<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
(Amendment No. _____ ) *
National Processing, Inc.
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(Name of Issuer)
Common Stock, without par value
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(Title of Class of Securities)
637229 10 5
----------------------
(CUSIP Numbers)
David L. Zoeller, Esq.
National City Corporation
1900 East Ninth Street
Cleveland, Ohio 44114-3484
216-575-2000
With a copy to:
Dennis W. LaBarre, Esq.
Jones, Day, Reavis & Pogue
901 Lakeside Avenue
Cleveland, Ohio 44114
216-586-3939
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
May 7, 1996
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
(Continued on following pages)
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*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP NO. 637229 10 5 13D
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<TABLE>
<CAPTION>
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<S> <C>
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
National City Corporation
34-1111088
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
44,365,400
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NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY ------------------------------------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH 44,365,400
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10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
44,365,400
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
87.7%
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14 TYPE OF REPORTING PERSON*
CO, HC
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
ITEM 1. SECURITY AND ISSUER.
This Schedule 13D relates to the Common Stock, without par
value (the "Common Stock"), of National Processing, Inc., an Ohio corporation
(the "Company"). The principal offices of the Company are located at One Oxmoor
Place, 101 Bullitt Lane, Suite 450, Louisville, Kentucky 40222.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) This Schedule 13D is filed by National City
Corporation, a Delaware corporation and a registered bank holding company under
the Bank Holding Company Act of 1956, as amended ("National City"). National
City's principal executive offices are located at 1900 East Ninth Street,
Cleveland, Ohio 44114.
Pursuant to General Instruction "C" for Schedule 13D, the
attached Annex 1 to this Schedule 13D sets forth certain information concerning
the executive officers and directors of National City. The contents of Annex 1
are incorporated herein by reference.
(d) During the last five years, neither National City nor, to
the best of National City's knowledge, any of the executive officers or
directors of National City has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors).
(e) During the last five years, neither National City nor, to
the best of National City's knowledge, any of the executive officers or
directors of National City has been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
(f) All of the individuals identified in this Item 2 are
citizens of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The aggregate amount of funds required by National City to
purchase 1,265,400 shares of Common Stock was $11,505,225. All funds used by
National City to purchase the Common Stock were obtained from the working
capital of National City, and no part of the purchase price for the Common Stock
consisted of borrowed funds.
ITEM 4. PURPOSE OF TRANSACTION.
Prior to the Company's initial public offering of 7,475,000
shares of its Common Stock on August 14, 1996, the Company was a wholly-owned
subsidiary of National City. Following consummation of the initial public
offering, National City continued to own directly 43,100,000 shares of the
Company's Common Stock, or approximately 85.2% of the outstanding Common Stock.
On May 2, 1997, National City announced its intent to acquire
up to 2,000,000 additional shares of the Company's Common Stock in open market
transactions in accordance with applicable federal and state laws and
regulations. A copy of National City's press release announcing its intent to
purchase the Common Stock is filed as an exhibit hereto and incorporated herein
by reference. As set forth in Item 5(c), on May 7, 1997, National City purchased
1,114,200 shares of Common Stock at a price of $9.125 per share, and on May 8,
1997, National City purchased 151,200 shares of Common Stock at a price of
$8.850 per share.
National City announced its stock purchase program and
purchased the Common Stock for general investment purposes and intends to review
continuously its equity position in the Company. In an effort to partially
offset the negative effects of margin pressure in its merchant card services
business, the Company has announced its intent to implement overhead reductions
at the corporate and business line levels. National City intends to monitor
these efforts, and, depending upon its future evaluations of the business
prospects of the
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Company and upon other developments, including, without limitation, general
economic and business conditions and money market and stock market conditions,
National City may determine to increase or decrease its equity interest in the
Company by acquiring additional shares of Common Stock or by disposing of all or
a portion of its holdings of Common Stock, subject to any applicable legal or
other restrictions on its ability to do so.
Except as set forth herein, National City does not have any
plans or proposals which would relate to or result in:
(a) The acquisition of additional securities of the
Company (in excess of National City's announced
intent to acquire up to 2,000,000 shares of Common
Stock), or the disposition of securities of the
Company;
(b) An extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the
Company or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of
the Company or of any of its subsidiaries;
(d) Any change in the present board of directors or
management of the Company (except for the Company's
previously-announced efforts to reduce overhead
costs), including any plans or proposals to change
the number or term of directors or to fill any
existing vacancies on the board;
(e) Any material change in the present capitalization or
dividend policy of the Company;
(f) Any other material change in the Company's business
or corporate structure (except for the Company's
previously-announced efforts to reduce overhead
costs);
(g) Changes in the Company's charter, bylaws or
instruments corresponding thereto or other actions
which may impede the acquisition of control of the
Company by any person;
(h) Causing a class of securities of the Company to be
delisted from a national securities exchange or to
cease to be authorized to be quoted in an
inter-dealer quotation system of a registered
national securities association;
(i) A class of equity securities of the Company becoming
eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities Exchange Act of
1934 (the "Exchange Act"); or
(j) Any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) - (b) At the date hereof, National City has the sole power
to vote and dispose of 44,365,400 shares of Common Stock. The Common Stock held
by National City represents approximately 87.7% of the 50,575,000 shares of
Common Stock outstanding as of May 12, 1997, based on the number of shares
outstanding as reported in the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1997.
As of the date hereof, to the best of National City's
knowledge, set forth below is information concerning the ownership of Common
Stock by the individuals identified in Item 2:
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<TABLE>
<CAPTION>
Number of Shares Held
With Sole Voting and
Name Dispositive Power
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<S> <C>
David A. Daberko 12,000
William R. Robertson 5,000
Vincent A. DiGirolamo 3,030
James R. Bell III 3,030
Gary A. Glaser 1,000
Thomas W. Golonski 1,000
Jon L. Gorney 300
J. Christopher Graffeo 5,000
Jeffrey D. Kelly 1,000
William E. MacDonald III 2,000
Robert G. Siefers 10,000
Harold B. Todd, Jr. 250
Thomas A. Richlovsky 1,000
Sandra H. Austin 1,212
Charles H. Bowman 200
Edward B. Brandon 8,000
Duane E. Collins 2,500
Daniel E. Evans 1,000
Otto N. Frenzel III 1,000
Bernadine P. Healy 750
Joseph H. Lemieux 1,000
W. Bruce Lunsford 7,000
Robert A. Paul 20,000
William F. Roemer 2,000
Stephen A. Stitle 1,000
Morry Weiss 10,000
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TOTAL 100,272
</TABLE>
To the best of National City's knowledge, the aggregate shares
of Common Stock owned by the individuals identified in Item 2 represents less
than 1% of the outstanding Common Stock and 1.6% of the outstanding Common Stock
held by persons other than National City. Except as set forth herein, to the
best of National City's knowledge, none of the individuals identified in Item 2
has the sole or shared power to vote or the sole or shared power to dispose of
any shares of Common Stock.
