Exhibit 2
AGREEMENT AND PLAN OF MERGER
by and between
NATIONAL CITY CORPORATION
and
PROVIDENT FINANCIAL GROUP, INC.
dated as of February 16, 2004
TABLE OF CONTENTS
PAGE
----
I. MERGER....................................................................... 1
1.1 Merger.................................................................... 1
1.2 Filings................................................................... 2
1.3 Effective Time............................................................ 2
1.4 Effect of Merger.......................................................... 2
1.5 Certificate of Incorporation and By-laws.................................. 2
1.6 Directors and Officers.................................................... 2
1.7 Additional Actions........................................................ 3
II. CONVERSION OF SHARES........................................................ 3
2.1 Conversion of Shares...................................................... 3
2.2 Assumption of Stock Options............................................... 4
2.3 Exchange of Certificates.................................................. 5
2.4 Closing of Company's Transfer Books....................................... 8
2.5 Changes in National City Common Stock..................................... 8
2.6 Tax Consequences.......................................................... 8
III. REPRESENTATIONS AND WARRANTIES OF NATIONAL CITY............................ 8
3.1 Corporate Organization.................................................... 8
3.2 Authority................................................................. 8
3.3 Capitalization............................................................ 9
3.4 Subsidiaries.............................................................. 9
3.5 Information in Disclosure Documents, Registration Statement, Etc.......... 10
3.6 Consents and Approvals; No Violation...................................... 10
3.7 Reports and Financial Statements.......................................... 11
3.8 Taxes..................................................................... 12
3.9 Employee Plans............................................................ 12
3.10 Material Contracts........................................................ 13
3.11 Absence of Certain Changes or Events...................................... 14
3.12 Litigation................................................................ 14
3.13 Compliance with Laws and Orders........................................... 14
3.14 Agreements with Bank Regulators, Etc...................................... 15
3.15 National City Ownership of Stock.......................................... 15
3.16 Tax Treatment............................................................. 15
3.17 Fees...................................................................... 15
3.18 National City Action...................................................... 15
3.19 Material Interests of Certain Persons..................................... 16
3.20 Environmental Matters..................................................... 16
i
PAGE
----
3.21 Labor Matters............................................................. 17
3.22 National City Disclosure Letter........................................... 18
IV. REPRESENTATIONS AND WARRANTIES OF COMPANY................................... 18
4.1 Corporate Organization.................................................... 18
4.2 Authority................................................................. 18
4.3 Capitalization............................................................ 18
4.4 Subsidiaries.............................................................. 19
4.5 Information in Disclosure Documents, Registration Statement, Etc.......... 19
4.6 Consent and Approvals; No Violation....................................... 20
4.7 Reports and Financial Statements.......................................... 20
4.8 Taxes..................................................................... 21
4.9 Employee Plans............................................................ 21
4.10 Material Contracts........................................................ 23
4.11 Absence of Certain Changes or Events...................................... 23
4.12 Litigation................................................................ 23
4.13 Compliance with Laws and Orders........................................... 23
4.14 Agreements with Bank Regulators, Etc...................................... 24
4.15 Tax Treatment............................................................. 25
4.16 Fees...................................................................... 25
4.17 Company Action............................................................ 25
4.18 Vote Required............................................................. 25
4.19 Material Interests of Certain Persons..................................... 25
4.20 Environmental Matters..................................................... 25
4.21 Labor..................................................................... 26
4.22 Company Disclosure Letter................................................. 26
4.23 Minute Books.............................................................. 26
V. COVENANTS.................................................................... 26
5.1 Acquisition Transactions.................................................. 26
5.2 Interim Operations of Company............................................. 27
5.3 Interim Operations of National City....................................... 29
5.4 Control of Other Party's Business......................................... 30
5.5 Employee Matters.......................................................... 30
5.6 Access and Information.................................................... 31
5.7 Certain Filings, Consents and Arrangements................................ 32
5.8 State Takeover Statutes................................................... 32
5.9 Indemnification........................................................... 32
5.10 Additional Agreements..................................................... 34
5.11 Section 16................................................................ 34
5.12 Publicity................................................................. 35
ii
PAGE
----
5.13 Registration Statement and Proxy.......................................... 35
5.14 Stock Exchange Listings................................................... 35
5.15 Shareholders' Meeting..................................................... 36
5.16 Tax-Free Reorganization Treatment......................................... 36
5.17 Provision of Shares....................................................... 36
5.18 Adverse Action............................................................ 36
5.19 Notice of Breach or Potential Breach...................................... 36
5.20 Update and Supplement to Disclosure Letters............................... 36
VI. CLOSING MATTERS............................................................. 37
6.1 The Closing............................................................... 37
6.2 Documents and Certificates................................................ 37
VII. CONDITIONS................................................................. 37
7.1 Conditions to Each Party's Obligations to Effect the Merger............... 37
7.2 Conditions to Obligation of Company to Effect the Merger.................. 39
7.3 Conditions to Obligation of National City to Effect the Merger............ 39
VIII. MISCELLANEOUS............................................................. 40
8.1 Termination............................................................... 40
8.2 Non-Survival of Representations, Warranties and Agreements................ 42
8.3 Waiver and Amendment...................................................... 42
8.4 Entire Agreement.......................................................... 42
8.5 Applicable Law............................................................ 42
8.6 Certain Definitions; Headlines............................................ 43
8.7 Notices................................................................... 44
8.8 Counterparts.............................................................. 45
8.9 Parties in Interest; Assignment........................................... 45
8.10 Effect of Termination and Termination Fee................................. 45
8.11 Enforcement of the Agreement.............................................. 47
8.12 Severability.............................................................. 47
iii
INDEX TO DEFINITIONS
DEFINITIONS PAGE
----------- ----
Acquisition Transactions 26
Affiliate 43
Agreement 1
Associate 43
Benefit Agreements 13
BHCA 8
Certificate of Designation 4
Certificates 5
Claim 33
Closing 37
Closing Date 37
Code 1
Commission 5
Common Merger Consideration 3
Common Stock Certificate 5
Common Stock Conversion Ratio 3
Company 1
Company Common Stock 1
Company Contracts 23
Company Disclosure Letter 19
Company Employee Plans 22
Company Insiders 34
Company Meeting 36
Company Option Plans 5
Company Preferred Stock 1
Company Reports 20
Company Subsidiaries 19
Company Subsidiary 19
Confidentiality Agreements 32
iv
Consents 37
Constituent Corporations 2
Continuing Employee 30
Continuing Employees 30
Control 43
Covered Parties 33
Delaware Certificate of Merger 2
DGCL 1
DPC Common Shares 3
DPC Preferred Shares 3
DPC Shares 3
Effective Time 2
Environmental Law 16
ERISA 12
Exchange Act 11
Exchange Agent 5
FDIA 15
Fed Approval Date 43
FRB 11
Governmental Entity 10
Hazardous Substance 16
HSR Act 11
Indemnitees 32
Insurance Expense Cap 33
Insurance Policy 33
IRS 12
Loan Portfolio Properties, Trust Properties and Other Properties 17
Market Price 43
Material Adverse Effect 43
Merger 1
Merger Consideration 4
NASD 11
v
National City 1
National City Common Stock 3
National City Contracts 13
National City Disclosure Letter 2
National City Employee Plans 12
National City Preferred Stock 4
National City Reports 11
Ohio Certificate of Merger 2
Ohio Code 1
PBGC 13
PCBs 17
Person 43
Preferred Merger Consideration 4
Preferred Stock Certificate 5
Proxy Statement 10
Registration Statement 10
SBIA 11
Securities Act 10
Significant Subsidiary 43
State Entities 11
Subsidiary 44
Surviving Corporation 2
Termination Fee 46
Trust Account Common Shares 3
Trust Account Preferred Shares 3
Trust Account Shares 3
Unexercised Options 5
vi
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of February 16, 2004 (the
"Agreement"), is made by and between National City Corporation, a Delaware
corporation ("National City"), and Provident Financial Group, Inc., an Ohio
corporation ("Company").
WHEREAS, National City and Company have each determined that it is in the
best interests of their respective stockholders and shareholders for Company to
merge with and into National City in a transaction in which the separate
corporate existence of Company will thereupon cease (the "Merger"), upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, the respective Boards of Directors of National City and Company
have each approved this Agreement and the consummation of the transactions
contemplated hereby and approved the execution and delivery of this Agreement;
and
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements contained herein and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
I. MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined below), Company will be merged with and into National
City and the separate corporate existence of Company will thereupon cease in
accordance with the applicable provisions of the General Corporation Law of the
Ohio Revised Code (the "Ohio Code") and the Delaware General Corporation Law
(the "DGCL").
National City may at any time change the method of effecting the
combination with Company (including, without limitation, the provisions of this
Article I) if and to the extent it deems such change to be desirable, including,
without limitation, to provide for a merger of Company with and into a
wholly-owned Subsidiary (as defined below) of National City; provided, however,
that no such change shall (i) alter or change the amount or kind of
consideration to be issued to holders of shares of common stock, without par
value, of Company ("Company Common Stock") and holders of shares of Series D
Non-Voting Convertible Preferred Stock ("Company Preferred Stock"), as provided
for in this Agreement, (ii) adversely affect the tax treatment of the
transaction as described in Section 7.1(f) or the tax treatment of Company's
shareholders as a result of receiving the Merger Consideration (as defined
below), (iii) materially impede or delay consummation of the transactions
contemplated by this Agreement or (iv) relieve National City of any of its
obligations hereunder.
1
1.2 Filings. As soon as practicable after satisfaction or waiver of all
conditions to the Merger specified in Article VII below and, provided, that this
Agreement has not been terminated pursuant to Section 8.1 below, immediately
prior to the Closing (as defined below), National City and Company (sometimes
together referred to herein as the "Constituent Corporations") shall cause a
certificate of merger complying with the requirements of the DGCL (the "Delaware
Certificate of Merger") to be filed with the Secretary of State of the State of
Delaware and a certificate of merger complying with the requirements of the Ohio
Code to be filed with the Secretary of State of the State of Ohio (the "Ohio
Certificate of Merger").
1.3 Effective Time. The Merger shall become effective at the time (the
"Effective Time") of the last of the following events to occur: (a) the filing
of the Delaware Certificate of Merger; (b) the filing of the Ohio Certificate of
Merger; or (c) such later time as shall be specified in such filings.
1.4 Effect of Merger. From and after the Effective Time, the Merger shall
have the effects specified in the Ohio Code and DGCL. Without limiting the
generality of the foregoing, National City shall be the surviving corporation in
the Merger (sometimes hereinafter referred to as the "Surviving Corporation")
and shall continue to be governed by the laws of the State of Delaware, and the
separate corporate existence of National City and all of its rights, privileges,
powers and franchises, public as well as private, and all its debts, liabilities
and duties as a corporation organized under the DGCL, shall continue unaffected
by the Merger.
1.5 Certificate of Incorporation and By-laws. The certificate of
incorporation and by-laws of National City in effect immediately prior to the
Effective Time, which shall be in the form of the copies that have been
delivered with the disclosure letter executed by National City and dated and
delivered by National City to Company as of the date hereof (the "National City
Disclosure Letter"), shall be the certificate of incorporation and by-laws of
the Surviving Corporation, until amended in accordance with applicable law.
1.6 Directors and Officers.
(a) Surviving Corporation. The directors and officers of National
City immediately prior to the Effective Time shall be the directors and
officers, respectively, of the Surviving Corporation, from and after the
Effective Time, until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the terms of the Surviving Corporation's certificate of incorporation and
by-laws and the DGCL.
(b) National City. Promptly after the Effective Time, in accordance
with the by-laws of National City, the Board of Directors of National City shall
increase its size to such number as is necessary to create one vacancy and shall
elect S. Xxxxx Xxxxxxx (or, if such individual is determined prior to the
Effective Time to be unable or unwilling to serve, then such other individual as
may be designated by Company's Board of Directors and reasonably acceptable to
National City) to fill such vacancy until the regular annual meeting of National
City shareholders scheduled for April, 2005. In addition, National City's
Nominating and Board of Directors Governance Committee shall recommend such
individual to National City's
2
shareholders for re-election as a director for the one year term commencing
April, 2005, so long as such recommendation will not violate the Nominating and
Board of Directors Governance Committee's fiduciary obligations and such
individual is willing to continue to serve as director and meets the director
qualifications set forth in National City's Corporate Governance Guidelines in
effect at the time of such recommendation.
1.7 Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or desirable to
(i) vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Company, or (ii) otherwise carry out the purposes of
this Agreement, Company and its officers and directors (solely in their
capacities as such) shall be deemed to have granted to the Surviving Corporation
an irrevocable power of attorney to execute and deliver all such deeds,
assignments or assurances in law or any other acts as are necessary or desirable
to (a) vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Company or (b) otherwise carry out the purposes of this
Agreement, and the officers and directors of the Surviving Corporation are
authorized in the name of Company or otherwise to take any and all such action.
II. CONVERSION OF SHARES
2.1 Conversion of Shares.
(a) Subject to Section 2.3 below, at the Effective Time, each then
outstanding share of Company Common Stock not owned by National City or any
direct or indirect wholly-owned Subsidiary of National City (except for any such
shares of Company Common Stock held in trust accounts, managed accounts or in
any similar manner as trustee or in a fiduciary capacity ("Trust Account Common
Shares") or acquired in satisfaction of debts previously contracted ("DPC Common
Shares")) excluding those shares of Company Common Stock held in the treasury of
Company and not withdrawn or waived, shall be, by virtue of the Merger and
without the need for any further action of the holder thereof, converted into a
right to receive 1.135 (the "Common Stock Conversion Ratio") shares of common
stock, par value $4.00 per share, of National City ("National City Common
Stock"). The number of shares of National City Common Stock that each share of
Company Common Stock will be converted into is sometimes referred to herein as
the "Common Merger Consideration".
(b) Subject to Section 2.3 below, at the Effective Time, each
then-outstanding share of Company Preferred Stock not owned by National City or
any direct or indirect wholly-owned Subsidiary of National City (except for any
such shares of Company Preferred Stock held in trust accounts, managed accounts
or in any similar manner as trustee or in a fiduciary capacity ("Trust Account
Preferred Shares" and, together with Trust Account Common Shares, "Trust Account
Shares") or acquired in satisfaction of debts previously contracted ("DPC
Preferred Shares" and, together with DPC Common Shares, "DPC Shares")), other
than those shares of Company Preferred Stock held in the treasury of Company and
not withdrawn or waived, shall be, by virtue of the Merger and without the need
for any further action of the holder thereof, converted into one share of
preferred stock, without par value, of National City which shall be
3
designated National City's Series D Non-Voting Convertible Preferred Stock
("National City Preferred Stock") and shall be initially convertible into 15.96
shares of National City Common Stock and shall otherwise have the designation,
preferences and rights set forth in the form of a certificate of designation
attached hereto as Exhibit A (the "Certificate of Designation"). The number of
shares of National City Preferred Stock that each share of Company Preferred
Stock will be converted into is sometimes referred to herein as the "Preferred
Merger Consideration" and, together with the Common Merger Consideration, as the
"Merger Consideration".
