholders will consider and vote on
approval and adoption of the Agreement and Plan of Merger at their separate
meeting to be held on April 22, 1996.
National City is a registered bank holding company that conducts a general
commercial and retail banking business in Ohio, Indiana and Kentucky. At
December 31, 1995, National City had total consolidated assets of approximately
$36.2 billion and total consolidated deposits of approximately $25.2 billion,
and consolidated stockholders' equity of approximately $2.9 billion.
The Board of Directors of Integra believes that the merger is in the best
interests of Integra and its shareholders and recommends that you vote FOR the
approval and adoption of the Agreement and Plan of Merger. The enclosed
Prospectus and Joint Proxy Statement explains the proposed merger in detail.
Please carefully review and consider all of this information.
It is especially important that your shares be represented and voted at the
meeting. Please complete, sign, date and promptly return the enclosed proxy card
even if you currently plan to attend the meeting. You may revoke your proxy at
any time before it is voted by giving written notice to Integra. If you attend
the meeting and vote in person, your vote will supersede your proxy.
Sincerely,
/s/ William F. Roemer
William F. Roemer
Chairman and
Chief Executive Officer
LOGO
<PAGE> 6
INTEGRA FINANCIAL CORPORATION
FOUR PPG PLACE
PITTSBURGH, PENNSYLVANIA 15222-5408
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
A Special Meeting of the Shareholders of Integra Financial Corporation
("Integra") will be held in the Wintergarden at One PPG Place, Pittsburgh,
Pennsylvania, at 9:30 a.m. Eastern Daylight Savings Time on Wednesday, April 24,
1996 for the following purpose:
To vote on approval and adoption of the Agreement and Plan of Merger dated
as of August 27, 1995 between Integra and National City Corporation
("National City"), providing for the merger of Integra with and into
National City. Upon consummation of the merger, each outstanding share of
Integra common stock will be converted into two shares of National City
common stock. The Agreement and Plan of Merger is included as Appendix A to
the enclosed Prospectus and Joint Proxy Statement.
Only holders of record of Integra common stock at the close of business on
February 29, 1996 are entitled to notice of and to vote at the meeting. Each
share of Integra common stock will entitle the holder thereof to one vote at the
meeting.
All shareholders who are entitled to vote, even if they now plan to attend
the meeting, are requested to execute the enclosed proxy card and return it
without delay in the enclosed postage-paid envelope. You may revoke your proxy
at any time before it is voted by giving written notice to Integra. If you
attend the meeting and vote in person, your vote will supersede your proxy.
By Order of the Board of Directors,
/s/ Kenneth C. Thiess
Kenneth C. Thiess
Secretary
March 15, 1996
<PAGE> 7
PROSPECTUS AND JOINT PROXY STATEMENT
LOGO
67,910,968 Shares of Common Stock
This Prospectus and Joint Proxy Statement relates to the proposed merger of
INTEGRA FINANCIAL CORPORATION, a Pennsylvania corporation ("Integra"), with and
into NATIONAL CITY CORPORATION, a Delaware corporation ("National City"). If the
proposed merger is consummated, the outstanding shares of common stock, par
value $1.00 per share, of Integra ("Integra Common"), will be converted into
shares of common stock, par value $4.00 per share, of National City ("National
City Common") at a rate of 2.00 shares of National City Common for each share of
Integra Common. The transaction is subject to various conditions, including
approval by the stockholders of National City and the shareholders of Integra at
their separate meetings, described herein, and approval by applicable regulatory
authorities, which regulatory approvals have been obtained.
National City Common is traded on the New York Stock Exchange ("NYSE"). The
closing price of National City Common on the NYSE on February 29, 1996 was
$34.75.
All information concerning National City contained in this Prospectus and
Joint Proxy Statement has been furnished by National City, and all information
concerning Integra has been furnished by Integra. National City has represented
and warranted to Integra, and Integra has represented and warranted to National
City, that the particular information so furnished is true and complete. See
"EXPERTS" with respect to the financial statements of National City and Integra.
------------------------
THE SHARES OF NATIONAL CITY COMMON TO BE ISSUED IN CONNECTION WITH THE
MERGER HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS AND JOINT PROXY STATEMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF NATIONAL CITY COMMON TO BE ISSUED IN CONNECTION WITH THE
MERGER ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR
SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY.
------------------------
JOINT PROXY STATEMENT
Annual Meeting
of Stockholders of
NATIONAL CITY CORPORATION
to be held on April 22, 1996
Special Meeting
of Shareholders of
INTEGRA FINANCIAL CORPORATION
to be held on April 24, 1996
THIS PROSPECTUS SERVES AS THE JOINT PROXY STATEMENT OF NATIONAL CITY
CORPORATION AND INTEGRA FINANCIAL CORPORATION IN CONNECTION WITH THE
SOLICITATION OF PROXIES TO BE USED AT THEIR RESPECTIVE MEETINGS TO BE HELD FOR
THE PURPOSES DESCRIBED HEREIN.
- --------------------------------------------------------------------------------
The date of this Prospectus and Joint Proxy Statement is March 15, 1996, and
is first being mailed to National City stockholders and Integra shareholders,
together with notices and forms of proxy, on or about March 15, 1996.
<PAGE> 8
AVAILABLE INFORMATION
Each of National City and Integra is subject to the information reporting
requirements of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), and, accordingly, files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information may be inspected or copied at
the public reference facilities of the Commission located at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; at the
Commission's Chicago Regional Office, Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and at its New York
Regional Office, R.R. Donnelly Building, 75 Park Place, 14th Floor, New York,
New York 10007. Copies of such materials may also be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. In addition, reports, proxy statements and other
information concerning National City and Integra may be inspected at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
This Prospectus and Joint Proxy Statement does not contain all of the
information set forth in the registration statement on Form S-4 and the exhibits
thereto filed by National City under the Securities Act of 1933, as amended (the
"1933 Act"), with the Commission relating to the shares of National City Common
offered hereby (the "Registration Statement"), certain portions of which have
been omitted pursuant to the rules and regulations of the Commission and to
which portions reference is hereby made for further information with respect to
National City, Integra and the securities offered hereby. The Registration
Statement and the exhibits thereto may be inspected without charge at the
offices of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies may be obtained from the Commission at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
National City hereby incorporates in this Prospectus and Joint Proxy
Statement by reference its Annual Report on Form 10-K for the year ended
December 31, 1995, the description of National City Common set forth in the
Restated Certificate of Incorporation of the Registrant, as amended (filed as
Exhibit 3.1 to Registration Statement No. 33-49823), and the description of
National City's 8% Cumulative Convertible Preferred Stock, without par value,
set forth in the Certificate of Stock Designation dated April 18, 1991 (filed as
Exhibit 4.4 to its Annual Report on Form 10-K for the year ended December 31,
1991), each as filed with the Commission pursuant to the Exchange Act. Integra
hereby incorporates in this Prospectus and Joint Proxy Statement by reference
its Annual Report on Form 10-K for the year ended December 31, 1995, as filed
with the Commission pursuant to the Exchange Act.
All documents filed by National City and Integra pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
Joint Proxy Statement and prior to the respective Annual Meeting of Stockholders
of National City and the Special Meeting of Shareholders of Integra shall be
deemed to be incorporated by reference in this Prospectus and Joint Proxy
Statement and to be a part hereof from the respective dates of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus and Joint Proxy Statement to the extent that
such statement is modified or superseded by a statement contained herein or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus and Joint Proxy Statement.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND JOINT PROXY
STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY NATIONAL CITY OR INTEGRA. THIS
PROSPECTUS AND JOINT PROXY STATEMENT DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION WITHIN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION WITHIN SUCH JURISDICTION. NEITHER THE DELIVERY
OF THIS PROSPECTUS AND JOINT PROXY STATEMENT NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICA-
2
<PAGE> 9
TION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF NATIONAL CITY OR INTEGRA
SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
THIS PROSPECTUS AND JOINT PROXY STATEMENT INCORPORATES DOCUMENTS OF
NATIONAL CITY AND INTEGRA BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR
DELIVERED HEREWITH. THE NATIONAL CITY DOCUMENTS (OTHER THAN CERTAIN EXHIBITS TO
ANY SUCH DOCUMENTS) ARE AVAILABLE TO ANY PERSON TO WHOM A COPY OF THIS
PROSPECTUS AND JOINT PROXY STATEMENT HAS BEEN DELIVERED UPON WRITTEN OR ORAL
REQUEST TO NATIONAL CITY CORPORATION, 1900 EAST NINTH STREET, CLEVELAND, OHIO
44114, ATTENTION: THOMAS A. RICHLOVSKY, SENIOR VICE PRESIDENT AND TREASURER,
TELEPHONE NUMBER (216) 575-2126, AND WILL BE FURNISHED WITHOUT CHARGE. THE
INTEGRA DOCUMENTS (OTHER THAN THE EXHIBITS TO ANY SUCH DOCUMENTS) ARE AVAILABLE
TO ANY PERSON TO WHOM A COPY OF THIS PROSPECTUS AND JOINT PROXY STATEMENT HAS
BEEN DELIVERED UPON WRITTEN OR ORAL REQUEST TO INTEGRA FINANCIAL CORPORATION,
CORPORATE SECRETARY'S OFFICE, FOUR PPG PLACE, PITTSBURGH, PA 15222-5408,
TELEPHONE NUMBER (412) 644-8797, AND WILL BE FURNISHED WITHOUT CHARGE. IN ORDER
TO ENSURE TIMELY DELIVERY OF ANY NATIONAL CITY DOCUMENTS, ANY REQUEST SHOULD BE
MADE BY APRIL 15, 1996. IN ORDER TO ENSURE TIMELY DELIVERY OF ANY INTEGRA
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY APRIL 17, 1996.
3
<PAGE> 10
TABLE OF CONTENTS
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PAGE
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<S> <C>
AVAILABLE INFORMATION................................................................ 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................................... 2
SUMMARY.............................................................................. 7
Parties to the Merger........................................................... 7
Reasons for the Merger.......................................................... 7
Terms of the Merger............................................................. 7
Conditions; Termination; Amendments............................................. 8
Regulatory Approvals............................................................ 8
The Meetings.................................................................... 8
Votes Required.................................................................. 9
Recommendation of the Boards of Directors....................................... 9
Opinions of Financial Advisors.................................................. 10
Interests of Certain Parties.................................................... 10
Appraisal and Dissenters' Rights................................................ 10
Certain Federal Income Tax Consequences and Accounting Treatment................ 11
The Options..................................................................... 11
Comparative Rights of Holders of Shares of Integra Common After the Merger...... 12
Market and Market Prices........................................................ 12
Selected Financial Data......................................................... 13
Comparative Per Share Data...................................................... 15
THE MEETINGS......................................................................... 16
VOTING............................................................................... 16
National City................................................................... 16
Integra......................................................................... 16
Record Dates and Voting Rights.................................................. 16
Voting and Revocation of Proxies................................................ 17
1. ELECTION OF DIRECTORS -- NATIONAL CITY............................................ 17
Board of Directors and Its Committees........................................... 17
Compensation of Directors....................................................... 18
Nominees for Election as Directors.............................................. 19
Vote by Stockholders............................................................ 19
Beneficial Ownership............................................................ 23
REMUNERATION OF EXECUTIVE OFFICERS AND TRANSACTIONS WITH MANAGEMENT -- NATIONAL
CITY............................................................................... 25
Executive Compensation.......................................................... 25
REPORT OF COMPENSATION AND ORGANIZATION COMMITTEE.................................... 28
Compensation Philosophy......................................................... 28
Executive Compensation Principles............................................... 28
Executive Compensation Programs................................................. 29
Peer Group Banks................................................................ 30
Summary......................................................................... 30
Director Equity Ownership....................................................... 30
REVIEW OF COMPANY PERFORMANCE........................................................ 31
THE COMPENSATION AND ORGANIZATION COMMITTEE'S REVIEW OF CEO COMPENSATION............. 31
Compensation and Organization Committee......................................... 32
STOCKHOLDER RETURN PERFORMANCE....................................................... 32
DESCRIPTION OF NATIONAL CITY'S BENEFIT PLANS......................................... 33
</TABLE>
4
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<TABLE>
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PAGE
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2. PROPOSAL RESPECTING AMENDING THE NATIONAL CITY CORPORATION 1993
STOCK OPTION PLAN................................................................. 39
Summary of Current Plan......................................................... 39
Eligibility..................................................................... 39
Terms of Option Grants.......................................................... 39
Appreciation Rights............................................................. 40
Proposed Amendment.............................................................. 40
Federal Tax Consequences........................................................ 41
Benefits Under the Amendment.................................................... 41
General......................................................................... 42
Approval by Stockholders........................................................ 42
3. SELECTION OF INDEPENDENT AUDITORS -- NATIONAL CITY................................ 42
4. MERGER............................................................................ 43
Background of and Reasons for the Merger -- Integra............................. 43
Background of and Reasons for the Merger -- National City....................... 44
Opinions of Financial Advisors.................................................. 45
Terms of the Merger............................................................. 54
Conversion of Shares of Integra Common.......................................... 54
Assumption of Employee and Director Stock Options............................... 56
Conditions to the Merger........................................................ 56
Regulatory Approvals............................................................ 57
Waiver; Amendment; Termination.................................................. 58
Effective Time.................................................................. 59
Conduct of National City's Business Pending the Merger.......................... 59
Conduct of Integra's Business Pending the Merger................................ 60
Employee Matters................................................................ 61
Indemnification and Insurance................................................... 61
Interests of Certain Persons in the Merger...................................... 62
Management After the Merger..................................................... 63
Certain Federal Income Tax Consequences......................................... 63
Accounting Treatment............................................................ 64
Resales by Affiliates........................................................... 65
Appraisal and Dissenters' Rights................................................ 65
The Options..................................................................... 65
National City Option Agreement.................................................. 65
Integra Option Agreement........................................................ 70
PRO FORMA COMBINED CONSOLIDATED FINANCIAL
INFORMATION (UNAUDITED)............................................................ 74
CERTAIN REGULATORY CONSIDERATIONS.................................................... 80
General......................................................................... 80
Payment of Dividends............................................................ 80
Certain Transactions by Bank Holding Companies with their Affiliates............ 81
Capital......................................................................... 81
Holding Company Support of Subsidiary Banks..................................... 82
FDIC Insurance Assessments...................................................... 82
DESCRIPTION OF NATIONAL CITY CAPITAL STOCK........................................... 83
Common Stock.................................................................... 83
Preferred Stock................................................................. 83
</TABLE>
5
<PAGE> 12
<TABLE>
<CAPTION>
PAGE
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<S> <C>
DESCRIPTION OF INTEGRA CAPITAL STOCK................................................. 84
General......................................................................... 84
Integra Preferred Stock......................................................... 84
Integra Common Stock............................................................ 84
GENERAL COMPARISON OF NATIONAL CITY AND INTEGRA CAPITAL STOCK........................ 86
General......................................................................... 86
Directors....................................................................... 86
Limitation of Director Liability in Certain Circumstances....................... 87
Indemnification and Insurance................................................... 87
Antitakeover Statutes........................................................... 89
Pennsylvania Business Combination Statute....................................... 89
Pennsylvania Control Transaction Statute........................................ 89
Consideration of Factors; General Powers........................................ 89
Issuance of Preferred Stock..................................................... 90
Cumulative Voting............................................................... 91
Action Without a Meeting........................................................ 91
Special Meetings................................................................ 91
Voting, Appraisal Rights and Corporate Reorganizations.......................... 91
By-laws......................................................................... 92
Preemptive Rights............................................................... 92
Dividends....................................................................... 92
INFORMATION ABOUT NATIONAL CITY...................................................... 92
INFORMATION ABOUT INTEGRA............................................................ 93
EXPERTS.............................................................................. 93
LEGAL OPINIONS....................................................................... 94
NATIONAL CITY STOCKHOLDER PROPOSALS.................................................. 94
TRANSACTIONS WITH MANAGEMENT......................................................... 94
GENERAL.............................................................................. 94
APPENDIX A -- AGREEMENT AND PLAN OF MERGER........................................... A-1
APPENDIX B -- OPINION OF MORGAN STANLEY & CO. INCORPORATED........................... B-1
APPENDIX C -- OPINION OF MERRILL LYNCH & CO.......................................... C-1
APPENDIX D -- NATIONAL CITY OPTION AGREEMENT......................................... D-1
APPENDIX E -- INTEGRA OPTION AGREEMENT............................................... E-1
APPENDIX F -- NATIONAL CITY CORPORATION AMENDED AND RESTATED 1993 STOCK OPTION
PLAN............................................................................... F-1
</TABLE>
6
<PAGE> 13
SUMMARY
The following is a summary of certain information with respect to matters
to be considered at the Annual Meeting of Stockholders of National City and at
the Special Meeting of Shareholders of Integra and is not intended to be a
complete statement of all material facts regarding the matters to be considered
at those meetings. It is qualified in its entirety by reference to more detailed
information contained elsewhere in this Prospectus and Joint Proxy Statement
(hereinafter sometimes referred to as this or the "Proxy Statement") or
incorporated by reference in this Proxy Statement, the accompanying appendices
and the documents referred to herein.
PARTIES TO THE MERGER
Integra. Integra is a regional, multibank holding company registered under
the Bank Holding Company Act of 1956, as amended (the "BHCA"). At December 31,
1995, Integra had consolidated total assets of $14.3 billion and consolidated
total deposits of $10.4 billion. Integra is the third largest bank holding
company in western Pennsylvania and the fifth largest in Pennsylvania. Integra
Bank carries on a general retail and commercial banking business through 263
offices throughout 23 counties in western Pennsylvania. Other major affiliates
include Integra Investment Company with assets of $360.4 million, Integra
Mortgage Company with a $3.7 billion portfolio of loans serviced for others,
Integra Trust Company with assets at a market value of $9.3 billion on December
31, 1995 and Altegra Credit Company, an indirect, non-conforming mortgage and
home equity lender. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE";
"SUMMARY -- Selected Financial Data"; "SUMMARY -- Comparative Per Share Data";
"PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)" and
"INFORMATION ABOUT INTEGRA". The principal office of Integra is located at Four
PPG Place, Pittsburgh, 15222-5401, and its telephone number is (412) 644-7669.
National City. National City is a registered multi-bank holding company
under the BHCA and is a registered savings and loan holding company under the
Home Owners' Loan Act of 1933, as amended (the "HOLA"), and is incorporated
under the laws of the State of Delaware. As of December 31, 1995, National City
owned substantially all of the outstanding stock of 17 commercial banks and 1
Federal Savings Bank in Ohio, Kentucky and Indiana and through these financial
institutions, operated 645 offices. National City subsidiaries provide financial
services that meet a wide range of customer needs, including commercial and
retail banking, trust and investment services, item processing, mortgage
servicing and credit card processing. At December 31, 1995, National City, its
affiliate banks and other subsidiaries had consolidated total assets of $36.2
billion and consolidated total deposits of $25.2 billion. See "SUMMARY --
Selected Financial Data"; "SUMMARY -- Comparative Per Share Data"; "PRO FORMA
COMBINED CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)" and "INFORMATION ABOUT
NATIONAL CITY"." The principal office of National City is located at 1900 East
Ninth Street, Cleveland, Ohio 44114, and its telephone number is (216) 575-2000.
REASONS FOR THE MERGER
National City's acquisition strategy includes the expansion into major,
contiguous markets where a significant presence can be established. Western
Pennsylvania is a logical extension of National City's current midwest markets
and the acquisition of Integra will provide National City with a meaningful
presence in western Pennsylvania together with an expansion of National City's
customer base and assets. After exploring various other strategic alternatives,
including the possibility of remaining independent, Integra believes that a sale
of the company to a larger financial institution offers the greatest potential
for achieving long term value for Integra shareholders. See "MERGER --
Background of and Reasons for the Merger -- Integra" and "-- Background of and
Reasons for the Merger -- National City."
TERMS OF THE MERGER
Pursuant to the Agreement and Plan of Merger dated as of August 27, 1995
(the "Agreement"), Integra will merge into National City (the "Merger"). Upon
consummation of the Merger, the surviving entity will be known as National City
Corporation. At the Effective Time, each outstanding share of Integra Common
7
<PAGE> 14
(except shares held by Integra, National City or any of their direct or indirect
wholly owned subsidiaries (other than shares of Integra Common held in trust
accounts, managed accounts or in any similar manner as trustee or in a fiduciary
capacity or acquired in satisfaction of debts previously contracted)) will be
converted into the right to receive 2.00 shares of National City Common (the
"Exchange Rate"). No fractional shares of National City Common will be issued in
the Merger. A copy of the Agreement is attached hereto as Appendix A.
The closing price of National City Common on the NYSE on February 29, 1996
was $34.75 (which is the equivalent of $69.50 for 2.00 shares of National City
Common).
Following the Merger, the directors and officers of National City at the
Effective Time will continue as the directors and officers of National City.
Promptly after the Effective Time, (a) the Board of Directors of National City
shall increase its size to such number as is necessary to create four vacancies,
and it is anticipated that William F. Roemer, James S. Broadhurst, Robert A.
Paul, and Michael A. Schuler, who now serve as directors of Integra, will become
directors of National City. See "MERGER -- Management after the Merger."
CONDITIONS; TERMINATION; AMENDMENTS
Consummation of the Merger is subject to satisfaction of a number of
conditions, including (a) approval by the stockholders of National City and
approval by the shareholders of Integra of the Agreement, (b) approval by
certain federal and state banking authorities, (c) authorization for listing on
the NYSE of the National City Common issuable in the Merger, (d) the issuance by
the Commission of an order declaring the Registration Statement effective, (e)
the receipt by National City and Integra of a letter from Ernst & Young LLP,
National City's independent auditors, 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 the Agreement, (f) the receipt by National City and Integra of
the opinion of Buchanan Ingersoll Professional Corporation, counsel to Integra
("Buchanan Ingersoll"), substantially to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and (g) the non-existence of a restraining order, preliminary or permanent
injunction or other order by any federal or state court in the United States
preventing the consummation of the Merger. Substantially all of the conditions
to consummation of the Merger (other than required stockholder, shareholder or
regulatory approvals) may be waived, in whole or in part, by the party for whose
benefit they have been created, without the approval of the stockholders or
shareholders, as the case may be, of that party. In addition, the Agreement may
be terminated under certain circumstances, and such termination would not
require stockholder or shareholder approval. The Agreement may be amended or
supplemented upon the written agreement of National City and Integra at any
time, provided that no amendment may be made after any stockholder or
shareholder approval, as applicable, of the Agreement which changes the form or
amount of the merger consideration without further stockholder or shareholder
approval, as applicable. See "MERGER -- Conditions to the Merger" and "MERGER --
Waiver; Amendment; Termination."
CURRENT DEVELOPMENTS
National City has had an active capital management program in the form of
dividend increases and substantial stock repurchases. National City has no plans
to make tainted share repurchases in connection with its capital management
program given the constraints associated with the pooling-of-interests method of
accounting. Management has suspended share repurchases and will request that the
Board rescind the outstanding share repurchase authorization. Further, National
City has not agreed directly or indirectly nor does it plan to retire or
reacquire all or part of the stock to be issued to effect the Merger. (See
"MERGER-Accounting Treatment")
REGULATORY APPROVALS
In order for the Merger to be consummated, approvals must be obtained from
the Board of Governors of the Federal Reserve System (the "FRB") and the
Pennsylvania Department of Banking (the "Pennsylvania
8
<PAGE> 15
Department"). The Pennsylvania Department approved the Merger on January 5,
1996. The FRB approved the Merger on January 22, 1996 (the "Fed Approval Date").
In accordance with the terms of the FRB approval, the Merger may not be
consummated until the 15th day after FRB approval is received. See "MERGER --
Regulatory Approvals."
THE MEETINGS
National City. The Annual Meeting of Stockholders of National City will be
held on April 22, 1996, at National City Bank, Indiana, One National City
Center, Fourth Floor, Indianapolis, Indiana 46255, commencing at 9:30 a.m.,
Indianapolis Time ("Eastern Standard Time"). The Board of Directors of National
City has fixed the close of business on February 29, 1996 as the record date for
determination of stockholders entitled to notice of and to vote at the Annual
Meeting of Stockholders of National City. The purpose of the Annual Meeting of
Stockholders of National City is (a) to elect directors of National City, (b) to
approve the amendment to the National City Corporation 1993 Stock Option Plan,
(c) to consider and vote on a proposal to adopt the Agreement, (d) to approve
the selection of Ernst & Young LLP as independent auditors, and (e) to transact
such other business as may properly come before the meeting.
Integra. The Special Meeting of Shareholders of Integra will be held on
April 24, 1996, at the Wintergarden at One PPG Place, Pittsburgh, PA, commencing
at 9:30 a.m., Eastern Daylight Savings Time. The Board of Directors of Integra
has fixed the close of business on February 29, 1996 as the record date for
determination of shareholders entitled to notice of and to vote at the Special
Meeting of Shareholders of Integra. The purpose of the Special Meeting of
Shareholders of Integra is to consider and vote on a proposal to approve the
Agreement.
For additional information with respect to the Meetings, see "THE
MEETINGS"; "ELECTION OF DIRECTORS -- NATIONAL CITY"; "REMUNERATION OF EXECUTIVE
OFFICERS AND TRANSACTIONS WITH MANAGEMENT -- NATIONAL CITY"; and "SELECTION OF
INDEPENDENT AUDITORS -- NATIONAL CITY;" AND "MERGER."
VOTES REQUIRED
The proposal to adopt the Agreement to be considered at the Annual Meeting
of Stockholders of National City must be adopted by the affirmative vote of the
holders of a majority of the outstanding shares of National City Common entitled
to vote at the Annual Meeting of Stockholders of National City. The adoption of
the Agreement by the stockholders of National City is required under the
Delaware General Corporation Law (the "DGCL") and such adoption is included in
the Agreement as a condition to the parties' obligations to close. As of
December 31, 1995, the directors and executive officers of National City and
their affiliates are entitled to vote approximately 3.40% of the outstanding
shares of National City Common entitled to vote at the Annual Meeting of
Stockholders of National City. See "THE MEETINGS -- Record Dates and Voting
Rights," and "ELECTION OF DIRECTORS -- National City -- Beneficial Ownership."
The proposal to approve the Agreement to be considered at the Special
Meeting of Shareholders of Integra must be adopted by the affirmative vote of
holders of a majority of votes cast by all shareholders entitled to vote. The
approval of the Agreement by the shareholders of Integra is required under
Section 1924 of the Pennsylvania Business Corporation Law ("BCL") and is
included in the Agreement as a condition to the parties' obligations to close.
As of December 31, 1995, the directors and executive officers of Integra and
their affiliates are entitled to vote approximately 3.69% of the outstanding
shares of Integra Common eligible to vote at the Special Meeting of Shareholders
of Integra. See "THE MEETINGS -- Record Dates and Voting Rights."
National City and Integra have been advised that their respective directors
and executive officers intend to vote their shares (including shares held in a
fiduciary capacity) in favor of the Agreement. The Agreement provides that,
absent certain circumstances (none of which has occurred), the respective Boards
of Directors of National City and Integra shall recommend that their
stockholders or shareholders, as the case may be, vote
9
<PAGE> 16
in favor of and approve the Merger and adopt or approve, as applicable, the
Agreement at their respective Meetings.
RECOMMENDATION OF THE BOARDS OF DIRECTORS
The Boards of Directors of National City and Integra (a) have unanimously
approved the Agreement, (b) believe that the proposed Merger is in the best
interests of their respective corporations and stockholders or shareholders, as
the case may be, and (c) unanimously recommend that their stockholders or
shareholders, as the case may be, vote FOR the adoption or approval, as
applicable, of the Agreement. See "MERGER -- Background of and Reasons for the
Merger -- Integra" and "MERGER -- Background of and Reasons for the Merger --
National City."
OPINIONS OF FINANCIAL ADVISORS
Morgan Stanley & Co. Incorporated ("Morgan Stanley"), Integra's financial
advisor, has rendered its opinions that, as of August 26, 1995 and the date of
this Prospectus and Joint Proxy Statement, the Exchange Rate is fair, from a
financial point of view, to the shareholders of Integra. Merrill Lynch & Co.
("Merrill Lynch"), National City's financial advisor, has rendered its opinions,
dated August 27, 1995 and the date of this Prospectus and Joint Proxy Statement,
that as of such dates the Exchange Rate was fair to National City from a
financial point of view. Copies of the opinions of Morgan Stanley and Merrill
Lynch dated the date of this Prospectus and Joint Proxy Statement, which are
attached hereto as Appendices B and C, respectively, describe the assumptions
made, matters considered and limits of the reviews undertaken by Morgan Stanley
and Merrill Lynch in rendering their respective opinions, and should be read in
their entirety. Integra and National City have agreed to pay fees to Morgan
Stanley and Merrill Lynch, respectively, a portion of which are contingent upon
consummation of the Merger. For a further description of the opinions of Morgan
Stanley and Merrill Lynch and the fees payable to them, see "THE
MERGER -- Opinions of Financial Advisors."
INTERESTS OF CERTAIN PARTIES
Messrs. Roemer, Carroll, Skillington and Echement are parties to Employment
Agreements (as hereinafter defined) with Integra which provide that upon a
change in control of Integra, either the employee or Integra may terminate the
employee's employment, at which time the employee is entitled to up to three
year's Annual Compensation (as hereinafter defined). The Merger constitutes a
change in control for purposes of the Employment Agreements. Messrs. Roemer,
Carroll and Echement have each elected to terminate their employment pursuant to
their respective Employment Agreements following the consummation of the Merger.
Accordingly Mr. Roemer will receive approximately $2,645,000 in cash and
benefits, Mr. Carroll approximately $2,030,000 in cash and benefits, and Mr.
Echement approximately $1,204,000 in cash and benefits under the terms of their
respective Employment Agreements. Mr. Roemer will also receive an annual
consulting fee of $225,000 until he attains the age of 65. Mr. Roemer is
currently 62 years of age. Mr. Skillington who currently intends to remain with
the organization after the Merger, would be entitled to approximately $1,360,000
if he were to leave while still being entitled to payment under his Employment
Agreement.
Messrs. Roemer, Carroll and Echement are also entitled to receive their
full, accrued benefits under the Integra Supplemental Executive Retirement Plan
at or after age 55 as if it were their normal retirement age. Accordingly, Mr.
Roemer will receive approximately an annual benefit of $374,338, Mr. Carroll
$286,607 and Mr. Echement $84,650 pursuant to the Integra Supplemental Executive
Retirement Plan. Mr. Skillington's services will be retained by National City
after the Merger.
Under certain of Integra's stock options, the date on which the options
held by directors and executive officers of Integra become exercisable is
accelerated upon a Change of Control of Integra. Upon consummation of the Merger
and pursuant to the acceleration provisions of such Integra stock options, Mr.
Roemer will have options to purchase 20,000 shares become exercisable, Mr.
Carroll will have options to purchase 12,000 shares become exercisable, Mr.
Echement will have options to purchase 8,000 shares become exercisable and Mr.
Skillington will have options to purchase 10,000 shares become exercisable.
10
<PAGE> 17
APPRAISAL AND DISSENTERS' RIGHTS
Neither holders of National City Common nor holders of Integra Common will
be entitled to any statutory appraisal and dissenters' rights in connection with
the Merger. See "MERGER -- Appraisal and Dissenters' Rights."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES AND ACCOUNTING TREATMENT
The Merger is structured to qualify as a tax-free reorganization under
Section 368 of the Code. The Agreement provides as a condition to the parties'
obligations to consummate the Merger that National City and Integra shall have
received the opinion of Buchanan Ingersoll substantially to the effect, among
other things, that for United States federal income tax purposes no gain or loss
will be recognized by the shareholders of Integra who exchange their shares of
Integra Common solely for shares of National City Common pursuant to the Merger.
See "MERGER -- Certain Federal Income Tax Consequences."
The Merger, if completed as proposed, will qualify as a
pooling-of-interests for accounting and financial purposes. The Agreement
provides as a condition to the parties' obligations to consummate the Merger
that National City and Integra shall have received a letter from Ernst & Young
LLP, dated the day of the Effective Time, 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 the Agreement. See "MERGER -- Accounting Treatment."
THE OPTIONS
National City Option. As a condition to National City's entering into the
Agreement, and in consideration therefor, Integra and National City entered into
a Stock Option Agreement dated as of August 27, 1995 (the "National City Option
Agreement"). The National City Option Agreement is intended to increase the
likelihood that the Merger will be consummated by making it more difficult and
more expensive for another party to obtain control of or acquire Integra. See
"MERGER -- The Option." A copy of the National City Option Agreement is attached
hereto as Appendix D.
Pursuant to the National City Option Agreement, Integra granted National
City an option (the "National City Option") to purchase up to 6,501,300 fully
paid and nonassessable shares of Integra Common at a price of $51.875 per share.
In the event that any additional shares of Integra Common are issued or
otherwise become outstanding after the date of the National City Option
Agreement (other than pursuant to the Integra Stock Option Plans as provided for
under the Agreement), the number of shares of Integra Common subject to the
National City Option will be increased so that, after such issuance, it equals
19.9% of the number of shares of Integra Common then issued and outstanding
without giving effect to any shares subject or issued pursuant to the National
City Option. National City may exercise the National City Option only upon the
occurrence of certain events (none of which has occurred) and upon obtaining any
regulatory approvals necessary for the acquisition of shares of Integra subject
to the National City Option. In lieu of exercising the National City Option,
National City can require Integra to repurchase for a formula price the National
City Option and any shares of Integra Common purchased upon exercise of the
National City Option and owned by National City at that time. See "MERGER -- The
National City Option."
In addition to other Exercise Termination Events (as such term is defined
in "MERGER -- The National City Option"), the National City Option Agreement
provides that the National City Option shall terminate upon the termination of
the Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event (as such term is
defined in "MERGER -- The National City Option"). The Agreement may be
terminated at any time prior to the Effective Time by either National City or
Integra if the Merger is not approved at either the Annual Meeting of
Stockholders of National City or the Special Meeting of Shareholders of Integra
(provided that the terminating party is not otherwise in material breach of its
obligations under the Agreement). Accordingly, if no Initial Triggering Event
has occurred, in the event that either the National City stockholders do not
adopt the Agreement at the Annual Meeting of Stockholders of National City or
the Integra shareholders do not approve the Agreement at the Special Meeting of
Shareholders of Integra, and either National City or Integra
11
<PAGE> 18
terminates the Agreement as a result thereof, the National City Option shall
terminate. See "MERGER -- The National City Option."
Integra Option. As a condition to Integra's entering into the Agreement and
the Plan of Merger, and in consideration therefor, Integra and National City
entered into a Stock Option Agreement dated as of August 27, 1995 (the "Integra
Option Agreement"). The Integra Option Agreement is intended to provide
assurance to Integra shareholders that they will receive National City Common in
exchange for their Integra Common at the consummation of the Merger by making
the acquisition of National City by a third party prior to the consummation of
the Merger more expensive. See "MERGER -- The Integra Option." A copy of the
Integra Option Agreement is attached hereto as Appendix E.
Pursuant to the Integra Option Agreement, National City granted Integra an
option (the "Integra Option") to purchase up to 12,098,600 fully paid and
nonassessable shares of National City Common at a price of $31.625 per share. In
the event that any additional shares of National City Common are issued or
otherwise become outstanding after the date of the Integra Option Agreement
(other than pursuant to the National City Stock Option Plans as provided for
under the Agreement), the number of shares of National City Common subject to
the Integra Option will be increased so that, after such issuance, it equals
8.2% of the number of shares of National City Common then issued and outstanding
without giving effect to any shares subject or issued pursuant to the Integra
Option. Integra may exercise the Integra Option only upon the occurrence of
certain events (none of which has occurred) and upon obtaining any regulatory
approvals necessary for the acquisition of shares of National City subject to
the Integra Option. In lieu of exercising the Integra Option, Integra can
require National City to repurchase for a formula price the Integra Option and
any shares of National City Common purchased upon exercise of the Integra Option
and owned by Integra at that time. See "MERGER -- The Integra Option."
In addition to other Exercise Termination Events (as such term is defined
in "MERGER -- The Integra Option"), the Integra Option Agreement provides that
the Integra Option shall terminate upon the termination of the Agreement in
accordance with the provisions thereof if such termination occurs prior to the
occurrence of an Initial Triggering Event (as such term is defined in "MERGER --
The Integra Option"). The Agreement may be terminated at any time prior to the
Effective Time by either Integra or National City if the Merger is not approved
at either the Annual Meeting of Stockholders of National City or the Special
Meeting of Shareholders of Integra (provided that the terminating party is not
otherwise in material breach of its obligations under the Agreement).
Accordingly, if no Initial Triggering Event has occurred, in the event that
either the National City stockholders do not adopt the Agreement at the Annual
Meeting of Stockholders of National City or the Integra shareholders do not
approve the Agreement at the Special Meeting of Shareholders of Integra, and
either Integra or National City terminates the Agreement as a result thereof,
the Integra Option shall terminate. See "MERGER -- The Integra Option."
COMPARATIVE RIGHTS OF HOLDERS OF SHARES OF INTEGRA COMMON AFTER THE MERGER
The rights of holders of shares of Integra Common currently are governed by
the BCL, Integra's Articles of Incorporation ("Integra's Articles"), and
Integra's Bylaws ("Integra's Bylaws"). At the Effective Time, Integra's
shareholders will become National City stockholders, and their rights will be
governed by the DGCL, National City's Restated Certificate of Incorporation, as
amended ("National City's Certificate"), and National City's First Restatement
of By-Laws dated April 27, 1987 (as amended through October 24, 1994) ("National
City's By-Laws"). See "GENERAL COMPARISON OF NATIONAL CITY AND INTEGRA CAPITAL
STOCK."
MARKET AND MARKET PRICES
National City Common and Integra Common are traded on the NYSE. Receipt of
authorization for listing on the NYSE of the shares of National City Common
issuable in connection with the Merger is a condition to consummation of the
Merger. See "MERGER -- Conditions to the Merger." The information set forth in
the table below presents (a) the closing prices for National City Common and
Integra Common on the NYSE on August 25, 1995, the last trading day preceding
the public announcement of the Merger, and on February 29, 1996, (b) the high
and low sale prices for National City Common and Integra Common on
12
<PAGE> 19
such dates, and (c) the Integra equivalent per share price as of August 25, 1995
and February 29, 1996, calculated by multiplying the closing price of National
City Common on the NYSE on such dates by the Exchange Rate.
<TABLE>
<CAPTION>
NATIONAL EQUIVALENT
CITY INTEGRA VALUE
COMMON COMMON PER SHARE
------------ ------------ ------------
<S> <C> <C> <C>
August 25, 1995
Closing Price............ $31.63 $51.88 $63.25
High..................... 31.63 52.00
Low...................... 31.25 51.75
February 29, 1996
Closing Price............ $34.75 $68.13 $69.50
High..................... 34.75 68.50
Low...................... 34.13 67.50
</TABLE>
No assurance can be given as to what the market price of National City
Common will be if and when the Merger is consummated or when the shares of
National City Common are actually issued in the Merger. If the Merger had been
consummated on February 29, 1996, the estimated total value of the Merger would
have been $2,303,660,969.
SELECTED FINANCIAL DATA
The following table presents selected consolidated financial data for (a)
National City on a historical basis, (b) Integra on a historical basis, and (c)
National City and Integra on an unaudited pro forma basis. The pro forma data in
the table assumes that the acquisition of Integra is accounted for as a
pooling-of-interests. See "MERGER -- Accounting Treatment." This table should be
read in conjunction with the financial statements and other financial
information of National City and Integra, respectively, incorporated herein by
reference and the pro forma combined consolidated financial information giving
effect to the Merger included elsewhere in this Proxy Statement. See "AVAILABLE
INFORMATION"; "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" and "PRO FORMA
COMBINED CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)." The pro forma data
presented below is not necessarily indicative of the results which actually
would have been obtained if the Merger had been consummated in the past or which
may be obtained in the future.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NATIONAL CITY CORPORATION:
Earnings (In thousands, except per
share data)
Net interest income................ $1,321,085 $1,236,809 $1,200,054 $1,152,745 $1,131,269
Provision for loan losses.......... 97,482 79,356 93,089 129,361 251,076
Net income......................... 465,109 429,434 403,997 346,923 236,805
Earnings per common share:
Primary.......................... 3.03 2.70 2.41 2.09 1.46
Fully diluted.................... 2.95 2.64 2.37 2.06 1.45
Cash dividends declared per common
share............................ 1.30 1.18 1.06 .94 .94
Average Balances (In millions)
Assets............................. 33,797 30,614 28,834 28,635 29,343
Earning assets..................... 30,233 27,261 25,745 25,681 26,279
Deposits........................... 24,472 22,835 21,646 21,967 22,474
Other borrowings................... 4,939 3,954 3,712 3,537 3,903
Corporate long term debt........... 992 712 452 329 318
Stockholders' equity............... 2,739 2,619 2,606 2,362 2,156
</TABLE>
13
<PAGE> 20
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INTEGRA FINANCIAL CORPORATION:
Earnings (In thousands, except per
share data)
Net interest income................ 507,260 528,819 542,299 507,791 433,029
Provision for loan losses.......... 16,000 30,000 50,000 96,390 71,837
Income before cumulative effect of
accounting changes............... 128,390 169,033 152,820 60,503 62,339
Net income......................... 128,390 169,033 212,820 60,503 62,339
Earnings per common share before
cumulative effect of accounting
changes.......................... 3.88 5.01 4.50 1.81 2.23
Cash dividends declared per common
share............................ 1.95 1.70 1.37 .98 1.11
Average Balances (In millions)
Assets............................. 14,283 13,597 13,561 12,703 11,410
Earning assets..................... 13,616 12,964 12,897 12,115 10,851
Deposits........................... 10,243 9,997 10,204 10,255 9,704
Other borrowings................... 1,610 1,665 1,621 1,127 776
Corporate long term debt........... 1,204 816 708 434 129
Shareholders' equity............... 1,010 941 831 728 608
PRO FORMA NATIONAL CITY CORPORATION:
Earnings (In thousands, except per
share data)
Net interest income................ $1,828,345 $1,765,628 $1,742,353 $1,660,536 $1,564,298
Provision for loan losses.......... 113,482 109,356 143,089 225,751 322,913
Income before cumulative effect of
accounting changes............... 591,460 598,467 556,817 407,426 299,144
Net income......................... 591,460 598,467 616,817 407,426 299,144
Earnings per common share before
cumulative effect of accounting
changes
Primary.......................... 2.68 2.64 2.36 2.04 1.37
Fully diluted.................... 2.64 2.60 2.33 2.02 1.37
Average common shares outstanding
Primary.......................... 215,097 220,824 228,794 222,072 207,770
Fully diluted.................... 224,005 229,846 238,314 232,078 216,320
Average Balances (In millions)
Assets............................. 48,102 44,211 42,395 41,338 40,753
Earning assets..................... 43,849 40,225 38,642 37,796 37,130
Deposits........................... 34,715 32,832 31,850 32,222 32,178
Other borrowings................... 6,549 5,619 5,333 4,664 4,679
Corporate long term debt........... 2,196 1,528 1,160 763 447
Stockholders' equity............... 3,701 3,560 3,437 3,090 2,764
</TABLE>
COMPARATIVE PER SHARE DATA
Based upon the Exchange Rate of 2.00 shares of National City Common for
each share of Integra Common outstanding immediately prior to the Merger, the
following table sets forth per common share book value, cash dividends declared
and net income of (a) National City on a historical basis, (b) National City pro
forma adjusted to give effect to the Merger as if the Merger had been effected
for the period presented, (c) Integra on a historical basis, and (d) Integra pro
forma equivalent of one share of Integra Common, adjusted for all applicable
stock splits. The following information should be read in conjunction with the
historical financial statements of National City and Integra incorporated by
reference in this Proxy Statement and the pro forma combined consolidated
financial information giving effect to the Merger included elsewhere in the
Proxy Statement. See "AVAILABLE INFORMATION"; "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE" and "PRO FORMA COMBINED CONSOLIDATED FINANCIAL
INFORMATION (UNAUDITED)." The data presented below are not necessarily
indicative of the results
14
<PAGE> 21
which actually would have been obtained if the Merger had been consummated in
the past or which may be obtained in the future.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
NATIONAL CITY COMMON STOCK
Earnings per common share before cumulative
effect of accounting changes
Historical
Primary.................................. $ 3.03 $ 2.70 $ 2.41 $ 2.09 $ 1.46
Fully diluted............................ 2.95 2.64 2.37 2.06 1.45
Pro forma combined
Primary.................................. 2.68 2.64 2.36 2.04 1.37
Fully diluted............................ 2.64 2.60 2.33 2.02 1.37
Cash dividends declared per share(2)
Historical.................................. 1.30 1.18 1.06 .94 .94
Book value per share at period-end(1)
Historical.................................. 18.80
Pro forma combined(4)....................... 18.23
INTEGRA FINANCIAL COMMON STOCK
Earnings per common share before cumulative
effect of accounting changes
Historical -- primary....................... 3.88 5.01 4.50 1.81 2.23
Pro forma equivalent(3) -- primary.......... 5.36 5.28 4.72 4.08 2.74
Cash dividends declared per share(2)
Historical.................................. 1.95 1.70 1.37 .98 1.11
Pro forma equivalent(3)..................... 2.60 2.36 2.12 1.88 1.88
Book value per share at period-end(1)
Historical.................................. 34.68
Pro forma equivalent(3)(4).................. 36.46
</TABLE>
- ---------------
(1) Included for specified periods only in accordance with SEC rules.
(2) No assurance can be given that equivalent dividends will be declared in the
future. The amount of future dividends payable by National City will depend
upon the earnings and financial condition of National City and other
factors, including applicable regulations and policies.
(3) The equivalent pro forma combined per share data for Integra Common
represents, in the case of book value and earnings per common share, the pro
forma per share data for National City Common multiplied by the Exchange
Rate and, in the case of dividends declared, the historical per share data
for National City Common multiplied by the Exchange Rate.
(4) Pro forma combined book value includes the conversion of the 8% Cumulative
Convertible Preferred Stock as discussed in Note B to the Pro Forma Combined
Consolidated Financial Information. Pro forma combined book value before the
conversion of the Cumulative Convertible Preferred Stock would have been
$18.12.
15
<PAGE> 22
THE MEETINGS
This Prospectus and Joint Proxy Statement is being furnished to the
stockholders of National City and the shareholders of Integra in connection with
the solicitation of proxies by the Boards of Directors of National City and
Integra for use at their respective Annual Meeting of Stockholders and Special
Meeting of Shareholders and at any adjournment or adjournments thereof. The
Annual Meeting of Stockholders of National City will be held on April 22, 1996,
at National City Bank, Indiana, One National City Center, Fourth Floor,
Indianapolis, Indiana, commencing at 9:30 a.m., Eastern Standard Time. The
Special Meeting of Shareholders of Integra will be held on April 24, 1996, in
the Wintergarden at One PPG Place, Pittsburgh, Pennsylvania, commencing at 9:30
a.m., Eastern Daylight Savings Time.
VOTING
NATIONAL CITY
A quorum is required for the transaction of business by stockholders at the
meeting. The holders of not less than a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy shall constitute a quorum. The election of directors requires the
plurality of the votes of the shares present in person or represented by proxy
at the meeting and entitled to vote on the election of directors. The approval
of the amendment to the Option Plan and the approval of the selection of Ernst
and Young LLP as independent auditors for 1996 require the affirmative vote of
the holders of the majority of shares present in person or represented by proxy
and entitled to vote at the Annual Meeting. The proposal to adopt the Agreement
requires the affirmative vote of the holders of a majority of the shares
outstanding and entitled to vote. Shares represented by proxies which are marked
"abstain" on any of the proposals will be counted for the purposes of
determining the number of shares represented by proxy at the meeting and not in
support of the proposal. Such proxies will thus have the effect as if the shares
represented thereby were voted against those proposals marked "abstain" (except
for the election of directors which is by a plurality of the votes). Shares not
voted on proxies returned by brokers will be treated as not represented at the
meeting and will therefor have no impact on the adoption of all the proposals
set forth in this proxy except for the adoption of the Agreement. Any action or
inaction other than a vote for the adoption of the Agreement or the returning of
the proxy signed but not marked is the equivalent to a no vote.
INTEGRA
A quorum is required for the transaction of business by shareholders at the
Integra Special Meeting of Shareholders. The presence in person or by proxy of
at least a majority of the shares of Integra Common outstanding and entitled to
vote at the meeting constitutes a quorum. Under Pennsylvania law, abstentions do
not count as votes cast and, therefore, have no effect on the vote required on
any matter at the meeting since the affirmative vote of at least a majority of
the votes cast (not counting abstentions) is required for approval of a matter.
Given the nature of the matters being considered at the Integra Special Meeting
of Shareholders, there should not be any broker nonvotes, although like
abstentions, broker nonvotes have no impact on the vote.
RECORD DATES AND VOTING RIGHTS
National City. The Board of Directors of National City has fixed the close
of business on February 29, 1996 as the record date for determination of
stockholders entitled to receive notice of and to vote at the Annual Meeting of
Stockholders of National City. On the record date, National City had 146,182,690
shares of National City Common outstanding, each of which is entitled to one
vote on all matters to be acted upon at the meeting. The affirmative vote of the
holders of a majority of the outstanding shares of National City Common entitled
to vote at the Annual Meeting of Stockholders of National City is required to
adopt the Agreement and to satisfy the NYSE listing requirements to which
National City is subject.
Integra. The Board of Directors of Integra has fixed the close of business
on February 29, 1996 as the record date for determination of shareholders
entitled to notice of and to vote at the Special Meeting of Shareholders of
Integra. As of the record date, Integra had outstanding and entitled to vote
33,146,201 shares of Integra Common, each of which is entitled to one vote on
all matters to be acted upon at the meeting. The affirmative vote of the holders
of a majority of the votes cast by all shareholders entitled to vote is required
to approve the Agreement under the BCL.
16
<PAGE> 23
VOTING AND REVOCATION OF PROXIES
Proxies for use at the Annual Meeting of the Stockholders of National City
and the Special Meeting of the Shareholders of Integra accompany this Proxy
Statement. A stockholder or shareholder may use his or her proxy if he or she is
unable to attend the meeting in person or wishes to have his or her shares voted
by proxy even if he or she does attend the meeting. The proxy may be revoked in
writing by the person giving it at any time before it is exercised by providing
notice of such revocation to the Secretary of National City or of Integra, as
the case may be, or by submitting a proxy having a later date, or by such person
appearing at the meeting and electing to vote in person. All proxies validly
submitted and not revoked will be voted in the manner specified therein by the
stockholder or shareholder. If no specifications are made, shares of Integra
Common represented by proxy will be voted FOR the approval of the Agreement and
FOR approval of the proposal to adjourn the meeting, to permit the solicitation
of additional votes and shares of National City Common represented by proxy will
be voted FOR the election of directors, FOR the approval of the amendments to
the National City Corporation 1993 Stock Option Plan, FOR the adoption of the
Agreement, FOR the approval of the selection of Ernst & Young LLP as independent
auditors of 1996, FOR approval of the proposal to vote and act upon such other
business as may properly come before the meeting. A specification to vote
against or to abstain from approval or adoption, as applicable, of the Agreement
will constitute a withdrawal of authority of those proxies to vote for an
adjournment of the National City Annual Meeting or the Integra Special Meeting,
as applicable, for the purpose of soliciting additional proxies.
Each of National City and Integra will bear its own cost of solicitation of
proxies from its stockholders and shareholders, respectively. In addition to
using the mails, proxies may be solicited by personal interview, telephone and
wire. It is anticipated that banks, brokerage houses and other institutions,
nominees or fiduciaries will be requested to forward their proxy soliciting
material to their principals and to obtain authorizations for the executions of
proxies. Officers and regular employees of National City or its subsidiaries and
of Integra or its subsidiaries, acting on behalf of National City or Integra, as
the case may be, may solicit proxies personally or by telephone or wire.
National City and Integra have separately retained Morrow and Co., Inc. to
assist in such solicitations. The fees of Morrow and Co., Inc. are estimated to
be $7,500 for National City and $7,000 for Integra, and Morrow and Co., Inc.
will be reimbursed by the parties for its reasonable out-of-pocket costs and
expenses. Neither National City nor Integra expects to pay any other
compensation for the solicitation of proxies, but may, upon request, pay the
standard charges and expenses of banks, brokerage houses, and other
institutions, nominees and fiduciaries for forwarding proxy materials to and
obtaining proxies from their principals. However, no such payment will be made
to any of National City's or Integra's subsidiaries acting through their
nominees or acting as fiduciaries.
Neither the Board of Directors of National City nor the Board of Directors
of Integra is aware of any matter other than the matters set forth in this Proxy
Statement that may be presented for action at the respective meetings, but if
other matters do properly come before the respective meetings or any
adjournments thereof then it is intended that the shares represented by the
accompanying proxy will be voted by the persons named in the proxy in accordance
with their best judgment pursuant to the discretionary authority granted by the
proxy.
1. ELECTION OF DIRECTORS -- NATIONAL CITY
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of National City has responsibility for establishing
broad corporate policies and overall performance of National City. However, it
is not involved in the day to day operating details of National City's business.
Members of the Board are kept informed of National City's business through
various documents and reports provided by the Chairman and other officers of
National City and by participating in Board and committee meetings. Each
director has access to all books, records and reports of National City, and
members of management are available at all times to answer their questions.
In 1995, the Board of Directors of National City held 6 meetings. Average
attendance by directors at those meetings was 88% and, except for Messrs.
Lemieux and Weiss, all directors attended 75% or more of the meetings of the
Board and the Board Committees they were scheduled to attend. Except for Messrs.
Biggar, Evans and Weiss, all of the persons nominated and elected as directors
of National City at National City's 1995 Annual Meeting of Stockholders attended
that Annual Meeting.
17
<PAGE> 24
The Board of Directors of National City has established several permanent
committees comprising directors who are appointed to those committees annually.
The principal committees are the Audit Committee, the Compensation and
Organization Committee, the Executive Committee, the Nominating Committee and
the Public Policy Committee, each of which is described below. The members of
each of those Committees are identified in the biographical material of the
nominees for election of Directors beginning at page 20.
The Audit Committee. The Audit Committee is required to meet at least
semiannually and met three times during 1995. The Audit Committee is composed of
directors who are independent of the management of National City and are free of
any relationship that would interfere with their exercise of independent
judgment as committee members. The responsibility for effective auditing of
National City and any subsidiary is carried out by the Audit Committee through
the general auditor and the independent auditors. The Audit Committee provides
assistance to the Board of Directors in fulfilling its responsibility to
stockholders, potential stockholders, and the investment community relating to
corporate accounting and reporting practices of National City, effectiveness of
its internal control structure and procedures for financial reporting, and
compliance with designated laws and regulations. In so doing, the Audit
Committee maintains free and open communications between the directors, the
independent auditors, the general auditor and the management of National City.
The Compensation and Organization Committee. The Compensation and
Organization Committee meets on the call of the Chairman of the Board of
Directors and met five times during 1995. The Compensation and Organization
Committee considers all matters relating to compensation policy and compensation
of senior officers of National City and its subsidiaries and makes
recommendations to the Board of Directors on matters relating to succession and
organization of senior executive management. Under the terms of each of National
City's Amended and Restated 1973 Stock Option Plan, as amended, 1984 Stock
Option Plan, as amended, the 1989 Stock Option Plan, and the 1993 Stock Option
Plan the Compensation and Organization Committee is authorized to grant stock
option rights and stock appreciation rights to officers and employees of
National City and its subsidiaries. The Compensation and Organization Committee
also determines participants and establishes the peer group for the Long Term
Incentive Compensation Plan and sets the awards granted pursuant to the Short
Term Incentive Plan. The Compensation and Organization Committee also determines
those employees who are eligible to receive awards of restricted stock under the
National City Corporation Amended and Second Restated 1991 Restricted Stock
Plan.
The Executive Committee. The Executive Committee meets on the call of the
Chairman of the Board of Directors and met twice during 1995. The Executive
Committee is empowered to exercise all powers and perform all duties of the
Board of Directors as permitted by applicable law when the Board is not in
session.
The Nominating Committee. The Nominating Committee meets on the call of the
Chairman of the Board of Directors and did not meet during 1995. The Committee
confers, advises and recommends with respect to nominations to fill vacancies on
the Board of Directors. Stockholders may submit the name of a possible nominee
to the Chairman, and he will arrange for that person to be given consideration
by the Committee. Further, stockholders may make nominations from the floor at
the Annual Meeting of Stockholders.
The Public Policy Committee. The Public Policy Committee meets on the call
of the Chairman of the Committee and met twice during 1995. The Public Policy
Committee has responsibility to oversee the various policies and programs of
National City as they relate to its relationships with employees, regulatory
agencies, governments, charitable organizations and the general public.
COMPENSATION OF DIRECTORS
Members of the Board of Directors of National City who are not officers of
National City, or any of its subsidiaries, receive a yearly retainer, payable in
quarterly installments, and a fee for each meeting of the Board, and of each
committee thereof, which they attend. The yearly retainer is $20,000*. The fee
for attendance at any Board meeting or any committee meeting is $1,000. Each of
the non-officer Chairpersons of committees of the Board of Directors of National
City receives an additional annual retainer of $2,500 paid in
- ---------------
* Each individual director who is not an officer of National City or any of its
subsidiaries and is a member of the board of directors of a subsidiary
receives compensation from the subsidiary for his responsibilities at that
subsidiary.
18
<PAGE> 25
quarterly installments. Under a plan for the deferred payment of director's
fees, a director may elect to have the payment of fees deferred until later
years.
In addition, currently each non-officer incumbent member of the Board on
the date when the National City Corporation Amended and Second Restated 1991
Restricted Stock Plan became effective was, and each individual who is first
elected or appointed as a member of the Board thereafter will be, awarded 1,000
shares of National City Common subject to transfer restrictions. Furthermore,
each year in which an individual is re-elected or re-appointed as a member of
the Board, such individual is to be awarded an additional 200 shares of National
City Common the transfer of which also is restricted. The restrictions on such
shares of National City Common do not expire until the earlier of the individual
director's death, disability or a date nine months after the date of the award.
NOMINEES FOR ELECTION AS DIRECTORS
Directors are to be elected to serve until the next Annual Meeting of
Stockholders and until their respective successors are duly elected and have
qualified. It is intended that shares represented by the proxies,
unless contrary instructions are given, will be voted for the election of the
nominees listed below as directors, whose number is equal to the total
authorized number of directors. Although management does not expect that any
nominee will be unavailable for election, in the event that vacancies occur
unexpectedly, the shares will be voted for substitute nominees, if any.
The fifteen nominees for election to the Board of Directors are identified
on pages 20 through 22. All of the nominees are presently directors of National
City. All of the incumbent members of the Board of Directors except Bernadine P.
Healy, M.D. and W. Bruce Lunsford were elected at the last Annual Meeting. The
following material contains biographical information concerning each of the
nominees, including their recent employment, positions with National City, other
directorships, age and the number of shares of National City Common beneficially
owned, all as of January 31, 1996. Unless otherwise indicated, the nominee has
sole voting and investment power with respect to National City's securities
shown to be owned by him. Options that are exercisable within 60 days of January
31, 1996 are separately noted (See Beneficial Ownership at page 23).
VOTE BY STOCKHOLDERS
The election of directors requires the plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors.
19
<PAGE> 26
SANDRA HARDEN AUSTIN, President, Physician Services, Caremark
International, a provider of health care products and
services, since 1994. Executive Vice President and Chief
Operating Officer of University of Chicago Hospitals from 1990
to 1993. Chairperson of the Public Policy Committee and Member
of the Nominating Committee. Age 48. Shares of National City
Common owned: 2,438.
CHARLES H. BOWMAN, Chairman and Chief Executive Officer of BP
America Inc., a diversified petroleum and natural resources
company, since 1994, Managing Director of BP Australia Limited
from 1990 to 1994. Director of National City since 1994,
Member of the Public Policy and Executive Committees. Age 60.
Shares of National City Common owned: 1,200.
EDWARD B. BRANDON, Retired as Chairman of the Board of
National City in 1995. Chairman of the Board and Chief
Executive Officer of National City from 1987 to 1995. Director
of Premier Industrial Corp., RPM, Inc. and The Standard
Products Company. Director of National City since 1986; Member
of the Executive and Nominating Committees. Age 64. Shares of
National City Common owned: 92,121; options exercisable within
60 days: 449,858.
JOHN G. BREEN, Chairman of the Board and Chief Executive
Officer of The Sherwin-Williams Company, a manufacturer of
coatings, since 1980. Director of The Sherwin-Williams
Company, The Mead Corporation, Parker-Hannifin Corporation and
Goodyear Tire & Rubber Co. Director of National City since
1979; Chairman of the Compensation and Organization Committee
and Member of the Executive and Nominating Committees. Age 61.
Shares of National City Common owned: 30,200.
DUANE E. COLLINS, President and Chief Executive Officer of
Parker Hannifin Corporation, a durable goods manufacturer,
since 1993. Vice Chairman of Parker Hannifin Corporation for
the previous year. President -- International 1987 to 1992.
Director of Parker Hannifin Corporation and the
Sherwin-Williams Company. Director of National City since
1995, Member of the Compensation and Organization and Audit
Committees. Age: 59. Shares of National City Common owned:
3,400.
<PAGE> 27
DAVID A. DABERKO, Chairman of the Board and Chief Executive
Officer of National City since 1995. President and Chief
Operating Officer of National City from 1993 to 1995 and
Deputy Chairman of National City from 1987 to 1993. Director
of the Student Loan Marketing Association. Director of
National City since 1988, Chairman of the Executive and
Nominating Committees. Age 50. Shares of Preferred Stock
owned: 600 depositary shares; shares of National City Common
owned: 92,764; options exercisable within 60 days: 197,667.
DANIEL E. EVANS, Chairman of the Board and Chief Executive
Officer of Bob Evans Farms, Inc., a restaurant and food
products company, since 1971. Director of Bob Evans Farms,
Inc. and The Sherwin-Williams Company. Director of National
City since 1992, Member of the Public Policy, Audit and
Compensation and Organization Committees. Age 59. Shares of
National City Common owned: 6,116.
OTTO N. FRENZEL III, Retired as Chairman of National City
Bank, Indiana in 1995. Chairman of National City Bank,
Indiana, a wholly owned subsidiary of National City, since
1992. Chairman and Chief Executive Officer of Merchants
National Corporation from 1979 to 1992. Director of American
United Life Insurance Company, Baldwin & Lyons, Inc. Indiana
Energy, Inc., IPALCO Enterprises, Inc. and IWC Resources Corp.
Director of National City since 1992. Age 65. Shares of
Corporation Common Stock owned: 1,100,238; options exercisable
within 60 days: 11,000. Mr. Frenzel shares voting and
investment powers as to an additional 1,683,869 shares of
National City Common.
BERNADINE P. HEALY, M.D., Professor of Medicine and Dean of
Ohio State University College of Medicine since September
1995. Past Director of the National Institutes of Health from
1991 to 1993. Sr. Policy Advisor, The Cleveland Clinic
Foundation from 1994 to 1995. Director of Medtronic Inc. and
Invacare. Director of National City since 1995 and previously
a Director from 1989 to 1990. Age 51. Shares of National City
Common owned: 4,129.
JOSEPH H. LEMIEUX, Chairman and Chief Executive Officer of
Owens-Illinois, Inc., a manufacturer of packaging products,
since 1990. Director of Owens-Illinois, Inc., Health Care and
Retirement Corporation, Libbey Inc., and Consol Limited
(Johannesburg Exchange). Director of National City since 1988,
Member of the Executive Committee and Compensation and
Organization Committee. Age 64. Shares of National City Common
owned: 2,909.
<PAGE> 28
THE BOARD OF DIRECTORS OF NATIONAL CITY RECOMMENDS A VOTE FOR THE SLATE OF
DIRECTOR NOMINEES.
W. BRUCE LUNSFORD, Chairman of the Board, President and Chief
Executive Officer of Vencor, Inc., a diversified healthcare
provider, since 1985. Director of Vencor, Inc., Churchill
Downs, Incorporated and Res-Care, Inc. Director of National
City since 1995. Age 48. Shares of National City Common owned:
10,000.
A. STEVENS MILES, Retired as President of the National City
and as Chairman of First Kentucky National Corporation, a
wholly owned subsidiary of the National City in 1989, having
served as President of National City since 1988 and as Chief
Executive Officer of the First Kentucky National Corporation
for 15 years. Director of National City since 1988, Member of
the Nominating Committee. Age 66. Shares of National City
Common owned: 151,832.
WILLIAM R. ROBERTSON, President of National City since 1995.
Deputy Chairman of National City from 1987 to 1995. Director
of Capitol American Financial Corporation. Director of
National City since 1988. Age 54. Shares of National City
Common owned: 102,074; Mr. Robertson shares voting and
investment powers as to an additional 10,000 shares; options
exercisable within 60 days: 161,489.
STEPHEN A. STITLE, Chairman of the Board of National City
Bank, Indiana since 1996. Vice President, Corporate Affairs of
Eli Lilly and Company, a pharmaceutical company, from 1993 to
1995. Vice President of Human Resources of Eli Lilly and
Company from 1987 to 1993. Director of National City since
1992, Member of the Nominating and Executive Committees. Age
50. Shares of National City Common owned: 13,167.
MORRY WEISS, Chairman of the Board and Chief Executive Officer
of American Greetings Corporation, a greeting card
manufacturer, since 1993; President and Chief Executive
Officer of American Greetings Corporation from 1987 to 1993.
Director of American Greetings Corporation, Syratech
Corporation and Artistic Greetings Incorporated. Director of
National City since 1992, Member of the Executive, Audit and
Nominating Committees. Age 55. Shares of National City Common
owned: 6,400.
<PAGE> 29
BENEFICIAL OWNERSHIP
As of January 31, 1996, National City had two classes of equity securities
outstanding, (a) National City Common par value $4.00 and (b) 8% Cumulative
Convertible Preferred Stock, without par value. See "DESCRIPTION OF National
City CAPITAL STOCK."