(c) On May 7, 1997, National City purchased 1,114,200 shares
of Common Stock at a price of $9.125 per share, and on May 8, 1997, National
City purchased 151,200 shares of Common Stock at a price of $8.850 per share,
all by means of placing orders for the purchase of such shares with a registered
broker on the New York Stock Exchange.
To the best of National City's knowledge, the individuals
identified in Item 2 have effected the following transactions in shares of
Common Stock during the past 60 days. On May 7, 1997, Robert A. Paul purchased
10,000 shares of Common Stock at a price of $9.125 per share. On May 9, 1997,
David A. Daberko purchased 5,490 shares of Common Stock at a price of $8.50
per share, and Thomas A. Richlovsky purchased 800 shares of Common Stock at a
price of $8.50 per share. All such transactions were executed by means of
placing orders for the purchase of such shares with a registered broker on the
New York Stock Exchange.
National City anticipates that certain of its executive
officers and directors may acquire shares of Common Stock for their individual
accounts in open market transactions at prevailing prices, subject to any
applicable legal or other restrictions on their ability to do so. There are no
agreements, understandings or arrangements between National City and any of its
executive officers or directors with respect to the Common Stock, and there can
be no assurance that any acquisitions by such executive officers or directors
will take place.
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Except as set forth herein, no transactions in shares of
Common Stock were effected during the past 60 days by National City, or to the
best of National City's knowledge, by any of the individuals identified in Item
2.
(d) Except as stated herein, to the best of National City's
knowledge, no other person has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the Common Stock.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
On July 16, 1996, in connection with the Company's initial
public offering of its Common Stock, the Company and National City entered into
a Registration Rights Agreement (the "Registration Rights Agreement"). Pursuant
to the Registration Rights Agreement, National City has the right to require the
Company to use its best efforts to register under the Securities Act of 1933, as
amended, and the securities or blue sky laws of any jurisdiction designated by
National City, all or a portion of the issued and outstanding Common Stock held
by National City for sale in accordance with National City's intended method of
disposition thereof. Such demand rights are subject to the condition that the
Company cannot be required to effect more than two demand registrations.
National City also has the right to participate, or "piggy-back," in equity
offerings initiated by the Company, subject to a reduction of the size of such
offerings on the advice of the managing underwriter. National City's rights
under the Registration Rights Agreement are fully assignable. Under the
Registration Rights Agreement, certain costs incurred in connection with the
registrations are allocated between National City and the Company, and the
Company has agreed to indemnify National City against certain claims. The
foregoing is a brief description of the Registration Rights Agreement and is
qualified in its entirety by reference to such agreement, a copy of which is
filed as an exhibit hereto and incorporated herein by reference.
Except as set forth herein, and other than National City's
internal policies requiring that all trading in securities by National City's
employees and agents comply with federal and state securities laws and other
applicable legal and contractual restrictions, to the best of National City's
knowledge, there are no other contracts, arrangements, understandings or
relationships (legal or otherwise) among the persons identified in Item 2 and
between such persons and any person with respect to any securities of the
Company, including but not limited to, transfer or voting of any of the
Company's securities, joint ventures, loan or option arrangements, puts or
calls, guarantees of profits, division of profits or loss, or the giving or
withholding of proxies, or a pledge or contingency the occurrence of which would
give another person voting power over the securities of the Company.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 99.1 -- Press Release of National City, dated May 2, 1997
Exhibit 99.2 -- Registration Rights Agreement, dated as of July 16, 1996,
between the Company and National City
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date: May 16, 1997 NATIONAL CITY CORPORATION
By: /s/ Thomas A. Richlovsky
-----------------------------------
Name: Thomas A. Richlovsky
Title: Senior Vice President & Treasurer
<PAGE> 8
Annex 1
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Set forth below are the names, titles and present principal
occupations for each of the executive officers and directors of National City.
The business address for each of the following individuals is 1900 East Ninth
Street, Cleveland, Ohio 44114.
<TABLE>
<CAPTION>
Name Title Present Principal Occupation
- ---- ----- ----------------------------
<S> <C> <C>
David A. Daberko Chairman of the Board and Chief Chairman of the Board and Chief
Executive Officer Executive Officer of National City
William R. Robertson President President of National City
Vincent A. DiGirolamo Vice Chairman Vice Chairman of National City
James R. Bell III Executive Vice President, Kentucky President and Chief Executive Officer,
Banking National City Bank of Kentucky
Gary A. Glaser Executive Vice President, Columbus President and Chief Executive Officer,
Banking National City Bank of Columbus
Thomas W. Golonski Executive Vice President, President and Chief Executive Officer,
Pennsylvania Banking National City Bank of Pennsylvania
Jon L. Gorney Executive Vice President, Executive Vice President, Information
Information Services & Operations Services & Operations of National
City
Christopher Graffeo Executive Vice President, Indiana President and Chief Executive Officer,
Banking National City Bank of Indiana
Jeffrey D. Kelly Executive Vice President, Executive Vice President, Investments
Investments of National City
William E. MacDonald III Executive Vice President, Cleveland President and Chief Executive Officer,
Banking National City Bank
Robert J. Ondercik Executive Vice President, Credit Executive Vice President, Credit
Administration Administration of National City
Robert G. Siefers Executive Vice President, Chief Executive Vice President and Chief
Financial Officer Financial Officer of National City
Harold B. Todd, Jr. Executive Vice President, Executive Vice President, Institutional
Institutional Trust & Investment Trust & Investment Services of
Services National City
James P. Gulick Senior Vice President, General Senior Vice President, General
Auditor Auditor of National City
Thomas A. Richlovsky Senior Vice President, Treasurer Senior Vice President, Treasurer of
National City
David L. Zoeller Senior Vice President, General Senior Vice President, General
Counsel & Secretary Counsel & Secretary of National City
Sandra Harden Austin Director Retired President, Physician Services
of Caremark International
</TABLE>
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2
<TABLE>
<CAPTION>
Name Title Present Principal Occupation
- ---- ----- ----------------------------
<S> <C> <C>
Charles H. Bowman Director Retired Chairman and Chief
Executive Officer of BP America Inc.
