SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 28, 1997
(January 19, 1997)
FIRST USA, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-11-3030 75-2291060
(State or Other (Commission (IRS Employer
Jurisdiction File Number) Identifica-
of Incorporation) tion No.)
1601 ELM STREET, 47TH FLOOR, DALLAS, TEXAS 75201
(Address of Principal Executive Offices) (Zip Code)
214-849-2000
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS
On January 19, 1997, First USA, Inc., a Delaware
corporation ("First USA"), and Banc One Corporation, an
Ohio corporation ("Banc One"), entered into an Agreement
and Plan of Merger (the "Merger Agreement") providing,
among other things, for the merger (the "Merger") of
First USA with and into Banc One, with Banc One as the
surviving corporation following the Merger. The
transaction will be accounted for as a pooling of
interests and will qualify as a tax free reorganization
under Section 368(a) of the Internal Revenue Code of
1986, as amended. The Merger, which was unanimously
approved by the Boards of Directors of both Banc One and
First USA, is expected to occur in the second quarter of
calendar 1997 shortly after all the conditions to the
consummation of the Merger, including obtaining
applicable stockholder and regulatory approvals, are met
or waived.
Pursuant to the Merger Agreement, (A) each share of
the common stock, par value $.01 per share (the "First
USA Common Stock"), of First USA issued and outstanding
immediately prior to the Merger (other than shares of
First USA Common Stock held in First USA's treasury or
held directly or indirectly by Banc One or First USA or
any of their respective wholly owned subsidiaries, but
including shares of First USA Common Stock (i) held
directly or indirectly by First USA or Banc One or any of
their respective wholly owned subsidiaries in trust
accounts, managed accounts and the like or otherwise held
in a fiduciary capacity that are beneficially owned by
third parties and (ii) held by First USA or Banc One or
any of their respective subsidiaries in respect of a debt
previously contracted) will be converted into the right
to receive 1.1659 shares (the "Common Exchange Ratio") of
the common stock, without par value, of Banc One (the
"Banc One Common Stock") and (B) each share of the 6-1/4%
Convertible Preferred Stock of First USA issued and
outstanding immediately prior to the Merger will be
converted into the right to receive one share of 6-1/4%
Convertible Preferred Stock of Banc One, which will have
terms substantially the same as the terms of the First
USA 6-1/4% Convertible Preferred Stock, except that it
will be convertible into Banc One Common Stock instead of
First USA Common Stock as adjusted to reflect the Common
Exchange Ratio. Pursuant to the Merger Agreement, First
USA has agreed to call the First USA 6-1/4% Convertible
Preferred Stock for redemption on May 20, 1997, the
earliest date permitted under the terms of such
securities.
Concurrently with the execution and delivery of the
Merger Agreement, First USA and Banc One entered into
reciprocal stock option agreements, each dated as of
January 19, 1997 (together, the "Stock Option
Agreements"). Pursuant to the Stock Option Agreements,
First USA granted Banc One an option to purchase up to
24,480,231 shares of First USA Common Stock at a price of
$46.50 per share and Banc One granted First USA an option
to purchase up to 85,025,391 shares of Banc One Common
Stock at a price of up to $45.125 per share. Each option
is exercisable only upon the occurrence of certain events
described therein, none of which has occurred. The
number of shares subject to each of the Stock Option
Agreements is subject to customary antidilution
adjustments.
The Merger Agreement contains certain covenants of
the parties pending consummation of the Mergers.
Generally, First USA and Banc One and their subsidiaries
must carry on their businesses in the ordinary course
consistent with past practice. First USA and its
subsidiaries (other than First USA Paymentech, Inc.) may
not, among other things, without the prior written
consent of Banc One (i) adjust, split, combine or
reclassify any capital stock, (ii) pay any dividends
except for regular quarterly dividends on the First USA
Common Stock and on the First USA 6-1/4% Convertible
Preferred Stock and except for dividends paid in the
ordinary course of business by its subsidiaries, (iii)
grant any stock appreciation rights or rights to acquire
shares of its capital stock, (iv) issue any additional
shares of capital stock, except pursuant to outstanding
stock options, and, subject to certain specified
limitations, other employee benefit plans, upon
conversion or redemption of the First USA 6-1/4%
Convertible Preferred Stock, subject to certain specified
limitations, pursuant to First USA's Dividend
Reinvestment and Stock Purchase Plan and Outside
Directors Stock Option Plan, pursuant to the Stock Option
Agreement or with Banc One's consent (which may not be
unreasonably withheld) in connection with the hiring of
new employees in the ordinary course of business
consistent with past practice, or (v) enter into any
agreement, understanding or arrangement with respect to
the sale or voting of its capital stock. Under the
Merger Agreement, First USA and its subsidiaries (other
than First USA Paymentech, Inc.) are also subject to
certain restrictions and limitations on, among other
things, charter amendments, the sale or encumbrance of
assets (except for sales of receivables in connection
with securitization transactions), the incurrence of
indebtedness except for indebtedness incurred in the
ordinary course of business, such as the issuance of
asset backed securities, bank notes or deposit notes,
acquisitions and investments, entering into material
agreements and certain increases in employee compensation
and benefits. In addition, pursuant to the Merger
Agreement, First USA has agreed not to solicit, encourage
or authorize any other person to solicit any third party
acquisition proposals.
Banc One and its subsidiaries may not, among other
things, without the prior written consent of First USA
(i) adjust, split, combine or reclassify any capital
stock, (ii) pay any dividends except for regular
quarterly dividends on the Banc One Common Stock and on
the Series C Preferred Stock of Banc One and except for
dividends paid in the ordinary course of business by its
subsidiaries or (iii) make any extraordinary distribution
on any shares of its capital stock.
Banc One and First USA intend that, following the
Merger, John C. Tolleson, the Chairman of the Board and
Chief Executive Officer of First USA, will be appointed
to the Board of Directors of Banc One. Following the
Merger, Richard W. Vague, the President of First USA,
will become Chairman and Chief Executive Officer of First
USA, which will operate the combined company's credit
card operations. Mr. Vague and certain other officers of
First USA and its subsidiaries will be offered employment
agreements by Banc One which will become effective upon
consummation of the Merger.
Consummation of the Merger is subject to certain
standard conditions, including, but not limited to,
approval of the Merger Agreement by the stockholders of
First USA and Banc One, the receipt of all required
regulatory approvals and the making of all necessary
governmental filings. It is also a condition to Banc
One's obligations under the Merger Agreement that Mr.
Vague and certain other officers of First USA and its
subsidiaries enter into the employment agreements offered
to them by Banc One. Stockholder meetings to vote on the
Merger will be convened as soon as practicable and are
expected to be held early in the second quarter of
calendar 1997. Stockholder approval requires the
affirmative vote of a majority of the outstanding shares
of First USA Common Stock, each of which has one vote,
and First USA 6-1/4% Convertible Preferred Stock, each of
which has four-fifths of one vote, voting together as a
class, and a majority of the outstanding shares of Banc
One Common Stock.
The Merger Agreement may be terminated under certain
circumstances, including by mutual consent of First USA
and Banc One; by either company if the requisite
stockholder approvals have not been obtained; by either
company as a result of a legal or regulatory prohibition;
by the non-breaching company if there occurs a material
breach of any representation, warranty, covenant or other
agreement contained in the Merger Agreement which is not
cured within 45 days following receipt of notice thereof;
by either company, if the Merger shall not have been
consummated on or before December 31, 1997, unless the
failure of the Merger to have been consummated is due to
the failure of the company seeking to terminate the
Merger Agreement to perform its covenants under the
Merger Agreement; and by First USA, if its Board of
Directors so determines during the two-day period
commencing at the close of business ten days prior to the
date scheduled for the consummation of the Merger, if the
average closing price of the Banc One Common Stock for
the previous ten trading days is less than $38.60 (the
equivalent of $45.00 in value of Banc One Common Stock
issuable for each share of First USA Common Stock in the
Merger, based on the Common Exchange Ratio of 1.1659).
If First USA elects to terminate in such event, Banc One
has the option to increase the Common Exchange Ratio such
that the value of the Banc One Common Stock issuable for
each share of First USA Common Stock, based on such ten
day trading period, equals $45.00.
The Merger Agreement and the Stock Option Agreements
are attached as exhibits hereto and are incorporated by
reference in their entirety. The foregoing summaries of
the Merger Agreement and the Stock Option Agreements do
not purport to be complete and are qualified in their
entirety by reference to such exhibits.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(c) Exhibits
Exhibit 2.1 Agreement and Plan of Merger dated as of
January 19, 1997 by and between Banc One
Corporation and First USA, Inc.
Exhibit 99.1 Stock Option Agreement, dated January 19,
1997, between First USA, Inc., as issuer,
and Banc One Corporation, as grantee.
Exhibit 99.2 Stock Option Agreement, dated January 19,
1997, between Banc One Corporation, as
issuer, and First USA, Inc., as grantee.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: January 28, 1997
FIRST USA, INC.
(Registrant)
By: /s/ Philip E. Taken
Name: Philip E. Taken
Title: Senior Vice President and
General Counsel
EXHIBIT INDEX
Exhibit
Exhibit 2.1 Agreement and Plan of Merger dated as of
January 19, 1997 by and between Banc One
Corporation and First USA, Inc.
Exhibit 99.1 Stock Option Agreement, dated January 19,
1997, between First USA, Inc., as issuer,
and Banc One Corporation, as grantee.
Exhibit 99.2 Stock Option Agreement, dated January 19,
1997, between Banc One Corporation, as
issuer, and First USA, Inc., as grantee.
AGREEMENT AND PLAN OF MERGER
between
BANC ONE CORPORATION
and
FIRST USA, INC.
DATED AS OF JANUARY 19, 1997
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
ARTICLE I
THE MERGER
1.1 The Merger . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Time . . . . . . . . . . . . . . . . . . 2
1.3 Effects of the Merger . . . . . . . . . . . . . . . 2
1.4 Conversion of FUSA Common Stock; FUSA
Convertible Preferred Stock . . . . . . . . . . . 2
1.5 Banc One Common Stock . . . . . . . . . . . . . . . 4
1.6 Options . . . . . . . . . . . . . . . . . . . . . . 4
1.7 Articles of Incorporation . . . . . . . . . . . . . 5
1.8 By-Laws . . . . . . . . . . . . . . . . . . . . . . 5
1.9 Tax Consequences . . . . . . . . . . . . . . . . . 5
1.10 Reservation of Right to Revise Transaction . . . . 5
ARTICLE II
EXCHANGE OF SHARES
2.1 Banc One to Make Shares Available . . . . . . . . . 6
2.2 Exchange of Shares. . . . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FUSA
3.1 Corporate Organization . . . . . . . . . . . . . . 9
3.2 Capitalization . . . . . . . . . . . . . . . . . . 11
3.3 Authority; No Violation . . . . . . . . . . . . . . 12
3.4 Consents and Approvals . . . . . . . . . . . . . . 13
3.5 Reports . . . . . . . . . . . . . . . . . . . . . . 14
3.6 Financial Statements . . . . . . . . . . . . . . . 14
3.7 Broker's Fees . . . . . . . . . . . . . . . . . . . 15
3.8 Absence of Certain Changes or Events . . . . . . . 16
3.9 Legal Proceedings . . . . . . . . . . . . . . . . . 16
3.10 Taxes and Tax Returns . . . . . . . . . . . . . . . 17
3.11 Employees . . . . . . . . . . . . . . . . . . . . . 18
3.12 SEC Reports . . . . . . . . . . . . . . . . . . . . 20
3.13 Licenses; Compliance with Applicable Law . . . . . 20
3.14 Certain Contracts . . . . . . . . . . . . . . . . . 21
3.15 Agreements with Regulatory Agencies . . . . . . . . 22
3.16 Other Activities of FUSA and its
Subsidiaries . . . . . . . . . . . . . . . . . . 23
3.17 Investment Securities . . . . . . . . . . . . . . . 23
3.18 Interest Rate Risk Management Instruments . . . . . 23
3.19 Undisclosed Liabilities . . . . . . . . . . . . . . 23
3.20 Environmental Liability . . . . . . . . . . . . . . 24
3.21 State Takeover Laws . . . . . . . . . . . . . . . . 24
3.22 Insurance . . . . . . . . . . . . . . . . . . . . . 24
3.23 Pooling of Interests . . . . . . . . . . . . . . . 24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF Banc One
4.1 Corporate Organization . . . . . . . . . . . . . . 25
4.2 Capitalization . . . . . . . . . . . . . . . . . . 25
4.3 Authority; No Violation . . . . . . . . . . . . . . 26
4.4 Consents and Approvals . . . . . . . . . . . . . . 27
4.5 Reports . . . . . . . . . . . . . . . . . . . . . . 28
4.6 Financial Statements . . . . . . . . . . . . . . . 28
4.7 Broker's Fees . . . . . . . . . . . . . . . . . . . 29
4.8 Absence of Certain Changes or Events . . . . . . . 30
4.9 Legal Proceedings . . . . . . . . . . . . . . . . . 30
4.10 Taxes and Tax Returns . . . . . . . . . . . . . . . 30
4.11 SEC Reports . . . . . . . . . . . . . . . . . . . . 32
4.12 Licenses; Compliance with Applicable Law . . . . . 32
4.13 Agreements with Regulatory Agencies . . . . . . . . 32
4.14 Undisclosed Liabilities . . . . . . . . . . . . . . 33
4.15 Environmental Liability . . . . . . . . . . . . . . 33
4.16 Insurance . . . . . . . . . . . . . . . . . . . . . 33
4.17 Pooling of Interests . . . . . . . . . . . . . . . 33
4.18 Employees . . . . . . . . . . . . . . . . . . . . . 34
4.19 Certain Contracts . . . . . . . . . . . . . . . . . 35
ARTICLE V
COVENANTS RELATING TO CONDUCT
OF BUSINESS
5.1 Conduct of Businesses Prior to the
Effective Time . . . . . . . . . . . . . . . . . 35
5.2 Forbearances of FUSA . . . . . . . . . . . . . . . 35
5.3 Forbearances of Banc One . . . . . . . . . . . . . 39
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters . . . . . . . . . . . . . . . . 40
6.2 Access to Information . . . . . . . . . . . . . . . 41
6.3 Stockholders' Approvals . . . . . . . . . . . . . . 42
6.4 Legal Conditions to Merger . . . . . . . . . . . . 42
6.5 Affiliates; Publication of Combined
Financial Results . . . . . . . . . . . . . . . . 43
6.6 Stock Exchange Listing . . . . . . . . . . . . . . 43
6.7 Employee Benefit Plans . . . . . . . . . . . . . . 43
6.8 Indemnification; Directors' and Officers'
Insurance . . . . . . . . . . . . . . . . . . . . 45
6.9 Additional Agreements . . . . . . . . . . . . . . . 46
6.10 Advice of Changes . . . . . . . . . . . . . . . . . 46
6.11 Dividends . . . . . . . . . . . . . . . . . . . . . 46
6.12 Employment Matters . . . . . . . . . . . . . . . . 46
6.13 Redemption of FUSA 6-1/4% of Convertible
Preferred Stock . . . . . . . . . . . . . . . . . 47
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To
Effect the Merger . . . . . . . . . . . . . . . . 47
7.2 Conditions to Obligations of Banc One . . . . . . . 49
7.3 Conditions to Obligations of FUSA . . . . . . . . . 49
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination . . . . . . . . . . . . . . . . . . . . 50
8.2 Effect of Termination . . . . . . . . . . . . . . . 52
8.3 Amendment . . . . . . . . . . . . . . . . . . . . . 52
8.4 Extension; Waiver . . . . . . . . . . . . . . . . . 52
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing . . . . . . . . . . . . . . . . . . . . . . 53
9.2 Nonsurvival of Representations, Warranties
and Agreements . . . . . . . . . . . . . . . . . 53
9.3 Expenses . . . . . . . . . . . . . . . . . . . . . 53
9.4 Notices . . . . . . . . . . . . . . . . . . . . . . 54
9.5 Interpretation . . . . . . . . . . . . . . . . . . 54
9.6 Counterparts . . . . . . . . . . . . . . . . . . . 55
9.7 Entire Agreement . . . . . . . . . . . . . . . . . 55
9.8 Governing Law . . . . . . . . . . . . . . . . . . . 55
9.9 Severability . . . . . . . . . . . . . . . . . . . 55
9.10 Publicity . . . . . . . . . . . . . . . . . . . . . 55
9.11 Assignment; Third Party Beneficiaries . . . . . . . 55
Exhibit 6.5(a)(1) - Form of Affiliate Letter Addressed
to FUSA*
Exhibit 6.5(a)(2) - Form of Affiliate Letter Addressed
to Banc One*
* The exhibits and schedules to the Merger Agreement have not been filed
herewith. First USA, Inc. agrees to furnish supplementally a copy of
such exhibits and schedules to the Commission upon request.
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 19, 1997, by
and between BANC ONE CORPORATION, an Ohio corporation ("Banc One") and
FIRST USA, INC., a Delaware corporation ("FUSA").
WHEREAS, Banc One is a registered bank holding company under the
Bank Holding Company Act of 1956, as amended (the "BHCA");
WHEREAS, FUSA is a registered unitary savings and loan holding
company under the Home Owners' Loan Act, as amended ("HOLA");
WHEREAS, the Boards of Directors of Banc One and FUSA have
determined that it is in the best interests of their respective
companies and stockholders to consummate the business combination
transaction provided for herein in which FUSA will, subject to the
terms and conditions set forth herein, merge with and into Banc One
(the "Merger"), so that Banc One is the surviving corporation
(hereinafter sometimes called the "Surviving Corporation") in the
Merger;
WHEREAS, as a condition to, and immediately after the execution
of this Agreement, Banc One and FUSA will enter into a stock option
agreement (the "FUSA Option Agreement") attached hereto as Exhibit A
and a stock option agreement (the "Banc One Option Agreement")
attached hereto as Exhibit B; and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to
prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and
intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the Ohio General Corporation Law (the
"OGCL") and the Delaware General Corporation Law (the "DGCL"), at the
Effective Time (as defined in Section 1.2), FUSA shall merge with and
into Banc One. Banc One shall be the Surviving Corporation in the
Merger, and shall continue its corporate existence under the laws of
the State of Ohio. Upon consummation of the Merger, the separate
corporate existence of FUSA shall terminate.