(c) Each holder of Company Common Stock who would otherwise have
been entitled to receive a fraction of a share of National City Common Stock
shall receive, in lieu thereof, a cash payment, without interest, in an amount
equal to such fractional part of a share of National City Common Stock
multiplied by the Market Price (as defined below).
(d) Notwithstanding anything in this Agreement to the contrary,
shares of Company Common Stock outstanding immediately prior to the Effective
Time and held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who has demanded appraisal for such shares of Company
Common Stock in accordance with Section 1701.85 of the Ohio Code shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect or withdraws or loses its, his or her right to appraisal, in
which case such shares of Company Common Stock shall be treated as if they had
been converted as of the Effective Time into a right to receive the Merger
Consideration, without interest thereon. Company shall give National City prompt
written notice of any demands received by Company for appraisal of shares of
Company Common Stock and, prior to the Effective Time, National City shall have
the right to direct all negotiations and proceedings with respect to such
demands. Prior to the Effective Time, Company shall not, except with the prior
written consent of National City, make any payment with respect to, or settle or
offer to settle any such demands. From and after the Effective Time, National
City, as the Surviving Corporation, shall have the right to direct all
negotiations and proceedings with respect to such demands.
(e) At the Effective Time each share of Company Common Stock held in
Company's treasury (if any) immediately prior to the Effective Time shall, by
virtue of the Merger, automatically and without any action on the part of the
holder thereof be cancelled.
(f) At the Effective Time, each then-outstanding share of Company
Common Stock and Company Preferred Stock owned by National City or any direct or
indirect wholly-owned Subsidiary of National City (except for any shares that
are Trust Account Shares or DPC Shares) shall be canceled and retired.
(g) Each share of National City Common Stock issued and outstanding
immediately prior to the Effective Time shall continue to be an issued and
outstanding share of common stock, par value $4.00 per share, of the Surviving
Corporation from and after the Effective Time.
2.2 Assumption of Stock Options. Except as expressly provided in this
Section 2.2, all rights under any stock option granted by Company or its
predecessors pursuant to Company's existing stock option plans listed on Exhibit
B attached hereto (collectively, the "Company
4
Option Plans") that remain outstanding and unexercised, whether vested or
unvested, immediately prior to the Effective Time ("Unexercised Options") shall
cease to represent a right to acquire shares of Company Common Stock and shall
be converted into the right to acquire that number of shares of National City
Common Stock equal to (i) the number of shares of Company Common Stock subject
to the Unexercised Option, multiplied by (ii) the Common Stock Conversion Ratio
(rounded to the nearest whole share). Except as provided below, National City
shall assume all of the obligations of Company with respect to the Unexercised
Options in accordance with the plans, agreements and grants by which such
obligations are evidenced. The exercise price per share of National City Common
Stock under each new option shall be equal to the exercise price per share of
Company Common Stock which was purchasable under each Unexercised Option divided
by the Common Stock Conversion Ratio (rounded to the nearest whole cent)
necessary to assure that the rights and benefits of the optionee under such
option shall not be increased or decreased by reason of this Section 2.2. In
addition, each Unexercised Option which is an "incentive stock option" as
defined in Section 422 of the Code shall be adjusted as required by Section 424
of the Code and the regulations promulgated thereunder so as not to constitute a
modification, extension or renewal of the option considered as the granting of a
new option within the meaning of Section 424(h)(1) of the Code. At or before the
Effective Time, National City shall file, and maintain the effectiveness of, a
registration statement with the Securities and Exchange Commission (the
"Commission") covering such options and the sale of the National City Common
Stock issued upon exercise of such options. At the Effective Time, no additional
options or option rights shall be granted pursuant to any Company Option Plans
and all such Company Option Plans shall be deemed amended to that effect. The
duration and other terms and conditions of the converted options shall be the
same as the original Company options, except that reference to Company shall be
deemed to be references to National City.
2.3 Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time, National City shall
designate National City Bank to act as exchange agent ("Exchange Agent") in
connection with the Merger pursuant to an exchange agent agreement providing
for, among other things, the matters set forth in this Section 2.3. Except as
set forth herein, from and after the Effective Time, each holder of a
certificate that immediately prior to the Effective Time represented outstanding
shares of Company Common Stock (each, a "Common Stock Certificate") shall be
entitled to receive in exchange therefor, upon surrender thereof to the Exchange
Agent, the Common Merger Consideration for each share of Company Common Stock so
represented by the Common Stock Certificate surrendered by such holder thereof.
The certificates representing shares of National City Common Stock that
constitute the Common Merger Consideration shall be properly issued and
countersigned and executed and authenticated, as appropriate. Except as set
forth herein, from and after the Effective Time, each holder of a certificate
that immediately prior to the Effective Time represented outstanding shares of
Company Preferred Stock (each, a "Preferred Stock Certificate" and, together
with the Common Stock Certificates, "Certificates") shall be entitled to receive
in exchange therefor, upon surrender thereof to the Exchange Agent, the
Preferred Merger Consideration for each share of Company Preferred Stock so
represented by the Preferred Stock Certificate surrendered by such holder
thereof. The certificates representing
5
shares of National City Preferred Stock that constitute the Preferred Merger
Consideration shall be properly issued and countersigned and executed and
authenticated, as appropriate.
(b) Notice of Exchange. Promptly after the Effective Time, National
City and Surviving Corporation shall cause the Exchange Agent to mail and/or
make available to each record holder of a Certificate a notice and letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificate shall pass, only upon proper delivery of the
Certificate to the Exchange Agent) advising such holder of the effectiveness of
the Merger and the procedures to be used in effecting the surrender of the
Certificate for exchange therefor. Upon surrender to the Exchange Agent of a
Certificate, together with such letter of transmittal duly executed and
completed in accordance with the instructions thereon, and such other documents
as may reasonably be requested, the Exchange Agent shall promptly deliver to the
Person entitled thereto the appropriate Merger Consideration for each share of
Company Common Stock or Company Preferred Stock, as the case may be, so
represented by the Certificate surrendered by such holder thereof, and such
Certificate shall forthwith be canceled.
(c) Transfer. If delivery of all or part of the Merger Consideration
is to be made to a Person other than the Person in whose name a surrendered
Certificate is registered, it shall be a condition to such delivery or exchange
that the Certificate surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the Person requesting such
delivery or exchange shall have paid any transfer and other taxes required by
reason of such delivery or exchange in a name other than that of the registered
holder of the Certificate surrendered or shall have established to the
reasonable satisfaction of the Exchange Agent that such tax either has been paid
or is not payable.
(d) Right to Merger Consideration. Subject to Section 2.3(e) below,
until surrendered and exchanged in accordance with Sections 2.1 or 2.3 above,
each Certificate shall, after the Effective Time, represent solely the right to
receive the appropriate Merger Consideration, multiplied by the number of shares
of Company Common Stock or Company Preferred Stock, as the case may be,
evidenced by such Certificate, together with any dividends or other
distributions as provided in Sections 2.3(e) and 2.3(f) below, and shall have no
other rights except as otherwise required by applicable law. From and after the
Effective Time, National City and Surviving Corporation shall treat such
Certificates that have not yet been surrendered for exchange as evidencing the
ownership of the aggregate Merger Consideration into which the shares of Company
Common Stock or Company Preferred Stock, as the case may be, represented by such
Certificates may be converted, notwithstanding any failure to surrender such
Certificates. One hundred eighty (180) days following the Effective Time, the
Exchange Agent shall deliver to Surviving Corporation any shares of National
City Common Stock and National City Preferred Stock and funds (including any
interest received with respect thereto) which National City has made available
to the Exchange Agent and which have not been disbursed to holders of
Certificates, and thereafter such holders shall be entitled to look to Surviving
Corporation (subject to abandoned property, escheat or other similar laws) with
respect to the shares of National City Common Stock (and cash in lieu of
fractional shares) and shares of National City Preferred Stock deliverable or
payable upon due surrender of their Certificates. Neither Exchange Agent nor any
party hereto shall be liable to any holder of shares of Company Common Stock or
Company Preferred Stock, as the case may be, for any Merger Consideration
6
(or dividends, distributions or interest with respect thereto) delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(e) Distributions with Respect to Unexchanged Certificates. Whenever
a dividend or other distribution is declared by National City on National City
Common Stock or National City Preferred Stock, the record date for which is at
or after the Effective Time, the declaration shall include dividends or other
distributions on all shares issuable pursuant to this Agreement; provided, that
no dividends or other distributions declared or made with respect to National
City Common Stock and/or National City Preferred Stock shall be paid to the
holder of any unsurrendered Certificate with respect to the share of National
City Common Stock or National City Preferred Stock represented thereby until the
holder of such Certificate shall surrender such Certificate in accordance with
this Article II. Upon surrender of such Certificate, there shall be paid to the
record holder of the Certificate for shares of National City Common Stock or
shares of National City Preferred Stock, as the case may be, in exchange
therefore the amount of dividends, if any, without interest, and less any taxes
that may have been imposed thereon, that have heretofore become payable with
respect to the number of whole shares of National City Common Stock and/or
National City Preferred Stock represented by such Certificate upon surrender and
exchange. Surviving Corporation shall pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have been
declared or made by Company on Company Common Stock or Company Preferred Stock,
as the case may be, in accordance with the terms of this Agreement on or prior
to the Effective Time and which remain unpaid at the Effective Time.
(f) Lost or Destroyed Exchanged Certificates. In the event that any
Certificate shall have been lost, stolen or destroyed, the Exchange Agent shall
deliver in exchange for such lost, stolen or destroyed certificate, upon the
making of an affidavit of that fact by the holder thereof in form satisfactory
to the Exchange Agent, the Merger Consideration, as may be required pursuant to
this Agreement; provided, however, that the Exchange Agent may, in its sole
discretion and as a condition precedent to the delivery of the Merger
Consideration to which the holder of such certificate is entitled as a result of
the Merger, require the owner of such lost, stolen or destroyed certificate to
deliver a bond or surety satisfactory to the Exchange Agent, in such sum as the
Exchange Agent may reasonably determine as indemnity against any claim that may
be made against Company, National City or the Exchange Agent or any other party
with respect to the certificate alleged to have been lost, stolen or destroyed.
(g) Rights With Respect to Unexchanged Certificates. Holders of
unexchanged Certificates shall have, as to such Certificates, no rights as a
stockholder of National City, including, without limitation, the right to vote
the shares represented by any unexchanged Certificates at any meeting of
National City stockholders.
(h) No Fractional Shares. No certificates or scrip representing
fractional shares of National City Common Stock shall be issued upon the
surrender for exchange of a Certificate or Certificates. No dividends or
distributions of National City shall be payable on or with respect to any
fractional share and any such fractional share interest will not entitle the
owner thereof to vote or to any rights of stockholders of National City.
7
2.4 Closing of Company's Transfer Books. The stock transfer books of
Company shall be closed at the close of business on the business day immediately
preceding the date of the Effective Time. In the event of a transfer of
ownership of Company Common Stock or Company Preferred Stock that is not
registered in the transfer records of Company, the Merger Consideration to be
distributed pursuant to this Agreement may be delivered to a transferee, if a
Certificate is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by payment of any applicable
stock transfer taxes. National City and the Exchange Agent shall be entitled to
rely upon the stock transfer books of Company to establish the identity of those
Persons entitled to receive, any notices, letters of transmittal and Merger
Consideration specified in this Agreement for their shares of Company Common
Stock or Company Preferred Stock, which books shall be conclusive with respect
to the ownership of such shares. In the event of a dispute with respect to the
ownership of any such shares, the Surviving Corporation and the Exchange Agent
shall be entitled to deposit any Merger Consideration not already paid
represented thereby in escrow with an independent party and thereafter be
relieved with respect to any claims to such Merger Consideration.
2.5 Changes in National City Common Stock. If, between the date of this
Agreement and the Effective Time, the shares of National City Common Stock shall
be changed into a different number or different class of shares by reason of any
reclassification, recapitalization, split-up, combination, exchange or
readjustment of shares, or if a stock dividend thereon shall be declared with a
record date within said period, the Merger Consideration shall be adjusted
accordingly.
2.6 Tax Consequences. This Agreement shall constitute a "plan of
reorganization" for purposes of Section 368(a) of the Code. National City and
Company agree to file any and all tax returns in a manner consistent with such
qualification.
III. REPRESENTATIONS AND WARRANTIES OF NATIONAL CITY
National City hereby represents and warrants to Company that:
3.1 Corporate Organization. National City is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is qualified to do business as a foreign corporation in each jurisdiction in
which its ownership or lease of property or the nature of the business conducted
by it makes such qualification necessary, except for such jurisdictions in which
the failure to be so qualified would not have a Material Adverse Effect (as
defined below). National City is registered as a financial holding company under
the Bank Holding Company Act of 1956, as amended (the "BHCA"). National City has
the requisite corporate power and authority to own, lease and operate its
properties and assets and to carry on its business as it is now being conducted.
National City has heretofore delivered to Company true and complete copies of
its certificate of incorporation and by-laws as currently in effect.
3.2 Authority. National City has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have been
duly approved by the Board of Directors of National
8
City and no other corporate proceedings on the part of National City are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly executed and delivered by, and
constitutes valid and binding obligations of National City enforceable against
National City in accordance with its terms, except as the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium and other similar laws affecting the enforcement of
creditors' rights generally and by the supervisory and enforcement powers of
bank regulatory agencies and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought.
3.3 Capitalization. As of the date hereof, the authorized capital stock of
National City consists of 1,400,000,000 shares of National City Common Stock and
5,000,000 shares of National City preferred stock. As of the close of business
on February 13, 2004 (i) 605,292,047 shares of National City Common Stock were
validly issued and outstanding, fully paid and nonassessable and (ii) no shares
of preferred stock were issued and outstanding. As of the date hereof, except as
set forth in the National City Disclosure Letter or in this Section 3.3,
pursuant to the exercise of employee stock options under National City's various
stock option plans in effect, National City's dividend reinvestment plan and
stock grants made pursuant to the National City's various restricted stock plans
or set forth in the National City Disclosure Letter, there are no other shares
of capital stock of National City authorized, issued or outstanding and there
are no outstanding subscriptions, options, warrants, rights, convertible
securities or any other agreements or commitments of any character relating to
the issued or unissued capital stock or other securities of National City
obligating National City to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of National City or
obligating National City to grant, extend or enter into any subscription,
option, warrant, right, convertible security or other similar agreement or
commitment. As of the date hereof, except as provided in this Agreement, there
are no voting trusts or other agreements or understandings to which National
City or any National City Subsidiary is a party with respect to the voting of
the capital stock of National City. All of the shares of National City Common
Stock and National City Preferred Stock issuable in exchange for Company Common
Stock and Company Preferred Stock, respectively, at the Effective Time in
accordance with this Agreement and all of the shares of National City Common
Stock issuable upon exercise of Unexercised Options will be, when so issued,
duly authorized, validly issued, fully paid and nonassessable and will not be
subject to preemptive rights.