Edward B. Brandon Director Retired Chairman of the Board of
Directors of National City
John G. Breen Director Chairman of the Board of Directors
and Chief Executive Officer of The
Sherwin-Williams Company
James S. Broadhurst Director Chairman and Chief Executive Officer
of Eat'n Park Restaurants
Duane E. Collins Director President and Chief Executive Officer
of Parker Hannifin Corporation
Daniel E. Evans Director Chairman of the Board of Directors
and Chief Executive Officer of Bob
Evans Farms, Inc.
Otto N. Frenzel III Director Retired Chairman of National City
Bank of Indiana
Bernadine P. Healy, M.D. Director Professor of Medicine and Dean of
Ohio State University College of
Medicine
Joseph H. Lemieux Director Chairman and Chief Executive Officer
of Owens-Illinois, Inc.
W. Bruce Lunsford Director Chairman of the Board of Directors,
President and Chief Executive Officer
of Vendor, Inc.
Robert A. Paul Director President and Chief Executive Officer
of Ampco-Pittsburgh Corporation
William F. Roemer Director Retired Chairman of the Board of
Directors and Chief Executive Officer
of Integra Financial Corporation
Michael A. Schuler Director Chairman of the Board of Directors,
President and Chief Executive Officer
of Zippo Manufacturing Company
Stephen A. Stitle Director Chairman of the Board of National
City Bank of Indiana
Morry Weiss Director Chairman of the Board of Directors
and Chief Executive Officer of
American Greetings Corporation
</TABLE>
<PAGE> 1
Exhibit 99.1
National City(R) NATIONAL CITY CORPORATION
P.O. Box 5756
Cleveland, OH 44101-0756
FOR MORE INFORMATION CONTACT: News Release
Thomas A. Richlovsky
Senior Vice President and Treasurer
(216) 575-2126
For Immediate Release
NATIONAL CITY ANNOUNCES INTENT TO ACQUIRE NATIONAL PROCESSING STOCK
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CLEVELAND, Ohio--May 2, 1997--National City Corporation (NYSE:NCC)
today announced its intent to acquire up to two million shares of the common
stock of National Processing, Inc. (NYSE:NAP). The shares will be acquired in
the open market in accordance with applicable regulations of the Securities and
Exchange Commission. The exact amounts and timing of purchases are subject to
market conditions. The share purchases by National City are not intended to
affect the listing of National Processing's common stock on the New York Stock
Exchange. National City currently owns approximately 85% of the outstanding
common stock of National Processing. If the share purchases are fully completed,
National City's ownership percentage of National Processing would increase to
approximately 89%. There are currently 50,575,000 shares outstanding of National
Processing, of which National City owns 43,100,000.
David A. Daberko, chairman and chief executive officer of National
City, stated: "Following National Processing's successful initial public
offering last August, the stock valuation has recently lagged its peer group. We
believe it to be in the best interests of National City stockholders to increase
National City's investment in National Processing at what appears to be an
attractive price." As of the close of business on May 1, 1997, the trading price
of National Processing's common stock was $7.00 per share.
(more)
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-2-
National Processing is a provider of transaction processing services
and customized processing solutions. Deploying technology and applications
software, the Company provides products and value-added services which include
processing of card and check transactions for merchants, outsourcing of
administrative and financial functions, and ticket processing and settlement for
providers of travel-related services.
National City is a $50 billion diversified financial services company
headquartered in Cleveland, Ohio. National City operates banks and other
financial services subsidiaries primarily in Ohio, Kentucky, Indiana, and
Pennsylvania. National City can be found on the Internet at
www.national-city.com.
-30-
<PAGE> 1
EXHIBIT 99.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made
and entered into as of this 16th day of July, 1996 between National City
Corporation, a Delaware corporation ("National City"), and National Processing,
Inc., an Ohio corporation (the "Company").
R E C I T A L S
---------------
WHEREAS, the Company is currently a wholly owned subsidiary
of National City;
WHEREAS, the Company is contemplating the issuance of
6,900,000 shares of the Company's common stock, without par value (the "Common
Stock"), in an initial public offering pursuant to a Registration Statement on
Form S-1 (Registration No. 333-05507) (the "Offering");
WHEREAS, following the Offering, National City will be the
beneficial and record owner of 43,100,000 shares of Common Stock;
WHEREAS, in conjunction with the Offering, National City and
the Company desire to enter into this Agreement to provide National City with
certain registration rights as provided herein.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, and for other good and valuable
consideration had and received, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. As used herein, the following terms
shall have the following respective meanings:
"Affiliate" shall mean any Person that directly or indirectly
controls, is controlled by, or is under common control with such
Person. A Person shall be deemed to control another Person if such
Person owns 5% or more of any equity interest in the "controlled"
Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled
Person, whether through ownership of stock or partnership interests,
by contract, agreement or understanding (whether oral or written), or
otherwise.
<PAGE> 2
"Common Stock" shall have the meaning in the second recital of
this Agreement.
"Designated Transferee" shall have the meaning set forth in
Section 10 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Holders" shall mean National City, any Affiliate of National
City (other than the Company) and any Designated Transferees who are
holders of record of any Registrable Shares, and any combination of
one or more such Holders.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Other Holders" shall mean Persons who are holders of record of
equity securities of the Company who subsequent to the date hereof
acquire more than 5% of the outstanding shares of Common Stock
pursuant to a transaction with the Company and to whom the Company
grants registration rights pursuant to a written agreement in
connection with such transaction.
"Person" shall mean any individual, corporation, association,
partnership, group (as defined in Section 13(d)(3) of the Exchange
Act), limited liability company, joint venture, business trust or
unincorporated organization, or a government or any agency or
political subdivision thereof.