1.2 Effective Time. The Merger shall become effective as set
forth in the certificate of merger (the "Ohio Certificate of Merger")
which shall be filed with the Secretary of State of the State of Ohio
(the "Ohio Secretary") and the certificate of merger (the "Delaware
Certificate of Merger") which shall be filed with the Secretary of
State of the State of Delaware (the "Delaware Secretary"), in each
case, on the Closing Date (as defined in Section 9.1). The term
"Effective Time" shall be the date and time when the Merger becomes
effective, as set forth in the Ohio Certificate of Merger and the
Delaware Certificate of Merger.
1.3 Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in Section 1701.82 of the OGCL
and Section 261 of the DGCL.
1.4 Conversion of FUSA Common Stock; FUSA Convertible Preferred
Stock. At the Effective Time, in each case, subject to Section 2.2(e),
by virtue of the Merger and without any action on the part of Banc
One, FUSA or the holder of any of the following securities:
(a) Each share of the common stock, par value $.01 per share, of
FUSA (the "FUSA Common Stock"; and together with the FUSA 6-1/4%
Convertible Preferred Stock, as defined below, the "FUSA Capital
Stock") issued and outstanding immediately prior to the Effective Time
(other than shares of FUSA Capital Stock held (i) in FUSA's treasury
or (ii) directly or indirectly by Banc One or FUSA or any of their
respective wholly owned Subsidiaries (as defined in Section 3.1)
(except for Trust Account Shares and DPC Shares, as such terms are
defined in Section 1.4(e) and as set forth in the FUSA Disclosure
Schedule as defined in Section 3.1(b))) shall be converted into the
right to receive 1.1659 shares (the "Common Exchange Ratio") of the
common stock, without par value, of Banc One (the "Banc One Common
Stock"; the Banc One Common Stock, the Banc One Preferred Stock (as
defined in Section 4.2) and the New Preferred Stock (as defined
Section 1.4(b)) being referred to herein as the "Banc One Capital
Stock").
(b) Each share of FUSA 6-1/4% Convertible Preferred Stock (as
defined in Section 3.2) issued and outstanding immediately prior to
the Effective Time shall be converted into the right to receive one
share of 6-1/4% convertible preferred stock of the Surviving
Corporation (the "New Preferred Stock"). The terms of the New
Preferred Stock shall be substantially the same as the terms of the
FUSA 6-1/4% Convertible Preferred Stock, except that it shall be
convertible into Banc One Common Stock instead of FUSA Common Stock as
adjusted to reflect the Common Exchange Ratio.
(c) All of the shares of FUSA Common Stock converted into Banc
One Common Stock pursuant to this Article I shall no longer be
outstanding and shall automatically be cancelled and shall cease to
exist as of the Effective Time, and each certificate (each a "Common
Certificate") previously representing any such shares of FUSA Common
Stock shall thereafter represent the right to receive (i) a
certificate representing the number of whole shares of Banc One Common
Stock and (ii) cash in lieu of fractional shares into which the shares
of FUSA Common Stock represented by such Common Certificate have been
converted pursuant to this Section 1.4 and Section 2.2(e). Common
Certificates previously representing shares of FUSA Common Stock shall
be exchanged for certificates representing whole shares of Banc One
Common Stock and cash in lieu of fractional shares issued in
consideration therefor upon the surrender of such Common Certificates
in accordance with Section 2.2, without any interest thereon. If,
prior to the Effective Time, the outstanding shares of Banc One Common
Stock or FUSA Common Stock shall have been increased, decreased,
changed into or exchanged for a different number or kind of shares or
securities as a result of a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or
other similar change in capitalization, then an appropriate and
proportionate adjustment shall be made to the Common Exchange Ratio.
(d) All of the shares of FUSA 6-1/4% Convertible Preferred Stock
converted into New Preferred Stock pursuant to this Article I shall no
longer be outstanding and shall automatically be cancelled and shall
cease to exist as of the Effective Time, and each certificate (each a
"Preferred Certificate"; and together with a Common Certificate, a
"Certificate") previously representing any such shares of FUSA 6-1/4%
Convertible Preferred Stock shall thereafter represent the right to
receive a certificate representing the number of shares of
corresponding New Preferred Stock into which the shares of FUSA 6-1/4%
Convertible Preferred Stock represented by such Preferred Certificate
have been converted pursuant to this Section 1.4. Preferred
Certificates previously representing shares of FUSA 6-1/4% Convertible
Preferred Stock shall be exchanged for certificates representing
shares of corresponding New Preferred Stock issued in consideration
therefor upon the surrender of such Preferred Certificates in
accordance with Section 2.2 hereof.
(e) At the Effective Time, all shares of FUSA Capital Stock that
are owned by FUSA as treasury stock and all shares of FUSA Capital
Stock that are owned, directly or indirectly, by Banc One or FUSA or
any of their respective wholly owned Subsidiaries (other than shares
of FUSA Capital Stock held, directly or indirectly, in trust accounts,
managed accounts and the like or otherwise held in a fiduciary
capacity that are beneficially owned by third parties (any such
shares, and shares of Banc One Capital Stock which are similarly held,
whether held directly or indirectly by Banc One or FUSA, as the case
may be, being referred to herein as "Trust Account Shares") and other
than any shares of FUSA Capital Stock held by Banc One or FUSA or any
of their respective Subsidiaries in respect of a debt previously
contracted (any such shares of FUSA Capital Stock, and shares of Banc
One Capital Stock which are similarly held, whether held directly or
indirectly by Banc One or FUSA or any of their respective
Subsidiaries, being referred to herein as "DPC Shares") and in each
case, with respect to FUSA or any of its Subsidiaries, as set forth in
the FUSA Disclosure Schedule) shall be cancelled and shall cease to
exist and no stock of Banc One or other consideration shall be
delivered in exchange therefor. All shares of Banc One Common Stock
that are owned by FUSA or any of its wholly owned Subsidiaries (other
than Trust Account Shares and DPC Shares) shall become treasury stock
of Banc One.
1.5 Banc One Common Stock; Banc One Preferred Stock. At and after
the Effective Time, each share of Banc One Common Stock and each share
of Banc One Preferred Stock issued and outstanding immediately prior
to the Closing Date shall remain an issued and outstanding share of
common stock or preferred stock, as the case may be, of the Surviving
Corporation and shall not be affected by the Merger.
1.6 Options. (a) At the Effective Time, each option granted by
FUSA to purchase shares of FUSA Common Stock which is outstanding and
unexercised immediately prior thereto shall cease to represent a right
to acquire shares of FUSA Common Stock and shall be converted
automatically into an option to purchase shares of Banc One Common
Stock in an amount and at an exercise price determined as provided
below (and otherwise subject to the terms of the FUSA benefit plans,
including provisions regarding accelerated vesting, as identified in
the FUSA Disclosure Schedule under which they were issued
(collectively, the "FUSA Stock Plans") and the agreements evidencing
grants thereunder)):
(i) The number of shares of Banc One Common Stock to be
subject to the new option shall be equal to the product of the
number of shares of FUSA Common Stock subject to the original
option and the Common Exchange Ratio, provided that any
fractional shares of Banc One Common Stock resulting from such
multiplication shall be rounded to the nearest whole share; and
(ii) The exercise price per share of Banc One Common Stock
under the new option shall be equal to the exercise price per
share of FUSA Common Stock under the original option divided by
the Common Exchange Ratio, provided that such exercise price
shall be rounded down to the nearest whole cent.
(b) The adjustment provided herein with respect to any options
which are "incentive stock options" (as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code")) shall be and
is intended to be effected in a manner which is consistent with
Section 424(a) of the Code. The duration and other terms of the new
option shall be the same as the original option except that all
references to FUSA shall be deemed to be references to Banc One.
1.7 Articles of Incorporation. Subject to the terms and
conditions of this Agreement, at the Effective Time, the Articles of
Incorporation of Banc One shall be the Articles of Incorporation of
the Surviving Corporation until thereafter amended in accordance with
applicable law.
1.8 By-Laws. Subject to the terms and conditions of this
Agreement, at the Effective Time, the By-Laws of Banc One shall be the
By-Laws of the Surviving Corporation until thereafter amended in
accordance with applicable law.
1.9 Tax Consequences. It is intended that the Merger shall
constitute a reorganization within the meaning of Section 368(a) of
the Code, and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 of the Code.
1.10 Reservation of Right to Revise Transaction. Banc One may,
with FUSA's consent (which will not be unreasonably withheld), at any
time change the method of effecting the acquisition of FUSA by Banc
One, and, upon providing such consent, FUSA shall cooperate in such
efforts, if and to the extent they deem such change to be desirable,
including to provide for a merger of FUSA with and into a wholly owned
subsidiary of Banc One, or to provide for mergers among certain of the
Subsidiaries of Banc One and FUSA to occur substantially
simultaneously with the Effective Time, provided, however, that no
such change shall (a) alter or change the amount or kind of
consideration to be issued to holders of FUSA Common Stock or FUSA
6-1/4% Convertible Preferred Stock as provided for in this Agreement
(the "Merger Consideration"), (b) adversely affect the proposed
accounting treatment for the Merger or the tax treatment to FUSA's
stockholders as a result of receiving the Merger Consideration, (c)
materially delay receipt of any approval referred to in Section 7.1(c)
or the consummation of the transactions contemplated by this Agreement
or (d) adversely affect First USA Paymentech, Inc.
ARTICLE II
EXCHANGE OF SHARES
2.1 Banc One to Make Shares Available. At or prior to the
Effective Time, Banc One shall deposit, or shall cause to be
deposited, with a bank or trust company selected by Banc One and
reasonably acceptable to FUSA which may be a subsidiary of Banc One
(the "Exchange Agent"), for the benefit of the holders of
Certificates, for exchange in accordance with this Article II,
certificates representing the shares of Banc One Common Stock and New
Preferred Stock and cash in lieu of any fractional shares (such cash
and certificates for shares of Banc One Common Stock and New Preferred
Stock, together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange Fund") to be
issued pursuant to Section 1.4 and paid pursuant to Section 2.2(a) in
exchange for outstanding shares of FUSA Capital Stock.
2.2 Exchange of Shares. (a) As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record
of one or more Certificates a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to
the Certificates shall pass, only upon delivery of the Certificates to
the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for certificates
representing the shares of Banc One Common Stock, New Preferred Stock
and any cash in lieu of fractional shares into which the shares of
FUSA Common Stock or FUSA 6-1/4% Convertible Preferred Stock
represented by such Certificate or Certificates shall have been
converted pursuant to this Agreement. Upon proper surrender of a
Certificate for exchange and cancellation to the Exchange Agent,
together with such properly completed letter of transmittal, duly
executed, the holder of such Certificate shall be entitled to receive
in exchange therefor, as applicable, (i) a certificate representing
that number of whole shares of Banc One Common Stock or that number of
shares of New Preferred Stock to which such holder of FUSA Common
Stock or FUSA 6-1/4% Convertible Preferred Stock shall have become
entitled pursuant to the provisions of Article I and (ii) a check
representing the amount of any cash in lieu of fractional shares of
Banc One Common Stock which such holder has the right to receive in
respect of the Certificate surrendered pursuant to the provisions of
this Article II, and the Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on any cash in lieu of
fractional shares or on any unpaid dividends and distributions payable
to holders of Certificates. Notwithstanding anything to the contrary
contained herein, no certificate representing Banc One Common Stock or
New Preferred or cash in lieu of a fractional share interest shall be
delivered to a person who is an affiliate (as defined in Section 6.5)
of FUSA unless such affiliate has theretofore executed and delivered
to Banc One the agreement referred to in Section 6.5.
(b) No dividends or other distributions declared after the
Effective Time with respect to Banc One Common Stock or New Preferred
Stock shall be paid to the holder of any unsurrendered Certificate
until the holder thereof shall surrender such Certificate in
accordance with this Article II. After the surrender of a Certificate
in accordance with this Article II, the record holder thereof shall be
entitled to receive any such dividends or other distributions without
any interest thereon, which theretofore had become payable with
respect to shares of Banc One Common Stock or New Preferred Stock
represented by such Certificate.
(c) If any certificate representing shares of Banc One Common
Stock or New Preferred Stock is to be issued in a name other than that
in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of the issuance thereof that the
Certificate so surrendered shall be properly endorsed (or accompanied
by an appropriate instrument of transfer) and otherwise in proper form
for transfer, and that the person requesting such exchange shall pay
to the Exchange Agent in advance any transfer or other taxes required
by reason of the issuance of a certificate representing shares of Banc
One Common Stock or New Preferred Stock in any name other than that of
the registered holder of the Certificate surrendered, or required for
any other reason, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the
stock transfer books of FUSA of the shares of FUSA Common Stock or
FUSA Preferred Stock which were issued and outstanding immediately
prior to the Effective Time. If, after the Effective Time,
Certificates representing such shares are presented for transfer to
the Exchange Agent, they shall be cancelled and exchanged for
certificates representing shares of Banc One Common Stock or New
Preferred Stock as provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Banc One
Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution with respect to Banc One
Common Stock shall be payable on or with respect to any fractional
share, and such fractional share interests shall not entitle the owner
thereof to vote or to any other rights of a stockholder of FUSA. In
lieu of the issuance of any such fractional share, Banc One shall pay
to each former stockholder of FUSA who otherwise would be entitled to
receive such fractional share an amount in cash determined by
multiplying (i) the average of the closing-sale prices of Banc One
Common Stock on the New York Stock Exchange, Inc. (the "NYSE") as
reported by The Wall Street Journal for the five trading days ending
on the second to last trading day prior to the Effective Time by (ii)
the fraction of a share (rounded to the nearest thousandth of a share)
of Banc One Common Stock to which such holder would otherwise be
entitled to receive pursuant to Section 1.4.
(f) Any portion of the Exchange Fund that remains unclaimed by
the stockholders of FUSA for 12 months after the Effective Time shall
be paid upon request by Banc One to Banc One. Any stockholders of FUSA
who have not theretofore complied with this Article II shall
thereafter look only to Banc One for payment of the shares of Banc One
Common Stock or New Preferred Stock, cash in lieu of any fractional
shares and any unpaid dividends and distributions on the Banc One
Common Stock or New Preferred Stock deliverable in respect of each
share of FUSA Common Stock or FUSA Preferred Stock, as the case may
be, such stockholder holds as determined pursuant to this Agreement,
in each case, without any interest thereon. Notwithstanding the
foregoing, none of FUSA, Banc One, the Exchange Agent or any other
person shall be liable to any former holder of shares of FUSA Common
Stock or FUSA Preferred Stock for any amount delivered in good faith
to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if
reasonably required by Banc One, the posting by such person of a bond
in such amount as Banc One may determine is reasonably necessary as
indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the shares of Banc One
Capital Stock and any cash in lieu of fractional shares deliverable in
respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FUSA
FUSA hereby represents and warrants to Banc One as follows:
3.1 Corporate Organization. (a) FUSA is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. FUSA is duly registered as a unitary savings and
loan holding company with the Office of Thrift Supervision ("OTS")
under HOLA. FUSA has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is
now being conducted, and is duly licensed or qualified to do business
in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or
leased by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified would not have a
Material Adverse Effect on FUSA. As used in this Agreement, the term
"Material Adverse Effect" means, with respect to Banc One, FUSA or the
Surviving Corporation, as the case may be, a material adverse effect
on the business, operations, financial condition or results of
operations of such party and its Subsidiaries taken as a whole. As
used in this Agreement, the word "Subsidiary" when used with respect
to any party means any bank, corporation, partnership, limited
liability company, or other organization, whether incorporated or
unincorporated, which is consolidated with such party for financial
reporting purposes. True and complete copies of the Certificate of
Incorporation and By-Laws of FUSA, as in effect as of the date of this
Agreement, have previously been made available by FUSA to Banc One.
(b) Section 3.1(b) of the FUSA disclosure schedule delivered to
Banc One concurrently herewith (the "FUSA Disclosure Schedule") sets
forth a complete and correct list of all of FUSA's Subsidiaries (each
a "FUSA Subsidiary" and collectively the "FUSA Subsidiaries"), all
outstanding capital stock or other equity securities of each such
Subsidiary, options, warrants, stock appreciation rights, scrip,
rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into,
shares of any capital stock or other equity securities of such
Subsidiary, or contracts, commitments, understandings or arrangements
by which such Subsidiary may become bound to issue additional shares
of its capital stock or other equity securities, or options, warrants,
scrip on rights to purchase, acquire, subscribe to, calls on or
commitments for any shares of its capital stock or other equity
securities; provided, however, that with respect to First USA
Paymentech, Inc., only the aggregate number of such equity securities
as of December 31, 1996 is disclosed on the FUSA Disclosure Schedule;
and provided, further, that FUSA may create additional Subsidiaries in
the ordinary course of business consistent with past practice. All of
the outstanding shares of capital stock of the FUSA Subsidiaries are
validly issued, fully paid and nonassessable and, except as otherwise
disclosed in Section 3.1(b) of the FUSA Disclosure Schedule, such
shares are owned by FUSA or its wholly owned Subsidiaries free and
clear of any material lien, claim, charge, option, encumbrance,
mortgage, pledge or security interest (a "Lien") with respect thereto.
Each FUSA Subsidiary (i) is duly organized and validly existing as a
savings and loan, bank, corporation, industrial loan company,
partnership or limited liability company under the laws of its
jurisdiction of organization, (ii) is duly qualified to do business
and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or the
conduct of its business requires it to be so qualified (except for
jurisdictions in which the failure to be so qualified would not have a
Material Adverse Effect on FUSA), and (iii) has all requisite
corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted. The place and
type of charter and the applicable insurance fund for First USA Bank,
First USA Federal Savings Bank and First USA Financial Services, Inc.
are set forth in Section 3.1(b) of the FUSA Disclosure Schedule.
Except for First USA Bank, First USA Federal Savings Bank and First
USA Financial Services, Inc., FUSA does not own any equity interest in
any entity which is an insured depository institution. Except as set
forth in Section 3.1(b) of the FUSA Disclosure Schedule, neither FUSA
nor any FUSA Subsidiary holds any interest in a partnership or joint
venture of any kind.
(c) The minute books of FUSA accurately reflect in all material
respects all corporate actions held or taken since January 1, 1995 of
its stockholders and Board of Directors (including committees of the
Board of Directors of FUSA).