Beneficial ownership of National City's outstanding equity securities, for
purposes of the ownership disclosures, has been determined in accordance with
Rule 13d-3 of the General Rules and Regulations under the Exchange Act, under
which Rule a person is deemed to be the beneficial owner of securities if he or
she has or shares voting power or investment power in respect of such securities
or has the right to acquire beneficial ownership within 60 days. Accordingly,
the amounts shown do not purport to represent beneficial ownership for any
purpose other than as set forth under such Rule. Further, beneficial ownership
as determined in this manner does not necessarily bear on the economic incidence
of ownership of National City's equity securities.
As of January 31, 1996, to the knowledge of National City, no person or
firm, except as noted below, beneficially owned more than 5% of National City
Common outstanding on that date. As of January 31, 1996, no individual director,
nominee or officer beneficially owned more than 5% of National City's
outstanding Common Stock. For purpose of this disclosure, the amount of
outstanding National City Common is the aggregate number of shares of National
City's Common actually outstanding on such date plus an amount equal to the
aggregate amount of National City's Common which could be issued upon the
exercise of stock options by such person or firm at that date. Beneficial
ownership of National City's Common includes, as of such date, those shares
which could have been acquired by the exercise of stock options and, for
purposes of this disclosure, those shares held for the benefit of such officers
in the National City Corporation Savings and Investment Trust.
As of December 31, 1995, two persons known to National City beneficially
own more than 5% of the outstanding National City Common. National City owns
22,917,850 shares of National City's Common which constituted 15.56% of the
outstanding National City Common on that date. These shares are held in various
fiduciary capacities through National City's wholly owned banking subsidiaries,
primarily National City Bank, National City Bank, Columbus, National City Bank,
Kentucky, and National City Bank, Indiana. Of the 14,232,777 shares of National
City Common as to which National City, through its subsidiaries, has voting
authority, it has sole voting authority as to 14,175,432 of those shares and
shared voting authority as to the remainder. Of the 19,723,128 shares as to
which National City, through its subsidiaries, has investment authority, it has
sole investment authority as to 14,408,963 of those shares, and shared
investment authority as to the remainder. Included in the aggregate number of
shares held as to which National City has sole voting and investment authorities
are 539,904 shares that are held under the National City Non-Contributory
Retirement Trust. The Capital Group Companies, Inc. and Capital Research and
Management Company beneficially own 9,938,400 shares of National City Common
which constituted 6.83% of the December 31, 1995 shares outstanding.
Under federal securities law, National City's directors, certain officers,
and persons holding more than 10% of any class of National City's equity
securities are required to report, within specified monthly and annual due
dates, their initial ownership in any class of National City's equity securities
and all subsequent acquisitions, dispositions or other transfers of interest in
such securities, if and to the extent reportable events occur that require
reporting by such due dates. National City is required to describe in this proxy
statement whether it has knowledge that any person required to file such a
report may have failed to do so in a timely manner. In this regard, to National
City's knowledge, based solely on the review of copies of reports furnished to
National City by its directors and executive officers pursuant to Rule 16a-3
promulgated pursuant to the Exchange Act, and on written representations that no
other reports were required during the period ending December 31, 1995, all of
National City's directors and officers satisfied such filing requirements in
full, except that Mr. Vincent A. DiGirolamo, who amended his timely filed May,
1995 Form 4 in June, 1995 to correct an inadvertent error.
National City's Board of Directors established stock ownership guidelines
for directors at its February 26, 1996 meeting. The guidelines recommend that
each director beneficially own 6,000 shares of National City Common.
23
<PAGE> 30
The following table sets forth the beneficial security ownership of (a)
each director and nominee of National City, (b) the chief executive officer and
the four other most highly compensated executive officers of National City and
(c) all directors and executive officers of National City as a Group, as of
January 31, 1996 (including shares that such individuals could have acquired by
the exercise of options within 60 days):
- --------------------------------------------------------------------------------
BENEFICIAL SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
SHARE EQUIVALENT TOTAL SHARES &
AMOUNT OF SHARES PERCENT OF HELD IN DEFERRED SHARE EQUIVALENTS
TITLE OF CLASS NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED CLASS COMPENSATION PLANS BENEFICIALLY HELD
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common Stock Sandra Harden Austin 2,438 * 3,224 5,662
Common Stock James M. Biggar 5,350 * 5,350
Common Stock Charles H. Bowman 1,200 * 1,797 2,997
Common Stock Morton Boyd 228,461 * 228,461
Common Stock Edward B. Brandon 541,979 * 541,979
Common Stock John G. Breen 30,200 * 30,200
Common Stock Duane E. Collins 3,400 * 557 3,957
Common Stock David A. Daberko 290,431 * 290,431
Common Stock Vincent A. DiGirolamo 116,409 * 116,409
Common Stock Richard E. Disbrow 2,500 * 2,500
Common Stock Daniel E. Evans 6,116 * 6,116
Common Stock Otto N. Frenzel III 2,793,757 1.8% 2,793,757
Common Stock Bernadine P. Healy, M.D. 4,129 * 4,129
Common Stock Gary A. Glaser 132,349 * 132,349
Common Stock Joseph H. Lemieux 2,909 * 9,042 11,951
Common Stock W. Bruce Lunsford 10,000 * 10,000
Common Stock A. Stevens Miles 151,832 * 151,832
Common Stock William R. Robertson 273,563 * 273,563
Common Stock Stephen A. Stitle 13,167 * 13,167
Common Stock Morry Weiss 6,400 * 6,400
Common Stock Directors and Executive Officers 5,232,590 3.4% 5,247,210
of National City as a Group
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The percent of National City Common beneficially owned is less than 1%.
The following table sets forth the beneficial security ownership of all
shareholders known to National City to be the beneficial owner of more than five
percent of National City Common.
- --------------------------------------------------------------------------------
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
(2) (3)
NAME AMOUNT
(1) AND ADDRESS AND NATURE OF (4)
TITLE OF OF BENEFICIAL BENEFICIAL PERCENT
CLASS OWNER OWNERSHIP(1) OF CLASS
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock National City Corporation 22,917,850 15.56
1900 East Ninth Street
Cleveland, OH 44114-3484
Common Stock The Capital Group Companies, Inc. 9,938,400 6.83
and Capital Research and
Management Company
333 South Hope Street
Los Angeles, CA 90071
</TABLE>
- ---------------
(1) No listed beneficial owner has the right to acquire beneficial ownership, as
specified in Rule 13d-3(d)(1) under the Exchange Act.
24
<PAGE> 31
REMUNERATION OF EXECUTIVE OFFICERS
AND TRANSACTIONS WITH MANAGEMENT -- NATIONAL CITY
EXECUTIVE COMPENSATION
(a) COMPENSATION. The following table sets forth, together with certain
other information, the compensation earned during the fiscal year ended December
31, 1995 by (i) David A. Daberko, the chief executive officer, (ii) Edward B.
Brandon, who was Chief Executive Officer through September 30, 1995 and (iii)
the four other most highly compensated executive officers of National City and
its subsidiaries.
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------------
AWARDS
ANNUAL COMPENSATION -------------------------
------------------------------------------- RESTRICTED SECURITIES PAYOUTS ALL
OTHER STOCK UNDERLYING ---------- OTHER
NAME AND PRINCIPAL BONUS ANNUAL AWARD(S) OPTIONS/ LTIP COMP
POSITION YEAR SALARY($) ($)(1) COMP($) ($)(2) SARS(#) PAYOUTS($) ($)(3)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------
D. A. Daberko 1995 $499,375 $300,400 $0 $ 55,269 75,000 $260,910 $ 66,678
Chairman of the Board 1994 $442,083 $263,250 $0 $ 47,700 45,000 $310,333 $ 54,516
and Chief Executive Officer 1993 $399,583 $259,616 $0 $ 42,296 36,000 $ 0 $ 24,880
W. R. Robertson 1995 $441,333 $243,860 $0 $ 79,169 50,000 $235,293 $ 56,198
President 1994 $419,583 $243,352 $0 $ 71,550 32,000 $304,633 $ 51,342
1993 $399,583 $231,868 $0 $ 72,152 36,000 $ 0 $ 24,880
V. A. DiGirolamo 1995 $276,833 $168,350 $0 $ 76,181 30,000 $107,893 $ 34,748
Vice Chairman 1994 $253,833 $138,640 $0 $ 37,100 20,000 $135,787 $ 31,415
1993 $240,000 $ 99,630 $0 $ 39,808 17,000 $ 0 $ 17,689
M. Boyd 1995 $288,333 $150,800 $0 $ 23,900 18,000 $116,863 $ 40,207
Executive Vice President 1994 $278,333 $148,200 $0 $ 19,875 19,500 $152,595 $ 37,450
1993 $268,067 $145,420 $0 $ 12,440 18,000 $ 0 $ 17,263
G. A. Glaser 1995 $268,167 $137,970 $0 $ 28,381 20,000 $107,893 $ 36,139
Executive Vice President 1994 $257,083 $139,585 $0 $ 21,200 19,500 $139,808 $ 33,011
1993 $245,417 $104,445 $0 $ 17,416 19,000 $ 0 $ 13,857
E. B. Brandon 1995 $565,833 $343,600 $0 $ 0 60,000 $439,833 $ 86,313
Director, Retired Chairman 1994 $689,167 $461,625 $0 $ 385,575 90,000 $608,264 $ 83,822
of the Board and CEO 1993 $630,000 $418,560 $0 $ 385,640 80,000 $ 0 $ 38,161
</TABLE>
- --------------------------------------------------------------------------------
(1) The National City Corporation Short Term Incentive Plan for Senior Officers
and the National City Corporation Annual Corporate Performance Plan awards
include both cash and deferred awards. The objectives used in determining
awards and their relative weights under Short Term Plan and Annual Corporate
Performance Plan are set forth on pages 34 and 35. Based on the National
City objectives and their weights, the payout under the Annual Corporate
Performance Plan for 1995 was 70% of the maximum.
(2) These grants of restricted stock were offsets to the Supplemental Executive
Retirement Plan, see page 37. D. A. Daberko has, in the aggregate, 11,550
shares of Restricted Stock having a total value as of 12/31/95 of $382,594.
W. R. Robertson has, in the aggregate, 19,050 shares of Restricted Stock
having a total value as of 12/31/95 of $631,031. V. A. DiGirolamo has, in
the aggregate, 10,250 shares of Restricted Stock having a total value as of
12/31/95 of $339,531. M. Boyd has, in the aggregate, 3,050 shares of
Restricted Stock having a total value as of 12/31/95 of $101,031. G. A.
Glaser has, in the aggregate, 4,250 shares of Restricted Stock having a
total value as of 12/31/95 of $140,781. All restrictions on any restricted
stock Mr. Brandon held lapsed effective as of September 30, 1995, his
retirement date. The named executive officers receive dividends on their
Restricted Stock at the same rate and frequency as all stockholders.
(3) All Other Compensation includes the Executive Savings Plan (see page 33) and
the Savings and Investment Plan (see page 33) matching and profit sharing
components together with premiums paid by National City in connection with
split dollar insurance contracts, but does not include retirement accruals
as these are not calculable. For the year 1995 each of the named executive
officers and Mr. Brandon credited with the following matching and profit
sharing amount under the Savings and Investment Plan: D. A. Daberko, $9,893;
W. R. Robertson, $9,951; V. A. DiGirolamo, $9,845; M. Boyd, $9,849; G. A.
Glaser, $9,853; and E. B. Brandon, $10,078. The named executive officers and
Mr. Brandon credited with the following match and profit sharing amount
under the Executive Savings Plan during the year 1995: D. A. Daberko,
$30,548; W. R. Robertson, $26,801; V. A. DiGirolamo, $12,881; M. Boyd,
$14,309; G. A. Glaser, $12,301 and E. B. Brandon, $42,240. All other
compensation also includes the following amounts equal to the full dollar
value of the remainder of the premiums paid by National City in connection
with life insurance policies issued pursuant to the Split Dollar Life
Insurance Agreements between National City and the following Named Executive
Officers and Mr. Brandon during 1995, respectively, as applicable: D. A.
Daberko $26,236; W. R. Robertson $19,446; V. A. DiGirolamo $12,022; M. Boyd
$16,049; G. A. Glaser $13,985 and E. B. Brandon
25
<PAGE> 32
$33,995. The premiums paid by National City in connection with the life
insurance policies issued pursuant to such Split Dollar Life Insurance
Agreements set forth in the preceding sentence generally will be recovered
in full by National City upon the cancellation or purchase by a Named
Executive Officer of any such life insurance policy or the payment of any
death benefits under any such life insurance policy.
- --------------------------------------------------------------------------------
(b) OPTIONS. The following table provides information on option grants in
fiscal year 1995 to the Named Executive Officers.
- --------------------------------------------------------------------------------
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
---------------------------------------------------------------- REALIZABLE VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM(1)(4)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------------
NAME GRANTED(#)(2) FISCAL YEAR(3) ($/SH) DATE 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
- ---------------------
D. A. Daberko........ 75,000 3.8 % $ 29.875 6/14/05 $1,409,117 $3,570,979
W. R. Robertson...... 40,000 2.0 % 29.875 6/14/05 751,529 1,904,522
10,000 0.5 % 30.125 9/14/05 189,455 480,115
V. A. DiGirolamo..... 20,000 1.0 % 29.875 6/14/05 375,765 952,261
10,000 0.5 % 30.125 9/14/05 189,455 480,115
M. Boyd.............. 18,000 0.9 % 29.875 6/14/05 338,188 857,035
G. A. Glaser......... 20,000 1.0 % 29.875 6/14/05 375,765 952,261
E. B. Brandon........ 60,000 3.0 % 29.875 6/14/05 1,127,294 2,856,783
</TABLE>
- --------------------------------------------------------------------------------
(1) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates dictated by the Securities and Exchange Commission when the
"Potential Realizable Value" alternative is used and are not intended to be
a forecast of National City Common's stock price.
(2) One half of each option grant becomes exercisable one year after the date of
the grant and the remainder becomes exercisable on the second anniversary of
the grant. For incentive stock options a further restriction is placed on
the exercise of options such that the maximum number of shares of National
City Common which become initially available for purchase under all
post-1986 incentive stock option grants from National City in any calendar
year shall be limited to that number of shares the aggregate exercise price
of which does not exceed $100,000.
(3) National City granted options representing 1,993,050 shares to employees
during 1995.
(4)
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
APPRECIATION FOR OPTION TERM
---------------------------------
5% 10%
<S> <C> <C> <C> <C> <C> <C>
Value created for all stockholders $2,734,545,440 $6,929,875,040
Gain of named executive officers as a percentage of value created for all .17% .17%
Stockholders
</TABLE>
- --------------------------------------------------------------------------------
26
<PAGE> 33
The following table sets forth the stock options exercised by each of the
Named Executive Officers during the calendar year 1995 and the December 31, 1995
value of all unexercised options held by the named executive officers.
- --------------------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT 12/31/95 AT 12/31/95(1)
SHARES ------------- ---------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
- ---------------------
D. A. Daberko........ 16,702 $ 204,251 197,667 $ 2,518,292
97,501 392,819
W. R. Robertson...... 22,510 272,705 161,489 1,987,100
66,001 266,006
V. A. DiGirolamo..... 0 0 85,199 1,049,285
40,001 161,256
M. Boyd.............. 9,190 114,169 93,959 1,175,240
27,751 123,100
G. A. Glaser......... 2,000 30,810 112,649 1,471,324
29,751 129,600
E. B. Brandon........ 11,070 112,803 446,085 4,647,377
3,773 24,997
</TABLE>
- --------------------------------------------------------------------------------
(1) The ultimate realization of profit on the sale of such options of National
City Common is dependent upon the market price of such stock at the time of
the sale. The fiscal year ended December 31, 1995. National City Common had
a closing price on that day on the NYSE of $33.125. The numbers shown
reflect the value of unexercised options accumulated over a ten-year period
based on the 1995 year-end closing price.
- --------------------------------------------------------------------------------
The following table provides information on the awards of long term
incentive plan participation during the year 1995.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER NON-
PERFORMANCE STOCK
NUMBER OF OR OTHER PRICE-BASED PLANS(3)
SHARES, UNITS PERIOD UNTIL -----------------------------------
OR OTHER MATURATION OR THRESHOLD TARGET MAXIMUM
NAME RIGHTS(#)(1) PAYOUT(2) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
- ---------------------
D. A. Daberko........ N/A December 31, 1998 $ 0 $284,066 $568,131
W. R. Robertson...... N/A December 31, 1998 0 192,624 385,247
V. A. DiGirolamo..... N/A December 31, 1998 0 140,680 281,360
M. Boyd.............. N/A December 31, 1998 0 94,147 188,295
G. A. Glaser......... N/A December 31, 1998 0 87,655 175,309
</TABLE>
- --------------------------------------------------------------------------------
(1) The National City Long Term Incentive Plan for Senior Officers grants cash
awards based on a percentage of the individual's base pay. No shares or
other rights are granted. (See page 33)
(2) The LTIP is based on a three year cycle starting 1/1/96 and ending 12/31/98.
Messrs. Daberko, Robertson, DiGirolamo, Boyd and Glaser were each awarded
the opportunity to participate in the next three year cycle. Payouts occur
only at the end of the cycle. (See page 33)
(3) The payout is based on National City's total return to its stockholders over
a three year period as compared to the total return to stockholders of a
peer group of high performing banking companies. Payouts are made on a basis
of a percentage of the average base pay for the three year period for each
participant. (See page 33)
- --------------------------------------------------------------------------------
27
<PAGE> 34
The value of benefits paid or furnished by National City in 1995 to
executive officers, other than those included in the preceding table are less
than the amounts required to be disclosed pursuant to the Exchange Act.
REPORT OF COMPENSATION AND ORGANIZATION COMMITTEE
National City believes that its stockholders should be provided information
about executive compensation that is easily understood and consistent with the
Securities and Exchange Commission's proxy rules on executive compensation.
The information provided is intended to enable stockholders to fully
understand the cash, performance based and equity based compensation programs
for executives. National City welcomes stockholder comments or suggestions on
whether the disclosure objectives have been met. Please send any comments to the
Corporate Secretary, National City Corporation, 1900 East Ninth Street,
Cleveland, Ohio 44114.
COMPENSATION PHILOSOPHY
National City is committed to aligning compensation strategies with overall
business objectives. The performance of National City's employees is key in
delivering the types of products and services that will enable National City to
be the premier diversified financial services company in the Midwest.
National City's compensation philosophy is built on four integral
components that form the basis of National City's new FOCUS ON PERFORMANCE
programs:
- Implement strategies which differentiate and focus on employee
performance.
- Tailor compensation programs to reflect unit and organizational
priorities.
- Compensate employees based on their contributions to the achievement of
National City's goals and objectives.
- Provide and support opportunities for equity ownership.
National City will structure its compensation plans to reward individuals
based on their contributions to individual, unit and corporate objectives.
Compensation strategies that support and are aligned with business objectives
will be pursued. National City's compensation philosophy recognizes the need for
diversification in pay practices. Variable pay opportunities provided through
incentive plans and performance bonus programs are important vehicles for
rewarding individual employee contributions. National City's FOCUS ON
PERFORMANCE programs are the foundation of achieving individual goals and
National City's financial objectives.
EXECUTIVE COMPENSATION PRINCIPLES
National City's executive compensation programs place a significant portion
of an executive's compensation at risk based upon performance. Rewards are based
on the attainment of both long-term and short-term strategic objectives. A total
compensation approach produces executive rewards that result from the
achievement of individual, unit, and corporate objectives.
National City's focus on equity ownership strengthens the link between
executive rewards and long-term corporate performance, ensuring that
stockholders and employee owners share long-term interests.
National City has adopted stock ownership guidelines for its executives.
Equity ownership is a vital component of National City's total compensation
strategy, which is based on corporate performance and shareholder interests.
Ownership guidelines were determined based on a multiple of the base salary mid
range for employees in Position Levels (1) - (3). Guidelines for the chief
executive officer and president were determined by market median compensation
data. The guidelines are applicable to all executives participating in the
National City Corporation Long-Term Incentive Compensation Plan for Senior
Officers and certain other executive officers of National City or its major
subsidiaries. Currently the number of executives governed by the guidelines is
54.
28
<PAGE> 35
STOCK OWNERSHIP GUIDELINES FOR THE NAMED EXECUTIVES
<TABLE>
<S> <C> <C>
David A. Daberko 5.5 X Multiple of Mid Range $2,200,000 National City Common Value
William R. Robertson 5.5 X Multiple of Mid Range $2,200,000 National City Common Value
Vincent A. DiGirolamo 3.5 X Multiple of Mid Range $1,400,000 National City Common Value
Morton Boyd 3.5 X Multiple of Mid Range $ 962,500 National City Common Value
Gary A. Glaser 3.5 X Multiple of Mid Range $ 962,500 National City Common Value
</TABLE>
The executives have three years in which to meet the stock ownership
guidelines. Both direct and indirect forms of ownership are recognized in
achieving the guidelines. Direct ownership will be in the form of shares of
National City Common owned. Indirect ownership will include deferred
compensation invested in the phantom National City Common and 401(k) funds
invested in the National City Corporation Stock Fund.
National City believes that it is in the best interest of stockholders to
retain as much flexibility as possible, now and in the future, with respect to
the design and payment of compensation to executive officers. National City
does, however, recognize the constraints imposed on this flexibility by Section
162(m) of the Internal Revenue Code, which disallows a tax deduction for
non-exempted compensation it pays in excess of $1,000,000 to key executives.
National City's compensation plans are currently structured in such a manner
that it is unlikely that non-exempted compensation paid to any executive officer
in any year will exceed the limitation for deduction by National City
established by Section 162(m).
EXECUTIVE COMPENSATION PROGRAMS
National City's compensation programs are designed to encourage and reward
performance. The executive compensation package is competitive and comparable to
the levels of compensation offered by National City's peer group companies.
Because building the bottom line is critical to National City's success,
compensation is focused on performance that generates revenue -- directly
through the business line and through increased efficiency as a result of staff
unit contributions. The attainment of National City's goals and objectives
contribute to the maximization of stockholder value and create enhanced
compensation opportunities for participating executives.
National City believes that executive compensation should be driven by the
attainment of aggressive business goals. These goals are based on annual and
three year plan cycles. Peer group comparative measures are established, against
which National City's results are assessed. Above average executive compensation
can only be attained by achieving an above average ranking against National
City's peer group.
National City establishes a salary range for each executive officer that is
determined by an evaluation of job criteria. This internally driven process is
then validated by market comparisons at peer group companies. National City's
objective is to provide base compensation at market median and to provide total
cash compensation opportunities above the market median when there is above
average performance. Executive salaries can vary within National City's range
structure based on performance, experience, and long-term potential.
STOCK OPTIONS are an important component of total compensation and provide
a long-term incentive to participants to align performance with stockholder
interests. Each organizational unit is allocated a pool of options for
distribution based on unit performance. Stock options are awarded to employees
based on their contribution to the performance of the unit. Broad guidelines are
used to award the stock options, with above average awards linked to above
average unit and individual performance.
National City is seeking to amend the National City Corporation 1993 Stock
Option Plan to allow for Additional Options when the employee has used currently
held National City Common to exercise an option grant (a swap transaction). This
program is aligned with National City's focus on increased equity ownership and
provides an additional opportunity for the executive to acquire National City
Common.
THE NATIONAL CITY CORPORATION ANNUAL CORPORATE PERFORMANCE INCENTIVE PLAN,
as amended January 1, 1996, rewards performance relative to peer group
performance based on four factors: growth in earnings per share (33% weight),
return on assets (17%) , overhead ratio (17%), and return on equity (33%).
Awards are
29
<PAGE> 36
paid based on National City's performance over the year as well as the
employee's individual award category. Awards under this plan are a percentage of
base pay and can range from 0% to 76.5% for the chief executive officer, 0% to
60% for the president and vice chairman and 0% to 42% for all other executive
officers of National City or its major subsidiaries. For 1995 National City
ranked 7th out of 16 banks in the peer group. The award payment for 1995 was
equal to 70% of the maximum award.
THE NATIONAL CITY CORPORATION SHORT-TERM INCENTIVE COMPENSATION PLAN FOR
SENIOR OFFICERS rewards performance based on the bottom-line performance of the
line or staff unit and the achievement of individual performance goals. Award
pools are funded based on unit performance. Individual awards are distributed
within each unit based on individual achievement as a percentage of pool
funding. Awards under this plan are a percent of base pay and can range from 0%
to 53.5% for the chief executive officer, 0% to 50% for the president and vice
chairman and 0% to 48% for any executive officer of National City or its major
subsidiaries.
THE NATIONAL CITY CORPORATION LONG-TERM INCENTIVE COMPENSATION PLAN FOR
SENIOR OFFICERS is designed to maximize returns to stockholders by linking the
compensation of key executives to the overall profitability and success of
National City. Awards are based on National City's ranking relative to a peer
group currently comprised of 16 super-regional banks. The ranking is determined
by total stockholder return at the end of each three year plan cycle. Awards are
paid at the completion of each plan cycle. Awards under this plan can range from
0% to 100% for the chief executive officer; 0% to 80% for the president and vice
chairman; and 0% to 60% for any executive officer of National City or its major
subsidiaries. The incentive award is computed based on the executive's average
annual salary during each plan cycle. National City ranked 7th out of 16 banks
in the peer group total return to shareholders for the 1993-1995 plan cycle. The
payout was equal to 70% of the maximum award.
PEER GROUP BANKS
The peer group companies are all included in the KBW 50 Total Return Index
("KBW 50") used in the performance chart on page 32 and, as a group, have
outperformed the KBW 50 over time. National City believes it is important that
the peer group it compares itself to consists of the better performing banks.
SUMMARY
National City has identified six critical success factors which can be
applied in varying degrees to assess performance:
- Knowledge of credit risk and return.
- Knowledge of capital funding and risk management.
- Knowledge of customer asset management.
- Expertise in products, delivery channels and technology.
- The ability to merchandise products and services.
- The ability to identify, develop and retain human capital.
National City's compensation programs serve to closely align cash
compensation with the overall performance of National City and ensure management
team continuity. National City will continue to build on programs that tie total
compensation to National City's success.
DIRECTOR EQUITY OWNERSHIP
In addition to the aforementioned executive compensation programs, National
City has adopted stock ownership guidelines for its Board of Directors.
Increased equity ownership for directors strengthens the linkage to long-term
stockholder interests. The Board established stock ownership guidelines at its
February 26, 1996 meeting. The guidelines recommend that each director
beneficially own 6,000 shares of National City Common. Both direct and indirect
National City equity ownership will be aggregated to satisfy the guideline.
30
<PAGE> 37
Direct ownership includes National City Common or Preferred shares and
restricted stock. Indirect ownership includes deferred compensation invested in
the form of phantom National City Common.
REVIEW OF COMPANY PERFORMANCE
National City's net income in 1995 was $465 million, compared with $429
million in 1994. Net income per common share increased 12% to $3.03, from $2.70
in 1994. Both net income and earnings per share were record results for National
City. The higher earnings were primarily the result of growth in net interest
income due to strong loan demand in the Ohio, Kentucky and Indiana markets.
Return on average common equity, a key performance measure, was 17.64% in
1995, compared with 17.06% in 1994. Return on average assets was 1.38% in 1995,
compared with 1.40% in 1994.
The combination of a solid capital base and strong earnings has enabled
National City to deliver excellent returns on stockholders' investments. Total
return of National City Common, assuming reinvestment of dividends, has
significantly outperformed the Standard & Poor's 500 Index ("S&P 500") over the
past 20 years -- an average of 16.7% per year, versus 14.5% for the S&P 500. The
quarterly dividend was increased in January 1996 to $.36 per share, following
two dividend increases in 1995.
THE COMPENSATION AND ORGANIZATION COMMITTEE'S
REVIEW OF CEO COMPENSATION
National City's executive compensation program is based on corporate and
individual performance and places a significant portion of an executive's
compensation at risk if pre-established goals are not attained. In addition, the
program rewards long term strategic management by using compensation vehicles
which promote equity ownership and emphasize attention to shareholder value.
National City's relative performance over the last three years has produced
fluctuations in Mr. Daberko's compensation.
Mr. Daberko served as president and chief operating officer of National
City from 1993 until July of 1995, when he was named chief executive officer.
Mr. Daberko has been an employee of National City for 27 years. In 1993, Mr.
Daberko's total cash compensation was 7% lower than his 1992 total cash
compensation. In 1994 his total cash compensation was 56% higher than in 1993.
In 1995 Mr. Daberko's total cash compensation was 1,060,685. These fluctuations
in compensation are primarily attributable to variations in performance based
incentive plans.
Upon Mr. Daberko's appointment to chief executive officer, his base salary
was increased to $525,000 and his award incentive potential increased for the
current and future plan years under the National City Corporation Short-Term
Incentive Compensation Plan for Senior Officers ("Short Term Plan") and for
future plan years or plan cycles under the National City Corporation Annual
Corporate Performance Incentive Plan ("Annual Corporate Performance Plan") and
the National City Corporation Long Term Incentive Plan for Senior Officers
("Long Term Plan").
Long-Term Plan awards are based solely on total stockholder return as
compared to the total stockholder return of a selected peer group of financial
institutions for a three year period. Based on National City's relative
performance during the 1993-95 time period, Mr. Daberko's award in 1995 was
$260,910.
Mr. Daberko's Short-Term Plan goals for 1995 reflected his transition to
the position of chief executive officer and were based upon improving corporate
earnings, maintaining long-term credit quality, increasing revenue growth and
the forming of his key senior management team. During 1995, all short term goals
were met or exceeded. After reviewing Mr. Daberko's performance as compared to
these pre-established individual goals the Committee awarded Mr. Daberko $49,300
under the Short Term Plan.
The Annual Corporate Performance Plan awards are determined by comparing
National City's relative performance against a selected peer group of financial
institutions based on pre-selected key financial indices. Mr. Daberko's Annual
Corporate Performance Plan award was $220,500.
31
<PAGE> 38
Stock options are another key element of total compensation. Equity-based
compensation produces a long-term link between the results achieved for
stockholders and the rewards provided to key executive officers. Each year, the
Committee reviews competitive peer group data and individual performance to
determine the level of equity-based awards to be granted to key executives.
National City places significant value and importance on stock ownership by
senior management. As Mr. Daberko met or exceeded all of his 1995 goals and in
recognizing his promotion to chief executive officer, Mr. Daberko received
options in 1995 to purchase 75,000 shares of National City Common with an
exercise price of $29.875 per share. The option award was within the mid range
of option awards made to chief executive officers of the peer group companies.
The Committee does not consider the number of options held by Mr. Daberko in
making this award, except for assuring the Option Plan's limits are not
exceeded.
COMPENSATION AND ORGANIZATION COMMITTEE
John G. Breen, Chairman
Duane E. Collins
Daniel E. Evans
Joseph H. Lemieux
STOCKHOLDER RETURN PERFORMANCE
Set forth below is a line graph comparing the five year cumulative total
return of National City Common, assuming reinvestment of dividends, with that of
the S&P 500 and the KBW 50. The KBW 50 is a market-capitalization-weighted bank
stock index developed and published by Keefe, Bruyette & Woods, Inc., a
nationally recognized brokerage and investment banking firm specializing in bank
stocks. The index is made up of 50 of the nation's most important banking
companies and is meant to be representative of the performance of the nation's
large banks.
5 YEAR TOTAL RETURN
12/90 - 12/95
NATIONAL CITY VS. KBW 50 INDEX AND S&P 500
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) NATIONAL CITY S&P 500 KBW INDEX
<S> <C> <C> <C>
1990 100.0 100.0 100.0
1991 125.7 130.4 158.3
1992 174.9 140.3 201.7
1993 180.1 154.3 212.9
1994 198.8 156.2 201.6
1995 265.9 214.7 323.5
</TABLE>
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<PAGE> 39
DESCRIPTION OF NATIONAL CITY'S BENEFIT PLANS
SAVINGS PLAN. The National City Savings and Investment Plan (the "Savings
Plan") is a qualified salary reduction profit-sharing plan within the meaning of
Section 401(k) of the Code. Under the Savings Plan as amended, all eligible
employees (generally, an eligible employee is one who has completed one year of
continuous service, is 21 years of age or older and has completed 1,000 hours of
service) of National City and its adopting subsidiaries may participate in the
Savings Plan by directing their employers to make Salary Reduction Contributions
(as defined in the Savings Plan) to the Savings Plan Trust (the "Trust") for
their accounts and to reduce their compensation by an equal amount.
Contributions may be directed in any whole percentage between 1% and 10% of the
employee's base compensation. The employers also make contributions to the Trust
("Employer Matching Contributions") in an amount equal to the Employer Matching
Contribution Percentage then in effect (the Employer Matching Contribution
Percentage is currently an amount equal to 100% of the first 3% of the
employee's pay contributed as a Salary Reduction Contribution, plus 50% of the
next 4% of the employee's pay similarly contributed as a Salary Reduction
Contribution, with no further Employer Matching Contribution for any additional
pay contributed as a Salary Reduction Contribution). Amounts contributed
pursuant to the Savings Plan may be invested in certain investment choices.
Salary Reduction Contributions and Employer Matching Contributions are fully
vested at all times.
The Savings Plan has a profit-sharing feature based upon National City's
profitability, as measured by the percentage return on common equity ("ROE")
from year to year. The profit-sharing contribution is in addition to the regular
Employer Matching Contributions described above. The additional amount of this
profit-sharing contribution in any year depends on National City's ROE for that
year and ranges, in five cent increments from no additional contribution if a
minimum ROE of 12% is not attained to a maximum of 50 cents for each $1.00 of an
individual's Salary Reduction Contributions for the year if National City's ROE
is equal to or greater than 18.5%. In 1995, National City's ROE was 17.64% which
resulted in National City contributing 40 cents for each $1.00 of an
individual's Salary Reduction Contribution as a profit-sharing contribution for
the year 1995.
EXECUTIVE PLAN. Effective January 1, 1989, National City adopted the
National City Executive Savings Plan (the "Executive Plan"), in the form of a
non-qualified salary reduction profit-sharing plan, similar to the Savings Plan.
The Executive Plan is to supplement the Savings Plan with respect to employee
Salary Reduction Contributions and the attendant Employer Matching Contributions
which by reason of an individual's annual compensation would not be otherwise
allowed because of the annual maximum limit of the Internal Revenue Code or
because of the application, under the Internal Revenue Code, of actual deferral
percentage testing against prohibited excessive deferrals by highly compensated
employees. The Executive Plan is substantially similar to the Savings Plan as to
amounts of employee Salary Reduction Contributions and Employer Matching
Contributions.
Participants in the Executive Plan are limited to those key officers of
National City or its subsidiaries who may be designated from time to time by the
Compensation and Organization Committee of the Board of Directors. The benefits
of the Executive Plan are without regard to any limitation imposed by the
Internal Revenue Code, or any other applicable law limiting the amount payable
under a qualified plan (such as the Savings Plan), and represent unfunded
general obligations of National City. Portions of such benefits are subject to
certain provisions for forfeiture as set forth in the Executive Plan.
Directors of National City or its subsidiaries who are not also employees
of National City or its subsidiaries are not eligible to participate in the
Savings Plan or the Executive Plan.
LONG TERM PLAN. The National City Long Term Incentive Compensation Plan for
Senior Officers focuses upon providing superior returns to stockholders of
National City and measures National City's total return to its stockholders
against the total returns to stockholders of a peer group of high performing
banking companies to their stockholders. The measurement of total return
includes dividends paid plus changes in the market value of the National City
Common. The measurement over a three-year period is intended to focus on the
long term performance of National City linking senior management's compensation
to the total returns experienced by the stockholders during the period.
33
<PAGE> 40
Each year begins a new three-year cycle. The awards can range up to 100% of
an individual participant's average annual base salary during the cycle for the
chief executive officer of National City, and up to a lesser percentage for
other senior executive officers selected to participate under the Long Term
Plan. The amount of the award earned is dependent upon the total stockholder
return during the cycle in comparison with the total stockholder return of the
peer group. The peer group is established prior to the beginning of the cycle by
the Compensation and Organization Committee. The banking companies in the peer
group at this time are all included in the KBW 50 index used in the performance
chart on page 32 and, as a group, outperform the KBW 50 over time. National City
believes it is important that the peer group it compares itself to consists of
the better performing banking companies. No awards under the Long Term Plan were
paid prior to the end of the first cycle, December 31, 1990.
Amounts awarded under the Long Term Plan may be in cash, in unfunded future
benefits or a combination thereof. With the exception of a cash award, awards
are not funded, but simply remain contractual liabilities of National City and
are subject to payment upon the recipient's termination of employment with
National City or its subsidiaries. Generally, these unfunded benefits, together
with earnings thereon, are payable to the former officer, his beneficiary or his
estate on an installment basis over 10 years. Unfunded future benefits awards
are considered as invested in the funds described in the Savings Plan or as
directed by the recipient from time to time in the equivalent of a savings
account and are subject to the gains or losses on those investments.
In the event of a change in control of National City, the Long Term Plan
provides that all the performance cycles shall terminate. The Long Term Plan
provides that if such change in control occurs, then each of the three-year
performance cycles then existing shall terminate as of the date of change in
control, National City's stockholder total return during each of the abbreviated
performance cycles shall be deemed to have reached that level at which the
participant in the Long Term Plan would be entitled to be awarded his or her
maximum award, and the award for each cycle shall be apportioned based upon the
number of full months from the beginning of the performance cycle to the
premature cycle termination date divided by 36. In adopting this plan, it was
felt this termination was appropriate in that those individuals previously
charged with providing superior total returns to the stockholders of National
City would no longer be in the same position to guide the affairs of National
City as they were prior to the event constituting a change in control and,
furthermore, following such a change in control no further performance
comparisons could be made.
Directors of National City or its subsidiaries who are not also employees
of National City or its subsidiaries are not eligible to participate in the Long
Term Plan.
SHORT TERM COMPENSATION PLAN. The National City Short Term Incentive Plan
for Senior Officers, as amended (the "Short Term Plan") focuses on the short
term goals achieved by the individual participant. Under this plan, awards can
be granted to any senior officer of National City, or to other officers of
National City or its subsidiaries as may be designated from time to time by the
Compensation and Organization Committee. Each participant in the Short Term Plan
is evaluated annually with respect to performance on approved objectives. Awards
are based on individual results and can range from 0% to 53.5% of the
recipient's base salary in effect at the close of the year for which the
evaluation is made. Awards under this plan are paid or credited no later than
the end of first quarter of the following year.
Amounts awarded under the Short Term Plan may be in cash, in unfunded
future benefits or a combination thereof. With the exception of a cash award,
awards are not funded, but simply remain contractual liabilities of National
City and are subject to payment upon the recipient's termination of employment
with National City and its subsidiaries. Generally, these unfunded benefits,
together with earnings thereon, are payable to the former officer or his
beneficiary or his estate on an installment basis over 10 years. Unfunded future
benefits awards are considered as invested as directed by the recipient from
time to time, in funds described in the Savings Plan or in the equivalent of a
savings account and are subject to the gains or losses on those investments.
In the event of a change in control, the Short Term Plan provides that each
participant will be paid at the effective time of the change in control the
maximum benefit the participant is entitled to receive under the Short Term
Plan.
34
<PAGE> 41
Directors of National City or its subsidiaries who are not also employees
of National City or its subsidiaries are not eligible to receive benefits under
the Short Term Plan.
ANNUAL CORPORATE PERFORMANCE PLAN. The National City Annual Corporate
Performance Incentive Plan (the "Annual Performance Plan") focuses on the annual
operating results achieved by National City. Under this plan, awards can be
granted to any senior officer of National City, or to other officers of National
City or its subsidiaries as may be designated from time to time by the
Compensation and Organization Committee. National City's financial performance
is currently measured in comparison with the financial performance of other high
performing banking companies, weighted as follows: return on equity (33%),
return on assets (17%), overhead ratio (17%) and percentage change in earnings
per share (33%). The high performing banks in the peer group are all included in
the KBW 50 index used in the performance chart on page 32 and, as a group,
outperform the KBW 50 over time. National City believes it important that the
peer group it compares itself to consists of the better performing banks. Awards
are based on the corporate results and can range from 0% to 76.5% of the
recipient's base salary in effect at the close of the year for which the
evaluation is made. Awards under this plan are paid or credited no later than
the end of first quarter of the following year.
Amounts awarded under the Annual Performance Plan may be in cash, in
unfunded future benefits or a combination thereof. With the exception of a cash
award, awards are not funded, but simply remain contractual liabilities of
National City and are subject to payment upon the recipient's termination of
employment with National City and its subsidiaries. Generally, these unfunded
benefits, together with earnings thereon, are payable to the former officer or
his beneficiary or his estate on an installment basis over 10 years. Unfunded
future benefits awards are considered as invested as directed by the recipient
from time to time, in funds described in the Savings Plan or in the equivalent
of a savings account and are subject to the gains or losses on those
investments.
In the event of a change in control, the Annual Performance Plan provides
that each participant will be paid at the effective time of the change in
control the maximum benefit the participant is entitled to receive under the
Annual Performance Plan.
Directors of National City or its subsidiaries who are not also employees
of National City or its subsidiaries are not eligible to receive benefits.
STOCK OPTION PLANS. National City has in effect the Amended and Restated
1973 Stock Option Plan, as amended, the 1984 Stock Option Plan, as amended, the
1989 Stock Option Plan and the 1993 Stock Option Plan. No options have been
granted since July 1987 under the 1973 Plan and no further options will be
granted under the 1973 Plan. Each of the four stock option plans (hereinafter
referred to jointly as the "Stock Option Plans") have substantially similar
provisions and generally provide for the granting of options to purchase shares
of National City Common, the options being either non-qualified options or
options which are intended to qualify as "Incentive Stock Options" under Section
422 of the Internal Revenue Code. The Stock Option Plans also provide for the
granting of Appreciation Rights, but only in tandem with stock options
previously granted or contemporaneously being granted. Under the Stock Option
Plans, no options may be granted at less than 100% of the market value of
National City Common on the date of the grant of the option. Stock option awards
are based on current individual performance. Previous awards are not considered
except for assuring the plan maximums are not exceeded.
Directors of National City or its subsidiaries who are not also employees
of National City or its subsidiaries are not eligible to receive options under
the Stock Option Plans.
RESTRICTED STOCK PLAN. National City has in effect the National City
Corporation Amended and Second Restated 1991 Restricted Stock Plan (the
"Restricted Stock Plan"). The purpose of the Restricted Stock Plan is to provide
alternative means of compensation and to promote the long term profitability and
success of National City by providing equity interests and equity based
incentives in National City to key employees and members of the Board of
Directors of National City.
The Restricted Stock Plan is administered by the Compensation and
Organization Committee of the Board of Directors of National City.
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<PAGE> 42
Restricted Stock is granted to executive officers only as a method of
offsetting the liability of a portion of their Supplemental Retirement Benefits
with the restrictions being lifted at retirement. Grants are based on the
present value of accrued supplemental benefits.
Other employees, who do not receive stock option grants and who have been
identified by their managers as high potential employees have been awarded
restricted stock grants. The restrictions on grants to high potential employees
lapse on the fourth anniversary of the grant.
Generally, the Restricted Stock Plan provides for the granting of shares of
National City Common ("Restricted Stock") to a recipient and restricting that
recipient's rights to transfer the shares for a specific period of time. During
that restricted period, those shares are subject to substantial risk of
forfeiture. To the extent the recipient forfeits his interest in the Restricted
Stock, he or she will have no rights in the Restricted Stock forfeited.
The total amount of Restricted Stock which may be awarded under the
Restricted Stock Plan is 1,000,000 shares of which no more than 150,000 shares
may be awarded in the aggregate to any one individual. Under the Restricted
Stock Plan, awards of Restricted Stock may be made to any regular employee of
National City (including employees who are members of the Board of Directors) or
any of its subsidiaries ("Employee Awards") and to the directors of National
City who are not employees of National City or its subsidiaries ("Director
Awards").
The Restricted Stock Plan contemplates that the Compensation and
Organization Committee may award Restricted Stock to the employees of National
City and National City's subsidiaries subject to the following restrictions: (a)
all awards are to be made subject to transfer restrictions which are set by the
Compensation and Organization Committee, and such restrictions must last at
least six months from the date of the award, and (b) all awards of Restricted
Stock shall be subject to the award agreement entered into between National City
and the employee receiving the award (such agreements may differ from employee
to employee and from award to award).
Other than directors who also are officers of National City, each
individual who was elected to the Board of Directors of National City on April
22, 1991, the date when the Restricted Stock Plan became effective, was awarded
500 shares of Restricted Stock, and each individual who is first elected or
appointed to the Board of Director will be, awarded 1000 (500 shares adjusted
for the July 1993 100% stock dividend) shares of Restricted Stock subject to
transfer restrictions. In addition, each year in which an individual is
re-elected or re-appointed as a director of National City, such individual is to
be awarded an additional 200 shares of Restricted Stock. The restrictions on the
Director Awards do not expire until the earlier of the individual director's
death, disability or nine months after the date of the award.
The Restricted Stock Plan provides that upon a change in control of
National City (as defined in the Restricted Stock Plan), all Restricted Stock
Plan restrictions will lapse and be of no further force or effect and that
National City shall cause all outstanding Restricted Stock held under the
Restricted Stock Plan to be exchanged for shares of National City Common free of
any Restricted Stock Plan legends or restrictions.
Various individuals who are participants in the Supplemental Plan (as
defined below) and agreed to waive certain rights to receive benefits under the
Supplemental Plan were granted various amounts of Restricted Stock. The
restrictions on the awards granted to these individuals do not lapse until such
time as they would qualify to receive retirement benefits under the Supplemental
Plan.
SEVERANCE AGREEMENTS. National City recognizes that, as is the case at most
companies, the possibility of a change in control exists. Accordingly, National
City desires to assure itself of both present and future continuity of
management and wishes to ensure that its senior executive officers and other key
employees ("Executives") continue to remain in the employ of National City by
entering into severance pay agreements with certain Executives of National City.
The severance agreements were entered into upon the recommendation of the
Compensation and Organization Committee and the forms of the agreement were
approved by the Board of Directors at its December 19, 1994 meeting. The
agreements become immediately operative upon a change in control.
The severance agreements provide that upon termination of employment with
National City, a subsidiary, or a successor to National City within three years
following a change in control, unless the termination is
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<PAGE> 43
because of death, permanent disability, or cause, the Executive will be entitled
to severance compensation. The severance agreements also provide that following
a change in control, the Executive may terminate his own employment with
National City or a subsidiary with the right to severance compensation during
the period commencing with the occurrence of the change in control and
continuing until the earliest of (i) the third anniversary of the occurrence of
the change in control, (ii) death, or (iii) attainment of age sixty-five and
upon the occurrence of one or more certain additional events. For fifteen
Executives, the severance agreements also provide that in the event of a change
in control, the Executive may terminate his employment with National City or any
subsidiary for any reason during the thirty-day period immediately following the
first anniversary of the first occurrence of a change in control without cause
with the right to severance compensation.
The severance compensation will be a lump sum payment in an amount equal to
three times the sum of (i) base pay at the highest rate in effect for any period
prior to the termination date plus (ii) incentive pay in an amount equal to not
less than the highest aggregate annual bonus, incentive or other payments of
cash compensation made or to be made in regard to services rendered in any
calendar year during the three calendar years immediately preceding the year in
which the change in control occurs. For thirty-six months following the
termination, National City will arrange to provide the Executive with employee
benefits that are welfare benefits substantially similar to those which the
Executive was receiving or was entitled to receive immediately prior to the
termination date and such thirty-six month period will be considered service
with National City for the purpose of determining service credits and benefits
due and payable under National City's various retirement benefit plans.
National City has agreed to bear the expense of any and all legal fees
incurred by any Executive associated with the interpretation, enforcement, or
defense of his rights under the severance agreements.
RETIREMENT PLANS. The National City Non-Contributory Retirement Plan (the
"Retirement Plan") is a qualified, non-contributory defined benefit plan, and
the pension trust is tax exempt under the Internal Revenue Code. The Retirement
Plan presently covers all regular employees of National City and those
subsidiaries of National City that have adopted the Retirement Plan when such
employees have completed 1,000 hours of service in a 12-month period (normally
the first 12 months of employment), provided they have attained age 21.
Upon reaching the normal retirement age of 65, with five years of vesting
service, each participant in the Retirement Plan generally is entitled to
receive monthly for life a basic benefit (less certain deductions specified in
the Retirement Plan) based upon the participant's highest average annual base
compensation for any 60 consecutive months of active employment during the last
120 months preceding retirement ("Final Average Earnings"). The annual basic
benefit shall be equal to the sum of (a) 1 1/4% times the employee's Final
Average Earnings not in excess of "Covered Compensation" plus (b) 1 3/4% times
the employee's Final Average Earnings in excess of "Covered Compensation," and
such sum multiplied by the number of years of benefit service, but not more than
35 years. "Covered Compensation," which is computed pursuant to government
regulations, generally is based upon the average of the wage base covered by
Social Security, upon the employee's date of birth and upon an assumed 35-year
work experience. Participant's "base compensation" is defined by the Retirement
Plan to mean generally the salary and wages paid to such participant, excluding
overtime, bonuses, commissions and other similar forms of remuneration. The Code
places limits on the amount of annual benefits which may be paid to any
participant by the pension trust of the Retirement Plan.
The Retirement Plan also provides for optional early retirement at a
reduced benefit at any time after a participant attains age 55 with at least 10
years of benefit service. The amount of the reduction of the benefit is
determined by a formula dependent upon the age at which the participant elects
to begin to receive benefits. If a participant has more than 20 years of vesting
service, the participant may elect to retire at 62 and start receiving unreduced
pension benefits.
National City adopted a supplemental retirement plan ("Supplemental Plan")
to supplement the pension payments under the Retirement Plan for those certain
senior officers of National City and its subsidiaries who may be designated from
time to time by the Compensation and Organization Committee. Payments under the
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<PAGE> 44
Supplemental Plan are paid from the general revenues of National City and have
no effect on the existing pension trust fund.
The Supplemental Plan's purpose is to augment an individual's income from
Social Security and pension payments the individual is entitled to receive upon
retirement. The amount of the Supplemental Plan benefit for any covered
individual will be the amount of the individual's retirement benefit determined
under the Retirement Plan, but determined (a) without regard to the limitations
on such benefits contained in the Internal Revenue Code, and (b) by adding to
the individual's highest average base compensation the average of the amounts
(if any) of the individual's five largest (not necessarily consecutive) awards
under the National City Corporation Short Term Plan, Incentive Plan and the
National City Corporation Annual Corporation Performance Incentive Plan during
the 10 calendar years completed prior to retirement, less the sum of (i) amounts
payable to the individual under the Retirement Plan, plus (ii) amounts payable
to the individual under any corporate program which is deemed to be another
offset program to the Supplemental Plan, as determined by the Compensation and
Organization Committee of the Board of Directors. The amount of the Supplemental
Plan benefit may, in the discretion of such Committee, be paid to the individual
in a lump sum.
The Supplemental Plan also provides supplemental disability benefits and
supplemental surviving spouse benefits. All benefits under the Supplemental Plan
are computed on the basis of the individual's retirement at age 65 (or age 62 if
he has 20 years of vesting service), and if an individual otherwise entitled to
receive benefits under the Supplemental Plan retires prior to attaining said
age, Supplemental Plan benefits will be reduced in the same manner as pension
payments are reduced under the Retirement Plan, subject, however, to such
reduction being waived by that Committee.
In the event of a change in control of National City, the Supplemental Plan
provides for the vesting of all accrued benefits.
- --------------------------------------------------------------------------------
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF BENEFIT SERVICE
AVERAGE BASE -------------------------------------------------------------------------------------------------
COMPENSATION 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
<S><C> <C> <C> <C> <C> <C> <C>
- ---
$ 25,000 $ 3,125 $ 4,687 $ 6,250 $ 7,812 $ 9,375 $ 10,937
50,000 7,373 11,060 14,747 18,434 22,120 25,807
100,000 16,124 24,185 32,248 40,310 48,371 56,433
200,000 33,623 50,435 67,247 84,059 100,870 117,682
400,000 68,624 102,936 137,248 171,560 205,871 240,183
600,000 103,624 155,436 207,248 259,059 310,873 362,685
800,000 138,623 207,935 277,247 346,559 415,870 485,182
1,000,000 173,624 260,436 347,248 434,060 520,871 607,683
1,200,000 208,624 312,936 417,248 521,561 625,873 730,185
</TABLE>
- --------------------------------------------------------------------------------
Retirement benefits above the defined benefit maximum of $150,000 in 1996 are
paid to those officers who are participating through a nonqualified Supplemental
Executive Retirement Plan.
- --------------------------------------------------------------------------------
Assuming retirement at age 65 under the Retirement Plan, the number of
years of benefit service under both the Retirement Plan and the Supplemental
Plan for the five individuals named in the Cash Compensation Table would be:
David A. Daberko, 35 years; William R. Robertson, 35 years; Vincent A.
DiGirolamo, 35 years; Morton Boyd, 12 years; and Gary A. Glaser, 35 years.
First Kentucky National Corporation, acquired by the Corporation in 1988,
had a defined contribution retirement plan unlike the Corporation's Retirement
Plan which is a defined benefit plan. The years shown for Mr. Boyd only relate
to benefit service under the Retirement Plan and the Supplemental Plan. Mr.
Boyd, upon retirement, is entitled to receive benefits under the First Kentucky
National Corporation defined contribution retirement plan in addition to those
under the Retirement Plan and Supplemental Plan, subject to offsets as
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<PAGE> 45
set forth in the Plans. After First Kentucky National Corporation was acquired
by National City, no further amounts have been accrued for any employee under
the First Kentucky National Corporation defined contribution retirement plan.
2. PROPOSAL RESPECTING AMENDING THE NATIONAL CITY CORPORATION 1993 STOCK OPTION
PLAN.
At the Annual Meeting amendments to the National City Corporation 1993
Stock Option Plan (the "Option Plan") will be presented for approval. The
amendments were adopted by the Board of Directors at its meeting February 26,
1996 subject to the approval of National City's stockholders.
The complete text of the Option Plan, as amended, appears as Appendix F to
this Prospectus and Joint Proxy Statement. While the amendments to the Option
Plan are summarized herein, such summaries are in all respects subject to the
complete text of the Option Plan in Appendix F.
SUMMARY OF CURRENT PLAN
The Option Plan was approved by stockholders on April 26, 1993. The total
number of shares for which options may be granted under the Option Plan is
10,000,000 shares (originally 5,000,000 shares adjusted for the 2 for 1 stock
split in July, 1993) of National City Common. As of February 29, 1996, 3,860,009
options are outstanding under the Option Plan. Additionally, the Option Plan
provides for the granting of stock appreciation rights ("Appreciation Rights")
in respect of stock options now outstanding or hereafter granted under the
Option Plan, the National City Corporation 1989 Stock Option Plan, the National
City Corporation 1984 Stock Option Plan, the National City 1973 Stock Option
Plan or under a stock option plan of an acquired corporation (if the options are
assumed by the Corporation).
ELIGIBILITY
Under the Option Plan, grants of options to purchase National City Common
at a specified price ("Option Rights") may be made to officers (including
officers who are members of the Board of Directors) and other key employees of
National City or of any of its subsidiaries. Appreciation Rights may be granted
to any present or future holder of outstanding Option Rights.
TERMS OF OPTION GRANTS
The Option Plan contemplates that Option Rights may be granted by the
Compensation and Organization Committee of the Board of Directors with respect
to unrestricted shares of National City Common, in accordance with the
provisions of the Plan, which include:
(a) Each grant must specify the number of shares of National City
Common to which it pertains or a method for determining such number.
(b) Each grant shall be at an option price which is not less than the
market value of National City Common on the date of grant.
(c) Successive grants may be made to the same employee whether or not
any Option Rights previously granted to such employee remain unexercised.
No employee may, however, be granted pursuant to the Option Plan more than
1,000,000 (originally 500,000 prior to adjustment for the July, 1993 two
for one stock split) Option Rights, subject to adjustment. Nothing in the
Option Plan would require that earlier options be exercised or expire
before later options are exercised.
(d) Option Rights granted under the Option Plan may be stock options
which are intended to qualify under particular provisions of the Internal
Revenue Code (the "Code"), stock options which are not intended so to
qualify, or a combination of the foregoing.
(e) No Option Right shall be exercised more than 10 years from the
date of grant.
Agreements evidencing Option Rights may contain such other terms and
provisions, consistent with the Option Plan, as the Board of Directors may
approve. National City anticipates that grants of Option Rights
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<PAGE> 46
normally will specify a period of service before they will become exercisable.
Shares covered by Option Rights which are terminated for any reason or expire
unexercised may be made the subject of new Option Rights.
The option price is payable at the time of exercise either in cash or by
the transfer to National City of unrestricted National City Common owned by
optionee having a market value equal to the option price or any combination of
both cash and stock. The Compensation and Organization Committee has the
authority to specify at the time Option Rights are granted that National City
Common will not be accepted in payment of the option price until they have been
owned by optionee for a specified period. The Plan does not require any such
holding period, however, and would permit immediate sequential exchanges of
National City Common at the time of exercise of Option Rights.
APPRECIATION RIGHTS
Appreciation Rights provide to optionees an alternative means of realizing
Option Rights benefits. The holder of an Appreciation Right may, in lieu of
exercising all or any part of his Option Rights, receive from National City an
amount equal to 100%, or such lesser percentage as the Board of Directors may
determine, of the spread between the option price and the current market value
of the shares subject to the Option Rights. Exercise of an Appreciation Right
will result in cancellation of the related Option Right, and the exercise of the
Option Right will result in the cancellation of the related Appreciation Right.
The proposed amendment does not provide for the granting of Additional Options
(as defined below) on Appreciation Rights.
PROPOSED AMENDMENT
National City has established stock ownership guidelines for its top
management personnel. The guidelines seek to have management officials
beneficially own National City Common having a value ranging from 1.5 to 5.5
times the midrange of the base salary for the grade in which the manager's job
is positioned. The amendment is expected to help management personnel achieve
and exceed their ownership goals. National City believes the amendment will
encourage management personnel to exercise options at an earlier date and retain
ownership of shares so exercised.
The amendment provides that National City may grant additional options
("Additional Options") to eligible employees. The purpose of the Additional
Options are to encourage ownership and retention of National City Common by
management personnel by providing for the grant of a new option if the exercise
price of an outstanding option is paid by delivering shares of National City
Common owned by the optionee. Also, Additional Options may be granted with
respect to shares tendered as payment of the amount to be withheld under
federal, state and local income tax laws in connection with the exercise of an
Option Right to which such Additional Option relates.
The proposed amendment to the Stock Option Plan provides that the Committee
may, at or after the date of grant with respect to any outstanding option, grant
Additional Options and may establish the terms and conditions of such Additional
Options. Pursuant to an Additional Option, the optionee would be granted a new
option at the then prevailing market price when the payment of the exercise
price of the option to which such Additional Option relates is made by using
shares of National City Common owned by the optionee and/or when shares of
National City Common are tendered or relinquished as payment of the amount to be
withheld under federal, state and local income tax laws in connection with the
exercise of the option to which such Additional Option relates. The new option
granted upon such exercise would be an option to purchase the number of shares
not exceeding the sum of (i) the number of shares of National City Common
tendered as payment upon the exercise of the option to which such "Additional
Option" option relates and (ii) the number of shares of National City Common
tendered or relinquished as payment of the amount to be withheld under income
tax laws in connection with the exercise of the option to which such Additional
Option relates. Additional Options may be granted with respect to options
previously granted under the Option Plan or any other stock option plan of
National City or any National City subsidiary now or hereafter in effect, or
pursuant to any stock option plan of any corporation which is merged into
National City and where National City has assumed the obligations of such
corporation under such option plan. The amendment provides that the Committee
has the discretion as to setting terms and conditions of the Additional Options
subject to the following provisions: (1) the Additional Option exercise price
shall be the closing price, per share, of the
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<PAGE> 47
shares of National City Common, on the NYSE on the date the employee delivers
shares of National City Common to exercise the Option that has the Additional
Option feature and/or delivers or relinquishes shares of National City Common in
payment of income tax withholding on the exercise of an Option that has the
Additional Option feature; (2) the Additional Option shall not be exercised
within six months after it is granted and (3) the Additional Option shall have
the same termination provisions as the underlying option to which such
Additional Option relates.
In addition, the proposed amendment provides that the number of shares of
National City Common which may be sold under the Option Plan will be increased
by the number of shares of National City Common that are delivered to National
City in connection with the exercise of a stock option and shares delivered or
relinquished in payment of federal, state and local income tax withholding
liabilities upon exercise of a stock option.
FEDERAL TAX CONSEQUENCES
National City presently anticipates that Option Rights granted pursuant to
the Option Plan will be either "non-qualified" or "incentive stock" options.
Non-qualified Option Rights and Additional Options will not result in any
taxable income to the optionee or deduction to National City at the time they
are granted. In general, the holder of non-qualified Option Rights will realize
taxable ordinary compensation income at the time of the exercise of the Option
Rights or related Additional Options in an amount measured by the excess of the
fair market value of the shares at that time over the option price. The tax
basis to the optionee for non-qualified option shares acquired will be the
option price plus such taxable ordinary compensation income and when the
optionee disposes of the shares capital gain or loss will be recognized, either
long or short term, depending on the holding period of the shares.
The amount included in the income of the optionee of non-qualified Option
Rights or related Additional Options as ordinary taxable income determines the
amount of the deduction to which the National City is entitled.
Option Rights or Additional Options which are incentive stock options will
not result in taxable income to the optionee or a deduction to the National City
at the time granted nor at the time exercised if holding period requirements are
observed. The optionee must hold the stock more than two years from date of
grant and one year from date of exercise. If these holding requirements are met,
the optionee will receive capital gain treatment and National City no deduction.
If these holding requirements are not met, in general, the optionee has ordinary
taxable income and the corporation a deduction measured by the excess of the
fair market value of the shares of National City Common at the time of exercise
or disqualifying sale over the option price, whichever produces a lesser gain.
The tax basis to the optionee for National City Common acquired on exercise
of an Option Right or Additional Option that is an incentive stock option will
be the fair market value at the date the Option Right or Additional Option was
granted. The difference between the fair market value at the date of exercise
and the option price of the incentive stock option will be an item of tax
preference. Thus, it will have to be included when making the alternative
minimum tax calculation for the year in which the incentive stock option was
exercised.
The granting of an Appreciation Right will not produce taxable income to
the optionee or a deduction to National City. Upon exercise of Appreciation
Rights the amount of any cash received and the fair market value of any National
City Common received will be taxable to the optionee as ordinary income and, in
general, determines the amount of the deduction to which National City is
entitled.
BENEFITS UNDER THE AMENDMENT
If National City's option plans had the Additional Option feature available
and all the Options Rights which were exercised during the fiscal year 1995 had
the "Additional Option" feature set forth in the above described amendment, the
individuals listed in the chart below would have been granted the indicated
additional options in exchange for the shares that were delivered to National
City in payment for Option
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<PAGE> 48
Rights exercised and shares delivered or forfeited in satisfaction of tax
withholding obligations in connection with the exercise of an outstanding Option
Right.
<TABLE>
<CAPTION>
NATIONAL CITY CORPORATION AMENDED AND RESTATED 1993 STOCK OPTION PLAN
- --------------------------------------------------------------------------------------------
NUMBER
OF
NAME AND POSITION UNITS
- ---------------------------------------------------------------------------------- -------
<S> <C>
D. A. Daberko -- Chairman & CEO................................................... 9,984
W. R. Robertson -- President...................................................... 13,381
V. A. DiGirolamo -- Executive Vice President...................................... -0-
M. Boyd -- Executive Vice President............................................... 5,280
G. A. Glaser -- Executive Vice President.......................................... 1,062
E. B. Brandon -- Retired Chairman & CEO........................................... 7,076
Executive Group................................................................... 46,240
Non-Executive Director Group...................................................... N/A
Non-Executive Officer Employee Group.............................................. 107,102
</TABLE>
GENERAL
The closing price for the shares of National City Common as reported in The
Wall Street Journal for February 29, 1996 was 34.75 per share.
No Option Right, Additional Option or related Appreciation Right shall be
transferable by an optionee other than by will or the laws of descent and
distribution, and shall be exercisable during the optionee's lifetime only by
the optionee or the optionee's guardian or legal representative.
APPROVAL BY STOCKHOLDERS
The amendments require for their adoption the favorable vote of the holders
of a majority of the shares present and entitled to vote at the annual meeting.
THE BOARD OF DIRECTORS OF NATIONAL CITY RECOMMENDS A VOTE FOR THIS PROPOSAL.
3. SELECTION OF INDEPENDENT AUDITORS -- NATIONAL CITY
The Board of Directors of National City believes it appropriate to submit
for action by the stockholders of National City the approval of the selection of
Ernst & Young LLP, independent auditors, as auditors for National City for the
year 1996. This firm and its predecessors have served as independent auditors
for National City since its inception in 1973. In the opinion of the Board of
Directors of National City, the reputation, qualifications and experience of the
firm make appropriate its reappointment for 1996. A representative of the firm
is expected to be present at the Annual Meeting of Stockholders of National City
with the opportunity to make a statement if such representative desires to do so
and is expected to be available to respond to appropriate questions. The
affirmative vote of the majority of shares present in person or represented by
proxy at the meeting and entitled to vote is required to approve the selection
of Ernst & Young LLP as auditors for National City for the year 1996.
THE BOARD OF DIRECTORS OF NATIONAL CITY RECOMMENDS A VOTE FOR THIS
PROPOSAL.
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4. MERGER
This section of the Prospectus and Joint Proxy Statement describes the
material aspects of the Merger. The following description of the Merger does not
purport to be complete and is qualified in its entirety by reference to the
Agreement, the National City Option Agreement and the Integra Option Agreement,
which are attached as Appendices A, D and E respectively to this Prospectus and
Joint Proxy Statement and are incorporated herein by reference. All stockholders
of National City and all shareholders of Integra are urged to read the
agreements.
.
BACKGROUND OF AND REASONS FOR THE MERGER -- INTEGRA
In recent years there has been, and there continues to be, substantial
consolidation in the United States banking and financial services industry.