"Registrable Shares" shall mean (i) the 43,100,000 shares of
Common Stock owned by the Holders on the date of this Agreement, and
(ii) any equity securities of the Company issued or distributed after
the date of this Agreement to a Holder in respect of Registrable
Shares by way of any stock dividend, stock split or other
distribution or any recapitalization or reclassification and any
equity securities of the Company acquired by a Holder upon exercise
or conversion of any such securities. As to any particular
Registrable Share, such Registrable Share shall cease to be a
Registrable Share when (w) it shall have been sold, transferred or
otherwise disposed of or exchanged pursuant to a registration
statement under the Securities Act; (x) it shall have been
distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act; (y) it shall have been sold or
transferred to a Person other than a Designated Transferee in a
private transaction effected other than pursuant to a registration
statement; or (z) it shall have been sold, transferred or otherwise
disposed of in violation of this Agreement.
2
<PAGE> 3
"Registration Expenses" shall have the meaning set forth in
Section 7(a) hereof.
"SEC" shall mean the Securities and Exchange Commission or any
successor agency thereto.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
2. INCIDENTAL REGISTRATIONS
(A) RIGHT TO INCLUDE REGISTRABLE SHARES. Each time the Company
shall determine to file a registration statement under the Securities Act in
connection with a proposed offer and sale for cash of any equity securities
(other than debt securities which are convertible into equity securities or an
offering of equity securities in an amount not in excess of 5% of the number of
shares of Common Stock outstanding at such time in connection with the offering
of debt securities) either by it or by any holders of its outstanding equity
securities, the Company will give prompt written notice of its determination to
each Holder and of such Holder's rights under this Section 2, at least 30 days
prior to the anticipated filing date of such registration statement. Upon the
written request of each Holder made within 21 days after the receipt of any
such notice from the Company, (which request shall specify the Registrable
Shares intended to be disposed of by such Holder), the Company will use its
best efforts to effect the registration under the Securities Act of all
Registrable Shares which the Company has been so requested to register by the
Holders thereof, to the extent required to permit the disposition of the
Registrable Shares so to be registered; PROVIDED, HOWEVER, that (i) if, at any
time after giving written notice of its intention to register any securities
and prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any reason
not to proceed with the proposed registration of the securities to be sold by
it, the Company may, at its election, give written notice of such determination
to each Holder of Registrable Shares and thereupon shall be relieved of its
obligation to register any Registrable Shares in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith), and (ii) if such registration involves an underwritten
offering, all Holders of Registrable Shares requesting to be included in the
Company's registration must sell their Registrable Shares to the underwriters
on the same terms and conditions as apply to the Company, with such
differences, including any with respect to indemnification and liability
insurance, as may be customary or appropriate in combined primary and secondary
offerings. If a registration requested pursuant to this Section 2(a) involves
an underwritten public offering, any Holder of Registrable Shares requesting to
be included in such registration may elect, in writing prior to the effective
date of the registration statement filed in connection with such registration,
not to register such
3
<PAGE> 4
securities in connection with such registration. No registration effected under
this Section 2 shall relieve the Company of its obligations to effect
registrations upon request under Section 4 hereof.
(B) PRIORITY IN INCIDENTAL REGISTRATION. If a registration
pursuant to this Section 2 involves an underwritten offering and the managing
underwriter or underwriters in good faith advises the Company in writing that,
in its opinion, the number of securities which the Company, the Holders and any
other Persons intend to include in such registration exceeds the largest number
of securities which can be sold in such offering without having an adverse
effect on such offering (including the price at which such securities can be
sold), then the Company will include in such registration (i) first, if the
registration pursuant to this Section 2 was initiated by Other Holders
exercising demand registration rights, 100% of the securities such Other
Holders propose to sell (except to the extent the terms of such Other Holders'
registration rights provide otherwise); (ii) second, 100% of the securities the
Company proposes to sell for its own account; (iii) third, to the extent that
the number of securities which such Other Holders exercising demand
registration rights and the Company propose to sell is less than the number of
securities which the Company has been advised can be sold in such offering
without having the adverse effect referred to above, such number of Registrable
Shares which the Holders have requested to be included in such registration
pursuant to Section 2(a) hereof and which, in the opinion of such managing
underwriter or underwriters, can be sold without having the adverse effect
referred to above; and (iv) fourth, to the extent that the number of securities
which are to be included in such registration pursuant to clauses (i), (ii) and
(iii) is, in the aggregate, less than the number of securities which the
Company has been advised can be sold in such offering without having the
adverse effect referred to above, such number of other securities requested to
be included in the offering for the account of any Other Holders which, in the
opinion of such managing underwriter or underwriters, can be sold without
having the adverse effect referred to above.
3. HOLDBACK AGREEMENTS. (a) If any registration of
Registrable Shares shall be in connection with an underwritten public offering,
the Holders shall not effect any public sale or distribution (except in
connection with such public offering), of any equity securities of the Company,
or of any security convertible into or exchangeable or exercisable for any
equity security of the Company (in each case, other than as part of such
underwritten public offering), during the 90-day period (or such lesser period
as the managing underwriter or underwriters may permit) beginning on the
effective date of such registration, if, and to the extent, the managing
underwriter or underwriters of any such offering determines such action is
necessary or desirable to effect such offering; PROVIDED, HOWEVER, that each
Holder has received the written notice required by Section 2(a)
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hereof; PROVIDED, FURTHER, that each Holder shall not be obligated to comply
with such restrictions arising as a result of an underwritten public offering
subject to Section 2 hereof more than once in any twelve-month period.
(b) If any registration of Registrable Shares shall be in
connection with any underwritten public offering, the Company shall not effect
any public sale or distribution (except in connection with such public
offering) of any of its equity securities or of any security convertible into
or exchangeable or exercisable for any of its equity securities (in each case
other than as part of such underwritten public offering) during the 90-day
period (or such lesser period as the managing underwriter or underwriters may
permit) beginning on the effective date of such registration, and the Company
shall use its best efforts to cause each member of the management of the
Company who holds any equity security and each other holder of 5% or more of
the outstanding shares of any equity security, or of any security convertible
into or exchangeable or exercisable for any equity security, of the Company
purchased from the Company (at any time other than in a public offering) to so
agree.