3.2 Capitalization. The authorized capital stock of FUSA consists
of (i) 200,000,000 shares of FUSA Common Stock, of which, as of
December 31, 1996, 123,016,240 shares were issued and outstanding and
no shares were held in treasury, (ii) 3,000,000 shares of non-voting
common stock of FUSA none of which is issued and outstanding (the
"FUSA Non-voting Common Stock") and (iii) 7,400,000 shares of
Preferred Stock (the "FUSA Preferred Stock"), of which, as of December
31, 1996, 5,750,000 were designated and issued and outstanding as
6-1/4% Convertible Preferred Stock (the "FUSA 6-1/4% Convertible
Preferred Stock"). All of the issued and outstanding shares of FUSA
Capital Stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. As of the date
of this Agreement, except for the FUSA Option Agreement and except as
provided below, FUSA does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, stock appreciation rights,
commitments or agreements of any character calling for the purchase or
issuance of any shares of FUSA Capital Stock or any other equity
securities of FUSA or any securities representing the right to
purchase or otherwise receive any shares of FUSA Common Stock, FUSA
Non-voting Common Stock or FUSA Preferred Stock. As of December 31,
1996, no shares of FUSA Common Stock, FUSA Non-voting Common Stock or
FUSA Preferred Stock were reserved for issuance, except for (i)
16,749,332 shares of FUSA Common Stock reserved for issuance upon the
exercise of stock options pursuant to the FUSA Stock Plans, of which
Options to purchase 9,843,292 shares of FUSA Common Stock were
outstanding as of December 31, 1996, (ii) 11,500,000 shares of FUSA
Common Stock reserved for issuance upon conversion or redemption of
FUSA 6-1/4% Convertible Preferred Stock and (iii) as set forth in
Section 3.2 of the FUSA Disclosure Schedule. FUSA has previously
provided Banc One with a list, as of the date hereof, of the option
holders, the date of each option to purchase FUSA Common Stock
granted, the number of shares subject to each such option, the
expiration date of each such option, and the price at which each such
option may be exercised under the applicable FUSA Stock Plan. Since
December 31, 1996, FUSA has not issued any shares of its capital stock
or any securities convertible into or exercisable for any shares of
its capital stock, other than shares of capital stock or securities
convertible into or exercisable for such shares reserved for issuance
as described above. Except as set forth on Section 3.2 of the FUSA
Disclosure Schedule, there are no outstanding contractual obligations
of FUSA or any of its Subsidiaries to repurchase, redeem or otherwise
acquire, or to register for sale, any shares of capital stock of FUSA
or any of its Subsidiaries. Except as set forth on Section 3.2 of the
FUSA Disclosure Schedule, there are no outstanding contractual
obligations of FUSA or any of its Subsidiaries to vote or to dispose
of any shares of the capital stock of any of its Subsidiaries. In no
event will the aggregate number of shares of FUSA Common Stock
outstanding at the Effective Time (without giving effect to any shares
issuable pursuant to the FUSA Option Agreement) exceed 133,100,000
(plus up to 11,500,000 shares issuable upon conversion or redemption
of the FUSA 6-1/4% Convertible Preferred Stock, plus 125,000 in
aggregate shares issuable per quarter under FUSA's Employee Stock
Purchase Plan and Dividend Reinvestment Plan, plus up to 60,000 shares
issuable under FUSA's Amended and Restated Outside Director Stock
Option Plan, in the event the Effective Time has not occurred by
November 1, 1997).
3.3 Authority; No Violation. (a) FUSA has full corporate power
and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly approved by the Board of Directors
of FUSA. The Board of Directors of FUSA has directed that this
Agreement and the transactions contemplated hereby be submitted to
FUSA's stockholders for approval at a meeting of such stockholders
and, except for the adoption of this Agreement by the affirmative vote
of the holders of a majority of the votes of the outstanding shares of
FUSA Capital Stock entitled to vote thereon, no other corporate
proceedings on the part of FUSA and no other stockholder votes are
necessary to approve this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed
and delivered by FUSA and (assuming due authorization, execution and
delivery by Banc One) constitutes a valid and binding obligation of
FUSA, enforceable against FUSA in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by FUSA
nor the consummation by FUSA of the transactions contemplated hereby,
nor compliance by FUSA with any of the terms or provisions hereof,
will (i) violate any provision of the Certificate of Incorporation or
By-Laws of FUSA or any FUSA Subsidiary or (ii) assuming that the
consents and approvals referred to in Section 3.4 are duly obtained,
violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to FUSA or any of its
Subsidiaries or any of their respective properties or assets, or
violate, conflict with, result in a breach of any provision of or the
loss of any benefit under, constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination or
cancellation under, accelerate the performance required by, or result
in the creation of any Lien upon any of the respective properties or
assets of FUSA or any of its Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement, contract, or other instrument or
obligation to which FUSA or any of its Subsidiaries is a party, or by
which they or any of their respective properties, assets or business
activities may be bound or affected, except (in the case of clause
(ii) above) for such violations, conflicts, breaches or defaults
which, either individually or in the aggregate, would not have a
Material Adverse Effect on FUSA.
3.4 Consents and Approvals. Except for (i) the filing of a notice
with the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") under the BHCA and approval of such notice
and the filing of any required applications or notices with the OTS or
the Federal Deposit Insurance Corporation (the "FDIC"), (ii) the
filing of any required applications or notices with the Delaware State
Bank Commissioner, the Utah Department of Financial Services and any
other applicable state or foreign agencies and approval of such
applications and notices (the "State Approvals"), (iii) the filing
with the Securities and Exchange Commission (the "SEC") of a joint
proxy statement in definitive form relating to the meetings of Banc
One's and FUSA's stockholders to be held in connection with this
Agreement and the transactions contemplated hereby (the "Joint Proxy
Statement") and the registration statement on Form S-4 (the "S-4") in
which the Joint Proxy Statement will be included as a prospectus, (iv)
the filing of the Delaware Certificate of Merger with the Delaware
Secretary pursuant to the DGCL, (v) the filing of the Ohio Certificate
of Merger with the Ohio Secretary pursuant to the OGCL, (vi) any
consent, authorizations, approvals, filings or exemptions in
connection with compliance with the applicable provisions of federal
and state securities laws relating to the regulation of broker-dealers
and of any applicable industry self-regulatory organization ("SRO"),
and the rules of the NYSE, or which are required under consumer
finance, mortgage banking and other similar laws, (vii) the expiration
of any applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (viii) the
approval of this Agreement by the requisite vote of the stockholders
of Banc One and FUSA and (ix) the consents and approvals set forth in
Section 3.4 of the FUSA Disclosure Schedule, no consents or approvals
of or filings or registrations with any court, administrative agency
or commission or other governmental authority or instrumentality (each
a "Governmental Entity") or, of or with any third party, are necessary
in connection with (A) the execution and delivery by FUSA of this
Agreement and (B) the consummation by FUSA of the Merger and the other
transactions contemplated hereby.
3.5 Reports. (a) FUSA and each of its Subsidiaries have timely
filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were
required to file since January 1, 1994 with (i) the OTS, (ii) the
FDIC, (iii) any state regulatory authority (each a "State Regulator"),
(iv) the SEC and (v) any SRO or other governmental or regulatory
agency (collectively "Regulatory Agencies"), and all other reports and
statements required to be filed by them since January 1, 1994,
including, without limitation, any report or statement required to be
filed pursuant to the laws, rules or regulations of the United States,
any state, or any Regulatory Agency and have paid all fees and
assessments due and payable in connection therewith, except where the
failure to file such report, registration or statement or to pay such
fees and assessments, either individually or in the aggregate, would
not have a Material Adverse Effect on FUSA. Except for normal
examinations conducted by a Regulatory Agency in the regular course of
the business of FUSA and its Subsidiaries, no Regulatory Agency has
initiated any proceeding or, to the best knowledge of FUSA,
investigation into the business or operations of FUSA or any of its
Subsidiaries since January 1, 1994, except where such proceedings or
investigations would not, either individually or in the aggregate,
have a Material Adverse Effect on FUSA or on the ability to consummate
the transactions contemplated hereby. There is no material unresolved
violation, criticism, or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of
FUSA or any of its Subsidiaries.
3.6 Financial Statements. FUSA has previously made available to
Banc One copies of (a) the consolidated balance sheets of FUSA and its
Subsidiaries as of June 30, for the fiscal years 1995 and 1996, and
the related consolidated statements of income, changes in
stockholders' equity and cash flows for the fiscal years 1994 through
1996, inclusive, as reported in FUSA's Annual Report on Form 10-K for
the fiscal year ended June 30, 1996 (the "FUSA June 30, 1996 Form
10-K") filed with the SEC under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), in each case accompanied by the audit
report of Ernst & Young LLP, independent public accountants with
respect to FUSA, and (b) the unaudited consolidated balance sheet of
FUSA and its Subsidiaries as of September 30, 1995 and September 30,
1996 and the related unaudited consolidated statements of income, cash
flows and changes in stockholders' equity for the three-month periods
then ended as reported in FUSA's Quarterly Report on Form 10-Q for the
period ended September 30, 1996 filed with the SEC under the Exchange
Act (the "FUSA September 30, 1996 Form 10-Q"). The June 30, 1996
consolidated balance sheet of FUSA (including the related notes, where
applicable) fairly presents the consolidated financial position of
FUSA and its Subsidiaries as of the date thereof, and the other
financial statements referred to in this Section 3.6 (including the
related notes, where applicable) fairly present (subject, in the case
of the unaudited statements, to recurring audit adjustments normal in
nature and amount) the results of the consolidated operations and
changes in stockholders' equity and consolidated financial position of
FUSA and its Subsidiaries for the respective fiscal periods or as of
the respective dates therein set forth; each of such statements
(including the related notes, where applicable) comply in all material
respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto; and
each of such statements (including the related notes, where
applicable) has been prepared in all material respects in accordance
with generally accepted accounting principles ("GAAP") consistently
applied during the periods involved, except, in each case, as
indicated in such statements or in the notes thereto or, in the case
of unaudited statements, as permitted by Form 10-Q. The books and
records of FUSA and its Subsidiaries have been, and are being,
maintained in all material respects in accordance with GAAP and any
other applicable legal and accounting requirements and reflect only
actual transactions. The allowance for possible credit losses in the
FUSA June 30, 1996 Form 10-K was established in accordance with the
past practices and experiences of FUSA and its Subsidiaries, and the
allowance for possible credit losses shown on the balance sheet of
FUSA and its Subsidiaries contained in the FUSA September 30, 1996
Form 10-Q is adequate in all material respects under the requirements
of GAAP to provide for possible losses, net of recoveries relating to
loans previously charged off, on loans outstanding as of September 30,
1996.
3.7 Broker's Fees. Except for Merrill Lynch & Co., neither FUSA
nor any FUSA Subsidiary nor any of their respective officers or
directors has employed any broker or finder or incurred any liability
for any broker's fees, commissions or finder's fees in connection with
the Merger or related transactions contemplated by this Agreement or
the FUSA Option Agreement.
3.8 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in FUSA Reports (as defined in Section 3.12) filed prior to
the date hereof, since September 30, 1996, no event has occurred which
has had, individually or in the aggregate, a Material Adverse Effect
on FUSA.
(b) As of the date hereof, except (x) as publicly disclosed in
FUSA Reports filed prior to the date hereof, (y) as publicly disclosed
in any registration statement, prospectus, report, schedule or
definitive proxy statement filed by First USA Paymentech, Inc. with
the SEC pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, or (z) as set forth in Section
3.8(b) of the FUSA Disclosure Schedule, since September 30, 1996, FUSA
and its Subsidiaries have, in all material respects, carried on their
respective businesses in the ordinary and usual course consistent with
their past practices (it being understood and agreed that the conduct
by FUSA and its Subsidiaries of their respective businesses in the
ordinary and usual course consistent with past practice shall include,
without limitation, the creation of deposit liabilities, purchases of
Federal funds, sales of certificates of deposit, entering into
repurchase agreements, issuance of bank notes or deposit notes and
securitization of receivables).
(c) Since July 31, 1996, neither FUSA nor any of its Subsidiaries
has (i) except for such actions as are in the ordinary course of
business consistent with past practice (including job reductions in
connection with acquisitions), except as required by applicable law or
except as set forth in Section 3.8(c) of the FUSA Disclosure Schedule,
(A) increased the wages, salaries, compensation, pension, or other
fringe benefits or perquisites payable to any executive officer,
employee, or director from the amount thereof in effect as of July 31,
1996, or (B) granted any severance or termination pay, entered into
any contract to make or grant any severance or termination pay, or
paid any bonus other than customary year-end bonuses for fiscal 1996,
or (ii) suffered any strike, work stoppage, slowdown, or other
material labor disturbance.
3.9 Legal Proceedings. (a) As of the date hereof, except as set
forth in Section 3.9(a) of the FUSA Disclosure Schedule, neither FUSA
nor any of its Subsidiaries is a party to any, and there are no
pending or, to the best of FUSA's knowledge, threatened, material
legal, administrative, arbitral or other proceedings, claims, actions
or governmental or regulatory investigations of any nature against
FUSA or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement or the
FUSA Option Agreement as to any of which there is a reasonable
probability of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, have a Material
Adverse Effect on FUSA.
(b) There is no injunction, order, judgment or decree imposed
upon FUSA, any of its Subsidiaries or the assets of FUSA or any of its
Subsidiaries which has had, or might reasonably be expected to have, a
Material Adverse Effect on FUSA.
3.10 Taxes and Tax Returns. Except as provided in Section 3.10 of
the FUSA Disclosure Schedule, (a) each of FUSA and its Subsidiaries
has duly filed all material federal, state, county, foreign and, to
the best of FUSA's knowledge, material local information returns and
tax returns required to be filed by it on or prior to the date hereof
(all such returns being accurate and complete in all material
respects) and has duly paid or made provision for (in accordance with
GAAP) the payment of all material Taxes (as defined in Section
3.10(b)) and other governmental charges which have been incurred or
are due or claimed to be due from it by federal, state, county,
foreign or local taxing authorities on or prior to the date hereof
(including, without limitation, if and to the extent applicable, those
due in respect of its properties, income, business, capital stock,
deposits, franchises, licenses, sales and payrolls) other than Taxes
which (i) are not yet delinquent or (ii) are being contested in good
faith and have not been finally determined. The consolidated federal
income tax returns of FUSA and its Subsidiaries have been examined by
the Internal Revenue Service (the "IRS") through June 30, 1994, and
either no material deficiencies were asserted as a result of such
examination for which FUSA does not have adequate reserves (in
accordance with GAAP) or all such deficiencies were satisfied. To the
best of FUSA's knowledge, there are no material disputes pending, or
claims asserted in writing for, Taxes or assessments upon FUSA or any
of its Subsidiaries, nor has FUSA or any of its Subsidiaries been
requested in writing to give any currently effective waivers extending
the statutory period of limitation applicable to any federal, state,
county or local income tax return for any period. In addition, (i)
proper and accurate amounts have been withheld by FUSA and its
Subsidiaries from their employees for all prior periods in compliance
in all material respects with the tax withholding provisions of
applicable federal, state and local laws, except where failure to do
so would not have a Material Adverse Effect on FUSA, (ii) federal,
state, county and local returns which are accurate and complete in all
material respects have been filed by FUSA and its Subsidiaries for all
periods for which returns were due with respect to income tax
withholding, Social Security and unemployment taxes, except where
failure to do so would not have a Material Adverse Effect on FUSA,
(iii) the amounts shown on such federal, state, local or county
returns to be due and payable have been paid in full or adequate
provision therefor (in accordance with GAAP) has been included by FUSA
in its consolidated financial statements as of June 30, 1996, except
where failure to do so would not have a Material Adverse Effect on
FUSA and (iv) there are no Tax liens upon any property or assets of
FUSA or its Subsidiaries except liens for current taxes not yet due.
Neither FUSA nor any of its Subsidiaries has been required to include
in income any adjustment pursuant to Section 481 of the Code by reason
of a voluntary change in accounting method initiated by FUSA or any of
its Subsidiaries, and the IRS has not initiated or proposed any such
adjustment or change in accounting method, in either case which has
had or is reasonably likely to have a Material Adverse Effect on FUSA.
Except as set forth in the financial statements described in Section
3.6, neither FUSA nor any of its Subsidiaries has entered into a
transaction which is being accounted for under the installment method
of Section 453 of the Code, which would be reasonably likely to have a
Material Adverse Effect on FUSA.
(b) As used in this Agreement, the term "Tax" or "Taxes" means
all federal, state, county, local, and foreign income, excise, gross
receipts, gross income, ad valorem, profits, gains, property, capital,
sales, transfer, use, payroll, employment, severance, withholding,
duties, intangibles, franchise, backup withholding, and other taxes,
charges, levies or like assessments together with all penalties and
additions to tax and interest thereon.
3.11 Employees. (a) The FUSA Disclosure Schedule sets forth a
true and complete list as of the date hereof of each material employee
benefit plan, arrangement or agreement that is maintained as of the
date of this Agreement (the "FUSA Benefit Plans") by FUSA or any of
its Subsidiaries or by any trade or business, whether or not
incorporated (an "FUSA ERISA Affiliate"), all of which together with
FUSA would be deemed a "single employer" within the meaning of Section
4001 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
(b) FUSA has heretofore delivered to Banc One true and complete
copies of each of the FUSA Benefit Plans and certain related
documents, including, but not limited to, (i) the actuarial report for
such FUSA Benefit Plan (if applicable) for each of the last two years,
and (ii) the most recent determination letter from the IRS (if
applicable) for such Plan.