Integra's executive management and Board of Directors have had ongoing
discussions regarding how to respond to this consolidation. In 1993 Integra
decided to remain independent while at the same time executive management was
instructed by the Board of Directors to stay in touch with companies Integra
would like to acquire as well as to get better acquainted with companies that
may be interested in acquiring Integra. Morgan Stanley was retained to advise
Integra in this process. In 1994, William F. Roemer, Chairman and Chief
Executive Officer of Integra ("Roemer"), updated the Executive Committee of
Integra on the conversations that he and Leonard M. Carroll, President and Chief
Operating Officer of Integra ("Carroll"), had had with executives from several
institutions. In addition to talking to potential acquisition candidates,
Integra had conversations with four companies that might have been interested in
acquiring Integra, none of which discussions amounted to more than an initial
expression of interest by such companies. At the Board of Directors retreat in
July 1995, an independent banking consultant again reviewed the state of the
industry. This review covered, among other things, the ability of an independent
institution like Integra to adequately respond to the ongoing consolidation
within the industry and at the same time enhance the value of Integra for its
shareholders.
In April 1995, Roemer attended the Bankers Roundtable in Florida and
visited with David A. Daberko ("Daberko"), who at that time was National City's
President and Chief Operating Officer. Roemer and Daberko discussed the
similarities between Integra and National City in regard to their cultures,
business philosophies and approach to managing. They agreed to meet again in May
when Roemer would be in Cleveland. In May they continued their discussions
regarding the similarities between the companies. Daberko stated that Integra
was on a list of National City's top acquisition candidates, but that National
City was only interested in a friendly acquisition. A meeting was then held in
Pittsburgh at the end of June which was attended by Roemer, Carroll, Daberko and
William R. Robertson, Deputy Chairman of National City. Carroll came away from
that meeting sharing the same positive impression regarding the similarities of
philosophies and interests of the two companies as had Roemer.
Following the meeting in Pittsburgh, Roemer contacted representatives of
Morgan Stanley and requested that they enter into an exploratory dialogue with
National City on Integra's behalf. A representative of Morgan Stanley met with
Daberko in early August to discuss the benefits of a proposed merger. While a
number of issues remained to be resolved in negotiations, the price to be paid
by National City in the transaction became the primary point of negotiations
between the parties. On August 18, 1995, a meeting was held in New York City
between Roemer and Carroll from Integra, Daberko and other senior officers from
National City, representatives from Morgan Stanley and representatives from
Merrill Lynch. On August 24, 1995, National City made an offer which was
supported by Merrill Lynch that Roemer and Carroll were prepared to recommend to
the Integra Board of Directors. The Executive Committee of the Board of
Directors of Integra met on August 24, 1995, and the full Board met on August
26, 1995 with representatives from Morgan Stanley in attendance at both
meetings. The Board of Directors of Integra unanimously approved the Agreement
and the transactions contemplated thereby, including the National City Option
Agreement and the Integra Option Agreement, and voted to recommend the Agreement
to the shareholders of Integra.
In reaching the determination that the Merger is fair to, and in the best
interests of, Integra and its shareholders, the Integra Board consulted with
Integra management, as well as its financial and legal advisers, and considered
a number of factors, including, without limitation, the following:
(a) Integra's business, operations, earnings, prospects and financial
condition;
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<PAGE> 50
(b) the business, operations, earnings, prospects and financial
condition of National City as determined from the due diligence conducted
by Integra management, the enhanced opportunities for operating
efficiencies (particularly in terms of integration of operations and
support functions) that could result from the Merger, and the enhanced
opportunities for growth that the Merger would make possible;
(c) the opinion of Morgan Stanley that as of August 26, 1995, the
Exchange Rate was fair to Integra shareholders from a financial point of
view;
(d) the value implied by the Exchange Rate in relation to the then
market value, book value and earnings of Integra and the fact that Integra
would be unlikely to match or exceed such value in the foreseeable future
by remaining independent;
(e) comparisons to median deal multiples of other recent bank
acquisitions in terms of premium to market, book value and earnings;
(f) the terms of the proposed Agreement, and the National City Option
Agreement and the Integra Option Agreement;
(g) National City's record as an institution consistently ranked near
the top of its peer group of regional bank holding companies in terms of
asset quality, reserve coverage, capital adequacy and profitability;
(h) alternatives to the Merger (including the alternatives of
remaining independent and growing internally, remaining independent for a
period of time and then selling Integra, and remaining independent and
growing through future acquisitions) and the competitive problems that
Integra was likely to encounter as an independent company;
(i) the apparent absence of any significant problems in obtaining
regulatory approvals for the Merger and the fact that the pro forma capital
position of the combined companies would be well in excess of all
applicable regulatory capital requirements;
(j) the effects on the communities Integra serves, along with the
effects on Integra's borrowers, depositors, suppliers and employees;
(k) the expectation that the Merger will generally be a tax-free
transaction to Integra and its shareholders and that the Merger will be
accounted for under the pooling-of-interests method of accounting (see
"MERGER -- Certain Federal Income Tax Consequences" and "-- Accounting
Treatment"); and
(l) the current and prospective economic environment and competitive
constraints facing financial institutions, including Integra.
The Integra Board did not assign any specific or relative weight to the
foregoing factors in their consideration.
IN VIEW OF ALL OF THE CONSIDERATIONS DESCRIBED ABOVE, THE BOARD OF
DIRECTORS OF INTEGRA UNANIMOUSLY RECOMMENDS THAT INTEGRA SHAREHOLDERS VOTE FOR
THE APPROVAL OF THE AGREEMENT.
BACKGROUND OF AND REASONS FOR THE MERGER -- NATIONAL CITY
National City's acquisition strategy has been to be a major player in its
existing markets and to expand into contiguous markets where a major presence
can be established. National City considers western Pennsylvania an extension of
its Ohio markets because of its proximity and similar characteristics. Integra
represented the most attractive way to enter the western Pennsylvania market.
Over the past year, National City engaged in discussions with Integra management
about the possibility of a merger of the two companies. Discussions intensified
over the summer of 1995 after Integra retained Morgan Stanley to become its
financial advisor in a potential transaction. Negotiations and due diligence
were conducted during the month of August 1995. The Agreement was executed on
August 27, 1995, after the due diligence review was completed, and an
announcement was made on August 28, 1995.
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<PAGE> 51
As indicated above, concurrent with the negotiation of the Agreement,
National City conducted a detailed due diligence review of Integra. Teams from
National City reviewed such areas as credit quality, risk management, systems,
controls, consolidation opportunities, and management issues. One of the main
objectives of the due diligence review was the verification of assumptions used
to determine the price to be paid for the Integra shares. After the review was
completed, National City became comfortable that cost savings, revenue
enhancements and one-time merger related charges were in line with initial
estimates. National City management presented its findings to its Board of
Directors at a special meeting held on August 27, 1995. At that meeting,
National City's Board approved the transaction.
National City believes that the Merger is fair to and in the best interests
of National City and its stockholders and recommends that its stockholders vote
in favor of the transaction. In negotiating the terms of the Merger and in
considering its recommendation to the stockholders of adoption of the Agreement,
National City reviewed a number of factors with a view to maximizing stockholder
value in the intermediate and long term, including earnings potential,
realization of economies of scale, market position of Integra and National
City's ability to sell its products to Integra's large customer base. In
addition, the National City Board of Directors consulted with National City
management, as well as its financial and legal advisers, and considered other
factors, including, without limitation, the following: (a) the business,
operations, earnings, prospects and financial condition of Integra as determined
from the due diligence conducted by National City management; (b) the opinion of
its financial advisor as described below; (c) the terms of the Agreement, the
National City Option and the Integra Option; and (d) regulatory approval
requirements.
National City believes that the affiliation of Integra with National City
and the acquisition of the banks and other subsidiaries now owned by Integra
will provide National City with a meaningful presence in western Pennsylvania
and an expansion of National City's customer base and assets. National City also
believes that Integra's low loan-to-deposit ratio represents a significant
source of low cost funding for all of National City. Also, Integra's expertise
in consumer finance through its subsidiary, Altegra Credit Company represents a
significant boost to National City's de-novo efforts in that business. In
addition, Integra's strong retail base provides an opportunity for expansion of
National City's products into western Pennsylvania. National City, with its
expertise in middle market lending and in investment banking provides a great
opportunity to grow revenues from the Integra markets.
National City has had substantial prior experience in effecting successful
mergers, including major bank holding company mergers (BancOhio Corporation in
1984, First Kentucky National Corporation in 1988 and Merchants National
Corporation in 1992) as well as other smaller acquisitions. National City has
completed all of its own standardization and consolidation projects and believes
it can effectively integrate the operations of Integra into National City within
one month after the consummation of the Merger, thereby realizing the full
benefits of the Merger within one of the shortest time periods in banking
history, although there can be no assurance. The Board of Directors of National
City believes that the Merger will result in a combined entity with increased
financial resources and greater financial strength than either National City or
Integra standing alone. The anticipated cost savings noted above, coupled with
the expected improved credit quality at Integra, should make the Merger
accretive to National City's earnings per share in 1997. The increased scale of
operations will also aid the profitability of such key product areas as trust,
mortgage servicing, credit card processing and consumer finance.
IN VIEW OF ALL THE CONSIDERATIONS DESCRIBED ABOVE, THE BOARD OF DIRECTORS
OF NATIONAL CITY UNANIMOUSLY RECOMMENDS THAT NATIONAL CITY STOCKHOLDERS VOTE FOR
THE ADOPTION OF THE AGREEMENT.
OPINIONS OF FINANCIAL ADVISORS
Integra. Integra retained Morgan Stanley to act as Integra's financial
advisor in connection with the Merger and related matters based upon its
qualifications, expertise and reputation, as well as Morgan Stanley's prior
investment banking relationship and familiarity with Integra. At the August 26,
1995 meeting of the Integra Board, Morgan Stanley rendered its oral opinion to
the Integra Board that, as of such date, the Exchange Ratio pursuant to the
Merger Agreement was fair from a financial point of view to holders of Integra
Common Stock. Morgan Stanley subsequently confirmed its August 26, 1995 oral
opinion by delivery to the Integra Board of a written opinion dated as of the
date of this Prospectus and Joint Proxy Statement.
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<PAGE> 52
THE FULL TEXT OF MORGAN STANLEY'S OPINION, DATED AS OF THE DATE OF THIS
PROSPECTUS AND JOINT PROXY STATEMENT, WHICH SETS FORTH, AMONG OTHER THINGS,
ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED, AND LIMITATIONS ON
THE REVIEW UNDERTAKEN, IS ATTACHED AS APPENDIX B TO THIS PROSPECTUS AND JOINT
PROXY STATEMENT. INTEGRA SHAREHOLDERS ARE URGED TO READ THE MORGAN STANLEY
OPINION CAREFULLY AND IN ITS ENTIRETY. MORGAN STANLEY'S OPINION IS ADDRESSED TO
THE INTEGRA BOARD AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY HOLDER OF
INTEGRA COMMON STOCK AS TO HOW SUCH SHAREHOLDERS SHOULD VOTE AT THE INTEGRA
MEETING. THE SUMMARY OF THE OPINION OF MORGAN STANLEY SET FORTH IN THIS
PROSPECTUS AND JOINT PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO THE FULL TEXT OF SUCH OPINION.
In connection with rendering its opinion dated as of the date of this
Prospectus and Joint Proxy Statement, Morgan Stanley, among other things: (i)
analyzed certain publicly available financial statements and other information
of Integra and National City, respectively; (ii) analyzed certain internal
financial statements and other financial and operating data concerning Integra
and National City prepared by the managements of Integra and National City,
respectively; (iii) analyzed certain financial projections prepared by the
managements of Integra and National City, respectively; (iv) discussed the past
and current operations and financial condition and the prospects of Integra and
National City with senior executives of Integra and National City, respectively;
(v) reviewed the reported prices and trading activity for the Integra Common and
the National City Common; (vi) compared the financial performance of Integra and
National City and the prices and trading activity of the Integra Common and the
National City Common with that of certain other comparable bank holding
companies and their securities; (vii) discussed the results of regulatory
examinations of Integra and National City with the Senior managements of the
respective companies; (viii) reviewed and discussed with the senior managements
of Integra and National City the strategic objectives of the Merger and
synergies and certain other benefits of the Merger; (ix) analyzed certain pro
forma financial projections for the combined company prepared by Integra and
National City; (x) reviewed and discussed with the senior managements of Integra
and National City certain estimates of the cost savings expected to result from
the Merger; (xi) reviewed the financial terms, to the extent publicly available,
of certain comparable merger transactions; (xii) participated in discussions and
negotiations among representatives of Integra and National City and their
financial and legal advisors; (xiii) reviewed the Merger Agreement, the Stock
Option Agreements between Integra and National City each dated as of August 27,
1995 and certain related documents; and (xiv) performed such other analyses as
it deemed appropriate.
In rendering its opinion, Morgan Stanley assumed and relied upon without
independent verification the accuracy and completeness of the information
reviewed by Morgan Stanley for the purposes of its opinion. With respect to the
financial projections, including the estimates of synergies and other benefits
expected to result from the Merger, Morgan Stanley assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the future financial performance of Integra and National City,
respectively. Morgan Stanley has not made any independent valuation or appraisal
of the assets or liabilities of Integra and National City, nor has Morgan
Stanley been furnished with any such appraisals and Morgan Stanley has not
examined any loan files of Integra and National City. Morgan Stanley's opinion
is necessarily based on economic, market and other conditions as in effect on,
and the information made available to Morgan Stanley as of, the date of the
opinion.
Morgan Stanley was not authorized to solicit, and did not solicit, interest
from any other party with respect to the acquisition of Integra or any of its
assets.
The following is a summary of the analyses presented by Morgan Stanley to
the Integra Board of Directors on August 26, 1995 in connection with rendering
its opinion.
Comparable Company Analysis. Comparable company analysis analyzes a
company's operating performance relative to a group of publicly traded peers.
Based on relative performance and outlook for a company versus its peers, this
analysis enables an implied unaffected market trading value to be determined.
Morgan Stanley analyzed the operating performance of Integra relative to 35
regional banks (the "Morgan Stanley Regional Bank Index," or the "Comparables").
Historical financial information used in connection with the ratios provided
below with respect to the Comparables is as of June 30, 1995.
Morgan Stanley analyzed the relative performance and value of Integra by
comparing certain market trading statistics for Integra with the Comparables.
Market information used in ratios provided below is as of
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<PAGE> 53
August 23, 1995. The market trading information used in the valuation analysis
was market price to book value (which was 1.6x for Integra and 1.7x in the case
of the mean for the Morgan Stanley Regional Bank Index) and market price to
earnings per share estimates for 1996 (which was 9.8x for Integra and 9.6x in
the case of the mean for the Morgan Stanley Regional Bank Index, in each case
based upon Institutional Brokers Estimate System ("IBES") estimates as of August
17, 1995). IBES is a data service that monitors and publishes compilations of
earnings estimates produced by selected research analysts regarding companies of
interest to institutional shareholders.
Morgan Stanley also reviewed the latest 12 months financial performance of
Integra with the Comparables. The trailing financial performance information
used was return on assets (which was 1.16% for Integra and 1.27% in the case of
the mean for the Morgan Stanley Regional Bank Index) and return on common equity
(which was 17.4% for Integra and 16.5% in the case of the mean for the Morgan
Stanley Regional Bank Index).
No company or transaction used in the comparable company and comparable
transaction analyses is identical to Integra or the Merger. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and operating
characteristics of Integra and other factors that could affect the public
trading value of the companies to which they are being compared. Mathematical
analysis (such as determining the average or median) is not in itself a
meaningful method of using comparable transaction data or comparable company
data.
Dividend Discount Analysis. Morgan Stanley performed a dividend discount
analysis to determine a range of present values per share of Integra Common
assuming Integra continued to operate as a stand-alone entity. This range was
determined by adding (i) the present value of the estimated future dividend
stream that Integra could generate over the period beginning in 1995 and ending
in 1997 and (ii) the present value of the "terminal value" of Integra Common at
the end of 1997. The following two sets of earnings projections formed the basis
for the projected dividend stream: (i) Integra management's projections for
1995, 1996 and 1997; and (ii) IBES estimates for 1995 and 1996, grown at 8%
thereafter through 1997. The "terminal value" of Integra Common at the end of
the period was determined by applying a projected price-to-earnings multiple of
10.0x to 1997 projected net income for Integra. The dividend stream and terminal
values were discounted to present values using discount rates of 13% and 14%,
which Morgan Stanley viewed as the appropriate discount rate range for a company
with Integra's risk characteristics. The fully diluted stand-alone value of
Integra Common ranged from approximately $46 per share to approximately $50 per
share based upon this analysis.
Implied Acquisition Value. As part of its analysis of the acquisition
valuation, Morgan Stanley assumed that the net present value of the estimated
cost savings associated with the Merger was added to the fully diluted
stand-alone value of Integra Common also described above (see "-- Dividend
Discount Analysis"). Based on the cost savings estimated by managements of
Integra and National City of 15%, 20% and 25%, a phase-in of cost savings over
two years, Morgan Stanley estimated the implied acquisition value of Integra
Common to range from $55 to $67 per share. This present value calculation
assumed a perpetual expense growth rate of 3%, a tax rate of 35% and a
restructuring charge equal to 100% of fully phased in cost savings.
Comparable Transaction Analysis. Morgan Stanley performed an analysis of
premiums paid for selected holding companies of commercial banks in transactions
with value of over $500 million in order to obtain a valuation range for the
Integra Common based upon comparable merger transactions. Multiples of market
value, book value, and earnings implied by the consideration to be received by
shareholders of Integra in the Merger were compared with multiples paid in other
comparable merger transactions from 1994 through August 7, 1995. The comparison
included a total of eight transactions. The transactions examined were
(acquiree/acquiror): FirsTier Financial/First Bank System, Premier Bancorp/Banc
One; Midlantic Corporation/PNC Bank; First Fidelity/First Union; West One
Bancorp/U.S. Bancorp; Shawmut National/Fleet Financial Group; Michigan
National/National Australia Bank; and Continental Bank/BankAmerica. The analysis
yielded a mean price paid over market price multiple of 1.4x for the comparable
transactions, compared to approximately 1.2x for the Merger, based on the market
price of the Integra Common as of August 23, 1995 ($51.88). In terms of price to
book multiple, the mean for the comparable transactions was 1.8x (compared to
approximately 2.0x for the Merger, based on Integra's June 30, 1995 book value
of $1,052
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million). The third multiple considered was price to latest twelve month
trailing earnings with a mean for the comparable transactions of 11.8x (compared
with 13.0x for the Merger, based upon Integra's earnings for the twelve months
ended June 30, 1995). For the comparable transactions: (i) multiples of price
paid to market value ranged from 1.0x to 1.7x; (ii) multiples of book value
ranged from 1.2x to 2.1x; and (iii) the multiples of last twelve month trailing
earnings ranged from 8.5x to 16.0x.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. Morgan
Stanley believes that its analyses must be considered as a whole and that
selecting portions of its analyses, without considering all analyses, would
create an incomplete view of the process underlying its opinion and the
presentation to the Integra Board. In addition, Morgan Stanley may have given
various analyses more or less weight than other analyses, and may have deemed
various assumptions more or less probable than other assumptions, so that the
ranges of valuations resulting from any particular analysis described above
should not be taken to be Morgan Stanley's view of the actual value of Integra.
In connection with its written opinion dated as of the date of this
Prospectus and Joint Proxy Statement, Morgan Stanley confirmed the
appropriateness of its reliance on the analyses used to render its August 26,
1995 opinion, by performing procedures to update certain of such analyses and by
reviewing the assumptions upon which such analyses were based and the factors
considered in connection therewith.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of National City or Integra.
The analyses performed by Morgan Stanley are not necessarily indicative of
actual values, which may be significantly more or less favorable than suggested
by such analyses. Such analyses were prepared solely as a part of Morgan
Stanley's analysis of the fairness of the Exchange Ratio to the holders of
Integra Common and were provided to the Integra Board in connection with the
delivery of Morgan Stanley's opinion. The analyses do not purport to be
appraisals or to reflect the prices at which a company might actually be sold.
In addition, as described above, Morgan Stanley's opinion and presentation to
the Integra Board was one of many factors taken into consideration by the
Integra Board in making its determination to approve the Merger. Consequently,
the Morgan Stanley analyses described above should not be viewed as
determinative of the Integra Board's or Integra management's opinion with
respect to the value of Integra or of whether the Integra Board or Integra
management would have been willing to agree to a different exchange ratio.
Morgan Stanley is an internationally recognized investment banking and
advisory firm. Morgan Stanley, as part of its investment banking business, is
continuously engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. Morgan Stanley makes a market
in Integra Common and National City Common, and may provide investment banking
services to National City in the future. In the course of its market-making and
other trading activities, Morgan Stanley may, from time to time, have a long or
short position in, and buy and sell securities of, Integra and National City. In
the past, Morgan Stanley and its affiliates have provided financial advisory and
financing services to Integra and to National City, and have received customary
fees for the rendering of these services.
Integra has agreed to pay Morgan Stanley (i) an advisory fee estimated to
be between $100,000 and $200,000, if the Merger is not consummated (an "Advisory
Fee"), (ii) an opinion fee of $2 million, which became payable upon the delivery
of its fairness opinion (an "Opinion Fee"), and (iii) an additional fee of $5
million which became payable three months following the execution of the
Agreement (an "Additional Fee"). Upon consummation of the Merger, Morgan Stanley
will be entitled to a transaction fee equal to 0.395% of the aggregate value of
the consideration paid for all outstanding shares of Integra Common (including
in-the-money options and warrants) (a "Transaction Fee"). The Advisory Fee,
Opinion Fee and Additional Fee will be credited against the Transaction Fee. In
addition, Integra has agreed, among other things, to reimburse Morgan Stanley
for all reasonable out-of-pocket expenses incurred in connection with the
services provided by Morgan Stanley, and to indemnify and hold harmless Morgan
Stanley and certain related parties from and
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against certain liabilities and expenses, including certain liabilities under
the federal securities laws, in connection with its engagement.
National City. National City retained Merrill Lynch to act as its
financial advisor in connection with the Merger and related matters based upon
its qualifications, expertise and reputation, as well as Merrill Lynch's prior
investment banking relationship and general familiarity with National City. At
the August 27, 1995 meeting of the National City Board, Merrill Lynch rendered
an oral opinion to the National City Board that, as of such date, the Exchange
Rate pursuant to the Agreement was fair to National City from a financial point
of view. Merrill Lynch subsequently delivered to the National City Board a
written opinion dated as of August 27, 1995, confirming its oral opinion.
Merrill Lynch reconfirmed its August 27, 1995 opinion by delivery to the
National City Board of its written opinion dated the date of this Prospectus and
Joint Proxy Statement that, as of the date of such opinion, the Exchange Rate
was fair to National City from a financial point of view. No limitations were
imposed by National City on the scope of Merrill Lynch's investigation or on the
procedures followed by Merrill Lynch in rendering its opinions.
The full text of Merrill Lynch's opinion dated as of the date of this
Prospectus and Joint Proxy Statement, which sets forth, among other things,
assumptions made, procedures followed, matters considered, and limitations on
the review undertaken by Merrill Lynch, is attached as Appendix C to this
Prospectus and Joint Proxy Statement and is incorporated herein by reference.
National City stockholders are urged to read the Merrill Lynch opinion in its
entirety. The summary of the opinion of Merrill Lynch set forth in this
Prospectus and Joint Proxy Statement is qualified in its entirety by reference
to the full text of such opinion.
MERRILL LYNCH'S OPINION IS DIRECTED TO THE NATIONAL CITY BOARD AND
ADDRESSES ONLY THE EXCHANGE RATE. IT DOES NOT ADDRESS THE UNDERLYING BUSINESS
DECISION TO PROCEED WITH THE MERGER AND DOES NOT CONSTITUTE, NOR SHOULD IT BE
CONSTRUED AS, A RECOMMENDATION TO ANY HOLDER OF NATIONAL CITY COMMON AS TO HOW
SUCH STOCKHOLDER SHOULD VOTE AT THE NATIONAL CITY MEETING.
In connection with rendering its opinion dated the date of this Prospectus
and Joint Proxy Statement, Merrill Lynch, among other things: (i) reviewed
Integra's Annual Reports on Form 10-K and related financial information for the
five fiscal years ended December 31, 1994 and Integra's Quarterly Reports on
Form 10-Q and the related unaudited financial information for the quarterly
periods ending March 31, 1995, June 30, 1995 and September 30, 1995; (ii)
reviewed National City's Annual Reports on Form 10-K and related financial
information for the five fiscal years ended December 31, 1995; (iii) reviewed
certain information, including financial forecasts and assumptions regarding
cost savings resulting from the Merger, relating to the respective business,
earnings, assets, contingencies and prospects of Integra and National City,
furnished to it by Integra and National City; (iv) conducted discussions with
members of senior management of Integra and National City concerning their
respective financial condition, businesses, operations, regulatory condition,
financial forecasts, contingencies and prospects; (v) reviewed the historical
market prices and trading activity for the Integra Common and the National City
Common and compared them with that of certain publicly traded companies which it
deemed to be relevant; (vi) compared the respective results of operations of
Integra and National City with that of certain companies which it deemed to be
relevant; (vii) compared the financial terms of the Merger contemplated by the
Agreement with the financial terms of certain other mergers and acquisitions
which Merrill Lynch deemed to be relevant; (viii) analyzed, based upon
information provided by National City's senior management, the pro forma impact
of the transaction on the earnings and book value per share, consolidated
capitalization and certain balance sheet and profitability ratios of National
City; (ix) reviewed the Agreement; (x) reviewed the National City Option and the
Integra Option; and (xi) reviewed such other financial studies and analyses and
performed such other investigations and took into account such other matters as
it deemed appropriate.
In preparing its opinion, Merrill Lynch relied on the accuracy and
completeness of all financial and other information supplied or otherwise made
available to it by Integra and National City, and did not independently verify
such information or undertake an independent evaluation or appraisal of the
assets or liabilities, contingent or otherwise, of National City or Integra or
any of their subsidiaries, nor was Merrill Lynch furnished with any such
evaluation or appraisal. Merrill Lynch also relied upon the managements of
National
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City and Integra as to the reasonableness and achievability of the financial
forecasts (and the assumptions and bases therefor) provided to Merrill Lynch. In
that regard, Merrill Lynch assumed with National City's consent that such
forecasts, including, without limitation, financial forecasts, evaluations of
contingencies, projected cost savings and operating synergies resulting from the
Merger and projections regarding future economic conditions and results of
operations, reflect the best currently available estimates and judgments of such
respective managements as to the future financial performance of Integra and
National City. Merrill Lynch's opinion was necessarily based upon economic,
market and other conditions as in effect on, and the information made available
to it as of, the date of the opinion. Merrill Lynch is not an expert in the
evaluation of allowances for loan losses and has not assumed any responsibility
for making an independent evaluation of the adequacy of the allowance for loan
losses of National City or Integra, nor has Merrill Lynch reviewed any
individual credit files.
In connection with rendering its August 27, 1995 opinion to the National
City Board, Merrill Lynch performed a variety of analyses, which are summarized
below. The preparation of a fairness opinion is a complex process involving
subjective judgments and is not necessarily susceptible to partial analysis or
summary description. Accordingly, Merrill Lynch believes that its analyses must
be considered as a whole and that selecting portions of its analyses and factors
considered therein, without considering all analyses and factors, or attempting
to ascribe relative weights to some or all such analyses and factors, could
create an incomplete view of the evaluation process underlying Merrill Lynch's
opinions. In addition, Merrill Lynch may have given various analyses more or
less weight than the other analyses, it may have used them for different
purposes and may have deemed various assumptions more or less probable than
other assumptions, so that the ranges of valuations resulting from any
particular analysis described below should not be taken to be Merrill Lynch's
view of the actual value of Integra or National City.
In performing its analyses, Merrill Lynch made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of National City and
Integra. With respect to the comparison of selected companies analysis and the
analysis of selected bank merger transactions summarized below, no public
company or transaction utilized as a comparison is identical to National City or
Integra or the Merger and such analyses necessarily involve complex
considerations and judgments concerning the differences in financial and
operating characteristics of such companies and transactions and other factors
that could affect the public trading values of the companies concerned. The
analyses performed by Merrill Lynch are not necessarily indicative of actual
values or actual future results, which may be significantly more or less
favorable than suggested by such analyses. In addition, the analyses do not
purport to be appraisals or to reflect the prices at which any securities of
National City or Integra may trade at the present time or at any time in the
future. Such analyses were prepared solely as part of Merrill Lynch's analysis
of the fairness of the Exchange Rate to National City from a financial point of
view. Furthermore, as described above, Merrill Lynch's opinions were one of the
many factors taken into consideration by the National City Board in making its
determination to approve the Merger.
The projections furnished to Merrill Lynch and used by it in certain of its
analyses were prepared by the managements of National City and Integra. National
City and Integra do not publicly disclose internal management projections of the
type provided to Merrill Lynch in connection with its review of the Merger. Such
projections were not prepared with a view towards public disclosure. The
projections were based on numerous variables and assumptions which are
inherently uncertain, including, without limitation, factors related to general
economic and competitive conditions. Accordingly, actual results could vary
significantly from those set forth in subject projections.
The following is a summary of the analyses performed by Merrill Lynch in
connection with its August 27, 1995 opinion to the National City Board.
Transaction Summary. Merrill Lynch reviewed the terms of the proposed
transaction, including the Exchange Rate and the aggregate transaction value.
Merrill Lynch reviewed the implied value of the consideration offered based upon
the closing share price of National City Common on August 24, 1995, which showed
that the implied value of the National City proposal was approximately $62.75
per share of Integra Common, representing a 20.7% premium to Integra's August
24, 1995 closing market price of $52.00 per share, or a total transaction value
of approximately $2.10 billion. In addition. Merrill Lynch reviewed the
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implied value of the consideration offered based upon the average closing share
price of Integra Common for the 30-day period ending on August 24, 1995 and the
closing share price of National City Common on August 24, 1995, which showed a
20.4% premium. Merrill Lynch also reviewed the implied value of the
consideration based upon the 52-week high price of Integra Common and the
closing share price of National City Common on August 24, 1995, which showed a
14.4% premium. Based on the aggregate consideration offered using the August 24,
1995 stock price for National City, Merrill Lynch calculated the price to fully
diluted book value per share, price to fully diluted tangible book value per
share, price to last twelve months earnings per share and price to First Call
estimated 1995 and 1996 earnings per share multiples in the contemplated
transaction. This analysis yielded a price to fully diluted book value per share
multiple of 1.96x, a price to fully diluted tangible book value per share of
2.13x, a price to last twelve months earnings per share multiple of 13.02x
(based on earnings for the twelve months ended June 30, 1995), and a price to
First Call estimated 1995 and 1996 earnings per share multiples of 12.81x and
11.88x, respectively. First Call is a financial data service that monitors and
publishes a compilation of earnings estimates produced by selected research
analysts regarding companies of interest to institutional investors.
Pro Forma Merger Analysis. Merrill Lynch analyzed, based on projections
provided by National City and Integra (which included pre-tax cost savings of
$25 million in 1996 and fully phased-in pre-tax cost savings of $85 million in
1997 and subsequent years, and an after-tax restructuring charge of $69
million), certain pro forma effects resulting from the Merger. This analysis
indicated that the transaction would be dilutive to projected earnings per share
of National City Common in 1996 and would be accretive to earnings per share in
1997. The analysis also showed that the Merger was dilutive to National City's
book value and tangible book value per share at June 30, 1995. In this analysis,
Merrill Lynch assumed that National City performed in accordance with the
earnings forecast and cost savings assumptions provided to Merrill Lynch by
National City senior management.
Contribution Analysis. Merrill Lynch reviewed the relative contributions
in terms of various balance sheet items, projected 1995 and 1996 net income and
market capitalization to be made by National City and Integra to the combined
institution based on projected data as of December 31, 1995. The income
statement and balance sheet components analyzed included total assets, total
loans (net), total deposits, fully diluted common equity, fully diluted tangible
common equity, 1995 estimated net income and 1996 estimated net income. Merrill
Lynch also analyzed the fully diluted market capitalization of the combined
institution. This analysis showed that, while National City stockholders would
own approximately 69.80% of the outstanding shares of the combined institution
based upon the Exchange Rate, National City was contributing 71.01% of total
assets, 75.49% of total loans (net), 70.05% of total deposits, 73.37% of fully
diluted common equity, 72.59% of tangible common equity, 74.24% of the fully
diluted market capitalization, 73.95% of 1995 estimated net income and 74.12% of
1996 estimated net income.
Discounted Dividend Stream Analysis. Using a discounted dividend stream
analysis, Merrill Lynch estimated the present value of the future streams of
after-tax cash flows that Integra could produce on a stand-alone basis from 1996
through 2000 and distribute to shareholders ("dividendable net income"). In this
analysis, Merrill Lynch assumed that Integra performed in accordance with the
forecasts provided to Merrill Lynch by National City's and Integra's senior
management and projected the maximum dividends that would permit Integra's
tangible equity to tangible asset ratio to be maintained at a minimum 6.5%
level. In addition, Merrill Lynch assumed an after-tax restructuring charge of
$69 million in connection with the Merger and 100% realization of the cost
savings projected by National City beginning in 1997. Merrill Lynch estimated
the terminal values for the Integra Common at 10.0 and 11.0 times Integra's year
2000 estimated operating income (defined as net income before intangible
amortization). The dividendable net income streams and terminal values were then
discounted to present values using discount rates of 13%, 14% and 15%. This
discounted dividend stream analysis indicated a reference range of between
$62.82 and $71.90 per share of Integra Common. The analysis was based upon
National City's and Integra's senior management's projections, which were based
upon many factors and assumptions, many of which are beyond the control of
National City or Integra. As indicated above, this analysis did not purport to
be indicative of actual future results and did not purport to reflect the prices
at which shares of Integra Common may trade. Merrill Lynch noted that discounted
cash flow analysis was included because it is a widely used valuation
methodology, but
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noted that the results of such methodology are highly dependent upon the
numerous assumptions that must be made, including earnings growth rates,
dividend payout rates, terminal values and discount rates.
Using a discounted dividend stream analysis, Merrill Lynch also estimated
the present value of the dividendable net income that National City could
produce on a stand-alone basis from 1996 through 2000. In this analysis, Merrill
Lynch assumed that National City performed in accordance with the earnings
forecasts provided to Merrill Lynch by National City's senior management and
projected the maximum dividends that would permit National City's tangible
common equity to tangible asset ratio to be maintained at a minimum 6.5% level.
Merrill Lynch estimated the terminal values for National City Common at 10.0 and
11.0 times National City's year 2000 estimated operating income. The
dividendable net income streams and terminal values were then discounted to
present values using discount rates of 13%, 14% and 15%. This discounted
dividend stream analysis indicated a reference range of between $30.47 and
$34.92 per share of National City Common. The analysis was based upon National
City's senior management's projections, which were based upon many factors and
assumptions, many of which are beyond the control of National City. As indicated
above, this analysis did not purport to be indicative of actual future results
and did not purport to reflect the prices at which shares of National City
Common may trade before or after the Merger.
Analysis of Selected Bank Merger Transactions. Merrill Lynch reviewed
publicly available information regarding selected bank merger transactions in
the United States with a value of greater than $500 million which had been
announced since January 1, 1994 and which were to be accounted for on a
pooling-of-interests basis. The bank merger transactions reviewed by Merrill
Lynch for purposes of this analysis were: PNC Bank Corp./Midlantic Corp., First
Union Corporation/First Fidelity Corporation, U.S. Bancorp/West One Bancorp,
Fleet Financial Group/Shawmut National Corp., and Boatmen's Bancshares/Worthen
Banking Corp. Merrill Lynch calculated the price to market, price to earnings,
price to fully diluted book value and price to fully diluted tangible book value
and the implied deposit premium paid in the contemplated transaction and such
selected bank merger transactions. This analysis yielded a range of price to
market values of $60.32 to $86.84 with a mean of $72.80 and a median of $73.32,
a range of price to earnings values of $59.85 to $74.72 with a mean of $68.85
and a median of $69.81, a range of price to fully diluted book values of
approximately $57.66 to $67.42 with a mean of $63.33 and a median of $64.59, a
range of price to fully diluted tangible book values of $59.41 to $81.20 with a
mean of $69.26 and a median of $68.66, and a range of implied deposit premiums
paid of $57.54 to $79.04 with a mean of $65.92 and a median of $63.39.
No company or transaction used in the above analysis as a comparison is
identical to Integra, National City or the Merger. Accordingly, an analysis of
the results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics of
such companies and other factors that could affect the value of the companies to
which they are being compared. Mathematical analysis (such a determining the
mean or median) is not, in itself, a meaningful method of using comparable
company data.
Comparison of Selected Companies. Merrill Lynch compared selected balance
sheet data, asset quality, capitalization and profitability ratios and market
statistics using financial data at or for the twelve months ended June 30, 1995
and market data as of August 24, 1995 for Integra to a group of selected bank
holding companies which Merrill Lynch deemed to be relevant, including AmSouth
Bancorporation, BayBanks, Inc., Crestar Financial Corporation, Central Fidelity
Banks, Inc., First Empire State Corporation, First Security Corporation, Firstar
Corporation, First Tennessee National Corp., Huntington Bancshares Inc.,
Meridian Bancorp, Inc., Marshall & Ilsley Corporation, Old Kent Financial
Corporation, Regions Financial Corp., SouthTrust Corporation and UJB Financial
Corp., all being bank holding companies with assets between $10 billion and $20
billion (collectively, the "Integra Composite"). This comparison showed, among
other things, that (i) for the twelve month period ended June 30, 1995,
Integra's noninterest expense to average assets was 2.88% compared to a mean of
3.59% and a median of 3.43% for the Integra Composite; (ii) for the twelve month
period ended June 30, 1995, Integra's noninterest income to average assets was
0.90%, compared to a mean of 1.71% and a median of 1.42% for the Integra
Composite; (iii) for the twelve month period ended June 30, 1995, Integra's net
interest margin was 4.07% compared to a mean of 4.43% and a median of 4.47% for
the Integra Composite; (iv) for the twelve month period ended June 30, 1995,
Integra's efficiency ratio (defined as noninterest expense divided by the sum of
noninterest income and net interest income before
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provision for loan losses) was 61.81%, compared to a mean of 61.72% and a median
of 62.14% for the Integra Composite; (v) for the twelve month period ended June
30, 1995, Integra's return on average assets was 1.16% compared to a mean of
1.16% and a median of 1.21% for the Integra Composite; (vi) for the twelve month
period ended June 30, 1995, Integra's return on average equity was 17.40%
compared to a mean of 14.90% and a median of 15.51% for the Integra Composite;
(vii) at June 30, 1995, Integra's tangible common equity to tangible assets was
6.58%, compared to a mean of 6.98% and a median of 7.07% for the Integra
Composite; (vii) at June 30, 1995, Integra's nonperforming loans to total loans
were 0.85%, compared to a mean of 0.65% and a median of 0.69% for the Integra
Composite; (ix) at June 30, 1995, Integra's nonperforming assets to total assets
were 0.53% compared to a mean of 0.60% and a median of 0.57% for the Integra
Composite; (x) at June 30, 1995, Integra's loan loss reserves to non-performing
assets were 287.12% compared to a mean of 243.97% and a median of 250.94% for
the Integra Composite; (xi) Integra's price per share to 1996 estimated earnings
per share was 9.85x, compared with a mean of 10.21x and a median of 10.16x for
the Integra Composite; (xii) Integra's price per share to book value per share
at June 30, 1995 was 1.62x, compared with a mean of 1.72x and a median of 1.66x
for the Integra Composite; (xiii) Integra's price per share to tangible book
value per share at June 30, 1995 was 1.76x, compared to a mean of 1.95x and a
median of 1.90x for the Integra Composite; and (xiv) Integra's dividend yield
was 3.85%, compared with a mean of 3.42% and a median of 3.54% for the Integra
Composite. Merrill Lynch then computed an imputed value for the Integra Common
based upon current trading multiples for the Integra Composite as of August 24,
1995. This analysis yielded a range of imputed values of $53.14 to $60.98 per
share of Integra Common using the mean and median of the trading multiples for
the Integra Composite and a range of imputed values of $46.93 to $79.19 per
share of Integra Common using the full range of low and high multiples for the
Integra Composite.
Merrill Lynch also compared selected operating and stock market results of
National City to the publicly available corresponding data of other companies
which Merrill Lynch deemed to be relevant, including Barnett Banks, Inc., Bank
of Boston Corporation, Boatmen's Bancshares, Inc., Comerica Incorporated,
CoreStates Financial Corp., First Bank System Inc., Mellon Bank Corporation,
Republic New York Corporation, SunTrust Banks, Inc., and Wachovia Corporation,
all being bank holding companies with assets between $25 billion and $50 billion
(collectively, the "National City Composite"). This comparison showed, among
other things, that (i) for the twelve month period ended June 30, 1995, National
City's noninterest expense to average assets was 4.38% compared to a mean of
3.48% and a median of 3.47% for the National City Composite; (ii) for the twelve
month period ended June 30, 1995, National City's noninterest income to average
assets was 2.76%, compared to a mean of 1.96% and a median of 1.69% for the
National City Composite; (iii) for the twelve month period ended June 30, 1995,
National City's net interest margin was 4.59% compared to a mean of 4.50% and a
median of 4.52% for the National City Composite; (iv) for the twelve month
period ended June 30, 1995, National City's efficiency ratio (defined as
noninterest expense divided by the sum of noninterest income and net interest
income before provision for loan losses) was 64.76%, compared to a mean of
58.87% and a median of 58.96% for the National City Composite; (v) for the
twelve month period ended June 30, 1995, National City's return on average
assets was 1.39% compared to a mean of 1.22% and a median of 1.25% for the
National City Composite; (vi) for the twelve month period ended June 30, 1995,
National City's return on average equity was 16.92% compared to a mean of 14.94%
and a median of 15.81% for the National City Composite; (vii) for the twelve
month period ended June 30, 1995, National City's tangible common equity to
tangible assets was 6.85%, compared to a mean of 6.87% and a median of 6.75% for
the National City Composite; (viii) for the twelve month period ended June 30,
1995, National City's nonperforming loans to total loans were 0.51%, compared to
a mean of 0.69% and a median of 0.63% for the National City Composite; (ix) for
the twelve month period ended June 30, 1995, National City's nonperforming
assets to total assets were 0.42% compared to a mean of 0.57% and a median of
0.57% for the National City Composite; (x) at June 30, 1995, National City's
loan loss reserves to non-performing assets were 338.28% compared to a mean of
254.45% and a median of 220.91% for the National City Composite; (xi) National
City's price per share to 1996 estimated earnings per share was 9.80x, compared
with a mean of 9.46x and a median of 9.50x for the National City Composite;
(xii) National City's price per share to book value per share at June 30, 1995
was 1.79x, compared with a mean of 1.77x and a median of 1.69x for the National
City Composite; (xiii) National City's price per share to tangible book value
per share at June 30, 1995 was 2.11x, compared to a mean of 2.18x and a median
of 2.03x for the National City Composite; and
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(xiv) National City's dividend yield was 4.29%, compared with a mean of 3.58%
and a median of 3.64% for the National City Composite.
Earnings per share estimates for all companies other than National City and
Integra were based on First Call earnings estimates. Earnings per share
estimates for National City and Integra were based upon estimates provided by
the senior management of National City and Integra.
In connection with its opinion dated the date of this Prospectus and Joint
Proxy Statement, Merrill Lynch performed procedures to update, as necessary,
certain of the analyses described above and reviewed the assumptions on which
such analyses were based and the factors considered in connection therewith.
Merrill Lynch has been retained by the National City Board as an
independent contractor to act as financial advisor to National City with respect
to the Merger and will receive a fee for its services. Merrill Lynch is a
nationally recognized investment banking firm which, among other things,
regularly engages in the valuation of businesses and securities, including
banking institutions, in connection with mergers and acquisitions. Merrill Lynch
has in the past two years provided financial advisory, investment banking and
other services to National City and certain of its affiliates and has received
customary fees for the rendering of such services. In addition, in the ordinary
course of its securities business, Merrill Lynch may actively trade debt and/or
equity securities of Integra and National City and their respective affiliates
for its own account and the accounts of its customers, and Merrill Lynch,
therefore, may from time to time hold a long or short position in such
securities.
National City and Merrill Lynch have entered into a letter agreement dated
August 14, 1995 relating to the services to be provided by Merrill Lynch in
connection with the Merger. National City has agreed to pay Merrill Lynch fees
as follows: (1) a cash fee of $500,000, which was paid upon execution of the
letter agreement, (2) an additional cash fee of $500,000 upon the rendering of
Merrill Lynch's fairness opinion at the August 27, 1995 National City Board
meeting, (3) an additional cash fee of $2,000,000 upon the signing of the
Agreement, and (4) an additional cash fee of $1,000,000 to be paid upon the
closing the Merger. In such letter, National City also agreed to reimburse
Merrill Lynch for its reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of its legal counsel, and to indemnify Merrill
Lynch against certain liabilities relating to or arising out of the Merger,
including liabilities arising under the federal securities laws.
TERMS OF THE MERGER
The Agreement provides for the merger of Integra into National City. Upon
consummation of the Merger, (a) the separate corporate existence of Integra will
cease, (b) National City will be the surviving corporation (the "Surviving
Corporation") and will continue to be governed by the laws of Delaware, (c) the
Certificate of Incorporation and By-Laws of National City in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation and the
By-Laws of the Surviving Corporation, (d) the directors and officers of National
City immediately prior to the Effective Time will be the directors and officers
of the Surviving Corporation from and after the Effective Time until their
successors have been duly elected or appointed and qualified, and (e) promptly
after the Effective Time, in accordance with the By-Laws of National City, the
Board of Directors of National City shall increase its size to such number as is
necessary to create four vacancies and shall elect four Integra directors to
fill such vacancies. It is anticipated that William F. Roemer, James S.
Broadhurst, Robert A. Paul and Michael A. Schuler, who now serve as directors of
Integra, will become directors of National City.
CONVERSION OF SHARES OF INTEGRA COMMON
Conversion of Shares of Integra Common. At the Effective Time, (a) each
then outstanding share of Integra Common other than (i) shares not owned by
National City or any direct or indirect wholly owned subsidiary of National City
(except for any such shares of Integra Common held by National City 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 debt previously
contracted ("DPC Shares")), and (ii) those shares of Integra Common held in the
treasury of Integra, will be cancelled, retired and converted into the right to
receive 2.00 shares of National City Common; (b) each then outstanding share of
Integra Common owned by
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National City or any direct or indirect wholly owned subsidiary of National City
(except for any shares that are Trust Account Shares or DPC Shares) will be
cancelled and retired; and (c) each share of Integra Common issued and held in
Integra's treasury will be cancelled and retired. If between August 27, 1995 and
the Effective Time, the shares of National City Common are 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 such period, the Exchange Rate will
be adjusted accordingly.
No Fractional Shares. No certificates or scrip representing fractional
shares of National City Common will be issued in the Merger.
Manner of Exchanging Integra Certificates for National City
Certificates. National City has designated 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. Promptly after the
Effective Time, the Exchange Agent will mail to each holder of record of a
certificate (a "Certificate"), which immediately prior to the Effective Time
represented outstanding shares of Integra Common, a notice advising the holder
of the effectiveness of the Merger accompanied by a letter of transmittal. The
letter of transmittal will contain instructions with respect to the procedures
to be followed in effecting the surrender of the Certificate for exchange
therefor and will specify that delivery will be effected, and risk of loss and
title to such Certificate will pass, only upon proper delivery of the
Certificate to the Exchange Agent. 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 promptly will deliver to the
person entitled thereto a certificate(s) representing 2.00 shares of National
City Common for each share of Integra Common so represented by the Certificate
surrendered by such holder thereof, and such Certificate will then be cancelled.
If delivery of all or part of the shares of National City Common is to be made
to a person other than the person in whose name a surrendered Certificate is
registered, it will be a condition to such delivery or exchange that the
Certificate so surrendered shall be properly endorsed or 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 of the Certificate
so surrendered or shall have established to the reasonable satisfaction of the
Exchange Agent that such tax either has been paid or is not payable.
CERTIFICATES FOR SHARES OF INTEGRA COMMON SHOULD NOT BE FORWARDED TO THE
EXCHANGE AGENT UNTIL AN INTEGRA SHAREHOLDER HAS RECEIVED A TRANSMITTAL LETTER
AND SHOULD NOT BE RETURNED WITH THE ENCLOSED PROXY.
Right to Shares of National City Common. Until surrendered and exchanged in
accordance with the procedures set forth in the letter of transmittal, after the
Effective Time, each Certificate shall represent solely the right to receive
2.00 shares of National City Common, multiplied by the number of shares of
Integra Common evidenced by such Certificate, together with any dividends or
other distributions as provided in "Distribution with Respect to Unexchanged
Certificates" below, and shall have no other rights. One hundred eighty (180)
days following the Effective Time, the Exchange Agent will deliver to National
City any shares of National City Common and funds (including any interest
received with respect thereto) which National City 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 National City (subject to
abandoned property, escheat or other similar laws) with respect to the shares of
National City Common deliverable or payable upon due surrender of their
Certificates. Neither the Exchange Agent, National City nor Integra shall be
liable to any holder of shares of Integra Common for any shares of National City
Common (or dividends, distributions or interest with respect thereto) delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law.
Distribution with Respect to Unexchanged Certificates. Whenever a dividend
or other distribution is declared by National City on the National City Common,
the record date for which is at or after the Effective Time, the declaration
will include dividends or other distributions on all shares issuable in the
Merger, provided that no dividends or other distributions declared or made with
respect to National City Common will
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be paid to the holder of any unsurrendered Certificate with respect to the
shares of National City Common represented thereby until the holder of such
Certificate has surrendered such Certificate in accordance with the instructions
set forth in the letter of transmittal. National City will pay any dividends or
make any other distributions with a record date prior to the Effective Time
which may have been declared or made by Integra on Integra Common in accordance
with the terms of the Agreement on or prior to the Effective Time and which
remain unpaid at the Effective Time.
Voting With Respect to Unexchanged Certificates. Holders of unsurrendered
Certificates will not be entitled to vote at any meeting of National City
stockholders.
Lost Certificates. Any Integra shareholder who has lost or misplaced a
Certificate for any of his or her shares of Integra Common should immediately
call the Exchange Agent (telephone number: (800) 622-6757) for information
regarding the procedures to be followed for replacing the lost certificate.
ASSUMPTION OF EMPLOYEE AND DIRECTOR STOCK OPTIONS
The Agreement provides that all rights under any stock option granted by
Integra pursuant to Integra's 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 Pennabancorp Employee Stock
Option Plan (collectively, the "Integra Option Plans") that remain unexercised
immediately prior to the Effective Time ("Unexercised Options") will be assumed
by National City, but will thereafter represent the right to acquire that number
of shares of National City Common to which the optionee would have been entitled
pursuant to the Exchange Rate if immediately prior to the Merger the optionee
had fully exercised the option and had been a shareholder of record of Integra.
The option price of each option will be adjusted to the extent necessary to
assure that the rights and benefits of the optionee under such option shall not
be increased or decreased by reason of the Agreement, and, in addition, each
option which is an incentive stock option shall be adjusted as required by
Section 424 of 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, National
City will file, and maintain the effectiveness of, a registration statement with
the Commission covering the Unexercised Options and the sale of the National
City Common issued upon the exercise of the Unexercised Options. At the
Effective Time, all of the Integra Option Plans will be terminated with respect
to the granting of any additional options or option rights. See page 60 for the
description of the impact of the Merger on the Integra Non-Qualified Plans.
CONDITIONS TO THE MERGER
Conditions to Each Party's Obligations. The respective obligations of each
of National City and Integra to effect the Merger are subject to the fulfillment
or waiver of certain conditions, including, but not limited to, the following
conditions:
(a) The Agreement shall have been approved by the stockholders of
National City and approved by the shareholders of Integra;
(b) The National City Common issuable in the Merger shall have been
authorized for listing on the NYSE, upon official notice of issuance;
(c) All material authorizations, consents, orders or approvals of, and
all expirations of waiting periods imposed by, all or any government
agency, including, without limitation, the FRB and the Pennsylvania
Department, which are necessary for the consummation of the Merger, 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
materially adversely impact the economic or business benefits of the
transactions contemplated by the Agreement so as to render inadvisable, in
the reasonable opinion of the Board of Directors of either National City or
Integra, the consummation of the Merger;
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(d) The Registration Statement shall have become effective in
accordance with the provisions of the 1933 Act, and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the Commission and remain in effect;
(e) National City and Integra shall have received a letter from Ernst
& Young LLP National City'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 the 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; and
(g) Buchanan Ingersoll shall have delivered to Integra and National
City their opinion 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. See "MERGER -- Certain
Federal Income Tax Consequences."
Conditions to Integra's Obligations. The obligation of Integra to effect
the Merger also is subject to the fulfillment or waiver of additional
conditions, including, but not limited to, the following conditions:
(a) National City shall have performed in all material respects its
covenants contained in the Agreement to be performed by it at or prior to
the Effective Time;
(b) The representations and warranties of National City contained in
the Agreement shall be true in all material respects as of the Effective
Time as if made at and as of the Effective Time, except as expressly
contemplated or permitted by the 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;
and
(c) Integra shall have received all officers' certificates of National
City required by the Agreement.
Conditions to National City's Obligations. The obligation of National City
to effect the Merger also is subject to the fulfillment or waiver of additional
conditions, including, but not limited to, the following conditions:
(a) Integra shall have performed in all material respects its
covenants contained in the Agreement to be performed by it at or prior to
the Effective Time;
(b) The representations and warranties of Integra contained in the
Agreement shall be true in all material respects as of the Effective Time
as if made at and as of the Effective Time, except as expressly
contemplated or permitted by the 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;
and
(c) National City shall have received all officers' certificates of
Integra required by the Agreement.
REGULATORY APPROVALS
The Merger is subject to approval by the FRB under the BHCA. The BHCA
prohibits the FRB from approving the Merger if (a) it would result in a
monopoly; (b) it would be in furtherance of any combination or conspiracy to
monopolize the business of banking in any part of the United States; (c) its
effect in any section of the country may be substantially to lessen competition
or to tend to create a monopoly; or (d) it would be in any other manner in
restraint of trade, unless the FRB finds that any anticompetitive effects of the
Merger are clearly outweighed in the public interest by the probable effect of
the transaction in meeting the convenience and needs of the communities to be
served. The Merger may not be consummated until after the 30th day after
approval by the FRB unless reduced in the FRB order to 15 days, during which
time the Merger may be challenged on antitrust grounds by the Department of
Justice.
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In addition, the BHCA requires that the FRB take into consideration, among
other facts, the financial and managerial resources and future prospects of the
institutions and the convenience and needs of the communities to be served. The
FRB has the authority to deny an application if it concludes that the combined
organization would have an inadequate capital position or if the acquiring
organization does not meet the requirements of the Community Reinvestment Act of
1977.
The FRB approved the Merger on January 22, 1996, and the 15-day Department
of Justice waiting period provided for in the FRB order has expired.
In considering the application, the Pennsylvania Department is required to
consider, among other things, (i) whether the Merger, its purposes and probable
effects, would be consistent with (A) the safe and sound conduct of the present
and resulting institutions involved in the Merger, (B) the conservation of the
assets of such institutions, (C) the maintenance of public confidence in the
institutions, (D) the protection of the interests of their depositors,
creditors, and shareholders and the interest of the public in the soundness and
preservation of the banking system, (E) the opportunity for such institutions to
remain competitive with other banking and nonbanking financial institutions
locally, nationally, and internationally, (F) the opportunity for such
institutions to serve effectively the convenience and needs of their depositors,
borrowers, and other customers and to participate in and promote the economic
progress of Pennsylvania and the country and to improve and expand their
services and facilities for such purposes, (G) the opportunity for the resulting
institution's management to exercise its business judgment consistent with sound
banking practice and the public interest, and (H) the authorization of
Pennsylvania banking institutions to participate in interstate banking and
branching and be competitive with interstate banking organizations based in
other states, (ii) whether the proposed Merger would be prejudicial to the
interest of the depositors, creditors, or stockholders of, or the beneficiaries
of fiduciary accounts held by, Integra or any of its subsidiaries, and (iii)
whether the character and fitness of the directors and officers of National City
and of any proposed new directors and officers of any resulting institutions are
such as to command the confidence of the community and to warrant the belief
that the business of the proposed institution will be honestly and efficiently
conducted.
The Pennsylvania Department approved the Merger on January 5, 1996.
National City and Integra are not aware of any other governmental approvals
or actions that are required for consummation of the Merger, except as described
above. Should any such approval or action be required, it is presently
contemplated that such approval or action would be sought. There can be no
assurance that any such approval or action, if needed, could be obtained or that
such approval or action would not be conditioned in a manner that would cause
National City to abandon the Merger.
WAIVER; AMENDMENT; TERMINATION
Waiver. Any party to the Agreement may, by written notice to the other
party thereto, (a) extend the time for the performance of any of the obligations
or other actions of the other party under the Agreement; (b) waive any
inaccuracies in the representations or warranties of the other party contained
in the Agreement or in any document delivered pursuant to the Agreement; (c)
waive compliance with any of the conditions or covenants of the other party
contained in the Agreement; or (d) waive or modify performance of any of the
obligations of the other party under the Agreement. Notwithstanding these
provisions, the Merger cannot be consummated unless the approvals of the FRB and
the Pennsylvania Department are obtained and unless the stockholders of National
City adopt, and the shareholders of Integra approve, the Agreement by the
requisite affirmative votes. See "MERGER -- Regulatory Approvals" and "THE
ANNUAL MEETING -- Record Dates and Voting Rights."
Amendment. Subject to the applicable provisions of the DGCL and the BCL,
the Agreement may be amended or supplemented upon the written agreement of
National City and Integra at any time, provided that an amendment may not be
made after any stockholder or shareholder adoption or approval, as applicable,
of the Agreement which reduces or changes the form or amount of the Merger
consideration without further stockholder or shareholder adoption or approval,
as applicable.
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Termination. The Agreement may be terminated at any time prior to the
Effective Time, whether before or after the adoption by the National City
stockholders or the approval by shareholders of Integra of the Agreement, under
the following circumstances:
(a) by the mutual consent of the Board of Directors of National City
and the Board of Directors of Integra;
(b) by the Board of Directors of either National City or Integra if
the Merger shall not have been consummated on or before August 27, 1996 or
if the Agreement is not adopted by the National City stockholders at
National City's Annual Meeting or not approved by the Integra shareholders
at Integra's Special Meeting (provided the terminating party is not
otherwise in material breach of its obligations under the Agreement);
(c) by the Board of Directors of Integra if any of the conditions to
Integra's obligation to effect the Merger have not been met or waived by
Integra at such time as such conditions can no longer be satisfied. See
"MERGER -- Conditions to the Merger -- Conditions to Each Party's
Obligations" and "Conditions to Integra's Obligations"; and
(d) by the Board of Directors of National City if any of the
conditions to National City's obligation to effect the Merger have not been
met or waived by National City at such time as such conditions can no
longer be satisfied. See "MERGER -- Conditions to the Merger -- Conditions
to Each Party's Obligations" and "Conditions to National City's
Obligations".
Expenses. (a) If the Merger is consummated, it is estimated that the costs
and expenses incurred in connection with the Agreement, and the transactions
contemplated thereby will be $13.1 million in the aggregate.
(b) In the event the Agreement is terminated by National City or Integra
because of the willful breach by the other party of any representation,
warranty, covenant, undertaking or restriction contained in the Agreement, and
if the terminating party is not in material breach of any representation,
warranty, covenant, undertaking or restriction contained in the Agreement, then
the breaching party shall pay all costs and expenses of the terminating party;
provided, however, that if the Agreement is terminated under circumstances other
than the ones described above in this paragraph, all costs and expenses incurred
in connection with the Agreement and the transactions contemplated thereby will
be paid by the party incurring such costs and expenses. If termination is due to
a willful breach, the payment of expenses pursuant to the Agreement shall not
constitute the non-breaching party's sole legal remedy. Final settlement with
respect to payment of fees and expenses by the parties shall be made within 30
days of the termination of the Agreement.
Assignment. Without the prior written consent of the other parties to the
Agreement, neither National City nor Integra may assign any of its rights or
delegate any of its obligations under the Agreement.
EFFECTIVE TIME
As soon as practicable after satisfaction or waiver of all conditions to
the Merger under the Agreement, National City and Integra 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 articles of merger complying with the requirements of the BCL (the
"Articles of Merger") to be filed with the Secretary of State of the
Commonwealth of Pennsylvania, respectively. The Merger will become effective at
the later of the times at which such filings are made with the Secretaries of
State of the State of Delaware and the Commonwealth of Pennsylvania (the
"Effective Time"). National City and Integra currently anticipate that the
Merger will be completed during the second quarter of 1996. See "MERGER --
Regulatory Approvals." In the event the Merger is not consummated on or before
August 27, 1996, either National City or Integra may terminate the Agreement.
See "MERGER -- Waiver; Amendments; Termination -- Termination."
CONDUCT OF NATIONAL CITY'S BUSINESS PENDING THE MERGER
The Agreement requires that from August 27, 1995 to the Effective Time,
National City will not, without the prior written consent of Integra, declare or
pay any extraordinary or special dividend on the National City
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Common or take any action that would (a) materially delay or adversely affect
the ability of National City to obtain any approvals of any governmental
agencies required to permit consummation of the Merger or (b) materially
adversely affect its ability to perform its obligations under the Agreement or
to consummate the transactions contemplated thereby.
CONDUCT OF INTEGRA'S BUSINESS PENDING THE MERGER
General. The Agreement requires that from August 27, 1995 to the Effective
Time, Integra and its subsidiaries conduct their respective business only in,
and not take any action except in, the ordinary course of business consistent
with past practice. Integra has covenanted to use reasonable efforts to preserve
intact the business organization of Integra and each of its 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 Integra
or its subsidiaries. In addition, the Agreement restricts Integra and its
subsidiaries from engaging in certain transactions during the interim period
from August 27, 1995 to the Effective Time, unless approved in writing by
National City, including, among other things, (a) incurring any indebtedness for
borrowed money (other than in the ordinary course of business consistent with
past practice or short term indebtedness incurred to refinance short term
indebtedness and indebtedness of Integra or any of its subsidiaries), assuming,
guaranteeing, endorsing or otherwise as an accommodation becoming responsible
for the obligations of any other person or entity, or making any loan or advance
other than in the ordinary course of business consistent with past practice; (b)
making any change or amendment to their respective articles of incorporation or
by-laws (or comparable governing instruments); (c) issuing or selling any shares
of capital stock or any other securities (other than pursuant to the Integra
Option Plans) or issuing 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 entering into any
contract, understanding or arrangement with respect to the issuance of, any
shares of capital stock or any other securities of any of the foregoing (other
than pursuant to the Integra Option Plans) or entering into any arrangement or
contract with respect to the purchase or voting of shares of their capital
stock, or adjusting, splitting, combining or reclassifying any of their capital
stock or other securities or making any other changes in their capital
structures; (d) granting any additional options under any Integra Option Plans;
(e) declaring, setting aside, paying or making any dividend or other
distribution or payment (whether in cash, stock or property) with respect to, or
purchasing or redeeming, any shares of their capital stock, other than (i)
regular quarterly cash dividends on Integra Common in an amount not to exceed 50
cents per share of Integra Common payable on Integra's regular historical
payment dates (the parties agreeing that they will cooperate so that there will
not be any duplication or omission of a dividend payment to Integra
shareholders) (National City has consented to first and second quarter 1996
dividends in the amount of 54 cents each, which dividends have been declared.
The four cent increase was consistent in timing and amount with Integra's
history of dividend increases.) and (ii) dividends paid by any Integra
subsidiary to another Integra subsidiary or Integra with respect to its capital
stock between August 27, 1995 and the Effective Time; (f) adopting or amending
(except as required by law) any bonus, profit sharing, 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) increasing the compensation or fringe benefits of any
director, officer or employee or paying any benefit not required by any existing
plan or arrangement (including, without limitation, the granting of stock
options or stock appreciation rights) or taking any action or granting any
benefit not required under the terms of any existing agreements, trusts, plans,
funds or other such arrangements or entering into any contract, agreement,
commitment or arrangement to do any of the foregoing (National City consented to
an increase in Integra's contribution to Integra's Profit Sharing Plan in 1995
and to the payment of certain cash bonuses under Integra's Management Incentive
Plan in 1995).
Certain Policies. The Agreement requires Integra to use its best efforts to
modify and change its loan, litigation and real estate valuation 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 National City and generally accepted accounting principles; provided,
however, that Integra shall not be required to modify or change any such
policies or practices until (a) such time as National City acknowledges that all
conditions
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to its obligation to consummate the Merger have been waived or satisfied or (b)
immediately prior to the Effective Time. Integra's representations, warranties
or covenants contained in the 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. Integra does not currently anticipate that such
changes or modifications, assuming the Merger is consummated during the second
quarter of 1996, will in the aggregate result in any material change in the
valuation of Integra's assets.
Acquisition Proposals. The Agreement provides that each of Integra and its
subsidiaries shall not, and shall instruct and otherwise use its best efforts to
cause their respective officers, directors, employees, agents or advisors or
other representatives or consultants not to, directly or indirectly, (a) solicit
or initiate any proposals or offers from any other person or entity 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,
Integra or any of its subsidiaries (each such transaction an "Acquisition
Transaction") or (b) except to the extent that the Board of Directors of Integra
is required in the exercise of its fiduciary duties in accordance with
applicable law (based on the written advice of its legal counsel), participate
in any discussion or negotiations regarding, or furnish to any other person or
entity any information with respect to, an Acquisition Transaction. Integra has
agreed to cease any existing activities, discussions or negotiations with any
other parties conducted prior to the execution of the Agreement with respect to
any Acquisition Transaction. Integra has agreed to notify National City
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, Integra.
EMPLOYEE MATTERS
The Agreement provides that upon consummation of the Merger, Integra
employees shall have benefits that in the aggregate are not less favorable than
the benefits enjoyed generally by National City employees working in similar
business lines. National City shall credit employees of Integra and its
subsidiaries, who become employees of National City as a result of the Merger,
with all service with Integra or any of its subsidiaries for purposes of
eligibility and vesting under its retirement plans as if such service had been
performed for National City but not for purposes of benefit accrual; provided,
however, that such provision will not change the treatment under the National
City Non-Contributory Retirement Plan and Trust of service with National City or
any of its subsidiaries prior to the Closing Date. Further, National City 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 of Integra's employee plans or
agreements.