4. REGISTRATION ON REQUEST.
(a) REQUEST BY HOLDERS. Upon the written request of the
Holders of at least 10% of the Registrable Shares that the Company effect the
registration under the Securities Act of all or part of such Holders'
Registrable Shares, and specifying the amount (which shall not be less than 10%
of the outstanding Registrable Shares in the aggregate) and the intended method
of disposition thereof, the Company will promptly give notice of such requested
registration to all other Holders of Registrable Shares and, as expeditiously
as possible, use its best efforts to effect the registration under the
Securities Act of: (i) the Registrable Shares which the Company has been so
requested to register by Holders of at least 10% of the Registrable Shares; and
(ii) all other Registrable Shares which the Company has been requested to
register by any other Holder thereof by written request received by the Company
within 21 days after the giving of such written notice by the Company (which
request shall specify the intended method of disposition of such Registrable
Shares); PROVIDED, HOWEVER, that the Company shall not be required to effect
more than two registrations pursuant to this Section 4; PROVIDED, FURTHER, that
the Company shall not be obligated to file a registration statement relating to
a registration request under this Section 4 (x) if the registration request is
delivered after delivery of a notice by the Company of an intended registration
and prior to the effective date of the registration statement referred to in
such notice, or (y) within a period of 90 days after the effective date of any
other registration statement of the Company requested by a Holder pursuant to
this Section 4 or pursuant to which the Holders included Registrable Shares.
The Holders initially requesting a registration pursuant to this Section 4 may,
at any time prior to
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the effective date of the registration statement relating to such registration,
revoke such request by providing a written notice to the Company revoking such
request; PROVIDED, HOWEVER, that, in the event the Holders shall have made a
written request for a demand registration (I) which is subsequently withdrawn
by the Holders after the Company has filed a registration statement with the
SEC in connection therewith but prior to such demand registration being
declared effective by the SEC or (II) which is not declared effective solely as
a result of the failure of Holders to take all actions reasonably required in
order to have the registration and the related registration statement declared
effective by the SEC, then, in any such event, such demand registration shall
be counted as a demand registration for purposes of this Section 4(a). Promptly
after the expiration of the 21-day period referred to in clause (ii) above, the
Company will notify all the Holders to be included in the registration of the
other Holders and the number of shares of Registrable Shares requested to be
included therein.
(b) REGISTRATION STATEMENT FORM. If any registration
requested pursuant to this Section 4 which is proposed by the Company to be
effected by the filing of a registration statement on Form S-3 (or any
successor or similar short-form registration statement) shall be in connection
with an underwritten public offering, and if the managing underwriter or
underwriters shall advise the Company in writing that, in its opinion, the use
of another form of registration statement is of material importance to the
success of such proposed offering, then such registration shall be effected on
such other form.
(c) EFFECTIVE REGISTRATION STATEMENT. A registration
requested pursuant to this Section 4 will not be deemed to have been effected
unless it has become effective under the Securities Act and, has remained
effective for 270 days or such shorter period as all the Registrable Shares
included in such registration have actually been sold thereunder. In addition,
if within 180 days after it has become effective, the offering of Registrable
Shares pursuant to such registration is interfered with by any stop order,
injunction or other order or requirement of the SEC or other governmental
agency or court, such registration will be deemed not to have been effected for
purposes of this Section 4.
(d) PRIORITY IN REQUESTED REGISTRATIONS. If a requested
registration pursuant to this Section 4 involves an underwritten offering and
the managing underwriter or underwriters in good faith advises the Company in
writing that, in its opinion, the number of securities requested to be included
in such registration (including securities of the Company which are not
Registrable Shares) exceeds the largest number of securities which can be sold
in such offering without having an adverse effect on such offering (including
the price at which such securities can be sold), then the Company will include
in such registration (i) first, 100% of the Registrable Shares
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<PAGE> 7
requested to be registered pursuant to Section 4(a) hereof (provided that if
the number of Registrable Shares requested to be registered pursuant to Section
4(a) hereof exceeds the number which the Company has been advised can be sold
in such offering without having the adverse effect referred to above, the
number of such Registrable Shares to be included in such registration by the
Holders shall be allocated pro rata among such Holders on the basis of the
relative number of Registrable Shares each such Holder has requested to be
included in such registration); (ii) second, to the extent that the number of
Registrable Shares requested to be registered pursuant to Section 4(a) hereof
is less than the number of securities which the Company has been advised can be
sold in such offering without having the adverse effect referred to above, such
number of shares of equity securities the Company requests to be included in
such registration; and (iii) third, to the extent that the number of
Registrable Shares requested to be included in such registration pursuant to
Section 4(a) hereof and the securities which the Company proposes to sell for
its own account are, in the aggregate, less than the number of equity
securities which the Company has been advised can be sold in such offering
without having the adverse effect referred to above, such number of other
securities proposed to be sold by any Other Holder which, in the opinion of
such managing underwriter or underwriters, can be sold without having the
adverse effect referred to above (provided that if the number of such
securities of such Other Holder requested to be registered exceeds the number
which the Company has been advised can be sold in such offering without having
the adverse effect referred to above, the number of such securities to be
included in such registration pursuant to this Section 4(d) shall be allocated
pro rata among all such Other Holders on the basis of the relative number of
securities each such Other Holder has requested to be included in such
registration).
(e) ADDITIONAL RIGHTS. If the Company at any time grants to
any other holders of equity securities of the Company any rights to request the
Company to effect the registration of any such shares of equity securities on
terms more favorable to such holders than the terms set forth in this Section 4
and in Section 5 hereof, the terms of this Section 4 and of Section 5 hereof
shall be deemed amended or supplemented to the extent necessary to provide the
Holders such more favorable rights and benefits. In no event shall the Company
grant to any person any rights to request the Company to effect the
registration of any shares of equity securities of the Company on terms which
are adverse to rights of the Holders set forth in Section 2 and this Section 4.