(c) (i) Each of the FUSA Benefit Plans has been operated and
administered in all material respects in accordance with applicable
laws, including, but not limited to, ERISA and the Code, (ii) each of
the FUSA Benefit Plans intended to be "qualified" within the meaning
of Section 401(a) of the Code is so qualified, (iii) with respect to
each Plan which is subject to Title IV of ERISA, the present value of
accrued benefits under such Plan, based upon the actuarial assumptions
used for funding purposes in the most recent actuarial report prepared
by such Plan's actuary with respect to such Plan, did not, as of its
latest valuation date, exceed the then current value of the assets of
such Plan allocable to such accrued benefits, (iv) no FUSA Benefit
Plan provides benefits, including, without limitation, death or
medical benefits (whether or not insured), with respect to current or
former employees of FUSA, its Subsidiaries or any FUSA ERISA Affiliate
beyond their retirement or other termination of service, other than
(A) coverage mandated by applicable law, (B) death benefits or
retirement benefits under any "employee pension plan" (as such term is
defined in Section 3(2) of ERISA), (C) deferred compensation benefits
accrued as liabilities on the books of FUSA, its Subsidiaries or the
FUSA ERISA Affiliates or (D) benefits the full cost of which is borne
by the current or former employee (or his beneficiary), (v) no
material liability under Title IV of ERISA has been incurred by FUSA,
its Subsidiaries or any FUSA ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material
risk to FUSA, its Subsidiaries or any FUSA ERISA Affiliate of
incurring a material liability thereunder, (vi) no Plan is a
"multiemployer pension plan" (as such term is defined in Section 3(37)
of ERISA), (vii) all contributions or other amounts payable by FUSA or
its Subsidiaries as of the Effective Time with respect to each FUSA
Benefit Plan in respect of current or prior plan years have been paid
or accrued in accordance with GAAP and Section 412 of the Code, (viii)
neither FUSA, its Subsidiaries nor any FUSA ERISA Affiliate has
engaged in a transaction in connection with which FUSA, its
Subsidiaries or any FUSA ERISA Affiliate reasonably could be subject
to either a material civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a material tax imposed pursuant to Section 4975 or
4976 of the Code, and (ix) to the best knowledge of FUSA there are no
pending, threatened or anticipated claims (other than routine claims
for benefits) by, on behalf of or against any of the FUSA Benefit
Plans or any trusts related thereto.
(d) Except as set forth in Section 3.11(d) of the FUSA Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result
in any material payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due
to any director or any employee of FUSA or any of its affiliates from
FUSA or any of its affiliates under any FUSA Benefit Plan or
otherwise, (ii) materially increase any benefits otherwise payable
under any FUSA Benefit Plan or (iii) result in any acceleration of the
time of payment or vesting of any such benefits to any material
extent.
3.12 SEC Reports. FUSA has made available to Banc One an accurate
and complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed
since January 1, 1994 by FUSA with the SEC pursuant to the Securities
Act, or the Exchange Act (the "FUSA Reports") and prior to the date
hereof, (b) communication mailed by FUSA to its stockholders since
January 1, 1994 and prior to the date hereof, and (c) each
registration statement, prospectus, report, schedule and definitive
proxy statement filed by First USA Paymentech Inc., any other
Subsidiary of FUSA or any entity which has issued securities with
respect to the securitization of credit card receivables generated in
connection with credit cards issued by FUSA or any Subsidiary of FUSA.
No such registration statement, prospectus, report, schedule, proxy
statement or communication contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances in which they were made, not misleading,
except that information as of a later date shall be deemed to modify
information as of an earlier date. Since January 1, 1994, FUSA and
each FUSA Subsidiary has timely filed all reports and other documents
required to be filed by it under the Securities Act and the Exchange
Act, and, as of their respective dates, all such reports complied in
all material respects with the published rules and regulations of the
SEC with respect thereto.
3.13 Licenses; Compliance with Applicable Law. FUSA and each of
its Subsidiaries hold all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, and have complied with and are
not in default in any material respect under any, applicable law,
statute, order, rule, regulation, policy and/or guideline of any
Governmental Entity relating to FUSA or any of its Subsidiaries
(including, without limitation, all applicable banking laws, federal
and state securities laws, and laws and regulations concerning the
sale of investment products and services, the sale of insurance,
discrimination, truth-in-lending, usury, fair credit reporting, fair
lending, consumer protection, fair employment practices and fair labor
standards, including, without limitation, the Equal Credit Opportunity
Act, the Americans with Disabilities Act, the Fair Housing Act and the
Community Reinvestment Act (collectively, "Specified Laws")), except
in each case where the failure to hold such license, franchise, permit
or authorization or such noncompliance or default would not,
individually or in the aggregate, have a Material Adverse Effect on
FUSA, and neither FUSA nor any of its Subsidiaries knows of, or has
received notice of, any material violations of any of the above. Each
of First USA Bank and First USA Financial Services, Inc. are members
in good standing of Visa International and Mastercard International
Incorporated and are in compliance with the rules and regulations
issued by each such organization.
3.14 Certain Contracts. (a) Except as set forth in Section
3.14(a) of the FUSA Disclosure Schedule, neither FUSA nor any of its
Subsidiaries is a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i) as of the
date hereof, with respect to the employment of any directors,
executive officers, key employees or material consultants, (ii) which,
upon the consummation of the transactions contemplated by this
Agreement will (either alone or upon the occurrence of any additional
acts or events) result in any payment (whether of severance pay or
otherwise) becoming due from Banc One, FUSA, the Surviving
Corporation, or any of their respective Subsidiaries to any officer or
employee thereof, (iii) as of the date hereof, which is a "material
contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K of the SEC) that has not been filed or incorporated by reference
in the FUSA Reports, (iv) which contains any material non-compete
provisions with respect to any line of business or geographic area in
which business is conducted with respect to FUSA or any of its
Subsidiaries or which restricts the conduct of any line of business by
FUSA or any of its Subsidiaries or any geographic area in which FUSA
or any of its Subsidiaries may conduct business, in each case in any
material respect, (v) with or to a labor union or guild (including any
collective bargaining agreement), (vi) except as set forth in Section
3.11(d) of the FUSA Disclosure Schedule (including any stock option
plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan) any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement,
or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement or
(vii) which would prohibit or materially delay the consummation of the
Merger or any of the transactions contemplated by this Agreement. FUSA
has previously made available to Banc One true and correct copies of
all employment and deferred compensation agreements with executive
officers, key employees or material consultants which are in writing
and to which FUSA or any of its Subsidiaries is a party. Each
contract, arrangement, commitment or understanding of the type
described in this Section 3.14(a), whether or not set forth in Section
3.14(a) of the FUSA Disclosure Schedule, is referred to herein as an
"FUSA Contract", and neither FUSA nor any of its Subsidiaries knows
of, or has received notice of, any violation of the above by any of
the other parties thereto (except for violations which, individually
or in the aggregate, would not have a Material Adverse Effect on
FUSA).
(b) (i) Each FUSA Contract is valid and binding on FUSA or any of
its Subsidiaries, as applicable, and in full force and effect, (ii)
FUSA and each of its Subsidiaries has in all material respects
performed all obligations required to be performed by it to date under
each FUSA Contract, except where such noncompliance, individually or
in the aggregate, would not have a Material Adverse Effect on FUSA,
and (iii) no event or condition exists which constitutes or, after
notice or lapse of time or both, would constitute, a breach or default
on the part of FUSA or any of its Subsidiaries under any such FUSA
Contract, except where such breaches or defaults, individually or in
the aggregate, would not have a Material Adverse Effect on FUSA.
3.15 Agreements with Regulatory Agencies. As of the date of this
Agreement, except as set forth in Section 3.15 of the FUSA Disclosure
Schedule, neither FUSA nor any of its Subsidiaries is subject to any
cease-and-desist or other order issued by, or is a party to any
written agreement, consent agreement or memorandum of understanding
with, or is a party to any commitment letter or similar undertaking
to, or is subject to any order or directive by, or is a recipient of
any supervisory letter from or has adopted any board resolutions at
the request of any Regulatory Agency or other Governmental Entity that
restricts the conduct of its business or that in any manner relates to
its capital adequacy, its credit policies, its management or its
business (each, whether or not set forth in the FUSA Disclosure
Schedule, a "FUSA Regulatory Agreement"), nor has FUSA or any of its
Subsidiaries been advised since January 1, 1994 by any Regulatory
Agency or other Governmental Entity that it is considering issuing or
requesting any such FUSA Regulatory Agreement. After the date of this
Agreement no matters referred to in this Section 3.15 shall have
arisen except matters which, individually or in the aggregate, would
not have a Material Adverse Effect on FUSA.
3.16 Other Activities of FUSA and its Subsidiaries. Neither FUSA
nor any of its Subsidiaries directly or indirectly engages in any
material activity or owns any material assets prohibited to be
conducted by or held by a bank holding company under the BHCA or
applicable Federal Reserve Board regulations or, except as set forth
in Section 3.16 of the FUSA Disclosure Schedule, possesses any special
grandfather rights that will be materially adversely affected by a
change of control of FUSA or any of its Subsidiaries.
3.17 Investment Securities. Each of FUSA and its Subsidiaries has
good and marketable title to all securities held by it (except
securities sold under repurchase agreements or held in any fiduciary
or agency capacity), free and clear of any Lien, except to the extent
such securities are pledged in the ordinary course of business
consistent with prudent banking practices to secure obligations of
FUSA or any of its Subsidiaries. Such securities are valued on the
books of FUSA in accordance with GAAP.
3.18 Interest Rate Risk Management Instruments. All interest rate
swaps, caps, floors and option agreements and other interest rate risk
management arrangements, whether entered into for the account of FUSA
or for the account of a customer of FUSA or one of its Subsidiaries,
were entered into in the ordinary course of business and, to FUSA's
knowledge, in accordance with prudent business practice and applicable
rules, regulations and policies of any Regulatory Authority and with
counterparties believed to be financially responsible at the time and
are legal, valid and binding obligations of FUSA or one of its
Subsidiaries enforceable in accordance with their terms (except as may
be limited by bankruptcy, insolvency, moratorium, reorganization or
similar laws affecting the rights of creditors generally and the
availability of equitable remedies), and are in full force and effect.
FUSA and each of its Subsidiaries have duly performed in all material
respects all of their material obligations thereunder to the extent
that such obligations to perform have accrued, and, to FUSA's
knowledge, there are no material breaches, violations or defaults or
allegations or assertions of such by any party thereunder.
3.19 Undisclosed Liabilities. Except for those liabilities that
are fully reflected or reserved against on the consolidated balance
sheet of FUSA included in the FUSA September 30, 1996 Form 10-Q, for
liabilities identified in Section 3.19 of the FUSA Disclosure Schedule
and for liabilities incurred in the ordinary course of business
consistent with past practice, since September 30, 1996, neither FUSA
nor any of its Subsidiaries has incurred any liability of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and
whether due or to become due) except for liabilities which,
individually or in the aggregate, have not had and would not have a
Material Adverse Effect on FUSA.
3.20 Environmental Liability. There are no legal, administrative,
arbitral or other proceedings, claims, actions, causes of action,
private environmental investigations or remediation activities or
governmental investigations of any nature seeking to impose, or that
could reasonably result in the imposition, on FUSA or any of its
Subsidiaries, of any liability or obligation arising under common law
or under any local, state or federal environmental statute, regulation
or ordinance including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), pending or threatened against FUSA or any of its
Subsidiaries, which liability or obligation could reasonably be
expected to have a Material Adverse effect on FUSA. To the knowledge
of FUSA, there is no reasonable basis for any such proceeding, claim,
action or governmental investigation that would impose any material
liability or obligation that could reasonably be expected to have a
Material Adverse Effect on FUSA.
3.21 State Takeover Laws. The Board of Directors of FUSA has
approved the transactions contemplated by this Agreement and the FUSA
Option Agreement such that the provisions of Section 203 of the DGCL
or any other applicable state takeover laws will not apply to this
Agreement or the FUSA Option Agreement or any of the transactions
contemplated hereby or thereby.
3.22 Insurance. FUSA has in effect insurance coverage with
reputable insurers which in respect of amounts, premiums, types and
risks insured, constitutes reasonably adequate coverage against all
risks customarily insured against by companies comparable in size and
operation to FUSA.
3.23 Pooling of Interests. Neither FUSA nor, to FUSA's best
knowledge, any of its affiliates has taken or agreed to take any
action that would prevent Banc One from accounting for the
transactions to be effected pursuant to this Agreement as a "pooling
of interests" in accordance with GAAP and applicable SEC regulations.
As of the date of this Agreement, FUSA has no reason to believe that
the Merger will not qualify as a "pooling of interests" for accounting
purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BANC ONE
Banc One hereby represents and warrants to FUSA as follows:
4.1 Corporate Organization. (a) Banc One is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Ohio. Banc One is duly registered as a bank holding company
under the BHCA. Banc One has the corporate power and authority to own
or lease all of its properties and assets and to carry on its business
as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified
would not have a Material Adverse Effect on Banc One. True and
complete copies of the Amended Articles of Incorporation and
Regulations of Banc One, as in effect as of the date of this
Agreement, have previously been made available by Banc One to FUSA.
(b) Each Banc One Subsidiary (i) is duly organized and validly
existing as a bank, savings and loan, corporation, partnership or
limited liability company under the laws of its jurisdiction of
organization, (ii) is duly qualified to do business and in good
standing in all jurisdictions (whether federal, state, local or
foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified (except for jurisdictions
in which the failure to be so qualified would not have a Material
Adverse Effect on Banc One), and (iii) has all requisite corporate
power and authority to own or lease its properties and assets and to
carry on its business as now conducted.
(c) The minute books of Banc One accurately reflect in all
material respects all corporate actions held or taken since January 1,
1995 of its stockholders and Board of Directors (including committees
of the Board of Directors of Banc One).
4.2 Capitalization. The authorized capital stock of Banc One
consists of 600,000,000 shares of Banc One Common Stock, of which, as
of December 31, 1996, 427,263,273 were issued and outstanding, and
35,000,000 shares of Preferred Stock, no par value (the "Banc One
Preferred Stock"), of which, as of December 31, 1996, (i) 4,140,314
shares were designated and issued and outstanding as Series C $3.50
Cumulative Convertible Preferred Stock ("Banc One Series C Preferred
Stock"). As of December 31, 1996, 5,829,915 shares of Banc One Common
Stock were held in Banc One's treasury. On December 31, 1996, no
shares of Banc One Common Stock or Banc One Preferred Stock were
reserved for issuance, except for (i) 8,769,826 shares of Banc One
Common Stock reserved for issuance upon the exercise of stock options
pursuant to the stock plans of Banc One and (ii) shares of Banc One
Common Stock reserved for issuance upon conversion of Banc One Series
C Preferred Stock. All of the issued and outstanding shares of Banc
One Common Stock and Banc One Preferred Stock have been duly
authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the
ownership thereof. As of the date of this Agreement, except for the
Banc One Series C Convertible Stock and the Banc One Stock Plans, Banc
One does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, stock appreciation rights, commitments or
agreements of any character calling for the purchase or issuance of
any shares of Banc One Common Stock or Banc One Preferred Stock or any
other equity securities of Banc One or any securities representing the
right to purchase or otherwise receive any shares of Banc One Common
Stock or Banc One Preferred Stock. The shares of Banc One Capital
Stock to be issued in the Merger will be duly authorized and validly
issued, and at the Effective Time, all such shares will be fully paid,
nonassessable and free of preemptive rights. Since December 31, 1996,
through the date hereof, Banc One has not issued any shares of its
capital stock or any securities convertible into or exercisable for
any shares of its capital stock, other than pursuant to the exercise
of employee stock options granted prior to such date. Except as set
forth in Section 4.2 of the Banc One Disclosure Schedule, as of the
date hereof, there are no outstanding contractual obligations of Banc
One or any of its Subsidiaries to repurchase, redeem or otherwise
acquire, or to register for sale, any shares of capital stock of Banc
One or any of its Subsidiaries. Except as set forth in Section 4.2 of
the Banc One Disclosure Schedule, as of the date hereof, there are no
outstanding contractual obligations of Banc One or any of its
Subsidiaries to vote or dispose of any shares of the capital stock of
any of its Subsidiaries.
4.3 Authority; No Violation. (a) Banc One has full corporate
power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly approved by the Board
of Directors of Banc One. The Board of Directors of Banc One has
directed that this Agreement and the transactions contemplated hereby
be submitted to Banc One's stockholders for approval at a meeting of
such stockholders and, except for the adoption of this Agreement by
the affirmative vote of the holders of a majority of the outstanding
shares of Banc One Common Stock, no other corporate proceedings on the
part of Banc One and no other stockholder votes are necessary to
approve this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and
delivered by Banc One and (assuming due authorization, execution and
delivery by FUSA) constitutes a valid and binding obligation of Banc
One, enforceable against Banc One in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by Banc
One, nor the consummation by Banc One of the transactions contemplated
hereby, nor compliance by Banc One with any of the terms or provisions
hereof, will (i) violate any provision of the Amended Articles of
Incorporation or Regulations of Banc One or (ii) assuming that the
consents and approvals referred to in Section 4.4 are duly obtained,
violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to Banc One or any of its
Subsidiaries or any of their respective properties or assets, or
violate, conflict with, result in a breach of any provision of or the
loss of any benefit under, constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination or
cancellation under, accelerate the performance required by, or result
in the creation of any Lien upon any of the respective properties or
assets of Banc One or any of its 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 Banc One or any of its Subsidiaries is a party, or by which
they or any of their respective properties or assets may be bound or
affected, except (in the case of clause (ii) above) for such
violations, conflicts, breaches or defaults which either individually
or in the aggregate would not have a Material Adverse Effect on Banc
One.
4.4 Consents and Approvals. Except for (i) the filing of a notice
with the Federal Reserve Board under the BHCA and approval of such
notice and the filing of any required applications or notices with the
OTS or the FDIC, (ii) the State Approvals, (iii) the filing with the
SEC of the Joint Proxy Statement and the S-4, (iv) the filing of the
Delaware Certificate of Merger with the Delaware Secretary pursuant to
the DGCL, (v) the filing of the Ohio Certificate of Merger with the
Ohio Secretary pursuant to the OGCL, (vi) any consent, authorizations,
approvals, filings or exemptions in connection with compliance with
the applicable provisions of federal and state securities laws
relating to the regulation of broker-dealers and of any applicable
SRO, and the rules of the NYSE, or which are required under consumer
finance, mortgage banking and other similar laws, (vii) such filings
and approvals as are required to be made and maintained under the
securities or "Blue Sky" laws of various states in connection with the
issuance of the shares of Banc One Common Stock pursuant to this
Agreement, (viii) the expiration of any applicable waiting period
under the HSR Act and (ix) the approval of this Agreement by the
requisite vote of the stockholders of Banc One and FUSA, no consents
or approvals of or filings or registrations with any Governmental
Entity or with any third party are necessary in connection with (A)
the execution and delivery by Banc One of this Agreement and (B) the
consummation by Banc One of the Merger and the other transactions
contemplated hereby.