3.4 Subsidiaries. The name and state of incorporation of each Significant
Subsidiary (as defined below) of National City is set forth in the National City
Disclosure Letter. Each of the Significant Subsidiaries is a bank, a corporation
or other business entity duly organized, validly existing and in good standing
(or the local law equivalent) under the laws of its respective jurisdiction of
incorporation or organization and is qualified to do business as a foreign
corporation or foreign business entity in each jurisdiction in which its
ownership or lease of property or the nature of the business conducted by it
makes such qualification necessary, except for such jurisdictions in which the
failure to be so qualified would not have a Material Adverse Effect. Each
Significant Subsidiary has the requisite corporate power and authority to own,
lease and operate its properties and assets and to carry on its businesses as
they are now being
9
conducted. Except as set forth in the National City Disclosure Letter, all
outstanding shares of capital stock of each Significant Subsidiary are owned by
National City or another of National City's Subsidiaries and are validly issued,
fully paid and (except pursuant to 12 U.S.C. Section 55 in the case of each
national bank subsidiary and applicable state law in the case of each state bank
subsidiary) nonassessable, are not subject to preemptive rights and are owned
free and clear of all liens, claims and encumbrances. Except as set forth in the
National City Disclosure Letter, there are no outstanding subscriptions,
options, warrants, rights, convertible securities or any other agreements or
commitments of any character relating to the issued or unissued capital stock or
other securities of any Significant Subsidiary obligating any Significant
Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold
additional shares of its capital stock or obligating any Significant Subsidiary
to grant, extend or enter into any subscription, option, warrant, right,
convertible security or other similar agreement or commitment.
3.5 Information in Disclosure Documents, Registration Statement, Etc. None
of the information with respect to National City or any of National City's
Subsidiaries provided by National City for inclusion in (i) the registration
statement to be filed with the Commission by National City on Form S-4 under the
Securities Act of 1933, as amended (the "Securities Act"), for the purpose of
registering the shares of National City Common Stock to be issued in the Merger
(the "Registration Statement") and (ii) any proxy statement of Company ("Proxy
Statement") required to be mailed to Company's shareholders in connection with
the Merger will, in the case of the Proxy Statement or any amendments or
supplements thereto, at the time of the mailing of the Proxy Statement and any
amendments or supplements thereto, and at the time of the Company Meeting (as
defined below), or, in the case of the Registration Statement, at the time it
becomes effective, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Registration Statement will comply as to form in all
material respects with the provisions of the Securities Act and the rules and
regulations promulgated thereunder.
3.6 Consents and Approvals; No Violation. Except as set forth in the
National City Disclosure Letter, neither the execution and delivery of this
Agreement by National City nor the consummation by National City of the
transactions contemplated hereby will (a) conflict with or result in any breach
of any provision of its certificate of incorporation or by-laws of National
City, (b) violate, conflict with, constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in the
creation of any lien or other encumbrance upon any of the properties or assets
of National City or any of National City's Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which National
City or any of National City's Subsidiaries is a party or to which they or any
of their respective properties or assets are subject, except for such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens or other encumbrances, which will not have a Material Adverse
Effect or (c) require any consent, approval, authorization or permit of or from,
or filing with or notification to, any court, governmental authority or other
regulatory or administrative agency or commission, domestic or foreign (a
"Governmental Entity"), except (i) pursuant to the Securities Exchange
10
Act of 1934, as amended (the "Exchange Act") and the Securities Act, (ii) filing
the Delaware Certificate of Merger and Certificate of Designation pursuant to
the DGCL, (iii) filing the Ohio Certificate of Merger, (iv) filings required
under the securities or blue sky laws of the various states, (v) filings under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (vi) filings with, and approval by, the Federal Reserve Board (the
"FRB"), (vii) filings with, and approvals by, the Ohio Superintendent of
Financial Institutions, the Arizona Director of Insurance and such other state
regulatory agencies (including, but not limited to, other state bank and
insurance regulatory agencies) as may be required (collectively, the "State
Entities"), (viii) filings and approvals pursuant to any applicable state
takeover law, (ix) filings and approvals under the Small Business Investment Act
of 1958 and the rules and regulations thereunder (the "SBIA"), (x) any consents,
authorizations, approvals, filings or exemptions in connection with compliance
with applicable provisions of federal and state securities laws relating to the
regulations of broker-dealers, investment advisers or transfer agents, (xi) any
filings with, approvals by and notifications pursuant to the rules and
regulations of the National Association of Securities Dealers (the "NASD"), or
(xii) consents, approvals, authorizations, permits, filings or notifications
which, if not obtained or made will not, individually or in the aggregate, have
a Material Adverse Effect.
3.7 Reports and Financial Statements. Since January 1, 1999, National City
and each of National City's Subsidiaries have filed all reports, registrations
and statements, together with any required amendments thereto, that they were
required to file with the Commission under Section 12(b), 12(g), 13(a) or 14(a)
of the Exchange Act, including, but not limited to Forms 10-K, Forms 10-Q and
proxy statements (the "National City Reports"). National City has previously
furnished or will promptly furnish Company with true and complete copies of each
of National City's annual report on Form 10-K for the fiscal year 2003. Except
as set forth in the National City Disclosure Letter, as of their respective
dates, the National City Reports complied in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstance under which they were made, not
misleading. Except as set forth in the National City Disclosure Letter, the
audited consolidated financial statements and unaudited interim financial
statements of National City included in the National City Reports have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (except as may be indicated therein or in the notes thereto)
and fairly present the consolidated financial position of National City and
National City's Subsidiaries as of the dates thereof and the results of their
operations and cash flows for the periods then ended subject, in the case of the
unaudited interim financial statements, to normal year-end and audit adjustments
and any other adjustments described therein. There exist no material liabilities
of National City and its consolidated subsidiaries, contingent or otherwise of a
type required to be disclosed in accordance with generally accepted accounting
practices, except as disclosed in the National City Reports. National City's
reserve for possible loan losses as shown in its annual report on Form 10-K for
the fiscal year 2003 was adequate, within the meaning of generally accepted
accounting principles and safe and sound banking practices.
11
3.8 Taxes. National City will promptly make available to Company, upon
request by Company, true and correct copies of the federal, state and local
income tax returns, and state and local property and sales tax returns and any
other tax returns filed by National City and any of National City's Subsidiaries
for each of the fiscal years that remains open, as of the date hereof, for
examination or assessment of tax. National City and each National City
Subsidiary have prepared in good faith and duly and timely filed, or caused to
be duly and timely filed, all federal, state, local and foreign income,
estimated tax, withholding tax, franchise, sales and other tax returns or
reports required to be filed by them on or before the date hereof, except to the
extent that all such failures to file, taken together, would not have a Material
Adverse Effect. National City and each of its subsidiaries have paid, or have
made adequate provision or set up an adequate accrual or reserve for the payment
of, all taxes, shown or required to be shown to be owing on all such returns or
reports, together with any interest, additions or penalties related to any such
taxes or to any open taxable year or period. Except as set forth in the National
City Disclosure Letter, neither National City nor any of National City's
Subsidiaries has consented to extend the statute of limitations with respect to
the assessment of any tax. Except as set forth in the National City Disclosure
Letter, neither National City nor any of National City's Subsidiaries is a party
to any action or proceeding, nor to the best of National City's knowledge is any
such action or proceeding threatened, by any Governmental Entity in connection
with the determination, assessment or collection of any taxes, and no deficiency
notices or reports have been received by National City or any of National City's
Subsidiaries in respect of any material deficiencies for any tax, assessment, or
government charge.
3.9 Employee Plans. Except as set forth in the National City Disclosure
Letter, all employee benefit, welfare, bonus, deferred compensation, pension,
profit sharing, stock option, employee stock ownership, consulting, severance,
or fringe benefit plans, formal or informal, written or oral, and all trust
agreements related thereto, relating to any present or former directors,
officers or employees of National City or any of its Subsidiaries ("National
City Employee Plans") have been maintained, operated, and administered in
substantial compliance with their terms and currently comply, and have at all
relevant times complied, in all material respects with the applicable
requirements of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the Code, and any other applicable laws. With respect to each
National City Employee Plan which is a pension plan (as defined in Section 3(2)
of ERISA): (a) except for recent amendment(s) to the plans not materially
affecting the qualified status of the plans (which are disclosed in, and copies
of which have been delivered with, the National City Disclosure Letter), each
pension plan as amended (and any trust relating thereto) intended to be a
qualified plan under Section 401(a) of the Code either: (i) has been determined
by the Internal Revenue Service ("IRS") to be so qualified or (ii) is the
subject of a pending application for such determination that was timely filed,
(b) there is no accumulated funding deficiency (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived, and no waiver of the
minimum funding standards of such sections has been requested from the IRS, (c)
neither National City nor any of its Subsidiaries has provided, or is required
to provide, security to any pension plan pursuant to Section 401(a)(29) of the
Code, (d) no reportable event described in Section 4043 of ERISA for which the
30 day reporting requirement has not been waived has occurred, (e) except as
disclosed in the National City Disclosure Letter, no defined benefit plan has
been terminated by National City in the past six years, nor has the Pension
Benefit Guaranty
12
Corporation ("PBGC") instituted proceedings to terminate a defined benefit plan
or to appoint a trustee or administrator of a defined benefit plan, and no
circumstances exist that constitute grounds under Section 4042(a)(2) of ERISA
entitling the PBGC to institute any such proceedings and (f) no pension plan is
a "multiemployer plan" within the meaning of Section 3(37) of ERISA or a
"multiple employer plan" within the meaning of 413(c) of the Code. Neither
National City nor any of its Subsidiaries has incurred any liability to the PBGC
with respect to any "single-employer plan" within the meaning of Section
4001(a)(15) of ERISA currently or formerly maintained by any entity considered
one employer with it under Section 4001 of ERISA or Section 414 of the Code,
except for premiums all of which have been paid when due. Neither National City
nor any of its Subsidiaries has incurred any withdrawal liability with respect
to a multiemployer plan under Subtitle E of Title IV of ERISA. There is no basis
for any Person to assert that National City or any of its Subsidiaries has an
obligation to institute any Employee Plan or any such other arrangement,
agreement or plan. With respect to any insurance policy that heretofore has or
currently does provide funding for benefits under any National City Employee
Plan, (v) there is no liability on the part of National City or any of its
Subsidiaries in the nature of a retroactive or retrospective rate adjustment,
loss-sharing arrangement, or other actual or contingent liability, nor would
there be any such liability if such insurance policy was terminated, and (y) no
insurance company issuing such policy is in receivership, conservatorship,
liquidation or similar proceeding and, to the knowledge of National City, no
such proceeding with respect to any such insurer is imminent. Except as set
forth in the National City Disclosure Letter, neither the execution of this
Agreement, nor the consummation of the transactions contemplated thereby will
(A) constitute a stated triggering event under any National City Employee Plan
that will result in any payment (whether of severance pay or otherwise) becoming
due from National City or any of its Subsidiaries to any present or former
officer, employee, director, shareholder, consultant or dependent of any of the
foregoing or (B) accelerate the time of payment or vesting, or increase the
amount of compensation due to any present or former officer, employee, director,
shareholder, consultant, or dependent of any of the foregoing. Neither National
City nor any of its Subsidiaries has any obligations for retiree health and life
benefits under any National City Employee Plan, except as set forth in the
National City Disclosure Letter. There are no restrictions on the rights of
National City or any of its Subsidiaries to amend or terminate any such National
City Employee Plan without incurring any liability thereunder.
3.10 Material Contracts. Except as set forth in the National City
Disclosure Letter or disclosed in the National City Reports, neither National
City nor any of its Subsidiaries is a party to, or is bound or affected by, or
receives benefits under (a) any employment, severance, termination, consulting
or retirement agreement (collectively, "Benefit Agreements") providing for
aggregate payments to any Person in any calendar year in excess of $1,000,000,
(b) any material agreement, indenture or other instrument relating to the
borrowing of money by National City or any of its Subsidiaries or the guarantee
by National City or any of its Subsidiaries of any such obligation (other than
trade payables and instruments relating to borrowings or guaranties made in the
ordinary course of business) or (c) any other contract or agreement or amendment
thereto that would be required to be filed as an exhibit to a Form 10-K filed by
National City with the Commission as of the date hereof (collectively, the
"National City Contracts"). Neither National City nor any of National City's
Subsidiaries is in default under any of the National City Contracts, which
default is reasonably likely to have, either individually or in the aggregate, a
13
Material Adverse Effect, and there has not occurred any event that with the
lapse of time or the giving of notice or both would constitute such a default.
3.11 Absence of Certain Changes or Events. Except as set forth in the
National City Disclosure Letter or disclosed in the National City Reports filed
by National City with the Commission prior to the date of this Agreement, since
December 31, 2003, there has not been any change in the financial condition,
results of operations or business of National City and its Subsidiaries which
will have a Material Adverse Effect.
3.12 Litigation. Except as disclosed in the National City Reports filed by
National City with the Commission prior to the date of this Agreement, there is
no suit, action or proceeding pending, or, to the knowledge of National City,
threatened against or affecting National City or any of National City's
Subsidiaries which, if decided adversely to National City, would be reasonably
expected to result in a Material Adverse Effect, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator,
outstanding against National City or any of National City's Subsidiaries having,
or which would, insofar as reasonably can be foreseen, now or in the future,
have a Material Adverse Effect.
3.13 Compliance with Laws and Orders.
(a) National City and each National City Subsidiary hold all
licenses, franchises, permits and authorizations necessary for the lawful
conduct of their respective businesses under and pursuant to each, and have
complied in all respects with and are not in default in any respect under any,
applicable law, statute, order, rule, regulation, policy or guideline of any
Governmental Entity relating to National City or National City Subsidiary,
except where the failure to hold such license, franchise, permit or
authorization or such noncompliance or default is not reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect.
(b) Except as set forth in the National City Disclosure Letter or
disclosed in the National City Reports filed by National City with the
Commission prior to the date of this Agreement, the businesses of National City
and of National City's Subsidiaries are not being conducted in violation of any
law, ordinance, regulation, judgment, order, decree, license or permit of any
Governmental Entity (including, without limitation, in the case of National
City's Subsidiaries that are banks, all statutes, rules and regulations
pertaining to the conduct of the banking business and the exercise of trust
powers), except for violations which individually or in the aggregate do not,
and, insofar as reasonably can be foreseen, in the future will not, have a
Material Adverse Effect. Except as set forth in the National City Disclosure
Letter, no investigation or review by any Governmental Entity with respect to
National City or any of National City's Subsidiaries is pending or, to the
knowledge of National City, threatened, nor has any Governmental Entity
indicated an intention to conduct the same in each case other than those the
outcome of which will not have a Material Adverse Effect.
(c) Except as is not reasonably likely to have, either individually
or in the aggregate, a Material Adverse Effect, National City and each National
City Subsidiary have properly administered all accounts for which
14
its acts as a fiduciary, including accounts for which it serves as a trustee,
agent, custodian, personal representative, guardian, conservator or investment
advisor, in accordance with the terms of the governing documents, applicable
state and federal law and regulation and common law. None of National City, any
National City Subsidiary, or any director, officer or employee of National City
or of any National City Subsidiary, has committed any breach of trust or
fiduciary duty with respect to any such fiduciary account that is reasonably
likely to have, either individually or in the aggregate, a Material Adverse
Effect, and, except as would not be reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect, and the accountings
for each such fiduciary account are true and correct and accurately reflect the
assets of such fiduciary account.