5. REGISTRATION PROCEDURES.
(a) If and whenever the Company is required by the provisions
of Sections 2 or 4 hereof to use its best efforts to effect or cause the
registration of Registrable Shares, the Company shall as expeditiously as
possible:
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<PAGE> 8
(i) prepare and, in any event within 60 days after the end of
the period within which a request for registration may be given to the
Company, file with the SEC a registration statement with respect to
such Registrable Shares and use its best efforts to cause such
registration statement to become effective;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period not in excess of 270 days and to
comply with the provisions of the Securities Act, the Exchange Act,
and the rules and regulations promulgated thereunder with respect to
the disposition of all the securities covered by such registration
statement during such period in accordance with the intended methods
of disposition by the Holders thereof set forth in such registration
statement; PROVIDED, HOWEVER, that (A) before filing a registration
statement (including an initial filing) or prospectus, or any
amendments or supplements thereto, the Company will furnish to one
counsel selected by the Holders of a majority of the Registrable
Shares covered by such registration statement copies of all documents
proposed to be filed, which documents will be subject to the review
and comment of such counsel and, (B) the Company will notify each
Holder of Registrable Shares covered by such registration statement of
any stop order issued or threatened by the SEC, any other order
suspending the use of any preliminary prospectus or of the suspension
of the qualification of the registration statement for offering or
sale in any jurisdiction, and take all reasonable actions required to
prevent the entry of such stop order, other order or suspension or to
remove it if entered;
(iii) furnish to each Holder and each underwriter, if
applicable, of Registrable Shares covered by such registration
statement such number of copies of the registration statement and of
each amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and
summary prospectus), in conformity with the requirements of the
Securities Act, and such other documents as each Holder of Registrable
Shares covered by such registration statement may reasonably request
in order to facilitate the disposition of the Registrable Shares by
such Holder;
(iv) use its best efforts to register or qualify such
Registrable Shares covered by such resignation statement under the
state securities or blue sky laws of such jurisdictions as each Holder
of Registrable Shares covered by such registration statement and, if
applicable, each underwriter, may reasonably request, and do any and
all
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<PAGE> 9
other acts and things which may be reasonably necessary to consummate
the disposition in such jurisdictions of the Registrable Shares owned
by such Holder, except that the Company shall not for any purpose be
required to qualify generally to do business as a foreign corporation
in any jurisdiction where, but for the requirements of this clause
(iv), it would not be obligated to be so qualified;
(v) use its best efforts to cause such Registrable Shares
covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the Holders thereof to consummate the disposition
of such Registrable Shares;
(vi) if at any time when a prospectus relating to the
Registrable Shares is required to be delivered under the Securities
Act, any event shall have occurred as the result of which any such
prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
immediately give written notice thereof to each Holder and the
managing underwriter or underwriters, if any, of such Registrable
Shares and prepare and furnish to each such Holder a reasonable number
of copies of an amended or supplemental prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such Registrable
Shares, such prospectus shall not include an untrue statement of
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(vii) use its best efforts to list any portion of such
Registrable Shares not already listed on any securities exchange on
which similar securities of the Company are then listed, and enter
into customary agreements including a listing application and
indemnification agreement in customary form, provided that the
applicable listing requirements are satisfied, and provide a transfer
agent and registrar for such Registrable Shares covered by such
registration statement not later than the effective date of such
registration statement;
(viii) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other actions
as each Holder of Registrable Shares being sold or the underwriter or
underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Shares, including
customary indemnification and opinions.
(ix) use its best efforts to obtain a "cold comfort" letter
or letters from the Company's independent public
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<PAGE> 10
accountants in customary form and covering matters of the type
customarily covered by "cold comfort" letters as the Holders of the
Registrable Shares being sold or the underwriters retained by such
Holders shall reasonably request;
(x) make available for inspection by representatives of any
Holder of Registrable Shares covered by such registration statement,
by any underwriter participating in any disposition to be effected
pursuant to such registration statement and by any attorney,
accountant or other agent retained by such Holders or any such
underwriter, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries'
officers, directors and employees to supply all information and
respond to all inquiries reasonably requested by such Holders or any
such representative, underwriter, attorney, accountant or agent in
connection with such registration statement;
(xi) promptly prior to the filing of any document which is to
be incorporated by reference into the registration statement or the
prospectus (after initial filing of the registration statement),
provide copies of such document to counsel to the Holders of
Registrable Shares covered by such registration statement and to the
managing underwriter or underwriters, if any, make the Company's
representatives available for discussion of such document and make
such changes in such document prior to the filing thereof as counsel
for such Holders or underwriters may reasonably request;
(xii) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable after the
effective date of the registration statement, an earnings statement
which shall satisfy the provisions of Section 11(a) of the Securities
Act and the rules and regulations promulgated thereunder;
(xiii) not later than the effective date of the applicable
registration statement, use its best efforts to provide a CUSIP number
for any portion of such Registrable Shares not already included in a
CUSIP number for similar securities of the Company, and provide the
applicable transfer agents with printed certificates for the
Registrable Shares which are in a form eligible for deposit with the
Depository Trust Company;
(xiv) notify counsel for the Holders of Registrable Shares
included in such registration statement and the managing underwriter
or underwriters, if any, immediately and confirm the notice in
writing, (A) when the registration statement, or any post-effective
amendment to the
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<PAGE> 11
registration statement, shall have become effective, or any supplement
to the prospectus or any amendment prospectus shall have been filed,
(B) of the receipt of any comments from the SEC and (C) of any request
of the SEC to amend the registration statement or amend or supplement
the prospectus or for additional information; and
(xv) cooperate with each seller of Registrable Shares and
each underwriter, if any, participating in the disposition of such
Registrable Shares and their respective counsel in connection with any
filings required to be made with the NASD.
(b) Each Holder of Registrable Shares hereby agrees that,
upon receipt of any notice from the Company of the happening of any event of
the type described in Section 5(a)(vi) hereof, such Holder shall forthwith
discontinue disposition of such Registrable Shares covered by such registration
statement or related prospectus until such Holder's receipt of the copies of
the supplemental or amended prospectus contemplated by Section 5(a)(vi) hereof,
and, if so directed by the Company, such Holder will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in
such Holder's possession, of the prospectus covering such Registrable Shares at
the time of receipt of such notice. In the event the Company shall give any
such notice, the period mentioned in Section 5(a)(ii) hereof shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 5(a)(vi) hereof and including the
date when such Holder shall have received the copies of the supplemental or
amended prospectus contemplated by Section 5(a)(vi) hereof. If for any other
reason the effectiveness of any registration statement filed pursuant to
Section 4 hereof is suspended or interrupted prior to the expiration of the
time period regarding the maintenance of the effectiveness of such Registration
Statement required by Section 5(a)(ii) hereof so that Registrable Shares may
not be sold pursuant thereto, the applicable time period shall be extended by
the number of days equal to the number of days during the period beginning with
the date of such suspension or interruption to and ending with the date when
the sale of Registrable Shares pursuant to such registration statement may be
recommenced.
(c) Each Holder hereby agrees to provide the Company, upon
receipt of its request, with such information about such Holder to enable the
Company to comply with the requirements of the Securities Act and to execute
such certificates as the Company may reasonably request in connection with such
information and otherwise to satisfy any requirements of law.