4.5 Reports. Banc One and each of its Subsidiaries have timely
filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were
required to file since January 1, 1994 with the Regulatory Agencies
and the Office of the Comptroller of the Currency (the "OCC"), and all
other reports and statements required to be filed by them since
January 1, 1994, including, without limitation, any report or
statement required to be filed pursuant to the laws, rules or
regulations of the United States, any state, any Regulatory Agency or
the OCC and have paid all fees and assessments due and payable in
connection therewith, except where the failure to file such report,
registration or statement or to pay such fees and assessments, either
individually or in the aggregate, would not have a Material Adverse
Effect on Banc One. Except for normal examinations conducted by a
Regulatory Agency or the OCC in the regular course of the business of
Banc One and its Subsidiaries, no Regulatory Agency has initiated any
proceeding or, to the best knowledge of Banc One, investigation into
the business or operations of Banc One or any of its Subsidiaries
since January 1, 1994, except where such proceedings or investigations
would not, either individually or in the aggregate, have a Material
Adverse Effect on Banc One or its ability to consummate the
transactions contemplated hereby. There is no material unresolved
violation, criticism, or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of
Banc One or any of its Subsidiaries.
4.6 Financial Statements. Banc One has previously made available
to FUSA copies of (a) the consolidated balance sheets of Banc One and
its Subsidiaries as of December 31, for the fiscal years 1995 and
1996, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the fiscal years 1994 through
1995, inclusive, as reported in Banc One's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995 filed with the SEC under
the Exchange Act, in each case accompanied by the audit report of
Coopers & Lybrand L.L.P., independent public accountants with respect
to Banc One, and (b) the unaudited consolidated balance sheet of Banc
One and its Subsidiaries as of September 30, 1995 and September 30,
1996 and the related unaudited consolidated statements of income, cash
flows and changes in stockholders' equity for the nine-month periods
then ended as reported in Banc One's Quarterly Report on Form 10-Q for
the period ended September 30, 1996 filed with the SEC under the
Exchange Act (the "Banc One September 30, 1996 Form 10-Q"). The
December 31, 1995 consolidated balance sheet of Banc One (including
the related notes, where applicable) fairly presents the consolidated
financial position of Banc One and its Subsidiaries as of the date
thereof, and the other financial statements referred to in this
Section 4.6 (including the related notes, where applicable) fairly
present (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount) the results
of the consolidated operations and changes in stockholders' equity and
consolidated financial position of Banc One and its Subsidiaries for
the respective fiscal periods or as of the respective dates therein
set forth; each of such statements (including the related notes, where
applicable) comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC
with respect thereto; and each of such statements (including the
related notes, where applicable) has been prepared in all material
respects in accordance with GAAP consistently applied during the
periods involved, except in each case as indicated in such statements
or in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. The books and records of Banc One and its
Subsidiaries have been, and are being, maintained in all material
respects in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions. The
reserve for possible loan and lease losses shown on the September 30,
1996 consolidated balance sheet of Banc One is adequate in all
material respects under the requirements of GAAP to provide for
possible losses, net of recoveries relating to loans previously
charged off, on loans outstanding as of September 30, 1996.
4.7 Broker's Fees. Except for Lazard Freres & Co. LLC and UBS
Securities LLC, neither Banc One nor any Banc One Subsidiary nor any
of their respective officers or directors has employed any broker or
finder or incurred any liability for any broker's fees, commissions or
finder's fees in connection with the Merger or related transactions
contemplated by this Agreement.
4.8 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in Banc One Reports (as defined in Section 4.11) filed prior
to the date hereof, since September 30, 1996, no event has occurred
which has had, individually or in the aggregate, a Material Adverse
Effect on Banc One.
(b) As of the date hereof, except (x) as publicly disclosed in
Banc One Reports filed prior to the date hereof or (y) as set forth in
Section 4.8(b) of the Banc One Disclosure Schedule, since September
30, 1996, Banc One and its Subsidiaries have, in all material
respects, carried on their respective businesses in the ordinary and
usual course consistent with their past practices.
4.9 Legal Proceedings. (a) Neither Banc One nor any of its
Subsidiaries is a party to any and there are no pending or, to the
best of Banc One's knowledge, threatened, material legal,
administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against Banc
One or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement as to any
of which there is a reasonable probability of an adverse determination
and which, if adversely determined, would, individually or in the
aggregate, have a Material Adverse Effect on Banc One.
(b) There is no injunction, order, judgment or decree (other than
those that apply to similarly situated bank holding companies or
banks) imposed upon Banc One, any of its Subsidiaries or the assets of
Banc One or any of its Subsidiaries which has had, or might reasonably
be expected to have, a Material Adverse Effect on Banc One.
4.10 Taxes and Tax Returns. Each of Banc One and its Subsidiaries
has duly filed all material federal, state, county, foreign and, to
the best of Banc One's knowledge, material local information returns
and tax returns required to be filed by it on or prior to the date
hereof (all such returns being accurate and complete in all material
respects) and has duly paid or made provision for (in accordance with
GAAP) the payment of all material Taxes and other governmental charges
which have been incurred or are due or claimed to be due from it by
federal, state, county, foreign or local taxing authorities on or
prior to the date hereof (including, without limitation, if and to the
extent applicable, those due in respect of its properties, income,
business, capital stock, deposits, franchises, licenses, sales and
payrolls) other than Taxes which (i) are not yet delinquent or (ii)
are being contested in good faith and have not been finally
determined. The consolidated federal income tax returns of Banc One
and its Subsidiaries have been examined by the IRS through 1992, and
either no material deficiencies were asserted as a result of such
examination for which Banc One does not have adequate reserves (in
accordance with GAAP) or all such deficiencies were satisfied. To the
best of Banc One's knowledge, there are no material disputes pending,
or claims asserted in writing for, Taxes or assessments in writing
upon Banc One or any of its Subsidiaries, nor has Banc One or any of
its Subsidiaries been requested to give any currently effective
waivers extending the statutory period of limitation applicable to any
federal, state, county or local income tax return for any period. In
addition, (i) proper and accurate amounts have been withheld by Banc
One and its Subsidiaries from their employees for all prior periods in
compliance in all material respects with the tax withholding
provisions of applicable federal, state and local laws, except where
failure to do so would not have a Material Adverse Effect on Banc One,
(ii) federal, state, county and local returns which are accurate and
complete in all material respects have been filed by Banc One and its
Subsidiaries for all periods for which returns were due with respect
to income tax withholding, Social Security and unemployment taxes,
except where failure to do so would not have a Material Adverse Effect
on Banc One, (iii) the amounts shown on such federal, state, local or
county returns to be due and payable have been paid in full or
adequate provision therefor (in accordance with GAAP) has been
included by Banc One in its consolidated financial statements as of
December 31, 1996, except where failure to do so would not have a
Material Adverse Effect on Banc One and (iv) there are no Tax liens
upon any property or assets of Banc One or its Subsidiaries except
liens for current taxes not yet due. Neither Banc One nor any of its
Subsidiaries has been required to include in income any adjustment
pursuant to Section 481 of the Code by reason of a voluntary change in
accounting method initiated by Banc One or any of its Subsidiaries,
and the IRS has not initiated or proposed any such adjustment or
change in accounting method, in either case, which has had or is
reasonably likely to have a Material Adverse Effect on Banc One.
Except as set forth in the financial statements described in Section
4.6, neither Banc One nor any of its Subsidiaries has entered into a
transaction which is being accounted for under the installment method
of Section 453 of the Code, which would be reasonably likely to have a
Material Adverse Effect on Banc One.
4.11 SEC Reports. Banc One has made available to FUSA an accurate
and complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed
since January 1, 1994 by Banc One with the SEC pursuant to the
Securities Act or the Exchange Act (the "Banc One Reports") and prior
to the date hereof and (b) communication mailed by Banc One to its
stockholders since January 1, 1994 and prior to the date hereof. No
such registration statement, prospectus, report, schedule, proxy
statement or communication contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances in which they were made, not misleading,
except that information as of a later date shall be deemed to modify
information as of an earlier date. Since January 1, 1994, Banc One has
timely filed all reports and other documents required to be filed by
it under the Securities Act and the Exchange Act, and, as of their
respective dates, all such reports complied in all material respects
with the published rules and regulations of the SEC with respect
thereto.
4.12 Licenses; Compliance with Applicable Law. Banc One and each
of its Subsidiaries hold all material licenses, franchises, permits
and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied in
all material respects with and are not in default in any material
respect under any, applicable law, statute, order, rule, regulation,
policy and/or guideline of any Governmental Entity relating to Banc
One or any of its Subsidiaries (including, without limitation, all
Specified Laws), except in such case where the failure to hold such
license, franchise, permit or authorization or such noncompliance or
default would not, individually or in the aggregate, have a Material
Adverse Effect on Banc One, and neither Banc One nor any of its
Subsidiaries knows of, or has received notice of, any material
violations of any of the above.
4.13 Agreements with Regulatory Agencies. Neither Banc One nor
any of its Subsidiaries is subject to any cease-and-desist or other
order issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any
order or directive by, is a recipient of any supervisory letter from
or has adopted any board resolutions at the request of any Regulatory
Agency or other Governmental Entity that currently restricts the
conduct of its business or that in any manner relates to its capital
adequacy, its credit policies, its management or its business (each,
whether or not set forth in the Banc One disclosure schedule delivered
to FUSA concurrently herewith, a "Banc One Regulatory Agreement"), nor
has Banc One or any of its Subsidiaries been advised since January 1,
1994, by any Regulatory Agency or other Governmental Entity that it is
considering issuing or requesting any such Regulatory Agreement.
4.14 Undisclosed Liabilities. Except for those liabilities that
are fully reflected or reserved against on the consolidated balance
sheet of Banc One included in the Banc One September 30, 1996 Form
10-Q and for liabilities incurred in the ordinary course of business
consistent with past practice, since September 30, 1996, neither Banc
One nor any of its Subsidiaries has incurred any liability of any
nature whatsoever (whether absolute, accrued, contingent or otherwise
and whether due or to become due) except for liabilities which,
individually or in the aggregate, have not had and would not have a
Material Adverse Effect on Banc One.
4.15 Environmental Liability. Except as set forth in the Banc One
Disclosure Schedule, there are no legal, administrative, arbitral or
other proceedings, claims, actions, causes of action, private
environmental investigations or remediation activities or governmental
investigations of any nature seeking to impose, or that reasonably
could result in the imposition, on Banc One or any of its Subsidiaries
of any liability or obligation arising under common law or under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, CERCLA, pending or threatened against
Banc One or any of its Subsidiaries, which liability or obligation
could reasonably be expected to have a Material Adverse Effect on Banc
One. To the knowledge of Banc One, there is no reasonable basis for
any such proceeding, claim, action or governmental investigation that
would impose any material liability or obligation that could
reasonably be expected to have a Material Adverse Effect on Banc One.
4.16 Insurance. Banc One has in effect insurance coverage with
reputable insurers which in respect of amounts, premiums, types and
risks insured, constitutes reasonably adequate coverage against all
risks customarily insured against by companies comparable in size and
operation to Banc One.
4.17 Pooling of Interests. Neither Banc One nor, to Banc One's
best knowledge, any of its affiliates has taken or agreed to take any
action that would prevent Banc One from accounting for the
transactions to be effected pursuant to this Agreement as a "pooling
of interests" in accordance with GAAP and applicable SEC regulations.
As of the date of this Agreement, Banc One has no reason to believe
that the Merger will not qualify as a "pooling of interests" for
accounting purposes.
4.18 Employees. (a) The Banc One Disclosure Schedule sets forth a
true and complete list of each material employee benefit plan,
arrangement or agreement that is maintained as of the date of this
Agreement (the "Banc One Benefit Plans") by Banc One or any of its
Subsidiaries or by any trade or business, whether or not incorporated
(an "Banc One ERISA Affiliate"), all of which together with Banc One
would be deemed a "single employer" within the meaning of Section 4001
of ERISA.
(b) (i) Each of the Banc One Benefit Plans has been operated and
administered in all material respects in accordance with applicable
laws, including, but not limited to, ERISA and the Code, (ii) each of
the Banc One Benefit Plans intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified, (iii) with
respect to each Plan which is subject to Title IV of ERISA, the
present value of accrued benefits under such Plan, based upon the
actuarial assumptions used for funding purposes in the most recent
actuarial report prepared by such Plan's actuary with respect to such
Plan, did not, as of its latest valuation date, exceed the then
current value of the assets of such Plan allocable to such accrued
benefits, (iv) no Banc One Benefit Plan provides benefits, including,
without limitation, death or medical benefits (whether or not
insured), with respect to current or former employees of Banc One, its
Subsidiaries or any Banc One ERISA Affiliate beyond their retirement
or other termination of service, other than (A) coverage mandated by
applicable law, (B) death benefits or retirement benefits under any
"employee pension plan" (as such term is defined in Section 3(2) of
ERISA), (C) deferred compensation benefits accrued as liabilities on
the books of Banc One, its Subsidiaries or the Banc One ERISA
Affiliates or (D) benefits the full cost of which is borne by the
current or former employee (or the beneficiary), (v) no material
liability under Title IV of ERISA has been incurred by Banc One, its
Subsidiaries or any Banc One ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material
risk to Banc One, its Subsidiaries or any Banc One ERISA Affiliate of
incurring a material liability thereunder, (vi) no Plan is a
"multiemployer pension plan" (as such term is defined in Section 3(37)
of ERISA), and (vii) all contributions or other amounts payable by
Banc One or its Subsidiaries as of the Effective Time with respect to
each Banc One Benefit Plan in respect of current or prior plan years
have been paid or accrued in accordance with GAAP and Section 412 of
the Code.
4.19 Certain Contracts. Except as set forth in Section 4.19 of
the Banc One Disclosure Schedule, neither Banc One nor any of its
Subsidiaries is a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral) which contains
any material exclusivity, non-competition or other provisions which,
following the Effective Time, would prohibit or materially impact the
ability of FUSA or any of its Subsidiaries to conduct its business as
currently conducted.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time. During the
period from the date of this Agreement to the Effective Time, except
as expressly contemplated or permitted by this Agreement or the FUSA
Option Agreement, each of Banc One and FUSA shall, and shall cause
each of their respective Subsidiaries to, (a) conduct its business in
the usual, regular and ordinary course consistent with past practice,
(b) use reasonable best efforts to maintain and preserve intact its
business organization, employees and advantageous business
relationships and, in the case of FUSA, retain the services of its key
officers and key employees and (c) take no action which would
adversely affect or delay in any material respect the ability of
either Banc One or FUSA to obtain any necessary approvals of any
Regulatory Agency or other governmental authority required for the
transactions contemplated hereby or to perform its covenants and
agreements under this Agreement or the FUSA Option Agreement.
5.2 Forbearances of FUSA. During the period from the date of this
Agreement to the Effective Time, except as set forth in the FUSA
Disclosure Schedule and, except as expressly contemplated or permitted
by this Agreement or the FUSA Option Agreement, FUSA shall not, and
shall not permit any of its Subsidiaries to, without the prior written
consent of Banc One (it being understood, however, that the
forbearances contained in this Section 5.2 shall not restrict the
board of directors or management of First USA Paymentech, Inc. in the
conduct of the business and operations of such company):
(a) other than in the ordinary course of business consistent
with past practice, incur (i) any indebtedness for borrowed money
(other than short-term indebtedness incurred to refinance
existing short-term indebtedness, and indebtedness of FUSA or any
of its Subsidiaries to FUSA or any of its Subsidiaries, and
indebtedness under existing lines of credit), assume, guarantee,
endorse or otherwise as an accommodation become responsible for
the obligations of any other individual, corporation or other
entity, or make any loan or advance (it being understood and
agreed that (x) incurrence of indebtedness in the ordinary course
of business consistent with past practice shall include, without
limitation, the creation of deposit liabilities, purchases of
Federal funds, sales of certificates of deposit, entering into
repurchase agreements and the issuance of bank notes, deposit
notes or asset backed securities, and (y) the making of any loan
or advance in the ordinary course of business consistent with
past practice shall include, without limitation, the making of
commercial and consumer loans, mortgages, home equity loans and
providing credit overdrafts) or (ii) any capital expenditures,
obligations or liabilities;
(b) (i) adjust, split, combine or reclassify any capital
stock; (ii) make, declare or pay any dividend (except, (A) for
regular quarterly cash dividends at a rate not in excess of $.06
per share of FUSA Common Stock, (B) for regular quarterly cash
dividends at a rate not in excess of $.498 per share of FUSA
6-1/4% Convertible Preferred Stock, and (C) for dividends paid in
the ordinary course of business by any Subsidiaries (whether or
not wholly owned) of FUSA) or make any other distribution on, or
directly or indirectly redeem (except as provided in Section
6.13), purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock; (iii) grant any
stock appreciation rights or grant any individual, corporation or
other entity any right to acquire any shares of its capital
stock; (iv) issue any additional shares of capital stock except
pursuant to (A) the exercise of stock options or warrants
outstanding as of the date hereof or options or restricted stock
issued with Banc One's consent (which shall not be unreasonably
withheld) in connection with the hiring of new employees in the
ordinary course of business consistent with past practice, and,
in an amount not to exceed 45,000 shares of FUSA Common Stock per
quarter, pursuant to the Dividend Reinvestment Plan and, in an
amount not to exceed 80,000 shares of FUSA Common Stock per
quarter, pursuant to the Employee Stock Purchase Plan of FUSA,
(B) the FUSA 6-1/4% Convertible Preferred Stock, (C) the FUSA
Option Agreement or (D) up to 60,000 shares issuable pursuant to
the FUSA Amended and Restated Outside Directors Plan, if the
Closing occurs after November 1, 1997; or (v) enter into any
agreement, understanding or arrangement with respect to the sale
or voting of its capital stock;
(c) sell, transfer, mortgage, encumber or otherwise dispose
of any of its properties or assets, including, without
limitation, capital stock in any Subsidiaries of FUSA, to any
individual, corporation or other entity other than a direct or
indirect wholly owned Subsidiary, or cancel, release or assign
any indebtedness to any such person or any claims held by any
such person, except in the ordinary course of business consistent
with past practice or pursuant to contracts or agreements in
force at the date of this Agreement and except for sales,
transfers or dispositions of receivables in connection with the
securitization of such receivables;
(d) except for transactions in the ordinary course of
business consistent with past practice, make any material
investment either by purchase of stock or securities,
contributions to capital, property transfers, or purchase of any
property or assets of any other individual, corporation or other
entity other than a wholly owned Subsidiary of FUSA;
(e) except for transactions in the ordinary course of
business consistent with past practice, enter into or terminate
any material lease, contract or agreement, or make any change in
any of its material leases, contracts or agreements, other than
renewals of leases, contracts or agreements without material
changes of terms (it being understood and agreed that the
entering into or changing by FUSA or any of its Subsidiaries of
real property leases in the ordinary course of business
consistent with past practice shall include acquiring additional
space by lease or, as disclosed in Section 5.2 of the FUSA
Disclosure Schedule, by purchase, to meet the then current
demands of FUSA or any of its Subsidiaries);
(f) increase in any manner the compensation or fringe
benefits of any of its employees or pay any pension or retirement
allowance not required by any existing plan or agreement to any
such employees or, except as contemplated in Section 6.12, become
a party to, amend or commit itself to any pension, retirement,
profit-sharing or welfare benefit plan or agreement or employment
agreement with or for the benefit of any employee other than in
the ordinary course of business consistent with past practice (it
being understood and agreed that FUSA's and its Subsidiaries'
payment of year-end compensation increases and bonuses and
mid-year promotions in accordance with their policy and
consistent with their past practice shall be deemed ordinary
course of business consistent with past practice) or accelerate
the vesting of any stock options or other stock-based
compensation;
(g) solicit, encourage or authorize any individual,
corporation or other entity to solicit from any third party any
inquiries or proposals relating to the disposition of its
business or assets, or the acquisition of its voting securities,
or the merger of it or any of its Subsidiaries with any
corporation or other entity other than as provided by this
Agreement (and FUSA shall promptly notify Banc One of all of the
relevant details relating to all inquiries and proposal which it
may receive relating to any of such matters);
(h) settle any material claim, action or proceeding
involving money damages or waive or release any material rights
or claims, except in the ordinary course of business consistent
with past practice;
(i) change its methods of accounting in effect at June 30,
1996, except as required by changes in GAAP, or change any of its
methods of reporting income and deductions for Federal income tax
purposes from those employed in the preparation of the Federal
income tax returns of Banc One for the taxable years ending June
30, 1996 and 1995, except as required by changes in law or
regulation or as set forth in Section 5.2 of the FUSA Disclosure
Schedule;
(j) take any action that would prevent or impede the Merger
from qualifying (i) for "pooling of interests" accounting
treatment or (ii) as a reorganization within the meaning of
Section 368 of the Code;
(k) adopt or implement any amendment to its certificate of
incorporation or any plan of consolidation, merger or
reorganization or any changes to its bylaws;
(l) other than in prior consultation with the other party to
this Agreement, materially restructure or materially change its
investment securities portfolio or its gap position, through
purchases, sales or otherwise, or the manner in which the
portfolio is classified or reported;
(m) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties
set forth in this Agreement being or becoming untrue in any
material respect at any time prior to the Effective Time, or in
any of the conditions to the Merger set forth in Article VII not
being satisfied or in a violation of any provision of this
Agreement, except, in every case, as may be required by
applicable law; or
(n) agree to, or make any commitment to, take any of the
actions prohibited by this Section 5.2.