INDEMNIFICATION AND INSURANCE
The Agreement provides that, from and after the Effective Time, National
City will assume and honor any obligation as provided for and permitted by
applicable federal and state law Integra had immediately prior to the Effective
Time with respect to the indemnification of each person who was on August 27,
1995, or has been at any time prior to August 27, 1995, or who becomes prior to
the Effective Time, a director or officer of Integra or any of its subsidiaries
or was serving at the request of Integra as a director or officer of any
domestic or foreign corporation joint venture, trust, employee benefit plan or
other enterprise (collectively, the "Indemnitees") arising out of Integra's
Articles of Incorporation or Integra's 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
Integra or any of its subsidiaries. The Agreement further provides that, for a
period of three years after the Effective Time, National City will use all
reasonable efforts to cause to be maintained in effect current directors' and
officers' liability insurance in an aggregate limit of $35 million which will
insure Integra's directors and officers for events which occurred before the
Effective Time but were undiscovered at the Effective Time; provided, however,
that the Agreement does not obligate National City to expend, in order to
maintain or provide insurance coverage pursuant to the Agreement, any amount per
annum in excess of 150% of the amount of the annual premium paid as of the date
of the Agreement by National City for its current directors and officers
liability insurance.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
In the Merger, (i) each director of Integra, (ii) each executive officer of
Integra, and (iii) each person who holds five percent or more of the Integra
Common Stock outstanding will receive, in exchange for the Integra Common Stock
beneficially owned by them, shares of National City Common Stock to the same
extent as other shareholders of Integra.
Messrs. Roemer, Carroll, Skillington and Echement are parties to Employment
Agreements with Integra which provide that upon a change of control of Integra,
either the employee or Integra (or Integra's successor) may terminate the
employee's employment, at which time the employee is entitled to (except in the
case of a termination for cause) up to three years' Annual Compensation (as
hereinafter defined) and the right to receive continued (or equivalent) coverage
for the employee and his eligible dependents under Integra's (or its
successor's) benefit plans for three years. The Merger constitutes a change of
control under the Employment Agreements. For purposes of the Employment
Agreements, "Annual Compensation" is defined as the employee's highest base
salary in the current or any one of the three preceding calendar years plus an
amount equal to the sum of the employee's highest awards from all of Integra's
profit sharing, bonus and short term compensation plans in which the employee
participated, if any, in any one of the three preceding years. The amount that
the employee is entitled to receive upon a change in control declines
proportionately for each month the employee is older than 62 at the time of the
change of control to zero at age 65. Each employee will also receive an
additional payment (a "Gross Up Payment") equal to the amount of any excise tax
imposed on any payments or distributions in excess of specified amounts under
the Internal Revenue Code which may be paid to the employee in connection with a
change of control. Further, the Employment Agreements provide that upon
termination of the employee's employment other than for cause, the employee is
entitled to receive his full, accrued benefits under the Integra Supplemental
Executive Retirement Plan at or after age 55 as if it were his normal retirement
age. National City wished to retain Mr. Skillington's services after the Merger
and agreed to modify Mr. Skillington's Employment Agreement by (i) extending
from one to three years the period during which Mr. Skillington may be
terminated and receive his change of control benefits under the Employment
Agreement, (ii) provide for change of control benefits in the event of Mr.
Skillington's death or disability during such three year period and (iii)
provide for the payment of Mr. Skillington's full accrued benefits under the
Integra Supplemental Executive Retirement Plan in the event of the termination
of his employment other than for cause as if it were his normal retirement age.
Messrs. Roemer, Carroll and Echement have each elected to terminate their
employment pursuant to their respective Employment Agreement following
consummation of the Merger, and National City has agreed to honor the Employment
Agreements. Accordingly Mr. Roemer will receive approximately $2,645,000 in cash
and benefits, Mr. Carroll approximately $2,030,000 in cash and benefits and Mr.
Echement approximately $1,204,000 in cash and benefits under the terms of their
respective Employment Agreements and Mr. Roemer will receive an annual benefit
of $374,338, Mr. Carroll $286,607 and Mr. Echement $84,650 pursuant to the
Integra Supplemental Retirement Plan. In order to assure a smooth transition
through the Merger, Integra entered into a consulting agreement with Mr. Roemer
pursuant to which Mr. Roemer will provide consulting services to National City
upon consummation of the Merger until Mr. Roemer attains age 65. Under the
consulting agreement, Mr. Roemer will receive an annual consulting fee of
$225,000. Mr. Roemer is currently 62 years of age. The consulting agreement also
provides that Mr. Roemer will receive the payments and benefits provided under
his Employment Agreement as described above and an additional payment equal to
the taxes paid by him as a result of his receipt of the Gross-Up Payment. The
consulting agreement provides that in the event Integra or its successor
terminates Mr. Roemer without cause or without Mr. Roemer's written consent, Mr.
Roemer will be entitled to receive the balance of the consulting fees due under
the consulting agreement.
Mr. Skillington currently intends to remain with the organization after the
Merger. If Mr. Skillington were to terminate his employment while entitled to
payment under his Employment Agreement, he would be entitled to receive
$1,360,000 approximately.
Integra is also a party to Change of Control Agreements with 15 other
senior officers of Integra, including all of the executive officers of Integra
(other than Messrs. Roemer, Carroll, Skillington and Echement). The Change of
Control Agreements provide for the continued payment of salary and medical and
dental benefits for the employee for twenty-four months following the
termination of the employee's employment by Integra
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(or its successor) without "cause" or by the employee for "good reason," as
defined in the agreement, following a change of control of Integra. The Merger
constitutes a change of control under the Change of Control Agreements. It is
anticipated that the employment of 7 senior officers with Change of Control
Agreements will be terminated in connection with the Merger, and National City
has agreed to honor those Change of Control Agreements.
Under certain of Integra's stock options, the date on which the options
held by directors and executive officers of Integra become exercisable is
accelerated upon a change of control of Integra. Upon consummation of the Merger
and pursuant to the acceleration provisions of such Integra stock options, Mr.
Roemer will have options to purchase 20,000 shares become exercisable, Mr.
Carroll will have options to purchase 12,000 shares become exercisable, Mr.
Echement will have options to purchase 8,000 shares become exercisable and Mr.
Skillington will have options to purchase 10,000 shares become exercisable.
Promptly after the Effective Time, the Board of Directors of National City
will increase the size of National City's Board to such number as is necessary
to create four vacancies, and it is anticipated that William F. Roemer, James S.
Broadhurst, Robert A. Paul and Michael A. Schuler, who now serve as directors of
Integra, will become directors of National City. It is also anticipated that
certain executive officers of Integra, including Charles A. Skillington, Thomas
W. Golonski and Stephen G. Hartle will become officers of one of National City's
subsidiaries after the Merger.
National City has agreed to indemnify the directors and officers of Integra
and its subsidiaries following the Merger for any liability they incur as a
result of acts and omissions occurring prior to the Merger to the same extent
that they were entitled to indemnification by Integra prior to the Merger.
Further, National City has agreed to maintain for three years following the
Merger, directors and officers liability insurance covering the former directors
and officers of Integra and its subsidiaries for events that occurred prior to
the Merger, provided that such insurance is available at a cost which is not in
excess of 150% of the annual premium paid by National City as of August 27, 1995
for its directors and officers liability insurance. (See "Merger Indemnification
and Insurance").
Neither Integra nor National City is aware of any material relationship
between Integra, its directors or executive officers or their affiliates and
National City or its directors or executive officers or their affiliates, except
as contemplated by the Merger Agreement or as described herein. In the ordinary
course of business and from time to time, Integra may do business with National
City, Integra may enter into banking transactions with certain of National
City's directors, executive officers and their affiliates, and National City may
enter into banking transactions with certain of Integra's directors, executive
officers and their affiliates.
As of February 1, 1996, Integra Trust Company, a subsidiary of Integra, may
be deemed to beneficially own 42,979 shares (.034%) of National City Common
Stock as to which it exercises, solely in a fiduciary capacity, sole voting
power with respect to 10,000 shares, shared voting power with respect to 15,604
shares, sole investment power with respect to 4,400 shares, shared investment
power with respect to 4,304 shares, and shares of National City Preferred Stock.
MANAGEMENT AFTER THE MERGER
Following the Merger, the directors and officers of National City at the
Effective Time will continue as the directors and officers of National City.
Promptly after the Effective Time, (a) the Board of Directors of National City
shall increase its size to such number as is necessary to create four vacancies,
and it is anticipated that William F. Roemer, James S. Broadhurst, Robert A.
Paul, and Michael A. Schuler, who now serve as directors of Integra, will become
directors of National City. See "MERGER -- Management after the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
National City and Integra have received an opinion of Buchanan Ingersoll
Professional Corporation to the effect that the Merger will be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code and, accordingly, for United States federal income tax
purposes:
(i) no gain or loss will be recognized by either National City or
Integra as a result of the Merger;
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(ii) no gain or loss will be recognized by shareholders of Integra who
exchange their shares of Integra Common solely for shares of National City
Common pursuant to the Merger;
(iii) the tax basis of shares of National City Common received by
shareholders of Integra who exchange all of their shares of Integra Common
solely for shares of National City Common in the Merger will be the same as
the tax basis of the shares of Integra Common surrendered in exchange
therefor; and
(iv) the holding period of the shares of National City Common received
in the Merger will include the holding period of the Integra Common
surrendered in exchange therefor, provided such shares of Integra Common
were held as capital assets at the Effective Time.
The Merger Agreement provides that neither National City nor Integra shall
intentionally take or cause to be taken any action whether before or after the
Effective Time which would disqualify the Merger as a reorganization within the
meaning of Section 368 of the Code. Buchanan Ingersoll's opinion is based on
facts, representations and assumptions set forth in such opinion, the Agreement,
and certificates of officers of Integra and National City, which Buchanan
Ingersoll has not independently investigated or verified (including, among
others, representations that (a) to the best knowledge of Integra, there is no
plan or intention by the shareholders of Integra to dispose of a number of
shares of National City Common received in the Merger such that the value, as of
the date of the Merger, of the shares of National City Common retained by such
shareholders will not be less than 50% of the value of the formerly outstanding
Integra Common held by such shareholders as of that date, (b) there is no plan
or intention for National City to reacquire any of the National City Common
issued pursuant to the Merger, and (c) there is no plan or intention to dispose
of any of the assets of Integra acquired in the Merger (other than in the
ordinary course of business)), and such facts, representations and assumptions
are assumed to be true at the Effective Time.
THE DISCUSSION SET FORTH ABOVE DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN
TAX ASPECTS OF THE MERGER OR THE TAX CONSEQUENCES OF THE MERGER TO CERTAIN
SHAREHOLDERS INCLUDING, FOR EXAMPLE, FOREIGN SHAREHOLDERS. THE DISCUSSION IS
BASED ON CURRENTLY EXISTING PROVISIONS OF THE CODE, EXISTING AND PROPOSED
TREASURY REGULATIONS THEREUNDER AND CURRENT ADMINISTRATIVE RULINGS AND COURT
DECISIONS. THE OPINION OF COUNSEL DESCRIBED ABOVE IS NOT BINDING UPON THE IRS,
AND NO RULINGS OF THE IRS WILL BE SOUGHT OR OBTAINED. THERE IS NO ASSURANCE THAT
THE IRS WILL AGREE WITH THE TAX CONSEQUENCES OF THE MERGER DESCRIBED ABOVE. ALL
OF THE FOREGOING IS SUBJECT TO CHANGE AND ANY SUCH CHANGE COULD AFFECT THE
CONTINUING VALIDITY OF THIS DISCUSSION. THE FOREGOING DISCUSSION MAY NOT BE
APPLICABLE TO AN INTEGRA SHAREHOLDER WHO ACQUIRED SHARES OF INTEGRA COMMON
PURSUANT TO THE EXERCISE OF AN EMPLOYEE STOCK OPTION OR OTHERWISE AS
COMPENSATION. EACH INTEGRA SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISOR CONCERNING THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH
SHAREHOLDER, INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL AND
OTHER TAX LAWS AND ANY PROPOSED CHANGES IN SUCH TAX LAWS.
ACCOUNTING TREATMENT
The Merger, if completed as proposed, will qualify as a
pooling-of-interests for accounting and financial reporting purposes. Under the
pooling-of-interests method of accounting, the historical basis of the assets
and liabilities of National City and Integra will be retroactively combined for
the entire fiscal period in which the Merger occurs and for all periods prior to
the Merger at historically recorded amounts. See "PRO FORMA COMBINED
CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)."
The obligations of National City, and Integra to effect the Merger are
conditioned, among other things, upon their receipt from Ernst & Young LLP of a
letter, dated the day of the Effective Time, 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 the Agreement. See "MERGER -- Conditions to the Merger --
Conditions to Each Party's Obligations." The Agreement further provides that
neither National City nor Integra shall intentionally take or cause to be taken
any action,
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whether before or after the Effective Time, which would disqualify the Merger as
a pooling-of-interests for accounting purposes. In this connection, National
City has not agreed directly or indirectly to retire or reacquire all or a part
of the stock to be issued to effect the combination. Further, although National
City has had an active capital management program in the form of dividend
increases and substantial stock repurchases, National City has no plans to make
tainted share repurchases in connection with its capital management program
given the constraints associated with the pooling-of-interests method of
accounting, and will request that the Board rescind its outstanding share
repurchase authorization.
RESALES BY AFFILIATES
The shares of National City Common issued to Integra shareholders pursuant
to the Agreement will have been registered under the 1933 Act, but such
registration does not cover resales by shareholders of Integra who may be deemed
to be "affiliates" of Integra, as that term is used in paragraphs (c) and (d) of
Rule 145 promulgated under the 1933 Act. In addition, there are limitations on
resales by affiliates of Integra for purposes of qualifying for
pooling-of-interests accounting treatment. Pursuant to the Agreement, prior to
the Effective Time, Integra shall identify to National City all persons who
were, at the time of Integra's Special Meeting of Shareholders, possible
"affiliates" of Integra. The Agreement further provides that Integra shall use
reasonable efforts to obtain from each person it identifies to National City as
a possible "affiliate" of Integra a commitment that such person will not sell,
pledge, transfer or otherwise dispose of any shares of Integra Common held by
such "affiliate" or shares of National City Common received by such "affiliate"
in the Merger: (a) in the case of National City Common only, except in
compliance with the applicable provisions of the 1933 Act and the rules and
regulations promulgated thereunder, and (b) 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 treatment. Commission
guidelines indicate that the pooling-of-interests method of accounting generally
will not be challenged on the basis of sales by "affiliates" of the acquiring or
acquired company if such "affiliates" do not dispose of any of the shares of the
acquired or acquired company they owned prior to the consummation of a merger or
shares of the acquiring corporation they receive in connection with a merger
during the period beginning 30 days before the merger and ending when financial
results covering at least 30 days of post-merger operations of the combined
entity have been published.
APPRAISAL AND DISSENTERS' RIGHTS
National City. Section 262(b)(1) of the DGCL provides that no appraisal
rights under the DGCL shall be available for the holders of shares of any class
or series of stock which, at the record date fixed to determine the stockholders
entitled to receive notice of and vote at the meeting of stockholders to act
upon an agreement of merger, were either listed on a national securities
exchange or held of record by more than 2,000 stockholders. Because National
City Common is listed on the NYSE and is held of record by more than 2,000
stockholders, stockholders of National City are not entitled to appraisal or
dissenters' rights in connection with the Merger.
Integra. Section 1571(b)(1) of the BCL provides that no dissenters rights
under the BCL shall be available for the holders of shares of any class or
series if, on the date fixed to determine the shareholders entitled to receive
notice of and vote at the meeting of shareholders at which a merger is to be
acted on, the shares of that class or series were listed on a national
securities exchange or were held of record by more than 2,000 shareholders.
Because Integra Common is traded on NYSE, shareholders of Integra are not
entitled to dissenters rights in connection with the Merger.
THE OPTIONS
NATIONAL CITY OPTION AGREEMENT
As a condition to National City's entering into the Agreement, and in
consideration therefor, Integra entered into the National City Option Agreement,
pursuant to which Integra granted National City the National City Option on
August 27, 1995. The National City Option Agreement is intended to increase the
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likelihood that the Merger will be consummated by making it more difficult and
more expensive for another party to obtain control of or acquire Integra.
Grant of Option. The Option entitles National City to purchase up to
6,501,300 fully paid and non-assessable shares of Integra Common, representing
19.9% of the shares of Integra Common issued and outstanding as of August 27,
1995 without giving effect to any shares subject or issued pursuant to the
option, at a price of $51.875 per share; provided, however, that in the event
Integra issues or agrees to issue any shares of Integra Common (other than as
permitted pursuant to the Integra Option Plans as provided under the Agreement)
at a price less than $51.875 per share (as adjusted as described below), such
price shall be equal to such lesser price (such price, as adjusted if
applicable, the "National City Option Price"); provided further, that in no
event may the number of shares for which the National City Option is exercisable
at any time exceed 19.9% of the issued and outstanding shares of Integra Common
without giving effect to any shares subject or issued pursuant to the National
City Option. The aggregate purchase price for the shares of Integra Common that
may be purchased upon the exercise of the National City Option at the original
National City Option Price is $337,254,937.50.
Triggering Events; Exercise of Option. The National City Option Agreement
provides that National City may exercise the National City Option, in whole or
in part, if both an Initial Triggering Event (as defined below) and a Subsequent
Triggering Event (as defined below) shall have occurred prior to the occurrence
of an Exercise Termination Event (as defined below), provided that National City
shall have sent to Integra written notice of such exercise within 30 days
following such Subsequent Triggering Event (or such later date as is necessary
to obtain all regulatory approvals for the exercise of the National City Option
and for the expiration of all statutory waiting periods, and to avoid liability
under Section 16(b) of the Exchange Act by reason of such exercise).
For purposes of the National City Option Agreement:
(a) The term "Initial Triggering Event" means any of the following events
or transactions occurring after August 27, 1995:
(i) Integra, or any of its subsidiaries, without having received
National City's prior written consent, shall have entered into an agreement
to engage in an Acquisition Transaction (as defined below) with any person
(the term "person" for purposes of the National City Option Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act and the rules and regulations promulgated thereunder), or the
Board of Directors of Integra shall have recommended that the shareholders
of Integra approve or accept any Acquisition Transaction other than the
Merger. For purposes of the National City Option Agreement, the term
"Acquisition Transaction" means (A) a merger or consolidation, or any
similar transaction, involving Integra or any of its banking subsidiaries
or mortgage banking subsidiaries (each a "Significant Subsidiary"), (B) a
purchase, lease or other acquisition of all or substantially all of the
assets of Integra or any Significant Subsidiary, or (C) 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
Integra or any Significant Subsidiary; provided, however, the term
"Acquisition Transaction" specifically does not include any merger or
consolidation among Integra and/or its subsidiaries;
(ii) The Board of Directors of Integra does not recommend that the
shareholders of Integra approve the Agreement;
(iii) Any person other than National City, any stockholder of National
City who, at August 27, 1995, beneficially held 10% or more of the
outstanding shares of National City Common, any subsidiary of National City
or any subsidiary of Integra 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 Integra Common (the term
"beneficial ownership" for purposes of the National City Option Agreement
having the meaning assigned thereto in Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder);
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(iv) Any person other than National City or any subsidiary of National
City shall have made a bona fide proposal to Integra 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 Integra or its
shareholders to engage in an Acquisition Transaction, Integra shall have
breached any covenant or obligation contained in the Agreement and such
breach (A) would entitle National City to terminate the Agreement and (B)
shall not have been cured prior to the date of the notice of the exercise
of the National City Option; or
(vi) Any person other than National City or any subsidiary of National
City, other than in connection with a transaction to which National City
has given its prior written consent, shall have filed an application with
the FRB or other governmental agency for approval to engage in an
Acquisition Transaction.
(b) The term "Subsequent Triggering Event" means either of the following
events or transactions occurring after August 27, 1995:
(i) The acquisition by any person of beneficial ownership of 15% or
more of the then outstanding shares of Integra Common other than by any
person who, at August 27, 1995, beneficially owned more than 15% of the
outstanding shares of Integra Common; or
(ii) The occurrence of the Initial Triggering Event described above in
clause (a)(i), except that the percentage referred to in subclause
(a)(i)(C) shall be 15%.
(c) Each of the following events constitutes an "Exercise Termination
Event":
(i) immediately prior to the Effective Time;
(ii) termination of the Agreement in accordance with the provisions
thereof 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. For
purposes of the National City Option Agreement, the term "Last Triggering
Event" means the last Initial Triggering Event to occur.
As of the date hereof, no Initial Triggering Event or Subsequent Triggering
Event has occurred.
The Agreement may be terminated at any time prior to the Effective Time by
either National City or Integra if the Merger is not approved at either the
Annual Meeting of Stockholders of National City or the Special Meeting of
Shareholders of Integra (provided that the terminating party is not otherwise in
material breach of its obligations under the Agreement). Accordingly, if no
Initial Triggering Event has occurred, in the event that either the National
City stockholders do not adopt the Agreement at the Annual Meeting of
Stockholders of National City or the Integra shareholders do not approve the
Agreement at the Special Meeting of Shareholders of Integra, and either National
City or Integra terminates the Agreement as a result thereof, the National City
Option shall terminate.
In the event of any change in Integra Common by reason of a stock dividend,
split-up, merger, recapitalization, combination, subdivision, conversion,
exchange of shares or similar transaction, the type and number of shares of
Integra Common subject to the National City Option and the purchase price
therefor will be adjusted appropriately.
Whenever the number of shares of Integra Common purchasable upon exercise
of the National City Option is adjusted as provided in the preceding paragraph,
the National City 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
Integra Common purchasable prior to the adjustment and the denominator of which
shall be equal to the number of shares of Integra Common purchasable after the
adjustment.
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Repurchase of the National City Option. Upon the occurrence of a Subsequent
Triggering Event that occurs prior to an Exercise Termination Event, at the
request of National City, delivered within 30 days of the Subsequent Triggering
Event (or such later date as is necessary to obtain all regulatory approvals and
for the expiration of all statutory waiting periods, and to avoid liability
under Section 16(b) of the Exchange Act), Integra (a) shall repurchase the
National City Option from National City at a price (the "National City Option
Repurchase Price") equal to (i) the amount by which (A) the market/offer price
(as defined below) exceeds (B) the National City Option Price, multiplied by the
number of shares for which the National City Option may then be exercised, plus
(ii) National City's Out-of-Pocket Expenses (as defined below) (to the extent
not previously reimbursed) and (b) shall repurchase such number of shares of
Integra Common issued upon total or partial exercise of the National City Option
(the "National City Option Shares") from National City as National City shall
designate at a price (the "National City Option Share Repurchase Price") equal
to (i) the market/offer price multiplied by the number of National City Option
Shares so designated plus (ii) National City's Out-of-Pocket Expenses (to the
extent not previously reimbursed).
For purposes of the National City Option Agreement:
(a) The term "Out-of-Pocket Expenses" means National City's reasonable
out-of-pocket expenses incurred in connection with the transactions contemplated
by the Agreement and the Plan of Merger, including, without limitation, legal,
accounting and investment banking fees.
(b) The term "market/offer price" means the highest of
(i) the price per share of Integra Common at which a tender offer or
exchange offer therefor has been made after August 27, 1995;
(ii) the price per share of Integra Common to be paid by any third
party pursuant to an agreement with Integra;
(iii) the highest closing price for shares of Integra Common within
the 30-day period immediately preceding the date National City gives notice
of the required repurchase of the National City Option or the National City
Option Shares, as the case may be; or
(iv) in the event of a sale of all or substantially all of Integra's
assets, the sum of the price paid in such sale for such assets and the
current market value of the remaining assets of Integra as determined by a
nationally recognized investment banking firm selected by National City,
divided by the number of shares of Integra Common outstanding at the time
of such sale. In determining the market/offer price, the value of
consideration other than cash will be determined by a nationally recognized
investment banking firm selected by National City, whose determination will
be conclusive and binding on all parties.
Substitute Option. The National City Option Agreement provides that in the
event that prior to an Exercise Termination Event, Integra enters into an
agreement (a) to consolidate or merge with any person, other than National City
or one of its subsidiaries, and Integra is not the continuing or surviving
corporation of such consolidation or merger, (b) to permit any person, other
than National City or one of its subsidiaries, to merge into Integra and Integra
is the continuing or surviving corporation, but, in connection with such merger,
the then outstanding shares of Integra Common are 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 Integra Common after such merger represent less
than 50% of the outstanding shares and share equivalents of the merged company,
or (c) to sell or otherwise transfer all or substantially all of its assets to
any person, other than National City or one of its subsidiaries, then, and in
each such case, the agreement governing such transaction must make proper
provision so that the National City Option shall, upon the consummation of any
such transaction, be converted into, or exchanged for, an option (the
"Substitute National City Option"), at the election of National City, of either
(i) the Acquiring Corporation (as defined below) or (ii) any person that
controls the Acquiring Corporation. For purposes of the National City Option
Agreement, the term "Acquiring Corporation" means (A) the continuing or
surviving corporation of a consolidation or merger with Integra (if other than
Integra), (B) Integra in a merger in which Integra is the continuing or
surviving corporation, and (C) the transferee of all or substantially all of
Integra's assets.
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The Substitute National City Option shall have the same terms as the
National City Option; provided, however, that if the terms of the Substitute
National City Option cannot, for legal reasons, be the same as the National City
Option, such terms shall be as similar as possible and in no event less
advantageous to National City. The National City Option Agreement provides that
Integra may not enter into any transaction described above triggering a
Substitute National City Option unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assumes in writing all the obligations
of Integra under the National City Option Agreement. The National City Option
Agreement further provides that the issuer of the Substitute National City
Option shall enter into an agreement with National City in substantially the
same form as the National City Option Agreement, which agreement shall be
applicable to the Substitute National City Option and shall provide for the
repurchase of the Substitute National City Option and any shares of the issuer
issued pursuant thereto on terms similar to the repurchase of the National City
Option and the National City Option Shares.
The Substitute National City Option will be exercisable for such number of
shares of common stock of the issuer of the Substitute National City Option
("Substitute Common Stock") as is equal to the market/offer price multiplied by
the number of shares of Integra Common for which the National City Option is
then exercisable, divided by the Average Price. For purposes of the National
City Option Agreement, the term "Average Price" means the average closing price
of a share of 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 a share of Substitute Common Stock on the day preceding such
consolidation, merger or sale; provided, however, that if Integra is the issuer
of the Substitute National City Option, the Average Price will be computed with
respect to a share of common stock issued by the person merging into Integra or
by any company which controls or is controlled by such person, as National City
may elect. The exercise price of the Substitute National City Option per share
of Substitute Common Stock will then be equal to the National City Option Price
multiplied by a fraction, the numerator of which will be the number of shares of
Integra Common for which the National City Option is then exercisable and the
denominator of which will be the number of shares of Substitute Common Stock for
which the Substitute National City Option is exercisable.
The National City Option Agreement provides that the Substitute National
City Option may not be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute National
City Option. In the event that the Substitute National City Option would be
exercisable for more than 19.9% of the shares of Substitute Common Stock
outstanding prior to exercise, the issuer of the Substitute National City Option
will be required to make a cash payment to National City equal to the excess of
(a) the value of the Substitute National City Option without giving effect to
the foregoing limitation over (b) the value of the Substitute National City
Option after giving effect to the foregoing limitation. Such difference in value
will be determined by a nationally recognized investment banking firm selected
by National City.
Registration Rights. Within 30 days after the occurrence of a Subsequent
Triggering Event (or such later date as is necessary to obtain all regulatory
approvals and for the expiration of all statutory waiting periods, and to avoid
liability under Section 16(b) of the Exchange Act), National City may request
Integra to prepare and file a registration statement with the Commission if such
registration is necessary to permit the sale or other disposition of the shares
of Integra Common purchased upon exercise of the National City Option. Integra
is required to use its best efforts to cause such registration statement to
become effective and then to remain effective for 180 days or such shorter time
as may be reasonably necessary to effect such sales or dispositions. National
City has the right to demand two such registrations. Integra also will permit
National City to include the sale of shares of Integra Common purchased upon
exercise of the National City Option in certain registration statements
initiated by Integra.
Assignment of National City Option. Neither National City nor Integra may
assign any of its rights or obligations under the National City Option Agreement
or the National City Option to any other person without the express written
consent of the other party, except that in the event a Subsequent Triggering
Event occurs prior to an Exercise Termination Event, National City may assign,
in whole or in part, its rights and obligations under the National City Option
Agreement or the National City Option within 30 days following such Subsequent
Triggering Event (or such later date as is necessary to obtain all regulatory
approvals and for
69
<PAGE> 76
the expiration of all statutory waiting periods, and to avoid liability under
Section 16(b) of the Exchange Act); provided, however, that until the date 30
days following the date at which the FRB approves an application by National
City under the BHCA to acquire the shares of Integra Common subject to the
National City Option, National City may not assign its rights under the National
City Option except in (a) a widely dispersed public distribution, (b) a private
placement in which no one party acquires the right to purchase in excess of 2%
of the voting shares of Integra, (c) an assignment to a single party (e.g., a
broker or investment banker) for the purpose of conducting a widely dispersed
public distribution on National City's behalf, or (d) any other manner approved
by the FRB.
Termination of the National City Option. The National City option will
terminate upon the occurrence of an Exercise Termination Event. In the event
that the holder of the National City Option or the owner of National City Option
Shares or any affiliate thereof is a person making an offer or proposal to
engage in an Acquisition Transaction (other than the Merger), then (a) in the
case of a holder of the National City Option or any affiliate thereof, the
National City Option held by it will immediately terminate, and (b) in the case
of an owner of National City Option Shares or any affiliate thereof, the
National City Option Shares held by it will be immediately repurchasable by
Integra at the National City Option Price.
Additional Provisions. Certain rights and obligations of National City and
Integra under the National City Option Agreement are subject to receipt of
required regulatory approvals. Among other things, the approval of the FRB is
required for the acquisition by National City of more than 5% of the outstanding
shares of Integra Common. Accordingly, an application for FRB approval of the
exercise of the National City Option was filed as part of the application
referred to on page 57 and approval has been received.
INTEGRA OPTION AGREEMENT
As a condition to Integra's entering into the Agreement, and in
consideration therefor, National City entered into the Integra Option Agreement,
pursuant to which National City granted Integra the Integra Option on August 27,
1995. The Integra Option Agreement is intended to provide assurance to Integra
shareholders that they will receive National City Common in exchange for their
Integra Common at the consummation of the Merger by making the acquisition of
National City by a third party prior to consummation of the Merger more
expensive.
Grant of Integra Option. The Integra Option entitles Integra to purchase
up to 12,098,600 fully paid and non-assessable shares of National City Common,
representing 8.2% of the shares of National City Common issued and outstanding
as of August 27, 1995 without giving effect to any shares subject or issued
pursuant to the Integra Option, at a price of $31.625 per share; provided,
however, that in the event National City issues or agrees to issue any shares of
National City Common (other than as permitted pursuant to the National City
Option Plans as provided under the Agreement) at a price less than $31.625 per
share (as adjusted as described below), such price shall be equal to such lesser
price (such price, as adjusted if applicable, the "Integra Option Price");
provided further, that in no event may the number of shares for which the
Integra Option is exercisable at any time exceed 8.2% of the issued and
outstanding shares of National City Common without giving effect to any shares
subject or issued pursuant to the Integra Option. The aggregate purchase price
for the shares of National City Common that may be purchased upon the exercise
of the Integra Option at the original Integra Option Price is $382,618,225.
Triggering Events; Exercise of Integra Option. The Integra Option
Agreement provides that Integra may exercise the Integra Option, in whole or in
part, if both an Initial Triggering Event (as defined below) and a Subsequent
Triggering Event (as defined below) shall have occurred prior to the occurrence
of an Exercise Termination Event (as defined below), provided that Integra shall
have sent to National City written notice of such exercise within 30 days
following such Subsequent Triggering Event (or such later date as is necessary
to obtain all regulatory approvals for the exercise of the Integra Option and
for the expiration of all statutory waiting periods, and to avoid liability
under Section 16(b) of the Exchange Act by reason of such exercise).
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<PAGE> 77
For purposes of the Option Agreement:
(a) The term "Initial Triggering Event" means any of the following events
or transactions occurring after August 27, 1995:
(i) National City, or any of its subsidiaries, without having received
Integra's prior written consent, shall have entered into an agreement to
engage in an Acquisition Transaction (as defined below) with any person
(the term "person" for purposes of the Integra Option Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Exchange
Act and the rules and regulations promulgated thereunder), or the Board of
Directors of National City shall have recommended that the shareholders of
National City approve or accept any Acquisition Transaction other than the
Merger. For purposes of the Integra Option Agreement, the term "Acquisition
Transaction" means (A) a merger or consolidation, or any similar
transaction, involving Integra or any of its banking subsidiaries or
mortgage banking subsidiaries (each a "Significant Subsidiary"), (B) a
purchase, lease or other acquisition of all or substantially all of the
assets of Integra or any Significant Subsidiary, or (C) 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
National City or any Significant Subsidiary; provided, however, the term
"Acquisition Transaction" specifically does not include any merger or
consolidation among National City and/or its subsidiaries; or
(ii) Any person other than Integra, any subsidiary of Integra or any
subsidiary of National City acting in a fiduciary capacity shall have
acquired beneficial ownership or the right to acquire beneficial ownership
of 30% or more of the outstanding shares of National City Common (the term
"beneficial ownership" for purposes of the National City Option Agreement
having the meaning assigned thereto in Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder);
(b) The term "Subsequent Triggering Event" means either of the following
events or transactions occurring after August 27, 1995:
(i) The acquisition by any person of beneficial ownership of 40% or
more of the then outstanding shares of National City;
(ii) The occurrence of the Initial Triggering Event described above in
clause (a)(i), except that the percentage referred to in subclause
(a)(i)(C) shall be 40%.
(c) Each of the following events constitutes an "Exercise Termination
Event":
(i) immediately prior to the Effective Time;
(ii) termination of the Agreement in accordance with the provisions
thereof 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. For
purposes of the Integra Option Agreement, the term "Last Triggering Event"
means the last Initial Triggering Event to occur.
As of the date hereof, no Initial Triggering Event or Subsequent Triggering
Event has occurred.
The Agreement may be terminated at any time prior to the Effective Time by
either National City or Integra if the Merger is not approved at either the
Annual Meeting of Stockholders of National City or the Special Meeting of
Shareholders of Integra (provided that the terminating party is not otherwise in
material breach of its obligations under the Agreement). Accordingly, if no
Initial Triggering Event has occurred, in the event that either the National
City stockholders do not adopt the Agreement at the Annual Meeting of
Stockholders of National City or the Integra shareholders do not approve the
Agreement at the Special Meeting of Shareholders of Integra, and either National
City or Integra terminates the Agreement as a result thereof, the Integra Option
shall terminate.
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<PAGE> 78
In the event of any change in National City Common by reason of a stock
dividend, split-up, merger, recapitalization, combination, subdivision,
conversion, exchange of shares or similar transaction, the type and number of
shares of National City Common subject to the Integra Option and the purchase
price therefor will be adjusted appropriately.
Whenever the number of shares of National City Common purchasable upon
exercise of the Integra Option is adjusted as provided in the preceding
paragraph, the Integra Option Price shall be adjusted by multiplying the Integra
Option Price by a fraction, the numerator of which shall be equal to the number
of shares of National City Common purchasable prior to the adjustment and the
denominator of which shall be equal to the number of shares of National City
Common purchasable after the adjustment.
Repurchase of Integra Option. Upon the occurrence of a Subsequent
Triggering Event that occurs prior to an Exercise Termination Event, at the
request of Integra, delivered within 30 days of the Subsequent Triggering Event
(or such later date as is necessary to obtain all regulatory approvals and for
the expiration of all statutory waiting periods, and to avoid liability under
Section 16(b) of the Exchange Act), National City (a) shall repurchase the
Integra Option from Integra at a price (the "Integra Option Repurchase Price")
equal to (i) the amount by which (A) the market/offer price (as defined below)
exceeds (B) the Integra Option Price, multiplied by the number of shares for
which the Integra Option may then be exercised, plus (ii) Integra's
Out-of-Pocket Expenses (as defined below) (to the extent not previously
reimbursed) and (b) shall repurchase such number of shares of National City
Common issued upon total or partial exercise of the Integra Option (the "Integra
Option Shares") from Integra as Integra shall designate at a price (the "Integra
Option Share Repurchase Price") equal to (i) the market/offer price multiplied
by the number of Integra Option Shares so designated plus (ii) Integra's
Out-of-Pocket Expenses (to the extent not previously reimbursed).
For purposes of the Integra Option Agreement:
(a) The term "Out-of-Pocket Expenses" means Integra's reasonable
out-of-pocket expenses incurred in connection with the transactions contemplated
by the Agreement and the Plan of Merger, including, without limitation, legal,
accounting and investment banking fees.
(b) The term "market/offer price" means the highest of
(i) the price per share of National City Common at which a tender
offer or exchange offer therefor has been made after August 27, 1995;
(ii) the price per share of National City Common to be paid by any
third party pursuant to an agreement with National City;
(iii) the highest closing price for shares of National City Common
within the 30-day period immediately preceding the date Integra gives
notice of the required repurchase of the Integra Option or the Integra
Option Shares, as the case may be; or
(iv) in the event of a sale of all or substantially all of National
City's assets, the sum of the price paid in such sale for such assets and
the current market value of the remaining assets of National City as
determined by a nationally recognized investment banking firm selected by
Integra, divided by the number of shares of National City Common
outstanding at the time of such sale. In determining the market/offer
price, the value of consideration other than cash will be determined by a
nationally recognized investment banking firm selected by Integra, whose
determination will be conclusive and binding on all parties.
Substitute Option. The Integra Option Agreement provides that in the event
that prior to an Exercise Termination Event, National City enters into an
agreement (a) to consolidate or merge with any person, other than Integra or one
of its subsidiaries, and National City is not the continuing or surviving
corporation of such consolidation or merger, (b) to permit any person, other
than Integra or one of its subsidiaries, to merge into National City and
National City is the continuing or surviving corporation, but, in connection
with such merger, the then outstanding shares of National City Common are
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 National
72
<PAGE> 79
City Common after such merger represent less than 50% of the outstanding shares
and share equivalents of the merged company, or (c) to sell or otherwise
transfer all or substantially all of its assets to any person, other than
Integra or one of its subsidiaries, then, and in each such case, the agreement
governing such transaction must make proper provision so that the Integra Option
shall, upon the consummation of any such transaction, be converted into, or
exchanged for, an option (the "Substitute Integra Option"), at the election of
Integra, of either (i) the Acquiring Corporation (as defined below) or (ii) any
person that controls the Acquiring Corporation. For purposes of the Integra
Option Agreement, the term "Acquiring Corporation" means (A) the continuing or
surviving corporation of a consolidation or merger with National City (if other
than National City), (B) National City in a merger in which National City is the
continuing or surviving corporation, and (C) the transferee of all or
substantially all of National City's assets.
The Substitute Integra Option shall have the same terms as the Integra
Option; provided, however, that if the terms of the Substitute Integra Option
cannot, for legal reasons, be the same as the Integra Option, such terms shall
be as similar as possible and in no event less advantageous to Integra. The
Integra Option Agreement provides that National City may not enter into any
transaction described above triggering a Substitute Integra Option unless the
Acquiring Corporation and any person that controls the Acquiring Corporation
assumes in writing all the obligations of National City under the Integra Option
Agreement. The Integra Option Agreement further provides that the issuer of the
Substitute Integra Option shall enter into an agreement with Integra in
substantially the same form as the Integra Option Agreement, which agreement
shall be applicable to the Substitute Integra Option and shall provide for the
repurchase of the Substitute Integra Option and any shares of the issuer issued
pursuant thereto on terms similar to the repurchase of the Integra Option and
the Integra Option Shares.
The Substitute Integra Option will be exercisable for such number of shares
of common stock of the issuer of the Substitute Integra Option ("Substitute
Common Stock") as is equal to the market/offer price multiplied by the number of
shares of National City Common for which the Integra Option is then exercisable,
divided by the Average Price. For purposes of the Integra Option Agreement, the
term "Average Price" means the average closing price of a share of 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 a share of
Substitute Common Stock on the day preceding such consolidation, merger or sale;
provided, however, that if National City is the issuer of the Substitute Integra
Option, the Average Price will be computed with respect to a share of common
stock issued by the person merging into National City or by any company which
controls or is controlled by such person, as Integra may elect. The exercise
price of the Substitute Integra Option per share of Substitute Common Stock will
then be equal to the Integra Option Price multiplied by a fraction, the
numerator of which will be the number of shares of National City Common for
which the Integra Option is then exercisable and the denominator of which will
be the number of shares of Substitute Common Stock for which the Substitute
Integra Option is exercisable.
The Integra Option Agreement provides that the Substitute Integra Option
may not be exercisable for more than 8.2% of the shares of Substitute Common
Stock outstanding prior to exercise of the Substitute Integra Option. In the
event that the Substitute Integra Option would be exercisable for more than 8.2%
of the shares of Substitute Common Stock outstanding prior to exercise, the
issuer of the Substitute Integra Option will be required to make a cash payment
to Integra equal to the excess of (a) the value of the Substitute Integra Option
without giving effect to the foregoing limitation over (b) the value of the
Substitute Integra Option after giving effect to the foregoing limitation. Such
difference in value will be determined by a nationally recognized investment
banking firm selected by Integra.
Registration Rights. Within 30 days after the occurrence of a Subsequent
Triggering Event (or such later date as is necessary to obtain all regulatory
approvals and for the expiration of all statutory waiting periods, and to avoid
liability under Section 16(b) of the Exchange Act), Integra may request National
City to prepare and file a registration statement with the Commission if such
registration is necessary to permit the sale or other disposition of the shares
of National City Common purchased upon exercise of the Integra Option. National
City is required to use its best efforts to cause such registration statement to
become effective and then to remain effective for 180 days or such shorter time
as may be reasonably necessary to effect such sales or dispositions. Integra has
the right to demand two such registrations. National City also will permit
Integra to
73
<PAGE> 80
include the sale of shares of National City Common purchased upon exercise of
the Integra Option in certain registration statements initiated by National
City.
Assignment of Integra Option. Neither National City nor Integra may assign
any of its rights or obligations under the Integra Option Agreement or the
Integra Option to any other person without the express written consent of the
other party, except that in the event a Subsequent Triggering Event occurs prior
to an Exercise Termination Event, Integra may assign, in whole or in part, its
rights and obligations under the Integra Option Agreement or the Integra Option
within 30 days following such Subsequent Triggering Event (or such later date as
is necessary to obtain all regulatory approvals and for the expiration of all
statutory waiting periods, and to avoid liability under Section 16(b) of the
Exchange Act); provided, however, that until the date 30 days following the date
at which the FRB approves an application by Integra under the BHCA to acquire
the shares of National City Common subject to the Integra Option, Integra may
not assign its rights under the Integra Option except in (a) a widely dispersed
public distribution, (b) a private placement in which no one party acquires the
right to purchase in excess of 2% of the voting shares of National City, (c) an
assignment to a single party (e.g., a broker or investment banker) for the
purpose of conducting a widely dispersed public distribution on Integra's
behalf, or (d) any other manner approved by the FRB.
Termination of the Integra Option. The Integra Option will terminate upon
the occurrence of an Exercise Termination Event. In the event that the holder of
the Integra Option or the owner of Integra Option Shares or any affiliate
thereof is a person making an offer or proposal to engage in an Acquisition
Transaction (other than the Merger), then (a) in the case of a holder of the
Integra Option or any affiliate thereof, the Integra Option held by it will
immediately terminate, and (b) in the case of an owner of Integra Option Shares
or any affiliate thereof, the Integra Option Shares held by it will be
immediately repurchasable by National City at the Integra Option Price.
Additional Provisions. Certain rights and obligations of Integra and
National City under the Integra Option Agreement are subject to receipt of
required regulatory approvals. Among other things, the approval of the FRB is
required for the acquisition by Integra of more than 5% of the outstanding
shares of National City Common.
PRO FORMA COMBINED
CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)
The unaudited financial information on the following pages presents (a) the
historical consolidated balance sheets of both National City and Integra at
December 31, 1995 and the pro forma combined consolidated balance sheet as of
December 31, 1995, giving effect to the Merger as if it had occurred on that
date on a pooling-of-interests accounting basis; and (b) the historical
consolidated statements of income of both National City and Integra and the pro
forma combined consolidated statements of income for the years ending December
31, 1995, 1994 and 1993, giving effect to the Merger on a pooling-of-interests
accounting basis. Certain reclassifications have been made to the historical
financial information to conform presentation.
The financial information assumes all of the outstanding shares of Integra
Common are converted into shares of National City Common. The pro forma
information is based on the historical financial statements, giving effect to
the Merger under the pooling-of-interests method of accounting. The pro forma
statements exclude the estimated effect of potential expense savings associated
with the consolidation of the operations of National City and Integra, and may
not be indicative of the results that actually would have occurred had the
Merger been consummated on the dates indicated, or which may be attained in the
future.
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<PAGE> 81
NATIONAL CITY CORPORATION
PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
NATIONAL INTEGRA
CITY FINANCIAL PRO FORMA PRO FORMA
(IN THOUSANDS OF DOLLARS) CORPORATION CORPORATION ADJUSTMENTS COMBINED
- ----------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Cash and demand balances due from
banks.................................. $ 2,637,049 $ 358,856 $ $ 2,995,905
Loans, net of unearned income............ 26,222,319 8,243,507 34,465,826
Allowance for loan losses................ (490,679) (215,167) (705,846)
----------- ----------- ----------- -----------
Net loans............................ 25,731,640 8,028,340 -- 33,759,980
Securities available for sale, at
market................................. 4,949,654 5,395,334 10,344,988
Federal funds sold and security resale
agreements............................. 724,564 10,000 734,564
Other short term investments............. 51,207 54,786 105,993
Properties and equipment................. 424,479 169,027 593,506
Customers' acceptance liability.......... 66,169 -- 66,169
Accrued income and other assets.......... 1,614,248 329,629 21,363(C,F) 1,965,240
----------- ----------- ----------- -----------
TOTAL ASSETS......................... $36,199,010 $14,345,972 $ 21,363 $50,566,345
============ ============ ============ ============
LIABILITIES
Deposits in domestic offices:
Noninterest bearing.................... $ 5,563,717 $ 1,429,504 $ $ 6,993,221
Interest bearing....................... 18,918,968 8,950,955 27,869,923
Deposits in overseas offices............. 717,823 -- 717,823
----------- ----------- ----------- -----------
Total deposits....................... 25,200,508 10,380,459 -- 35,580,967
Federal funds borrowed and security
repurchase agreements.................. 4,010,149 976,346 4,986,495
Other borrowed funds..................... 2,089,150 327,939 2,417,089
Corporate long-term debt................. 1,215,356 1,268,120 2,483,476
Acceptances outstanding.................. 66,169 -- 66,169
Accrued expenses and other liabilities... 696,701 248,200 68,902(C,F) 1,013,803
----------- ----------- ----------- -----------
TOTAL LIABILITIES.................... 33,278,033 13,201,064 68,902 46,547,999
STOCKHOLDERS' EQUITY
Preferred stock.......................... 185,400 -- (185,400)(B) --
Common stock............................. 582,183 33,592 265,869(A,B) 881,644
Capital surplus.......................... 202,669 451,680 (104,496)(A,B) 549,853
Treasury stock........................... -- (24,027) 24,027(A) --
Retained earnings........................ 1,953,467 683,663 (47,539)(C,F) 2,589,591
Shares acquired by ESOP trust............ (2,742) -- -- (2,742)
----------- ----------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY........... 2,920,977 1,144,908 (47,539) 4,018,346
----------- ----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY............................. $36,199,010 $14,345,972 $ 21,363 $50,566,345
============ ============ ============ ============
</TABLE>
See Accompanying Notes to Pro Forma Combined Consolidated Financial Information
75
<PAGE> 82
NATIONAL CITY CORPORATION
PRO FORMA COMBINED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
NATIONAL INTEGRA
CITY FINANCIAL PRO FORMA PRO FORMA
(IN THOUSANDS EXCEPT PER SHARE DATA) CORPORATION CORPORATION ADJUSTMENTS COMBINED
- --------------------------------------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans and loans held for sale,
including fees....................... $2,206,199 $ 703,871 $ $2,910,070
Securities:
Taxable.............................. 256,278 347,085 603,363
Exempt from Federal income taxes..... 37,091 7,856 44,947
Other interest income.................. 33,545 12,106 45,651
----------- ----------- ----------- ----------
Total interest income.............. 2,533,113 1,070,918 -- 3,604,031
INTEREST EXPENSE
Deposits............................... 858,418 391,280 1,249,698
Other borrowings....................... 283,915 96,501 380,416
Corporate long term debt............... 69,695 75,877 145,572
----------- ----------- ----------- ----------
Total interest expense............. 1,212,028 563,658 -- 1,775,686
----------- ----------- ----------- ----------
Net interest income................ 1,321,085 507,260 -- 1,828,345
Provision for loan losses.............. 97,482 16,000 113,482
----------- ----------- ----------- ----------
Net interest income after provision
for loan losses.................. 1,223,603 491,260 -- 1,714,863
NONINTEREST INCOME
Item processing revenue................ 327,929 19,538 347,467
Trust fees............................. 138,028 29,196 167,224
Service charges on deposit accounts.... 157,486 36,008 193,494
Credit card fees....................... 82,226 8,858 91,084
Mortgage banking revenue............... 69,827 17,085 (3,137)(F) 83,775
Brokerage revenue...................... 28,329 1,173 29,502
Other.................................. 88,868 19,381 108,249
----------- ----------- ----------- ----------
Total fees and other income........ 892,693 131,239 (3,137) 1,020,795
Security gains......................... 24,076 18,289 42,365
----------- ----------- ----------- ----------
Total noninterest income........... 916,769 149,528 (3,137) 1,063,160
NONINTEREST EXPENSE
Salaries and employee benefits......... 685,322 197,893 883,215
Net occupancy.......................... 93,777 32,695 126,472
Equipment.............................. 95,181 32,431 127,612
Other.................................. 596,374 199,205 795,579
----------- ----------- ----------- ----------
Total noninterest expense.......... 1,470,654 462,224 -- 1,932,878
----------- ----------- ----------- ----------
Income before income taxes............. 669,718 178,564 (3,137) 845,145
Income tax expense..................... 204,609 50,174 (1,098)(F) 253,685
----------- ----------- ----------- ----------
NET INCOME......................... $ 465,109 $ 128,390 $ (2,039) $ 591,460
=========== =========== ============ ==========
EARNINGS PER COMMON SHARE:
PRIMARY............................ $ 3.03 $ 3.88 $ 2.68
FULLY DILUTED...................... 2.95 -- 2.64
AVERAGE COMMON SHARES OUTSTANDING:
PRIMARY............................ 148,851 33,123 215,097
FULLY DILUTED...................... 157,759 -- 224,005
</TABLE>
See Accompanying Notes to Pro Forma Combined Consolidated Financial Information
76
<PAGE> 83
NATIONAL CITY CORPORATION
PRO FORMA COMBINED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
NATIONAL INTEGRA PRO FORMA
CITY FINANCIAL ADJUSTMENTS PRO FORMA
(IN THOUSANDS EXCEPT PER SHARE DATA) CORPORATION CORPORATION (D, E) COMBINED
- ------------------------------------------------------- ---------- -------- ----------- ----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans and loans held for sale, including fees.......... $1,765,898 $619,884 $ $2,385,782
Securities:
Taxable............................................ 204,463 331,906 536,369
Exempt from Federal income taxes................... 40,085 5,309 45,394
Other interest income.................................. 31,418 3,679 35,097
---------- -------- ----------- ----------
Total interest income......................... 2,041,864 960,778 -- 3,002,642
INTEREST EXPENSE
Deposits............................................... 592,870 317,867 910,737
Other borrowings....................................... 162,947 66,180 229,127
Corporate long term debt............................... 49,238 47,912 97,150
---------- -------- ----------- ----------
Total interest expense........................ 805,055 431,959 -- 1,237,014
---------- -------- ----------- ----------
Net interest income........................... 1,236,809 528,819 -- 1,765,628
Provision for loan losses.............................. 79,356 30,000 109,356
---------- -------- ----------- ----------
Net interest income after provision for loan
losses...................................... 1,157,453 498,819 -- 1,656,272
NONINTEREST INCOME
Item processing revenue................................ 312,358 23,060 335,418
Trust fees............................................. 125,668 27,763 153,431
Service charges on deposit accounts.................... 153,870 33,545 187,415
Credit card fees....................................... 85,308 6,810 92,118
Mortgage banking revenue............................... 67,406 10,822 78,228
Brokerage revenue...................................... 18,790 958 19,748
Other.................................................. 89,438 15,344 104,782
---------- -------- ----------- ----------
Total fees and other income................... 852,838 118,302 -- 971,140
Security gains......................................... 10,530 19,749 30,279
---------- -------- ----------- ----------
Total noninterest income...................... 863,368 138,051 -- 1,001,419
NONINTEREST EXPENSE
Salaries and employee benefits......................... 653,890 177,789 831,679
Net occupancy.......................................... 89,994 32,219 122,213
Equipment.............................................. 93,345 28,933 122,278
Other.................................................. 565,904 156,295 722,199
---------- -------- ----------- ----------
Total noninterest expense..................... 1,403,133 395,236 -- 1,798,369
---------- -------- ----------- ----------
Income before income taxes............................. 617,688 241,634 -- 859,322
Income tax expense..................................... 188,254 72,601 260,855
---------- -------- ----------- ----------
NET INCOME.................................... $ 429,434 $169,033 $ -- $ 598,467
========== ========= ============ ==========
EARNINGS PER COMMON SHARE:
PRIMARY............................................ $ 2.70 $ 5.01 $ 2.64
FULLY DILUTED...................................... 2.64 -- 2.60
AVERAGE COMMON SHARES OUTSTANDING:
PRIMARY............................................ 153,354 33,735 220,824
FULLY DILUTED...................................... 162,376 -- 229,846
</TABLE>
See Accompanying Notes to Pro Forma Combined Consolidated Financial Information
77
<PAGE> 84
NATIONAL CITY CORPORATION
PRO FORMA COMBINED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1993
(UNAUDITED)
<TABLE>
<CAPTION>
NATIONAL INTEGRA PRO FORMA
CITY FINANCIAL ADJUSTMENTS PRO FORMA
(IN THOUSANDS EXCEPT PER SHARE DATA) CORPORATION CORPORATION (D,E) COMBINED
- ----------------------------------------- ---------- -------- ----------- ----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans and loans held for sale, including
fees................................... $1,582,106 $612,768 $ $2,194,874
Securities:
Taxable.............................. 229,007 360,325 589,332
Exempt from Federal income taxes..... 47,279 3,082 50,361
Other interest income.................... 31,772 1,611 33,383
---------- -------- ----------- ----------
Total interest income........... 1,890,164 977,786 -- 2,867,950
INTEREST EXPENSE
Deposits................................. 542,165 345,261 887,426
Other borrowings......................... 119,568 50,275 169,843
Corporate long term debt................. 28,377 39,951 68,328
---------- -------- ----------- ----------
Total interest expense.......... 690,110 435,487 -- 1,125,597
---------- -------- ----------- ----------
Net interest income............. 1,200,054 542,299 -- 1,742,353
Provision for loan losses................ 93,089 50,000 143,089
---------- -------- ----------- ----------
Net interest income after
provision for loan losses..... 1,106,965 492,299 -- 1,599,264
NONINTEREST INCOME
Item processing revenue.................. 267,962 18,429 286,391
Trust fees............................... 122,597 26,829 149,426
Service charges on deposit accounts...... 152,609 33,142 185,751
Credit card fees......................... 92,966 5,991 98,957
Mortgage banking revenue................. 58,678 2,736 61,414
Brokerage revenue........................ 9,013 971 9,984
Other.................................... 95,990 17,796 113,786
---------- -------- ----------- ----------
Total fees and other income..... 799,815 105,894 -- 905,709
Security gains........................... 11,922 29,862 41,784
---------- -------- ----------- ----------
Total noninterest income........ 811,737 135,756 -- 947,493
NONINTEREST EXPENSE
Salaries and employee benefits........... 623,472 167,277 790,749
Net occupancy............................ 89,729 37,024 126,753
Equipment................................ 89,005 25,950 114,955
Other.................................... 545,534 177,313 722,847
---------- -------- ----------- ----------
Total noninterest expense....... 1,347,740 407,564 -- 1,755,304
---------- -------- ----------- ----------
Income before income taxes............... 570,962 220,491 -- 791,453
Income tax expense....................... 166,965 67,671 234,636
---------- -------- ----------- ----------
INCOME BEFORE CUMULATIVE EFFECT
OF
ACCOUNTING CHANGES............ $ 403,997 $152,820 $ -- $ 556,817
========== ========= ============ ==========
EARNINGS PER COMMON SHARE BEFORE
CUMULATIVE EFFECT OF ACCOUNTING CHANGES:
PRIMARY.............................. $ 2.41 $ 4.50 $ 2.36
FULLY DILUTED........................ 2.37 -- 2.33
AVERAGE COMMON SHARES OUTSTANDING:
PRIMARY.............................. 161,164 33,815 228,794
FULLY DILUTED........................ 170,684 -- 238,314
</TABLE>
See Accompanying Notes to Pro Forma Combined Consolidated Financial Information
78
<PAGE> 85
NOTES TO PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)
(A) The pro forma combined consolidated balance sheet gives effect to the
proposed Merger of National City and Integra by combining the respective balance
sheets of the two companies at December 31, 1995 on a pooling-of-interests
basis. The capital accounts have been adjusted to reflect the issuance of
66,025,390 shares of National City Common in exchange for all the outstanding
shares of Integra Common after giving effect to the cancellation of 579,667
shares of Integra Common held as treasury stock. The number of shares that is
expected to actually be issued upon consummation is estimated to be
approximately 66,431,000 shares. The pro forma financial information would not
be materially different based upon this information.
(B) On March 5, 1996, National City called for redemption its outstanding
Depositary Shares of the 8% Cumulative Convertible Preferred Stock. Unless
converted by the holder, National City will redeem the Depositary Shares on May
1, 1996 at the price of $52 per Depositary Share. Based on current market
prices, it is expected that this action will result in the conversion into
common stock of substantially all of the outstanding preferred stock. At
December 31, 1995, 3,708,000 Depository Shares of preferred stock were
outstanding. These shares were convertible into 8,839,872 shares of National
City Common based on the applicable conversion rate of 2.384 (see Note 11 to
National City's consolidated financial statements).
(C) A liability of $70 million has been recorded in the pro forma combined
consolidated balance sheet to reflect management's estimate of anticipated
expenses and nonrecurring charges related to the Merger. This liability resulted
in a $46 million after-tax adjustment to retained earnings in the pro forma
combined consolidated balance sheet. It is anticipated that substantially all of
these charges will be recognized at or near consummation of the Merger. The
following table provides detail of the estimated charges by type:
<TABLE>
<CAPTION>
PRE-TAX AMOUNT
TYPE OF COST (IN MILLIONS)
------------------------------------------------------------------ --------------
<S> <C>
Operations and Facilities......................................... $ 27
Personnel Related................................................. 31
Other............................................................. 12
</TABLE>
Operations and facilities consists of costs associated with the elimination of
certain operational facilities, furniture and equipment that will be sold or
retired, write-offs of computer hardware and software due to incompatibility or
duplication, and signage write-offs. Personnel related costs consist primarily
of charges related to employment contracts, severance and the termination of
certain employee benefit plans. Other charges primarily include investment
banker fees, legal and accounting fees and other consulting fees. Management
continues to review these charges and there can be no assurance that such
expenses and charges will not exceed the amounts described above.
(D) Effective January 1, 1993 Integra adopted FAS 106, "Employers Accounting for
Postretirement Benefits Other Than Pensions." As permitted under FAS 106,
Integra elected to recognize immediately the January 1, 1993 transitional
liability of $8 million ($5 million after-tax) as the cumulative effect of a
change in accounting principle in the first quarter of 1993. National City
adopted FAS 106 on January 1, 1991, and as permitted under that statement,
elected not to recognize its transitional liability but to amortize that
liability over 20 years. The pro forma amounts do not include the effects of
Integra adopting FAS 106 on January 1, 1991 and recognizing the transitional
liability over an amortization period of 20 years as the impact would not be
material to the pro forma combined consolidated financial statements.
(E) On January 1, 1993 Integra adopted FAS 109, "Accounting for Income Taxes."
The adoption increased earnings by $65 million and was recognized as the
cumulative effect of a change in accounting principle. National City adopted FAS
109 in 1992. The cumulative effect of adopting FAS 109 was not material to
National City's 1992 results of operations. A calculation was not done to
determine the amount of the
79
<PAGE> 86
cumulative effect of a change in accounting principle if Integra would have
adopted FAS 109 on January 1, 1992 as it is not practical.
(F) Integra adopted FAS 122 "Accounting for Mortgage Servicing Rights" during
the second quarter of 1995 effective as of January 1, 1995. National City
adopted FAS 122 as of January 1, 1996. As required under the
pooling-of-interests accounting rules, an accounting adjustment was made to
conform the timing of Integra's adoption to National City's. This resulted in a
$2 million after-tax reduction to net income in 1995.
CERTAIN REGULATORY CONSIDERATIONS
GENERAL
Bank holding companies and banks are extensively regulated under both
federal and state law. To the extent that the following information describes
statutory and regulatory provisions, it is qualified in its entirety by
reference to the particular statutory and regulatory provisions. A change in
applicable law or regulation may have a material effect on the business of
National City or Integra.
As bank holding companies, National City and Integra are subject to
regulation under the BHCA and its examination and reporting requirements. Under
the BHCA, bank holding companies may not (subject to certain limited exceptions)
directly or indirectly acquire the ownership or control of more than 5% of any
class of voting shares or substantially all of the assets of any company,
including a bank, without the prior written approval of the FRB. In addition,
bank holding companies are generally prohibited under the BHCA from engaging in
nonbanking activities, subject to certain exceptions.
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
amended Section 3(d) of the BHCA by authorizing the FRB to approve on or after
September 29, 1995 the acquisition by a bank holding company of more than 5% of
any class of the voting shares of, or substantially all the assets of, any bank
(or its holding company) located outside of the state in which the operations of
such acquiring bank holding company's banking subsidiaries are principally
conducted on the date such company became a bank holding company, regardless of
whether the acquisition would be prohibited by state law. However the amendment
to Section 3(d) of the BHCA provides that the FRB may only approve the
acquisition applications of bank holding companies that are "adequately
capitalized" and "adequately managed". In addition, the FRB may not approve an
out of state bank holding company's application to acquire a bank (or its
holding company) in another state that has not existed for a minimum period of
time, if any, required by the "host state". In no event shall the "host state's"
law require that a bank have existed more than five years. Also the FRB may not
approve a bank holding company's application, if the applicant, including its
insured depository affiliates, controls or would control, more than ten (10)
percent of the total amount of deposits of insured depository institutions in
the United States. Furthermore, amended Section 3(d) prohibits the FRB's
approval of an acquisition if the applicant, including all insured depository
affiliates, would control 30 percent or more of the deposits of all insured
depository institutions in an affected State. In determining whether to approve
an application, the FRB is required to comply with its responsibilities under
Section 804 of the Community Reinvestment Act of 1977, and consider the
applicants compliance with state community reinvestment laws.
PAYMENT OF DIVIDENDS
Each of National City and Integra is a legal entity separate and distinct
from its banking and other subsidiaries. Most of National City's and Integra's
revenues result from dividends paid to it by its bank subsidiaries. There are
statutory and regulatory requirements applicable to the payment of dividends by
subsidiary banks as well as by National City to its stockholders and Integra to
its shareholders.
Each state bank subsidiary that is a member of the Federal Reserve System
and each national banking association is required by federal law to obtain the
prior approval of the FRB or the Comptroller of the Currency (the
"Comptroller"), as the case may be, for the declaration and payment of dividends
if the total of all dividends declared by the board of directors of such bank in
any year will exceed the total of (a) such bank's net profits (as defined and
interpreted by regulation) for that year plus (b) the retained net profits (as
defined and interpreted by regulation) for the preceding two years, less any
required transfers to surplus. In addition, these banks may only pay dividends
to the extent that retained net profits (including the portion transferred to
surplus) exceed bad debts (as defined by regulation).
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<PAGE> 87
In 1995, National City's subsidiary banks, without obtaining governmental
approvals, could declare aggregate dividends of approximately $386.0 million
from retained net profits. During 1995, National City's subsidiary banks paid
$221.4 million in dividends. As of January 1, 1996, the subsidiary banks could
initiate dividend payments, without prior regulatory approval, of $432.0
million.
In 1995, Integra's subsidiary banks, without obtaining governmental
approvals, could declare aggregate dividends of approximately $317.8 million
from retained net profits. During 1995, Integra's subsidiary banks paid $109.1
million in dividends. As of January 1, 1996, the subsidiary banks could initiate
dividend payments, without prior regulatory approval, of $67.4 million.
The payment of dividends by National City and its bank subsidiaries are
also affected by various regulatory requirement and policies, such as the
requirement to maintain adequate capital. In addition, if, in the opinion of the
applicable regulatory authority, a bank under its jurisdiction is engaged in or
is about to engage in an unsafe or unsound practice (which, depending on the
financial condition of the bank, could include the payment of dividends), such
authority may require, after notice and hearing, that such bank cease and desist
from such practice. The FRB and the Comptroller have each indicated that paying
dividends that deplete a bank's capital base to an inadequate level would be an
unsafe and unsound banking practice. The FRB, the Comptroller and the Federal
Deposit Insurance Corporation (the "FDIC") have issued policy statements which
provide that bank holding companies and insured banks should generally only pay
dividends out of current operating earnings.