6. UNDERWRITTEN REGISTRATIONS.
Subject to the provisions of Sections 2, 3 and 4 hereof, any
of the Registrable Shares covered by a registration
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statement may be sold in an underwritten offering at the discretion of the
Holder thereof. In the case of an underwritten offering pursuant to Section 2
hereof, the managing underwriter or underwriters that will administer the
offering shall be selected by the Company; PROVIDED, HOWEVER, that such
managing underwriter or underwriters shall be reasonably satisfactory to the
Holders of a majority of the Registrable Shares to be registered. In the case
of any underwritten offering pursuant to Section 4 hereof, the managing
underwriter or underwriters that will administer the offering shall be selected
by the Holders of a majority of the Registrable Shares to be registered;
provided, however, that such underwriters shall be reasonably satisfactory to
the Company.
7. EXPENSES.
(a) Subject to Section 7(b), the Company shall pay all fees,
costs and expenses of all registrations pursuant to Section 2 hereof, including
all SEC and stock exchange or NASD registration and filing fees and expenses,
reasonable fees and expenses of any "qualified independent underwriter" and its
counsel as may be required by the rules of the NASD, fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel for the underwriters, if any, in connection with blue
sky qualifications of the Registrable Shares), rating agency fees, printing
expenses (including expenses of printing certificates for Registrable Shares
and prospectuses), messenger, telephone and delivery expenses, the fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange or national market system on which
similar securities issued by the Company are then listed, fees and
disbursements of counsel for the Company and all independent certified public
accountants (including the expenses of any annual audit, special audit and
"cold comfort" letters required by or incident to such performance and
compliance), the fees and disbursement of the underwriters customarily paid by
issuers or sellers of securities (including expenses relating to "road shows"
and other marketing activities), the reasonable fees and expenses of special
experts required to be retained by the Company in connection with such
registration, and the reasonable fees and expenses of other Persons required to
be retained by the Company (collectively, "Registration Expenses"); PROVIDED,
HOWEVER, that Registration Expenses shall not include (i) any allocation of the
overhead of the Company, including any allocation of the compensation or
benefits of employees of the Company that assist in a registration, or (ii) any
other expense to the extent it would have been incurred by the Company in the
absence of any sale of securities in connection with a registration pursuant to
this Agreement (including the cost of the Company's annual audit).
(b) The Holders shall pay the following: (i) all fees,
costs and expenses of all registrations effected pursuant to Section 4 hereof,
including all Registration Expenses, (ii)
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any underwriting discounts or commissions or transfer taxes, if any,
attributable to the sale of Registrable Shares by the Holders pursuant to this
Agreement and (iii) all fees, costs and expenses of counsel to the Holders
pursuant to this Agreement in connection with any registration pursuant to this
Agreement.
8. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of any
registration of any securities of the Company under the Securities Act pursuant
to Sections 2 or 4 hereof, the Company will, and it hereby does, indemnify and
hold harmless, to the extent permitted by law, each of the Holders of any
Registrable Shares covered by such registration statement, each Affiliate of
such Holder and their respective directors and officers, each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls such Holder or any such underwriter
within the meaning of the Securities Act (collectively, the "Indemnified
Parties"), against any and all losses, claims, damages or liabilities, joint or
several, and expenses (including any amounts paid in any settlement effected
with the Company's consent, which consent shall not be unreasonably withheld)
to which any Indemnified Party may become subject under the Securities Act,
state securities or blue sky laws, common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof, whether or not such Indemnified Party is a party thereto) or expenses
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which such securities were registered under the Securities Act, any
preliminary, final or summary prospectus contained therein, or any amendment or
supplement thereof, (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (iii) any violation by the Company of any federal,
state or common law rule or regulation applicable to the Company and relating
to action required of or inaction by the Company in connection with any such
registration, and the Company will reimburse such Indemnified Party for any
legal or any other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; PROVIDED, HOWEVER, that the Company shall not be liable to any
Indemnified Party in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement or
amendment or supplement thereof or in any such preliminary, final or summary
prospectus in reliance upon and in conformity with written information with
respect to such Holder furnished to the Company by such Holder specifically for
use in the preparation thereof. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf
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of such Holder or any Indemnified Party and shall survive the transfer of such
securities by such Holder.
(b) INDEMNIFICATION BY THE HOLDERS AND UNDERWRITERS. The
Company may require, as a condition to including any Registrable Shares in any
registration statement filed in accordance with Sections 2 or 4 hereof, that
the Company shall have received an undertaking reasonably satisfactory to it
from the Holders of such Registrable Shares or any underwriter to indemnify and
hold harmless (in the same manner and to the same extent as set forth in
Section 8(a) hereof) the Company with respect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary, final or summary prospectus contained therein, or any
amendment or supplement, if such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with written
information with respect to the Holders of the Registrable Shares being
registered or such underwriter furnished to the Company by such Holders or such
underwriter specifically for use in the preparation of such registration
statement, preliminary, final or summary prospectus or amendment or supplement,
or a document incorporated by reference into any of the foregoing; provided,
however, that no such Holder shall be liable for any indemnity claims in excess
of the amount of the net proceeds received by such Holder from the sale of
Registrable Shares. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or any of
the Holders, or any of their respective Affiliates, directors, officers or
controlling Persons, and shall survive the transfer of such securities by such
Holder.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 8, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; PROVIDED, HOWEVER, that the failure
of the indemnified party to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Section 8, except to the
extent that the indemnifying party is actually materially prejudiced by such
failure to give notice. In case any such action is brought against an
indemnified party, the indemnifying party will be entitled to participate in
and to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation; PROVIDED,
HOWEVER, that the indemnified party shall have the right, at the sole cost and
expense of the
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indemnifying party, to employ counsel to represent the indemnified party and
its respective controlling persons, directors, officers, employees or agents
who may be subject to liability arising out of any claim in respect of which
indemnity may be sought by the indemnified party against such indemnifying
party under this Section 8 if (i) the employment of such counsel shall have
been authorized in writing by such indemnifying party in connection with the
defense of such action, (ii) the indemnifying party shall not have promptly
employed counsel reasonably satisfactory to the indemnified party to assume the
defense of such action or counsel, or (iii) any indemnified party shall have
reasonably concluded that there may be defenses available to such indemnified
party or its respective controlling persons, directors, officers, employees or
agents which are in conflict with or in addition to those available to an
indemnifying party; PROVIDED, FURTHER, that the indemnifying party shall not be
obligated to pay for more than the expenses of one firm of separate counsel for
the indemnified party (in addition to the reasonable fees and expenses of one
firm serving as local counsel). No indemnifying party will consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to any indemnified party under Section 8(a)
or 8(b) hereof or is insufficient to hold it harmless in respect of any loss,
claim, damage or liability, or any action in respect of any loss, claim, damage
or liability, or any action in respect thereof referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the indemnified party and
indemnifying party or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) but also the
relative fault of the indemnified party and indemnifying party with respect to
the statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations. Notwithstanding any other provision of this Section
8(d), no Holder of Registrable Shares shall be required to contribute an amount
greater than the dollar amount of the proceeds received by such Holder with
respect to the sale of any such Registrable Shares. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) OTHER INDEMNIFICATION. Indemnification similar to
that specified in the preceding subdivisions of this Section 8
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(with appropriate modifications) shall be given by the Company and each Holder
of Registrable Shares with respect of any required registration or other
qualification of securities under any federal or state law or regulation other
than the Securities Act.