3.14 Agreements with Bank Regulators, Etc. Neither National City nor any
National City Subsidiary is a party to any written agreement or memorandum of
understanding with, or a party to any commitment letter, board resolution or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, any Governmental Entity
which restricts materially the conduct of its business, or in any manner relates
to its capital adequacy, its credit or reserve policies or its management, nor
has National City been advised by any Governmental Entity that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or similar
submission. Neither National City nor any of National City's Subsidiaries is
required by Section 32 of the Federal Deposit Insurance Act ("FDIA") to give
prior notice to a Federal banking agency of the proposed addition of an
individual to its board of directors or the employment of an individual as a
senior executive officer. National City knows of no reason why the regulatory
approvals referred to in Section 3.6(c) above should not be obtained.
3.15 National City Ownership of Stock. As of the date hereof, neither
National City nor any of its Affiliates or Associates (i) beneficially owns,
directly or indirectly, or (ii) are parties to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of,
Company Common Stock (other than DPC Shares or Trust Account Shares), which in
the aggregate, represent five percent (5%) or more of the outstanding shares of
Company Common Stock.
3.16 Tax Treatment. As of the date hereof, National City is aware of no
reason why the Merger will fail to qualify as a reorganization under Section
368(a) of the Code.
3.17 Fees. Except for fees paid and payable to Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx, Incorporated neither National City nor any of National City's
Subsidiaries has paid or will become obligated to pay any fee (including any
break-up or termination fee) or commission to any broker, finder or intermediary
or any other Person in connection with, or as a result of, the transactions
contemplated by this Agreement.
3.18 National City Action. The Board of Directors of National City (at a
meeting duly called, constituted and held) has by the requisite vote of all
directors present (a) determined that the Merger is advisable and in the best
interests of National City and its stockholders and (b) approved this Agreement
and the transactions contemplated by
15
this Agreement, including the Merger. The Board of Directors of National City
has approved the transactions contemplated by this Agreement such that the
provisions of Section 203 of the DGCL and any other applicable state business
combination or anti-takeover provisions of National City certificate of
incorporation or by-laws shall not be triggered by the Merger, execution of this
Agreement or any transactions contemplated by this Agreement.
3.19 Material Interests of Certain Persons. Except as disclosed in
National City's Reports, no officer or director of National City, or any
"associate" (as such term is defined in Rule 14a-1 under the Exchange Act) of
any such officer or director, has any material interest in any material contract
or property (real or personal), tangible or intangible, used in or pertaining to
the business of National City or any of its Subsidiaries that is required to be
disclosed under the requirements of the Exchange Act and the rules and
regulations promulgated thereunder.
3.20 Environmental Matters. For purposes of this Agreement, the following
terms shall have the indicated meanings:
"Environmental Law" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, determination, judgment, decree, injunction or
agreement with any governmental entity relating to (i) the health,
protection, preservation, containment or restoration of the environment
including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil,
wetlands, plant and animal life or any other natural resource,
conservation, and/or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of Hazardous Substances. The term Environmental Law
includes, without limitation, (x) the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 U.S.C. Section
9601, et seq.; the Superfund Amendments and Reauthorization Act of 1986,
42 U.S.C. 9601(2)(D); the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901, et seq.; the Clean Air Act, as amended,
42 U.S.C. Section 7401, et seq.; the Federal Water Pollution Control Act,
as amended by the Clean Water Act, 33 U.S.C. Section 1251, et seq.; the
Toxic Substances Control Act, as amended, 15 U.S.C. Section 9601, et seq.;
the Emergency Planning and Community Right to Know Act, 42 U.S.C. Section
11001, et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f, et
seq.; and all comparable state and local laws, ordinances, rules,
regulations respecting the interpretation or enforcement of same and (y)
any common law (including without limitation common law that may impose
strict liability) that may impose liability for injuries or damages due to
the release of any Hazardous Substance.
"Hazardous Substance" means (i) any hazardous wastes, toxic
chemicals, materials, substances or wastes as defined by or for the
purposes of any Environmental Law; (ii) any "oil," as defined by the Clean
Water Act, as amended from time to time, and regulations promulgated
thereunder (including crude oil or any fraction thereof and any petroleum
products or derivatives thereof); (iii) any substance, the presence of
which is prohibited, regulated or controlled by any applicable federal,
state or local laws, regulations, statutes or ordinances now in force or
hereafter enacted relating to waste disposal or environmental protection
with respect to the exposure to, or manufacture,
16
possession, presence, use, generation, storage, transportation, treatment,
release, emission, discharge, disposal, abatement, cleanup, removal,
remediation or handling of any such substance; (iv) any asbestos or
asbestos-containing materials, polychlorinated biphenyls ("PCBs") in the
form of electrical equipment, fluorescent light fixtures with ballasts,
cooling oils or any other form, urea formaldehyde, atmospheric radon; (v)
any solid, liquid, gaseous or thermal irritant or contaminant, such as
smoke, vapor, soot, fumes, alkalis, acids, chemicals, pesticides,
herbicides, sewage, industrial sludge or other similar wastes; (vi)
industrial, nuclear or medical by-products; (vii) any lead-based paint or
coating and (viii) any underground storage tank(s).
"Loan Portfolio Properties, Trust Properties and Other Properties"
means any real property, interest in real property, improvements,
appurtenances, rights and personal property attendant thereto, which is
owned, leased as a landlord or a tenant, licensed as a licensor or
licensee, managed or operated or upon which is held a mortgage, deed of
trust, deed to secure debt or other security interest by National City or
Company, as the case may be, or any of their Subsidiaries whether
directly, as an agent, as trustee or other fiduciary or otherwise.
Except as set forth in the National City Disclosure Letter, (a) to the
best of National City's knowledge, neither National City nor any of its
Subsidiaries is in violation of or has any liability, absolute or contingent, in
connection with or under any Environmental Law, except any such violations or
liabilities which would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect; (ii) to the best of National
City's knowledge, none of the Loan Portfolio Properties, Trust Properties and
Other Properties of National City or its Subsidiaries is in violation of or has
any liability, absolute or contingent, under any Environmental Law, except any
such violations or liabilities which, individually or in the aggregate would not
have a Material Adverse Effect; and (iii) to the best of National City's
knowledge, there are no actions, suits, demands, notices, claims, investigations
or proceedings pending or threatened relating to any Loan Portfolio Properties,
Trust Properties and Other Properties including, without limitation, any
notices, demand letters or requests for information from any federal or state
environmental agency relating to any such liability under or violation of
Environmental Law, which would impose a liability upon National City or its
Subsidiaries pursuant to any Environmental Law, except such as would not,
individually or in the aggregate have a Material Adverse Effect.
3.21 Labor Matters. (a) Neither National City nor any of its Subsidiaries
is engaged in, and has not engaged in, any unfair labor practice; (b) there is
no labor strike, dispute, slowdown or stoppage actually pending threatened
against or directly affecting National City or its Subsidiaries; (c) no union is
currently certified, and there is no union representation question and no union
or other organizational activity that would be subject to the National Labor
Relations Act (29 U.S.C. Section 151 et seq.) exists or is, to the best of
National City's knowledge, threatened; (d) no grievance or arbitration
proceeding arising out of or under collective bargaining agreements is pending
and no claims therefore exist or to the best of National City's knowledge, are
threatened; (e) no collective bargaining agreement exists which is binding on
National City and/or any of its Subsidiaries; (f) neither National City nor any
of its Subsidiaries has experienced any material work stoppage or other material
labor difficulty; and (g) neither
17
National City nor any of its Subsidiaries is delinquent in any material payments
to any of its current or former officers, directors, employees or agents for any
wages, salaries, commissions, bonuses, benefits or other compensation for any
services performed by them or amounts required to be reimbursed to them.
3.22 National City Disclosure Letter. The National City Disclosure Letter
is arranged in a format in which the disclosures made therein are arranged in
paragraphs or sections corresponding to the numbered and lettered sections and
subsections of this Agreement. Any information expressly disclosed in the
National City Disclosure Letter shall be deemed to be disclosed for all purposes
thereunder, so long as such disclosure contains sufficient factual detail to
render its relevance to such other purposes readily apparent. The inclusion of
any matter in the National City Disclosure Letter shall not be deemed an
admission or otherwise imply that any such matter is material for purposes of
this Agreement.
IV. REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to National City that:
4.1 Corporate Organization. Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio and is
qualified to do business as a foreign corporation in each jurisdiction in which
its ownership or lease of property or the nature of the business conducted by it
makes such qualification necessary, except for such jurisdictions in which the
failure to be so qualified would not have a Material Adverse Effect. Company is
registered as a bank holding company under the BHCA. Company has the requisite
corporate power and authority to own, lease and operate its properties and
assets and to carry on its business as it is now being conducted. Company has
heretofore delivered to National City true and complete copies of its articles
of incorporation and code of regulations as currently in effect.
4.2 Authority. Company has the requisite corporate power and authority to
execute and deliver this Agreement and, except for any required approval of
Company's shareholders, to consummate the transactions contemplated herein. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been duly approved by the Board of
Directors of Company and no other corporate proceedings on the part of Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated, subject only to approval by the shareholders of Company as
provided in Section 5.14 below. This Agreement has been duly executed and
delivered by, and constitutes valid and binding obligations of Company,
enforceable against Company in accordance with its terms, except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and other similar laws affecting
the enforcement of creditors' rights generally and by the supervisory and
enforcement powers of bank regulatory agencies and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceedings may be brought.
4.3 Capitalization. As of the date hereof, the authorized capital stock of
Company consists of 110,000,000 shares of Company Common Stock and 5,000,000
shares of preferred
18
stock. As of the close of business on February 13, 2004, 49,886,942 shares of
Company Common Stock and 70,272 shares of Company Preferred Stock were validly
issued and outstanding, fully paid and nonassessable. As of the date hereof,
except as set forth in this Section 4.3, pursuant to Company's Option Plans or
set forth in a disclosure letter executed by Company and dated and delivered by
Company to National City as of the date hereof (the "Company Disclosure
Letter"), there are no other shares of capital stock of Company authorized,
issued or outstanding and there are no outstanding subscriptions, options,
warrants, rights, convertible securities or any other agreements or commitments
of any character relating to the issued or unissued capital stock or other
securities of Company obligating Company to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock of Company or
obligating Company to grant, extend or enter into any subscription, option,
warrant, right, convertible security or other similar agreement or commitment.
Except as set forth in the Company Disclosure Letter, there are no voting trusts
or other agreements or understandings to which Company or any of Company's
Subsidiaries is a party with respect to the voting of the capital stock of
Company. As of the date hereof, there were outstanding under Company Option
Plans options to purchase 8,327,142 shares of Company Common Stock, which
Company stock options had a weighted average exercise price of $29.3144 and for
which adequate shares of Company Common Stock have been reserved for issuance
under Company Option Plans.
4.4 Subsidiaries. The Company Disclosure Letter sets forth the name and
state of incorporation of each Subsidiary of Company (collectively, "Company
Subsidiaries" and each an "Company Subsidiary"). Each Company Subsidiary is a
bank, a corporation or other business entity duly organized, validly existing
and in good standing (or the local law equivalent) under the laws of its
respective jurisdiction of incorporation or organization and is qualified to do
business as a foreign corporation or foreign business entity in each
jurisdiction in which its ownership or lease of property or the nature of the
business conducted by it makes such qualification necessary, except for such
jurisdictions in which the failure to be so qualified would not have a Material
Adverse Effect. Each Company Subsidiary has the requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its businesses as they are now being conducted. Except as set forth in the
Company Disclosure Letter, all outstanding shares of capital stock of each
Company Subsidiary are owned by Company or another Company Subsidiary and are
validly issued, fully paid and (except pursuant to the Ohio Code in the case of
The Provident Bank) nonassessable, are not subject to preemptive rights in favor
of any Person (other than the Company or another Company Subsidiary) and are
owned free and clear of all liens, claims and encumbrances. There are no
outstanding subscriptions, options, warrants, rights, convertible securities or
any other agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of any Company Subsidiary obligating
any Company Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold additional shares of its capital stock or obligating any
Company Subsidiary to grant, extend or enter into any subscription, option,
warrant, right, convertible security or other similar agreement or commitment.
4.5 Information in Disclosure Documents, Registration Statement, Etc. None
of the information with respect to Company or any Company Subsidiary provided by
Company for inclusion in (i) the Registration Statement and (ii) the Proxy
Statement will, in the case of the
19
Proxy Statement or any amendments or supplements thereto, at the time of the
mailing of the Proxy Statement and any amendments or supplements thereto, and at
the time of the Company Meeting, or, in the case of the Registration Statement,
at the time it becomes effective, contain any untrue statement of material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated thereunder.
4.6 Consent and Approvals; No Violation. Except as set forth in the
Company Disclosure Letter, neither the execution and delivery of this Agreement
by Company nor the consummation by Company of the transactions contemplated
hereby will (a) conflict with or result in any breach of any provision of its
articles of incorporation or code of regulations of Company, (b) violate,
conflict with, constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in the creation of any
lien or other encumbrance upon any of the properties or assets of Company or any
Company Subsidiary 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 Company or any Company Subsidiary is a
party or to which they or any of their respective properties or assets are
subject, except for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens or other encumbrances, which
will not have a Material Adverse Effect or (c) require any consent, approval,
authorization or permit of or from, or filing with or notification to, any
Governmental Entity, except (i) pursuant to the Exchange Act and the Securities
Act, (ii) filing the Delaware Certificate of Merger and Certificate of
Designation, (iii) filing the Ohio Certificate of Merger, (iv) filings required
under the securities or blue sky laws of the various states, (v) filings under
the HSR Act, (vi) filings with, and approval by, the FRB, (vii) filings with,
and approvals by, the State Entities, (including, but not limited to, the Ohio
Superintendent of Financial Institutions, the Arizona Director of Insurance and
such other state bank and insurance regulatory agencies) as may be required,
(viii) filings and approvals pursuant to any applicable state takeover law, (ix)
filings and approvals under the SBIA, (x) any consents, authorizations,
approvals, filings or exemptions in connection with compliance with applicable
provisions of federal and state securities laws relating to the regulations of
broker-dealers, investment advisers or transfer agents, (xi) any filings with,
approvals by and notifications pursuant to the rules and regulations of the
NASD, (xii) any consents, authorizations, approvals, filings or exemptions in
connection with the Xxxxxx Xxx Delegated Underwriting and Servicing lending
activities of Company or any Company Subsidiary, or (xiii) consents, approvals,
authorizations, permits, filings or notifications which, if not obtained or made
will not, individually or in the aggregate, have a Material Adverse Effect.