CERTAIN TRANSACTIONS BY BANK HOLDING COMPANIES WITH THEIR AFFILIATES
There are also various legal restrictions on the extent to which National
City, Integra and most of their respective nondepository subsidiaries can borrow
or otherwise obtain credit from, or engage in certain other transactions
("covered transactions") with, its depository institution subsidiaries. Such
borrowings and other transactions by an insured depository institution with
their nondepository affiliates are limited to the following amounts: (a) in the
case of any one such affiliate, the aggregate amount of covered transactions of
the insured depository institution and its subsidiaries cannot exceed 10% of the
capital stock and surplus of the insured depository institution; and (b) in the
case of all affiliates, the aggregate amount of covered transactions of the
insured depository institution and its subsidiaries cannot exceed 20% of the
capital stock and surplus of the insured depository institution. In addition,
such extensions of credit must be collateralized in prescribed amounts.
Furthermore, a bank holding company and its subsidiaries are prohibited from
engaging in certain tie-in arrangements in connection with any extension of
credit, lease or sale of property or furnishing of services.
CAPITAL
National City and Integra are each subject to capital adequacy guidelines
of the Federal Reserve. Under the Federal Reserve's capital guidelines, a
holding company's capital is divided into two tiers, Tier 1 and Tier 2. The
respective components of Tier 1 and Tier 2 capital are described in materials
incorporated herein by reference. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE". The minimum guideline for the ratio of Total Capital (Tier 1 plus
Tier 2 capital) to risk-adjusted assets is 8%, of which half (4%) must be Tier 1
capital. In addition the Federal Reserve requires a leverage ratio (Tier 1
capital to average total consolidated assets) of at least 3% for bank holding
companies that meet specified criteria, including having the highest regulatory
rating. To be considered well capitalized, the Tier 1 capital ratio, the Total
Capital ratio and the leverage ratio must be at least 6%, 10%, and 5%,
respectively.
The following table sets forth the ratio of Tier 1 capital to risk-adjusted
assets, Total Capital to risk-adjusted assets and Tier 1 capital to average
total consolidated assets for National City and Integra
81
<PAGE> 88
individually and on a pro forma combined basis as of December 31, 1995 (in each
case calculated pursuant to the current risk-based capital guidelines).
<TABLE>
<CAPTION>
NATIONAL PRO FORMA
CITY INTEGRA COMBINED
-------- ----- ---------
<S> <C> <C> <C>
TIER 1 RISK-BASED CAPITAL...................... 8.54% 11.13% 9.01%
TOTAL RISK-BASED CAPITAL....................... 13.13 14.61 13.34
LEVERAGE....................................... 7.37 7.02 7.17
</TABLE>
Each of National City's and Integra's subsidiary banks is subject to
similar capital requirements established by the subsidiary's primary federal
regulator. At December 31, 1995, all of National City's and Integra's subsidiary
banks were considered well-capitalized.
Effective January 17, 1995, the Federal Reserve and the other federal
banking agencies amended the risk-based capital standards to consider risk from
concentrations of credit and the risks of nontraditional activities, as well as
an institution's ability to manage these risks, as important factors in
determining the adequacy of an institution's capital. Institutions with higher
than desired levels of risk will be expected to maintain a higher capital ratio
or minimum levels of capital. The federal banking agencies also issued an
amendment to the capital standards, effective September 1, 1995, which requires
the banking agencies to consider an institution's exposure to interest rate risk
when assessing the adequacy of capital. This amendment does not codify a
measurement framework for assessing the level of interest rate exposure. It is
anticipated that at some future date the federal banking agencies will establish
an explicit capital charge for interest rate risk that will be based upon an
institution's measured interest rate risk exposure.
Under federal banking laws, failure to meet the minimum regulatory capital
requirements could subject a banking institution to a variety of enforcement
remedies including the possible termination of deposit insurance by the FDIC and
seizure of the institution.
HOLDING COMPANY SUPPORT OF SUBSIDIARY BANKS
Under FRB policy, National City and Integra are expected to act as a source
of financial strength to each of its subsidiary banks and to commit resources to
support each of such subsidiaries. This support may be required at times when,
absent such FRB policy, National City or Integra would not otherwise be required
to provide it. In addition, any capital loans by National City or Integra to a
subsidiary bank would be subordinate in right of payment to deposits and to
certain other indebtedness of such bank. In the event of a bank holding
company's bankruptcy, any commitment by the bank holding company to a federal
bank regulatory agency to maintain the capital of a subsidiary bank will be
assumed by the bankruptcy trustee and entitled to a priority of payment. This
priority apparently would apply to guarantees of capital restoration plans under
the Federal Deposit Insurance Corporation Improvement Act of 1991.
A depository institution insured by the FDIC can be held liable for any
loss incurred by, or reasonably expected to be incurred by, the FDIC in
connection with (a) the default of a commonly controlled FDIC-insured depository
institution, or (b) any assistance provided by the FDIC to any commonly
controlled FDIC-insured depository institution in danger of default.
FDIC INSURANCE ASSESSMENTS
National City's and Integra's subsidiary banks are subject to FDIC deposit
insurance assessments. On November 14, 1995, the FDIC reduced the premiums on
BIF deposits for the first semiannual assessment period of 1996 by 4 cents per
$100.00 of eligible deposits so that the highest rated institutions will pay the
statutory annual minimum of $2,000.00. The SAIF deposit premium will continue to
be assessed at 23 cents for "well capitalized" institutions for the first
semiannual assessment period of 1996.
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<PAGE> 89
DESCRIPTION OF NATIONAL CITY CAPITAL STOCK
COMMON STOCK
General. National City has 350,000,000 authorized shares of National City
Common, of which 145,545,689 shares were issued and outstanding on December 31,
1995, and an additional 17,465,886 shares were reserved for issuance in
connection with National City's stock option plans (options to purchase
8,797,235 of such shares have been granted and are outstanding) and the National
City Corporation Amended and Second Restated 1991 Restricted Stock Plan (awards
of 551,250 of such shares have been granted and are outstanding). The shares of
National City Common to be issued in connection with the Merger will be validly
issued, fully paid and nonassessable. National City Common is listed on the NYSE
and trades under the symbol NCC. As of December 31, 1995 there were 22,194
National City Common stockholders of record. The transfer agent, registrar and
dividend disbursing agent for shares of National City Common is National City
Bank, Cleveland.
Dividend and Liquidation Rights. Holders of National City Common are
entitled to such dividends as may be declared by National City's Board of
Directors out of funds legally available therefor. In the event of liquidation,
holders of National City Common will be entitled to receive pro rata any assets
distributable to stockholders in respect of the number of shares held by them.
The dividend and liquidation rights of National City Common are subject to the
rights of any preferred stock of National City.
Voting, Preemptive, Conversion and Redemption Rights. Holders of National
City Common are entitled to one vote per share on all matters submitted to
stockholders and are not entitled to cumulative voting rights in the election of
directors or to preemptive rights for the purchase of additional shares of any
class of National City's stock. National City Common has no conversion or
redemption rights.
PREFERRED STOCK
General. Under National City's Certificate, the Board of Directors of
National City is authorized without further stockholder action to provide for
the issuance of up to 5,000,000 shares of preferred stock, without par value, in
one or more series as the Board of Directors may determine, and to fix the
relative powers, preferences and rights (including voting rights) of each such
series of preferred stock in relation to the powers, preferences and rights of
any other series of preferred stock. Voting rights, if any, may be general,
special, conditional or limited. The Board of Directors of National City also
has the discretion to determine the number of votes per share which each holder
of a share of a series of the preferred stock will have, but in no event may any
holder of any series of National City preferred stock be entitled to more than
one vote per share. Additionally, the Board of Directors of National City is
authorized to permit the holders of a series of preferred stock to vote
separately or together with the holders of one or more other series of preferred
stock on all or some matters as a separate voting group. National City may, at
its option, elect to offer depositary shares evidenced by depositary receipts,
each representing a fractional interest in a share of the particular series of
the National City preferred stock issued and deposited with a depositary
selected by National City.
Convertible Preferred Stock. By resolution dated April 18, 1991, the Board
of Directors of National City designated a series of National City preferred
stock as 8% Cumulative Convertible Preferred Stock, without par value, of
National City ("Convertible Preferred Stock"). The number of shares constituting
such series is 800,000, of which 741,600 shares (3,708,000 depositary shares)
were issued and outstanding as of December 31, 1995. Each depositary share of
Convertible Preferred Stock (a "Depositary Share") represents a one-fifth
interest in a share of Convertible Preferred Stock. The Depositary Shares are
listed on the NYSE. The transfer agent, registrar, dividend disbursing agent,
redemption agent and depositary for shares of Convertible Preferred Stock and
Depositary Shares is National City Bank, Cleveland.
Dividends. Holders of shares of Convertible Preferred Stock are entitled
to receive, when and as declared by the Board of Directors of National City out
of funds legally available therefor, cash dividends at the rate of 8% per annum
(equivalent to $4.00 per Depositary Share). Dividends on Convertible Preferred
Stock are payable quarterly on February 1, May 1, August 1 and November 1 of
each year, commencing August 1, 1991, at such annual rate. Dividends are
cumulative from the date of original issue.
83
<PAGE> 90
Redemption. The Convertible Preferred Stock is redeemable at the option of
National City, in whole or in part, for a premium on or after May 1, 1996 and
for each 12-month period thereafter through the year 2000 and thereafter at par.
National City has elected to exercise its option to redeem the outstanding
Convertible Preferred Stock as of May 1, 1996 and mailed the notice of
redemption on March 5, 1996 to all holders of record. It is expected that this
action will result in the conversion into National City Common of substantially
all of the outstanding Convertible Preferred Stock. The Convertible Preferred
Stock is redeemable at a price of $260 per share ($52.00 per Depositary Share)
for the period May 1, 1996 to May 1, 1997.
Conversion Rights. The Convertible Preferred Stock is convertible at the
option of the holder into 2.384 shares of National City Common per Depositary
Share. Accordingly, as of December 31, 1995, 8,839,872 shares of National City
Common were reserved for the conversion of the Convertible Preferred Stock.
Fractional shares of National City Common Stock will not be delivered upon
conversion, but a cash adjustment will be paid in respect of such fractional
interests, based on the then current market price of National City Common.
DESCRIPTION OF INTEGRA CAPITAL STOCK
The following description of the capital stock of Integra is qualified in
its entirety by reference to the Articles of Incorporation and Bylaws of
Integra, as amended.
GENERAL
Integra's Articles of Incorporation provide for authorized capital stock
consisting of 19,642,631 shares of Integra preferred stock ("Integra Preferred
Stock"), without par value, and 100,000,000 shares of Integra Common, par value
$1.00 per share.
As of December 31, 1995, there were 33,012,695 shares of Integra Common
outstanding. No shares of Integra Preferred Stock were outstanding on that date.
INTEGRA PREFERRED STOCK
The Board of Directors of Integra is authorized, without further action by
Integra shareholders, to issue Integra Preferred Stock from time to time as a
class or in one or more series, with whatever rights, designations, preferences,
qualifications, privileges, limitations, options and other special rights, if
any, including without limitation, dividend rights, conversion rights, voting
rights, redemption rights and maturity dates, as are specified by the Board of
Directors of Integra in the resolution fixing the terms of the class or
establishing the series.
The Integra Preferred Stock is available for possible future financing and
acquisition transactions, stock dividends or distributions, employee benefit
plans and other general corporate purposes. Under certain circumstances, the
Integra Preferred Stock could be used to create voting impediments or to
frustrate persons seeking to effect a takeover, assume control of the Board, or
otherwise gain control of Integra.
INTEGRA COMMON
The rights of the holders of Integra Common described below are subject to
any rights and preferences pertaining to any class or series of Integra
Preferred to the extent set forth in the resolution of the Board of Directors of
Integra fixing the terms of the class or establishing the class or series.
Voting Rights. Holders of Integra Common are entitled to one vote per
share. The Board of Directors of Integra has the authority to grant proportional
voting rights to fractional shares of any class or series of any class or stock
of Integra.
Holders of Integra Common have cumulative voting rights in the election of
directors -- that is, each holder is entitled to a number of votes equal to the
number of shares held multiplied by the number of directors to be elected in
each class and to cast all such votes for a single nominee in the class being
elected or to distribute them among the nominees in the class as such holder
sees fit.
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<PAGE> 91
Integra's Board of Directors is divided into three classes. One of the
three classes of the Board is elected each year for a three-year term. The
affirmative vote of holders of not less than two-thirds (66 2/3%) of the
outstanding shares of each class of stock of Integra, voting as a class, is
required to amend or repeal the provision of Integra's Articles of Incorporation
providing for a classified Board. The classification of the Board of Directors
helps to insure continuity and stability of corporate leadership and policy. It
also has the effect, however, of increasing the number of shares required,
pursuant to the exercise of cumulative voting, to elect a given number of
directors and it increases the period of time before a majority of the Board is
re-elected or can be replaced.
Dividend Rights. Dividends may be paid on Integra Common at the discretion
of Integra's Board of Directors out of any funds legally available therefor.
Under the BCL, dividends may not be paid if Integra is at the time insolvent or
would be insolvent after payment of such dividend.
The parent company's principal assets are its investments in its
subsidiaries and the dividends from its subsidiary banks constitute an important
source of operating income. Dividends that may be paid by Integra Bank to
Integra are subject to certain regulatory limitations. The dividends paid by a
Pennsylvania state bank may not exceed accumulated net earnings (essentially,
undivided profits) of the bank. Generally, the prior approval of the FRB is
required if the total of all dividends declared by a state member bank in any
calendar year exceeds its net profits (as defined) for that year combined with
its retained net profits for the preceding two calendar years. Further, no
dividends may be paid by an insured bank if the bank is in arrears in the
payment of any insurance assessment due to the FDIC. The FDIC, the FRB and the
Pennsylvania Department of Banking also have the authority to disallow the
payment of dividends if the payment of such dividends is determined to
constitute an unsafe and unsound practice.
Integra Bank is subject to certain restrictions imposed by Federal law on
any extensions of credit to, and certain other transactions with Integra and
certain other affiliates, on investments in stock or other securities thereof
and on the taking of such securities as collateral for loans. The payment of
dividends by Integra Bank may also be affected or limited by other factors, such
as the requirement to maintain adequate capital above regulatory minimums.
Integra Trust Company, National Association, a national bank regulated by
the Office of the Comptroller of the Currency, is subject to restrictions on the
payment of dividends that are similar to the restrictions to which Integra Bank
is subject.
Liquidation Rights. In the event of a voluntary or involuntary liquidation
or dissolution of Integra, the holders of Integra Common are entitled to receive
pro rata the net assets available for distribution to common stock shareholders
after payment of all liabilities and obligations of Integra and all preference
distributions to holders of Integra Preferred Stock.
Integra is a legal entity separate and distinct from its subsidiary banks
and other subsidiaries. Accordingly, the right of Integra and its shareholders
to participate in any distribution of the assets or earnings of any subsidiary
is necessarily subject to the prior claims of creditors of the subsidiary
(including depositors of Integra Bank), except to the extent that claims of
Integra itself as a creditor may be recognized.
Issuance of Additional Shares. The Integra Common does not carry preemptive
rights. Integra may issue Integra Common, option rights or securities having
conversion or option rights without first offering them to holders of Integra
Common.
Integra's Articles of Incorporation provide that, except as limited by the
provisions of any class or series of Integra Preferred Stock, the Board of
Directors may in its discretion, at any time or from time to time, issue or
cause to be issued all or any part of the authorized and unissued shares of
Integra Common for consideration of such character and value as the Board shall,
from time to time, fix or determine.
Conversion Rights, Sinking Fund and Redemption Provisions. There are no
conversion rights or sinking fund provisions applicable to Integra Common, and
Integra Common is not subject to redemption.
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Amendment to the Articles of Incorporation and By-laws of Integra. Under
the BCL, Integra's Articles of Incorporation may be amended by the affirmative
vote of at least a majority of the votes cast by all shareholders entitled to
vote on the proposed amendment, except that by its terms the provision
establishing a classified Board of Directors may be amended only by the
affirmative vote of not less than two-thirds of the outstanding shares of each
class of stock of Integra, voting as a class.
The Bylaws of Integra may be amended by a vote of a majority of the Board
of Directors at any regular meeting of the Integra Board or at any special
meeting called for that purpose, except that under the BCL, the Board of
Directors may not amend the Bylaws in certain respects, including the provision
relating to the limitation of the personal liability of directors. Further,
under the BCL, any amendment of the Bylaws by Integra's Board of Directors is
subject to the power of the shareholders to change such action.
Considerations to be Observed in Acquisitions or Sales. The Articles of
Incorporation of Integra provide that the Board of Directors of Integra, when
evaluating any offer by Integra to acquire a bank or bank holding company or any
offer by a third party to acquire the securities or assets of or to combine with
Integra, shall, in the exercise of its business judgment, give due consideration
to all relevant factors, including the social, economic and other effects on
depositors, borrowers, customers and employees of the bank or banks affected and
on the communities in which such banks are located, in determining the action
that is in the best interests of Integra and its shareholders. The consideration
of such factors is authorized under Pennsylvania law.
GENERAL COMPARISON OF NATIONAL CITY AND INTEGRA CAPITAL STOCK
GENERAL
If the shareholders of Integra approve, and the stockholders of National
City adopt, the Agreement and the Merger is subsequently consummated, all
shareholders of Integra will become stockholders of National City. National City
is a corporation organized under, and governed by, the DGCL, whereas Integra is
a corporation organized under, and governed by, the BCL.
The following is a brief summary of certain differences between the
Delaware corporate laws applicable to National City and the Pennsylvania
corporate laws applicable to Integra and certain differences between National
City's Certificate and Bylaws and Integra's Articles and Bylaws. The purpose of
this summary is to briefly indicate the differences between holding National
City capital stock and Integra capital stock to the extent such differences are
created by the state corporation laws applicable to National City and Integra or
arise because of differences between National City's Certificate and Bylaws and
Integra's Articles and Bylaws. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE DGCL, THE BCL, NATIONAL CITY'S CERTIFICATE AND BYLAWS AND
INTEGRA'S ARTICLES AND BYLAWS.
DIRECTORS
National City's Bylaws provide that the number of directors of National
City shall be determined by resolution of the Board of Directors, that such
directors shall be elected at the annual meeting of the stockholders of National
City, and that each director elected shall hold office until his or her
successor is duly elected and shall qualify. The number of directors as of the
Annual Meeting is set at 15. Section 141 of the DGCL provides that any director
or the entire board of directors may be removed, with or without cause, by the
holders of a majority of shares then entitled to vote at an election of
directors.
The Integra Bylaws and Articles of Incorporation provide that the Integra
Board of Directors shall be divided into three classes, each class serving a
staggered three year term, with the term of one class expiring each year. If at
any meeting of Integra shareholders, whether an annual meeting or special
meeting for the election of directors, directors of more than one class are to
be elected, separate elections shall be held for the directors of each class.
The classification of Integra's Board of Directors may restrict a minority
shareholder's ability to obtain representation on the Integra Board of
Directors.
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LIMITATION OF DIRECTOR LIABILITY IN CERTAIN CIRCUMSTANCES
As permitted by the DGCL, Article Seventh of National City's Certificate
provides that directors of National City shall not be liable personally to
National City or its stockholders for monetary damages for breach of fiduciary
duty as a director except for liability arising out of (a) any breach of the
director's duty of loyalty to National City or its stockholders, (b) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (c) payment of a dividend or approval of a stock repurchase in
violation of Section 174 of the DGCL or (d) any transaction from which the
director derived an improper personal benefit. This provision protects National
City directors against personal liability for monetary damages from breaches of
their duty of care. Under Delaware law, absent adoption of Article Seventh,
directors can be held liable for gross negligence in connection with decisions
made on behalf of the corporation in the performance of their duty of care, but
may not be liable for simple negligence. Although Article Seventh provides
National City directors with protection from certain awards of monetary damages
for breaches of their duty of care, it does not eliminate the director's duty of
care. Accordingly, Article Seventh has no effect on the availability of
equitable remedies, such as an injunction or rescission, based upon a director's
breach of his duty of care. Article Seventh does not apply to officers of
National City who are not directors of National City.
The Bylaws of Integra provide that a director of Integra shall not be
personally liable for monetary damages for any action taken, or any failure to
take any action except to the extent that such elimination or limitation of
liability is expressly prohibited by applicable law. Under the BCL, the personal
liability of a director may not be eliminated or limited if: (1) the director
has breached or failed to perform the duties of his office under the BCL
(relating to the fiduciary duties of directors); and (2) the breach or failure
to perform constitutes self-dealing, willful misconduct or recklessness.
Furthermore, this limitation on the personal liability of directors of Integra
does not apply to: (1) the responsibility or liability of a director pursuant to
any criminal statute; or (2) the liability of a director for the payment of
taxes pursuant to local, state or federal law.
INDEMNIFICATION AND INSURANCE
National City. Under Section 145 of the DGCL, directors, officers,
employees and other individuals may be indemnified against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement in connection
with specified actions, suits or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation -- a "derivative action") if they acted in good faith and in a
manner they reasonably believed to be in, or not opposed to, the best interests
of the corporation, and, regarding any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with the
defense or settlement of such actions. The DGCL requires court approval before
there can be any indemnification where the person seeking indemnification has
been found liable to the corporation. To the extent that a person otherwise
eligible to be indemnified is successful on the merits of any claim or defense
described above, indemnification for expenses (including attorneys' fees)
actually and reasonably incurred is mandated by the DGCL.
Article VI of National City's Bylaws provides that National City must
indemnify, to the fullest extent authorized by the DGCL, each person who was or
is made party to, is threatened to be made a party to, or is involved in, any
action, suit or proceeding because he is or was a director, officer or employee
of National City or of any National City subsidiary (or was serving at the
request of National City as a director, trustee, officer, employee or agent of
another entity) while serving in such capacity against all expenses, liabilities
or loss incurred by such person in connection therewith. The amount of any
indemnification to which any person shall otherwise be entitled under Article VI
shall be reduced to the extent that such person shall otherwise be entitled to
valid and collectible indemnification provided by a subsidiary of National City
or any other source.
Article VI also provides that National City may pay expenses incurred in
defending the proceedings specified above in advance of their final disposition.
National City may advance expenses to any director, officer or employee only
upon delivery to National City of an undertaking by the indemnified party
stating that he has reasonably incurred or will reasonably incur actual expenses
in defending an actual civil or criminal
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suit, action or proceeding in his capacity as such director, officer or
employee, or arising out of his status as such director, officer or employee,
and that he undertakes to repay all amounts so advanced if it is ultimately
determined that the person receiving such payments is not entitled to be
indemnified.
Finally, Article VI provides that National City may maintain insurance, at
its expense, to protect itself and any of its directors, officers, employees or
agents against any expense, liability or loss, regardless of whether National
City has the power or obligation to indemnify that person against such expense,
liability or loss under the provisions of Article VI.
The right to indemnification is not exclusive of any other right which any
person may have or acquire under any statute, provision of National City's
Certificate or Bylaws, or otherwise. Additionally, no amendment to National
City's Certificate can increase the liability of any director or officer for any
act or omission by him prior to such amendment.
Integra. The BCL provides in general that a corporation may indemnify any
person, including its directors, officers and employees, who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or investigative
(other than actions by or in the right of the corporation) by reason of the fact
that he or she is or was a representative of or serving at the request of the
corporation, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with the action or proceeding if he or she is determined by the board
of directors, or in certain circumstances by independent legal counsel to the
shareholders, to have acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the corporation and,
with respect to any criminal proceeding, had no reason to believe his conduct
was unlawful. In the case of actions by or in the right of the corporation,
indemnification is not permitted in respect of any claim, issue or matter as to
which the person has been adjudged to be liable to the corporation except to the
extent a court determines that the person is fairly and reasonably entitled to
indemnification. In any case, to the extent that the person has been successful
on the merits or otherwise in defense of any claim, issue or matter, he or she
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith. The BCL also provides
that the indemnification permitted or required by the BCL is not exclusive of
any other rights to which a person seeking indemnification may be entitled.
Integra's Articles of Incorporation and Bylaws provide that Integra shall
indemnify and hold harmless to the full extent not prohibited by law any person
who was or is made a party to, or threatened to be made a party to, or is
involved in, any action, suit, or proceeding (including actions by or in the
right of Integra) by reason of the fact that he or she is or was a director,
officer or employee of Integra (or is or was serving at the request of Integra
as a director, officer, trustee, employee, or agent of a related enterprise,
including any employee benefit plan of Integra, or is or was serving at the
specific written request of Integra as a director, officer, trustee, employee,
or agent of an unrelated enterprise) against all expenses and liabilities he or
she actually incurs, including, without limitation, judgments and amounts paid
or to be paid in settlement of or in actions brought by or in the right of
Integra. Directors and officers are also entitled to payment in advance of
expenses incurred in defending any such action, suit or proceeding, upon receipt
of an undertaking to repay all amounts so advanced if it is ultimately
determined that they are not entitled to be indemnified, or, in the case of a
criminal action, if a majority of the Board of Directors so determines. Under
the BCL, indemnification pursuant to this provision of Integra's Articles of
Incorporation and Bylaws is not permitted in any case in which the act or
failure to act giving rise to the claim for indemnification is determined by a
court to have constituted willful misconduct or recklessness. There may be other
circumstances where indemnification may not be permitted as a matter of public
policy.
Integra and its subsidiaries also carry insurance for their officers,
directors and certain other persons against certain liabilities, including
certain liabilities under the Securities Act, which they might incur as
directors, officers and certain other persons of Integra or its subsidiaries or
as a representative of any other organization which they serve at Integra's
request.
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ANTITAKEOVER STATUTES
Delaware Business Combination Statute. Section 203 of the DGCL ("Section
203"), which applies to National City, regulates transactions with major
stockholders after they become major stockholders. Section 203 prohibits a
Delaware corporation from engaging in mergers, dispositions of 10% or more of
its assets, issuances of stock and other transactions ("business combinations")
with a person or group that owns 15% or more of the voting stock of the
corporation (an "interested stockholder"), for a period of three years after the
interested stockholder crosses the 15% threshold. These restrictions on
transactions involving an interested stockholder do not apply if (a) before the
interested stockholder owned 15% or more of the voting stock, the board of
directors approved the business combination or the transaction that resulted in
the person or group becoming an interested stockholder; (b) in the transaction
that resulted in the person or group becoming an interested stockholder, the
person or group acquired at least 85% of the voting stock other than stock owned
by inside directors and certain employee stock plans; (c) after the person or
group became an interested stockholder, the board of directors and at least
two-thirds of the voting stock other than stock owned by the interested
stockholder approves the business combination; or (d) certain competitive
bidding circumstances.
PENNSYLVANIA BUSINESS COMBINATION STATUTE
Integra is subject to provisions of the BCL regarding business
combinations. The BCL prohibits certain business combinations (as defined in the
BCL) involving a Pennsylvania corporation that has voting shares registered
under the Exchange Act and an "interested shareholder" unless one of five
conditions is satisfied or an exemption is found. An "interested shareholder" is
generally defined to include a person who beneficially owns at least 20% of the
votes that all shareholders would be entitled to cast in an election of
directors of the corporation. In general, a corporation can effect a business
combination involving an interested shareholder under the BCL if one of the
following five conditions is satisfied: (i) prior to the date on which the
person becomes an interested shareholder, the board of directors approves the
business combination or the purchase of shares that causes the person to become
an interested shareholder; (ii) the business combination is approved by an
affirmative vote of the holders of all outstanding shares; (iii) the business
combination is approved by a majority of the disinterested shareholders at a
meeting called at least five years after the date the person becomes an
interested shareholder; (iv) the interested shareholder holds 80% or more of the
votes that all shareholders would be entitled to cast in an election of
directors of the corporation and the business combination is approved by a
majority of the disinterested shareholders at a meeting held at least three
months after the interested shareholder acquired such 80% interest, provided
that the fair price and procedural requirements set forth in the BCL are
satisfied; or (v) the business combination is approved by the shareholders at a
meeting called at least five years after the date the person becomes an
interested shareholder, provided that the fair price and procedural requirements
set forth in the BCL are satisfied.
PENNSYLVANIA CONTROL TRANSACTION STATUTE
The BCL provides that any holder of voting shares of a registered
corporation who objects to a "control transaction" will be entitled to make a
written demand on the "controlling person or group" for payment of the fair
value of the voting shares of the corporation held by the shareholder. A
"control transaction" is defined as the acquisition by a person or group (the
controlling person or group) that would entitle the holders thereof to cast at
least 20% of the votes that all shareholders would be entitled to cast in an
election of the directors of the corporation.
CONSIDERATION OF FACTORS; GENERAL POWERS
The BCL provides that in discharging the duties of their respective
positions, the board of directors, committees of the board and individual
directors of Integra may, in considering the best interests of the corporation,
consider to the extent they deem appropriate the following factors: (i) the
effects of any action upon any or all groups affected by such action, including
shareholders, employees, suppliers, customers and creditors of Integra, and upon
communities in which offices or other establishments of the corporation are
located; (ii) the short-term and long-term interests of the corporation,
including benefits that may accrue to the corporation from its long-term plans
and the possibility that these interest may be best served by the
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continued independence of the corporation; (iii) the resources, intent and
conduct (past, stated and potential) of any person seeking to acquire control of
the corporation; and (iv) all other pertinent factors.
Integra's Articles provide that the Board of Directors of Integra, when
evaluating any offer by Integra to acquire a bank or bank holding company or any
offer by a third party to acquire the securities or assets of or to combine with
Integra, shall in the exercise of its judgment give due consideration to all
relevant factors, including the social, economic and other effects on
depositors, borrowers, customers and employees of the bank or banks affected and
on the communities in which such banks are located, in determining the action
that is in the best interests of Integra and its shareholders. See "DESCRIPTION
OF INTEGRA CAPITAL STOCK--Integra Common Stock."
ISSUANCE OF PREFERRED STOCK
National City's Certificate and Integra's Articles authorize the Board of
Directors of the respective companies to issue shares of preferred stock, from
time to time, in one or more series as the Boards of Directors may determine,
and to fix the relative powers, preferences and rights (including voting rights)
of each such series of preferred stock in relation to the powers, preferences
and rights of any other series of preferred stock. Voting rights, if any, may be
general, special, conditional or limited. The Boards of Directors of National
City and Integra also have the discretion to determine the number of votes per
share which each holder of a share of a series of the preferred stock will have,
but in no event may any holder of any series of National City preferred stock be
entitled to more than one vote per share. Additionally, the Boards of Directors
of National City and Integra are authorized to permit the holders of a series of
preferred stock to vote separately or together with the holders of one or more
other series of preferred stock on all or some matters as a separate voting
group. Except with respect to the number of votes per share, National City's
Certificate does not materially differ from the provisions of Integra's Articles
with respect to the ability of the Boards of Directors of National City and
Integra to issue preferred stock in one or more series and to fix the relative
powers, preferences and rights of each such series in relation to the powers,
preferences and rights of any other series of preferred stock. The power of the
Boards of Directors of National City and Integra to issue preferred stock with
voting or other powers, preferences and rights may be used to impede or
discourage a takeover attempt. See "DESCRIPTION OF NATIONAL CITY CAPITAL STOCK
- -- Preferred Stock" and "DESCRIPTION OF INTEGRA CAPITAL STOCK -- Preferred Stock
- -- General."
Generally, the issuance of preferred stock by National City could (a)
result in a class of securities outstanding which will have certain preferences
regarding distributions in a liquidation over National City Common and might
provide for certain rights (whether general, special, conditional or limited)
that could dilute the voting rights of National City Common and (b) result in
dilution of the net income per share and net book value per share relating to
National City Common. Further, the issuance of any additional shares of National
City Common, pursuant to any conversion rights granted holders of any preferred
stock, may also result in dilution of the voting rights, net income per share
and net book value of National City Common.
Specifically, the terms of National City's Convertible Preferred Stock
provide that in the event of any voluntary or involuntary liquidation,
dissolution or winding up of National City, the holders of shares of Convertible
Preferred Stock are entitled to receive out of the assets of National City
available for distribution to stockholders, before any distribution of assets is
made to holders of National City Common, liquidation distributions in the amount
of $250 per share (equivalent to $50 per Depositary Share) plus accrued and
unpaid dividends. Additionally, if the equivalent of six quarterly dividends
payable on the Convertible Preferred Stock are in arrears, the number of
directors of National City will be increased by two, and the holders of
Convertible Preferred Stock will be entitled to elect two directors to fill such
vacancies. Such right to elect two additional directors shall continue until all
dividends in arrears have been paid or declared and set apart for payment.
Finally, shares of Convertible Preferred Stock are convertible at any time at
the option of the holder thereof into shares of National City Common at a
conversion price of $20.975 per share of National City Common (equivalent to a
conversion rate of approximately 11.919 shares of National City Common for each
share of Convertible Preferred Stock and 2.384 shares for each Depositary
Share). See "DESCRIPTION OF NATIONAL CITY CAPITAL STOCK -- Preferred Stock."
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CUMULATIVE VOTING
Section 214 of the DGCL provides that no cumulative voting rights, in
respect of elections of directors, exist under Delaware Law, unless a
corporation's certificate of incorporation provides otherwise. National City's
Certificate does not provide for cumulative voting in elections of directors.
The Integra Articles provide shareholders with the right to cumulate their
votes in the election of the Board of Directors. Under cumulative voting, each
shareholder is entitled to the number of votes equal to the number of shares
held multiplied by the total number of directors to be elected in the same
election and may cast that whole number of votes for one candidate or distribute
them among two or more candidates. The right of cumulative voting may provide
minority shareholders with a greater ability to obtain representation on the
Board.
ACTION WITHOUT A MEETING
Section 228 of the DGCL permits any action required or permitted to be
taken at a stockholders' meeting to be taken by written consent signed by the
holders of the number of shares that would have been required to effect the
action at an actual meeting of the stockholders. Generally, holders of a
majority of outstanding shares can effect such an action. The DGCL also provides
that a corporation's certificate of incorporation may restrict or even prohibit
stockholders' action without a meeting. National City's Certificate does not
restrict or prohibit stockholders' action without a meeting.
Under the BCL, in corporations which have a class of voting stock
registered under the Exchange Act such as Integra, an action may be authorized
by the shareholders without a meeting by less than unanimous consent only if
such action without a meeting is permitted by the corporation's articles of
incorporation. Integra's Articles do not permit such action by shareholders
without a meeting.
SPECIAL MEETINGS
Under Section 211(d) of the DGCL, the board of directors or those persons
authorized by the corporation's certificate of incorporation or bylaws may call
a special meeting of the corporation's stockholders. National City's Bylaws
provide that a special meeting may be called by the Chairman of the Board and
must be called by the Chairman of the Board or Secretary at the request in
writing of a majority of the Board of Directors, or at the request in writing of
stockholders owning a majority in amount of the entire capital stock of National
City issued and outstanding and entitled to vote.
In comparison, Section 1755 of the BCL provides that special meetings of
the shareholders may be called at any time by its board of directors or the
person or persons specifically authorized to do so by the Bylaws or at the
request of shareholders holding of record not less than one-fifth of all of the
shares outstanding and entitled to vote on the business for which the meeting is
being called. Integra's Bylaws provide that a special meeting may be called by
the Chairman of the Board, the President, any Vice-Chairman of the Board or the
Board of Directors.
VOTING, APPRAISAL RIGHTS AND CORPORATE REORGANIZATIONS
The DGCL generally requires a majority vote of stockholders to approve a
merger, sale of assets or similar reorganization transaction. Under Section
251(f) of the DGCL, however, no vote of the stockholders of a corporation
surviving the merger is required if the number of shares to be issued in the
merger does not exceed 20% of the shares of the surviving corporation
outstanding immediately prior to the date of the merger and if certain other
conditions are met. Although the approval of the Agreement by the stockholders
of National City is not required under the DGCL because the Merger is with a
subsidiary of National City, such adoption is included in the Agreement as a
condition to the parties' obligations for the purpose of meeting the NYSE
listing requirements to which National City is subject.
Section 262 of the DGCL does not provide for dissenters' rights of
appraisal for (a) the sale, lease or exchange of all or substantially all of the
assets of a corporation, (b) a merger by a corporation, the shares of which are
either listed on a national securities exchange or held by more than 2,000
stockholders if such stockholders receive shares of the surviving corporation or
of a listed or widely held corporation or
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(c) stockholders of a corporation surviving a merger if no vote of such
stockholders is required to approve the merger. See "MERGER -- Appraisal and
Dissenters' Rights -- National City."
The BCL requires that a majority of votes cast by shareholders entitled to
vote thereon is required to approve a plan of merger or share exchange. The
approval of the Agreement by the affirmative vote of a majority of the votes
cast of Integra Common eligible to vote is a condition to the parties'
obligation to close.
Section 1571 of the BCL does not provide for dissenters' rights for a
merger or plan of share exchange by a corporation the shares of which are (a)
registered on a national securities exchange, or (b) held of record by 2,000
shareholders. See "MERGER -- Appraisal and Dissenters' Rights -- Integra."
BYLAWS
Section 109 of the DGCL places the power to adopt, amend or repeal bylaws
in the corporation's shareholders, but permits the corporation, in its
certificate of incorporation, also to vest such power with the board of
directors. National City's Certificate contains such a provision. Although the
Board of Directors of National City has been vested with such authority,
National City's stockholders' power to adopt, amend or repeal Bylaws remains
unrestricted.
The Bylaws of Integra may be amended by a vote of a majority of the Board
of Directors at any regular meeting of the Board or at any special meeting
called for that purpose, except that under the BCL, the Board of Directors may
not amend the Bylaws in certain respects, including the provision relating to
the limitation of the personal liability of directors. Further, under the BCL,
any amendment of the Bylaws by Integra's Board of Directors is subject to the
power of the shareholders to change such action.
PREEMPTIVE RIGHTS
Under Section 102 of the DGCL, no statutory preemptive rights will exist,
unless a corporation's certificate of incorporation specifies otherwise.
National City's Certificate does not provide for any such preemptive rights.
Section 1530 of the BCL provides that the shareholders of a corporation do
not have a preemptive right to acquire a corporation's unissued shares except to
the extent the articles of incorporation so provide. Integra's Articles do not
provide for any such preemptive rights.
DIVIDENDS
Delaware corporations may pay dividends out of surplus or, if there is no
surplus, out of net profits for the fiscal year in which declared and for the
preceding fiscal year. Section 170 of the DGCL also provides that dividends may
not be paid out of net profits if, after the payment of the dividend, capital is
less than the capital represented by the outstanding stock of all classes having
a preference upon the distribution of assets.
In comparison, the BCL does not permit dividend distributions if, after
giving effect to the proposed dividend, (a) the corporation would be unable to
pay its debts as they become due in the ordinary course of business, or (b) the
corporation's total assets would be less than the sum of its total liabilities
plus (unless the articles of incorporation permit otherwise) the amount that
would be needed, if the corporation were to be dissolved at the time of
distribution, to satisfy the preferential rights (if any) of shareholders whose
preferential rights are superior to those shareholders receiving the
distribution.
National City and Integra are subject to the same FRB policies regarding
payment of dividends, which generally limit dividends to operating earnings. See
"CERTAIN REGULATORY CONSIDERATIONS -- Payment of Dividends."
INFORMATION ABOUT NATIONAL CITY
National City is a registered multi-bank holding company under the BHCA and
is a registered savings and loan holding company under the Home Owners' Loan Act
of 1933, as amended (the "HOLA"), and is incorporated under the laws of the
State of Delaware. As of December 31, 1995, National City owned
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substantially all of the outstanding stock of 17 commercial banks and 1 Federal
Savings Bank in Ohio, Kentucky and Indiana and through these financial
institutions, operated 645 offices. National City subsidiaries provide financial
services that meet a wide range of customer needs, including commercial and
retail banking, trust and investment services, item processing, mortgage
servicing and credit card processing. At December 31, 1995, National City, its
affiliate banks and other subsidiaries had consolidated total assets of $36.2
billion and consolidated total deposits of $25.2 billion.
National City was organized under Delaware law in 1972, and had, along with
its subsidiaries, 20,767 full-time equivalent employees at December 31, 1995.
As of December 31, 1995, the four largest commercial banking subsidiaries
of National City had offices and total assets, loans, deposits and equity
capital, as follows:
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS)
-------------------------------------------------------
TOTAL EQUITY
OFFICES ASSETS LOANS DEPOSITS CAPITAL
------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
National City Bank...................... 97 $ 10,188 $ 6,243 $5,935 $ 623
National City Bank, Kentucky............ 84 6,928 4,890 4,076 485
National City Bank, Columbus............ 121 6,764 4,367 4,651 390
National City Bank, Indiana............. 125 5,618 4,149 4,394 474
</TABLE>
For more detailed information about National City, reference is made to the
National City Annual Report on Form 10-K for the year ended December 31, 1995,
which is incorporated herein by reference. See "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
INFORMATION ABOUT INTEGRA
Integra is a regional, multibank holding company registered under the BHCA.
At December 31, 1995, Integra had consolidated total assets of $14.3 billion and
consolidated total deposits of $10.4 billion. Integra is the third largest bank
holding company in western Pennsylvania and the fifth largest in Pennsylvania.
Integra Bank carries on a general retail and commercial banking business through
263 offices throughout 23 counties in western Pennsylvania. Other major
affiliates include Integra Investment Company with assets of $360.4 million,
Integra Mortgage Company with a $3.7 billion portfolio of loans serviced for
others, Integra Trust Company with assets at a market value of $9.3 billion on
December 31, 1995 and Altegra Credit Company, an indirect, non-conforming
mortgage and home equity lender.
For more detailed information about Integra, reference is made to the
Integra Annual Report on Form 10-K for the fiscal year ended December 31, 1995,
which is incorporated herein by reference. See "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
EXPERTS
The consolidated financial statements of National City appearing in
National City's Annual Report on Form 10-K for the fiscal year ended December
31, 1995, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements included in Integra's Annual Report
on Form 10-K for the fiscal year ending December 31, 1995, incorporated by
reference in this Prospectus and Joint Proxy Statement, have been incorporated
herein in reliance on the report, which includes an explanatory paragraph
discussing the adoption of various Financial Accounting Standards Board
Statements in 1995 and 1993, of Coopers & Lybrand L.L.P., independent certified
public accountants, given on the authority of that firm as experts in accounting
and auditing.
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LEGAL OPINIONS
The Agreement provides as a condition to the parties' obligation to close
that National City and Integra shall have received the opinion of Buchanan
Ingersoll Professional Corporation, substantially to the effect, among other
things, that no gain or loss will be recognized by the shareholders of Integra
who exchange their shares of Integra Common solely for shares of National City
Common pursuant to the Merger.
NATIONAL CITY STOCKHOLDER PROPOSALS
Holders of National City Common who wish to make a proposal to be included
in National City's Proxy Statement and Proxy for National City's 1997 Annual
Meeting of Stockholders which, unless changed, is scheduled to be held on April
28, 1997, in Cleveland, Ohio, must cause such proposal to be received by
National City at its principal office not later than November 6, 1996. Each
proposal submitted should be accompanied by the name and address of the
stockholder submitting the proposal, the number of shares of National City
Common owned, and the dates those shares were acquired by the stockholder. If
the proponent is not a stockholder of record, proof of beneficial ownership
should also be submitted. The proponent should also state his or her intention
to appear at National City's 1997 Annual Meeting, either in person or by
representative, to present the proposal. The proxy rules of the Commission
govern the content and form of stockholder proposals and the minimum
stockholding requirement. All proposals must be a proper subject for action at
National City's 1997 Annual Meeting.
TRANSACTIONS WITH MANAGEMENT
Certain of National City's directors, executive officers and associates of
directors or executive officers were customers of or had various transactions
with National City and its subsidiaries in the ordinary course of business in
1995. These transactions cover a wide range of banking and trust services, both
personal and corporate. Without exception, all services were provided to the
directors, executive officers and their associates at market rates consistent
with published fee schedules. Similar additional transactions may be expected to
take place in the ordinary course of business in the future. Although various
laws and regulations governing National City and its subsidiaries allow National
City and its subsidiaries to make loans to a limited extent to its executive
officers, all loans and loan commitments and sales of commercial paper involving
executive officers, directors or their affiliates were made on substantially the
same terms, including interest rates and collateral, as those prevailing at that
time for comparable transactions with other persons and, did not involve more
than the normal risk of collectibility or other unfavorable features.
GENERAL
Management of National City is not aware of any matter which may be
presented for action at the Annual Meeting other than the matters herein set
forth. If any other matters come before the meeting or any adjournment thereof,
it is the intention of the persons named in the enclosed proxy to vote the
shares represented thereby in accordance with their best judgment pursuant to
the discretionary authority granted in the proxy.
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APPENDIX A
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..................................................................... A-7
1.2 Effective Time............................................................. A-7
1.3 Effect of Merger........................................................... A-7
1.4 Certificate of Incorporation and By-laws................................... A-7
1.5 Directors and Officers..................................................... A-7
(a) Surviving Corporation...................................................... A-7
(b) NCC........................................................................ A-8
1.6 Additional Actions......................................................... A-8
II. CONVERSION OF SHARES
2.1 Conversion of Shares....................................................... A-8
2.2 Assumption of Employee Stock Options....................................... A-8
2.3 Exchange of Certificates
(a) Exchange Agent............................................................. A-9
(b) Notice of Exchange......................................................... A-9
(c) Transfer................................................................... A-9
(d) Right to Merger Consideration.............................................. A-9
(e) Distribution with Respect to Unexchanged Certificates...................... A-10
(f) Lost or Destroyed Exchanged Certificates................................... A-10
(g) Voting With Respect to Unexchanged Certificates............................ A-10
(h) No Fractional Shares....................................................... A-10
2.4 Closing of the Company's Transfer Books.................................... A-10
2.5 Changes in NCC Common Stock................................................ A-11
III. REPRESENTATIONS AND WARRANTIES OF NCC
3.1 Corporate Organization..................................................... A-11
3.2 Authority.................................................................. A-11
3.3 Capitalization............................................................. A-11
3.4 Subsidiaries............................................................... A-12
3.5 Information in Disclosure Documents, Registration Statement, Etc........... A-12
3.6 Consents and Approvals; No Violation....................................... A-12
3.7 Reports and Financial Statements........................................... A-13
3.8 Taxes...................................................................... A-13
3.9 Employee Plans............................................................. A-13
3.10 Material Contracts......................................................... A-14
3.11 Absence of Certain Changes or Events....................................... A-14
3.12 Litigation................................................................. A-15
3.13 Compliance with Laws and Orders............................................ A-15
3.14 Agreements with Bank Regulators, Etc....................................... A-15
3.15 NCC Ownership of Stock..................................................... A-15
3.16 Accounting Matters......................................................... A-15
3.17 Fees....................................................................... A-15
3.18 Company Action............................................................. A-15
3.19 Vote Required.............................................................. A-16
3.20 Material Interests of Certain Persons...................................... A-16
3.21 Environmental Matters...................................................... A-16
</TABLE>
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IV. REPRESENTATIONS AND WARRANTIES OF IFC
4.1 Corporate Organization..................................................... A-17
4.2 Authority.................................................................. A-17
4.3 Capitalization............................................................. A-17
4.4 Subsidiaries............................................................... A-18
4.5 Information in Disclosure Documents, Registration Statement, Etc........... A-18
4.6 Consent and Approvals; No Violation........................................ A-18
4.7 Reports and Financial Statements........................................... A-18
4.8 Taxes...................................................................... A-19
4.9 Employee Plans............................................................. A-19
4.10 Material Contracts......................................................... A-20
4.11 Absence of Certain Changes or Events....................................... A-20
4.12 Litigation................................................................. A-20
4.13 Compliance with Laws and Orders............................................ A-20
4.14 Agreements with Bank Regulators, Etc....................................... A-21
4.15 Accounting Matters......................................................... A-21
4.16 Fees....................................................................... A-21
4.17 Company Action............................................................. A-21
4.18 Vote Required.............................................................. A-21
4.19 Material Interests of Certain Persons...................................... A-21
4.20 Environmental Matters...................................................... A-21
V. COVENANTS
5.1 Acquisition Proposals...................................................... A-22
5.2 Interim Operations of IFC.................................................. A-22
(a) Conduct of Business........................................................ A-22
(b) Articles and By-laws....................................................... A-22
(c) Capital Stock.............................................................. A-22
(d) Dividends.................................................................. A-22
(e) Employee Plans, Compensation, Etc.......................................... A-23
(f) Certain Policies........................................................... A-23
5.3 Interim Operations of NCC.................................................. A-23
5.4 Employee Matters........................................................... A-23
(a) Benefit Agreements......................................................... A-23
(b) Retirement Plans........................................................... A-23
(c) General.................................................................... A-23
5.5 Access and Information..................................................... A-23
5.6 Certain Filings, Consents and Arrangements................................. A-24
5.7 State Takeover Statutes.................................................... A-24
5.8 Indemnification and Insurance.............................................. A-24
(a) Indemnification............................................................ A-24
(b) Insurance.................................................................. A-24
5.9 Additional Agreements...................................................... A-24
5.10 Publicity.................................................................. A-25
5.11 Registration Statement..................................................... A-25
5.12 Securities Act; Pooling-of-Interests....................................... A-25
5.13 Stock Exchange Listings.................................................... A-25
5.14 Proxy...................................................................... A-25
5.15 Stockholders' Meetings..................................................... A-25
5.16 Pooling-of-Interests and Tax-Free Reorganization Treatment................. A-26
5.17 Provision of Shares........................................................ A-26
</TABLE>
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VI. CLOSING MATTERS
6.1 The Closing................................................................ A-26
6.2 Documents and Certificates................................................. A-26
VII. CONDITIONS
7.1 Conditions to Each Party's Obligations to Effect the Merger................ A-26
7.2 Conditions to Obligation of IFC to Effect the Merger....................... A-27
7.3 Conditions to Obligation of NCC to Effect the Merger....................... A-28
VIII. MISCELLANEOUS
8.1 Termination................................................................ A-28
8.2 Non-Survival of Representations, Warranties and Agreements................. A-28
8.3 Waiver and Amendment....................................................... A-28
8.4 Entire Agreement........................................................... A-29
8.5 Applicable Law; Consent to Jurisdiction.................................... A-29
8.6 Certain Definitions; Headlines............................................. A-29
8.7 Notices.................................................................... A-29
8.8 Counterparts............................................................... A-30
8.9 Parties in Interest; Assignment............................................ A-30
8.10 Expenses................................................................... A-30
8.11 Enforcement of the Agreement............................................... A-31
8.12 Severability............................................................... A-31
Signatures......................................................................... A-31
Index to Definitions............................................................... A-5
</TABLE>
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INDEX TO DEFINITIONS
<TABLE>
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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)
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
</TABLE>
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<TABLE>
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DEFINITIONS SECTIONS
- ----------------------------------------------------------------------------------------------
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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
</TABLE>
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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 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
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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, 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
(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
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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.
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 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
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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 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 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
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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 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
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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 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 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
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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.
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 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
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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) 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 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
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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 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 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
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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 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.
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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, 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 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
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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 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 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,
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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 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 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
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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 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, 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
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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 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.
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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, 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 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
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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, 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.
(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
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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.
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 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,
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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.
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.
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
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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:
(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
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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 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 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,
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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 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, 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.
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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;
(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
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.
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(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.
(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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APPENDIX B
March 15, 1996
Board of Directors
Integra Financial Corporation
Four PPG Place
Pittsburgh, PA 15222
Members of the Board:
We understand that Integra Financial Corporation ("Integra" or the
"Company") and National City Corporation ("National City") have entered an
Agreement and Plan of Merger dated August 27, 1995 (the "Merger Agreement"),
which provides, among other things, for the merger (the "Merger") of Integra
with and into National City. Pursuant to the Merger, each outstanding share of
common stock, par value $1.00 per share, of Integra ("Integra Common"), other
than shares held in treasury or held by National City or any direct or indirect
wholly-owned subsidiary of National City (except for any such shares of Integra
Common held in trust accounts, managed accounts or in any similar manner as
trustee or in a fiduciary capacity or acquired in satisfaction of debts
previously contracted), will be canceled, retired and converted into 2.00 (the
"Exchange Ratio") shares of common stock, par value $4.00 per share, of National
City (the "National City Common"). We understand that the transaction will be
accounted for as a pooling of interests. The terms and conditions of the Merger
are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the Exchange Ratio pursuant to
the Merger Agreement is fair from a financial point of view to holders of
Integra Common (other than National City and its subsidiaries).
For purposes of the opinion set forth herein, we have:
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(i) analyzed certain publicly available financial statements and other information of
Integra and National City, respectively;
(ii) analyzed certain internal financial statements and other financial and operating
data concerning Integra and National City prepared by the managements of Integra and
National City, respectively;
(iii) analyzed certain financial projections prepared by the managements of Integra and
National City, respectively;
(iv) discussed the past and current operations and financial condition and the prospects
of Integra and National City with senior executives of Integra and National City,
respectively;
(v) reviewed the reported prices and trading activity for the Integra Common and the
National City Common;
(vi) compared the financial performance of Integra and National City and the prices and
trading activity of the Integra Common and the National City Common with that of
certain other comparable bank holding companies and their securities;
(vii) discussed the results of regulatory examinations of Integra and National City with
the senior managements of the respective companies;
(viii) reviewed and discussed with the senior managements of Integra and National City the
strategic objectives of the Merger and the synergies and certain other benefits of
the Merger;
(ix) analyzed certain pro forma financial projections for the combined company prepared
by Integra and National City;
(x) reviewed and discussed with the senior managements of Integra and National City
certain estimates of the cost savings expected to result from the Merger;
(xi) reviewed the financial terms, to the extent publicly available, of certain
comparable merger transactions;
</TABLE>
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<TABLE>
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(xii) participated in discussions and negotiations among representatives of Integra and
National City and their financial and legal advisors;
(xiii) reviewed the Merger Agreement, the Stock Option Agreements between Integra and
National City each dated as of August 27, 1995 and certain related documents; and
(xiv) performed such other analyses as we have deemed appropriate.
</TABLE>
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for purposes of this
opinion. With respect to the financial projections, including the estimates of
synergies and other benefits expected to result from the Merger, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of Integra
and National City, respectively. We have not made any independent valuation or
appraisal of the assets or liabilities of Integra and National City, nor have we
been furnished with any such appraisals and we have not examined any loan files
of Integra and National City. Our opinion is necessarily based on economic,
market and other conditions as in effect on, and the information made available
to us as of, the date hereof.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any other party with respect to the acquisition of
Integra or any of its assets.
We have acted as financial advisor to the Board of Directors of Integra in
connection with this transaction and will receive a fee for our services. In the
past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services to Integra and National City and have
received fees for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of Integra and may not be used for any other purpose without our prior
written consent.
Based on and subject to the foregoing, we are of the opinion on the date
hereof that the Exchange Ratio pursuant to the Merger Agreement is fair from a
financial point of view to holders of Integra Common (other than National City
and its subsidiaries).
Very truly yours,
MORGAN STANLEY & CO.
INCORPORATED
By: /s/ DONALD A. MOORE, JR.
Donald A. Moore, Jr.
Managing Director
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MERRILL LYNCH LOGO
March 15, 1996
Board of Directors
National City Corporation
1900 East 9th Street
Cleveland, Ohio 44114
Members of the Board:
National City Corporation ("National City") and Integra Financial
Corporation ("Integra") have entered into an Agreement and Plan of Merger (the
"Agreement") dated August 27, 1995, pursuant to which Integra will be merged
with and into National City in a transaction (the "Merger") in which each
outstanding share of Integra's common stock, par value $1.00 per share (the
"Integra Shares"), will be converted into the right to receive 2.00 shares (the
"Exchange Ratio") of the common stock, par value $4.00 per share, of National
City (the "National City Shares"), all as set forth more fully in the Agreement.
In connection with the Merger, the parties have also entered into agreements,
dated August 27, 1995, (the "Option Agreements") pursuant to which National City
and Integra have granted to the other an option to acquire, under certain
circumstances, a certain number of their respective common shares outstanding,
all as set forth more fully in the Option Agreements.
You have asked us whether, in our opinion, the proposed Exchange Ratio in
the Merger is fair to National City from a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed Integra's Annual Reports on Form 10-K and related financial
information for the five fiscal years ended December 31, 1995;
(2) Reviewed National City's Annual Reports on Form 10-K and related
financial information for the five fiscal years ended December 31,
1995;
(3) Reviewed certain information, including financial forecasts and
assumptions regarding cost savings resulting from the Merger, relating
to the respective business, earnings, assets, contingencies and
prospects of Integra and National City, furnished to us by Integra and
National City;
(4) Conducted discussions with members of senior management of Integra and
National City concerning their respective financial condition,
businesses, operations, regulatory condition, financial forecasts,
contingencies and prospects;
(5) Reviewed the historical market prices and trading activity for the
Integra Shares and the National City Shares and compared them with
that of certain publicly traded companies which we deemed to be
relevant;
(6) Compared the results of operations of Integra and National City with
that of certain companies which we deemed to be relevant;
(7) Compared the proposed financial terms of the Merger contemplated by
the Agreement with the financial terms of certain other mergers and
acquisitions which we deemed to be relevant;
(8) Analyzed, based upon information provided by National City's senior
management, the pro forma impact of the transaction on the earnings
and book value per share, consolidated capitalization and certain
balance sheet and profitability ratios of National City;
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(9) Reviewed the Agreement;
(10) Reviewed the Option Agreements; and
(11) Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed appropriate.
In preparing our opinion, we have relied on the accuracy and completeness
of all information supplied or otherwise made available to us by Integra and
National City, and we have not independently verified such information or
undertaken an independent evaluation or appraisal of the assets or liabilities,
contingent or otherwise, of Integra or National City or any of their
subsidiaries, nor have we been furnished any such evaluation or appraisal. We
have also relied upon the managements of Integra and National City as to the
reasonableness and achievability of the financial forecasts (and the assumptions
and bases therefor) provided to us. In that regard, we have assumed with your
consent that such forecasts, including without limitation, financial forecasts,
evaluations of contingencies, projected cost savings and operating synergies
resulting from the Merger and projections regarding future economic conditions
and results of operations reflect the best currently available estimates and
judgments of such respective managements as to the future financial performance
of Integra and National City. Our opinion is necessarily based on economic,
market and other conditions as in effect on, and the information made available
to us as of, the date hereof. We are not experts in the evaluation of allowances
for loan losses and we have not assumed any responsibility for making an
independent evaluation of the adequacy of the allowance for loan losses of
Integra and National City nor have we reviewed any individual credit files.
We have been retained by the Board of Directors of National City as an
independent contractor to act as financial advisor to National City with respect
to the Merger and will receive a fee for our services. We may have, in the past,
provided financial advisory and financing services to Integra and National City
and received fees for the rendering of such services. In addition, in the
ordinary course of business, we may actively trade debt and/or equity securities
of Integra and National City and their respective affiliates for our own account
and the accounts of our customers, and we therefore may from time to time hold a
long or short position in such securities.
Our opinion is directed to the Board of Directors of National City and does
not constitute a recommendation to any shareholder of National City as to how
such shareholder should vote at any shareholder meeting of National City held in
connection with the Merger.
On the basis of, and subject to the foregoing, we are of the opinion that
the proposed Exchange Ratio in the Merger is fair to National City from a
financial point of view.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
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APPENDIX D
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 hereinafter 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 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
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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);
(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
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application for approval and shall expeditiously process the same and the period
of time that otherwise would run pursuant to this sentence shall run from the
later of (x) the date on which any required notification periods have expired or
been terminated and (y) the date on which such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall pay to Issuer the aggregate purchase price for the shares of Common
Stock purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Issuer, PROVIDED that
failure or refusal of Issuer to designate such a bank account shall not preclude
the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer a copy of this Stock Option Agreement and a letter
agreeing that the Holder will not offer to sell or otherwise dispose of such
shares in violation of applicable law or the provisions of this Stock Option
Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder shall be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject to
certain provisions of an agreement between the registered holder hereof
and Issuer and to resale restrictions arising under the Securities Act of
1933, as amended. A copy of such agreement is on file at the principal
office of Issuer and will be provided to the holder hereof without charge
upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the Securities and Exchange Commission (the "SEC"), or an opinion of counsel,
in form and substance satisfactory to Issuer, to the effect that such legend is
not required for purposes of the 1933 Act; (ii) the reference to the provisions
of this Stock Option Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the shares have been sold
or transferred in compliance with the provisions of this Stock Option Agreement
and under circumstances that do 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.
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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 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
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registration of Option Shares as provided above, Issuer is in the process of
registration with respect to an underwritten public offering of shares of Common
Stock, and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering the offering or inclusion of the Holder's Option or Option Shares would
interfere with the successful marketing of the shares of Common Stock offered by
Issuer, the number of Option Shares otherwise to be covered in the registration
statement contemplated hereby may be reduced; PROVIDED, HOWEVER, that after any
such required reduction the number of Option Shares to be included in such
offering for the account of the Holder shall constitute at least 25% of the
total number of shares to be issued by the Holder and Issuer in the aggregate;
PROVIDED FURTHER, however, that if such reduction occurs, then the Issuer shall
file a registration statement for the balance as promptly as practical and no
reduction shall thereafter occur. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. Upon receiving any request under this Section 6 from any
Holder, Issuer agrees to send a copy thereof to any other person known to Issuer
to be entitled to registration rights under this Section 6, in each case by
promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies.
7. (a) Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, (i) at the request of the Holder,
delivered within 30 days of the Subsequent Trigger Event (or such later period
as may be provided pursuant to Section 10), Issuer shall repurchase the Option
from the Holder at a price (the "Option Repurchase Price") equal to (x) the
amount by which (A) the market/offer price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which this Option may then
be exercised plus (y) Grantee's Out-of-Pocket Expenses (as defined below) (to
the extent not previously reimbursed) and (ii) at the request of the owner of
Option Shares from time to time (the "Owner"), delivered within 30 days of a
Subsequent Trigger Event (or such later period as may be provided pursuant to
Section 10), Issuer shall repurchase such number of the Option Shares from the
Owner as the Owner shall designate at a price (the "Option Share Repurchase
Price") equal to (x) the market/offer price multiplied by the number of Option
Shares so designated plus (y) Grantee's Out-of-Pocket Expenses (to the extent
not previously reimbursed). The term "Out-of-Pocket Expenses" shall mean
Grantee's reasonable out-of-pocket expenses incurred in connection with the
transactions contemplated by the Agreement, including, without limitation,
legal, accounting and investment banking fees. The term "market/offer price"
shall mean the highest of (i) the price per share of Common Stock at which a
tender offer or exchange offer therefor has been made after the date hereof,
(ii) the price per share of Common Stock to be paid by any third party pursuant
to an agreement with Issuer, (iii) the highest closing 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.
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(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 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.
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(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Stock Option Agreement, which
shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option is then exercisable,
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option is then exercisable and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for a number of shares that together with the
number of shares owned by 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 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
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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:
(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
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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 (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
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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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APPENDIX E
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:
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 hereinafter 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 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
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"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
(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
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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 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.
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5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Stock Option Agreement, the number of shares of Common Stock purchasable upon
the exercise of the Option shall be subject to adjustment from time to time as
provided in this Section 5.
(a) In the event of any change in Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares or the like, the type and number of shares of
Common Stock purchasable upon exercise hereof shall be appropriately adjusted.
(b) Whenever the number of shares of Common Stock purchasable upon exercise
hereof is adjusted as provided in this Section 5, the Option Price shall be
adjusted by multiplying the Option Price by a fraction, the numerator of which
shall be equal to the number of shares of Common Stock purchasable prior to the
adjustment and the denominator of which shall be equal to the number of shares
of Common Stock purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within 30 days (or such later date as may be provided pursuant to
Section 10) of such Subsequent Triggering Event (whether on its own behalf or on
behalf of any subsequent holder of this Option (or part thereof) or any of the
shares of Common Stock issued pursuant hereto), promptly prepare, file and keep
current a shelf registration statement under the 1933 Act covering any shares
issued and issuable pursuant to this Option and shall use its best efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of any shares of Common Stock
issued upon total or partial exercise of this option ("Option Shares") in
accordance with any plan of disposition requested by Grantee; PROVIDED, HOWEVER,
that Issuer may postpone filing a registration statement relating to a
registration request by Grantee under this Section 6 for a period of time (not
in excess of 180 days) if in its judgment such filing would require the
disclosure of material information that Issuer has a BONA FIDE business purpose
for preserving as confidential. Issuer will use its best efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 180 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee shall have the
right to demand two such registrations. If requested by any such Holder in
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
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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
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
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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 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.
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(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 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
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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 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.
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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 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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APPENDIX F
NATIONAL CITY CORPORATION
AMENDED AND RESTATED
1993 STOCK OPTION PLAN
(The proposed changes to the National City Corporation 1993 Stock Option Plan
are set forth below. The italicized language is the language that will be added.
The language that will be deleted is shown with a rule drawn through the text.)
1. PURPOSES. The purposes of this 1993 Stock Option Plan are to provide
employment incentives and to encourage capital accumulation and stock ownership
by Eligible Employees of National City Corporation (the "Corporation") or of any
of its Subsidiaries, and to provide to designated Optionees under stock options
heretofore or hereafter granted pursuant to any stock option plan of the
Corporation or of any of its Subsidiaries an alternative method of realizing the
benefits provided by such stock options.
2. DEFINITIONS. As used in this Plan,
(a) The term "Appreciation Right" means a right granted pursuant to
Paragraph 5 of this Plan.
(b) The term "Board of Directors" means the Board of Directors of National
City Corporation.
(c) The term "Committee" means the Committee provided for in Paragraph 9(a)
of this Plan.
(d) The term "Common Stock" means Common Stock, par value $4 per share, of
the Corporation or any security into which such Common Stock may be changed by
reason of any transaction or event of the type described in Paragraph 7 of
this Plan.
(e) The term "Eligible Employees" means persons who are at the time the
officers (including officers who are members of the Board of Directors) and
other key employees of the Corporation or of any of its Subsidiaries.
(f) The term "Market Value per Share" means, at any date, the closing price,
per share, of the shares of Common Stock, on the New York Stock Exchange on
that date as reported by The Wall Street Journal (Midwest Edition) or, if the
Common Stock shall be primarily traded in another market, as determined in a
manner specified by the Board of Directors using quotations in such other
market.
(g) The term "Optionee" shall mean the optionee named in an agreement
evidencing an Outstanding Option.
(h) The term "Option Right" means the right to purchase a share of Common
Stock upon exercise of an Outstanding Option.