5.3 Forbearances of Banc One. During the period from the date of
this Agreement to the Effective Time, except as expressly contemplated
by this Agreement, Banc One shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of FUSA:
(a) adopt or implement any amendment to its articles of
incorporation (other than to increase the number of shares of
capital stock authorized thereunder) or any plan of
consolidation, merger or reorganization which would affect in any
manner the terms and provisions of the shares of Banc One Common
Stock or New Preferred Stock or the rights of the holders of such
shares or reclassify any of the Banc One Common Stock;
(b) change its methods of accounting in effect at December
31, 1995, except as required by changes in GAAP as concurred in
with Coopers & Lybrand, L.L.P. its independent auditors, or
change any of its methods of reporting income and deductions for
Federal income tax purposes from those employed in the
preparation of the Federal income tax returns of Banc One for the
taxable years ending December 31, 1995 and 1994, except as
required by changes in law or regulation;
(c) engage in any acquisition, or take any other action,
that adversely affects the ability of Banc One to consummate the
transactions contemplated by this Agreement;
(d) take any action that would prevent or impede the Merger
from qualifying (i) for "pooling of interests" accounting
treatment or (ii) as a reorganization within the meaning of
Section 368 of the Code; provided, however, that nothing
contained herein shall limit the ability of Banc One to exercise
its rights under the FUSA Option Agreement;
(e) (i) adjust, split, combine or reclassify any capital
stock; or (ii) make, declare or pay any dividend (except, (A) for
regular quarterly cash dividends at a rate not in excess of $.38
per share of Banc One Common Stock, (B) for regular quarterly
cash dividends at a rate not in excess of $.875 per share of Banc
One Series C Preferred Stock, and (C) except for dividends paid
in the ordinary course of business by any subsidiary (whether or
not wholly owned) of Banc One) or make any extraordinary
distribution on any shares of its capital stock;
(f) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties
set forth in this Agreement being or becoming untrue in any
material respect at any time prior to the Effective Time, or in
any of the conditions to the Merger set forth in Article VII not
being satisfied or in a violation of any provision of this
Agreement, except, in every case, as may be required by
applicable law; or
(g) agree to, or make any commitment to, take any of the
actions prohibited by this Section 5.3.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters. (a) Banc One and FUSA shall promptly
prepare and file with the SEC the Joint Proxy Statement and Banc One
shall promptly prepare and file with the SEC the S-4, in which the
Joint Proxy Statement will be included as a prospectus. Each of Banc
One and FUSA shall use all reasonable efforts to have the S-4 declared
effective under the Securities Act as promptly as practicable after
such filing, and Banc One and FUSA shall thereafter mail or deliver
the Joint Proxy Statement to their respective stockholders. Banc One
shall also use all reasonable efforts to obtain all necessary state
securities law or "Blue Sky" permits and approvals required to carry
out the transactions contemplated by this Agreement, and FUSA shall
furnish all information concerning FUSA and the holders of FUSA
Capital Stock as may be reasonably requested in connection with any
such action.
(b) The parties hereto shall cooperate with each other and use
their best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and
filings, to obtain as promptly as practicable all permits, consents,
approvals and authorizations of all third parties and Governmental
Entities which are necessary or advisable to consummate the
transactions contemplated by this Agreement (including, without
limitation, the Merger), and to comply with the terms and conditions
of all such permits, consents, approvals and authorizations of all
such Governmental Entities. Banc One and FUSA shall have the right to
review in advance, and, to the extent practicable, each will consult
the other on, in each case subject to applicable laws relating to the
exchange of information, all the information relating to FUSA or Banc
One, as the case may be, and any of their respective Subsidiaries,
which appear in any filing made with, or written materials submitted
to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the
foregoing right, each of the parties hereto shall act reasonably and
as promptly as practicable. The parties hereto agree that they will
consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and
Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep
the other apprised of the status of matters relating to completion of
the transactions contemplated herein.
(c) Banc One and FUSA shall, upon request, furnish each other
with all information concerning themselves, their Subsidiaries,
directors, officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the Joint Proxy
Statement, the S-4 or any other statement, filing, notice or
application made by or on behalf of Banc One, FUSA or any of their
respective Subsidiaries to any Governmental Entity in connection with
the Merger and the other transactions contemplated by this Agreement.
(d) Banc One and FUSA shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent
or approval is required for consummation of the transactions
contemplated by this Agreement which causes such party to believe that
there is a reasonable likelihood that any Requisite Regulatory
Approval (as defined in Section 7.1(c)) will not be obtained or that
the receipt of any such approval will be materially delayed.
6.2 Access to Information. (a) Upon reasonable notice and subject
to applicable laws relating to the exchange of information, each of
Banc One and FUSA shall, and shall cause each of their respective
Subsidiaries to, afford to the officers, employees, accountants,
counsel and other representatives of the other party, access, during
normal business hours during the period prior to the Effective Time,
to all its properties, books, contracts, commitments and records and,
during such period, each of Banc One and FUSA shall, and shall cause
their respective Subsidiaries to, make available to the other party
(i) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the
requirements of federal securities laws or federal or state banking
laws, savings and loan or savings association laws (other than reports
or documents which Banc One or FUSA, as the case may be, is not
permitted to disclose under applicable law) and (ii) all other
information concerning its business, properties and personnel as such
party may reasonably request. Neither Banc One nor FUSA nor any of
their respective Subsidiaries shall be required to provide access to
or to disclose information where such access or disclosure would
violate or prejudice the rights of Banc One's or FUSA's, as the case
may be, customers, jeopardize the attorney-client privilege of the
institution in possession or control of such information or contravene
any law, rule, regulation, order, judgment, decree, fiduciary duty or
binding agreement entered into prior to the date of this Agreement.
The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the
preceding sentence apply.
(b) Each of Banc One and FUSA shall hold all information
furnished by or on behalf of the other party or any of such party's
Subsidiaries or representatives pursuant to Section 6.2(a) in
confidence to the extent required by, and in accordance with, the
provisions of the confidentiality agreement entered into between Banc
One and FUSA (the "Confidentiality Agreement").
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the
other set forth herein.
6.3 Stockholders' Approvals. Each of Banc One and FUSA shall call
a meeting of its stockholders to be held as soon as reasonably
practicable for the purpose of voting upon the requisite stockholder
approvals required in connection with this Agreement and the Merger,
and each shall use its best efforts to cause such meetings to occur on
the same date. The Board of Directors of each of Banc One and FUSA
shall, subject to compliance with its fiduciary duties, recommend to
its shareholders the approval of the Merger, this Agreement and the
transactions contemplated hereby.
6.4 Legal Conditions to Merger. Each of Banc One and FUSA shall,
and shall cause its Subsidiaries to, use their best efforts (a) to
take, or cause to be taken, all actions necessary, proper or advisable
to comply promptly with all legal requirements which may be imposed on
such party or its Subsidiaries with respect to the Merger and, subject
to the conditions set forth in Article VII hereof, to consummate the
transactions contemplated by this Agreement and (b) to obtain (and to
cooperate with the other party to obtain) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity and
any other third party which is required to be obtained by FUSA or Banc
One or any of their respective Subsidiaries in connection with the
Merger and the other transactions contemplated by this Agreement.
6.5 Affiliates; Publication of Combined Financial Results. (a)
Each of Banc One and FUSA shall use its best efforts to cause each
director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act and for purposes of
qualifying the Merger for "pooling of interests" accounting treatment)
of such party to deliver to the other party hereto, as soon as
practicable after the date of this Agreement, and prior to the date of
the stockholders meetings called by Banc One and FUSA to approve this
Agreement, a written agreement, in the form of Exhibit 6.5(a)(1) or
(2), as applicable, hereto, providing that such person will not sell,
pledge, transfer or otherwise dispose of any shares of Banc One
Capital Stock or FUSA Capital Stock held by such "affiliate" and, in
the case of the "affiliates" of FUSA, the shares of Banc One Capital
Stock to be received by such "affiliate" in the Merger: (i) in the
case of shares of Banc One Capital Stock to be received by
"affiliates" of FUSA in the Merger, except in compliance with the
applicable provisions of the Securities Act and the rules and
regulations thereunder; and (ii) except to the extent and under the
conditions permitted therein, during the period commencing 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
Banc One and FUSA.
(b) Banc One shall use its best efforts to publish no later than
90 days after the end of the first month after the Effective Time in
which there are at least 30 days of post-Merger combined operations
(which month may be the month in which the Effective Time occurs),
combined sales and net income figures as contemplated by and in
accordance with the terms of SEC Accounting Series Release No. 135.
6.6 Stock Exchange Listing. Banc One shall use its best efforts
to cause the shares of Banc One Common Stock and New Preferred Stock
to be issued in the Merger to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the Effective Time.
6.7 Employee Benefit Plans. (a) From and after the Effective
Time, unless otherwise mutually determined, the FUSA Benefit Plans and
Banc One Benefit Plans in effect as of the date of this Agreement
shall remain in effect with respect to employees of FUSA or Banc One
(or their Subsidiaries) covered by such plans at the Effective Time
until such time as the Surviving Corporation shall, subject to
applicable law, the terms of this Agreement and the terms of such
plans, adopt new benefit plans with respect to employees of the
Surviving Corporation and its Subsidiaries (the "New Benefit Plans").
Prior to the Closing Date, FUSA and Banc One shall cooperate in
reviewing, evaluating and analyzing the Banc One Benefit Plans and
FUSA Benefit Plans with a view towards developing appropriate New
Benefit Plans for the employees covered thereby subsequent to the
Merger. Such New Benefit Plans shall (i) treat similarly situated
employees on a substantially equivalent basis, taking into account all
relevant factors, including, without limitation, duties, geographic
location, tenure, qualifications and abilities, and (ii) not
discriminate between employees of the Surviving Corporation who were
covered by FUSA Benefit Plans, on the one hand, and those covered by
Banc One Benefit Plans, on the other, at the Effective Time. With
respect to incentive compensation, Banc One agrees to provide
employees of FUSA and its Subsidiaries with compensation consistent
with FUSA's past practices and guided by the compensation practices of
other rapidly growing financial services companies, especially
monoline credit card companies.
(b) The foregoing notwithstanding, the Surviving Corporation
agrees to honor in accordance with their terms all Banc One Benefit
Plans, FUSA Benefit Plans and all other employee benefit plans,
contracts, arrangements, commitments, or understandings described in
the Banc One Disclosure Schedule and the FUSA Disclosure Schedule.
(c) Nothing in this Section 6.7 shall be interpreted as
preventing the Surviving Corporation from amending, modifying or
terminating any Banc One Benefit Plans, FUSA Benefit Plans, or other
employee benefit plans, contracts, arrangements, commitments or
understandings, in accordance with their terms and applicable law.
(d) FUSA and Banc One agree that the consummation of the Merger
will constitute a "change in control" for purposes of each FUSA
Benefit Plan with respect to which such concept is applicable.
(e) FUSA and Banc One shall take all actions necessary, including
securing the consent of optionees, to amend the terms of FUSA Stock
Plans and the Banc One Stock Plans and any severance or other
agreements that provide for the surrender of stock options issued
thereunder in exchange for a cash payment ("LSARs") as a result of or
in connection with the Merger to provide that such LSARs shall be
settled in stock with a fair market value equal to the cash that would
otherwise have been payable thereunder.
6.8 Indemnification; Directors' and Officers' Insurance. (a) Banc
One shall, and shall cause the Surviving Corporation to, indemnify,
defend and hold harmless, to the fullest extent permitted by law, the
present and former officers, directors, employees and agents of FUSA
or any of FUSA's Subsidiaries in their capacities as such (each an
"Indemnified Party") after the Effective Time against all losses,
expenses, claims, damages or liabilities arising out of actions or
omissions occurring on or prior to the Effective Time. In addition,
Banc One shall, and shall cause the Surviving Corporation to, advance
expenses, regardless of allegations, as incurred to the fullest extent
permitted by law, and Banc One's Amended Articles of Incorporation and
Regulations, provided that the Indemnified Party to whom expenses are
advanced provides an undertaking to repay such advances if it is
ultimately determined that such Indemnified Party is not entitled to
indemnification for whatever reason.
(b) Banc One shall use its best efforts to cause the persons
serving as officers and directors of FUSA immediately prior to the
Effective Time to be covered for a period of six years from the
Effective Time by the directors' and officers' liability insurance
policy maintained by FUSA (provided that Banc One may substitute
therefore policies of at least the same coverage and amounts
containing terms and conditions which are not less advantageous than
such policy) with respect to acts or omissions occurring prior to the
Effective Time which were committed by such officers and directors in
their capacity as such; provided, however, that in no event shall Banc
One be required to expend more than 200% of the current amount
expended by FUSA (the "Insurance Amount") to maintain or procure
insurance coverage pursuant hereto and further provided that if Banc
One is unable to maintain or obtain the insurance called for by this
Section 6.8(b), Banc One shall use its best efforts to obtain as much
comparable insurance as available for the Insurance Amount.
(c) In the event Banc One or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to
the extent necessary, proper provision shall be made so that the
successors and assigns of Banc One assume the obligations set forth in
this section.
(d) The provisions of this Section 6.8 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and
his or her heirs and representatives.
6.9 Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement (including, without limitation, any
merger between a Subsidiary of FUSA and a Subsidiary of Banc One) or
to vest the Surviving Corporation with full title to all properties,
assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, the proper officers and directors of each party
to this Agreement and their respective Subsidiaries shall take all
such necessary action as may be reasonably requested by, and at the
sole expense of, Banc One.
6.10 Advice of Changes. Banc One and FUSA shall promptly advise
the other party of any change or event having a Material Adverse
Effect on it or which it believes would or would be reasonably likely
to cause or constitute a material breach of any of its
representations, warranties or covenants contained herein.
6.11 Dividends. After the date of this Agreement, each of Banc
One and FUSA shall coordinate with the other the declaration of any
dividends in respect of Banc One Common Stock and FUSA Common Stock
and the record dates and payment dates relating thereto, it being the
intention of the parties hereto that holders of Banc One Common Stock
or FUSA Common Stock shall not receive two dividends, or fail to
receive one dividend, for any quarter with respect to their shares of
Banc One Common Stock and/or FUSA Common Stock and any shares of Banc
One Capital Stock any such holder receives in exchange therefor in the
Merger.
6.12 Employment Matters. (a) Prior to the Effective Time, Banc
One and FUSA agree to enter into employment agreements in
substantially the form set forth in Schedule 6.12 attached hereto with
each of the individuals identified in Section 6.12(a) of the FUSA
Disclosure Schedule (collectively, the "Employment Agreements").
(b) At the Closing, Banc One agrees to issue options to purchase
shares of Banc One Common Stock and restricted shares of Banc One
Common Stock, and agrees that First USA Paymentech, Inc. may issue
options and restricted stock with respect to its common stock, to each
of the individuals identified in Section 6.12(b) of the FUSA
Disclosure Schedule in such amounts and with such vesting schedules
and other terms as set forth for each such individual in Section
6.12(b) of the FUSA Disclosure Schedule. The parties agree that such
issuances shall be in addition to annual grants of stock options and
restricted stock which such recipients would otherwise be entitled to
receive as provided in Section 6.7.
6.13 Redemption of FUSA 6-1/4% of Convertible Preferred Stock.
FUSA shall cause all of the outstanding shares of FUSA 6-1/4%
Convertible Preferred Stock to be called for redemption on and as of
May 20, 1997.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Stockholder Approval. This Agreement and the
transactions contemplated hereby shall have been approved and
adopted by the respective requisite affirmative votes of the
holders of FUSA Capital Stock and Banc One Common Stock entitled
to vote thereon.