4.7 Reports and Financial Statements. Since January 1, 1999, Company and
each Company Subsidiary have filed all reports, registrations and statements,
together with any required amendments thereto, that they were required to file
with the Commission under Section 12(b), 12(g), 13(a) or 14(a) of the Exchange
Act, including, but not limited to Forms 10-K, Forms 10-Q and proxy statements
(the "Company Reports"). Company has previously furnished
20
or will promptly furnish National City with true and complete copies of each of
Company's annual reports on Form 10-K for the years 1999 through 2002. Except as
set forth in the Company Disclosure Letter, as of their respective dates, the
Company Reports complied in all material respects with the requirements of the
Exchange Act and the rules and regulations promulgated thereunder and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstance under which they were made, not misleading. Except as
set forth in the Company Disclosure Letter, the audited consolidated financial
statements and unaudited interim financial statements of Company included in the
Company Reports have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present the consolidated financial
position of Company and Company Subsidiaries as at the dates thereof and the
results of their operations and cash flows for the periods then ended subject,
in the case of the unaudited interim financial statements, to normal year-end
and audit adjustments and any other adjustments described therein. There exist
no material liabilities of Company and its consolidated subsidiaries, contingent
or otherwise of a type required to be disclosed in accordance with generally
accepted accounting practices, except as disclosed in the Company Reports.
Company's reserve for possible loan losses as shown in its Quarterly Report on
Form 10-Q for the quarter ending September 30, 2003 was adequate, within the
meaning of generally accepted accounting principles and safe and sound banking
practices.
4.8 Taxes. Company will promptly make available to National City, upon
request by National City, true and correct copies of the federal, state and
local income tax returns, and state and local property and sales tax returns
filed by Company and any of Company Subsidiaries for each of the fiscal years
that remains open, as of the date hereof, for examination or assessment of tax.
Except as set forth in the Company Disclosure Letter, Company and each Company
Subsidiary have prepared in good faith and duly and timely filed, or caused to
be duly and timely filed, all federal, state, local and foreign income,
estimated tax, withholding tax, franchise, sales and other tax returns or
reports required to be filed by them on or before the date hereof, except to the
extent that all such failures to file, taken together, would not have a Material
Adverse Effect. Except as set forth in the Company Disclosure Letter, Company
and each Company Subsidiary have paid, or have made adequate provision or set up
an adequate accrual or reserve for the payment of, all taxes shown or required
to be shown to be owing on all such returns or reports, together with any
interest, additions or penalties related to any such taxes or to any open
taxable year or period. Except as set forth in the Company Disclosure Letter,
neither Company nor any of Company's Subsidiaries has consented to extend the
statute of limitations with respect to the assessment of any tax. Except as set
forth in the Company Disclosure Letter, neither Company nor any of Company
Subsidiaries is a party to any action or proceeding, nor to the best of
Company's knowledge is any such action or proceeding threatened, by any
Governmental Entity in connection with the determination, assessment or
collection of any taxes, and no deficiency notices or reports have been received
by Company or any of Company Subsidiaries in respect of any material
deficiencies for any tax, assessment, or government charge.
4.9 Employee Plans. Except as set forth in the Company Disclosure Letter,
all employee benefit, welfare, bonus, deferred compensation, pension, profit
sharing, stock option,
21
employee stock ownership, consulting, severance, or fringe benefit plans, formal
or informal, written or oral and all trust agreements related thereto, relating
to any present or former directors, officers or employees of Company or Company
Subsidiaries ("Company Employee Plans") have been maintained, operated, and
administered in substantial compliance with their terms and currently comply,
and have at all relevant times complied, in all material respects with the
applicable requirements of ERISA, the Code, and any other applicable laws.
Neither Company nor any Company Subsidiary maintains any defined benefit plan
(as defined in Section 3(35) of ERISA) and, except for amendments adopted since
January 1, 2003 to Company Employee Plans intended to be qualified under Section
401(a) of the Code not materially affecting the qualified status of the plans
(which are disclosed in, and copies of which have been delivered with, the
Company Disclosure Letter), each such plan as amended (and any trust relating
thereto) either (i) has been determined by the IRS to be so qualified or (ii) is
the subject of a pending application for such determination that was timely
filed. In addition, (a) no defined benefit plan previously maintained by the
Company or any Company Subsidiary, if any, has been terminated in the six years
preceding the date of this Agreement, nor has the PBGC instituted proceedings to
terminate any such defined benefit plan or to appoint a trustee or administrator
of any such defined benefit plan, and no circumstances exist that constitute
grounds under Section 4042(a)(2) of ERISA entitling the PBGC to institute any
such proceedings and (b) Company has not maintained or participated in a
"multiemployer plan" within the meaning of Section 3(37) of ERISA or a "multiple
employer plan" within the meaning of Section 413(c) of the Code. Neither Company
nor any Company Subsidiary has incurred any liability to the PBGC with respect
to any "single-employer plan" within the meaning of Section 4001(a)(15) of ERISA
currently or formerly maintained by any entity considered one employer with it
under Section 4001 of ERISA or Section 414 of the Code, except for premiums all
of which have been paid when due. Except as set forth in the Company Disclosure
Letter, there is no basis for any Person to assert that Company or any Company
Subsidiary has an obligation to institute any Employee Plan or any such other
arrangement, agreement or plan. With respect to any insurance policy that
heretofore has or currently does provide funding for benefits under any Company
Employee Plan, (x) there is no liability on the part of Company or any Company
Subsidiary in the nature of a retroactive or retrospective rate adjustment,
loss-sharing arrangement, or other actual or contingent liability, nor would
there be any such liability if such insurance policy was terminated, and (y) no
insurance company issuing such policy is in receivership, conservatorship,
liquidation or similar proceeding and, to the knowledge of Company, no such
proceeding with respect to any such insurer is imminent. Except as set forth in
the Company Disclosure Letter, neither the execution of this Agreement, nor the
consummation of the transactions contemplated thereby will (A) constitute a
stated triggering event under any Company Employee Plan that will result in any
payment (whether of severance pay or otherwise) becoming due from Company or any
Company Subsidiary to any present or former officer, employee, director,
shareholder, consultant or dependent of any of the foregoing or (B) accelerate
the time of payment or vesting, or increase the amount of compensation due to
any present or former officer, employee, director, shareholder, consultant, or
dependent of any of the foregoing. Neither Company nor any Company Subsidiary
has any obligations for retiree health and life benefits under any Company
Employee Plan, except as set forth in the Company Disclosure Letter. Except as
set forth in the Company Disclosure Letter, there are no restrictions on the
rights of Company or Company
22
Subsidiaries to amend or terminate any such Company Employee Plan without
incurring any liability thereunder.
4.10 Material Contracts. Except as set forth in the Company Disclosure
Letter or disclosed in the Company Reports, neither Company nor any Company
Subsidiary is a party to, or is bound or affected by, or receives benefits under
(a) any Benefit Agreements providing for aggregate payments to any Person in any
calendar year in excess of $250,000, (b) any material agreement, indenture or
other instrument relating to the borrowing of money by Company or any Company
Subsidiary or the guarantee by Company or any Company Subsidiary of any such
obligation (other than trade payables and instruments relating to borrowings or
guaranties made in the ordinary course of business consistent with past
practice) or (c) any other contract or agreement or amendment thereto that would
be required to be filed as an exhibit to a Form 10-K filed by Company with the
Commission as of the date hereof (collectively, the "Company Contracts").
Neither Company nor any Company Subsidiary is in default under any Company
Contract, which default is reasonably likely to have, either individually or in
the aggregate, a Material Adverse Effect, and there has not occurred any event
that with the lapse of time or the giving of notice or both would constitute
such a default. Except as set forth in Company Disclosure Letter, neither
Company nor any Company Subsidiary is a party to, or is bound by, any collective
bargaining agreement, contract, or other agreement or understanding with a labor
union or labor organization, nor is Company or any Company Subsidiary the
subject of a proceeding asserting that it or any Company Subsidiary has
committed an unfair labor practice or seeking to compel it or such Subsidiary to
bargain with any labor organization as to wages and conditions of employment,
nor is there any strike or other labor dispute involving it or any Company
Subsidiary pending or threatened.
4.11 Absence of Certain Changes or Events. Except as disclosed in the
Company Reports filed by Company with the Commission prior to the date of this
Agreement, since December 31, 2003, there has not been any change in the
financial condition, results of operations or business of Company or any Company
Subsidiary which will have a Material Adverse Effect.
4.12 Litigation. Except as disclosed in the Company Reports filed by
Company with the Commission prior to the date of this Agreement, there is no
suit, action or proceeding pending, or, to the knowledge of Company, threatened
against or affecting Company or any Company Subsidiary which, if determined
adversely to Company, would be reasonably expected to have a Material Adverse
Effect, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator, outstanding against Company or any Company
Subsidiary having, or which would, insofar as reasonably can be foreseen, now or
in the future, have a Material Adverse Effect.
4.13 Compliance with Laws and Orders.
(a) Company and each Company Subsidiary hold all licenses,
franchises, permits and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to each, and have complied in all
respects with and are not in default in any respect under any, applicable law,
statute, order, rule, regulation, policy or guideline of any
23
Governmental Entity relating to Company or Company Subsidiary, except where the
failure to hold such license, franchise, permit or authorization or such
noncompliance or default is not reasonably likely to have, either individually
or in the aggregate, a Material Adverse Effect.
(b) Except as set forth in the Company Disclosure Letter or as
disclosed in the Company Reports filed by Company with the Commission prior to
the date of this Agreement, the businesses of Company and each Company
Subsidiary are not being conducted in violation of any law, ordinance,
regulation, judgment, order, decree, license or permit of any Governmental
Entity (including, without limitation, in the case of a Company Subsidiary that
is a bank, all statutes, rules and regulations pertaining to the conduct of the
banking business and the exercise of trust powers), except for violations which
individually or in the aggregate do not, and, insofar as reasonably can be
foreseen, in the future will not, have a Material Adverse Effect. Except as set
forth in the Company Disclosure Letter, no investigation or review by any
Governmental Entity with respect to Company or any Company Subsidiary is pending
or, to the knowledge of Company threatened, nor has any Governmental Entity
indicated an intention to conduct the same in each case other than those the
outcome of which will not have a Material Adverse Effect.
(c) Except as is not reasonably likely to have, either individually
or in the aggregate, a Material Adverse Effect, Company and each Company
Subsidiary have properly administered all accounts for which its acts as a
fiduciary, including accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor,
in accordance with the terms of the governing documents, applicable state and
federal law and regulation and common law. None of Company, any Company
Subsidiary, or any director, officer or employee of Company or of any Company
Subsidiary, has committed any breach of trust or fiduciary duty with respect to
any such fiduciary account that is reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect, and, except as
would not be reasonably likely to have, either individually or in the aggregate,
a Material Adverse Effect, the accountings for each such fiduciary account are
true and correct and accurately reflect the assets of such fiduciary account.
4.14 Agreements with Bank Regulators, Etc. Neither Company nor any Company
Subsidiary is a party to any written agreement or memorandum of understanding
with, or a party to any commitment letter, board resolution or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, any Governmental Entity which
restricts materially the conduct of its business, or in any manner relates to
its capital adequacy, its credit or reserve policies or its management, except
for those the existence of which has been disclosed in the Company Disclosure
Letter, nor has Company been advised by any Governmental Entity that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or similar
submission, except as set forth in the Company Disclosure Letter. Neither
Company nor any Company Subsidiary is required by Section 32 of the Federal
Deposit Insurance Act to give prior notice to a Federal banking agency of the
proposed addition of an individual to its board of directors or the employment
of an individual as a senior or executive officer. Company knows of no reason
why the regulatory approvals referred to in Section 4.6(c) above should not be
obtained.
24
4.15 Tax Treatment. As of the date hereof, Company is aware of no reason
why the Merger will fail to qualify as a reorganization under Section 368(a) of
the Code.
4.16 Fees. Except for fees paid and payable to UBS Securities LLC and The
Secura Group, L.L.C., neither Company nor any Company Subsidiary has paid or
will become obligated to pay any fee (including any break-up or termination fee)
or commission to any broker, finder, intermediary or any other Person in
connection with, or as a result of, the transactions contemplated by this
Agreement.
4.17 Company Action. The Board of Directors of Company (at a meeting duly
called, constituted and held) has by the requisite vote of all directors present
(a) determined that the Merger is advisable and in the best interests of Company
and its shareholders, (b) approved this Agreement and the transactions
contemplated by this Agreement, including the Merger, and (c) has directed that
the Merger be submitted for consideration by Company's shareholders at the
Company Meeting. The Board of Directors of Company has approved the transactions
contemplated by this Agreement and taken all steps necessary to exempt (i) the
execution of this Agreement, (ii) the Merger and (iii) the transactions
contemplated hereby and thereby from, any statute of the Ohio Code that purports
to limit or restrict business combinations or the ability to acquire or to vote
shares and any other applicable state business combination or anti-takeover
provisions of Company's articles of incorporation or code of regulations as
currently in effect.
4.18 Vote Required. The affirmative votes of holders of at least
two-thirds of the outstanding shares of Company Common Stock entitled to vote
thereon are the only votes of the holders of any class or series of Company
capital stock necessary to approve this Agreement and the transactions
contemplated by this Agreement.
4.19 Material Interests of Certain Persons. Except as disclosed in
Company's Proxy Statement for its 2003 Annual Meeting of Stockholders, no
officer or director of Company, or any "associate" (as such term is defined in
Rule 14a-1 under the Exchange Act) of any such officer or director, has any
material interest in any material contract or property (real or personal),
tangible or intangible, used in or pertaining to the business of Company or any
Company Subsidiary that is required to be disclosed under the requirements of
the Exchange Act and the rules and regulations promulgated thereunder.
4.20 Environmental Matters. (i) To the best of Company's knowledge,
neither Company nor any Company Subsidiary is in violation of or has any
liability, absolute or contingent, in connection with or under any Environmental
Law, except any such violations or liabilities which would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect;
(ii) to the best of Company's knowledge, none of the Loan Portfolio Properties,
Trust Properties and Other Properties of Company or any Company Subsidiary is in
violation of or has any liability, absolute or contingent, under any
Environmental Law, except any such violations or liabilities which, individually
or in the aggregate would not have a Material Adverse Effect; and (iii) to the
best of Company's knowledge, there are no actions, suits, demands, notices,
claims, investigations or proceedings pending or threatened relating to any Loan
Portfolio Properties, Trust Properties and Other Properties including, without
limitation, any notices, demand letters or requests for information from any
federal or state environmental
25
agency relating to any such liability under or violation of Environmental Law,
which would impose a liability upon Company or any Company Subsidiary pursuant
to any Environmental Law, except such as would not, individually or in the
aggregate have a Material Adverse Effect.
4.21 Labor. (a) Neither Company nor any Company Subsidiary is engaged in,
and has not engaged in, any unfair labor practice; (b) there is no labor strike,
dispute, slowdown or stoppage actually pending threatened against or directly
affecting Company or any Company Subsidiary; (c) no union is currently
certified, and there is no union representation question and no union or other
organizational activity that would be subject to the National Labor Relations
Act (29 U.S.C. Section 151 et seq.) exists or is, to the best knowledge of
Company, threatened; (d) no grievance or arbitration proceeding arising out of
or under collective bargaining agreements is pending and no claims therefore
exist or to the best of Company's knowledge, are threatened; (e) no collective
bargaining agreement exists which is binding on Company and/or any Company
Subsidiary; (f) neither Company nor any Company Subsidiary has experienced any
material work stoppage or other material labor difficulty; and (g) except as set
forth in the Company Disclosure Letter, neither Company nor any Company
Subsidiary is delinquent in any material payments to any of its current or
former officers, directors, employees or agents for any wages, salaries,
commissions, bonuses, benefits or other compensation for any services performed
by them or amounts required to be reimbursed to them.