(i) The term "Outstanding Option" means, at any time, an option to purchase
shares of Common Stock granted by the Corporation or any of its Subsidiaries
pursuant to this Plan or any other stock option plan of the Corporation or any
such Subsidiary now or hereafter in effect, or pursuant to any stock option
plan of any corporation which is merged into the Corporation and where the
Corporation has by action of its Board of Directors, assumed the obligations
of such corporation under such stock option plan, all whether or not such
option is at the time exercisable, to the extent that such option at such time
has not been exercised and has not terminated.
(j) "Additional Option Feature" means a feature of an Option that provides
for the automatic grant of an Additional Option in accordance with the
provisions described in Section 5.
(k) "Additional Option" means an Option Right granted to an Optionee to
purchase a number of shares of Common Stock equal to the number of shares of
already owned Company stock delivered by the Optionee as payment of the
exercise price upon exercise of an Option Right and/or the number of shares of
Common Stock tendered or relinquished as payment of the amount to be withheld
under applicable federal, state and local income tax laws in connection with
the exercise of an option as described in Section 5.
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(j) (l) The term "Spread" means the excess of the Market Value per Share of
Common Stock on the date when an Appreciation Right is exercised over the
option price provided for in the related Option Right.
(k) (m) The term "Subsidiary" shall mean any corporation in which at the
time the Corporation owns or controls, directly or indirectly, not less than
50% of the total combined voting power represented by all classes of stock
issued by such corporation.
(l) (n) The term "Internal Revenue Code" means the 1986 Internal Revenue
Code, as amended from time to time.
(m) (o) The term "Incentive Stock Option" means an Option Right granted by
the Corporation to an eligible employee, which Option Right is intended to
qualify as an "Incentive Stock Option" as that term is used in Section 422A of
the Internal Revenue Code.
3. SHARES AVAILABLE UNDER PLAN.
(a) The shares of Common Stock which may be made the subject of Option
Rights and Appreciation Rights pursuant to this Plan may be treasury shares or
shares of original issue or a combination of the foregoing.
(b) Subject to adjustments in accordance with Paragraph 7 of this Plan, the
maximum number of shares of Common Stock which may be sold upon the exercise
of Option Rights granted pursuant to this Plan shall be 5,000,000 shares of
Common Stock which are made available for sale by virtue of this Plan. For
purposes of determining the number of shares that may be sold under the Plan,
such number shall increase by the number of shares surrendered by an optionee
or relinquished to the Corporation (a) in connection with the exercise of a
Stock Option or (b) in payment of federal, state and local income tax
withholding liabilities upon exercise of an Option Right.
(c) Subject to adjustments in accordance with Paragraph 7 of this Plan, the
maximum number of Shares of Common Stock which may be delivered upon the
exercise of Appreciation Rights granted pursuant to this Plan shall not exceed
5,000,000.
(d) Shares covered by Option Rights cancelled upon exercise of Appreciation
Rights shall not be available for the granting of further Option Rights under
this Plan or under any other stock option plan of the Corporation or of any of
its Subsidiaries, anything in this Plan or such other stock option plan to the
contrary notwithstanding.
4. GRANTS OF OPTION RIGHTS. The Board of Directors may, from time to time
and upon such terms and conditions as it may determine, authorize the granting
to Eligible Employees of Option Rights. Each such grant may utilize any or all
of the authorizations, and shall be subject to all of the limitations, contained
in the following provisions:
(a) Each grant shall specify the number of shares of Common Stock to which
it pertains.
(b) Each grant shall specify an option price per share not less than the
Market Value per Share on the date of grant.
(c) Successive grants may be made to the same Eligible Employee whether or
not any Option Rights previously granted to such Eligible Employee remain
unexercised. No Eligible Employee may, however, be granted under this plan, in
the aggregate, more than 500,000 Option Rights, subject to adjustment pursuant
to Paragraph 7 of this Plan.
(d) Option Rights granted under this Plan may be (i) options which are
intended to qualify under particular provisions of the Internal Revenue Code,
as in effect from time to time, (ii) options which are not intended so to
qualify, or (iii) combinations of the foregoing.
(e) The date of grant of each Option Right shall be the date of its
authorization by the Board of Directors, except that the date of grant of an
Additional Option shall be the date of exercise of the underlying Option
Right. No Option Right shall be exercisable more than 10 years from such date
of grant.
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(f) Upon exercise of an Option Right, the option price shall be payable (i)
in cash, (ii) by the transfer to the Corporation by the Optionee of shares of
Common Stock with a value (Market Value per Share times the number of shares)
equal to the total option price, or (iii) by a combination of such methods of
payment.
(g) Each grant of Option Rights shall be evidenced by an agreement executed
on behalf of the Corporation by any officer designated by the Board of
Directors for this purpose and delivered to and accepted by the Eligible
Employee and shall contain such terms and provisions, consistent with this
Plan, as the Board of Directors may approve.
(h) No Option Rights, intended to be an Incentive Stock Option, shall be
granted hereunder to any Optionee which would allow the aggregate fair market
(determined at the time the Option Rights are granted) of the stock subject of
all post 1986 Incentive Stock Options, including the Incentive Stock Option in
question, which such Optionee may exercise for the first time during any
calendar year, to exceed $100,000. The term "post 1986 Incentive Stock
Options" shall mean all Option Rights, which are intended to be Incentive
Stock Options, granted on or after January 1, 1987 under any Stock Option Plan
of the Corporation or its subsidiaries. If the Corporation shall ever be
deemed to have a "parent," as such term is used in Section 422A of the
Internal Revenue Code, as amended, then Stock Options intended to be Incentive
Stock Options, granted after January 1, 1987, under such parent's Stock Option
plans, shall be included with the terms of the definition of "post 1986
Incentive Stock Options".
5. ADDITIONAL OPTION. (a) The Committee may, at or after the date of
grant of Option Rights, grant Additional Options. Additional Options may be
granted with respect to any Outstanding Option.
(b) If an Optionee exercises an Outstanding Option that has an Additional
Option Feature by delivering already owned shares of Common Stock and/or when
shares of Common Stock are tendered or relinquished as payment of the amount to
be withheld under applicable federal, state and local income tax laws (at
withholding rates not to exceed the Optionee's applicable marginal tax rates) in
connection with the exercise of an option, the Optionee shall automatically be
granted an Additional Option. The Additional Option shall be subject to the
following provisions:
(1) The Additional Option shall cover the number of shares of Common Stock
equal to the sum of (A) the number of shares of Common Stock delivered as
consideration upon the exercise of the previously granted Outstanding Option
to which such Additional Option Feature relates and (B) the number of shares
of Common Stock tendered or relinquished as payment of the amount to be
withheld under applicable federal, state and local income tax laws in
connection with the exercise of the option to which such Additional Option
Feature relates;
(2) The Additional Option will not have an Additional Option Feature unless
the Committee directs otherwise;
(3) The Additional Option option price shall be 100% of the Market Value per
Share on the date the employee delivers shares of Common Stock to exercise the
Option that has the Additional Option Feature and/or delivers or forfeits
shares of Common Stock in payment of income tax withholding on the exercise of
an Option that has the Additional Option Feature;
(4) The Additional Option shall not be exercised within the first six months
after it is granted; provided that this restriction shall not apply if the
Optionee becomes disabled or dies during the six-month period; and
(5) The Additional Option shall have the same termination date and other
termination provisions as the underlying Option that had the Additional Option
Feature.
5. 6. GRANTS OF APPRECIATION RIGHTS. The Board of Directors may from time
to time authorize the granting of Appreciation Rights in respect of any or all
of the Option Rights under any Outstanding Option (including Options Rights
simultaneously granted) to the Optionee thereunder. An Appreciation Right shall
be a right in the Optionee to receive from the Corporation an amount which shall
be determined by the Board of Directors and shall be expressed as a percentage
of the Spread (not exceeding 100%) at the time of exercise. To the extent such
Optionee elects to exercise such Appreciation Right instead of the related
Option
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Right, the related Option Right shall be cancelled, and vice versa. Each such
grant may utilize any or all of the authorizations, and shall be subject to all
of the limitations, contained in the following provisions:
(a) Any grant may permit the exercise of an Appreciation Right with respect
to the value of shares of Common Stock covered by the related Option Rights.
(b) Any grant may specify that the amount payable on exercise of an
Appreciation Right may be paid by the Corporation in cash, in shares of Common
Stock or in any combination thereof, and may either grant to the Optionee or
retain in the Board of Directors the right to elect among those alternatives.
(c) Each grant shall provide that the maximum number of shares of Common
Stock deliverable upon exercise of an Appreciation Right may not exceed the
number of shares of Common Stock purchasable upon exercise of the related
Option Rights.
(d) Any grant may specify waiting periods before exercise and permissible
exercise dates or periods. No Appreciation Right shall be exercisable except
at a time when the related Option Right is also exercisable.
(e) Each grant of an Appreciation Right shall be evidenced by an agreement
executed on behalf of the Corporation by any officer designated by the Board
of Directors for this purpose and delivered to and accepted by the Optionee,
which agreement shall describe such Appreciation Right, identify the related
Option Rights, state that such Appreciation Right is subject to all the terms
and conditions of this Plan, including the right of the Board of Directors to
amend, suspend or terminate such Appreciation Right as set forth in Paragraph
10(c) of this Plan, and contain such other terms and provisions, consistent
with this Plan, as the Board of Directors may approve.
6. 7. TRANSFERABILITY. No Option Right including any related Appreciation
Right shall be transferable by an Optionee other than by will or the laws of
descent and distribution. Option Rights and Appreciation Rights shall be
exercisable during the Optionee's lifetime only by the Optionee or by the
Optionee's guardian or legal representative.
7. 8. ADJUSTMENTS. The Board of Directors may make or provide for such
adjustments in the maximum numbers of shares of Common Stock specified in
Paragraphs 3(b) and (c) and 4(c) of this Plan, in the numbers of shares of
Common Stock covered by Option Rights and Appreciation Rights granted hereunder,
and in the prices per share applicable under such Option Rights and Appreciation
Rights, as such Board in its sole discretion, exercised in good faith, may
determine is equitably required to prevent dilution or enlargement of the rights
of Optionees that otherwise would result from any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Corporation, merger, consolidation, spin-off, reorganization, partial or
complete liquidation, issuance of rights or warrants to purchase securities, or
any other corporate transaction or event having an effect similar to any of the
foregoing.
8. 9. FRACTIONAL SHARES. The Corporation shall not be required to issue
any fractional share of Common Stock pursuant to this Plan. The Board of
Directors may provide for the elimination of fractions or for the settlement of
fractions in cash.
9. 10. ADMINISTRATION OF THE PLAN.
(a) This Plan shall be administered by the Board of Directors, which may
from time to time delegate all or any part of its authority under this Plan to
a Compensation and Organization Committee of the Board of Directors of not
less than three disinterested Directors appointed by the Board of Directors.
To the extent of such delegation, references herein to the "Board of
Directors" shall include the Compensation and Organization Committee. No
Option Right or Appreciation Right shall be granted to any member of the
Compensation and Organization Committee so long as his membership continues.
(b) The interpretation and construction by the Board of Directors of any
provision of this Plan or of any agreement evidencing the grant of Option
Rights or Appreciation Rights and any determination by the Board of Directors
pursuant to any provision of this Plan or of any such agreement shall be final
and
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conclusive. No member of the Board of Directors shall be liable for any such
action or determination made in good faith.
11. AMENDMENTS, ETC.
(a) This Plan may be amended from time to time by the Board of Directors but
without further approval by the stockholders of the Corporation no such
amendment shall (i) increase the maximum numbers of shares of Common Stock
specified in Paragraphs 3(b) and (c) and 4(c) of this Plan (except that
adjustments authorized by Paragraph 7 of this Plan shall not be limited by
this provision), (ii) change the definition of "Eligible Employees", or (iii)
materially increase the benefits accruing to Optionees hereunder.
(b) The Board of Directors may, with the concurrence of the affected
Optionee, cancel any agreement evidencing Option Rights granted under this
Plan. In the event of such cancellation, the Board of Directors may authorize
the granting of new Option Rights (which may or may not cover the same number
of shares which had been the subject of the prior agreement) in such manner,
at such option price and subject to the same terms, conditions and discretions
as, under this Plan, would have been applicable had the cancelled Option
Rights not been granted.
(c) The Board of Directors may at any time amend, suspend or terminate any
agreement evidencing Appreciation Rights granted under this Plan; in the case
of an amendment, the amended Appreciation Right shall conform to the
provisions of this Plan.
(d) In the case of any Option or Appreciation Right not immediately
exercisable in full, the Board of Directors in its discretion may accelerate
the time at which Option or Appreciation Rights may be exercised.
12. ASSUMPTIONS.
(a) In the event that a corporation is merged into the Corporation, and the
Corporation is the survivor of such merger, the Board of Directors may elect,
in its sole discretion, to assume under this Plan any or all outstanding
options granted by such corporation to its officers and employees under any
stock option plan adopted by it prior to such merger. Such assumptions shall
be on such terms and conditions as the Board of Directors may determine in its
sole discretion, provided, however, that the options as assumed do not provide
or contain any terms, conditions or rights which an Option Right may not
provide or contain under Sections 2 through 10 hereunder.
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PART II
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the DGCL empowers a Delaware corporation to indemnify any
person who was or is, or is threatened to be made, a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation, by reason of the fact that such person is or was a director,
officer, employee or agent of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise). The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, such person had no reasonable cause to believe
his conduct was unlawful. A Delaware corporation may indemnify such persons in
actions brought by or in the right of the corporation to procure a judgment in
its favor under the same conditions, except that no indemnification is permitted
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and to the extent the Court of
Chancery of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses as the Court of Chancery or other such court shall deem proper. To the
extent such person has been successful on the merits or otherwise in defense of
any action referred to above, or in defense of any claim, issue or matter
therein, the corporation must indemnify him against expenses (including
attorney's fees) actually and reasonably incurred by him in connection
therewith. The indemnification and advancement of expenses provided for, or
granted pursuant to, Section 145 are not exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
any by-law, agreement, vote of stockholders or disinterested directors or
otherwise. Section 145 also provides that a corporation may maintain insurance
against liabilities for which indemnification is not expressly provided by the
statute.
Article VI of National City's By-Laws provides for the mandatory
indemnification of directors, officers or employees of National City or any of
its subsidiaries and of those persons serving at the request of National City as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise in accordance with and to the full
extent permitted by the DGCL. National City has purchased liability insurance
covering certain liabilities which may be incurred by the directors, officers,
employees and agents of National City and its subsidiaries in connection with
the performance of their duties.
In addition, National City's Certificate, as permitted by Section 102(d) of
the DGCL, limits directors' liability to National City and its stockholders by
eliminating liability in damages for breach of fiduciary duty of care. Article
Seventh of National City's Certificate provides that neither National City nor
its stockholders may recover damages from National City's directors or former
directors for breach of their duty of care in the performance of their duties as
directors of National City. As limited by Section 102(b), this provision cannot,
however, have the effect of indemnifying any director or former director of
National City in the case of liability (a) for a breach of the director's duty
of loyalty, (b) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) for unlawful payments
of dividends or unlawful stock repurchases or redemptions as provided in Section
174 of the DGCL or (d) for any transactions for which the director derived an
improper personal benefit.
The Agreement provides that, from and after the Effective Time, National
City will assume and honor any obligation of Integra immediately prior to the
Effective Time with respect to the indemnification of each person who is or has
been at any time prior to the Effective Time, a director or officer of Integra
or any of its subsidiaries or was serving at the request of Integra as a
director, officer of any domestic or foreign corporation joint venture, trust,
employee benefit plan or other enterprise arising out of Integra's Articles or
Integra's By-Laws or any indemnification (to the maximum extent available
thereunder) 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
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director or officer (whether elected or appointed), of Integra or any of its
subsidiaries. The Agreement further provides that, for a period of four years
after the Effective Time, National City will use all reasonable efforts to cause
to be maintained in effect the policies of directors' and officers' liability
insurance maintained by Integra in effect at the Effective Time (provided that
National City may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are substantially no less
advantageous) with respect to claims arising from facts or events which occurred
before the Effective Time; provided, however, that the Agreement does not
obligate National City to expend, in order to maintain or provide insurance
coverage pursuant to the Agreement, any amount per annum in excess of 150% of
the amount of the annual premiums paid as of the date of the Agreement by
Integra for such insurance. If the amount of the annual premiums necessary to
maintain or procure such insurance coverage exceeds the Maximum Amount, National
City must use all reasonable efforts to maintain the most advantageous policies
of directors' and officers' insurance obtainable for an annual premium equal to
the Maximum Amount.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
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<C> <S>
2.1 Agreement and Plan of Merger dated as of August 27, 1995 by and between National
City Corporation and Integra Financial Corporation filed as Exhibit 2.1 to Form 8-K
dated August 30, 1995, and incorporated herein by reference).
3.1 Restated Certificate of Incorporation of NCC, as amended (filed as Exhibit 3.1 to
Registration Statement No. 33-49823 and incorporated herein by reference).
3.2 National City Corporation First Restatement of By-laws adopted April 27, 1987 (As
Amended through October 24, 1994) (filed as Exhibit 3.2 to Registrant's Form S-4
Registration Statement No. 33-56539 dated November 18, 1994 and incorporated herein
by reference).
4.1 Instruments defining the rights of holders of certain long-term debt of NCC and its
consolidated subsidiaries are not filed as exhibits because the amount of debt
under such instruments is less than 10% of the total consolidated assets of NCC.
NCC undertakes to file these instruments with the Commission upon request.
4.2 Credit Agreement dated as of February 2, 1996, by and between NCC and the banks
named therein.
4.3 Certificate of Stock Designation dated April 18, 1991, designating NCC's 8%
Cumulative Convertible Preferred Stock, without par value, and fixing the powers,
preference, rights, and qualifications, limitations and restrictions thereof in
addition to those set forth in NCC's Restated Certificate of Incorporation, as
amended (incorporated herein by reference to Exhibit 4.4 to NCC's Annual Report on
Form 10-K for the year ended December 31, 1991).
5.1 Opinion of Carlton E. Langer as to the legality of NCC Common being registered.
8.1 Opinion of Buchanan Ingersoll Professional Corporation as to certain tax
consequences of the Merger.
10.1 National City Corporation Short Term Incentive Compensation Plan for Senior
Officers As Amended and Restated Effective January 1, 1995. (filed as Exhibit 10.1
to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31,
1994 and incorporated herein by reference).
10.2 National City Corporation Long Term Incentive Compensation Plan for Senior Officers
As Amended and Restated Effective January 1, 1995. (filed as Exhibit 10.2 to
Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994
and incorporated herein by reference).
10.3 National City Corporation Annual Corporate Performance Incentive Plan Effective
January 1, 1995. (filed as Exhibit 10.21 to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994 and incorporated herein by reference).
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
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10.4 National City Savings and Investment Plan, As Amended and Restated Effective July
1, 1992. (filed as Exhibit 10.24 to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 and incorporated herein by reference).
10.5 The National City Savings and Investment Plan No. 2, As Amended and Restated
Effective January 1, 1992 (filed as Exhibit 10.25 to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994 and incorporated herein by
reference).
10.6 National City Corporation's Amended and Restated 1973 Stock Option Plan, as amended
(filed as Exhibit 10.4 to Registration Statement No. 2-91434) and amended 1984
Stock Option Plan (filed as Exhibit No. 10.2 to NCC's Annual Report on Form 10-K
for the fiscal year ended December 31, 1987); both incorporated herein by
reference.
10.7 National City Corporation 1989 Stock Option Plan (filed as Exhibit 10.7 to NCC's
Annual Report on Form 10-K for the fiscal year ended December 31, 1989, and
incorporated herein by reference).
10.8 National City Corporation's 1993 Stock Option Plan (filed as Exhibit 10.5 to
Registration Statement No. 33-49823 and incorporated herein by reference).
10.9 National City Corporation 150th Anniversary Stock Option Plan. (Filed as Exhibit
10.9 to Registration Statement No. 33-59487 and incorporated herein by reference).
10.10 National City Corporation Plan for Deferred Payment of Directors' Fees, as amended
(filed as Exhibit 10.5 to Registration Statement No. 2-914334 and incorporated
herein by reference).
10.11 National City Corporation Supplemental Executive Retirement Plan, as amended and
restated effective January 1, 1995 (filed as Exhibit 10.5 to NCC's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994, and incorporated herein by
reference).
10.12 National City Corporation Executive Savings Plan As Amended and Restated Effective
January 1, 1995 (filed as Exhibit 10.9 to NCC's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, and incorporated herein by reference).
10.13 National City Corporation Amended and Second Restated 1991 Restricted Stock Plan
(filed as Exhibit 10.9 to Registration Statement No. 33-49823 and incorporated
herein by reference).
10.14 First Kentucky National Corporation 1985 Stock Option Plan (filed as Exhibit 10.2
to First Kentucky National Corporation's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987, and incorporated herein by reference).
10.15 First Kentucky National Corporation 1982 Stock Option Plan (filed as Exhibit 10.3
to First Kentucky National Corporation's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987, and incorporated herein by reference).
10.16 Form of grant made under National City Corporation 1991 Restricted Stock Plan made
in connection with National City Corporation Supplemental Executive Retirement Plan
as amended (filed as Exhibit 10.10 to NCC's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992, and incorporated herein by reference).
10.17 Amended Employment Agreement dated July 21, 1989 by and between Merchants National
Corporation or a subsidiary and Otto N. Frenzel, III (filed as Exhibit 10(21) to
Merchants National Corporation Annual Report of Form 10-K for the fiscal year ended
December 31, 1987 and incorporated herein by reference).
10.18 Split Dollar Insurance Agreement dated January 4, 1988 between Merchants National
Corporation and Otto N. Frenzel, III Irrevocable Trust II (filed as Exhibit 10(26)
to Merchants National Corporation Annual Report on Form 10-K for the fiscal year
ended December 31, 1989 and incorporated herein by reference).
10.19 Merchants National Corporation Director's Deferred Compensation Plan, as amended
and restated August 16, 1983 (filed as Exhibit 10(3) to Merchants National
Corporation Registration Statement as Form S-2 filed June 28, 1985, incorporated
herein by reference).
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
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<C> <S>
10.20 Merchants National Corporation Supplemental Pension Plan dated November 20, 1984;
First Amendment to the Supplemental Pension Plans dated January 21, 1986; Second
Amendment to the Supplemental Pension Plans dated July 3, 1989; and Third Amendment
to the Supplemental Pension Plans dated November 21, 1990 (filed respectively as
Exhibit 10(n) to Merchants National Corporation Annual Report on Form 10-K for the
year ended December 31, 1984; as Exhibit 10(q) to the Merchants National
Corporation Annual Report on Form 10-K for the year ended December 31, 1985; as
Exhibit 10(49) to Merchants National Corporation Annual Report on Form 10-K for the
year ended December 31, 1990; and as Exhibit 10(50) to the Merchants National
Corporation Annual Report on Form 10-K for the year ended December 31, 1990; all
incorporated herein by reference).
10.21 Merchants National Corporation Employee Benefit Trust Agreement, effective July 1,
1987 (filed as Exhibit 10(27) to Merchants National Corporation Annual Report on
Form 10-K for the year ended December 31, 1987, incorporated herein by reference).
10.22 Merchants National Corporation Non-qualified Stock Option Plan effective January
20, 1987, and the First Amendment to that Merchants National Non-qualified Stock
Option Plan, effective October 16, 1990 (filed respectively as Exhibit 10(23) to
Merchants National Corporation Annual Report on Form 10-K for the year ended
December 31, 1986, and as Exhibit 10(55) to Merchants National Corporation Annual
Report on Form 10-K for the year ended December 31, 1990, both of which are
incorporated herein by reference).
10.23 Merchants National Corporation 1987 Non-qualified Stock Option Plan, effective
November 17, 1987, and the First Amendment to effective October 16, 1990, (filed
respectively as Exhibit 10(30) to Merchants National Corporation Annual Report on
Form 10-K for the year ended December 31, 1987, and as Exhibit 10(61) to Merchants
National Corporation Annual Report on Form 10-K for the year ended December 31,
1990, both of which are incorporated herein by reference).
10.24 Merchants National Corporation Directors Non-qualified Stock Option Plan and the
First Amendment to Merchants National Corporation Directors Non-qualified Stock
Option Plan effective October 16, 1990 (filed respectively as Exhibit 10(44) to
Merchants National Corporation Annual Report on Form 10-K for the year ended
December 31, 1988, and as Exhibit 10(68) to Merchants National Corporation Annual
Report on Form 10-K for the year ended December 31, 1990, both of which are
incorporated herein by reference).
10.25 Central Indiana Bancorp Option Plan effective March 15, 1991 (filed as Exhibit
10.26 to Registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1994 and incorporated herein by reference).
10.26 Central Indiana Bancorp 1993 Option Plan effective October 12, 1993 (filed as
Exhibit 10.27 to Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 and incorporated herein by reference).
10.27 Forms of contracts with David A. Daberko, William R. Robertson, Vincent A.
DiGirolamo, William E. MacDonald III, Jon L. Gorney, Harold B. Todd, Jr., Robert G.
Siefers, Robert J. Ondercik, Jeffrey D. Kelly, David L. Zoeller, Thomas A.
Richlovsky, James P. Gulick, Gary A. Glaser, J. Christopher Graffeo and Morton Boyd
(filed as Exhibit 10.22 to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 and incorporated herein by reference).
10.28 Split Dollar Insurance Agreement effective January 1, 1994 between National City
Corporation and those individuals listed in Exhibit 10.27 and other key employees.
(filed as exhibit 10.28 to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 and incorporated herein by reference).
10.29 Stock Option Agreement, dated as of August 27, 1995 by and between National City
Corporation and Integra Financial Corporation (filed as Exhibit 2.2 to Form 8-K
dated August 30, 1995 and incorporated herein by reference).
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
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<C> <S>
</TABLE>
<TABLE>
<C> <S>
10.30 Stock Option Agreement, dated as of August 27, 1995 by and between National City
Corporation and Integra Financial Corporation (filed as Exhibit 2.3 to Form 8-K
dated August 30, 1995 and incorporated herein by reference).
10.31 National City Corporation Short-Term Incentive Compensation Plan for Senior Of-
ficers--Corporate Results As Amended and Restated Effective January 1, 1996 (filed
as Exhibit 10.31 to Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 and incorporated herein by reference).
11.1 Computation of Earnings per share. (Filed as Exhibit 11.1 to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995 and incorporated
herein by reference).
21.1 Subsidiaries. (Filed as Exhibit 21.1 to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995 and incorporated herein by reference).
23.1 Consent of Ernst & Young LLP, Independent Auditors for NCC.
23.2 Consent of Coopers & Lybrand LLP, Independent Auditors for Integra Financial
Corporation
23.3 Consent of Buchanan Ingersoll Professional Corporation (included in the opinion as
filed as Exhibit 8.1 to this Registration Statement and incorporated herein by
reference)
23.4 Consent of Carlton E. Langer (included in his opinion as filed as Exhibit 5.1 to
this Registration Statement and incorporated herein by reference)
23.5 Consent of William R. Roemer
23.6 Consent of James S. Broadhurst
23.7 Consent of Robert A. Paul
23.8 Consent of Michael A. Schuler
23.9 Consent of Morgan Stanley & Co. Incorporated
23.10 Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated
24.1 Powers of attorney.
27.1 Financial Data Schedule (filed as Exhibit 27.1 to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995 and incorporated herein by
reference)
99.1 Form of Proxy to be used in soliciting holders of Integra Financial Corporation
Common for its Special Meeting.
99.2 Form of Proxy to be used in soliciting holders of National City Corporation Common
for its Annual Meeting.
</TABLE>
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Proxy Statement pursuant
to Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-5
<PAGE> 165
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The Registrant undertakes that every prospectus (a) that is filed pursuant
to the paragraph immediately preceding, or (b) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned Registrant hereby undertakes: (1) to file, during any
period in which offers or sales are being made, a post-effective amendment to
this Registration Statement: (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any
facts or events arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
the Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (the total dollar value of securities
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) (sec.230.424(b) of
this chapter) if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement; (2) that, for
the purpose of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof. (3)
to remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
II-6
<PAGE> 166
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF CLEVELAND, STATE OF OHIO,
ON MARCH 13, 1996.
NATIONAL CITY CORPORATION
By: /s/ ROBERT G. SIEFERS
Robert G. Siefers,
Executive Vice President
and Chief Financial Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ----------------------------------- -----------------
<S> <C> <C>
*DAVID A. DABERKO Chairman and Chief Executive March 13, 1996
David A. Daberko Officer, Director
*WILLIAM R. ROBERTSON March 13, 1996
William R. Robertson President, Director
*SANDRA H. AUSTIN March 13, 1996
Sandra H. Austin Director
*JAMES M. BIGGAR March 13, 1996
James M. Biggar Director
*CHARLES H. BOWMAN March 13, 1996
Charles H. Bowman Director
*EDWARD B. BRANDON March 13, 1996
Edward B. Brandon Director
*JOHN G. BREEN March 13, 1996
John G. Breen Director
*DUANE E. COLLINS March 13, 1996
Duane E. Collins Director
Richard E. Disbrow Director
*DANIEL E. EVANS March 13, 1996
Daniel E. Evans Director
*OTTO N. FRENZEL III March 13, 1996
Otto N. Frenzel III Director
*BERNADINE P. HEALY, M.D. March 13, 1996
Bernadine P. Healy, M.D. Director
*JOSEPH H. LEMIEUX March 13, 1996
Joseph H. Lemieux Director
*W. BRUCE LUNSFORD March 13, 1996
W. Bruce Lunsford Director
*A. STEVENS MILES March 13, 1996
A. Stevens Miles Director
</TABLE>
II-7
<PAGE> 167
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ----------------------------------- -----------------
<S> <C> <C>
</TABLE>
<TABLE>
<S> <C> <C>
*STEPHEN A. STITLE March 13, 1996
Stephen A. Stitle Director
*MORRY WEISS March 13, 1996
Morry Weiss Director
/s/ROBERT G. SIEFERS Executive Vice President and Chief March 13, 1996
Robert G. Siefers Financial Officer
/s/THOMAS A. RICHLOVSKY Senior Vice President and Treasurer March 13, 1996
Thomas A. Richlovsky (Principal Accounting Officer)
</TABLE>
*David L. Zoeller, the undersigned attorney-in-fact, by signing his name
below, does hereby sign this Registration Statement on behalf of each of the
above-indicated officers and directors of National City (constituting a majority
of the directors) pursuant to a power of attorney executed by such persons and
filed with the Securities and Exchange Commission contemporaneously herewith.
Dated: March 13, 1996
/s/DAVID L. ZOELLER
David L. Zoeller
Attorney-in-Fact
II-8
<PAGE> 168
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE NUMBER IN
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT DESCRIPTION NUMBERED COPY
- ------- ------------------------------------------------------------------- --------------
<C> <S> <C>
2.1 Agreement and Plan of Merger dated as of August 27, 1995 by and
between National City Corporation and Integra Financial Corporation
filed as Exhibit 2.1 to Form 8-K dated August 30, 1995, and
incorporated herein by reference).
3.1 Restated Certificate of Incorporation of NCC, as amended (filed as
Exhibit 3.1 to Registration Statement No. 33-49823 and incorporated
herein by reference).
3.2 National City Corporation First Restatement of By-laws adopted
April 27, 1987 (As Amended through October 24, 1994) (filed as
Exhibit 3.2 to Registrant's Form S-4 Registration Statement No.
33-56539 dated November 18, 1994 and incorporated herein by
reference).
4.1 Instruments defining the rights of holders of certain long-term
debt of NCC and its consolidated subsidiaries are not filed as
exhibits because the amount of debt under such instruments is less
than 10% of the total consolidated assets of NCC. NCC undertakes to
file these instruments with the Commission upon request.
4.2 Credit Agreement dated as of February 2, 1996, by and between NCC
and the banks named therein.
4.3 Certificate of Stock Designation dated April 18, 1991, designating
NCC's 8% Cumulative Convertible Preferred Stock, without par value,
and fixing the powers, preference, rights, and qualifications,
limitations and restrictions thereof in addition to those set forth
in NCC's Restated Certificate of Incorporation, as amended
(incorporated herein by reference to Exhibit 4.4 to NCC's Annual
Report on Form 10-K for the year ended December 31, 1991).
5.1 Opinion of Carlton E. Langer as to the legality of NCC Common being
registered.
8.1 Opinion of Buchanan Ingersoll Professional Corporation as to
certain tax consequences of the Merger.
10.1 National City Corporation Short Term Incentive Compensation Plan
for Senior Officers As Amended and Restated Effective January 1,
1995. (filed as Exhibit 10.1 to Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 and incorporated
herein by reference).
10.2 National City Corporation Long Term Incentive Compensation Plan for
Senior Officers As Amended and Restated Effective January 1, 1995.
(filed as Exhibit 10.2 to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994 and incorporated herein
by reference).
10.3 National City Corporation Annual Corporate Performance Incentive
Plan Effective January 1, 1995. (filed as Exhibit 10.21 to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 and incorporated herein by reference).
10.4 National City Savings and Investment Plan, As Amended and Restated
Effective July 1, 1992. (filed as Exhibit 10.24 to Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1994 and incorporated herein by reference).
10.5 The National City Savings and Investment Plan No. 2, As Amended and
Restated Effective January 1, 1992 (filed as Exhibit 10.25 to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 and incorporated herein by reference).
</TABLE>
II-9
<PAGE> 169
<TABLE>
<CAPTION>
PAGE NUMBER IN
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT DESCRIPTION NUMBERED COPY
- ------- ------------------------------------------------------------------- --------------
<C> <S> <C>
10.6 National City Corporation's Amended and Restated 1973 Stock Option
Plan, as amended (filed as Exhibit 10.4 to Registration Statement
No. 2-91434) and amended 1984 Stock Option Plan (filed as Exhibit
No. 10.2 to NCC's Annual Report on Form 10-K for the fiscal year
ended December 31, 1987); both incorporated herein by reference.
10.7 National City Corporation 1989 Stock Option Plan (filed as Exhibit
10.7 to NCC's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989, and incorporated herein by reference).
10.8 National City Corporation's 1993 Stock Option Plan (filed as
Exhibit 10.5 to Registration Statement No. 33-49823 and
incorporated herein by reference).
10.9 National City Corporation 150th Anniversary Stock Option Plan.
(Filed as Exhibit 10.9 to Registration Statement No. 33-59487 and
incorporated herein by reference).
10.10 National City Corporation Plan for Deferred Payment of Directors'
Fees, as amended (filed as Exhibit 10.5 to Registration Statement
No. 2-914334 and incorporated herein by reference).
10.11 National City Corporation Supplemental Executive Retirement Plan,
as amended and restated effective January 1, 1995 (filed as Exhibit
10.5 to NCC's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, and incorporated herein by reference).
10.12 National City Corporation Executive Savings Plan As Amended and
Restated Effective January 1, 1995 (filed as Exhibit 10.9 to NCC's
Annual Report on Form 10-K for the fiscal year ended December 31,
1994, and incorporated herein by reference).
10.13 National City Corporation Amended and Second Restated 1991
Restricted Stock Plan (filed as Exhibit 10.9 to Registration
Statement No. 33-49823 and incorporated herein by reference).
10.14 First Kentucky National Corporation 1985 Stock Option Plan (filed
as Exhibit 10.2 to First Kentucky National Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31, 1987,
and incorporated herein by reference).
10.15 First Kentucky National Corporation 1982 Stock Option Plan (filed
as Exhibit 10.3 to First Kentucky National Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31, 1987,
and incorporated herein by reference).
10.16 Form of grant made under National City Corporation 1991 Restricted
Stock Plan made in connection with National City Corporation
Supplemental Executive Retirement Plan as amended (filed as Exhibit
10.10 to NCC's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, and incorporated herein by reference).
10.17 Amended Employment Agreement dated July 21, 1989 by and between
Merchants National Corporation or a subsidiary and Otto N. Frenzel,
III (filed as Exhibit 10(21) to Merchants National Corporation
Annual Report of Form 10-K for the fiscal year ended December 31,
1987 and incorporated herein by reference).
</TABLE>
II-10
<PAGE> 170
<TABLE>
<CAPTION>
PAGE NUMBER IN
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT DESCRIPTION NUMBERED COPY
- ------- ------------------------------------------------------------------- --------------
<C> <S> <C>
10.18 Split Dollar Insurance Agreement dated January 4, 1988 between
Merchants National Corporation and Otto N. Frenzel, III Irrevocable
Trust II (filed as Exhibit 10(26) to Merchants National Corporation
Annual Report on Form 10-K for the fiscal year ended December 31,
1989 and incorporated herein by reference).
10.19 Merchants National Corporation Director's Deferred Compensation
Plan, as amended and restated August 16, 1983 (filed as Exhibit
10(3) to Merchants National Corporation Registration Statement as
Form S-2 filed June 28, 1985, incorporated herein by reference).
10.20 Merchants National Corporation Supplemental Pension Plan dated
November 20, 1984; First Amendment to the Supplemental Pension
Plans dated January 21, 1986; Second Amendment to the Supplemental
Pension Plans dated July 3, 1989; and Third Amendment to the
Supplemental Pension Plans dated November 21, 1990 (filed
respectively as Exhibit 10(n) to Merchants National Corporation
Annual Report on Form 10-K for the year ended December 31, 1984; as
Exhibit 10(q) to the Merchants National Corporation Annual Report
on Form 10-K for the year ended December 31, 1985; as Exhibit
10(49) to Merchants National Corporation Annual Report on Form 10-K
for the year ended December 31, 1990; and as Exhibit 10(50) to the
Merchants National Corporation Annual Report on Form 10-K for the
year ended December 31, 1990; all incorporated herein by
reference).
10.21 Merchants National Corporation Employee Benefit Trust Agreement,
effective July 1, 1987 (filed as Exhibit 10(27) to Merchants
National Corporation Annual Report on Form 10-K for the year ended
December 31, 1987, incorporated herein by reference).
10.22 Merchants National Corporation Non-qualified Stock Option Plan
effective January 20, 1987, and the First Amendment to that
Merchants National Non-qualified Stock Option Plan, effective
October 16, 1990 (filed respectively as Exhibit 10(23) to Merchants
National Corporation Annual Report on Form 10-K for the year ended
December 31, 1986, and as Exhibit 10(55) to Merchants National
Corporation Annual Report on Form 10-K for the year ended December
31, 1990, both of which are incorporated herein by reference).
10.23 Merchants National Corporation 1987 Non-qualified Stock Option
Plan, effective November 17, 1987, and the First Amendment to
effective October 16, 1990, (filed respectively as Exhibit 10(30)
to Merchants National Corporation Annual Report on Form 10-K for
the year ended December 31, 1987, and as Exhibit 10(61) to
Merchants National Corporation Annual Report on Form 10-K for the
year ended December 31, 1990, both of which are incorporated herein
by reference).
10.24 Merchants National Corporation Directors Non-qualified Stock Option
Plan and the First Amendment to Merchants National Corporation
Directors Non-qualified Stock Option Plan effective October 16,
1990 (filed respectively as Exhibit 10(44) to Merchants National
Corporation Annual Report on Form 10-K for the year ended December
31, 1988, and as Exhibit 10(68) to Merchants National Corporation
Annual Report on Form 10-K for the year ended December 31, 1990,
both of which are incorporated herein by reference).
10.25 Central Indiana Bancorp Option Plan effective March 15, 1991 (filed
as Exhibit 10.26 to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 and incorporated herein by
reference).
</TABLE>
II-11
<PAGE> 171
<TABLE>
<CAPTION>
PAGE NUMBER IN
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT DESCRIPTION NUMBERED COPY
- ------- ------------------------------------------------------------------- --------------
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
10.26 Central Indiana Bancorp 1993 Option Plan effective October 12, 1993
(filed as Exhibit 10.27 to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994 and incorporated herein
by reference).
10.27 Forms of contracts with David A. Daberko, William R. Robertson,
Vincent A. DiGirolamo, William E. MacDonald III, Jon L. Gorney,
Harold B. Todd, Jr., Robert G. Siefers, Robert J. Ondercik, Jeffrey
D. Kelly, David L. Zoeller, Thomas A. Richlovsky, James P. Gulick,
Gary A. Glaser, J. Christopher Graffeo and Morton Boyd (filed as
Exhibit 10.22 to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 and incorporated herein by
reference).
10.28 Split Dollar Insurance Agreement effective January 1, 1994 between
National City Corporation and those individuals listed in Exhibit
10.27 and other key employees. (filed as exhibit 10.28 to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 and incorporated herein by reference).
10.29 Stock Option Agreement, dated as of August 27, 1995 by and between
National City Corporation and Integra Financial Corporation (filed
as Exhibit 2.2 to Form 8-K dated August 30, 1995 and incorporated
herein by reference).
10.30 Stock Option Agreement, dated as of August 27, 1995 by and between
National City Corporation and Integra Financial Corporation (filed
as Exhibit 2.3 to Form 8-K dated August 30, 1995 and incorporated
herein by reference).
10.31 National City Corporation Short-Term Incentive Compensation Plan
for Senior Officers--Corporate Results As Amended and Restated
Effective January 1, 1996 (filed as Exhibit 10.31 to Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1995 and incorporated herein by reference).
11.1 Computation of Earnings per share. (Filed as Exhibit 11.1 to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 and incorporated herein by reference).
21.1 Subsidiaries. (Filed as Exhibit 21.1 to Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1995 and
incorporated herein by reference).
23.1 Consent of Ernst & Young LLP, Independent Auditors for NCC.
23.2 Consent of Coopers & Lybrand LLP, Independent Auditors for Integra
Financial Corporation
23.3 Consent of Buchanan Ingersoll Professional Corporation (included in
the opinion as filed as Exhibit 8.1 to this Registration Statement
and incorporated herein by reference)
23.4 Consent of Carlton E. Langer (included in his opinion as filed as
Exhibit 5.1 to this Registration Statement and incorporated herein
by reference)
23.5 Consent of William R. Roemer
23.6 Consent of James S. Broadhurst
23.7 Consent of Robert A. Paul
23.8 Consent of Michael A. Schuler
23.9 Consent of Morgan Stanley & Co. Incorporated
23.10 Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated
</TABLE>
II-12
<PAGE> 172
<TABLE>
<CAPTION>
PAGE NUMBER IN
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT DESCRIPTION NUMBERED COPY
- ------- ------------------------------------------------------------------- --------------
<C> <S> <C>
24.1 Powers of attorney.
27.1 Financial Data Schedule (Filed as Exhibit 27.1 to Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1995 and incorporated herein by reference.)
99.1 Form of Proxy to be used in soliciting holders of Integra Financial
Corporation Common for its Special Meeting.
99.2 Form of Proxy to be used in soliciting holders of National City
Corporation Common for its Annual Meeting.
</TABLE>
II-13
<PAGE> 1
================================================================================
COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT
Dated as of February 2, 1996
Among
NATIONAL CITY CORPORATION,
THE LENDERS NAMED HEREIN,
and
CHEMICAL BANK, as Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- ----
<S> <C> <C>
I. DEFINITIONS 1
1.01 Defined Terms 1
1.02 Terms Generally 19
1.03 Accounting Terms 19
II. THE CREDITS 20
2.01 Commitments 20
2.02 Loans 20
2.03 Competitive Bid Procedure 22
2.04 Standby Borrowing Procedure 25
2.05 Conversion and Continuation
of Standby Borrowings 26
2.06 Fees 28
2.07 Repayment of Loans; Evidence
of Debt 28
2.08 Interest on Loans 29
2.09 Default Interest 30
2.10 Alternate Rate of Interest 30
2.11 Termination, Reduction of
Commitments 31
2.12 Prepayment 31
2.13 Reserve Requirements; Change in
Circumstances 32
2.14 Change in Legality 34
2.15 Indemnity 35
2.16 Pro Rata Treatment 36
2.17 Sharing of Setoffs 37
2.18 Payments 38
2.19 Taxes 38
2.20 Duty to Mitigate; Assignment of
Commitments Under Certain
Circumstances 42
2.21 Extension of Maturity Date 43
III. REPRESENTATIONS AND WARRANTIES 44
3.01 Financial Condition 44
3.02 No Change 45
3.03 Corporate Existence; Compliance
with Law 45
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- ----
<S> <C> <C>
3.04 Corporate Power; Authorization;
Enforceable Obligations 46
3.05 No Legal Bar 46
3.06 No Material Litigation 46
3.07 Ownership of Property; Liens 46
3.08 Taxes 47
3.09 Federal Reserve Regulations 47
3.10 Employee Benefit Plans 47
3.11 Investment Company Act; Public
Utility Holding Company Act 48
3.12 Use of Proceeds 48
3.13 No Material Misstatements 48
3.14 Environmental and Safety Matters 48
3.15 Capital Commitments 48
IV. CONDITIONS OF LENDING 49
4.01 All Borrowings 49
4.02 Closing Date 49
V. AFFIRMATIVE COVENANTS 51
5.01 Financial Statements 51
5.02 Inspection of Property; Books and
Records; Discussions 53
5.03 Notices 53
5.04 Continuance of Business 53
5.05 Compliance with Regulatory
Standards 54
5.06 Payment of Obligations 54
5.07 Maintenance of Property, Insurance 54
5.08 Employee Benefits 54
5.09 Capital Requirements 55
VI. NEGATIVE COVENANTS 55
6.01 Limitation on Liens 55
6.02 Mergers, Consolidations and
Transfers of Assets 56
6.03 Tier 1 Capital 56
6.04 Nonperforming Assets 56
6.05 Double Leverage 56
6.06 Use of Proceeds 56
6.07 Regulation U 57
6.08 Capital Commitments 57
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- ----
<S> <C>
VII. EVENTS OF DEFAULT 57
VIII. THE AGENT 61
IX. MISCELLANEOUS 64
9.01 Notices 64
9.02 Survival of Agreement 65
9.03 Binding Effect 65
9.04 Successors and Assigns 65
9.05 Expenses; Indemnity 69
9.06 Applicable Law 70
9.07 Waivers; Amendment 70
9.08 Entire Agreement 71
9.09 Severability 71
9.10 Counterparts 72
9.11 Headings 72
9.12 Right of Setoff 72
9.13 Jurisdiction; Consent to Service
of Process 72
9.14 Waiver of Jury Trial 73
</TABLE>
<TABLE>
<CAPTION>
Exhibits
- --------
<S> <C>
Exhibit A-1 Form of Competitive Bid Request
Exhibit A-2 Form of Notice of Competitive Bid Request
Exhibit A-3 Form of Competitive Bid
Exhibit A-4 Form of Competitive Bid Accept/Reject
Letter
Exhibit A-5 Form of Standby Borrowing Request
Exhibit B Form of Administrative Questionnaire
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Opinion of Counsel for Borrower
Schedules
- ---------
Schedule 2.01 Lenders and Commitments
Schedule 3.06 Litigation
</TABLE>
<PAGE> 5
COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY
AGREEMENT (the "Agreement") dated as of February 2, 1996, among
NATIONAL CITY CORPORATION, a Delaware corporation (the
"Borrower"), the lenders listed in Schedule 2.01 (the
"Lenders"), and CHEMICAL BANK, a New York banking corporation,
as agent for the Lenders (in such capacity, the "Agent").
The Borrower has requested the Lenders to extend credit to the
Borrower in order to enable it to borrow on a standby revolving credit basis on
and after the date hereof and at any time and from time to time prior to the
Maturity Date (as herein defined) a principal amount not in excess of
$350,000,000 at any time outstanding. The Borrower has also requested the
Lenders to provide a procedure pursuant to which the Borrower may invite the
Lenders to bid on an uncommitted basis on short-term borrowings by the
Borrower. The proceeds of all such borrowings are to be used for general
corporate purposes, including acquisitions and commercial paper backup. The
Lenders are willing to extend such credit to the Borrower on the terms and
subject to the conditions herein set forth.
Accordingly, the Borrower, the Lenders and the Agent agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the
following terms shall have the meanings specified below:
"ABR BORROWING" shall mean a Borrowing comprised of ABR Loans.
"ABR LOAN" shall mean any Standby Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ADMINISTRATIVE QUESTIONNAIRE" shall mean an Administrative
Questionnaire in the form of Exhibit B hereto.
<PAGE> 6
2
"AGENT FEES" shall have the meaning assigned to such term in Section
2.06(c).
"AFFILIATE" shall mean, when used with respect to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with
the Person specified.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. For purposes hereof, "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by the Agent as its
prime rate in effect at its principal office in New York City; each change in
the Prime Rate shall be effective on the date such change is publicly announced
as effective. "Base CD Rate" shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) Statutory Reserves and (b) the
Assessment Rate. "Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board through the public information telephone
line of the Federal Reserve Bank of New York (which rate will, under the
current practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day) , or, if such rate shall
not be so reported on such day or such next preceding Business Day, the average
of the secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately 10:00 a.m.,
New York City time, on such day (or, if such day shall not be a Business Day,
on the next preceding Business Day) by the Agent from three New York City
negotiable certificate of deposit dealers of recognized standing selected by
it. "Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations for the day of such transactions received by the
Agent from
<PAGE> 7
3
three Federal funds brokers of recognized standing selected by it. If
for any reason the Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective Rate or both for any
reason, including the inability of the Agent to obtain sufficient quotations in
accordance with the terms hereof, the Alternate Base Rate shall be determined
without regard to clause (b) or (c), or both, of the first sentence of this
definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal
Funds Effective Rate shall be effective on the effective date of such change in
the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate, respectively.
"ASSESSMENT RATE" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Agent as the then current net annual assessment rate that will be employed in
determining amounts payable by the Agent to the Federal Deposit Insurance
Corporation (or any successor) for insurance by such Corporation (or such
successor) of time deposits made in Dollars at the Agent's domestic offices.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance
entered into by a Lender and an assignee substantially in the form of Exhibit C.
"BANK REGULATORY AUTHORITY" shall mean the Board of Governors of the
Federal Reserve System, the Comptroller of the Currency, the Federal Deposit
Insurance Corporation and all other relevant bank regulatory authorities
(including, without limitation, relevant state bank regulatory authorities).
"BANK SUBSIDIARY" shall mean any Subsidiary which is a commercial
bank, banking corporation, savings and loan association, savings bank, trust
company or Edge Act corporation.
"BOARD" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"BORROWING" shall mean a group of Loans of a single Type made by the
Lenders (or, in the case of a Competitive Borrowing, by the Lender or Lenders
whose
<PAGE> 8
4
Competitive Bids have been accepted pursuant to Section 2.03) on a
single date and as to which a single Interest Period is in effect.
"BUSINESS DAY" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which banks are
open for business in New York City; PROVIDED, HOWEVER, that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in Dollar deposits in the
London interbank market.
"CAPITAL COMMITMENT" shall mean any commitment to the Federal
Deposit Insurance Corporation, the Resolution Trust Corporation, the Director
of the Office of Thrift Supervision, the Comptroller of the Currency, or the
Board, or their predecessors or successors, to maintain the capital of an
insured depository institution.
"CAPITAL LEASE OBLIGATIONS" of any Person shall mean the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
A "CHANGE IN CONTROL" shall be deemed to have occurred if (a) any
Person or group (within the meaning of Rule 13d-5 of the Securities and
Exchange Commission as in effect on the date hereof) shall own directly or
indirectly, beneficially or of record, shares representing 25% or more of the
aggregate ordinary voting power represented by the issued and outstanding
capital stock of the Borrower; (b) a majority of the seats (other than vacant
seats) on the board of directors of the Borrower shall at any time be occupied
by Persons who were neither (i) members of the board of directors of the
Borrower on the date hereof, nor (ii) appointed as, or nominated for election
as, directors by a majority of the directors referred to in clause (i) or
appointed or nominated in accordance with this clause (ii); or (c) any Person
or group (other than the board of directors of the Borrower) shall otherwise
directly or indirectly Control the Borrower.
<PAGE> 9
5
"CLOSING DATE" shall mean the date hereof.
"CODE" shall mean the Internal Revenue Code of 1986,
as the same may be amended from time to time.
"COMMITMENT" shall mean, with respect to each Lender,
the commitment of such Lender hereunder as set forth in Schedule
2.01 hereto, as such Lender's Commitment may be permanently
terminated or reduced from time to time pursuant to Section
2.11.
"COMPETITIVE BID" shall mean an offer by a Lender to
make a Competitive Loan pursuant to Section 2.03.
"COMPETITIVE BID ACCEPT/REJECT LETTER" shall mean a
notification made by the Borrower pursuant to Section 2.03(d) in
the form of Exhibit A-4.
"COMPETITIVE BID RATE" shall mean, as to any
Competitive Bid made by a Lender pursuant to Section 2.03(b),
(i) in the case of a Eurodollar Loan, the Margin, and (ii) in
the case of a Fixed Rate Loan, the fixed rate of interest
offered by the Lender making such Competitive Bid.
"COMPETITIVE BID REQUEST" shall mean a request made
pursuant to Section 2.03 in the form of Exhibit A-i.
"COMPETITIVE BORROWING" shall mean a Borrowing
consisting of a Competitive Loan or concurrent Competitive Loans
from the Lender or Lenders whose Competitive Bids for such
Borrowing have been accepted by the Borrower under the bidding
procedure described in Section 2.03.
"COMPETITIVE LOAN" shall mean a Loan from a Lender to
the Borrower pursuant to the bidding procedure described in
Section 2.03. Each Competitive Loan shall be a Eurodollar
Competitive Loan or a Fixed Rate Loan.
"CONSOLIDATED NET WORTH" at any date shall mean the
Net Worth of the Borrower and the consolidated Subsidiaries on
such date, determined on a consolidated basis in accordance with
GAAP.
"CONTINGENT OBLIGATION" with respect to the Borrower
or any Subsidiary shall mean any obligation of the Borrower or
such Subsidiary, as applicable, guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends
<PAGE> 10
6
or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether
or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any such
primary obligation or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth
or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment
of such primary obligation or (d) otherwise to assure or hold harmless the
owner of such primary obligation against loss in respect thereof; PROVIDED,
HOWEVER, that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business or
guarantees by the Borrower of obligations of any Subsidiary. The amount of any
Contingent Obligation shall be deemed to equal the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the Borrower in good faith.
"CONTRACTUAL OBLIGATION" with respect to the Borrower or any
Subsidiary shall mean any provision of any security issued by the Borrower or
such Subsidiary, as applicable, or of any agreement, instrument or undertaking
to which the Borrower or such Subsidiary, as applicable, is a party or by which
it or any of its property is bound.
"CONTROL" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, but not including the exercise of investment discretion as an
investment advisor or fiduciary, and "Controlling" and "Controlled" shall have
meanings correlative thereto.
"DEFAULT" shall mean any event or condition which upon notice, lapse
of time or both would constitute an Event of Default.
"DOLLARS" or "$" shall mean lawful money of the United States of
America.
<PAGE> 11
7
"EQUITY INVESTMENT" shall mean the aggregate equity investment of
the Borrower in the Subsidiaries as determined in accordance with GAAP.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414 of the Code.
"EUROCURRENCY RESERVE REQUIREMENTS" shall mean the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the Board and any
other banking authority to which the Agent is subject and applicable to
"Eurocurrency Liabilities", as such term is defined in Regulation D of the
Board, or any similar category of assets or liabilities relating to
eurocurrency fundings. Eurocurrency Reserve Requirements shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"EURODOLLAR BORROWING" shall mean a Borrowing comprised of
Eurodollar Loans.
"EURODOLLAR COMPETITIVE LOAN" shall mean any Competitive Loan
bearing interest at a rate determined by reference to the LIBO Rate in
accordance with the provisions of Article II.
"EURODOLLAR LOAN" shall mean any Eurodollar Competitive Loan or
Eurodollar Standby Loan.
"EURODOLLAR STANDBY LOAN" shall mean any Standby Loan bearing
interest at a rate determined by reference to the LIBO Rate in accordance with
the provisions of Article II.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Article VII.
"FACILITY FEE" shall have the meaning assigned to such term in
Section 2.06 (a).
<PAGE> 12
8
"FACILITY FEE PERCENTAGE" shall mean on any date the
applicable percentage set forth below based upon the ratings by
S&P and Moody's, respectively, applicable on such date to the
type of Index Debt described below:
CATEGORY 1 Percentage
- ---------- ----------
Rating
------
AA- or higher by S&P 0.0800
Aa3 or higher by Moody's
CATEGORY 2
- ----------
Rating
------
A+ or A by S&P 0.1000
A1 or A2 by Moody's
CATEGORY 3
- ----------
Rating
------
A- or BBB+ by S&P 0.1500
A3 or Baa1 by Moody's
CATEGORY 4
- ----------
Rating
------
BBB or below by S&P 0.1875
Baa2 or below by Moody's
For purposes of the foregoing, (i) if there shall
exist no Index Debt (other than by reason of the circumstances
referred to in the last sentence of this definition), then each
rating agency shall be deemed to have established a rating with
respect to Index Debt in Category 4; (ii) if the ratings
established or deemed to have been established by S&P and
Moody's for the Index Debt shall fall within different
Categories, the Facility Fee Percentage shall be based on the
Category containing the higher of such ratings; and (iii) if any
rating for Index Debt established or deemed to have been
established by S&P or Moody's shall be changed (other than as a
result of a change in the rating system of S&P or Moody's), such
change shall be effective (A) if the Index Debt is not publicly
<PAGE> 13
9
rated, as of the date of the applicable Ratings Review Letter
indicating such change or (B) if the Index Debt is publicly rated, as
of the date on which such change is first announced by the applicable
rating agency. Each change in the Facility Fee Percentage shall apply
during the period commencing on the effective date of such change and
ending on the date immediately preceding the effective date of the next such
change. If the rating system of S&P or Moody's shall change, or if any such
rating agency shall cease to be in the business of rating corporate debt
obligations, the Borrower and the Lenders, acting through the Administrative
Agent, shall negotiate in good faith to amend the references to specific
ratings in this definition to reflect such changed rating system or the
nonavailability of ratings from such rating agency, and pending agreement on
such amendment, the Facility Fee Percentage most recently determined in
accordance with this definition shall continue in effect.
"FEES" shall mean the Facility Fee, the Utilization Fee and the
Agent Fees.
"FINANCIAL OFFICER" of any corporation shall mean the chief
financial officer, principal accounting officer, Treasurer, Assistant Treasurer
or Controller of such corporation.
"FIXED RATE BORROWING" shall mean a Borrowing comprised of Fixed
Rate Loans.
"FIXED RATE LOAN" shall mean any Competitive Loan bearing interest
at a fixed percentage rate per annum (expressed in the form of a decimal to no
more than four decimal places) specified by the Lender making such Loan in its
Competitive Bid.
"GAAP" shall mean generally accepted accounting principles in the
United States, applied on a basis consistent with those employed in the
financial statements referred to in Section 3.01.
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"GUARANTEE" of or by any Person shall mean any obligation,
contingent or otherwise (whether or not denominated as a guarantee) , of such
Person guaranteeing any Indebtedness or any other obligation of any other
Person
<PAGE> 14
10
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of such Person, direct or indirect, (a) to purchase or
pay (or advance or supply funds for the purchase or payment of) such
Indebtedness (or other obligation) or to purchase (or to advance or supply
funds for the purchase of) any security for the payment of such Indebtedness
(or other obligation), (b) to purchase property, securities or services for the
purpose of assuring the owner of such Indebtedness (or other obligation) of the
payment of such Indebtedness (or other obligation) or (c) to maintain working
capital, equity capital or other financial statement condition or liquidity of
the primary obligor so as to enable the primary obligor to pay such
Indebtedness (or other obligation); PROVIDED, HOWEVER, that the term
"Guarantee" shall not include endorsements for collection or deposit, in either
case in the ordinary course of business.
"INDEBTEDNESS" of any Person shall mean, without duplication, (a)
all obligations of such Person for borrowed money or with respect to deposits
or advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property or assets purchased by such Person, (e) all obligations of such Person
issued or assumed as the deferred purchase price of property or services, (f)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (g) all Contingent Obligations
of such Person, (h) all Capital Lease Obligations of such Person, (i) all
obligations of such Person in respect of interest rate protection agreements,
foreign currency exchange agreements or other interest or exchange rate hedging
arrangements and (j) all obligations of such Person as an account party in
respect of letters of credit and bankers' acceptances. The Indebtedness of any
Person shall include the Indebtedness of any partnership in which such Person
is a general partner.
"INDEX DEBT" shall mean (i) senior, unsecured noncredit-enhanced,
long-term debt of the Borrower (whether or not any such debt shall be
outstanding) publicly rated by both S&P and Moody's or (ii) if the debt
described in
<PAGE> 15
11
clause (i) shall not exist, long-term subordinated debt of the Borrower
(whether or not any such debt shall be outstanding) rated by both S&P and
Moody's or (iii) if the debt described in clauses (i) and (ii) shall not exist,
senior, unsecured, noncredit-enhanced, long-term debt of the Borrower (whether
or not any such debt shall be outstanding) with respect to which the Borrower
has delivered to the Agent a Ratings Review Letter dated not earlier than the
most recent Ratings Review Date (or which has been publicly rated by only one
of S&P or Moody's and as to which a Ratings Review Letter from the other rating
agency has been delivered to the Agent not earlier than such date).
"INSURED SUBSIDIARY" shall mean any insured depositary institution
(as defined in 12 U.S.C. Section 1813(c) (2) (or any successor provision), as
amended, reenacted or designated from time to time) that is controlled (within
the meaning of 12 U.S.C. Section 1841 (or any successor provision), as amended,
reenacted or redesignated from time to time) by the Company.
"INTANGIBLES" with respect to any Person at any date shall mean the
amount of all assets of such Person that would be classified as intangible
assets in accordance with GAAP, but in any event including unamortized debt
discount and expense, unamortized organization and reorganization expense,
costs in excess of the net asset value of acquired companies, patents,
copyrights, trade or service marks, franchises, trade names, goodwill and the
amount of any write-up in the book value of any assets resulting from any
revaluation (other than (a) revaluations of tangible assets arising out of
purchase accounting adjustments, (b) revaluations arising out of foreign
currency valuations in accordance with GAAP, and (c) revaluations pursuant to
the Statement of Financial Accounting Standards No. 115) thereof after December
31, 1993.
"INTEREST PAYMENT DATE" SHALL mean, with respect to any Loan, the
last day of the Interest Period applicable thereto and, in the case of a
Eurodollar Loan with an Interest Period of more than three months' duration or
a Fixed Rate Loan with an Interest Period of more than 90 days' duration, each
day that would have been an Interest Payment Date for such Loan had successive
Interest Periods of three months' duration or 90 days duration, as the case may
be, been applicable to such Loan and, in addition, the date of any refinancing
or conversion of such Loan with or to a Loan of a different Type.
<PAGE> 16
12
"INTEREST PERIOD" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the
last day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the
Borrower may elect, (b) as to any ABR Borrowing, the period commencing on the
date of such Borrowing and ending on the next succeeding March 31, June 30,
September 30 or December 31, or, if earlier, on the Maturity Date or the date
of prepayment of such Borrowing and (c) as to any Fixed Rate Borrowing, the
period commencing on the date of such Borrowing and ending on the date
specified in the Competitive Bids in which the offer to make the Fixed Rate
Loans comprising such Borrowing were extended, which shall not be earlier than
seven days after the date of such Borrowing or later than 360 days after the
date of such Borrowing; PROVIDED, HOWEVER, that if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless, in the case of Eurodollar Loans
only, such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business
Day. Interest shall accrue from and including the first day of an Interest
Period to but excluding the last day of such Interest Period.
"LIBO RATE" shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum equal to the arithmetic mean
(rounded upwards, if necessary, to the next 1/16 of 1%) of the offered rates
for dollar deposits with a maturity comparable to such Interest Period which
appears on the Telerate British Bankers Assoc. Interest Settlement Rates Page
(as hereinafter defined) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period; PROVIDED, HOWEVER, that
if there shall no longer exist a Telerate British Bankers Assoc. Interest
Settlement Rates Page, "LIBO Rate" shall mean an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the rate at
which dollar deposits approximately equal in principal amount to (i) in the
case of a Eurodollar Standby Loan, the Agent's portion of such Standby
Borrowing and (ii) in the case of a Eurodollar Competitive Loan, a principal
amount that would have been the Agent's portion of such Competitive Borrowing
had such Competitive Borrowing been a Eurodollar Standby Loan, and for a
maturity comparable to such Interest Period are
<PAGE> 17
13
offered to the principal London office of the Agent in immediately
available funds in the London interbank market at approximately 11:00
a.m, London time, two Business Days prior to the commencement of such
Interest Period. "Telerate British Bankers Assoc. Interest Settlement
Rates Page" shall mean the display designated as Page 3750 on
Teleratesystem Incorporated (or such other page as may replace the LIBO page on
that service for the purpose of displaying London interbank offered rates of
major banks).
"LIEN" shall mean, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset
and (c) in the case of securities, any purchase option, call or similar right
of a third party with respect to such securities, other than redemption or
prepayment rights of the issuers of such securities.
"LOAN" shall mean a Competitive Loan or a Standby Loan, whether made
as a Eurodollar Loan, an ABR Loan or a Fixed Rate Loan, as permitted hereby.
"LOAN DOCUMENTS" shall mean (i) this Agreement and the letter
agreements referred to in Section 2.06(c) and (ii) any amendment, supplement,
modification, consent or waiver of, to or in respect of the foregoing.
"LOAN LOSS RESERVES" with respect to the Borrower at any date shall
mean the aggregate reserves for loan losses of the Borrower and the
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"MARGIN" shall mean, as to any Eurodollar Competitive Loan, the
margin (expressed as a percentage rate per annum in the form of a decimal to no
more than four decimal places) to be added to or subtracted from the LIBO Rate
in order to determine the interest rate applicable to such Loan, as specified
in the Competitive Bid relating to such Loan.
"MARGIN STOCK" shall have the meaning given such term under
Regulation U.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
the business, assets, operations or
<PAGE> 18
14
condition, financial or otherwise, of the Borrower and its subsidiaries taken
as a whole.
"MATURITY DATE" shall mean the date that is four years less one day
after the Closing Date, as the same may be extended pursuant to Section 2.21.
"MOODY'S" shall mean Moody's Investors Service, Inc., and its
successors.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as defined in
Section 4001(a) (3) of ERISA.
"NET WORTH" with respect to any Person at any date shall mean (i) all
amounts which would be included under shareholders' equity on a balance sheet
of such Person determined in accordance with GAAP, less (ii) such Person's
treasury stock, to the extent reflected in (i).