(b) Stock Exchange Listing. The shares of Banc One Common
Stock and, if any, New Preferred Stock which shall be issued to
the stockholders of FUSA upon consummation of the Merger shall
have been authorized for listing on the NYSE, subject to official
notice of issuance.
(c) Other Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been
obtained and shall remain in full force and effect and all
statutory waiting periods in respect thereof shall have expired
(all such approvals and the expiration of all such waiting
periods being referred to herein as the "Requisite Regulatory
Approvals").
(d) S-4. The S-4 shall have become effective under the
Securities Act and no stop order suspending the effectiveness of
the S-4 shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger or any of
the other material transactions contemplated by this Agreement
shall be in effect. No statute, rule, regulation, order,
injunction or decree shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which
prohibits, materially restricts or makes illegal consummation of
the Merger.
(f) Federal Tax Opinion. Banc One shall have received an
opinion of Wachtell, Lipton, Rosen & Katz, counsel to Banc One,
and FUSA shall have received an opinion of Skadden, Arps, Slate,
Meagher & Flom LLP, counsel to FUSA, in form and substance
reasonably satisfactory to Banc One and FUSA, respectively, dated
as of the Effective Time, in each case 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:
(i) The Merger will constitute a tax free
reorganization under Section 368(a) of the Code and Banc One
and FUSA will each be a party to the reorganization;
(ii) No gain or loss will be recognized by Banc One or
FUSA as a result of the Merger;
(iii) No gain or loss will be recognized by the
stockholders of FUSA who exchange their FUSA Capital Stock
solely for Banc One Capital Stock pursuant to the Merger
(except with respect to cash received in lieu of a
fractional share interest in Banc One Common Stock);
(iv) The tax basis of the Banc One Capital Stock
received by stockholders of FUSA who exchange FUSA Capital
Stock solely for Banc One Capital Stock in the Merger will
be the same as the tax basis of the FUSA Capital Stock
surrendered in exchange therefor; and
(v) The holding period of the Banc One Capital Stock
received by stockholders of FUSA in the Merger will include
the period during which the shares of FUSA Capital Stock
surrendered in exchange therefor were held; provided, such
FUSA Capital Stock was held as a capital asset by the holder
of such FUSA Capital Stock at the Effective Time.
In rendering such opinion, counsel may require and rely upon
representations contained in certificates of officers of Banc
One, FUSA and others.
(g) Pooling of Interests. Banc One and FUSA shall have
received a letter from Coopers & Lybrand, L.L.P., to the effect
that the Merger will qualify for "pooling of interests"
accounting treatment.
7.2 Conditions to Obligations of Banc One. The obligation of Banc
One to effect the Merger is also subject to the satisfaction or waiver
by Banc One at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of FUSA set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement
and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date. Banc One shall have received
a certificate signed on behalf of FUSA by its Chief Executive
Officer and Chief Financial Officer to the foregoing effect.
(b) Performance of Obligations of FUSA. FUSA shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date, and Banc One shall have received a certificate signed on
behalf of FUSA by its Chief Executive Officer and Chief Financial
Officer to such effect.
(c) Employment Agreements. Each of the individuals
identified in Section 7.2(c) of the FUSA Disclosure Schedule
shall have executed and delivered his or her Employment
Agreement.
7.3 Conditions to Obligations of FUSA. The obligation of FUSA to
effect the Merger is also subject to the satisfaction or waiver by
FUSA at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Banc One set forth in this Agreement shall be true
and correct in all material respects as of the date of this
Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date. FUSA shall have
received a certificate signed on behalf of Banc One by its
Chairman, President or Executive Vice President and by its
Secretary or Assistant Secretary to the foregoing effect.
(b) Performance of Obligations of Banc One. Banc One shall
have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the
Closing Date, and FUSA shall have received a certificate signed
on behalf of Banc One by its Chairman, President or an Executive
Vice President and by its Secretary or Assistant Secretary to
such effect.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the
matters presented in connection with the Merger by the stockholders of
Banc One or FUSA:
(a) by mutual consent of Banc One and FUSA in a written
instrument, if the Board of Directors of each so determines by a
vote of a majority of the members of its entire Board;
(b) by either the Board of Directors of Banc One or the
Board of Directors of FUSA if any Governmental Entity which must
grant a Requisite Regulatory Approval has denied approval of the
Merger and such denial has become final and nonappealable or any
Governmental Entity of competent jurisdiction shall have issued a
final nonappealable Injunction permanently enjoining or otherwise
prohibiting the consummation of the transactions contemplated by
this Agreement;
(c) by either the Board of Directors of Banc One or the
Board of Directors of FUSA if the Merger shall not have been
consummated on or before December 31, 1997, unless the failure of
the Closing (as defined in Section 9.1) to occur by such date
shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe the covenants and agreements
of such party set forth herein;
(d) by either the Board of Directors of Banc One or the
Board of Directors of FUSA (provided that the terminating party
is not then in material breach of any representation, warranty,
covenant or other agreement contained herein) if there shall have
been a material breach of any of the covenants or agreements or
any of the representations or warranties set forth in this
Agreement on the part of the other party, which breach is not
cured within 45 days following written notice to the party
committing such breach, or which breach, by its nature or timing,
cannot be cured prior to the Closing;
(e) by either Banc One or FUSA if any approval of the
stockholders of Banc One or FUSA required for the consummation of
the Merger shall not have been obtained by reason of the failure
to obtain the required vote at a duly held meeting of
stockholders or at any adjournment or postponement thereof; or
(f) by FUSA, if its Board of Directors so determines by a
vote of a majority of the members of its entire Board, at any
time during the two-day period commencing at the close of
business on the tenth calender day (the "Determination Date")
prior to the date scheduled for the consummation of the Merger,
if the Average Closing Price shall be less than $38.60; subject,
however, to the following four sentences.
If FUSA elects to exercise its termination right pursuant to
this Section 8.1(f), it shall give prompt written notice to Banc
One; provided that such notice of election to terminate may be
withdrawn at any time within the aforementioned two-day period or
during the five-day period specified below. During the five-day
period commencing with its receipt of such notice, Banc One shall
have the option to elect to increase the Common Exchange Ratio to
equal a number equal to a quotient (rounded to the nearest
one-thousandth), the numerator of which is the product of $38.60
and the Common Exchange Ratio (as then in effect) and the
denominator of which is the Average Closing Price. If Banc One
makes an election contemplated by the preceding sentence within
such five-day period, it shall give prompt written notice to FUSA
of such election and the revised Common Exchange Ratio, whereupon
no termination shall have occurred pursuant to this Section
8.1(f) and this Agreement shall remain in effect in accordance
with its terms, except that any references in this Agreement to
"Common Exchange Ratio" shall thereafter be deemed to refer to
the Common Exchange Ratio as adjusted pursuant to this Section
8.1(f). If Banc One declares or effects a stock dividend,
reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between the date hereof
and the Determination Date, the prices for the Banc One Common
Stock shall be appropriately adjusted for the purposes of
applying this Section 8.1(f).
For purposes of this Section 8.1(f), "Average Closing Price"
means the average of the daily last sale prices of Banc One
Common Stock as reported on the NYSE Composite Transactions
reporting system (as reported in The Wall Street Journal or, if
not reported therein, in another mutually agreed upon
authoritative source) for the ten consecutive full trading days
in which such shares are traded on the NYSE ending at the close
of trading on the Determination Date.
8.2 Effect of Termination. In the event of termination of this
Agreement by either Banc One or FUSA as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect, and none of
Banc One, FUSA, any of their respective Subsidiaries or any of the
officers or directors of any of them shall have any liability of any
nature whatsoever hereunder, or in connection with the transactions
contemplated hereby, except that (i) Sections 6.2(b), 8.2, 9.2 and
9.3, shall survive any termination of this Agreement, and (ii)
notwithstanding anything to the contrary contained in this Agreement,
neither Banc One nor FUSA shall be relieved or released from any
liabilities or damages arising out of its willful breach of any
provision of this Agreement.
8.3 Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors, at any time before
or after approval of the matters presented in connection with the
Merger by the stockholders of FUSA; provided, however, that after any
approval of the transactions contemplated by this Agreement by the
stockholders of FUSA, there may not be, without further approval of
such stockholders, any amendment of this Agreement which changes the
amount or the form of the consideration to be delivered to the holders
of FUSA Capital Stock hereunder other than as contemplated by this
Agreement. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective
Board of Directors, may, to the extent legally allowed, (a) extend the
time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein; provided, however, that
after any approval of the transactions contemplated by this Agreement
by the stockholders of FUSA, there may not be, without further
approval of such stockholders, any extension or waiver of this
Agreement or any portion thereof which reduces the amount or changes
the form of the consideration to be delivered to the holders of FUSA
Capital Stock hereunder other than as contemplated by this Agreement.
Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed
on behalf of such party, but such extension or waiver or failure to
insist on strict compliance with an obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect
to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this
Agreement and the FUSA Option Agreement, the closing of the Merger
(the "Closing") will take place at 10:00 a.m. on a date and at a place
to be specified by the parties, which shall be no later than three
business days after the satisfaction or waiver (subject to applicable
law) of the latest to occur of the conditions set forth in Article VII
hereof, unless extended by mutual agreement of the parties (the
"Closing Date").
9.2 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties, covenants and agreements in
this Agreement or in any instrument delivered pursuant to this
Agreement (other than pursuant to the FUSA Option Agreement, which
shall terminate in accordance with its terms) shall survive the
Effective Time, except for those covenants and agreements contained
herein and therein which by their terms apply in whole or in part
after the Effective Time.
9.3 Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid
by the party incurring such expense, provided, however, that the costs
and expenses of printing and mailing the Joint Proxy Statement, and
all filing and other fees paid to the SEC in connection with the
Merger, shall be borne equally by Banc One and FUSA.
9.4 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), mailed by registered or certified mail
(return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Banc One, to:
Banc One Corporation
100 East Broad Street
Columbus, Ohio 43271
Attn: General Counsel
Fax: (614) 248-6060
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Edward D. Herlihy, Esq.
Fax: (212) 403-2000
and
(b) if to FUSA, to:
First USA, Inc.
1601 Elm Street
Dallas, Texas 75201
Attn: General Counsel
Fax: (214) 849-2066
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attn: Randall H. Doud, Esq.
Fax: (212) 735-2000
9.5 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section
of or Exhibit or Schedule to this Agreement unless otherwise
indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Whenever the
words "include," "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation".
No provision of this Agreement shall be construed to require FUSA,
Banc One or any of their respective Subsidiaries or affiliates to take
any action which would violate any applicable law, rule or regulation.
9.6 Counterparts. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each of the
parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
9.7 Entire Agreement. This Agreement (including the documents and
the instruments referred to herein) constitutes the entire agreement
and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof
other than the FUSA Option Agreement and the Confidentiality
Agreement.
9.8 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware, without regard
to any applicable conflicts of law.
9.9 Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
9.10 Publicity. Except as otherwise required by applicable law or
the rules of the NYSE, neither Banc One nor FUSA shall, nor shall
either permit any of its Subsidiaries to, issue or cause the
publication of any press release or other public announcement with
respect to, or otherwise make any public statement concerning, the
transactions contemplated by this Agreement without the consent of the
other party, which consent shall not be unreasonably withheld.
9.11 Assignment; Third Party Beneficiaries. Neither this
Agreement nor any of the rights, interests or obligations shall be
assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns. Except as otherwise
specifically provided in Section 6.8 and, with respect to the
individuals listed in Section 7.2(c) of the FUSA Disclosure Schedule,
Section 6.12(a), this Agreement (including the documents and
instruments referred to herein) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
IN WITNESS WHEREOF, Banc One and FUSA have caused this Agreement
to be executed by their respective officers thereunto duly authorized
as of the date first above written.
BANC ONE CORPORATION FIRST USA, INC.
By: /s/ JOHN B. McCOY By: /s/ JOHN C. TOLLESON
--------------------- ----------------------
Name: John B. McCoy Name: John C. Tolleson
Title: Chairman and Chief Title: Chairman and Chief
Executive Officer Executive Officer
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated January 19, 1997,
between First USA, Inc., a Delaware corporation ("Issuer"),
and Banc One Corporation, an Ohio corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an
Agreement and Plan of Merger of even date herewith (the
"Merger Agreement"), which agreement has been executed by the
parties hereto immediately prior to this Stock Option
Agreement (the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into
the Merger 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 Merger 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 24,480,231 fully paid and
nonassessable shares of Issuer's Common Stock, par value $.01
per share ("Common Stock"), at a price of $46.50 per share
(the "Option Price"); provided, however, that in no event
shall the number of shares of Common Stock for which this
Option is exercisable exceed 19.9% of the Issuer's issued and
outstanding shares of Common Stock without giving effect to
any shares subject to 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 either (i) issued or otherwise become
outstanding after the date of this Agreement (other than
pursuant to this Agreement or as permitted under the terms of
the Merger Agreement) or (ii) redeemed, repurchased, retired
or otherwise cease to be outstanding after the date of the
Agreement, the number of shares of Common Stock subject to
the Option shall be increased or decreased, as appropriate,
so that, after such issuance, such number 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 Agreement shall be deemed to
authorize Issuer or Grantee to breach any provision of the
Merger Agreement.
2. (a) The Holder (as hereinafter defined) may
exercise the Option, in whole or part, and from time to time,
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 90 days following such
Subsequent Triggering Event. Each of the following shall be
an "Exercise Termination Event": (i) the Effective Time (as
defined in the Merger Agreement) of the Merger; (ii)
termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the
occurrence of an Initial Triggering Event except a
termination by Grantee pursuant to Section 8.1(d) of the
Merger Agreement (unless the breach by Issuer giving rise to
such right of termination is non-volitional); or (iii) the
passage of 12 months after termination of the Merger
Agreement if such termination follows the occurrence of an
Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(d) of the Merger Agreement (unless
the breach by Issuer giving rise to such right of termination
is non-volitional) (provided that if an Initial Triggering
Event continues or occurs beyond such termination and prior
to the passage of such 12-month period, the Exercise
Termination Event shall be 12 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 expire. The term
"Holder" shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean
any of the following events or transactions occurring after
the date hereof:
(i) Issuer or any of its Subsidiaries (each
an "Issuer Subsidiary"), without having received
Grantee's prior written consent, shall have entered into
an agreement to engage in an Acquisition Transaction (as
hereinafter defined) with any person (the term "person"
for purposes of this Agreement having the meaning
assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (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 stockholders of Issuer approve
or accept any Acquisition Transaction. For purposes of
this Agreement, "Acquisition Transaction" shall mean (w)
a merger or consolidation, or any similar transaction,
involving Issuer or any Significant Subsidiary (as
defined in Rule 1-02 of Regulation S-X promulgated by
the Securities and Exchange Commission (the "SEC")) of
Issuer, (x) a purchase, lease or other acquisition or
assumption of all or a substantial portion of the assets
or deposits of Issuer or any Significant Subsidiary of
Issuer, (y) 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 (z) any substantially similar
transaction; provided, however, that in no event shall
any merger, consolidation, purchase or similar
transaction involving only the Issuer and one or more of
its Subsidiaries or involving only any two or more of
such Subsidiaries, be deemed to be an Acquisition
Transaction, provided that any such transaction is not
entered into in violation of the terms of the Merger
Agreement;
(ii) Issuer or any Issuer Subsidiary, without
having received Grantee's prior written consent, shall
have authorized, recommended, proposed or publicly
announced its intention to authorize, recommend or
propose, to engage in an Acquisition Transaction with
any person other than Grantee or a Grantee Subsidiary,
or the Board of Directors of Issuer shall have publicly
withdrawn or modified, or publicly announced its
interest to withdraw or modify, in any manner adverse to
Grantee, its recommendation that the stockholders of
Issuer approve the transactions contemplated by the
Merger Agreement in anticipation of engaging in an
Acquisition Transaction;
(iii) Any person other than Grantee, any
Grantee Subsidiary or any Issuer Subsidiary acting in a
fiduciary capacity in the ordinary course of its
business 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 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 stockholders by public announcement or
written communication that is or becomes the subject of
public disclosure to engage in an Acquisition
Transaction; provided that for the purposes of this
paragraph (iv), a proposal relating solely to an
acquisition of the assets or stock of First USA
Paymentech, Inc. shall not be deemed to be an Initial
Triggering Event;
(v) After an overture is made by a third
party to Issuer or its stockholders to engage in an
Acquisition Transaction, Issuer shall have breached any
covenant or obligation contained in the Merger Agreement
and such breach (x) would entitle Grantee to terminate
the Merger 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 Federal Reserve Board, or other federal or state
bank regulatory authority, which application or notice
has been accepted for processing, 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 20% or more of the then
outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering
Event described in paragraph (i) of subsection (b) of
this Section 2, except that the percentage referred to
in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in
writing of the occurrence of any Initial Triggering Event or
Subsequent Triggering Event of which it has notice (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 Federal Reserve Board or
any other regulatory agency 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 instead from the date
on which any required notification periods have expired or
been terminated or 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 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 Agreement.
(h) Certificates for Common Stock delivered at a
closing hereunder may 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 SEC, or an opinion of counsel,
in form and substance reasonably satisfactory to Issuer, to
the effect that such legend is not required for purposes of
the 1933 Act; (ii) the reference to the provisions to this
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 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 (the
"BHCA"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or
notice to the Federal Reserve Board or to any state
regulatory authority is necessary before the Option may be
exercised, cooperating fully with the Holder in preparing
such applications or notices and providing such information
to the Federal Reserve Board or such state regulatory
authority 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 Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of the
Holder, upon presentation and surrender of this Agreement at
the principal office of Issuer, for other Agreements
providing for Options of different denominations entitling
the holder thereof to purchase, 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 "Agreement" and "Option" as
used herein include any Stock Option Agreements and related
Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Agreement, and (in the case of loss,
theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a
new Agreement of like tenor and date. Any such new Agreement
executed and delivered shall constitute an additional
contractual obligation on the part of Issuer, whether or not
the Agreement so lost, stolen, destroyed or mutilated shall
at any time be enforceable by anyone.
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 Agreement, the
number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject
to adjustment from time to time as provided in this Section
5. In the event of any change in, or distributions in
respect of, the Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, distributions
on or in respect of the Common Stock that would be prohibited
under the terms of the Merger Agreement, or the like, the
type and number of shares of Common Stock purchasable upon
exercise hereof and the Option Price shall be appropriately
adjusted in such manner as shall fully preserve the economic
benefits provided hereunder and proper provision shall be
made in any agreement governing any such transaction to
provide for such proper adjustment and the full satisfaction
of the Issuer's obligations hereunder.