4.22 Company Disclosure Letter. The Company Disclosure Letter is arranged
in a format in which the disclosures made therein are arranged in paragraphs or
sections corresponding to the numbered and lettered sections and subsections of
this Agreement. The matters expressly disclosed in the Company Disclosure Letter
shall be deemed to be disclosed for all purposes thereunder, so long as such
disclosure contains sufficient factual detail to render its relevance to such
other purposes readily apparent. The inclusion of any matter in the Company
Disclosure Letter shall not be deemed an admission or otherwise imply that any
such matter is material for purposes of this Agreement.
4.23 Minute Books. The minute books of Company and each Company Subsidiary
contain or will contain at Closing accurate records of all corporate actions of
their respective shareholder(s) and boards of directors (including committees of
the board of directors).
V. COVENANTS
5.1 Acquisition Transactions. Company and each Company Subsidiary shall
not, directly or indirectly, and shall instruct and otherwise use its best
efforts to cause their respective officers, directors, employees, agents or
advisors or other representatives or consultants not to, directly or indirectly,
(i) solicit or initiate any proposals or offers from any Person relating to any
acquisition or purchase of all or a material amount of the assets of, or any
securities of, or any merger, consolidation or business combination with,
Company or any Company Subsidiary (such transactions are referred to herein as
"Acquisition Transactions") or (ii) participate in any discussions or
negotiation regarding, or furnish to any other Person any information with
respect to, an Acquisition Transaction. Notwithstanding the foregoing, nothing
in this Section 5.1 shall restrict or prohibit (x) any disclosure by Company
that is required in any document to be filed with the Commission after the date
of this Agreement, (y) any disclosure that, in the written
26
opinion of counsel to the Board of Directors of Company is otherwise required by
applicable law, or (z) prior to the Company Meeting, consideration and
participation in discussions and negotiations regarding, and furnishing to any
other Person any information with respect to, a bona fide proposal for an
Acquisition Transaction received by Company if the Board of Directors of Company
determines in good faith (after consultation with outside legal counsel) that
failure to do so would cause it to violate its fiduciary duties. Company shall,
and shall cause each Company Subsidiary to, immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. Company shall notify
National City immediately if any such inquiries or proposals are received by,
any such information is requested from, or any such negotiations or discussions
are sought to be initiated or continued with Company or any Company Subsidiary.
5.2 Interim Operations of Company. During the period from the date of this
Agreement to the Effective Time, except as specifically contemplated by this
Agreement, set forth in the Company Disclosure Letter or as otherwise approved
expressly in writing by National City (which approval will not be unreasonably
withheld, conditioned or delayed):
(a) Conduct of Business. Company shall, and shall cause each Company
Subsidiary to, conduct their respective businesses only in, and not take any
action except in, the ordinary course of business consistent with past practice.
Company shall use reasonable efforts to preserve intact the business
organization of Company and each Company Subsidiary, to keep available the
services of its and their present key officers and employees and to preserve the
goodwill of those having business relationships with Company or any Company
Subsidiary. Other than in the ordinary course of business consistent with past
practice, Company shall not (i) incur any indebtedness for borrowed money (it
being understood and agreed that incurrence of indebtedness in the ordinary
course of business shall include, without limitation, the creation of deposit
liabilities, purchases of federal funds, sales of certificates of deposit and
entering into repurchase agreements), (ii) assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of any
other individual, corporation or other entity, or (iii) make any loan or
advance. Company shall not, and shall not permit any of the Company Subsidiaries
to, adopt a plan of complete or partial liquidation or resolutions providing for
or authorizing such a liquidation or a dissolution, restructuring,
recapitalization or reorganization.
(b) Articles and Code of Regulations. Company shall not and shall
not permit any Company Subsidiary to make any change or amendment to their
respective articles of incorporation or code or regulations (or comparable
governing instruments) in a manner that would materially and adversely affect
either party's ability to consummate the Merger or the economic benefits of the
Merger to either party.
(c) Capital Stock. Company shall not, and shall not permit any
Company Subsidiary to, issue or sell any shares of capital stock or any other
securities of any of them (other than pursuant to outstanding exercisable stock
options granted pursuant to one of Company Option Plans or conversion of any
shares of Company Preferred Stock and to the extent of additional shares of
Company Common Stock with respect to the PRIDES issued by PFGI Capital
Corporation and Series A Preferred Stock of The Provident Bank) or issue any
securities convertible into or exchangeable for, or options, warrants to
purchase, scrip, rights to
27
subscribe for, calls or commitments of any character whatsoever relating to, or
enter into any contract, understanding or arrangement with respect to the
issuance of, any shares of capital stock or any other securities of any of them
(other than pursuant to Company Option Plans) or enter into any arrangement or
contract with respect to the purchase or voting of shares of their capital
stock, or adjust, split, combine or reclassify any of their capital stock or
other securities or make any other changes in their capital structures. Neither
Company nor any Company Subsidiary shall grant any additional stock options,
except for up to 25,000 shares in the aggregate of Company Common Stock awarded
in the ordinary course of business consistent with Company's past practices.
(d) Dividends. Company shall not, and shall not permit any Company
Subsidiary to, declare, set aside, pay or make any dividend or other
distribution or payment (whether in cash, stock or property) with respect to, or
purchase or redeem, any shares of the capital stock of any of them other than
(i) regular quarterly cash dividends in an amount not to exceed $.24 per share
of Company Common Stock payable on the regular historical payment dates, (ii)
regular dividends on Company Preferred Stock and (ii) dividends paid between the
date hereof and the Effective Time by any Company Subsidiary to Company or
another Company Subsidiary with respect to its capital stock, (iii) regular
dividends or distributions on the Preferred Securities under the Provident
Capital Trust I, Provident Capital Trust II, Provident Capital Trust III or
Provident Capital Trust IV and (iv) regular dividends declared by the PFGI
Capital Corporation Board of Directors as contemplated under the Series A
Preferred Stock of PFGI Capital Corporation. It is agreed by the parties hereto
that they shall cooperate to assure that, during any quarter, there shall not be
a duplication of or omission of payment of dividends to shareholders of Company.
If National City proposes to consummate the Merger on a date after the record
date for the declaration of its quarterly dividend has occurred but prior to the
date on which Company's dividend for the same quarterly period has been declared
or paid, the parties agree that the record date for the declaration of Company's
dividends for such quarter, or the dividend payment date, or both, may be
accelerated to permit the payment of such dividend prior to the Effective Time.
(e) Employee Plans, Compensation, Etc Except as otherwise provided
in this Agreement, Company shall not, and shall not permit any Company
Subsidiary to, adopt or amend except as required by law (including as required
to maintain qualification under Section 401(a) of the Code or other contractual
obligations existing on the date hereof) or with the consent of National City,
which consent shall not be unreasonably withheld, any bonus, profit sharing,
compensation, severance, termination, stock option, pension, retirement,
deferred compensation, employment or other employee benefit agreements, trusts,
plans, funds or other arrangements for the benefit or welfare of any director,
officer or employee, or (except for normal increases in the ordinary course of
business consistent with past practice not to exceed 3% in the aggregate)
increase the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any existing plan, agreement or
arrangement (including, without limitation, the granting of stock options or
stock appreciation rights) or take any action or grant any benefit not required
under the terms of any existing agreements, trusts, plans, funds or other such
arrangements or enter into any contract, agreement, commitment or arrangement to
do any of the foregoing.
28
(f) Certain Policies. Company will modify and change its loan,
litigation, real estate valuation, asset, liquidity and investment portfolio
policies and practices (including loan classifications and level of reserves)
prior to the Effective Time so as to be consistent on a mutually satisfactory
basis with those of National City and generally accepted accounting principles,
at the earlier of (i) such time as National City acknowledges that all
conditions to its obligations to consummate the Merger set forth in Sections 7.1
and 7.3 below have been irrevocably waived or satisfied and National City waives
any right to terminate this Agreement for any reason whatsoever (but in no event
prior to seven (7) days before the Effective Time) or (ii) immediately prior to
the Effective Time. Company's representations, warranties or covenants contained
in this Agreement shall not be deemed to be untrue or breached in any respect
for any purpose as a consequence of any such modifications or changes.
5.3 Interim Operations of National City. During the period from the date
of this Agreement to the Effective Time, without the prior written consent of
Company, National City agrees for itself and its Subsidiaries as follows:
(a) Conduct of Business. National City shall use reasonable efforts
to preserve its business goodwill. Other than in the ordinary course of business
consistent with past practice and except for transactions not exceeding
$5,000,000,000 in the aggregate, National City shall not (i) incur any
indebtedness for borrowed money (it being understood and agreed that incurrence
of indebtedness in the ordinary course of business shall include, without
limitation, the creation of deposit liabilities, purchases of federal funds,
sales of certificates of deposit, issuing bank notes and entering into
repurchase agreements) or (ii) assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other individual,
corporation or other entity other than a National City Subsidiary. National City
shall not, and shall not permit any of its Significant Subsidiaries to, adopt a
plan of complete or partial liquidation or resolutions providing for or
authorizing such a liquidation or a dissolution.
(b) Certificate of Incorporation and By-laws. National City shall
not and shall not permit any National City Subsidiary to make any change or
amendment to their respective certificates of incorporation or by-laws (or
comparable governing instruments) in a manner that would materially and
adversely affect either party's ability to consummate the Merger or the economic
benefits of the Merger to either party.
(c) Dividends; Changes in Stock. National City shall neither declare
or pay nor propose to declare or pay any extraordinary or special dividends on
or make any other special distributions in respect of any of its capital stock,
except (A) as otherwise expressly provided herein, (B) the declaration and
payment of regular quarterly cash dividends as may be adjusted from time to
time, in each case with usual record and payment dates for such dividends in
accordance with National City's past dividend practice, and (C) for dividends by
a Subsidiary of National City.
(d) Actions Causing Delay. National City shall not, and shall not
permit any of its wholly-owned Subsidiaries to, acquire or agree to acquire, by
merging or consolidating with, by purchasing a substantial equity interest in or
a substantial portion of the assets of, by forming a partnership or joint
venture, or by any other manner, any business or any corporation,
29
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets, or make or propose to make any
sale, lease, assignment or other disposition of a material part of its assets or
the assets of any Subsidiary, if the effect of any of the foregoing would be to
present a material risk of any material delay in the receipt of any approval
required for consummating the Merger or delay in the Effective Time. Without
limiting the generality of the foregoing, National City shall not (i) enter into
any merger, consolidation or similar business combination transaction in which
National City is not the surviving entity or (ii) undertake any other merger,
consolidation, acquisition or similar business combination transaction that
would result in National City issuing a portion of its capital stock greater
than the portion of its capital stock contemplated to be issued to shareholders
of Company pursuant to this Agreement or that would result in National City or
any wholly-owned National City Subsidiary paying an amount in cash or other
property greater than the value of the capital stock of National City
contemplated to be issued to shareholders of Company pursuant to this Agreement.
5.4 Control of Other Party's Business. Nothing contained in this Agreement
(including, without limitation, Sections 5.2 and 5.3) shall give National City,
directly or indirectly, the right to control or direct the operations of Company
or shall give Company, directly or indirectly, the right to control or direct
the operations of National City prior to the Effective Time. Prior to the
Effective Time, each of Company and National City shall exercise, consistent
with the terms and conditions of this Agreement, complete control and
supervision over its and its Subsidiaries' respective operations.
5.5 Employee Matters.
(a) Benefit Agreements. Surviving Corporation and National City
shall honor, maintain and perform on and after the Effective Time and through
December 31, 2004, without deduction, counterclaims, interruptions or deferment
(other than withholding under applicable law or as expressly authorized by a
Company Employee Plan), all of Company's and Company Subsidiaries' obligations
under Company Employee Plans as such plans are in effect as of the Effective
Time. Nothing in this Section shall be construed to require the accrual of any
benefit under any Company Employee Plans past December 31, 2004 or preclude
National City from amending or terminating any such Company Employee Plan
effective on or after December 31, 2004.
(b) Employment of Continuing Employees. National City agrees that
each Person who is an employee of Company or any Company Subsidiary as of
immediately prior to the Effective Time (individually, a "Continuing Employee"
and, collectively, the "Continuing Employees") shall be an employee of National
City or one of its Subsidiaries as of the Effective Time. Following the
Effective Time and through December 31, 2004, each Continuing Employee, while
employed by National City or one of its Subsidiaries, shall continue to receive,
as nearly as is practicable, the benefits such Continuing Employee would have
received under the Company Employee Plans immediately prior to the Effective
Time.
(c) Participation in National City Plans. Commencing as of January
1, 2005, National City and its Subsidiaries shall cause the Continuing
Employees, while employed by National City or any of its Subsidiaries, to be
eligible to participate in the National City
30
Employee Plans that provide employee benefits (including, but not limited to,
pension, welfare, incentive compensation, severance, and vacation pay benefits)
that similarly situated National City employees participate in.
(d) Past Service Credit Under National City Plans. National City and
its Subsidiaries shall cause the National City Employee Plans that cover the
Continuing Employees or any of their dependents or beneficiaries to treat the
employment and service of the Continuing Employees with the Company, Company
Subsidiaries and any predecessor employers through the Effective Time as
employment and service with National City and its Subsidiaries for all purposes
(other than benefit accruals under any defined benefit pension plan including,
but not limited to, the calculation of future pay credit service under a cash
balance pension formula and any eligibility requirements for benefits under
National City's Retiree Welfare Benefit Plan) under National City Employee Plans
that cover the Continuing Employees.
(e) Severance Upon Termination of Continuing Employee. If a
Continuing Employee's employment is terminated by National City or any of its
Subsidiaries (A) on or prior to the first anniversary of the Effective Time,
such Continuing Employee shall be entitled to severance benefits from National
City and its Subsidiaries that are not less than the greater of (i) the
severance benefits that would have been paid under the severance benefit plan or
program of the Company or Company Subsidiaries applicable to such Continuing
Employee as of the date hereof, and (ii) the severance benefits that would be
paid from time to time under the severance benefit plan or program of National
City and its Subsidiaries that applies to similarly situated employees of
National City and its Subsidiaries; and (B) after the first anniversary of the
Effective Time, such Continuing Employee shall be entitled to severance benefits
from National City and its Subsidiaries in accordance with the severance plans
and policies of National City and its Subsidiaries, as in effect from time to
time thereafter for similarly situated employees.
(f) Change in Control. National City acknowledges that, and will
cause the Surviving Corporation to acknowledge that, the consummation of the
Merger shall constitute a "Change in Control" within the meaning of each Company
Employee Plan and each severance agreement or employment agreement to which the
Company or any Company Subsidiary is a party, and that following the
consummation of the Merger "Good Reason" within the meaning of each severance or
employment agreement listed in section 5.5(f)(1) of the Company Disclosure
Letter shall exist for purposes of each such listed agreement. Upon the
consummation of the Merger, National City shall, or shall cause the Surviving
Corporation to, assume the Company's obligations under each severance or
employment agreement of the Company, including without limitation those
specifically listed in section 5.5(f)(2) of the Company Disclosure Letter.