(f) NON-EXCLUSIVITY. The obligations of the parties
under this Section 8 shall be in addition to any liability which
any party may otherwise have to any other party.
9. RULE 144. The Company covenants that it will file in a
timely manner the reports required to be filed by it under the Securities Act
and the Exchange Act and the rules and regulations promulgated thereunder (or,
if the Company is not required to file such reports, it will, upon the request
of any Holder of Registrable Shares, make publicly available such information),
and it will take such further action as any Holder of Registrable Shares may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Shares without registration under the Securities Act
within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
any Holder of Registrable Shares, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
10. ASSIGNABILITY. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Except as provided herein, no party may
assign any of its rights or delegate any of its duties under this Agreement
without the express consent of the other parties hereto. In addition, and
whether or not any express assignment shall have been made, the provisions of
this Agreement which are for the benefit of the parties hereto other than the
Company shall also be for the benefit of and enforceable by any subsequent
Holder of any Registrable Shares, subject to the provisions contained herein.
Any Holder may assign any of its rights or delegate any of its duties under
this Agreement; in whole or in part, without any prior consent of the Company,
only to a Person (a "Designated Transferee") (a) who is an Affiliate of
National City or (b) who is a transferee of Registrable Shares (whether through
purchase, share exchange, bequest or otherwise) and who agrees to be bound by
the terms of this Agreement. Any purported assignment in violation of this
Section 11 shall be void.
11. NOTICES. Any and all notices, designations, consents,
offers, acceptances or any other communications shall be given in writing by
either (a) personal delivery to and receipted for by the addressee or by (b)
telecopy or registered or certified mail which shall be addressed, in the case
of the Company, to: Richard A. Alston, 1231 Durrett Lane, Louisville, Kentucky
40285-0001, fax no. (502) 364-2284; in the case of
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Holders, to the address or addresses thereof appearing on the books of the
Company or of the transfer agent and registrar for its Common Stock.
All such notices and communications shall be deemed to have
been duly given and effective: when delivered by hand, if personally delivered;
two business days after being deposited in the mail, postage prepaid, if
mailed; and when receipt acknowledged, if telecopied.
12. NO INCONSISTENT AGREEMENTS. The Company will not
hereafter enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the Holders in this Agreement.
13. SPECIFIC PERFORMANCE. The Company acknowledges that the
rights granted to the Holders in this Agreement are of a special, unique and
extraordinary character, and that any breach of this Agreement by the Company
could not be compensated for by damages. Accordingly, if the Company breaches
its obligations under this Agreement, the Holders shall be entitled, in
addition to any other remedies that they may have, to enforcement of this
Agreement by a decree of specific performance requiring the Company to fulfill
its obligations under this Agreement. The Company consents to personal
jurisdiction in any such action brought in the United States District Court for
the Northern District of Ohio or any such other court and to service of process
upon it in the manner set forth in Section 11 hereof.
14. SEVERABILITY. If any provision of this Agreement or any
portion thereof is finally determined to be unlawful or unenforceable, such
provision or portion thereof shall be deemed any portion of such invalidated
provision that is not invalidated by such a determination, shall remain in full
force and effect.
15. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which,
together, shall constitute one and the same instrument.
16. DEFAULTS. A default by any party to this Agreement in
such party's compliance with any of the conditions or covenants hereof or
performance of any of the obligations of such party hereunder shall not
constitute a default by any other party.
17. AMENDMENTS, WAIVERS. This Agreement may not be amended,
modified or supplemented and no waivers of or consents to departures from the
provisions hereof may be given unless consented to in writing by the Company
and the holders of a majority of the Registrable Shares; provided, however,
that no such amendment, supplement, modification or waiver shall deprive any
Holder of any rights under Sections 2 or 4 hereof without the consent of such
Holder.
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18. CONSTRUCTION. The captions contained in this Agreement
are for reference purposes only and shall not constitute a part of this
Agreement. Unless the context requires otherwise, the use of the masculine
shall include the feminine, and the use of the singular shall include the
plural. The word "including" shall mean "including, without limitation,".
19. ATTORNEYS' FEES. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to
recover reasonable attorneys' fees in addition to any other available remedy.
20. ENTIRE AGREEMENT. This Agreement contains the entire
agreement among the parties hereto with respect to the transactions
contemplated herein and understandings among the parties relating to the
subject matter hereof. Any and all previous agreements and understandings
between or among the parties hereto regarding the subject matter hereof are,
whether written or oral, superseded by this Agreement.
21. GOVERNING LAW. This Agreement is made pursuant to and
shall be construed in accordance with the laws of the State of New York,
without regard to that state's conflicts of laws principles. The parties hereto
submit to the non-exclusive jurisdiction of the courts of the State of Ohio in
any action or proceeding arising out of or relating to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective authorized officers as of the date
first written above.
NATIONAL CITY CORPORATION
By /s/ Thomas A. Richlovsky
-----------------------------
Name: Thomas A. Richlovsky
Title: Senior Vice President &
Treasurer
NATIONAL PROCESSING, INC.
By /s/ Richard A. Alston
-----------------------------
Name: Richard A. Alston
Title: Executive Vice President