"NONPERFORMING ASSETS" shall mean, as at any date, the sum, for the
Borrower and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP) of the following: (a) nonaccrual loans
plus (b) accruing loans past due 90 days or more plus (c) restructured loans
and leases plus (d) other real estate owned.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"PERSON" shall mean any natural Person, corporation, business trust,
joint venture, association, company, partnership or government, or any agency
or political subdivision thereof.
"PLAN" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code that is maintained for current or former employees, or any
beneficiary thereof, of the Borrower or any ERISA Affiliate.
"RATINGS REVIEW DATE" shall mean (a) the Closing Date, (b) each
anniversary of the Closing Date and (c) any date after the most recent date
referred to in (a) or (b) above which shall have been designated in a notice
delivered by the Required Lenders to the Borrower not fewer than 60 days prior
to such designated date.
<PAGE> 19
15
"RATINGS REVIEW LETTERS" shall mean, on any date, the letters of
each of S&P and Moody's that set forth the ratings of the Index Debt by such
rating agencies, which letters shall not be dated earlier than 10 days prior to
the date of delivery thereof to the Agent.
"REGULATION D" shall mean Regulation D of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"REGULATION G" shall mean Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"REGULATION U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"REGULATION X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"REGULATION Y" shall mean Regulation Y of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"REPORTABLE EVENT" shall mean any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate that is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414).
"REQUIRED LENDERS" shall mean, at any time, Lenders having
Commitments representing at least a majority of the Total Commitment or, for
purposes of action taken to accelerate the maturity of Loans under Article VII,
Lenders holding Loans representing at least a majority of the aggregate
principal amount of the Loans outstanding.
"REQUIREMENT OF LAW" as to any Person shall mean the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person and any law, treaty, rule, regulation, regulatory guideline or
pronouncement or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
<PAGE> 20
16
"RESPONSIBLE OFFICER" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"RESTRICTED SUBSIDIARY" shall mean any Subsidiary that is a
Significant Subsidiary under Rule 1-02 of Regulation S-X of the Securities and
Exchange Commission, 17 C.F.R. Section 210.1-02.
"RISK ADJUSTED ASSETS" shall mean, with reference to the Borrower,
at any time, the Borrower's total weighted risk assets at such time as defined
and determined in accordance with Regulation Y.
"SIGNIFICANT SUBSIDIARY" shall mean any Subsidiary which, at the
time any determination is being made, constitutes a "significant subsidiary" as
defined in Rule 1-02 of Regulation S-X of the Securities and Exchange
Commission, 17 C.F.R. Section 210.1-02, as in effect on the date hereof.
"S&P" shall mean Standard and Poor's Corporation, and its
successors.
"SPREAD" shall mean on any date, with respect to Eurodollar Standby
Loans or ABR Loans, the applicable percentage set forth below based upon the
ratings by S&P and Moody's, respectively, applicable on such date to the Index
Debt:
CATEGORY 1 LIBOR Spread ABR Spread
- ---------- ------------ ----------
Rating
------
AA- or higher by S&P .1700 0
Aa3 or higher by Moody's
CATEGORY 2
- ----------
Rating
------
A+ or A by S&P .2250 0
A1 or A2 by Moody's
<PAGE> 21
17
CATEGORY 3
- ----------
Rating
------
A- or BBB+ by S&P .2750 0
A3 or Baa1 by Moody's
CATEGORY 4
- ----------
Rating
------
BBB or below by S&P .3125 0
Baa2 or below by Moody's
For purposes of the foregoing, (i) if there shall exist no Index
Debt (other than by reason of the circumstances referred to in the last
sentence of this definition), then each rating agency shall be deemed to have
established a rating with respect to Index Debt in Category 4; (ii) if the
ratings established or deemed to have been established by S&P and Moody's for
the Index Debt shall fall within different Categories, the Spread shall be
based on the Category containing the higher of such ratings; and (iii) if any
rating for Index Debt established or deemed to have been established by S&P or
Moody's shall be changed (other than as a result of a change in the rating
system of S&P or Moody's), such change shall be effective (A) if the Index Debt
is not publicly rated, as of the date of the applicable Ratings Review Letter
indicating such change or (B) if the Index Debt is publicly rated, as of the
date on which such change is first announced by the applicable rating agency.
Each change in the Spread shall apply during the period commencing on the
effective date of such change and ending on the date immediately preceding the
effective date of the next such change. If the rating system of S&P or Moody's
shall change, or if any such rating agency shall cease to be in the business of
rating corporate debt obligations, the Borrower and the Lenders, acting through
the Administrative Agent, shall negotiate in good faith to amend the references
to specific ratings in this definition to reflect such changed rating system or
the nonavailability of ratings from such rating agency, and pending agreement
on such amendment, the Spread most recently determined in accordance with this
definition shall continue in effect.
<PAGE> 22
18
"STANDBY BORROWING" shall mean a Borrowing consisting of simultaneous
Standby Loans from each of the Lenders.
"STANDBY BORROWING REQUEST" shall mean a request made pursuant to
Section 2.04 in the form of Exhibit A-5.
"STANDBY LOAN" shall mean a revolving loan made by the Lenders to the
Borrower pursuant to Section 2.04. Each Standby Loan shall be a Eurodollar
Standby Loan or an ABR Loan.
"STATUTORY RESERVES" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including
any marginal, special, emergency or supplemental reserves) expressed as a
decimal established by the Board and any other banking authority to which the
Agent is subject for new negotiable nonpersonal time deposits in Dollars of
over $100,000 with maturities approximately equal to three months. Statutory
Reserves shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.
"SUBSIDIARY" shall mean, with respect to any Person (herein referred to
as the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held, other than in a
fiduciary capacity, or (b) which is, at the time any determination is made,
otherwise Controlled by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"SUBSIDIARY" shall mean any subsidiary of the Borrower.
"TIER 1 CAPITAL" shall mean, with reference to the Borrower, at any
time, the Borrower's Tier 1 capital at such time as defined and determined in
accordance with Regulation Y.
<PAGE> 23
19
"TOTAL COMMITMENT" shall mean at any time the aggregate amount of
the Lenders' Commitments, as in effect at such time.
"TYPE", when used in respect of any Loan or Borrowing, shall refer
to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, "Rate" shall
include the LIBO Rate, the Adjusted CD Rate, the Alternate Base Rate and any
fixed rate.
"UTILIZATION FEE" shall have the meaning assigned to such term in
Section 2.06(b).
"WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan,
as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require.
SECTION 1.03. ACCOUNTING TERMS. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; PROVIDED,
HOWEVER, that if the Borrower notifies the Agent that the Borrower wishes to
amend any covenant in Article VI or any related definition to eliminate the
effect of any change in GAAP occurring after the Closing Date on the operation
of such covenant (or if the Agent notifies the Borrower that the Required
Lenders wish to amend Article VI or any related definition for such purpose),
then the Borrower's compliance with such covenant shall be determined on the
basis of GAAP in effect immediately before such change in GAAP became
effective, until either such notice is withdrawn or such covenant is amended in
a manner satisfactory to the Borrower and the Required Lenders.
<PAGE> 24
20
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, to make Standby Loans to the Borrower, at
any time and from time to time on and after the date hereof and until the
earlier of the Maturity Date or the termination of the Commitment of such
Lender in accordance with the terms hereof, in an aggregate principal amount at
any time outstanding not to exceed such Lender's Commitment minus the amount by
which the Competitive Loans outstanding at such time shall be deemed to have
used such Commitment pursuant to Section 2.16, subject, however, to the
conditions that (a) at no time shall (i) the sum of (x) the outstanding
aggregate principal amount of all Standby Loans made by all Lenders plus (y)
the outstanding aggregate principal amount of all Competitive Loans made by all
Lenders exceed (ii) the Total Commitment and (b) at all times the outstanding
aggregate principal amount of all Standby Loans made by each Lender shall equal
the product of (i) the percentage which its Commitment represents of the Total
Commitment times (ii) the outstanding aggregate principal amount of all Standby
Loans made pursuant to Section 2.04. Each Lender's Commitment is set forth
opposite its respective name in Schedule 2.01. Such Commitments may be
terminated or reduced from time to time pursuant to Section 2.11.
Within the foregoing limits, the Borrower may borrow, pay or prepay
and reborrow hereunder, on and after the Closing Date and prior to the Maturity
Date, subject to the terms, conditions and limitations set forth herein.
SECTION 2.02. LOANS. (a) Each Standby Loan shall be made as part of
a Borrowing consisting of Loans made by the Lenders ratably in accordance with
their Commitments; PROVIDED, HOWEVER, that the failure of any Lender to make
any Standby Loan shall not in itself relieve any other Lender of its obligation
to lend hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan required to be
made by such other Lender). Each Competitive Loan shall be made in accordance
with the procedures set forth in Section 2.03. The Standby Loans or Competitive
Loans comprising any Borrowing shall be in an
<PAGE> 25
21
aggregate principal amount which is an integral multiple of $1,000,000 and not
less than $5,000,000.
(b) Each Competitive Borrowing shall be comprised entirely of
Eurodollar Competitive Loans or Fixed Rate Loans, and each Standby Borrowing
shall be comprised entirely of Eurodollar Standby Loans or ABR Loans, as the
Borrower may request pursuant to Section 2.03 or 2.04, as applicable. Each
Lender may at its option make any Eurodollar Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; PROVIDED that any
exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement. Borrowings of
more than one Type may be outstanding at the same time; PROVIDED, HOWEVER, that
the Borrower shall not be entitled to request any Borrowing which, if made,
would result in an aggregate of more than seven separate Standby Loans of any
Lender being outstanding hereunder at any one time. For purposes of the
foregoing, Loans having different Interest Periods, regardless of whether they
commence on the same date, shall be considered separate Loans.
(c) Subject to Section 2.05 and paragraph (d) below, each Lender
shall make each Loan to be made by it hereunder on the proposed date thereof by
wire transfer of immediately available funds to the Agent in New York, New
York, not later than 1:00 p.m., New York City time, and the Agent shall by 3:00
p.m., New York City time, credit or wire transfer the amounts so received to
the general deposit account of the Borrower with the Agent or to such other
account as the Borrower may designate or, if a Borrowing shall not occur on
such date because any condition precedent herein specified shall not have been
met, return the amounts so received to the respective Lenders. Competitive
Loans shall be made by the Lender or Lenders whose Competitive Bids therefor
are accepted pursuant to Section 2.03 in the amounts so accepted and Standby
Loans shall be made by the Lenders pro rata in accordance with Section 2.16.
Unless the Agent shall have received notice from a Lender prior to the date
(or, in the case of ABR Borrowings, on the date) of any Borrowing that such
Lender will not make available to the Agent such Lender's portion of such
Borrowing, the Agent may assume that such Lender has made such portion
available to the Agent on the date of such Borrowing in accordance with this
paragraph (c) and the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent that such
<PAGE> 26
22
Lender shall not have made such portion available to the Agent, such
Lender and the Borrower severally agree to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Agent, in the case of the Borrower and such Lender, at
the Federal Funds Effective Rate; PROVIDED, HOWEVER, that the Borrower shall
not in any event have any liability to the extent the Agent has recovered such
funds from such Lender. The Agent, after receiving knowledge of such Lender's
failure to make such portion available to the Agent, shall promptly provide
notice of such to the Borrower. If such Lender shall repay to the Agent such
corresponding amount with such interest, such amount shall constitute such
Lender's Loan as part of such Borrowing (from the date such Loan was made by
the Agent on behalf of such Lender to the Borrower) for purposes of this
Agreement.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date.
SECTION 2.03. COMPETITIVE BID PROCEDURE. (a) In order to request
Competitive Bids, the Borrower shall hand deliver or telecopy to the Agent a
duly completed Competitive Bid Request in the form of Exhibit A-1 hereto, to be
received by the Agent (i) in the case of a Eurodollar Competitive Borrowing,
not later than 10:00 a.m., New York City time, four Business Days before a
proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing,
not later than 10:00 a.m., New York City time, one Business Day before a
proposed Competitive Borrowing. No ABR Loan shall be requested in, or made
pursuant to, a Competitive Bid Request. A Competitive Bid Request that does not
conform substantially to the format of Exhibit A-1 may be rejected in the
Agent's sole discretion, and the Agent shall promptly notify the Borrower of
such rejection by telecopier. Such request shall in each case refer to this
Agreement and specify (x) whether the Borrowing then being requested is to be a
Eurodollar Borrowing or a Fixed Rate Borrowing, (y) the date of such Borrowing
(which shall be a Business Day) and the aggregate principal amount thereof
which shall be in a minimum principal amount of $10,000,000 and in an integral
multiple of $1,000,000, and (z) the Interest Period with respect thereto (which
may not end after the Maturity Date). Promptly after its receipt of a
<PAGE> 27
23
Competitive Bid Request that is not rejected as aforesaid, the Agent
shall invite by telecopier (in the form set forth in Exhibit A-2
hereto) the Lenders to bid, on the terms and conditions of this
Agreement, to make Competitive Loans pursuant to the Competitive Bid
Request.
(b) Each Lender may, in its sole discretion, make one or more
Competitive Bids to the Borrower responsive to a Competitive Bid Request. Each
Competitive Bid by a Lender must be received by the Agent via telecopier, in
the form of Exhibit A-3 hereto, (i) in the case of a Eurodollar Competitive
Borrowing, not later than 9:30 a.m., New York City time, three Business Days
before a proposed Competitive Borrowing and (ii) in the case of a Fixed Rate
Borrowing, not later than 9:30 a.m., New York City time, on the day of a
proposed Competitive Borrowing. Multiple bids will be accepted by the Agent.
Competitive Bids that do not conform substantially to the format of Exhibit A-3
may be rejected by the Agent after conferring with, and upon the instruction
of, the Borrower, and the Agent shall notify the Lender making such
nonconforming bid of such rejection as soon as practicable. Each Competitive
Bid shall refer to this Agreement and specify (x) the principal amount (which
shall be in a minimum principal amount of $5,000,000 and in an integral
multiple of $1,000,000 and which may equal the entire principal amount of the
Competitive Borrowing requested by the Borrower) of the Competitive Loan or
Loans that the Lender is willing to make to the Borrower, (y) the Competitive
Bid Rate or Rates at which the Lender is prepared to make the Competitive Loan
or Loans and (z) the Interest Period and the last day thereof. If any Lender
shall elect not to make a Competitive Bid, such Lender shall so notify the
Agent via telecopier (I) in the case of Eurodollar Competitive Loans, not later
than 9:30 a.m., New York City time, three Business Days before a proposed
Competitive Borrowing, and (II) in the case of Fixed Rate Loans, not later than
9:30 a.m., New York City time, on the day of a proposed Competitive Borrowing;
PROVIDED, HOWEVER, that failure by any Lender to give such notice shall not
cause such Lender to be obligated to make any Competitive Loan as part of such
Competitive Borrowing. A Competitive Bid submitted by a Lender pursuant to this
paragraph (b) shall be irrevocable.
(c) The Agent shall promptly (but in no event later than 10:00 a.m.,
New York City time) notify the Borrower by telecopier of all the Competitive
Bids made in accordance with paragraph (b) above, the Competitive Bid
<PAGE> 28
24
Rate and the principal amount of each Competitive Loan in respect of
which a Competitive Bid was made and the identity of the Lender that
made each bid. The Agent shall send a copy of all Competitive Bids to
the Borrower for its records as soon as practicable after completion of the
bidding process set forth in this Section 2.03.
(d) The Borrower may in its sole and absolute discretion, subject
only to the provisions of this paragraph (d), accept or reject any Competitive
Bid referred to in paragraph (c) above. The Borrower shall notify the Agent by
telephone, confirmed by telecopier in the form of a Competitive Bid
Accept/Reject Letter in the form of Exhibit A-4 hereto, whether and to what
extent it has decided to accept or reject any of or all the bids referred to in
paragraph (c) above, (x) in the case of a Eurodollar Competitive Borrowing, not
later than 1:00 p.m., New York City time, three Business Days before a proposed
Competitive Borrowing, and (y) in the case of a Fixed Rate Borrowing, not later
than 10:30 a.m., New York City time, on the day of a proposed Competitive
Borrowing; PROVIDED, HOWEVER, that (i) the failure by the Borrower to give such
notice shall be deemed to be a rejection of all the bids referred to in
paragraph (c) above, (ii) the Borrower shall not accept a bid made at a
particular Competitive Bid Rate if the Borrower has decided to reject a bid
made at a lower Competitive Bid Rate, (iii) the aggregate amount of the
Competitive Bids accepted by the Borrower shall not exceed the principal amount
specified in the Competitive Bid Request, (iv) if the Borrower shall accept a
bid or bids made at a particular Competitive Bid Rate but the amount of such
bid or bids shall cause the total amount of bids to be accepted by the Borrower
to exceed the amount specified in the Competitive Bid Request, then the
Borrower shall accept a portion of such bid or bids in an amount equal to the
amount specified in the Competitive Bid Request less the amount of all other
Competitive Bids accepted with respect to such Competitive Bid Request, which
acceptance, in the case of multiple bids at such Competitive Bid Rate, shall be
made pro rata in accordance with the amount of each such bid at such
Competitive Bid Rate, and (v) except pursuant to clause (iv) above, no bid
shall be accepted for a Competitive Loan unless such Competitive Loan is in a
minimum principal amount of $10,000,000 and an integral multiple of $1,000,000;
PROVIDED FURTHER, HOWEVER, that if a Competitive Loan must be in an amount less
than $10,000,000 because of the provisions of clause (iv) above, such
Competitive Loan may be for a minimum of $1,000,000 or any
<PAGE> 29
25
integral multiple thereof, and in calculating the pro rata allocation
of acceptances of portions of multiple bids at a particular Competitive Bid
Rate pursuant to clause (iv) the amounts shall be rounded to integral multiples
of $1,000,000 in a manner which shall be in the discretion of the Borrower. A
notice given by the Borrower pursuant to this paragraph (d) shall be
irrevocable.
(e) The Agent shall promptly notify each bidding Lender whether or
not its Competitive Bid has been accepted (and if so, in what amount and at
what Competitive Bid Rate) by telecopy sent by the Agent, and each successful
bidder will thereupon become bound, subject to the other applicable conditions
hereof, to make the Competitive Loan in respect of which its bid has been
accepted.
(f) A Competitive Bid Request shall not be made within five Business
Days after the date of any previous Competitive Bid Request.
(g) If the Agent shall elect to submit a Competitive Bid in its
capacity as a Lender, it shall submit such bid directly to the Borrower one
quarter of an hour earlier than the latest time at which the other Lenders are
required to submit their bids to the Agent pursuant to paragraph (b) above.
(h) All Notices required by this Section 2.03 shall be given in
accordance with Section 9.01.
SECTION 2.04. STANDBY BORROWING PROCEDURE. In order to request a
Standby Borrowing, the Borrower shall hand deliver or telecopy a Standby
Borrowing Request to the Agent in the form of Exhibit A-S hereto (a) in the
case of a Eurodollar Standby Borrowing, not later than 10:30 a.m., New York
City time, three Business Days before a proposed borrowing and (b) in the case
of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the day
of a proposed borrowing. No Fixed Rate Loan shall be requested or made pursuant
to a Standby Borrowing Request. Such notice shall be irrevocable and shall in
each case specify (i) whether the Borrowing then being requested is to be a
Eurodollar Standby Borrowing or an ABR Borrowing; (ii) the date of such Standby
Borrowing (which shall be a Business Day) and the amount thereof; and (iii) if
such Borrowing is to be a Eurodollar Standby Borrowing, the Interest Period
with respect thereto. If no election as to the Type of Standby Borrowing is
specified in any such notice, then the
<PAGE> 30
26
requested Standby Borrowing shall be an ABR Borrowing. If no Interest
Period with respect to any Eurodollar Standby Borrowing is specified in any
such notice, then the Borrower shall be deemed to have selected an Interest
Period of one month's duration. The Agent shall promptly advise the Lenders of
any notice given pursuant to this Section 2.04 and of each Lender's portion of
the requested Borrowing.
SECTION 2.05. CONVERSION AND CONTINUATION OF STANDBY BORROWINGS. The
Borrower shall have the right at any time upon prior irrevocable notice to the
Agent (i) not later than 11:00 a.m., New York City time, one Business Day prior
to conversion, to convert any Borrowing consisting of Eurodollar Standby Loans
into a Borrowing consisting of ABR Loans, (ii) not later than 10:30 a.m., New
York City time, three Business Days prior to conversion or continuation, to
convert any Standby Borrowing consisting of ABR Loans into a Borrowing
consisting of Eurodollar Standby Loans or to continue any Borrowing consisting
of Eurodollar Standby Loans for an additional Interest Period and (iii) not
later than 10:30 a.m., New York City time, three Business Days prior to
conversion, to convert the Interest Period with respect to any Borrowing
consisting of Eurodollar Standby Loans to another permissible Interest Period,
subject in each case to the following:
(a) each conversion or continuation shall be made pro rata among the
Lenders in accordance with the respective principal amounts of the Loans
comprising the converted or continued Borrowing;
(b) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, the aggregate principal amount
of such Borrowing converted or continued shall be an integral multiple of
$1,000,000 and not less than $5,000,000.
(c) accrued interest on a Loan (or portion thereof) being converted
shall be paid by the Borrower at the time of conversion;
(d) if any Borrowing consisting of Eurodollar Standby Loans is
converted at a time other than the end of the Interest Period applicable
thereto, the Borrower shall pay, upon demand, any amounts due to the
Lenders pursuant to Section 2.15 as a result of such conversion;
<PAGE> 31
27
(e) any portion of a Borrowing maturing or required to be repaid in
less than one month may not be converted into or continued as a Borrowing
consisting of Eurodollar Standby Loans;
(f) any portion of a Borrowing consisting of Eurodollar Standby
Loans which cannot be continued as such by reason of clause (e) above
shall be automatically converted at the end of the Interest Period in
effect for such Borrowing into a Standby Borrowing consisting of ABR
Loans;
(g) no Interest Period may be selected for any Borrowing consisting
of Eurodollar Standby Loans that would end later than the Maturity Date;
and
(h) at any time when there shall have occurred and be continuing any
Default or Event of Default, no Borrowing may be converted into or
continued as a Eurodollar Standby Borrowing.
Each notice pursuant to this Section 2.05 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Standby Borrowing that the Borrower requests be converted or continued, (ii)
whether such Borrowing is to be converted to or continued as a Borrowing
consisting of Eurodollar Standby Loans or ABR Loans, (iii) if such notice
requests a conversion, the date of such conversion (which shall be a Business
Day) and (iv) if such Borrowing is to be converted to or continued as a
Borrowing consisting of Eurodollar Standby Loans, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a Borrowing consisting of
Eurodollar Standby Loans, the Borrower shall be deemed to have selected an
Interest Period of one month's duration. The Agent shall advise the other
Lenders of any notice given pursuant to this Section 2.05 and of each Lender's
portion of any converted or continued Borrowing. If the Borrower shall not have
given notice in accordance with this Section 2.05 to continue any Borrowing
into a subsequent Interest Period (and shall not otherwise have given notice in
accordance with this Section 2.05 to convert such Borrowing) , such Borrowing
shall, at the end of the Interest Period applicable thereto (unless repaid
pursuant to the terms hereof) , automatically be continued into a new Interest
Period as an ABR Borrowing.
<PAGE> 32
28
SECTION 2.06. FEES. (a) The Borrower agrees to pay to each Lender,
through the Agent, on each March 31, June 30, September 30 and December 31 and
on the date on which the Commitment of such Lender shall be terminated as
provided herein, a facility fee (a "Facility Fee"), at a rate per annum equal
to the Facility Fee Percentage from time to time in effect on the amount of the
Commitment of such Lender, whether used or unused, during the preceding quarter
(or other period commencing on the date of this Agreement or ending with the
Maturity Date or any date on which the Commitment of such Lender shall be
terminated). All Facility Fees shall be computed on the basis of the actual
number of days elapsed in a year of 360 days. The Facility Fee due to each
Lender shall commence to accrue on the date hereof and shall cease to accrue on
the earlier of the Maturity Date and the date of termination of the Commitment
of such Lender as provided herein.
(b) For any day during which the outstanding principal amount of the
Loans shall be greater than 50% of the Total Commitment under this Agreement,
the Borrower shall pay a utilization fee equal to 0.0500% per annum (computed
on the basis of the actual number of days elapsed in a year of 360 days). Each
fee described in this paragraph (b) is referred to herein as a "Utilization
Fee". The Utilization Fee, if any, in respect of any quarter shall be paid in
arrears to each Lender, through the Agent, on each March 31, June 30, September
30 and December 31 and on the Maturity Date (based on the amount of such
Lender's outstanding Loans during such period) and in the event such Lender's
Commitment is terminated other than on one of the aforementioned quarterly
dates, then such Fee shall be prorated and paid on the next succeeding
quarterly date.
(c) The Borrower agrees to pay the Agent, for its own account, agent
and administrative fees (the "Agent Fees") at the times and in the amounts
agreed upon in the letter agreement dated May 27, 1994 between the Borrower and
the Agent, as supplemented by a letter agreement dated December 5, 1995.
(d) All Fees shall be paid on the dates due, in immediately available
funds, to the Agent for distribution, if and as appropriate, among the Lenders.
Once paid, none of the Fees shall be refundable under any circumstances.
SECTION 2.07. REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) The
outstanding principal balance of each
<PAGE> 33
29
Competitive Loan shall be payable on the last day of the Interest Period
applicable to such Loan, and the outstanding principal balance of each Standby
Loan shall be payable on the Maturity Date. Each Competitive Loan and each
Standby Loan shall bear interest from the date of the Borrowing of which such
Loan is a part on the outstanding principal balance thereof as set forth in
Section 2.08.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness to such Lender resulting
from each Loan made by such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time under
this Agreement.
(c) The Agent shall maintain accounts in which it shall record (i)
the amount of each Loan made hereunder, the Type of each Loan made and the
Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Agent
hereunder from the Borrower and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) and (c) of this Section 2.07 shall be prima facie evidence of the
existence and amounts of the obligations therein recorded; PROVIDED, HOWEVER,
that the failure of any Lender or the Agent to maintain such accounts or any
error therein shall not in any manner affect the obligations of the Borrower to
repay the Loans in accordance with their terms.
SECTION 2.08. INTEREST ON LOANS. (a) Subject to the provisions of
Section 2.09, the Loans comprising each Eurodollar Borrowing shall bear
interest (computed on the basis of the actual number of days elapsed over a
year of 360 days) at a rate per annum equal to (i) in the case of each
Eurodollar Standby Loan, (a) the LIBO Rate for the Interest Period in effect
for such Borrowing plus (b) the Spread applicable to Eurodollar Loans from time
to time in effect and (ii) in the case of each Eurodollar Competitive Loan, (a)
the LIBO Rate for the Interest Period in effect for such Borrowing plus (b) the
Margin (which may be negative) offered by the Lender making such Loan and
accepted by the Borrower pursuant to Section 2.03. Interest on each Eurodollar
Borrowing shall be payable on each applicable Interest Payment Date except as
otherwise
<PAGE> 34
30
provided in this Agreement. The LIBO Rate shall be determined by the
Agent, and such determination shall be conclusive absent manifest
error. The Agent shall promptly advise the Borrower and each Lender of such
determination.
(b) Subject to the provisions of Section 2.09, the Loans comprising
each ABR Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as the case may be, when
determined by reference to the Prime Rate and over a year of 360 days at all
other times) at a rate per annum equal to the Alternate Base Rate. Interest on
each ABR Borrowing shall be payable on each applicable Interest Payment Date
except as otherwise provided in this Agreement. The Alternate Base Rate shall
be determined by the Agent, and such determination shall be conclusive absent
manifest error. The Agent shall promptly advise the Borrower and each Lender of
such determination.
(c) Subject to the provisions of Section 2.09, each Fixed Rate Loan
shall bear interest at a rate per annum (computed on the basis of the actual
number of days elapsed over a year of 360 days) equal to the fixed rate of
interest offered by the Lender making such Loan and accepted by the Borrower
pursuant to Section 2.03. Interest on each Fixed Rate Loan shall be payable on
the Interest Payment Dates applicable to such Loan except as otherwise provided
in this Agreement.
SECTION 2.09. DEFAULT INTEREST. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount
becoming due hereunder, whether at scheduled maturity, by notice of prepayment,
acceleration or otherwise, the Borrower shall on demand from time to time from
the Agent pay interest, to the extent permitted by law, on such defaulted
amount up to (but not including) the date of actual payment (after as well as
before judgment) at a rate per annum (computed on the basis of the actual
number of days elapsed over a year of 360 days) equal to the Alternate Base
Rate plus 2% per annum.
SECTION 2.10. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Agent shall have determined that
Dollar deposits in the principal amounts of the Eurodollar Loans comprising
such Borrowing are not generally available in the London interbank market, or
that the rates at which
<PAGE> 35
31
such Dollar deposits are being offered will not adequately and fairly reflect
the cost to any Lender of making or maintaining its Eurodollar Loan during such
Interest period, or that reasonable means do not exist for ascertaining the
LIBO Rate, the Agent shall, as soon as practicable thereafter, give written or
telecopied notice of such determination to the Borrower and the Lenders. In the
event of any such determination, until the Agent shall have advised the
Borrower and the Lenders that the circumstances giving rise to such notice no
longer exist, (i) any request by the Borrower for a Eurodollar Competitive
Borrowing pursuant to Section 2.03 shall be of no force and effect and shall be
denied by the Agent and (ii) any request by the Borrower for a Eurodollar
Standby Borrowing pursuant to Section 2.04 shall be deemed to be a request for
an ABR Borrowing; PROVIDED, HOWEVER, that any request for such a Eurodollar
Standby Borrowing may be revoked by the Borrower, as soon as is practicable
after receiving the aforementioned notice from the Agent. Each determination by
the Agent hereunder shall be conclusive absent manifest error.
SECTION 2.11. TERMINATION, REDUCTION OF COMMITMENTS. (a) The
Commitments shall be automatically and permanently terminated on the Maturity
Date.
(b) Upon at least three Business Days' prior irrevocable written or
telecopied notice to the Agent, the Borrower may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the
Total Commitment; PROVIDED, HOWEVER, that (i) each partial reduction of the
Total Commitment shall be in an integral multiple of $1,000,000 and in a
minimum principal amount of $5,000,000 and (ii) no such termination or
reduction shall be made which would reduce the Total Commitment to an amount
less than the aggregate outstanding principal amount of the Competitive Loans
and the Standby Loans.
(c) Each reduction in the Total Commitment hereunder shall be made
ratably among the Lenders in accordance with their respective Commitments. The
Borrower shall pay to the Agent for the account of the Lenders, on the date of
each termination or reduction, the Facility Fees on the amount of the
Commitments so terminated or reduced accrued through the date of such
termination or reduction.
SECTION 2.12. PREPAYMENT. (a) The Borrower shall have the right at
any time and from time to time to prepay any Standby Borrowing, in whole or in
part, upon
<PAGE> 36
32
giving written or telecopied notice (or telephone notice promptly confirmed by
written or telecopied notice) to the Agent: (i) before 10:30 a.m., New York
City time, three Business Days prior to prepayment, in the case of Eurodollar
Loans; and (ii) before 10:00 a.m., New York City time, one Business Day prior
to prepayment in the case of ABR Loans; PROVIDED, HOWEVER, that each partial
prepayment shall be in an amount which is an integral multiple of $1,000,000
and not less than $5,000,000. The Borrower shall not have the right to prepay
any Competitive Borrowing.
(b) On the date of any termination or reduction of the Commitments
pursuant to Section 2.11, the Borrower shall pay or prepay so much of the
Standby Borrowings as shall be necessary in order that the aggregate principal
amount of the Competitive Loans and Standby Loans outstanding will not exceed
the Total Commitment after giving effect to such termination or reduction.
(c) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower to prepay such Borrowing (or portion
thereof) by the amount stated therein on the date stated therein. All
prepayments under this Section 2.12 shall be subject to Section 2.15 but
otherwise without premium or penalty. All prepayments under this Section 2.12
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of payment.
SECTION 2.13. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a) If
any Lender shall give notice to the Agent and the Borrower at any time to the
effect that Eurocurrency Reserve Requirements are, or are scheduled to become,
effective and that such Lender is or will be generally subject to such
Eurocurrency Reserve Requirements as a result of which such Lender will incur
additional costs, then such Lender shall, for each day from the later of the
date of such notice and the date on which such Eurocurrency Reserve
Requirements become effective, be entitled to additional interest on each
Eurodollar Loan made by it at a rate per annum determined for such day (rounded
upward to the nearest 100th of 1%) equal to the remainder obtained by
subtracting (i) the LIBO Rate for such Eurodollar Loan from (ii) the rate
obtained by dividing such LIBO Rate by a percentage equal to 100% minus the
then-applicable Eurocurrency Reserve Requirements. Such additional interest
will be payable in arrears to the Agent,
<PAGE> 37
33
for the account of such Lender, on each Interest Payment Date relating to such
Eurodollar Loan and on any other date when interest is required to be paid
hereunder with respect to such Loan. Any Lender which gives a notice under this
paragraph (a) shall promptly withdraw such notice (by written notice of
withdrawal given to the Agent and the Borrower) in the event Eurocurrency
Reserve Requirements cease to apply to it or the circumstances giving rise to
such notice otherwise cease to exist.
(b) Notwithstanding any other provision herein, if after the date of
this Agreement any change in applicable law, rule or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall result in the imposition, modification or applicability of
any reserve, special deposit or similar requirement against assets of, deposits
with or for the account of or credit extended by any Lender (except for any
such reserve requirement which is included in Eurocurrency Reserve Requirements
covered by paragraph (a) of this Section), or shall result in the imposition on
any Lender or the London interbank market of any other condition affecting this
Agreement, such Lender's Commitment or any Eurodollar Loan or Fixed Rate Loan
made by such Lender, and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurodollar Loan
or Fixed Rate Loan or to reduce the amount of any sum received or receivable by
such Lender hereunder (whether of principal, interest or otherwise) by an
amount deemed by such Lender to be material, then such additional amount or
amounts as will compensate such Lender for such additional costs or reduction
will be paid by the Borrower to such Lender upon demand. Notwithstanding the
foregoing, no Lender shall be entitled to request compensation under this
paragraph with respect to any Competitive Loan if the change giving rise to
such request was applicable to such Lender at the time of submission of the
Competitive Bid pursuant to which such Competitive Loan was made.
(c) If any Lender shall have determined that the adoption after the
date hereof of any law, rule, regulation or guideline regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any Governmental Authority charged
with the interpretation or administration thereof, or compliance by any Lender
(or any lending office
<PAGE> 38
34
of such Lender) or any Lender's holding company with any request or directive
regarding capital adequacy (whether or not having the force of law) made or
promulgated after the date hereof by any such Governmental Authority has or
would have the effect of reducing the rate of return on such Lender's capital
or on the capital of such Lender's holding company, if any, as a consequence of
this Agreement or the Loans made by such Lender pursuant hereto to a level
below that which such Lender or such Lender's holding company could have
achieved but for such applicability, adoption, change or compliance (taking
into consideration such Lender's policies and the policies of such Lender's
holding company with respect to capital adequacy) by an amount deemed by such
Lender to be material, then from time to time the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
(d) A certificate of a Lender setting forth such amount or amounts as
shall be necessary to compensate such Lender as specified in paragraph (b) or
(c) above, as the case may be, and, in reasonable detail, the method by which
such amount or amounts shall have been determined, shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
each Lender the amount shown as due on any such certificate delivered by it
within 10 days after the receipt of the same.
(e) Failure on the part of any Lender to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Lender's right to demand compensation with respect to such period or any
other period. The protection of this Section shall be available to each Lender
regardless of any possible contention of the invalidity or inapplicability of
the law, rule, regulation, guideline or other change or condition which shall
have occurred or been imposed.
SECTION 2.14. CHANGE IN LEGALITY. (a) Notwithstanding any other
provision herein, if any change in any law or regulation or in the
interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written
notice to the Borrower and to the Agent, such Lender may:
<PAGE> 39
35
(i) declare that Eurodollar Loans will not thereafter
be made by such Lender hereunder, whereupon such Lender
shall not submit a Competitive Bid in response to a request
for Eurodollar Competitive Loans and any request by the
Borrower for a Eurodollar Standby Borrowing shall, as to
such Lender only, be deemed a request for an ABR Loan unless
such declaration shall be subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans
made by it be converted to ABR Loans, in which event all
such Eurodollar Loans shall be automatically converted to
ABR Loans as of the effective date of such notice as
provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or
(ii) above, all payments and prepayments of principal which would
otherwise have been applied to repay the Eurodollar Loans that
would have been made by such Lender or the converted Eurodollar
Loans of such Lender shall instead be applied to repay the ABR
Loans made by such Lender in lieu of, or resulting from the
conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.14, a notice to the
Borrower by any Lender shall be effective as to each Eurodollar
Loan, if lawful, on the last day of the Interest Period currently
applicable to such Eurodollar Loan; in all other cases such
notice shall be effective on the date of receipt by the Borrower.
SECTION 2.15. Indemnity. The Borrower shall indemnify
each Lender against any loss or expense which such Lender may
sustain or incur as a consequence of (a) any failure by the
Borrower to fulfill on the date of any borrowing hereunder the
applicable conditions set forth in Article IV, (b) any failure by
the Borrower to borrow or to convert or continue any Loan
hereunder after irrevocable notice of such borrowing, conversion
or continuation has been given pursuant to Section 2.03 or 2.04,
(c) any payment, prepayment or conversion of a Eurodollar Loan or
Fixed Rate Loan required by any other provision of this Agreement
or otherwise made or deemed made on a date other than the last day
of the Interest Period applicable thereto, (d) any default in
payment or prepayment of the principal amount of any Loan or any
part thereof or interest accrued thereon, as and when due and
payable (at the due date thereof, whether at scheduled maturity,
by acceleration,
<PAGE> 40
36
irrevocable notice of prepayment or otherwise), (e) the occurrence of
any Event of Default, or (f) any transfer or assignment pursuant to
Section 2.20(b), including, in each such case, any loss or reasonable
expense sustained or incurred or to be sustained or incurred in
liquidating or employing deposits from third parties acquired to effect or
maintain such Loan or any part thereof as a Eurodollar Loan or Fixed Rate Loan.
Such loss or expense shall exclude any loss of margin hereunder, but shall
include an amount equal to the excess, if any, as reasonably determined by such
Lender, of (i) its cost of obtaining the funds for the Loan being paid,
prepaid, converted or not borrowed (assumed to be the LIBO Rate or, in the case
of a Fixed Rate Loan, the fixed rate of interest applicable thereto) for the
period from the date of such payment, prepayment or failure to borrow to the
last day of the Interest Period for such Loan (or, in the case of a failure to
borrow, the Interest Period for such Loan which would have commenced on the
date of such failure) over (ii) the amount of interest (as reasonably
determined by such Lender) that would be realized by such Lender in reemploying
the funds so paid, prepaid or not borrowed for such period or Interest Period,
as the case may be. A certificate of any Lender setting forth any amount or
amounts which such Lender is entitled to receive pursuant to this Section and,
in reasonable detail, the method by which such amount or amounts shall have
been determined, shall be delivered to the Borrower and shall be conclusive
absent manifest error.
SECTION 2.16. PRO RATA TREATMENT. Except as required under Section
2.14, each Standby Borrowing, each payment or prepayment of principal of any
Standby Borrowing, each payment of interest on the Standby Loans, each payment
of Facility Fees and Utilization Fees, each reduction of the Commitments and
each conversion or continuation of any Borrowing with a Standby Borrowing of
any Type, shall be allocated pro rata among the Lenders in accordance with
their respective Commitments (or, if such Commitments shall have expired or
been terminated, in accordance with the respective principal amounts of their
outstanding Standby Loans). Each payment of principal of any Competitive
Borrowing shall be allocated pro rata among the Lenders participating in such
Borrowing in accordance with the respective principal amounts of their
outstanding Competitive Loans comprising such Borrowing. Each payment of
interest on any Competitive Borrowing shall be allocated pro rata among the
Lenders participating in such Borrowing in accordance with the respective
amounts of accrued and
<PAGE> 41
37
unpaid interest on their outstanding Competitive Loans comprising such
Borrowing. For purposes of determining the available Commitments of the Lenders
at any time, each outstanding Competitive Borrowing shall be deemed to have
utilized the Commitments of the Lenders (including those Lenders which shall
not have made Loans as part of such Competitive Borrowing) pro rata in
accordance with such respective Commitments. Each Lender agrees that in
computing such Lender's portion of any Borrowing to be made hereunder, the
Agent may, in its discretion, round each Lender's percentage of such Borrowing
to the next higher or lower whole Dollar amount.
SECTION 2.17. SHARING OF SETOFFS. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower, including, but not limited to, a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, obtain payment (voluntary or involuntary) in respect of any
Standby Loan or Loans as a result of which the unpaid principal portion of the
Standby Loans shall be proportionately less than the unpaid principal portion
of the Standby Loans of any other Lender, it shall be deemed simultaneously to
have purchased from such other Lender at face value, and shall promptly pay to
such other Lender the purchase price for, a participation in the Standby Loans
of such other Lender, so that the aggregate unpaid principal amount of the
Standby Loans and participations in the Standby Loans held by each Lender shall
be in the same proportion to the aggregate unpaid principal amount of all
Standby Loans then outstanding as the principal amount of its Standby Loans
prior to such exercise of banker's lien, setoff or counterclaim or other event
was to the principal amount of all Standby Loans outstanding prior to such
exercise of banker's lien, setoff or counterclaim or other event; PROVIDED,
HOWEVER, that, if any such purchase or purchases or adjustments shall be made
pursuant to this Section 2.17 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. The Borrower expressly consents to the
foregoing arrangements and agrees that any Lender holding a participation in a
Standby Loan deemed to have been so purchased may exercise any and all rights
of
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38
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by the Borrower to such Lender by reason thereof as fully as if such Lender had
made a Standby Loan directly to the Borrower in the amount of such
participation.
SECTION 2.18. PAYMENTS. (a) The Borrower shall make each payment
(including principal of or interest on any Borrowing or any Fees or other
amounts) hereunder and under any other Loan Document not later than 12:00
(noon), New York City time, on the date when due in Dollars to the Agent at its
offices at 270 Park Avenue, New York, New York, in immediately available funds.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.19. TAXES. (a) Any and all payments by the Borrower hereunder
shall be made, in accordance with Section 2.18, free and clear of and without
deduction for any and all current or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, EXCLUDING
(i) income taxes imposed on the net income of the Agent or any Lender (or any
transferee or assignee thereof, including a participation holder (any such
entity a "Transferee")), (ii) franchise taxes imposed on the net income of the
Agent or any Lender (or Transferee) and (iii) all other taxes of general
applicability to the Agent or any Lender that are not payable solely as a
result of the transactions contemplated by this Agreement, in each case by the
jurisdiction under the laws of which the Agent or such Lender (or Transferee)
is organized or any political subdivision thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities,
collectively or individually, "Taxes"). If the Borrower shall be required to
deduct any Taxes from or in respect of any sum payable hereunder to any Lender
(or any Transferee) or the Agent, (i) the sum payable shall be increased by the
amount (an "additional amount") necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.19) such Lender (or Transferee) or the Agent (as
<PAGE> 43
39
the case may be) shall receive an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay to the relevant
Governmental Authority in accordance with applicable law any current or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document ("Other Taxes") .
(c) The Borrower will indemnify each Lender (or Transferee) and the
Agent for the full amount of Taxes and Other Taxes paid by such Lender (or
Transferee) or the Agent, as the case may be, and any liability (including
penalties, interest and expenses (including reasonable attorney's fees and
expenses)) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability prepared
by a Lender, or the Agent on its behalf, absent manifest error, shall be final,
conclusive and binding for all purposes. Such indemnification shall be made
within 30 days after the date the Lender (or Transferee) or the Agent, as the
case may be, makes written demand therefor. Each Lender (or Transferee) or the
Agent shall, as a prerequisite to such indemnity, make written demand for such
indemnification no later than 180 days after the earlier of (i) the date on
which such Lender (or Transferee) or the Agent makes such payment of Taxes or
Other Taxes and (ii) the date on which such relevant taxing authority or other
Governmental Authority makes written demand upon such Lender (or Transferee) or
the Agent for payment of such Taxes or Other Taxes.
(d) If a Lender (or Transferee) or the Agent shall become aware that
it is entitled to claim a refund from a Governmental Authority in respect of
Taxes or Other Taxes as to which it has been indemnified by the Borrower, or
with respect to which the Borrower has paid additional amounts, pursuant to
this Section 2.19, it shall promptly notify the Borrower of the availability of
such refund claim and shall, within 30 days after receipt of a request by the
Borrower, make a claim to such Governmental Authority for
<PAGE> 44
40
such refund at the Borrower's expense. If a Lender (or Transferee) or
the Agent receives a refund (including pursuant to a claim for refund
made pursuant to the preceding sentence) in respect of any Taxes or
Other Taxes as to which it has been indemnified by the Borrower or with respect
to which the Borrower has paid additional amounts pursuant to this Section
2.19, it shall within 30 days from the date of such receipt pay over such
refund to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.19 with respect
to the Taxes or Other Taxes giving rise to such refund) , net of all
out-of-pocket expenses of such Lender (or Transferee) or the Agent and without
interest (other than interest paid by the relevant Governmental Authority with
respect to such refund); PROVIDED, HOWEVER, that the Borrower, upon the request
of such Lender (or Transferee) or the Agent, agrees to repay the amount paid
over to the Borrower (plus penalties, interest or other charges) to such Lender
(or Transferee) or the Agent in the event such Lender (or Transferee) or the
Agent is required to repay such refund to such Governmental Authority .
(e) As soon as practicable after the date of any payment of Taxes or
Other Taxes by the Borrower to the relevant Governmental Authority, the
Borrower will deliver to the Agent, at its address referred to in Section 9.01,
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing payment thereof.
(f) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.19
shall survive the payment in full of the principal of and interest on all Loans
made hereunder.
(g) Each Lender (or Transferee) that is organized under the laws of
a jurisdiction other than the United States, any State thereof or the District
of Columbia (a "Non-U.S. Bank") shall deliver to the Borrower and the Agent two
copies of either United States Internal Revenue Service Form 1001 or Form 4224,
or, in the case of a Non-U.S. Bank claiming exemption from U.S. Federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a Form W-8, or any subsequent versions
thereof or successors thereto (and, if such Non-U.S. Bank delivers a Form W-8,
a certificate representing that such Non-U.S. Bank is not a bank for
<PAGE> 45
41
purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within
the meaning of Section 871(h) (3) (B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864 (d) (4) of the Code)), properly completed and duly executed by such
Non-U.S. Bank claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax on payments by the Borrower under this Agreement and
the other Loan Documents. Such forms shall be delivered by each Non-U.S. Bank
on or before the date it becomes a party to this Agreement (or, in the case of
a Transferee that is a participation holder, on or before the date such
participation holder becomes a Transferee hereunder) and on or before the date,
if any, such Non-U.S. Bank changes its applicable lending office by designating
a different lending office (a "New Lending Office") . In addition, each
Non-U.S. Bank shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Bank.
Notwithstanding any other provision of this Section 2.19(g), a Non-U.S. Bank
shall not be required to deliver any form pursuant to this Section 2.19(g) that
such Non-U.S. Bank is not legally able to deliver.
(h) The Borrower shall not be required to indemnify any Non-U.S.
Bank, or to pay any additional amounts to any Non-U.S. Bank, in respect of
United States Federal withholding tax pursuant to paragraph (a) or (c) above to
the extent that (i) the obligation to withhold amounts with respect to United
States Federal withholding tax existed on the date such Non-U.S. Bank became a
party to this Agreement (or, in the case of a Transferee that is a
participation holder, on the date such participation holder became a Transferee
hereunder) or, with respect to payments to a New Lending Office, the date such
Non-U.S. Bank designated such New Lending Office with respect to a Loan;
PROVIDED, HOWEVER, that this clause (i) shall not apply to any Transferee or
New Lending Office that becomes a Transferee or New Lending Office as a result
of an assignment, participation, transfer or designation made at the request of
the Borrower; and PROVIDED FURTHER, HOWEVER, that this clause (i) shall not
apply to the extent the indemnity payment or additional amounts any Transferee,
or Lender (or Transferee) through a New Lending Office, would be entitled to
receive (without regard to this clause (i)) do not exceed the indemnity payment
or additional amounts that the person making the assignment, participation or
transfer to such Transferee, or Lender (or
<PAGE> 46
42
Transferee) making the designation of such New Lending Office, would have been
entitled to receive in the absence of such assignment, participation, transfer
or designation or (ii) the obligation to pay such additional amounts would not
have arisen but for a failure by such Non-U.S. Bank to comply with the
provisions of paragraph (g) above.
(i) Nothing contained in this Section 2.19 shall require any Lender (or
Transferee) or the Agent to make available any of its tax returns (or any other
information that it deems to be confidential or proprietary) .
SECTION 2.20. DUTY TO MITIGATE; ASSIGNMENT OF COMMITMENTS UNDER CERTAIN
CIRCUMSTANCES. (a) Any Lender (or Transferee) claiming any indemnity payment or
additional amounts payable pursuant to Section 2.13 or Section 2.19 shall use
reasonable efforts (consistent with legal and regulatory restrictions) to file
any certificate or document reasonably requested in writing by the Borrower or
to change the jurisdiction of its applicable lending office if the making of
such a filing or change would avoid the need for or reduce the amount of any
such indemnity payment or additional amounts that may thereafter accrue or
avoid the circumstances giving rise to such exercise and would not, in the sole
reasonable determination of such Lender (or Transferee), be otherwise
disadvantageous to such Lender (or Transferee).
(b) In the event that any Lender shall have delivered a notice or
certificate pursuant to Section 2.13 (other than pursuant to paragraph (a) of
Section 2.13) or 2.14, or the Borrower shall be required to make additional
payments to any Lender under Section 2.19, the Borrower shall have the right,
at its own expense, upon notice to such Lender and the Agent, to require such
Lender to transfer and assign without recourse (in accordance with and subject
to the restrictions contained in Section 9.04) all its interests, rights and
obligations under this Agreement to another financial institution approved by
the Agent (which approval shall not be unreasonably withheld) which shall
assume such obligations; PROVIDED that (i) no such assignment shall conflict
with any law, rule or regulation or order of any Governmental Authority and
(ii) the assignee shall pay to the affected Lender in immediately available
funds on the date of such assignment the principal of and interest accrued to
the date of payment on the Loans made by it hereunder and all other amounts
accrued for its account or owed to it hereunder.
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43
SECTION 2.21. EXTENSION OF MATURITY DATE. (a) The Company may, by
notice to the Agent (which shall promptly deliver a copy to each of the
Lenders) not less than 45 days and not more than 60 days prior to the first
anniversary of the Closing Date or with respect to such second additional
extension, the second anniversary of the Closing Date (in each case, the
"Anniversary Date") , request that the Lenders extend the Maturity Date for an
additional year from the Maturity Date then in effect hereunder (the "Existing
Maturity Date"); PROVIDED that the Borrower may request only two extensions
pursuant to this Section 2.21. Each Lender, acting in its sole discretion,
shall, by notice to the Borrower and the Agent given not less than 20 days and
not more than 30 days prior to the Anniversary Date (the "Consent Date"),
advise the Borrower whether or not such Lender agrees to such extension;
PROVIDED that each Lender that determines not to extend the Maturity Date (a
"Nonextending Lender") shall notify the Agent (which shall notify the Borrower)
of such fact promptly after such determination (but in any event no later than
the Consent Date) and any Lender that does not advise the Borrower on or before
the Consent Date shall be deemed to be a Nonextending Lender. The election of
any Lender to agree to such extension shall not obligate any other Lender to
agree.
(b) The Borrower shall have the right on or before the Anniversary
Date to replace any Non-extending Lender with, and otherwise add to this
Agreement, one or more other banks (which may include any Lender, each prior to
the Anniversary Date an "Additional Commitment Lender") with the approval of
the Agent (which approval shall not be unreasonably withheld), each of which
Additional Commitment Lenders shall have entered into an agreement in form and
substance satisfactory to the Borrower and the Agent pursuant to which such
Additional Commitment Lender shall, effective as of the Anniversary Date,
undertake a Commitment (if any such Additional Commitment Lender is a Lender,
its Commitment shall be in addition to such Lender's Commitment hereunder on
such date) .
(c) If (and only if) Lenders holding Commitments that, together with
the additional Commitments of the Additional Commitment Lenders that will
become effective on the Anniversary Date, aggregate at least 66-2/3% of the
aggregate amount of the Commitments (not including the additional Commitments
of the Additional Commitment Lenders) on the Consent Date shall have agreed to
extend the Existing Maturity Date, then, effective as of the Anniversary Date,
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44
the Existing Maturity Date shall be extended to the first anniversary
of the Existing Maturity Date (provided, if such date is not a Business Day,
then such Maturity Date as so extended shall be the next preceding Business
Day) and each Additional Commitment Lender shall thereupon become a
"Lender" for all purposes of this Agreement.
Notwithstanding the foregoing, the extension of the Existing
Maturity Date shall not be effective with respect to any Lender unless:
(i) no Default shall have occurred and be continuing on each of the
date of the notice requesting such extension, on the Consent Date or on
the Existing Maturity Date;
(ii) each of the representations and warranties of the Borrower in
Article III hereof shall be true and correct in all material respects on
and as of each of the date of the notice requesting such extension, the
Consent Date and the Existing Maturity Date with the same force and effect
as if made on and as of each date (or, if any such representation or
warranty is expressly stated to have been made as of a specific date, as
of such specific date); and
(iii) each Non-extending Lender shall have been paid in full by the
Borrower all amounts owing to such Lender hereunder on or before the
Existing Maturity Date.
Even if the Existing Maturity Date is extended as aforesaid, the
Commitment of each Non-extending Lender shall terminate on the Existing
Maturity Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to each of the Lenders that:
SECTION 3.01. FINANCIAL CONDITION. Both (i) the consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at December
31, 1994, and the related consolidated statements of income and cash flows and
changes in shareholders' equity of the Borrower and its
<PAGE> 49
45
consolidated Subsidiaries for the fiscal year ended on such date,
reported on by Ernst & Young and (ii) the consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at September 30, 1995, and the
related consolidated statements of income and cash flows and changes in
shareholders' equity of the Borrower and its consolidated Subsidiaries for the
quarter ended on such date are complete and correct in all material respects
and present fairly the consolidated financial condition of the Borrower and the
consolidated results of the operations and changes in financial condition of
the Borrower and its consolidated Subsidiaries for the fiscal year then ended.
Such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by such accountants and as disclosed
therein) .
SECTION 3.02. NO CHANGE. Since December 31, 1994, there has
occurred no Material Adverse Effect.
SECTION 3.03. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. The Borrower
and each corporate Subsidiary which is not a Bank Subsidiary is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. Each Bank Subsidiary which is a national bank is duly organized,
validly existing and in good standing under the National Bank Act, and each
Bank Subsidiary (other than any Edge Act corporation) which is not a national
bank is a corporation duly organized, validly existing, chartered as a state
bank or trust company and in good standing under the laws of the state in which
it is chartered. The Borrower and each Subsidiary (a) has all requisite power
and authority to own and operate its property and assets and to conduct the
business in which it is currently engaged, (b) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification except to the extent that the failure to comply
therewith could not, in the aggregate, result in a Material Adverse Effect, and
(c) is in compliance with all Requirements of Law except to the extent that the
failure to comply therewith could not, in the aggregate, result in a Material
Adverse Effect. The Borrower is a bank holding company duly registered with the
Board under the Bank Holding Company Act of 1956, as amended.
<PAGE> 50
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SECTION 3.04. CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
The Borrower has the corporate power and authority to execute, deliver and
perform its obligations under this Agreement and to borrow hereunder and has
taken all necessary corporate action to authorize the execution, delivery and
performance by the Borrower of this Agreement and the borrowings hereunder. No
consent or authorization of, filing with, or other act by or in respect of any
Governmental Authority, is required in connection with the borrowings hereunder
or with the execution, delivery, performance, validity or enforceability of
this Agreement. This Agreement has been duly executed and delivered on behalf
of the Borrower and constitutes a legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equity principles (whether
enforcement is sought by proceedings in equity or at law) .
SECTION 3.05. NO LEGAL BAR. The execution, delivery and performance of
this Agreement, the borrowings hereunder and the use of the proceeds thereof
will not violate any Requirement of Law or any Contractual Obligation of the
Borrower or any Subsidiary, and will not result in, or require, the creation or
imposition of any Lien on any of its or their respective properties or revenues
pursuant to any Requirement of Law or Contractual Obligation.
SECTION 3.06. NO MATERIAL LITIGATION. Except as set forth in Schedule
3.06, no litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or to the knowledge of the Borrower
threatened against the Borrower or any Subsidiary or against any of its or
their respective properties (a) with respect to the Loan Documents or any of
the transactions contemplated thereby, or (b) which could reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.07. OWNERSHIP OF PROPERTY; LIENS. The Borrower and each
Subsidiary has good record and marketable title in fee simple to or valid
leasehold interests in substantially all its real property, and good title to
substantially all its other property, and none of such property is subject to
any Lien which is prohibited by Section 6.01.
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47
SECTION 3.08. TAXES. Each of the Borrower and the Subsidiaries has
filed or caused to be filed all tax returns which to the knowledge of the
Borrower are required to be filed, and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than those the amount or validity
of which is currently being contested in good faith by appropriate proceedings
and with respect to which reserves in conformity with GAAP have been provided
on the books of the Borrower or the Subsidiaries, as the case may be); and no
tax liens have been filed and, to the knowledge of the Borrower, no claims are
being asserted with respect to any such taxes, fees or other charges.
SECTION 3.09. FEDERAL RESERVE REGULATIONS. (a) Neither the Borrower
nor any of the Subsidiaries is engaged principally in the business of extending
credit for the purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether directly
or indirectly, and whether immediately, incidentally or ultimately, for any
purpose which entails a violation of, or which is inconsistent with, the
provisions of the Regulations of the Board, including Regulation G, U or X.
(c) After giving effect to the application of the proceeds of each
Loan, Margin Stock will not account for more than 25% of the value (i) of the
assets of the Borrower subject to Section 6.01 or (ii) of the assets subject to
the provisions of Section 6.02.
SECTION 3.10. EMPLOYEE BENEFIT PLANS. Each of the Borrower and its
ERISA Affiliates is in compliance in all material respects with the applicable
provisions of ERISA and the Code and the regulations and published
interpretations thereunder. No Reportable Event has occurred in respect of any
Plan of the Borrower or any ERISA Affiliate. The present value of all benefit
liabilities under each Plan (based on those assumptions used to fund such Plan)
did not, as of the last annual valuation date applicable thereto, exceed by
more than $5,000,000 the value of the assets of such Plan, and the present
value of all benefit liabilities of all underfunded Plans (based on those
assumptions used to fund each such Plan) did not, as of the last annual
valuation dates applicable thereto, exceed by
<PAGE> 52
48
more than $5,000,000 the value of the assets of all such underfunded Plans.
Neither the Borrower nor any ERISA Affiliate is required to contribute to any
Multiemployer Plan or has withdrawn from any Multiemployer Plan where such
withdrawal has resulted or would result in any Withdrawal Liability that has
not been fully paid.
SECTION 3.11. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT. The Borrower is not (a) an "investment company", or a company "controlled"
by an "investment company", within the meaning of the Investment Company Act of
1940, as amended or (b) a "holding company" as defined in, or subject to
regulation under, the Public Utility Holding Company Act of 1935 as amended.
SECTION 3.12. USE OF PROCEEDS. The Borrower will use the proceeds
of the Loans only for the purposes specified in the preamble to this Agreement.
SECTION 3.13. NO MATERIAL MISSTATEMENTS. No information, report,
financial statement, exhibit or schedule furnished by or on behalf of the
Borrower to the Agent or any Lender in connection with the negotiation of any
Loan Document or included therein or delivered pursuant thereto contained,
contains or will contain any material misstatement of fact or omitted, omits or
will omit to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were, are or will be made,
not misleading.
SECTION 3.14. ENVIRONMENTAL AND SAFETY MATTERS. The Borrower is aware
of no events, conditions or circumstances involving environmental pollution or
contamination or employee health or safety that could reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.15. CAPITAL COMMITMENTS. The Borrower and the
Subsidiaries are not a party to any Capital Commitment.
<PAGE> 53
49
ARTICLE IV
CONDITIONS OF LENDING
The obligations of the Lenders to make Loans hereunder are subject to
the satisfaction of the following conditions:
SECTION 4.01. ALL BORROWINGS. On the date of each Borrowing:
(a) The Agent shall have received a notice of such Borrowing as
required by Section 2.03 or Section 2.04, as applicable.
(b) The representations and warranties set forth in Article III
hereof (except the representations set forth in Section 3.02) shall be
true and correct in all material respects on and as of the date of such
Borrowing with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly relate
to an earlier date.
(c) The Borrower shall be in compliance in all material respects with
all the terms and provisions set forth herein and in each other Loan
Document on its part to be observed or performed, and at the time of and
immediately after such Borrowing no Event of Default or Default shall have
occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date of such Borrowing as to the matters specified in
paragraphs (b) and (c) of this Section 4.01.
SECTION 4.02. CLOSING DATE. On the Closing Date:
(a) The Agent shall have received a favorable written opinion of
David L. Zoeller, Esq., General Counsel and Secretary of the Borrower,
substantially in the form of Exhibit D hereto, dated the Closing Date and
addressed to the Lenders and satisfactory to the Lenders and to Cravath,
Swaine & Moore, counsel for the Agent, and the Borrower hereby instructs
such counsel to deliver such opinion to the Agent.
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50
(b) All legal matters incident to this Agreement and the borrowings
hereunder shall be satisfactory to the Lenders and to Cravath, Swaine & Moore,
counsel for the Agent.
(c) The Agent shall have received (i) a copy of the certificate or
articles of incorporation, including all amendments thereto, of the Borrower,
certified as of a recent date by the Secretary of State of the state of its
organization, and a certificate as to the good standing of the Borrower as of a
recent date, from such Secretary of State; (ii) a certificate of the Secretary
or Assistant Secretary of the Borrower dated the Closing Date and certifying
(A) that attached thereto is a true and complete copy of the by-laws of the
Borrower as in effect on the Closing Date and at all times since a date prior
to the date of the resolutions described in clause (B) below, (B) that attached
thereto is a true and complete copy of resolutions duly adopted by the Board of
Directors of the Borrower authorizing the execution, delivery and performance
of the Loan Documents and the borrowings hereunder, and that such resolutions
have not been modified, rescinded or amended and are in full force and effect,
(C) that the certificate or articles of incorporation of the Borrower have not
been amended since the date of the last amendment thereto shown on the
certificate of good standing furnished pursuant to clause (i) above, and (D) as
to the incumbency and specimen signature of each officer executing any Loan
Document or any other document delivered in connection herewith on behalf of
the Borrower; (iii) a certificate of another officer as to the incumbency and
specimen signature of the Secretary or Assistant Secretary executing the
certificate pursuant to (ii) above; and (iv) such other documents as the
Lenders or Cravath, Swaine & Moore, counsel for the Agent, may reasonably
request.
(d) The Agent shall have received a certificate, dated the Closing Date
and signed by a Financial Officer of the Borrower, confirming compliance with
the conditions precedent set forth in paragraphs (b) and (c) of Section 4.01.
(e) The Agent shall have received all Fees and other amounts due and
payable on or prior to the Closing Date.
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51
(f) The Agent shall have received a certificate of a Financial
Officer of the Borrower certifying as to (i) the termination of the
$300,000,000 Credit Agreement dated as of June 30, 1994, among the
Borrower and the banks party thereto, and (ii) the payment in full of all
obligations of the Borrower outstanding under such agreement.
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with each Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on any
Loan, any Fees or any other expenses or amounts payable under any Loan Document
shall be unpaid, unless the Required Lenders shall otherwise consent in
writing, the Borrower will, and will cause each of the Subsidiaries to:
SECTION 5.01. FINANCIAL STATEMENTS. In the case of the Borrower,
furnish to each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, the consolidated balance sheet of
the Borrower and its consolidated subsidiaries as at the end of such year
and the related consolidated statements of income and cash flows and
changes in shareholders' equity of the Borrower and its consolidated
subsidiaries for such year, audited and reported on by independent
certified public accountants of nationally recognized standing and in a
form reasonably acceptable to the Required Lenders;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, unaudited consolidated balance sheet of the Borrower
and its consolidated subsidiaries as at the end of each such quarter and
the related unaudited consolidated statements of income and cash flows and
changes in shareholders' equity of the Borrower and its consolidated
subsidiaries for such quarter and the portion of the fiscal year through
such date, certified by a Financial Officer as presenting fairly the
financial positions and results of operations of the
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52
Borrower and its consolidated Subsidiaries and as having been prepared in
accordance with GAAP (subject to normal year-end audit adjustments);
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein (except as
approved by such accountants or officer, as the case may be, and disclosed
therein);
(c) concurrently with the delivery of the financial statements referred to
in clauses (a) and (b) above, a certificate of a Responsible Officer of the
Borrower (i) stating that, to the best of his knowledge, the Borrower during
such period has kept, observed, performed and fulfilled each and every covenant
and condition contained in the Loan Documents and that he has obtained no
knowledge of any Default or Event of Default hereunder, except as specifically
indicated, and (ii) showing in detail the calculations supporting such
statement in respect of Sections 6.03, 6.04, and 6.05;
(d) within five days after the same are sent, copies of all financial
statements and reports which the Borrower sends to its stockholders generally,
and within five days after the same are filed, copies of all financial
statements and periodic reports which the Borrower may make to, or file with,
the Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(e) as soon as is reasonably practicable after the same becomes available,
the "Parent Company Only Financial Statement for Bank Holding Companies"
(report No. FR Y-9LP or any successor form of the Federal Reserve System) of
the Borrower and the "Consolidated Financial Statements for Bank Holding
Companies" (report no. FR Y-9C or any successor form of the Federal Reserve
System) of the Borrower that the Borrower shall have filed with the Board;
(f) promptly upon the request of the Agent or any Lender, copies of all
call reports of each Significant Subsidiary which is a Bank Subsidiary; and
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(g) promptly, such additional financial and other information as the
Agent or any Lender may from time to time reasonably request.