5.6 Access and Information. Upon reasonable notice, National City and
Company shall, and shall cause its respective Subsidiaries to, afford to the
other party to this Agreement and its representatives (including, without
limitation, directors, officers and employees of such investigating party and
its affiliates, and counsel, accountants and other professionals retained) such
access during normal business hours throughout the period prior to the Effective
Time to the books, records (including, without limitation, tax returns and work
papers of independent auditors), properties, personnel and to such other
information as such investigating party may reasonably request; provided,
however, that a party shall not be required to provide access to any
31
such information if the providing of such access (i) would be reasonably likely,
to advice of counsel, to result in the loss or impairment of any privilege
generally recognized under law with respect to such information or (ii) would be
precluded by any law, ordinance, regulation, judgment, order, decree, license or
permit of any Governmental Entity. Any claim by a party for a breach of
representation, warranty, covenant, agreement or obligation of such party
hereunder shall not be affected by any investigation conducted by such party
with respect to, or knowledge acquired (or capable of being acquired), with
respect to the accuracy or inaccuracy of or compliance with any such
representation, warranty, covenant, agreement or obligation. All information
furnished by one party to the other parties in connection with this Agreement or
the transactions contemplated hereby shall be subject to the terms and
conditions of the Confidentiality Agreements, dated November 4, 2003 and
February 9, 2004, by and between National City and Company (the "Confidentiality
Agreements"). Without limiting the effect of the Confidentiality Agreements, if
the transactions contemplated by this Agreement are not consummated, each party
shall promptly cause all copies of documents or extracts thereof containing
information and data as to another party hereto to be returned to the party that
furnished the same or destroyed.
5.7 Certain Filings, Consents and Arrangements. National City and Company
shall (a) as soon as practicable make any required filings and applications
required to be filed with Governmental Entities between the date of this
Agreement and the Effective Time, (b) cooperate with one another (i) in promptly
determining whether any other filings are required to be made or consents,
approvals, permits or authorizations are required to be obtained under any other
relevant federal, state or foreign law or regulation and (ii) in promptly making
any such filings, furnishing information required in connection therewith and
seeking timely to obtain any such consents, approvals, permits or authorizations
and (c) deliver to the other parties to this Agreement copies of the
publicly-available portions of all such reports promptly after they are filed.
5.8 State Takeover Statutes. Company shall take all reasonable steps to
(i) exempt Company and the Merger from the requirements of any state takeover
law by action of Company's Board of Directors or otherwise and (ii), upon the
request of National City, assist in any challenge by National City to the
applicability to the Merger of any state takeover law.
5.9 Indemnification.
(a) From and after the Effective Time, in the event of any
threatened or actual claim, action, suit, proceeding or investigation, whether
civil, criminal or administrative, including, without limitation, any such
claim, action, suit, proceeding or investigation in which any Person who is now,
or has been at any time prior to the date of this Agreement, or who becomes
prior to the Effective Time, a director or officer of Company or any Company
Subsidiary (the "Indemnitees") is, or is threatened to be, made a party based in
whole or in part on, or arising in whole or in part out of, or pertaining to (i)
the fact that he is or was a director, officer or employee of Company, any of
the Company Subsidiaries or any of their respective predecessors; or (ii) this
Agreement or any of the transactions contemplated hereby, whether in any case
asserted or arising before or after the Effective Time, National City shall
indemnify and hold harmless, as and to the fullest extent permitted by law, each
such Indemnitee against any
32
losses, claims, damages, liabilities, costs, expenses (including reasonable
attorney's fees and expenses in advance of the final disposition of any claim,
suit, proceeding or investigation to each Indemnitee to the fullest extent
permitted by law upon receipt of any undertaking required by applicable law),
judgments, fines and amounts paid in settlement in connection with any such
threatened or actual claim, action, suit, proceeding or investigation, and in
the event of any such threatened or actual claim, action, suit, proceeding or
investigation (whether asserted or arising before or after the Effective Time).
National City's obligations under this Section 5.9(a) continue in full force and
effect for a period of six (6) years from the Effective Time; provided, however,
that all rights to indemnification in respect of any claim (a "Claim") asserted
or made within such period shall continue until the final disposition of such
Claim.
(b) National City agrees that all rights to indemnification and all
limitations on liability existing in favor of the directors, officers and
employees of Company and the Company Subsidiaries, and their respective heirs
and assigns (the "Covered Parties") as provided in their respective articles or
certificate of incorporation or code of regulations as in effect as of the date
hereof with respect to matters occurring prior to the Effective Time shall
survive the Merger and shall continue in full force and effect, without any
amendment thereto.
(c) National City, from and after the Effective Time, shall (i)
cause the Persons who served as directors or officers of Company and the Company
Subsidiaries on or before the Effective Time to be covered by Company's existing
directors' and officers' liability insurance policy or an equivalent "tail"
directors and officers liability insurance policy, and a "tail" fiduciary
liability insurance policy covering officers and employees of Company and the
Company Subsidiaries with respect to the Company Employee Plans, with a duration
of not less than six (6) years from the Effective Time (provided, that National
City may substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are not materially less favorable than
such policy) (the "Insurance Policies"); provided, however, that (i) after the
first year of coverage under the Insurance Policies, National City shall not be
obligated to make annual premium payments (or the annualized equivalent in
premium payments for whatever period may be covered) pursuant to this Section
5.9(c) for the Insurance Policies to the extent such premiums exceed 150% of the
annual premiums paid as of the date hereof by Company for its current premiums
for such insurance (the "Insurance Expense Cap"), (ii) National City shall use
its reasonable best efforts to obtain the Insurance Policy commencing on the
Effective Time and, within the Insurance Expense Cap, keep such policy in effect
until the sixth anniversary of the Effective Time. If National City is unable to
obtain such Insurance Policy with the coverages required hereby within the
Insurance Expense Cap, then National City shall use the full amount of the
Insurance Expense Cap to obtain one or more alternate insurance policies with as
much coverage as is commercially obtainable. National City shall provide Company
with a true and complete copy of a binder with respect to such Insurance Policy
at least ten (10) days prior to the Effective Time and shall provide Company a
true and complete copy of the Insurance Policy as proposed to be issued prior to
the Effective Time.
(d) If National City or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or National City 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
33
be made so that the successors and assigns of National City assume the
obligations set forth in this Section.
(e) The provisions of this Section 5.9 are intended to be for the
benefit of, and shall be enforceable by, as the case may be, each Indemnitee,
Covered Party or director or officer of Company and each Company Subsidiary and
their respective heirs, representatives and assigns. National City agrees to pay
all costs and expenses (including fees and expenses of counsel) that may be
incurred by any such Person or his or her personal representatives in
successfully enforcing the obligations of National City under this Section. The
provisions of this Section shall survive the Closing for an indefinite period of
time and are in addition to any other rights to which an Indemnitee or Covered
Party may be entitled.
5.10 Additional Agreements.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use its reasonable efforts to take promptly, or cause
to be taken promptly, all actions and to do promptly, or cause to be done
promptly, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, including using its best efforts to
obtain all necessary actions or non-actions, extensions, waivers, consents and
approvals from all applicable Governmental Entities, effecting all necessary
registrations, applications and filings and obtaining any required contractual
consents and regulatory approvals.
(b) Each party covenants, for itself and its Subsidiaries, not to
take intentionally any action that would, or reasonably might be expected to,
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue, subject to such exceptions as do not have, and would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company, National City or on the Surviving Corporation
following the Effective Time, or in any of the conditions to the Merger not
being satisfied or in a violation of any provision of this Agreement, or (unless
such action is required by applicable law) which would adversely affect the
ability of the parties to obtain any approval required for the consummation of
the Merger without imposition of conditions or restrictions.
5.11 Section 16. National City and Company agree that, in order to most
effectively compensate and retain Company Insiders (as defined below) in
connection with the Merger, both prior to and after the Effective Time, it is
desirable that Company Insiders not be subject to a risk of liability under
Section 16(b) of the Exchange Act to the fullest extent permitted by applicable
law in connection with the conversion of shares of Company Common Stock and
Unexercised Options to acquire Company Common Stock into shares of National City
Common Stock and options to acquire shares of National City Common Stock in the
Merger, and for that compensatory and retentive purpose agree to the provisions
of this Section 5.11. "Company Insiders" shall mean those officers and directors
of Company who are subject to the reporting requirements of Section 16(a) of the
Exchange Act. Company shall, reasonably promptly following the date hereof,
provide to National City a list of (a) the Company Insiders, (b) the number of
shares of National City Common Stock and National City Preferred Stock thereon
expected to be received pursuant to the Merger, as appropriate, by each Company
Insider at the
34
Effective Time on account of shares of Company Common Stock, Company Preferred
Stock and Unexercised Options thereon, reasonably expected to be held by such
Company Insider immediately prior to the Effective Time and (c) a description of
the material terms of such Unexercised Options. Prior to the Effective Time, (x)
the Company's Board of Directors shall take such actions consistent with the
Commission's interpretive guidance to approve the disposition of Company Common
Stock, Company Preferred Stock and Unexercised Options thereon, by each Company
Insider for purposes of Rule 16b-3(e) such that the deemed "sale" of such
Company Common Stock, Company Preferred Stock and Company Options thereon by
such Persons pursuant to the Merger shall be exempt from liability pursuant to
Section 16(b) of the Exchange Act, and (y) the National City Board of Directors
shall take such action consistent with the Commission's interpretive guidance to
approve the acquisition of National City Common Stock and National City
Preferred Stock by each director and officer of National City for purposes of
Rule 16b-3(d) under the Exchange Act such that the deemed "purchase" of such
National City Common Stock and National City Preferred Stock thereon, by such
Persons pursuant to the Merger shall be exempt from liability pursuant to
Section 16(b) of the Exchange Act.
5.12 Publicity. The initial press release announcing this Agreement shall
be a joint press release and thereafter Company and National City shall consult
with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and in making
any filings with any Governmental Entity or with any national securities
exchange with respect thereto.
5.13 Registration Statement and Proxy. As soon as practicable after the
date hereof, National City and Company shall prepare and file with the
Commission the Proxy Statement, with form of proxy to be used in connection with
the vote of Company shareholders with respect to the Merger. National City
shall, as promptly as practicable after the date hereof, prepare and file with
the Commission the Registration Statement, containing the Proxy Statement, in
connection with the registration under the Securities Act of National City
Common Stock issuable upon conversion of Company Common Stock in the Merger.
National City and Company shall each use all reasonable efforts to have or cause
the Registration Statement declared effective as promptly as practicable
following receipt of final comments from the Staff of the Commission on the
Proxy Statement and Registration Statement (or confirmation that such Staff will
not review such filings), including, without limitation, cooperating with each
other in the preparation of such documents, causing their accountants to deliver
necessary or required instruments such as opinions and certificates and taking
any other action required or necessary to be taken under federal or state
securities laws or otherwise in connection with the registration process and to
maintain the effectiveness of the Registration Statement. Company shall use all
reasonable efforts to cause the Proxy Statement to be mailed to its shareholders
at the earliest practicable date. National City and Company shall cooperate with
respect to the Company Meeting, and Company shall use all reasonable efforts to
hold such meeting as soon as practicable after the date hereof.
5.14 Stock Exchange Listings. National City shall use its best efforts to
list on the New York Stock Exchange, upon official notice of issuance, the
National City Common Stock to be issued pursuant to the Merger.
35
5.15 Shareholders' Meeting. Company shall take all action necessary, in
accordance with applicable law and its articles of incorporation and code of
regulations, to convene a special meeting of the holders of Company Common Stock
(the "Company Meeting") as promptly as practicable for the purpose of
considering and taking action upon this Agreement. The Board of Directors of
Company shall recommend that the holders of Company Common Stock vote in favor
of and approve the Merger and adopt this Agreement at the Company Meeting, and
may not withdraw or modify its approval or recommendation, unless the Board of
Directors of Company determines in good faith (after consultation with outside
legal counsel) that failure to do so would cause it to violate its fiduciary
duties.
5.16 Tax-Free Reorganization Treatment. Neither National City nor Company
shall intentionally take or cause to be taken any action, whether before or
after the Effective Time, which would disqualify the Merger as a
"reorganization" within the meaning of Section 368 of the Code.
5.17 Provision of Shares. National City shall issue and provide the shares
of National City Common Stock and National City Preferred Stock deliverable upon
the conversion of Company Common Stock and Company Preferred Stock,
respectively, pursuant to this Agreement, and will provide the cash to be paid
in lieu of fractional shares of National City Common Stock as provided in
Section 2.1 above. The shares of National City Common Stock and National City
Preferred Stock to be issued and exchanged for shares of Company Common Stock
and Company Preferred Stock, respectively, pursuant to this Agreement shall, at
the Effective Time, be duly authorized, validly issued, fully paid and
nonassessable and subject to no preemptive rights.
5.18 Adverse Action. From the date hereof until the Effective Time, except
as expressly contemplated by the Agreement, neither party will, without the
written consent of the other party (which consent will not be unreasonably
withheld, conditioned or delayed) knowingly take any action that would, or would
be reasonably likely to result in (a) any of its representations and warranties
set forth in the Agreement being or becoming untrue, (b) any of the conditions
to the Merger set forth in Article VII below not being satisfied or (c) a
material violation of any provision of the Agreement except, in each case, as
may be required by applicable law.
5.19 Notice of Breach or Potential Breach. Company or National City, as
the case may be, shall promptly notify the other party to this agreement of any
change, circumstance or event which would cause any of the representations or
warranties made by such notifying party pursuant to this Agreement to be untrue
or which prevents such notifying party from complying with any of its
obligations hereunder.
5.20 Update and Supplement to Disclosure Letters. Company and National
City shall be permitted to update and supplement their respective Disclosure
Letters so as to disclose other information or exceptions to one or more
representations or warranties contained in Article III hereof in the case of
National City and Article IV hereof in the case of Company which are a result of
events which occur, or knowledge first obtained, after the date hereof;
provided, however, that, anything herein to the contrary notwithstanding, (i) no
exceptions or other information set forth on any such updated or supplemented
Disclosure Letter shall be deemed to
36
cure any representation or warranty which was not true and correct as of the
date hereof, and (ii) the exceptions and other information set forth on any such
updated or supplemented Disclosure Letter shall not be taken into consideration
in determining, for purposes of this Agreement, whether the conditions set forth
in Section 7.3 hereof in the case of National City, and Section 7.2 hereof in
the case of Company shall have been satisfied, and (iii) this Section 5.20 shall
not relieve any party of its obligations under any covenant set forth herein.
VI. CLOSING MATTERS
6.1 The Closing. Subject to satisfaction or waiver of all conditions
precedent set forth in Article VII below, the closing (the "Closing") shall
occur at such location mutually agreeable to the parties and on a date (the
"Closing Date") which is on the first business day after the later of:
(a) the first date on which the Merger may be consummated in
accordance with the approvals of any Governmental Entities; or
(b) the date the required approvals of Company's shareholders have
been obtained; or
(c) such other date to which the Parties agree in writing.
If all conditions are determined to be satisfied in all material respects
(or are duly waived) at the Closing, the Closing shall be consummated by the
making of all necessary filings required by all Governmental Entities.