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 90
days 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 this
Option and any shares issued and issuable pursuant to this
Option and shall use its reasonable best efforts to cause
such registration statement to become effective and remain
current in order to permit the sale or other disposition of
this Option and 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.
Issuer will use its reasonable 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. The
foregoing notwithstanding, if, at the time of any request by
Grantee for registration of the Option or Option Shares as
provided above, Issuer is in 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 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;
and 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 sold by the Holder and
Issuer in the aggregate; and 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. 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 secondary offering
underwriting agreements for the Issuer. 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. Notwithstanding anything to the contrary contained
herein, in no event shall Issuer be obligated to effect more
than two registrations pursuant to this Section 6 by reason
of the fact that there shall be more than one Grantee as a
result of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a
Repurchase Event (as defined below), (i) following a request
of the Holder, delivered prior to an Exercise Termination
Event, Issuer (or any successor thereto) shall repurchase the
Option from the Holder at a price (the "Option Repurchase
Price") equal to 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 and (ii) at the request of the owner of
Option Shares from time to time (the "Owner"), delivered
within 90 days of such occurrence (or such later period as
provided in 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 the Market/Offer Price multiplied by the number of
Option Shares so designated. 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, (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 six-month 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 a substantial portion 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 mutually
selected by the Holder or the Owner, as the case may be, on
the one hand, and the Issuer, on the other, 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
mutually selected by the Holder or Owner, as the case may be,
on the one hand, and the Issuer, on the other.
(b) The Holder and 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 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. Within the latter to occur of (x) 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 and (y) the time that is immediately
prior to the occurrence of a Repurchase Event, 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 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 paragraph (b) of this Section 7 is prohibited
under applicable law or regulation 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 Repurchase 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 portion thereof theretofore
delivered to the Holder and the denominator of which is the
Option Repurchase Price, or (B) to the Owner, a certificate
for the Option Shares it is then so prohibited from
repurchasing.
(d) For purposes of this Section 7, a Repurchase
Event shall be deemed to have occurred (i) upon the
consummation of any merger, consolidation or similar
transaction involving Issuer or any purchase, lease or other
acquisition of all or a substantial portion of the assets of
Issuer, other than any such transaction which would not
constitute an Acquisition Transaction pursuant to the
provisos to Section 2(b)(i) hereof or (ii) upon the
acquisition by any person of beneficial ownership of 50% or
more of the then outstanding shares of Common Stock, provided
that no such event shall constitute a Repurchase Event unless
a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event. The parties hereto agree that
Issuer's obligations to repurchase the Option or Option
Shares under this Section 7 shall not terminate upon the
occurrence of an Exercise Termination Event unless no
Subsequent Triggering Event shall have occurred prior to the
occurrence of an Exercise Termination Event.
8. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i)
to consolidate with or merge into any person, other than
Grantee or one of its Subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or
merger, (ii) to permit any person, other than Grantee or one
of its Subsidiaries, to merge into Issuer and Issuer shall be
the continuing or surviving corporation, but, in connection
with such merger, the then outstanding shares of 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 voting
shares and voting 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 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 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 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 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 or the Owner,
as the case may be, and reasonably acceptable to the
Acquiring Corporation.
(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
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 reasonable 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 reasonable 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 six-month
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 and 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 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, in either case, 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 from
repurchasing the Substitute Option and/or the Substitute
Shares in part or in full, the Substitute Option Issuer
following a request for repurchase pursuant to this Section 9
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 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 portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the
Substitute Option Repurchase Price, or (B) to the Substitute
Share Owner, a certificate for the Substitute Common Shares
it is then so prohibited from repurchasing.
10. The 90-day period for exercise of certain
rights under Sections 2, 6, 7 and 13 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 Agreement and to consummate the
transactions contemplated hereby. The execution and delivery
of this 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 Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly
executed and delivered by 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 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, encumbrance and security
interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including if
required redeeming all of the Rights or amending or
terminating the Rights Agreement) so that the entering into
of this Option Agreement, the acquisition of shares of Common
Stock hereunder and the other transactions contemplated
hereby do not and will not result in the grant of any rights
to any person under the Rights Agreement or enable or require
the Rights to be exercised, distributed or triggered.
12. Grantee hereby represents and warrants to
Issuer that:
(a) Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any
approvals or consents referred to herein, to consummate the
transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all
necessary corporate action on the part of Grantee. This
Agreement has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of
Common Stock or other securities acquired by Grantee upon
exercise of the Option will not be, acquired with a view to
the public distribution thereof and will not be transferred
or otherwise disposed of except in a transaction registered
or exempt from registration under the Securities Act.
13. Neither of the parties hereto may assign any
of its rights or obligations under this 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 90 days following
such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the
date 15 days following the date on which the Federal Reserve
Board approves an application by Grantee under the BHCA 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.g., 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 Federal Reserve Board.
14. 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 authorities necessary to
the consummation of the transactions contemplated by this
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 Federal Reserve Board under the BHCA for
approval to acquire the shares issuable hereunder, but
Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common
Stock issuable hereunder until such time, if ever, as it
deems appropriate to do so.
15. The parties hereto acknowledge that damages
would be an inadequate remedy for a breach of this Agreement
by either party hereto and that the obligations of the
parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
16. If any term, provision, covenant or
restriction contained in this Agreement is held by a court or
a federal or state regulatory agency of competent
jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and
restrictions contained in this Agreement shall remain in full
force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory
agency determines that 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 Merger Agreement.
18. This 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 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 Merger Agreement, this 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 Agreement shall
inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns.
Nothing in this 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 Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and
not defined herein shall have the meanings assigned thereto
in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed on its behalf by its officers
thereunto duly authorized, all as of the date first above
written.
FIRST USA, INC.
By: /s/ JOHN C. TOLLESON
Name: John C. Tolleson
Title: Chairman and Chief
Executive Officer
BANC ONE CORPORATION
By: /s/ JOHN B. McCOY
Name: John B. McCoy
Title: Chairman and Chief
Executive Officer
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated January 19, 1997,
between Banc One Corporation, an Ohio corporation ("Issuer"),
and First USA, Inc., a Delaware corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an
Agreement and Plan of Merger of even date herewith (the
"Merger Agreement"), which agreement has been executed by the
parties hereto immediately prior to this Stock Option
Agreement (the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into
the Merger 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 Merger 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 85,025,391 fully paid and
nonassessable shares of Issuer's Common Stock, no par value
("Common Stock"), at a price of $45.125 per share (the
"Option Price"); provided, however, that in no event shall
the number of shares of Common Stock for which this Option is
exercisable exceed 19.9% of the Issuer's issued and
outstanding shares of Common Stock without giving effect to
any shares subject to 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 either (i) issued or otherwise become
outstanding after the date of this Agreement (other than
pursuant to this Agreement or as permitted under the terms of
the Merger Agreement) or (ii) redeemed, repurchased, retired
or otherwise cease to be outstanding after the date of the
Agreement, the number of shares of Common Stock subject to
the Option shall be increased or decreased, as appropriate,
so that, after such issuance, such number 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 Agreement shall be deemed to
authorize Issuer or Grantee to breach any provision of the
Merger Agreement.
2. (a) The Holder (as hereinafter defined) may
exercise the Option, in whole or part, and from time to time,
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 90 days following such
Subsequent Triggering Event. Each of the following shall be
an "Exercise Termination Event": (i) the Effective Time (as
defined in the Merger Agreement) of the Merger; (ii)
termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the
occurrence of an Initial Triggering Event except a
termination by Grantee pursuant to Section 8.1(d) of the
Merger Agreement (unless the breach by Issuer giving rise to
such right of termination is non-volitional); or (iii) the
passage of 12 months after termination of the Merger
Agreement if such termination follows the occurrence of an
Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(d) of the Merger Agreement (unless
the breach by Issuer giving rise to such right of termination
is non-volitional) (provided that if an Initial Triggering
Event continues or occurs beyond such termination and prior
to the passage of such 12-month period, the Exercise
Termination Event shall be 12 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 expire. The term
"Holder" shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean
any of the following events or transactions occurring after
the date hereof:
(i) Issuer or any of its Subsidiaries (each
an "Issuer Subsidiary"), without having received
Grantee's prior written consent, shall have entered into
an agreement to engage in an Acquisition Transaction (as
hereinafter defined) with any person (the term "person"
for purposes of this Agreement having the meaning
assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (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 stockholders of Issuer approve
or accept any Acquisition Transaction. For purposes of
this Agreement, "Acquisition Transaction" shall mean (w)
a merger or consolidation, or any similar transaction,
involving Issuer or any Significant Subsidiary (as
defined in Rule 1-02 of Regulation S-X promulgated by
the Securities and Exchange Commission (the "SEC")) of
Issuer, (x) a purchase, lease or other acquisition or
assumption of all or a substantial portion of the assets
or deposits of Issuer or any Significant Subsidiary of
Issuer, (y) 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 (z) any substantially similar
transaction; provided, however, that in no event shall
any merger, consolidation, purchase or similar
transaction involving only the Issuer and one or more of
its Subsidiaries or involving only any two or more of
such Subsidiaries, be deemed to be an Acquisition
Transaction, provided that any such transaction is not
entered into in violation of the terms of the Merger
Agreement;
(ii) Issuer or any Issuer Subsidiary, without
having received Grantee's prior written consent, shall
have authorized, recommended, proposed or publicly
announced its intention to authorize, recommend or
propose, to engage in an Acquisition Transaction with
any person other than Grantee or a Grantee Subsidiary,
or the Board of Directors of Issuer shall have publicly
withdrawn or modified, or publicly announced its
interest to withdraw or modify, in any manner adverse to
Grantee, its recommendation that the stockholders of
Issuer approve the transactions contemplated by the
Merger Agreement in anticipation of engaging in an
Acquisition Transaction;
(iii) Any person other than Grantee, any
Grantee Subsidiary or any Issuer Subsidiary acting in a
fiduciary capacity in the ordinary course of its
business 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 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 stockholders by public announcement or
written communication that is or becomes the subject of
public disclosure to engage in an Acquisition
Transaction;
(v) After an overture is made by a third
party to Issuer or its stockholders to engage in an
Acquisition Transaction, Issuer shall have breached any
covenant or obligation contained in the Merger Agreement
and such breach (x) would entitle Grantee to terminate
the Merger 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 Federal Reserve Board, or other federal or state
bank regulatory authority, which application or notice
has been accepted for processing, 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 20% or more of the then
outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering
Event described in paragraph (i) of subsection (b) of
this Section 2, except that the percentage referred to
in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in
writing of the occurrence of any Initial Triggering Event or
Subsequent Triggering Event of which it has notice (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 Federal Reserve Board or
any other regulatory agency 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 instead from the date
on which any required notification periods have expired or
been terminated or 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 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 Agreement.
(h) Certificates for Common Stock delivered at a
closing hereunder may 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 SEC, or an opinion of counsel,
in form and substance reasonably satisfactory to Issuer, to
the effect that such legend is not required for purposes of
the 1933 Act; (ii) the reference to the provisions to this
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 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 (the
"BHCA"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or
notice to the Federal Reserve Board or to any state
regulatory authority is necessary before the Option may be
exercised, cooperating fully with the Holder in preparing
such applications or notices and providing such information
to the Federal Reserve Board or such state regulatory
authority 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 Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of the
Holder, upon presentation and surrender of this Agreement at
the principal office of Issuer, for other Agreements
providing for Options of different denominations entitling
the holder thereof to purchase, 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 "Agreement" and "Option" as
used herein include any Stock Option Agreements and related
Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Agreement, and (in the case of loss,
theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a
new Agreement of like tenor and date. Any such new Agreement
executed and delivered shall constitute an additional
contractual obligation on the part of Issuer, whether or not
the Agreement so lost, stolen, destroyed or mutilated shall
at any time be enforceable by anyone.
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 Agreement, the
number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject
to adjustment from time to time as provided in this Section
5. In the event of any change in, or distributions in
respect of, the Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, distributions
on or in respect of the Common Stock that would be prohibited
under the terms of the Merger Agreement, or the like, the
type and number of shares of Common Stock purchasable upon
exercise hereof and the Option Price shall be appropriately
adjusted in such manner as shall fully preserve the economic
benefits provided hereunder and proper provision shall be
made in any agreement governing any such transaction to
provide for such proper adjustment and the full satisfaction
of the Issuer's obligations hereunder.
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 90
days 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 this
Option and any shares issued and issuable pursuant to this
Option and shall use its reasonable best efforts to cause
such registration statement to become effective and remain
current in order to permit the sale or other disposition of
this Option and 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.
Issuer will use its reasonable 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. The
foregoing notwithstanding, if, at the time of any request by
Grantee for registration of the Option or Option Shares as
provided above, Issuer is in 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 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;
and 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 sold by the Holder and
Issuer in the aggregate; and 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. 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 secondary offering
underwriting agreements for the Issuer. 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. Notwithstanding anything to the contrary contained
herein, in no event shall Issuer be obligated to effect more
than two registrations pursuant to this Section 6 by reason
of the fact that there shall be more than one Grantee as a
result of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a
Repurchase Event (as defined below), (i) following a request
of the Holder, delivered prior to an Exercise Termination
Event, Issuer (or any successor thereto) shall repurchase the
Option from the Holder at a price (the "Option Repurchase
Price") equal to 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 and (ii) at the request of the owner of
Option Shares from time to time (the "Owner"), delivered
within 90 days of such occurrence (or such later period as
provided in 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 the Market/Offer Price multiplied by the number of
Option Shares so designated. 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, (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 six-month 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 a substantial portion 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
mutually selected by the Holder or the Owner, as the case may
be, on the one hand, and the Issuer, on the other, 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
mutually selected by the Holder or Owner, as the case may be,
on the one hand, and the Issuer, on the other.
(b) The Holder and 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 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. Within the latter to occur of (x) 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 and (y) the time that is immediately
prior to the occurrence of a Repurchase Event, 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 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 paragraph (b) of this Section 7 is prohibited
under applicable law or regulation 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 Repurchase 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 portion thereof
theretofore delivered to the Holder and the denominator of
which is the Option Repurchase Price, or (B) to the Owner, a
certificate for the Option Shares it is then so prohibited
from repurchasing.
(d) For purposes of this Section 7, a Repurchase
Event shall be deemed to have occurred (i) upon the
consummation of any merger, consolidation or similar
transaction involving Issuer or any purchase, lease or other
acquisition of all or a substantial portion of the assets of
Issuer, other than any such transaction which would not
constitute an Acquisition Transaction pursuant to the
provisos to Section 2(b)(i) hereof or (ii) upon the
acquisition by any person of beneficial ownership of 50% or
more of the then outstanding shares of Common Stock, provided
that no such event shall constitute a Repurchase Event unless
a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event. The parties hereto agree that
Issuer's obligations to repurchase the Option or Option
Shares under this Section 7 shall not terminate upon the
occurrence of an Exercise Termination Event unless no
Subsequent Triggering Event shall have occurred prior to the
occurrence of an Exercise Termination Event.
8. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i)
to consolidate with or merge into any person, other than
Grantee or one of its Subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or
merger, (ii) to permit any person, other than Grantee or one
of its Subsidiaries, to merge into Issuer and Issuer shall be
the continuing or surviving corporation, but, in connection
with such merger, the then outstanding shares of 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 voting
shares and voting 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 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 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 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 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 or the Owner,
as the case may be, and reasonably acceptable to the
Acquiring Corporation.
(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
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 reasonable 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
reasonable 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 six-month 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 and 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 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, in either case, 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 from
repurchasing the Substitute Option and/or the Substitute
Shares in part or in full, the Substitute Option Issuer
following a request for repurchase pursuant to this Section 9
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 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 portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the
Substitute Option Repurchase Price, or (B) to the Substitute
Share Owner, a certificate for the Substitute Common Shares
it is then so prohibited from repurchasing.
10. The 90-day period for exercise of certain
rights under Sections 2, 6, 7 and 13 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 Agreement and to consummate the
transactions contemplated hereby. The execution and delivery
of this 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 Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly
executed and delivered by 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 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, encumbrance and security
interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including if
required redeeming all of the Rights or amending or
terminating the Rights Agreement) so that the entering into
of this Option Agreement, the acquisition of shares of Common
Stock hereunder and the other transactions contemplated
hereby do not and will not result in the grant of any rights
to any person under the Rights Agreement or enable or require
the Rights to be exercised, distributed or triggered.
12. Grantee hereby represents and warrants to
Issuer that:
(a) Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any
approvals or consents referred to herein, to consummate the
transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all
necessary corporate action on the part of Grantee. This
Agreement has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of
Common Stock or other securities acquired by Grantee upon
exercise of the Option will not be, acquired with a view to
the public distribution thereof and will not be transferred
or otherwise disposed of except in a transaction registered
or exempt from registration under the Securities Act.
13. Neither of the parties hereto may assign any
of its rights or obligations under this 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 90 days following
such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the
date 15 days following the date on which the Federal Reserve
Board approves an application by Grantee under the BHCA 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.g., 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 Federal Reserve Board.
14. 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 authorities necessary to
the consummation of the transactions contemplated by this
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 Federal Reserve Board under the BHCA for
approval to acquire the shares issuable hereunder, but
Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common
Stock issuable hereunder until such time, if ever, as it
deems appropriate to do so.
15. The parties hereto acknowledge that damages
would be an inadequate remedy for a breach of this Agreement
by either party hereto and that the obligations of the
parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
16. If any term, provision, covenant or
restriction contained in this Agreement is held by a court or
a federal or state regulatory agency of competent
jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and
restrictions contained in this Agreement shall remain in full
force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory
agency determines that 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 Merger Agreement.
18. This 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 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 Merger Agreement, this 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 Agreement shall
inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns.
Nothing in this 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 Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and
not defined herein shall have the meanings assigned thereto
in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed on its behalf by its officers
thereunto duly authorized, all as of the date first above
written.
FIRST USA, INC.
By: /s/ JOHN C. TOLLESON
Name: John C. Tolleson
Title: Chairman and Chief
Executive Officer
BANC ONE CORPORATION
By: /s/ JOHN B. McCOY
Name: John B. McCoy
Title: Chairman and Chief
Executive Officer