SECTION 5.02. INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
Keep proper books of record and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and
reasonably permit the Lenders (who shall endeavor to coordinate
the exercise of their rights under this Section in order to minimize the burden
on the Borrower), acting through representatives designated by them, to visit
and inspect (upon 24 hours notice to the Borrower) any of its properties and
examine and make abstracts from any of its books and records, at any reasonable
time during normal business hours and as often as may reasonably be desired,
and to discuss the business, operations, properties and financial and other
condition of the Borrower and any Subsidiary with officers of the Borrower and
any Subsidiary and with the Borrower's independent public accountants.
SECTION 5.03. NOTICES. Promptly give notice to the Agent and each
Lender of:
(a) the occurrence of any Default or Event of Default;
(b) the filing or commencement of any action, suit or
proceeding against the Borrower or any Subsidiary whether
at law or in equity or by or before any Governmental
Authority, which is reasonably likely to result in a
Material Adverse Effect; and
(c) any Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a
statement of the chief executive officer or chief financial
officer or treasurer of the Borrower setting forth details of
the occurrence referred to therein and stating what action the
Borrower proposes take with respect thereto.
SECTION 5.04. CONTINUANCE OF BUSINESS. With respect to
the Borrower, at all times be a bank holding company duly
registered with the Board under the Bank Holding Company Act of
1956, as amended, and continue (and will cause each Subsidiary
to continue) to (a) engage in
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54
business of the same general type as now conducted by it or any other
business permitted under, and in accordance with, the Bank Holding
Company Act of 1956, as amended, and any regulation of, or ruling or
order by, the Board issued thereunder and (b) unless otherwise
permitted by this Agreement, maintain its corporate existence and keep in full
force and effect all licenses and permits necessary to the proper conduct of
its business.
SECTION 5.05. COMPLIANCE WITH REGULATORY STANDARDS. At all times
substantially comply with all applicable regulatory guidelines, policy
statements, regulations or other Requirements of Law and cause each Bank
Subsidiary (other than any Edge Act corporation) to maintain membership with
the Federal Deposit Insurance Corporation.
SECTION 5.06. PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its taxes and other material obligations of whatever nature, except,
without prejudice to the effectiveness of paragraph (f) of Article VII hereof,
for any taxes or other obligations when the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
the Borrower or any Subsidiary, as the case may be.
SECTION 5.07. MAINTENANCE OF PROPERTY, INSURANCE. Keep all property
useful and necessary in its business in good working order and condition;
maintain with financially sound and reputable insurance companies insurance on
all its property in at least such amounts and against at least such risks (but
including in any event public liability and business interruption insurance) as
are usually insured against in the same or a similar business.
SECTION 5.08. EMPLOYEE BENEFITS. (a) Comply in all material respects
with the applicable provisions of ERISA and the Code and (b) furnish to the
Agent (i) as soon as possible after, and in any event within 30 days after any
Responsible Officer of the Borrower or any ERISA Affiliate knows or has reason
to know that, any Reportable Event has occurred that alone or together with any
other Reportable Event could reasonably be expected to result in liability of
the Borrower to the PBGC in an aggregate amount exceeding $5,000,000, a
statement of a Financial Officer setting forth details as to such Reportable
Event and the action that the
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55
Borrower proposes to take with respect thereto, together with a copy of the
notice, if any, of such Reportable Event given to the PBGC, (ii) promptly after
receipt thereof, a copy of any notice that the Borrower or any ERISA Affiliate
may receive from the PBGC relating to the intention of the PBGC to terminate
any Plan or Plans (other than a Plan maintained by an ERISA Affiliate that is
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Code
Section 414) or to appoint a trustee to administer any such Plan and (iii)
within 10 days after the due date for filing with the PBGC pursuant to Section
412(n) of the Code a notice of failure to make a required installment or other
payment with respect to a Plan, a statement of a Financial Officer setting
forth details as to such failure and the action that the Borrower proposes to
take with respect thereto, together with a copy of any such notice given to the
PBGC.
SECTION 5.09. CAPITAL REQUIREMENTS. IN the case of the Borrower and
each of the Bank Subsidiaries to, (a) maintain (at all times 120 days or more
after the date such Person became a Bank Subsidiary) such amount of capital as
may be prescribed from time to time by each Bank Regulatory Authority with
jurisdiction over the Borrower or such Bank Subsidiary, whether by regulation,
agreement or order, and (b) ensure that each Bank Subsidiary shall be
"adequately capitalized" (within the meaning of 12 U.S.C. 18310, as amended,
reenacted or redesignated from time to time) at all times 120 days or more
after the date such Person became a Bank Subsidiary.
ARTICLE VI
NEGATIVE COVENANTS
The Borrower covenants and agrees with each Lender and the Agent
that, so long as this Agreement shall remain in effect or the principal of or
interest on any Loan, any Fees or any other expenses or amounts payable under
any Loan Document shall be unpaid, unless the Required Lenders shall otherwise
consent in writing, the Borrower will not, and will not cause or permit any of
the Subsidiaries to:
SECTION 6.01. LIMITATION ON LIENS. Create, incur, assume or suffer
to exist any Lien upon any of the stock of any Significant Subsidiary.
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SECTION 6.02. MERGERS, CONSOLIDATIONS AND TRANSFERS OF ASSETS. Merge
or consolidate with any other person, or sell, lease or otherwise transfer, in
one transaction or a series of related transactions, assets representing a
substantial part of the consolidated assets of the Borrower or any capital
stock of any Subsidiary; PROVIDED, HOWEVER, that this Section shall not
prohibit (a) any Subsidiary from merging, liquidating into or transferring
assets to the Borrower; (b) any Subsidiary from merging or consolidating with
or transferring assets to another Subsidiary; (c) the Borrower or any
Subsidiary from transferring (including by way of any merger or consolidation)
any assets or capital stock of any Subsidiary which is not a Restricted
Subsidiary, so long as the assets, capital stock and Subsidiaries which are the
subject of such transfers during any period of 12 consecutive months would not,
on a combined basis, have constituted a Significant Subsidiary (it being agreed
that any capital stock of a Subsidiary will be deemed for this purpose to
represent a percentage of the revenues and earnings of such Subsidiary which
corresponds to the percentage such capital stock being so transferred
represents of the Subsidiary's total capital stock) ; or (d) the Borrower or
any Subsidiary from transferring any assets or capital stock the divestiture of
which is required by any Governmental Authority in connection with any
acquisition.
SECTION 6.03. TIER 1 CAPITAL. Permit at any time Tier 1 Capital
divided by Risk Adjusted Assets to be less than 6%.
SECTION 6.04. NONPERFORMING ASSETS. Permit AT any time the ratio of
(a) the sum of Consolidated Net Worth and Loan Loss Reserves to (b)
Nonperforming Assets to be less than 3 to 1.
SECTION 6.05. DOUBLE LEVERAGE. Permit at any time the ratio of (a)
the sum of the Equity Investment in the Subsidiaries and the Intangibles of the
Borrower to (b) Consolidated Net Worth to be more than 1.30 to 1.
SECTION 6.06. USE OF PROCEEDS. Use proceeds of the Loans to purchase
shares of capital stock of any publicly traded company (other than the
Borrower) if, (a) after giving effect to such purchase, the Borrower and its
Subsidiaries would own shares (other than in a fiduciary capacity) representing
more than 5% of the aggregate ordinary voting power of the capital stock of
such company
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(unless such purchase shall have been approved by the board of
directors of such company) or (b) such purchase is part of an
attempted hostile acquisition.
SECTION 6.07. REGULATION U. In the event the proceeds
of any Loans are used to purchase or carry Margin Stock within
the meaning of Regulation U, permit at any time more than 25% of
the value (determined in accordance with Regulation U) of the
assets which are subject to Sections 6.01 and 6.02 to constitute
Margin Stock.
SECTION 6.08. CAPITAL COMMITMENTS. Enter into, assume
or suffer to exist with respect to the Borrower or any of the
Subsidiaries, any Capital Commitment (other than a Capital
Commitment with respect to a Person that became a Bank
Subsidiary after the date of this Agreement, which Capital
Commitment shall be terminated not later than the first
anniversary of the date on which such Person became a Bank
Subsidiary).
ARTICLE VII
EVENTS OF DEFAULT
Upon the occurrence of any of the following events
("Events of Default") :
(a) default shall be made in the payment of any
principal of any Loan when and as the same shall become due
and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or by acceleration thereof or
otherwise; or
(b) default shall be made in the payment of any
interest on any Loan or any Fee or any other amount (other
than an amount referred to in paragraph (a) above) due
hereunder, when and as the same shall become due and
payable, and such default shall continue unremedied for a
period of five days; or
(c) any representation or warranty made or deemed made
by the Borrower herein or which is contained in any
certificate, document or financial or other statement
furnished at any time under or in connection with this
Agreement shall prove to have been false or misleading in
any material respect on or as of the date made, deemed made
or furnished; or
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58
(d) the Borrower shall default in the observance or performance of any
covenant, condition or agreement contained in Section 5.03, Section 5.09, or
Article VI (other than Sections 6.03, 6.04 and 6.05); or
(e) the Borrower shall default in the observance or performance of any
other covenant, condition or agreement contained in any Loan Document (other
than those specified in (a), (b) or (d) above), and such default shall continue
unremedied for a period of 30 days after such notice by the Agent to the
Borrower; or
(f) the Borrower or any Subsidiary shall (i) default in any payment of any
amount of principal of or interest on any Indebtedness in a principal amount,
which in the aggregate, is in excess of $25,000,000, beyond the period of
grace, if any, provided in the instrument or agreement under which such
Indebtedness was created; or (ii) default in the observance or performance of
any other agreement or condition relating to any such Indebtedness (in excess
of $25 million in the aggregate) or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders or beneficiary or beneficiaries of
such Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to become due prior to its stated maturity; or
(g) (i) the Borrower or any Subsidiary shall commence any case, proceeding
or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, liquidation,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a conservator, receiver, trustee,
custodian or other similar official for it or for all or any substantial part
of its assets, or the Borrower or any Subsidiary shall make a general
assignment for the benefit of its
<PAGE> 63
59
creditors; or (ii) there shall be commenced against the Borrower or any
Subsidiary any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or in
any such adjudication or appointment or (B) remains undismissed or undischarged
for a period of 90 days; or (iii) there shall be commenced against the Borrower
or any Subsidiary any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all or
any substantial part of its assets which results in the entry of an order for
any such result which shall not have been vacated, discharged or stayed within
90 days from the entry therepf; or (iv) the Borrower or any Subsidiary shall
take any action in furtherance of, or indicating its consent to, approval of,
or acquiescence in, any of the acts set forth in clause (i), (ii) or (iii)
above; or (v) the Borrower or any Subsidiary shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
(h) (i) a Reportable Event or Reportable Events, or a failure to make a
required installment or other payment (within the meaning of Section 412(n) (1)
of the Code) , shall have occurred with respect to any Plan or Plans that
reasonably could be expected to result in liability of the Borrower to the PBGC
or to a Plan in an aggregate amount exceeding $5,000,000 and, within 30 days
after the reporting of any such Reportable Event to the Agent or after the
receipt by the Agent of a statement required pursuant to Section 5.08(b) (iii)
hereof, the Agent shall have notified the Borrower in writing that (A) the
Required Lenders have made a determination that, on the basis of such
Reportable Event or Reportable Events or the failure to make a required
payment, there are reasonable grounds for the termination of such Plan or Plans
by the PBGC, the appointment by the appropriate United States district court of
a trustee to administer such Plan or Plans or the imposition of a lien in favor
of a Plan and (B) as a result thereof an Event of Default exists hereunder; or
(ii) a trustee shall be appointed by a United States district court to
administer any such Plan or Plans; or (iii) the PBGC shall institute
proceedings (including giving notice of intent thereof) to terminate any such
Plan or Plans; or
<PAGE> 64
60
(i) one or more judgments or decrees shall be entered against the
Borrower or any Subsidiary involving in the aggregate a liability (not paid or
fully covered by insurance) of $25,000,000 or more and the same shall remain
undischarged for a period of 30 days during which execution shall not be
effectively stayed or any action shall be legally taken by a judgment creditor
to levy upon assets or properties of the Borrower or any Significant Subsidiary
to enforce any such judgment; or
(j) any Bank Subsidiary which is a Significant Subsidiary shall cease
accepting deposits or making commercial loans on the instruction of any
Federal, state or other regulatory body with authority to give such instruction
other than pursuant to an instruction applicable to national banks generally or
a substantial portion thereof or banks located in a particular state or
substantial portion thereof; or
(k) the Comptroller of the Currency shall, pursuant to 12 U.S.C.
Section 55 or any successor statute, notify any bank Subsidiary which is a
Significant Subsidiary and a national bank, or any other Federal or state
regulatory authority having jurisdiction to regulate any other bank Subsidiary
which is a Significant Subsidiary shall, pursuant to any comparable Federal or
state statute, notify such other bank Subsidiary, that such bank Subsidiary's
capital stock has become impaired; or any bank Subsidiary which is a
Significant Subsidiary shall cease to be an insured bank under the Federal
Deposit Insurance Act, as amended, and the rules and regulations promulgated
thereunder; or
(l) any Insured Subsidiary as of the date hereof shall be required
(whether or not the time allowed by the appropriate Federal banking agency for
the submission of such plan has been established or elapsed) to submit a
capital restoration plan of the type referred to in 12 U.S.C. Section 18310(b)
(2) (C) , as amended, reenacted or redesignated from time to time; or
(m) the Borrower shall Guarantee in writing (voluntarily or otherwise)
the capital of any Insured Subsidiary as part of or in connection with any
agreement or arrangement with any Federal banking
<PAGE> 65
61
agency other than in connection with obtaining regulatory approval for the
acquisition of such Insured Subsidiary.
then, and in any such event, (a) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (g) above with respect to the
Borrower, the Commitments shall immediately and automatically terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under any Loan Document shall immediately become due and payable, and (b) if
such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the consent of the Required Lenders, the Agent
may, or upon the request of the Required Lenders, the Agent shall, by notice to
the Borrower declare the Commitments to be terminated forthwith, whereupon the
Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Agent may, or upon the request of the Required Lenders,
the Agent shall, declare the Loans hereunder (with accrued interest thereon)
and all other amounts owing under the Loan Documents to be due and payable
forthwith, whereupon the same shall immediately become due and payable, in the
case of each of (a) and (b), without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived notwithstanding
anything contained herein or in any other Loan Document.
ARTICLE VIII
THE AGENT
In order to expedite the transactions contemplated by this Agreement,
Chemical Bank is hereby appointed to act as Agent on behalf of the Lenders.
Each of the Lenders hereby irrevocably authorizes the Agent to take such
actions on behalf of such Lender or holder and to exercise such powers as are
specifically delegated to the Agent by the terms and provisions hereof,
together with such actions and powers as are reasonably incidental thereto. The
Agent is hereby expressly authorized by the Lenders, without hereby limiting
any implied authority, (a) to receive on behalf of the Lenders all payments of
principal of and interest on the Loans and all other amounts due to the Lenders
hereunder, and promptly to distribute to each Lender its proper share of each
payment so received; (b) to give notice on behalf of each of the Lenders to the
Borrower of any Event of Default
<PAGE> 66
62
of which the Agent has actual knowledge acquired in connection with its agency
hereunder; and (c) to distribute to each Lender copies of all notices,
financial statements and other materials delivered by the Borrower pursuant to
this Agreement as received by the Agent.
Neither the Agent nor any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted by any of them
except for its or his or her own gross negligence or willful misconduct, or be
responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by
the Borrower of any of the terms, conditions, covenants or agreements contained
in this Agreement. The Agent shall not be responsible to the Lenders for the
due execution, genuineness, validity, enforceability or effectiveness of this
Agreement or other instruments or agreements. The Agent may deem and treat the
Lender which makes any Loan as the holder of the indebtedness resulting
therefrom for all purposes hereof until it shall have received notice from such
Lender, given as provided herein, of the transfer thereof. The Agent shall in
all cases be fully protected in acting, or refraining from acting, in
accordance with written instructions signed by the Required Lenders and, except
as otherwise specifically provided herein, such instructions and any action or
inaction pursuant thereto shall be binding on all the Lenders. The Agent shall,
in the absence of knowledge to the contrary, be entitled to rely on any
instrument or document believed by it in good faith to be genuine and correct
and to have been signed or sent by the proper person or persons. Neither the
Agent nor any of its directors, officers, employees or agents shall have any
responsibility to the Borrower on account of the failure of or delay in
performance or breach by any Lender of any of its obligations hereunder or to
any Lender on account of the failure of or delay in performance or breach by
any other Lender or the Borrower of any of their respective obligations
hereunder or in connection herewith. The Agent may execute any and all duties
hereunder by or through agents or employees and shall be entitled to rely upon
the advice of legal counsel selected by it with respect to all matters arising
hereunder and shall not be liable for any action taken or suffered in good
faith by it in accordance with the advice of such counsel.
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63
The Lenders hereby acknowledge that the Agent shall be under no duty
to take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement unless it shall be requested in writing to do so
by the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Lenders and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor Agent acceptable to the Borrower. If no successor
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent which shall be a bank with an office in New York, New York,
having a combined capital and surplus of at least $500,000,000 or an Affiliate
of any such bank. Upon the acceptance of any appointment as Agent hereunder by
a successor bank, such successor shall succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Agent and the
retiring Agent shall be discharged from its duties and obligations hereunder.
After the Agent's resignation, the provisions of this Article shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken
by it while it was acting as Agent.
With respect to the Loans made by it hereunder, the Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were not the Agent, and
the Agent and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not the Agent.
Each Lender agrees (i) to reimburse the Agent, on demand, in the
amount of its pro rata share (based on its Commitment hereunder or, if the
Commitments shall have been terminated, the amount of its outstanding Loans) of
any expenses incurred for the benefit of the Lenders by the Agent, including
counsel fees and compensation of agents and employees paid for services
rendered on behalf of the Lenders, which shall not have been reimbursed by the
Borrower and (ii) to indemnify and hold harmless the Agent and any of its
directors, officers, employees or agents, on demand, in the amount of such pro
rata share, from and
<PAGE> 68
64
against any and all liabilities, taxes, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against it in its capacity as the Agent in any way relating to or arising out
of this Agreement or any action taken or omitted by it under this Agreement to
the extent the same shall not have been reimbursed by the Borrower; PROVIDED
that no Lender shall be liable to the Agent for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the gross negligence or
willful misconduct of the Agent or any of its directors, officers, employees or
agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any related agreement or any document
furnished hereunder or thereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed or sent by telecopy as follows:
(a) if to the Borrower, to it at National City
Corporation, National City Center, 1900 East Ninth Street,
Cleveland, OH 44114-3464, Attention of Mr. Thomas A.
Richlovsky (Telecopy No. 216-575-2983)
(b) if to the Agent, to it at 270 Park Avenue, 10th
Floor, New York, New York 10017, Attention of Mr. Robert
J. Juelis (Telecopy No. 212-270-0412); and
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65
(c) if to a Lender, to it at its address (or telecopy number) set
forth in Schedule 2.01 or in the Assignment and Acceptance pursuant to
which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to
have been given on the date of receipt if delivered by hand or
overnight courier service or sent by telecopy, or on the date five
Business Days after dispatch by certified or registered mail if mailed, in each
case delivered, sent or mailed (properly addressed) to such party as provided
in this Section 9.01 or in accordance with the latest unrevoked direction from
such party given in accordance with this Section 9.01.
SECTION 9.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and shall survive the making by the
Lenders of the Loans, regardless of any investigation made by the Lenders or on
their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any Fee or any other amount
payable under this Agreement or any other Loan Document is outstanding and
unpaid and so long as the Commitments have not been terminated.
SECTION 9.03. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Borrower and the Agent and when the
Agent shall have received copies hereof which, when taken together, bear the
signatures of each Lender, and thereafter shall be binding upon and inure to
the benefit of the Borrower, the Agent and each Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior consent of
all the Lenders.
SECTION 9.04. SUCCESSORS AND ASSIGNS. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the Borrower, the Agent or the Lenders that
are contained in this Agreement
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66
shall bind and inure to the benefit of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations under this Agreement (including all or
a portion of its Commitment and the Loans at the time owing to it); PROVIDED,
HOWEVER, that (i) except in the case of an assignment to a Lender or an
Affiliate of a Lender, the Borrower and the Agent must give their prior written
consent (except when there exists a Default or an Event of Default) to such
assignment (which consent shall not be unreasonably withheld), (ii) each such
assignment shall be of a constant, and not a varying, percentage of all the
assigning Lender's rights and obligations under this Agreement, (iii) the
amount of the Commitment of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Agent) shall not be less than
$5,000,000 and the amount of the Commitment of such Lender remaining after such
assignment shall not be less than $5,000,000 or shall be zero, (iv) the parties
to each such assignment shall execute and deliver to the Agent an Assignment
and Acceptance, and a processing and recordation fee of $2,500 and (v) the
assignee, if it shall not be a Lender, shall deliver to the Agent an
Administrative Questionnaire. Upon acceptance by the Agent of any such
Assignment and Acceptance, from and after the effective date specified in such
Assignment and Acceptance, which effective date shall be at least five Business
Days after the execution thereof, (A) the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement
and (B) the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto (but shall
continue to be entitled to the benefits of Sections 2.13, 2.15, 2.19 and 9.05,
as well as to any Fees accrued for its account hereunder and not yet paid)) .
Notwithstanding the foregoing, any Lender assigning its rights and obligations
under this Agreement may retain any Competitive Loans made by it outstanding at
such time, and in such case shall retain its rights hereunder in respect of
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67
any Loans so retained until such Loans have been repaid in full in accordance
with this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim, (ii)
except as set forth in (i) above, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto or the financial condition of the Borrower or the performance or
observance by the Borrower of any obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance; (iv) such assignee confirms that it has received a
copy of this Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 5.01 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (v) such assignee will
independently and without reliance upon the Agent, such assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (vi) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their terms
all the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(d) The Agent shall maintain at one of its offices in the City of New
York a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitment of, and the principal amount of the Loans owing to, each Lender
pursuant to the terms hereof from time
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68
to time (the "Register") . The entries in the Register shall be conclusive in
the absence of manifest error and the Borrower, the Agent and the Lenders may
treat each person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by each party hereto, at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee together with an Administrative
Questionnaire completed in respect of the assignee (unless the assignee shall
already be a Lender hereunder) , the processing and recordation fee referred to
in paragraph (b) above and, if required, the written consent of the Borrower to
such assignment, the Agent shall (i) accept such Assignment and Acceptance and
(ii) record the information contained therein in the Register.
(f) Each Lender may sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
PROVIDED, HOWEVER, that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) each
participating bank or other entity shall be entitled to the benefit of the cost
protection provisions contained in Sections 2.13, 2.15 and 2.19 to the same
extent as if it was the selling Lender (and limited to the amount that could
have been claimed by the selling Lender had it continued to hold the interest
of such participating bank or other entity) , except that all claims made
pursuant to such Sections shall be made through such selling Lender, and (iv)
the Borrower, the Agent and the other Lenders shall continue to deal solely and
directly with such selling Lender in connection with such Lender's rights and
obligations under this Agreement, and the Lender shall retain the sole right to
enforce the obligations of the Borrower relating to the Loans and to approve,
without the consent of or consultation with any participant, any amendment,
modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers with respect to fees payable hereunder or
an increase in the amount of principal of or a decrease in the rate at which
interest is payable on the Loans, or an extension of the
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69
dates fixed for payments of principal of or interest on the Loans).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section,
disclose to the assignee or participant or proposed assignee or participant any
information relating to the Borrower furnished to such Lender; PROVIDED that,
prior to any such disclosure, each such assignee or participant or proposed
assignee or participant shall execute an agreement whereby such assignee or
participant shall agree (subject to customary exceptions) to preserve the
confidentiality of any such information.
(h) The Borrower shall not assign or delegate any rights and duties
hereunder without the prior written consent of all Lenders.
(i) Any Lender may at any time pledge all or any portion of its rights
under this Agreement to a Federal Reserve Bank; PROVIDED that no such pledge
shall release any Lender from its obligations hereunder or substitute any such
Federal Reserve Bank for such Lender as a party hereto. In order to facilitate
such an assignment to a Federal Reserve Bank, the Borrower shall, at the
request of the assigning Lender, duly execute and deliver to the assigning
Lender a promissory note or notes evidencing the Loans made to the Borrower by
the assigning Lender hereunder.
SECTION 9.05. EXPENSES; INDEMNITY. (a) The Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the Agent in connection with the
preparation, negotiation, execution and delivery of this Agreement or any
amendments, modifications or waivers of the provisions hereof, or incurred by
the Agent or any Lender in connection with the enforcement or protection of
their rights in connection with this Agreement or any other Loan Document or in
connection with the Loans made hereunder, including the reasonable fees and
disbursements of counsel for the Agent or, in the case of enforcement or
protection, any Lender (including, without limitation, the allocated costs of
in-house counsel).
(b) The Borrower agrees to indemnify the Agent, each Lender, each of
their Affiliates and the directors, officers, employees and agents of the
foregoing (each such person being called an "Indemnitee") against, and to hold
each Indemnitee harmless from, any and all losses, claims,
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70
damages, liabilities and related expenses, including reasonable counsel fees
and expenses (including, without limitation, the allocated costs of in-house
counsel) , incurred by or asserted against any Indemnitee arising out
of (i) the execution or delivery of this Agreement or any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto or thereto of their respective obligations
hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby, (ii) the use of the proceeds of the Loans or (iii) any
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether or not any Indemnitee is a party thereto; PROVIDED that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are finally determined
by a court of competent jurisdiction to have resulted from the gross negligence
or willful misconduct of such Indemnitee.
(c) The provisions of this Section and of Sections 2.13(d) and 2.15
shall remain operative and in full force and effect regardless of the
expiration of the term of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Loans, the invalidity or
unenforceability of any term or provision of this Agreement or any
investigation made by or on behalf of the Agent or any Lender. All amounts due
under this Section shall be payable on written demand therefor.
SECTION 9.06. APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.07. WAIVERS; AMENDMENT. (a) No failure or delay of the
Agent or any Lender in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Agent and the Lenders
hereunder are cumulative and are not exclusive of any rights or remedies which
they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in
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the specific instance and for the purpose for which given. No notice or demand
on the Borrower or any Subsidiary in any case shall entitle such party to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders; PROVIDED, HOWEVER, that
no such agreement shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan, or waive or excuse any such payment or any part
thereof, or decrease the rate of interest on any Loan, without the prior
written consent of each Lender affected thereby, (ii) change the Commitment or
decrease the Facility Fee or Utilization Fee of any Lender without the prior
written consent of such Lender, or (iii) amend or modify the provisions of
Section 2.16 or Section 9.04(h), the provisions of this Section or the
definition of "Required Lenders", in each case without the prior written
consent of each Lender; PROVIDED FURTHER, HOWEVER, that no such agreement shall
amend, modify or otherwise affect the rights or duties of the Agent hereunder
without the prior written consent of the Agent. Each Lender shall be bound by
any waiver, amendment or modification authorized by this Section and any
consent by any Lender pursuant to this Section shall bind any assignee of its
rights and interests hereunder.
SECTION 9.08. ENTIRE AGREEMENT. This Agreement and the letter
agreement referred to in Section 2.06(c) constitute the entire contract among
the parties relative to the subject matter hereof. Any previous agreement among
the parties with respect to the subject matter hereof is superseded by this
Agreement and the letter agreement referred to in Section 2.06(c). Nothing in
this Agreement or the letter agreement referred to in Section 2.06(c),
expressed or implied, is intended to confer upon any party other than the
parties hereto any rights, remedies, obligations or liabilities under or by
reason of this Agreement or the letter agreement referred to in Section
2.06(c).
SECTION 9.09. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected
<PAGE> 76
72
or impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 9.10. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 9.03.
SECTION 9.11. HEADINGS. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower against any and all the
obligations of the Borrower now or hereafter existing under this Agreement held
by such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement and although such obligations may be unmatured.
Each Lender agrees promptly to notify the Borrower after such setoff and
application made by such Lender, but the failure to give such notice shall not
affect the validity of such setoff and application. The rights of each Lender
under this Section are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which such Lender may have.
SECTION 9.13. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) The
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any
<PAGE> 77
73
such action or proceeding may be heard and determined in such New York State
or, to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Subject to the foregoing and to
paragraph (b) below, nothing in this Agreement shall affect any right that any
party hereto may otherwise have to bring any action or proceeding relating to
this Agreement against any other party hereto in the courts of any
jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State
or Federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.14. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND OTHER PARTIES HERETO HAVE
<PAGE> 78
74
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATION IN THIS SECTION.
IN WITNESS WHEREOF, the Borrower, the Agent and the Lenders have
caused this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
NATIONAL CITY CORPORATION,
by /s/Thomas A. Richlovsky
----------------------------------
Name: Thomas A. Richlovsky
Title: Senior Vice President
and Treasurer
CHEMICAL BANK, individually and as
Agent,
by
----------------------------------
Name:
Title:
<PAGE> 79
75
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION,
by
------------------------------------
Name:
Title:
THE BANK OF NEW YORK,
by
------------------------------------
Name:
Title:
BAYERISCHE LANDESBANK,
by
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, N.A.,
by
------------------------------------
Name:
Title:
CITIBANK, N.A.,
by
------------------------------------
Name:
Title:
<PAGE> 80
76
COMERICA BANK,
by
------------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
------------------------------------
Name:
Title:
HARRIS TRUST AND SAVINGS BANK,
by
------------------------------------
Name:
Title:
MELLON BANK
by
------------------------------------
Name:
Title:
NATIONSBANK OF TEXAS, N.A.,
by
------------------------------------
Name:
Title:
<PAGE> 81
77
THE NORTHERN TRUST CO.,
by
------------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
by
------------------------------------
Name:
Title:
SUNTRUST BANK,
by
------------------------------------
Name:
Title:
by
------------------------------------
Name:
Title:
<PAGE> 82
EXHIBIT A-1
FORM OF COMPETITIVE BID REQUEST
ChemicaL Bank, as Agent for
the Lenders referred to below,
270 Park Avenue
New York, N.Y. 10017
[Date]
Attention:
Dear Ladies and Gentlemen:
The undersigned, NationaL City Corporation (the "Borrower"), refers to
the Competitive Advance and RevoLving Credit Facility Agreement dated as of
February 2, 1996 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Credit Agreement"), among the Borrower, the
Lenders named therein and Chemical Bank, as Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Credit Agreement. The Borrower hereby gives you notice
pursuant to Section 2.03(a) of the Credit Agreement that it requests a
Competitive Borrowing under the Credit Agreement, and in that connection sets
forth below the terms on which such Competitive Borrowing is requested to be
made:
(A) Date of Competitive Borrowing
(which is a Business Day) ____________________
(B) Principal Amount of
Competitive Borrowing 1/ ____________________
(C) Interest rate basis 2/ ____________________
(D) Interest Period and the last
day thereof 3/ ____________________
Upon acceptance of any or all of the Loans offered by the Banks in
response to this request, the Borrower shall be deemed to have represented and
warranted that the conditions to lending specified in Section 4.01(b) and (c)
of the Credit Agreement have been satisfied.
Very truly yours,
by
--------------------------------
Title: [Responsible Officer]
- ---------------------------
1/ Not less than $10,000,000 (and in integral multiples of
$1,000,000) and not greater than the Total Commitment then available.
2/ Eurodollar Loan or Fixed Rate Loan.
3/ Which shall be subject to the definition of "Interest Period"
and end not Later than the Maturity Date.
<PAGE> 83
EXHIBIT A-2
FORM OF NOTICE OF COMPETITIVE BID REQUEST
[Name of Lender]
[Address]
New York, New York
[Date]
Attention:
Dear Ladies and Gentlemen:
Reference is made to the Competitive Advance and Revolving Credit Facility
Agreement dated as of February 2, 1996 (as it may hereafter be amended,
modified, extended or restated from time to time, the "Credit Agreement"),
among National City Corporation (the "Borrower"), the Lenders named therein and
Chemical Bank, as Agent. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement. The Borrower made a Competitive Bid Request on [Month] [Day],
[Year], pursuant to Section 2.03(a) of the Credit Agreement, and in that
connection you are invited to submit a Competitive Bid by [Date]/[Time]. 1/
Your Competitive Bid must comply with Section 2.03(b) of the Credit Agreement
and the terms set forth below on which the Competitive Bid Request was made:
(A) Date of Competitive Borrowing __________________
(B) Principal amount of
Competitive Borrowing __________________
(C) Interest rate basis __________________
(D) Interest Period and the last
day thereof __________________
Very truly yours,
CHEMICAL BANK, as Agent,
By
----------------------
Title:
- ------------------------
1/ The Competitive Bid must be received by the Agent (i) in the case of
Eurodollar Loans, not later than 9:30 a.m., New York City time, three Business
Days before a proposed Competitive Borrowing, and (ii) in the case of Fixed
Rate Loans, not Later than 9:30 a.m., New York City time, on the Business Day
of a proposed Competitive Borrowing.
<PAGE> 84
EXHIBIT A-3
FORM OF COMPETITIVE BID
Chemical Bank, as Agent for
the Lenders referred to below,
270 Park Avenue
New York, N.Y. 10017
[Date]
Attention:
Dear Ladies and Gentlemen:
The undersigned, [Name of Lender], refers to the Competitive Advance and
Revolving Credit Facility Agreement dated as of February 2, 1996 (as it may
hereafter be amended, modified, extended or restated from time to time, the
"Credit Agreement"), among National City Corporation (the "Borrower"), the
Lenders named therein and Chemical Bank, as Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Credit Agreement. The undersigned hereby makes a Competitive
Bid pursuant to Section 2.03(b) of the Credit Agreement, in response to the
Competitive Bid Request made by the Borrower on [Month] [Day], [Year], and in
that connection Sets forth below the terms on which such Competitive Bid is
made:
(A) Principal Amount 1/ __________________
(B) Competitive Bid Rate 2/ __________________
(C) Interest Period and last
day thereof __________________
The undersigned hereby confirms that it is prepared, subject to the
conditions set forth in the Credit Agreement, to extend credit to the Borrower
upon acceptance by the Borrower of this bid in accordance with Section 2.03(d)
of the Credit Agreement.
Very truly yours,
[NAME OF LENDER],
by
----------------------------
Title:
- -------------------------
1/ Not Less than $5,000,000 and not greater than the requested Competitive
Borrowing and in integral multiples of $1,000,000. Multiple bids will be
accepted by the Agent.
2/ I.e., LIBO Rate + or - %, in the case of Eurodollar Loans or %, in the
case of Fixed Rate Loans.
<PAGE> 85
EXHIBIT A-4
FORM OF COMPETITIVE BID ACCEPT/REJECT LETTER
[Date]
Chemical Bank, as Agent for
the Lenders referred to below
270 Park Avenue
New York, N.Y. 10172
Attention: [ ]
Dear Ladies and Gentlemen:
The undersigned, National City Corporation (the "Borrower"), refers to the
Credit Agreement dated as of February 2, 1996 (as it may hereafter be amended,
modified, extended or restated from time to time, the "Credit Agreement"),
among the Borrower, the Lenders named therein and Chemical Bank, as Agent for
the Lenders.
In accordance with Section 2.03(c) of the Credit Agreement, we have
received a summary of bids in connection with our Competitive Bid Request dated
__________ and in accordance with Section 2.03(d) of the Credit Agreement, we
hereby accept the following bids for maturity on [date]:
Principal Amount Fixed Rate/Margin Lender
- ---------------- ----------------- ------
$ [%]/[+/-. %]
$
We hereby reject the following bids:
Principal Amount Fixed Rate/Margin Lender
- ---------------- ----------------- ------
$ [%]/[+/-. %]
$
The $ should be deposited in the Borrower's account [account number]
on [date].
Very truly yours,
NATIONAL CITY CORPORATION
by
----------------------
Name:
Title:
<PAGE> 86
EXHIBIT A-5
FORM OF STANDBY BORROWING REQUEST
Chemical Bank, as Agent for the
Lenders referred to below,
270 Park Avenue
New York, N.Y. 10172
[Date]
Attention:
Dear Ladies and Gentlemen:
The undersigned, National City Corporation (the "Borrower"), refers to
the Competitive Advance and Revolving Credit Facility Agreement dated as of
February 2, 1996 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Credit Agreement"), among the Borrower, the
Lenders named therein and Chemical Bank, as Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Credit Agreement. The Borrower hereby gives you notice
pursuant to Section 2.04 of the Credit Agreement that it requests a Standby
Borrowing under the Credit Agreement, and in that connection sets forth below
the terms on which such Standby Borrowing is requested to be made:
(A) Date of Standby Borrowing
(which is a Business Day) __________________
(B) Principal Amount of Standby
Borrowing 1/ __________________
(C) Interest rate basis 2/ __________________
(D) Interest Period and the last
day thereof 3/ __________________
Upon acceptance of any or alL of the Loans made by the Lenders in
response to this request, the Borrower shall be deemed to have represented and
warranted that the conditions to lending specified in Section 4.01(b) and (c)
of the Credit Agreement have been satisfied.
Very truly yours,
By
----------------------------
Title: [Responsible Officer]
- ------------------------------
1/ Not less than $5,000,000 (and in integral multiples of
$1,000,000) and not greater than the Total Comnitment then available.
2/ Eurodollar Loan or ABR Loan.
3/ Which shall be subject to the definition of "Interest Period"
and end not later than the Maturity Date.
<PAGE> 87
EXHIBIT B
Administrative Questionnaire
----------------------------
National City Corporation
-------------------------
NOTE TO PARTICIPANTS: PLEASE FORWARD THIS COMPLETED FORM AS SOON AS POSSIBLE
TO JANET BELDEN, AGENCY GROUP, CHEMICAL BANK, VIA
TELECOPIER TO (212) 622-0854.
PLEASE TYPE ALL INFORMATION.
---------------------------
AGENT: Chemical Bank
270 Park Avenue
New York, N.Y. 10017
CONTACTS: Mr. Robert J. Juelis (212) 270-0412 (fax) Banking &
Corporate Finance
OPERATIONAL CONTACT: Janet Belden (212) 622-0011 Agency Group
TELEX: NY: 353006 Answerback: ABSCNYK
TELECOPIER: (212) 622-0854
Full Legal Name of your Bank: _________________________________________
Exact Name of Signing Officer: _________________________________________
Title of Signing Officer: _________________________________________
Business Address for Delivery
of Execution Copies of Credit
Agreement (Please do not use
P.O. Box address; hand
deliveries cannot be made): _________________________________________
Signing Officer's Phone No.: _________________________________________
Alternate Officer Contact: _________________________________________
Alternate Officer's Phone No.: _________________________________________
PRIMARY CONTACT INFORMATION
---------------------------
These contacts are for critical notification (drawdowns, repayments, rate
setting, etc.)
Bank Name: ______________________________________
Address: ______________________________________
Primary Contact: ______________________________________
Title and Department: ______________________________________
Phone Number: ______________________________________
Primary Telecopier: ______________________________________
Alternate Telecopier: ______________________________________
Primary Telex/Answerback: ______________________________________
ALTERNATE CONTACT INFORMATION
-----------------------------
Alternate Contact: _________________________________________
Title and Department: _________________________________________
Phone Number: _________________________________________
Primary Telecopier: _________________________________________
Alternate Telecopier: _________________________________________
Primary Telex/Answerback: _________________________________________
GENERAL OPERATIONAL INFORMATION
-------------------------------
Wire Instructions to your Bank: Bank Name: ___________________________
Dept :___________________________
ABA #:___________________________
A/C #:___________________________
Attn :___________________________
Ref :___________________________
Telex Information: Contact Name(s):_________________
Number :_________________
Answerback :_________________
If any changes are made to the above information, please notify by telecopier
to Janet Belden at (212) 622-0011 and [Rufus Kearny] at (212) 701-5658.
Movement of funds to us: Wire Fed Funds to:
- -----------------------
Chemical Bank
Wholesale Loan Services Department
52 Broadway, 4th Floor
New York, New York
Attention: [ ]
Reference: National City Corporation
PLEASE COMPLETE THE FOLLOWING INFORMATION FOR COMPETITIVE AUCTIONS ONLY
-----------------------------------------------------------------------
Agent: Chemical Bank
270 Park Avenue - 7th Floor
New York, NY 10017
Attn: Structured Finance Department
Telex: NY: 353006 Answerback: ABSCNYK
Telecopier: (212) 270-1063 Primary
(212) 270-[ ] Backup
Contacts: Janet Belden (212) 622-0011 Agency Group
[ ] Structured Finance
<PAGE> 88
Primary Contact
---------------
Competitive Auctions
--------------------
Bank Name:_____________________________________________________
Address:_______________________________________________________
Primary Contact:_______________________________________________
Title:_________________________________________________________
Department:____________________________________________________
Telephone Number:______________________________________________
Telex Number and Answerback:___________________________________
Telecopier Number:_____________________________________________
Alternate Contact
-----------------
Competitive Auctions
--------------------
Alternate Contact:_____________________________________________
Title:_________________________________________________________
Department:____________________________________________________
Telephone Number: _____________________________________________
Telex Number and Answerback:___________________________________
Telecopier Number:_____________________________________________
General Information
-------------------
Domestic Lending Office
-----------------------
Institution Name:______________________________________________
Street Address:________________________________________________
City, State, Zip Code:_________________________________________
General Information
-------------------
Eurodollar Lending Office
-------------------------
Institution Name:______________________________________________
Street Address:________________________________________________
City, State, Zip Code:_________________________________________
<PAGE> 89
EXHIBIT C
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Competitive Advance and Revolving Credit
Facility Agreement dated as of February 2, 1996 (the "Credit Agreement"), among
National City Corporation, a Delaware corporation (the "Borrower"), the lenders
listed in Schedule 2.01 thereof (the "Lenders") and Chemical Bank, as agent for
the Banks (in such capacity, the "Agent"). Terms defined in the Credit
Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth on the reverse
hereof, the interests set forth on the reverse hereof (the "Assigned Interest")
in the Assignor's rights and obligations under the Credit Agreement, including,
without limitation, the interests set forth on the reverse hereof in the
Commitment of the Assignor on the Effective Date and the Competitive Loans and
Standby Loans owing to the Assignor which are outstanding on the Effective Date,
together with unpaid interest accrued on the assigned Loans to the Effective
Date and the amount, if any, set forth on the reverse hereof of the Fees accrued
to the Effective Date for the account of the Assignor. Each of the Assignor and
the Assignee hereby makes and agrees to be bound by all the representations,
warranties and agreements set forth in Section 9.04(c) of the Credit Agreement,
a copy of which has been received by each such party. From and after the
Effective Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the interests assigned
by this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the Loan Documents and (ii) the Assignor shall, to the
extent of the interests assigned by this Assignment and Acceptance, relinouish
its rights and be released from its obligations under the Credit Agreement.
2. This Assignment and Acceptance is being delivered to the Agent
together with (i) if the Assignee is organized under the laws of a jurisdiction
outside the United States, the forms specified in Section 2.19(g) of the Credit
Agreement, duly completed and executed by such Assignee, (ii) if the Assignee is
not already a Lender under the Credit Agreement, an Administrative Questionnaire
in the form of Exhibit B to the Credit Agreement and (iii) a processing and
recordation fee of $2,500.
3. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
<PAGE> 90
2
Assignee's Address for Notices:
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment):
Percentage Assigned of
Facility/Commitment
(set forth, to at
least 8 decimals, as a
Principal Amount percentage of the
Assigned (and Facility and the
identifying information aggregate Commitments
as to individual of all Lenders
Facility Competitive Loans) thereunder)
- -------- ----------------- ----------------------
Commitment
Assigned: $ %
Standby Loans:
Competitive
Loans:
Fees Assigned (if
any):
The terms set forth above and on
the reverse side hereof are hereby
agreed to: Accepted */
_______________, as Assignor CHEMICAL BANK, as Agent,
By:_______________________ By:_______________________
Name: Name:
Title: Title:
_______________, as Assignee NATIONAL CITY CORPORATION, as
Borrower,
By:_______________________ By:_______________________
Name: Name:
Title: Title:
*/ To be completed only if consents are required under Section
9.04(a).
EXHIBIT D
[FORM OF]
OPINION OF COUNSEL FOR
NATIONAL CITY CORPORATION 1/
-
1. National City Corporation (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
(ii) has all requisite power and authority to own its property and assets and to
carry on its business as now conducted, (iii) is qualified to do business in
every jurisdiction within the United States where such qualification is
required, except where the failure so to qualify would not result in a Material
Adverse Effect on National City Corporation, and (iv) has all requisite
corporate power and authority to execute, deliver and perform its obligations
under the Agreement and to borrow funds thereunder.
2. The execution, delivery and performance by National City
Corporation of the Agreement and the borrowings of National City Corporation
thereunder (collectively, the "Transactions") (i) have been duly authorized by
all requisite corporate action and (ii) will not (a) violate (1) any provision
of law, statute, rule or regulation (including without limitation, the Margin
Regulations), or of the certificate of incorporation or other constitutive
documents or by-laws of National City Corporation, (2) any order of any
governmental authority or (3) any provision of any indenture, agreement or
other instrument to which National City Corporation is a party or by which it
or its property is or may be bound, (b) be in conflict with, result in a breach
of or constitute (alone or with notice or lapse of time or both) a default
under any such indenture, agreement or other instrument or (c) result in the
creation or imposition of any lien upon any property or assets of National City
Corporation.
3. The Agreement has been duly executed and delivered by National
City Corporation and constitutes a legal, valid and binding obligation of
National City Corporation enforceable against National City Corporation in
accordance with its terms, subject as to the enforceability of rights and
remedies to any applicable bankruptcy, reorganization, insolvency, moratorium
or other similar laws of general application relating to or affecting the
enforcement of creditors' rights from time to time in effect.
4. No action, consent or approval of, registration or filing with, or
any other action by, any government authority is or will be required in
connection with the Transactions, except such as have been made or obtained and
are in full force and effect.
5. Neither National City Corporation nor any of its subsidiaries is
(a) an "investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 (the "1940 Act") or (b) a "holding company" as
defined in, or subject to regulation under, the Public Utility Holding Company
Act of 1935.
6. No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or to our knowledge threatened
against the Corporation or any Subsidiary or aginst any of its or their
respective properties (a) with respect to the Loan Documents or any of the
transactions contemplated thereby, or (b) could reasonably be expected to
reseult in a Material Adverse Effect.
- ----------------------------
1/ Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Competitive Advance and Revolving Credit
Facility Agreement (the "Agreement") dated as of February 2, 1996, among
National City Corporation, the lenders listed in Schedule 2.01 thereto, and
Chemical Bank, as Administrative Agent.
<PAGE> 91
SCHEDULE 2.01
<TABLE>
<CAPTION>
Contact Person
Name and Address of Lender and Telecopy Number Commitment
- -------------------------- ------------------- ----------
<S> <C> <C>
Chemical Bank Mr. Robert J. Juelis $20,000,000
270 Park Avenue (212) 270-0412
New York, NY 10017
The Chase Manhattan Bank, N.A. Ms. Susan Herzog $20,000,000
One Chase Manhattan Plaza (212) 552-7879
5th Floor
New York, NY 10081
Bank of America Mr. Jennings Werner $30,000,000
231 South La Salle St, Unit 6152 (312) 987-6982
Chicago, IL 60697
The Bank of New York Mr. David Lucey $25,000,000
One Wall Street (212) 809-9520
17th Floor
New York, NY 10286
Bayerische Landesbank, Dept 7110 Ms. Etienne Cammaert $30,000,000
Brienner Strasse 18 49-89-2171-3576
Munich GERMANY D-80277
Citibank, N.A. Ms. Catherine Morrow $30,000,000
399 Park Avenue (212) 793-5904
12th Floor, Zone 12
New York, NY 10043
Comerica Bank-Detroit Mr. Jeffery Judge $25,000,000
500 Woodward Avenue (313) 222-3330
MC 3279
Detroit, MI 48226
The First National Bank of Chicago Mr. Phillip Hagglund $30,000,000
One First National Plaza (312) 732-4423
Suite 0162
Chicago, IL 60670-0162
Harris Trust & Savings Bank Mr. Donald J. Boreman $15,000,000
111 West Monroe Street (312) 765-8353
4th Floor
Chicago, IL 60603
Mellon Bank Mr. Michael Shuster $30,000,000
1 Mellon Bank Center (412) 234-9047
Pittsburgh PA, 15258-0001
</TABLE>
<PAGE> 92
<TABLE>
<CAPTION>
Contact Person
Name and Address of Lender and Telecopy Number Commitment
- -------------------------- ------------------- ----------
<S> <C> <C>
NationsBank of Texas, N.A. Mr. L.M. Bater Bates $30,000,000
901 Main Street (214) 508-0604
Suite 6600
Dallas, TX 75201
The Northern Trust Company Mr. Thomas Bernhardt $25,000,000
50 South LaSalle Street, B-7 (312) 557-8337
Chicago, IL 60675
PNC Bank, N.A. Mr. Wayne G. Evans $25,000,000
5th Avenue and Wood Streets (412) 762-2784
Pittsburgh, PA 15265
SunTrust Bank, Atlanta Ms. Ruth whitner $15,000,000
25 Park Place (404) 827-6270
Center Code #118
Atlanta, GA 30303
</TABLE>
<PAGE> 93
SCHEDULE 3.06
Material Litigation
-------------------
None.
<PAGE> 1
Exhibit 5.1
March 13, 1996
National City Corporation
1900 East Ninth Street
Cleveland, OH 44114
Re: Shares of Common Stock, par value $4.00 per share, of National City
Corporation to be Registered in connection with the Merger of
Integra Financial Corporation, Inc. with and into National
City Corporation
Gentlemen:
The law Department acts as counsel to National City Corporation ("NCC")
and in connection with the transaction contemplated under the Merger Agreement
as hereinafter defined we are delivering this opinion in connection with the
Merger (the "Merger") of Integra Financial Corporation ("Integra") with and
into NCC in accordance with the Agreement and Plan of Merger, dated as of
August 27, 1995 (the "Merger Agreement"), by and between Integra and NCC,
pursuant to which NCC may issue and deliver up to 67,910,968 shares of its
common stock, par value $4.00 per share (the "Shares").
We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion, and based thereon we are of the
opinion that the shares of common stock which may be exchanged will be, when
exchanged or transferred, validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as to the Registration
Statement on Form S-4 filed by NCC to effect registration of the Shares in
connection with the Merger under the Securities Act of 1933, and to the
reference to me under the caption "LEGAL OPINIONS" in the prosepctus comprising
a part of such Registration Statement.
Very truly yours,
/s/ Carlton E. Langer
National City Corporation
Carlton E. Langer
Assistant Secretary
<PAGE> 1
Exhibit 8.1
BUCHANAN INGERSOLL
------------------
PROFESSIONAL CORPORATION
Attorneys
One Oxford Centre
301 Grant Street, 20th Floor
Pittsburgh, PA 15219-1410
Telephone: 412-562-8800
Fax: 412-562-1041
March 12, 1996
Integra Financial Corporation
Four PPG Place
Pittsburgh, Pennsylvania 15222-5408
National City Corporation
1900 East Ninth Street
Cleveland, Ohio 44114
Re: Merger of Integra Financial Corporation
with and into National City Corporation
---------------------------------------
Gentlemen:
You have requested our opinion as to the federal income tax consequences of
the transaction contemplated by the Agreement and Plan of Merger dated August
27, 1995, by and between Integra Financial Corporation ("Integra") and National
City Corporation ("National City") (the "Merger Agreement") providing, in part
and subject to certain conditions, for the merger of Integra with and into
National City (the "Merger") pursuant to the Delaware General Corporation Law
and the Pennsylvania Business Corporation Law. Upon consummation of the
Merger, National City will be the surviving corporation.
Upon consummation of the Merger, each issued and outstanding share (other
than shares held by Integra as treasury stock, National City or any of their
direct or indirect wholly
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus and Joint Proxy
Statement of National City Corporation for the proposed merger of Integra
Financial Corporation for the registration of 67,910,968 shares of its common
stock and to the incorporation by reference therein of our report dated January
22, 1996, with respect to the consolidated financial statements of National
City Corporation included in the Annual Report on Form 10-K for the year ended
December 31, 1995, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Cleveland, Ohio
March 11, 1996
<PAGE> 1
Exhibit 23.2
Consent of Independent Accountants
We consent to the inclusion in this registration statement on Form S-4 (File
No. XXXXXX) of our report, which includes an explanatory paragraph discussing
the adoption of various Financial Accounting Standards Board Statements in 1995
and 1993, dated January 17, 1996, on our audits of the financial statements of
Integra Financial Corporation and subsidiaries. We also consent to the
reference to our firm under the caption "Experts."
Pittsburgh, Pennsylvania
March 12, 1996
<PAGE> 1
EXHIBIT 23.5
CONSENT OF WILLIAM F. ROEMER
I hereby consent to the reference of my name as being one of the individuals
who is anticipated to be named to the Board of Directors of National City
Corporation at the Effective Time of the merger of National City Corporation
and Integra Financial Corporation in the Prospectus and Proxy Statement filed
with the Securities and Exchange as part of the Form S-4 Registration Statement
of National City Corporation.
/s/ William F. Roemer
-------------------------
William F. Roemer
March 11, 1996
<PAGE> 1
EXHIBIT 23.6
CONSENT OF JAMES S. BROADHURST
I hereby consent to the reference of my name as being one of the individuals
who is anticipated to be named to the Board of Directors of National City
Corporation at the Effective Time of the merger of National City Corporation
and Integra Financial Corporation in the Prospectus and Proxy Statement filed
with the Securities and Exchange as part of the Form S-4 Registration Statement
of National City Corporation.
/s/ James S. Broadhurst
-------------------------
James S. Broadhurst
March 11, 1996
<PAGE> 1
EXHIBIT 23.7
CONSENT OF ROBERT A. PAUL
I hereby consent to the reference of my name as being one of the individuals
who is anticipated to be named to the Board of Directors of National City
Corporation at the Effective Time of the merger of National City Corporation
and Integra Financial Corporation in the Prospectus and Proxy Statement filed
with the Securities and Exchange as part of the Form S-4 Registration Statement
of National City Corporation.
/s/ Robert A. Paul
--------------------
Robert A. Paul
March 11, 1996
<PAGE> 1
EXHIBIT 23.8
CONSENT OF MICHAEL A. SCHULER
I hereby consent to the reference of my name as being one of the individuals
who is anticipated to be named to the Board of Directors of National City
Corporation at the Effective Time of the merger of National City Corporation
and Integra Financial Corporation in the Prospectus and Proxy Statement filed
with the Securities and Exchange as part of the Form S-4 Registration Statement
of National City Corporation.
/s/ Michael A. Schuler
------------------------
Michael A. Schuler
March 11, 1996
<PAGE> 1
Exhibit 23.9
MORGAN STANLEY
MORGAN STANLEY & CO.
INCORPORATED
1585 BROADWAY
NEW YORK, NEW YORK 10036
(212) 761-4000
CONSENT OF MORGAN STANLEY & CO. INCORPORATED
March 13, 1996
Integra Financial Corporation
Four PPG Place
Pittsburgh, PA 15222
Dear Sirs:
We hereby consent to the use in this Registration Statement on Form S-4
of National City Corporation of our letter to the Board of Directors of Integra
Financial Corporation included as Appendix B to the Joint Proxy
Statement/Prospectus that is a part of this Registration Statement, and to the
references to such letter and to our firm in such Joint Proxy
Statement/Prospectus. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933, or the rules and regulations of the Securities
and Exchange Commisssion thereunder (the "33 Act") nor do we admit that we are
experts with respect to any part of such Registration Statement within the
meaning of the term "experts" as used in the 33 Act, as amended.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Stephen S. Crawford
------------------------------
Stephen S. Carwford
Principal
<PAGE> 1
Exhibit 23.10
World Financial Center
North Tower
New York, New York 10281-1325
212 449 1000
[MERRIL LYNCH LOGO]
We hereby consent to the use of our opinion letter dated March 15, 1996
to the Board of Directors of National City Corporation included as Appendix C
to the Proxy Statement/Prospectus which forms a part of the Registration
Statement on Form S-4 relating to the proposed merger of Integra Financial
Corporation with and into National City Corporation and to the references to
such opinion in such Proxy Statement/Prospectus. In giving such consent, we do
not admit and we hereby disclaim that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
thereunder, nor do we thereby admit that we are experts with respect to any
part of such Registration Statement within the meaning of the term "experts" as
used in the Securities Act of 1933, as amended, or the rules and regulations of
the Securities and Exchange Commission thereunder.
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By /s/ Paul M. Wetzel
--------------------
March 13, 1996
<PAGE> 1
Exhibit 24.1
POWER OF ATTORNEY
The undersigned directors and officers of National City Corporation
(the "Registrant") hereby constitute and appoint Thomas A. Richlovsky, David L.
Zoeller and Carlton E. Langer, or any of them, with full power of substitution
and resubstitution, as attorneys or attorney of the undersigned, to sign and
file under the Securities Act of 1933, as amended, a Registration Statement on
Form S-4 relating to the registration of the shares of Common Stock, par value
$4.00 per share, of the Registrant to be issued pursuant to the Agreement and
Plan of Merger, dated as of August 27, 1995, by and between Integra Financial
Corporation and Registrant, and any and all amendments and exhibits thereto,
including post-effective amendments, and any and all applications or other
documents to be filed with the Securities and Exchange Commission pertaining to
such registration, with full power and authority to do and perform any and all
acts and things whatsoever required and necessary to be done in the premises,
hereby ratifying and approving the acts of said attorneys and any of them and
any such substitute.
Executed this 18th day of December, 1995
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ DAVID A. DABERKO
- -------------------------------------- Chairman and Chief Executive
David A. Daberko Officer, Director
/s/ WILLIAM R. ROBERTSON
- --------------------------------------
William R. Robertson President, Director
/s/ SANDRA H. AUSTIN
- --------------------------------------
Sandra H. Austin Director
/s/ JAMES M. BIGGAR
- --------------------------------------
James M. Biggar Director
/s/ CHARLES H. BOWMAN
- --------------------------------------
Charles H. Bowman Director
/s/ EDWARD B. BRANDON
- --------------------------------------
Edward B. Brandon Director
/s/ JOHN G. BREEN
- --------------------------------------
John G. Breen Director
/s/ DUANE E. COLLINS
- --------------------------------------
Duane E. Collins Director
- --------------------------------------
Richard E. Disbrow Director
/s/ DANIEL E. EVANS
- --------------------------------------
Daniel E. Evans Director
/s/ OTTO N. FRENZEL III
- --------------------------------------
Otto N. Frenzel III Director
/s/ BERNADINE P. HEALY, M.D.
- --------------------------------------
Bernadine P. Healy, M.D. Director
/s/ JOSEPH H. LEMIEUX
- --------------------------------------
Joseph H. Lemieux Director
/s/ W. BRUCE LUNSFORD
- --------------------------------------
W. Bruce Lunsford Director
/s/ A. STEVENS MILES
- --------------------------------------
A. Stevens Miles Director
/s/ STEPHEN A. STITLE
- --------------------------------------
Stephen A. Stitle Director
/s/ MORRY WEISS
- --------------------------------------
Morry Weiss Director
</TABLE>
<PAGE> 1
DETACH CARD
- --------------------------------------------------------------------------------
INTEGRA FINANCIAL CORPORATION
Four PPG Place, Pittsburgh, PA 15222-5408
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R The undersigned hereby appoints Charles R. Skillington and
Robert H. Stevenson as proxies, and each of them, with full
O power of substitution, and hereby authorizes them to
represent and vote as designated below the same number of
X shares of Common Stock of Integra Financial Corporation
(other than shares held under the Integra Employee Stock
Y Purchase Plan) which the undersigned would be entitled to
vote if personally present at the Special Meeting of
Shareholders to be held on April 24, 1996 and any
adjournment thereof and in their discretion to vote and act
upon such other business as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
ADOPTION OF THE AGREEMENT AND PLAN OF MERGER PROVIDING FOR
THE MERGER OF INTEGRA FINANCIAL CORPORATION WITH AND INTO
NATIONAL CITY CORPORATION.
1. ADOPTION OF THE AGREEMENT AND PLAN OF MERGER
PROVIDING FOR THE MERGER OF INTEGRA FINANCIAL
CORPORATION WITH AND INTO NATIONAL CITY CORPORATION
/ / FOR / / AGAINST / / ABSTAIN
(Continued on reverse side)
<PAGE> 2
DETACH CARD
- --------------------------------------------------------------------------------
(Continued from other side)
Instructions: Please sign exactly as the name appears at
the left. When shares are held jointly, all owners must
sign. Please date and return the proxy card promptly, using
the enclosed envelope.
DATE:
---------------------------
---------------------------------
Signature
---------------------------------
Signature if held jointly
IMPORTANT
When signing as attorney,
executor, administrator, trustee
or guardian, please give full
title. If a corporation, please
sign in full corporate name by
president or other authorized
officer. If a partnership, please
sign in ownership name by
authorized person.
<PAGE> 3
DETACH CARD
- --------------------------------------------------------------------------------
SPECIAL PROXY FOR SHARES HELD IN THE
INTEGRA FINANCIAL CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R The undersigned hereby appoints Charles R. Skillington and
Robert H. Stevenson as proxies, and each of them, with full
O power of substitution, and hereby authorizes them to
represent and vote as designated below the same number of
X shares of Common Stock of Integra Financial Corporation
held for the undersigned under the Integra Employee Stock
Y Purchase Plan which the undersigned would be entitled to
vote if personally present at the Special Meeting of
Shareholders to be held on April 24, 1996 and any
adjournment thereof and in their discretion to vote and act
upon such other business as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
ADOPTION OF THE AGREEMENT AND PLAN OF MERGER PROVIDING FOR
THE MERGER OF INTEGRA FINANCIAL CORPORATION WITH AND INTO
NATIONAL CITY CORPORATION AND FOR PROPOSAL 2.
1. ADOPTION OF THE AGREEMENT AND PLAN OF MERGER
PROVIDING FOR THE MERGER OF INTEGRA FINANCIAL
CORPORATION WITH AND INTO NATIONAL CITY CORPORATION
/ / FOR / / AGAINST / / ABSTAIN
(Continued on reverse side)
<PAGE> 4
DETACH CARD
- --------------------------------------------------------------------------------
(Continued from other side)
Instructions: Please sign exactly as the name appears at
the left. When shares are held jointly, all owners must
sign. Please date and return the proxy card promptly, using
the enclosed envelope.
DATE:
------------------------
------------------------------
Signature
------------------------------
Signature if held jointly
IMPORTANT
When signing as attorney,
executor, administrator, trustee
or guardian, please give full
title. If a corporation, please
sign in full corporate name by
president or other authorized
officer. If a partnership,
please sign in ownership name
by authorized person.
<PAGE> 1
[MAP]
DETACH CARD
- --------------------------------------------------------------------------------
NATIONAL CITY CORPORATION PROXY SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS FOR APRIL 22, 1996
P ANNUAL MEETING
R The undersigned stockholder of National City Corporation hereby
appoints Thomas A. Richlovsky and David L. Zoeller and each of them,
O with power of substitution, proxies for the undersigned to vote all
the shares of COMMON STOCK of National City which the undersigned is
X entitled to vote at the Annual Meeting of Stockholders of National
City to be held on April 22, 1996 and any adjournment thereof as
Y follows and in their discretion to vote and act upon such other
business as may properly come before the meeting. The Board of
Directors recommends a vote FOR the following:
1. THE ELECTION OF DIRECTORS
FOR all nominees listed below / / WITHHOLD AUTHORITY / /
(except as otherwise marked below) to vote for all nominees
listed below
S. H. Austin, C. H. Bowman, E. B. Brandon, J. G. Breen, D. E.
Collins, D. A. Daberko, D. E. Evans, O. N. Frenzel, III, B. P.
Healy, J. H. Lemieux, W. B. Lunsford, A. S. Miles, W. R.
Robertson, S. A. Stitle and M. Weiss.
(Instructions: to withhold authority to vote for any individual
nominee, strike a line through that nominee's name.)
2. APPROVE THE AMENDMENT OF THE NATIONAL CITY CORPORATION 1993 STOCK
OPTION PLAN
/ / FOR / / AGAINST / / ABSTAIN
3. APPROVE THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
/ / FOR / / AGAINST / / ABSTAIN
4. ADOPT THE AGREEMENT AND PLAN OF MERGER DATED AS OF AUGUST 27, 1995,
BY AND BETWEEN NATIONAL CITY CORPORATION AND INTEGRA FINANCIAL
CORPORATION
/ / FOR / / AGAINST / / ABSTAIN
(Continued, and to be signed, on the reverse side.)
<PAGE> 2
We invite you
to attend the annual meeting of stockholders
of National City Corporation.
<TABLE>
<S> <C>
Date: Monday, April 22, 1996
Time: 9:30 a.m., eastern standard time
Location: National City Bank, Indiana
One National City Center, Fourth Floor
Indianapolis, Indiana
(see map on reverse side)
</TABLE>
DETACH CARD
- --------------------------------------------------------------------------------
Proxy No. (Continued from reverse side.) Shares
UNLESS OTHERWISE INDICATED, THE PROXIES ARE INSTRUCTED TO VOTE
FOR THE ELECTION OF DIRECTORS, FOR THE APPROVAL OF THE AMENDMENT
OF THE NATIONAL CITY CORPORATION 1993 STOCK OPTION PLAN, FOR THE
SELECTION OF ERNST & YOUNG LLP AND FOR THE ADOPTION OF THE
AGREEMENT AND PLAN OF MERGER DATED AS OF AUGUST 27, 1995, BY AND
BETWEEN NATIONAL CITY CORPORATION AND INTEGRA FINANCIAL
CORPORATION.
Dated , 1996
-------------------------
-------------------------
(Sign here)
INSTRUCTIONS: Please sign
exactly as shown hereon.
When signing as a
fiduciary or on behalf of
a corporation, bank,
trust company, or other
similar entity, your
title or capacity should
be shown.
PLEASE SIGN, DATE, AND RETURN YOUR PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE TO STOCK TRANSFER DEPT., (NCC),
NATIONAL CITY BANK, P.O. BOX 92301, CLEVELAND, OHIO 44193-0900.