6.2 Documents and Certificates. National City and Company shall use their
respective best efforts, on or prior to the Closing, to execute and deliver all
such instruments, documents or certificates as may be necessary or advisable, on
advice of counsel, for the consummation at the Closing of the transactions
contemplated by this Agreement to occur as soon as practicable.
VII. CONDITIONS
7.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) The Merger shall have been approved and adopted by the requisite
vote of the holders of Company Common Stock.
(b) The National City Common Stock issuable in the Merger shall have
been authorized for listing on the New York Stock Exchange, upon official notice
of issuance.
(c) All authorizations, consents, orders or approvals of, and all
expirations of waiting periods imposed by, any Governmental Entity
(collectively, "Consents") which are necessary for the consummation of the
Merger, (other than immaterial Consents, the failure to
37
obtain which would not be materially adverse to, National City and National
City's Subsidiaries, taken as a whole, or Company and Company Subsidiaries,
taken as a whole) shall have been obtained or shall have occurred and shall be
in full force and effect at the Effective Time; provided, however, that no such
authorization, consent, order or approval shall be deemed to have been received
if it shall include any conditions or requirements which would so materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement so as to render inadvisable in the reasonable
opinion of National City the consummation of the Merger.
(d) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the Commission and remain in effect; provided, however, that prior to
October 29, 2004, the fact that a stop order has been issued and remains in
effect shall not be the sole basis for termination of this Agreement by a party
pursuant to Sections 8.1(d) or 8.1(f) of this Agreement so long as the other
party is taking, or cooperating in taking, all commercially reasonable actions
to obtain the lifting of such stop order.
(e) No temporary restraining order or preliminary or permanent
injunction or other order by any federal or state court in the United States
which prevents the consummation of the Merger shall have been issued and remain
in effect; provided, however, that prior to the earlier of (i) October 29, 2004
or (ii) the time at which such injunction or order becomes final and
non-appealable, the entry of any such injunction or order shall not be the sole
basis for termination of this Agreement by a party pursuant to Sections 8.1(d)
or 8.1(f) of this Agreement so long as the other party is taking, or cooperating
in taking, all commercially reasonable actions to cause such injunction or order
to be appealed, vacated, lifted or otherwise modified to permit the Merger to
become effective.
(f) Xxxxxxx, Xxxxxxxx & Xxxxxxx, PLL, counsel to Company, shall have
delivered to Company and National City its opinion, dated the day of the
Effective Time, substantially to the effect that, on the basis of facts,
representations and assumptions set forth or referenced in such opinion that are
consistent with the state of facts existing at the Effective Time, the Merger
will be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and that, accordingly: (i) no gain or loss
will be recognized by National City or Company as a result of the Merger (except
for amounts resulting from any required change in accounting methods, any income
and deferred gain recognized pursuant to U.S. Treasury Regulations issued under
Section 1502 of the Code, or other exceptions as set forth in such opinion),
(ii) no gain or loss will be recognized by the shareholders of Company who
exchange their shares of Company Common Stock or Company Preferred Stock solely
for shares of National City Common Stock or National City Preferred Stock,
respectively, pursuant to the Merger (except with respect to cash received in
lieu of a fractional share interest in National City Common Stock), (iii) the
aggregate tax basis of the shares of National City Common Stock received by a
Company shareholder in the Merger (including any fractional shares of National
City Common Stock deemed received and redeemed) will be the same as the
aggregate tax basis of the shares of Company Common Stock surrendered by such
Company shareholder in exchange therefor, (iv) the aggregate tax basis of the
shares of National City Preferred Stock received by a Company shareholder in the
merger (including any
38
fractional shares of National City Preferred Stock deemed received and redeemed)
will be the same as the aggregate tax basis of the shares of Company Preferred
Stock surrendered by such Company shareholder in exchange therefor, and (v) the
holding period of the shares of National City Common Stock or National City
Preferred Stock received in the Merger will include the period during which the
shares of Company Common Stock or Company Preferred Stock surrendered in
exchange therefore were held, provided such shares of Company Common Stock or
Company Preferred Stock were held as capital assets at the Effective Time. In
rendering such opinion, counsel may require and rely upon such representations
as it deems appropriate and which shall be contained in certificates of officers
of Company, National City and others.
7.2 Conditions to Obligation of Company to Effect the Merger. The
obligation of Company to effect the Merger shall be subject to the fulfillment
or waiver at or prior to the Effective Time of the additional following
conditions:
(a) National City shall have performed in all material respects its
covenants contained in this Agreement required to be performed at or prior to
the Effective Time.
(b) The representations and warranties of National City contained in
this Agreement shall be true and correct when made and the representations and
warranties set forth in Article III above shall be true and correct as of the
Effective Time as if made at and as of such time, except as expressly
contemplated or permitted by this Agreement, except for representations and
warranties relating to a time or times other than the Effective Time which were
or will be true and correct at such time or times and except where the failure
or failures of such representations and warranties to be so true and correct,
individually or in the aggregate, does not result or would not result in a
Material Adverse Effect without taking into consideration any materiality or
knowledge qualifier that applies to such representation or warranty.
(c) National City shall have furnished Company a certificate dated
the date of the Closing, signed by the Chief Executive Officer and Chief
Financial Officer of National City that, to the best of their knowledge and
belief after due inquiry, the conditions set forth in Sections 7.2(a) and 7.2(b)
above have been satisfied.
(d) Counsel to National City (which may be in-house counsel) shall
have delivered its opinion that the shares of National City Common Stock and
National City Preferred Stock have been validly issued and shall be fully paid
and nonassessable upon issuance to Company's shareholders.
7.3 Conditions to Obligation of National City to Effect the Merger. The
obligation of National City to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the additional
following conditions:
(a) Company shall have performed in all material respects its
covenants contained in this Agreement required to be performed at or prior to
the Effective Time.
(b) The representations and warranties of Company contained in this
Agreement shall be true and correct when made and the representations and
warranties set forth
39
in Article IV above shall be true and correct as of the Effective Time as if
made on and as of such time, except as expressly contemplated or permitted by
this Agreement, except for representations and warranties relating to a time or
times other than the Effective Time which were or will be true and correct at
such time or times and except where the failure or failures of such
representations and warranties to be so true and correct, individually or in the
aggregate, does not result or would not result in a Material Adverse Effect
without taking into consideration any materiality or knowledge qualifier that
applies to such representation or warranty.
(c) Company shall have furnished National City a certificate dated
the date of the Closing signed by the Chief Executive Officer and Chief
Financial Officer of Company that, to the best of their knowledge and belief
after due inquiry, the conditions set forth in Sections 7.3(a) and 7.3(b) above
have been satisfied.
VIII. MISCELLANEOUS
8.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, notwithstanding any approval or adoption of this Agreement by
the shareholders of Company as follows:
(a) by mutual consent in writing of the Board of Directors of
National City and the Board of Directors of Company;
(b) by National City or Company if the Merger shall not have been
consummated on or before October 29, 2004 and such terminating party is not in
material breach hereof;
(c) by National City or Company if the shareholders of Company do
not approve the transactions contemplated herein at the Company Meeting;
(d) (i) by National City if any condition specified in Sections
7.1(b), 7.1(c), 7.1(d) or 7.1(f) above has not been met or waived by National
City at such time as such condition is no longer capable of being satisfied;
(ii) by Company if any condition specified in Sections 7.1(b),
7.1(c) and 7.1(d) above has not been met or waived by Company at such time as
such time as such condition is no longer capable of being satisfied;
(iii) by Company if the condition specified in Section 7.1(f)
above has not been met or waived by Company and National City is unable to
obtain an equivalent opinion from a nationally recognized law firm reasonably
acceptable to Company within 30 days of being notified that Xxxxxxx, Xxxxxxxx &
Xxxxxxx PLL is unwilling or unable to provide the opinion set for in Section
7.1(f);
(e) by Company (i) if any condition specified in Section 7.2(b), (c)
or (d) above has not been met or waived by Company at such time as such
condition is no longer capable of being satisfied or (ii) if the condition
specified in Section 7.2(a) has not been met or waived by Company, but in
connection with this clause (ii) only after Company has furnished
40
written notice to National City of its failure to perform and such failure has
not been cured or waived by the earlier of 30 days after the date of such notice
or October 29, 2004;
(f) by National City (i) if any condition specified in Section
7.3(b) or (c) above has not been met or waived by National City at such time as
such condition is no longer capable of being satisfied or (ii) if the condition
specified in Section 7.3(a) has not been met or waived by National City, but in
connection with this clause (ii) only after National City has furnished written
notice to Company of its failure to perform and such failure has not been cured
or waived by the earlier of 30 days after the date of such notice or October 29,
2004;
(g) by either party hereto in writing, if any Governmental Entity
shall have enacted, issued, promulgated, enforced or entered any final and
non-appealable injunction, order, decree or ruling that has the effect of making
consummation of the Merger illegal or otherwise preventing or prohibiting
consummation of the Merger;
(h) by Company if (A) it is not in material breach of its
obligations under Section 5.1 above, (B) it enters into a binding written
agreement for, or its Board of Directors recommends, an Acquisition Transaction,
and (C) upon Company's termination pursuant to this Section 8.1(h), the Company
pays National City the Termination Fee described in Section 8.10(b) below;
(i) by National City if Company enters into a binding written
agreement for, or its Board of Directors recommends, an Acquisition Transaction
(which in case of a termination pursuant to this Section 8.1(i), Company shall
become obligated to pay the Termination Fee to National City as described in
Section 8.10(b) below); or
(j) by National City if
(A) a tender offer or exchange offer shall have been commenced
that, if consummated, would result in any Person becoming the legal
or beneficial owner of either (x) 25% or more of the Company Common
Stock or (y) 10% or more of the Company Common Stock and such offer
is made as a part of a transaction or series of transactions in
which such Person shall acquire additional Company Common Stock
which in the aggregate constitutes more than 50% of the issued and
outstanding Company Common Stock; and
(B) the Board of Directors of Company fails to recommend
against acceptance of such tender offer or exchange offer or elects
to take no position with respect to the acceptance of such offer
(which in case of a termination pursuant to this Section 8.1(j),
Company shall become obligated to pay the Termination Fee to
National City as described in Section 8.10(b) below); or
41
(k) by National City if it is not in material breach of this
Agreement and the closing condition set forth in Section 7.2(b) would otherwise
be satisfied on the date of termination, and
(A) the Company Meeting shall not have been called prior to
October 1, 2004 through fault (whether commission or omission) of
Company;
(B) the Board of Directors of Company does not publicly
recommend in the Proxy Statement that the Company's shareholders
approve and adopt this Agreement; or
(C) after recommending in the Proxy Statement that such
shareholders approve and adopt this Agreement, the Board of
Directors of Company shall have withdrawn, modified or amended such
recommendation in any manner adverse to National City
(which in case of a termination pursuant to this Section 8.1(k),
Company shall become obligated to pay the Termination Fee to
National City as described in Section 8.10(b) below).
8.2 Non-Survival of Representations, Warranties and Agreements. The
representations, warranties and covenants in this Agreement will terminate at
the Effective Time or the earlier termination of this Agreement pursuant to
Section 8.1 above, as the case may be; provided, however, that if the Merger is
consummated, Sections 1.7, 2.1 through 2.4, 5.5, 5.6, 5.9, 5.16 and 8.2 hereof
shall survive the Effective Time to the extent contemplated by such Sections,
except Section 5.5 shall survive for a period of two years following the
Effective Time; provided, further, that the last two sentences of Section 5.6
and all of Section 8.10 hereof shall in all events survive any termination of
this Agreement.
8.3 Waiver and Amendment. Subject to applicable provisions of the DGCL and
Ohio Code, any provision of this Agreement may be waived at any time by the
party which is, or whose stockholders, shareholders or employees are, entitled
to the benefits thereof, and this Agreement may be amended or supplemented at
any time, provided that no amendment will be made after any stockholder or
shareholder approval of the Merger which reduces or changes the form of the
Merger Consideration without further stockholder or shareholder approval. No
such waiver, amendment or supplement will be effective unless in a writing that
makes express reference to this Section 8.3 and is signed by the party or
parties sought to be bound thereby.
8.4 Entire Agreement. This Agreement, the Confidentiality Agreements and
each party's disclosure letters contain the entire agreement among National City
and Company with respect to the Merger and the other transactions contemplated
hereby and thereby, and supersede all prior agreements among the parties with
respect to such matters.
8.5 Applicable Law. This Agreement will be governed by and construed in
accordance with the substantive laws of the State of Ohio except to the extent
the respective laws
42
of the State of Delaware or Ohio govern the manner in which the Merger shall be
consummated and the effect thereof.
8.6 Certain Definitions; Headlines. (a) For purposes of this Agreement,
the term:
(i) "Affiliate", "Associate" and "Significant Subsidiary"
shall have the respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
hereof.
(ii) "Control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise.
(iii) "Fed Approval Date" means the day the FRB issues an
order approving consummation of the Merger.
(iv) "Market Price" means the weighted average of the per
share closing prices on the New York Stock Exchange of National City Common
Stock for the ten (10) consecutive trading days ending at the end of the trading
day immediately preceding the Effective Time.
(v) "Material Adverse Effect" means an event, change or
occurrence which has a material negative impact on the financial condition,
businesses or results of operations of Company and its Subsidiaries, taken as a
whole, or National City and its Subsidiaries, taken as a whole, as the case may
be, or the ability of Company or National City, as the case may be, to
consummate the transactions contemplated hereby. The effect of any action taken
by Company solely pursuant to Section 5.2(f) above shall not be taken into
consideration in determining whether any Material Adverse Effect has occurred;
provided, however, that in determining whether a Material Adverse Effect has
occurred there shall be excluded any effect on the referenced party the cause of
which is (i) any change in banking or similar laws, rules or regulations of
general applicability or interpretations thereof by courts or governmental
authorities, (ii) any change in generally accepted accounting principles or
regulatory accounting requirements applicable to banks or their holding
companies, generally, (iii) general changes in conditions, including interest
rates, in the banking industry or in the global or United States economy or
financial markets, with respect to clause (i), (ii) or (iii), to the extent that
a change does not materially affect the referenced party to a materially
different extent than other similarly situated banking organizations, (iv) any
action or omission of Company or National City or any Subsidiary of either of
them taken with the prior written consent of National City or Company, as
applicable, in contemplation of the Merger, or (v) the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby or
the announcement thereof.
(vi) "Person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization or
other entity or organization; and
43
(vii) "Subsidiary" of Company, National City or any other
Person means, except where the context otherwise requires, any corporation,
partnership, limited liability company, trust or similar association of which
Company, National City or any other Person, as the case may be (either alone or
through or together with any other Subsidiary), owns, directly or indirectly,
more than 50% of the stock or other equity interests, the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation or other types of entities listed.
(b) The descriptive headings contained in this Agreement are for
convenience and reference only and will not affect in any way the meaning or
interpretation of this Agreement.
(c) Unless the context of this Agreement expressly indicates
otherwise, (i) any singular term in this Agreement will include the plural and
any plural term will include the singular and (ii) the term "Section" or
"Schedule" will mean a section or schedule of or to this Agreement.
8.7 Notices. All notices, consents, requests, demands and other
communications hereunder will be in writing and will be deemed to have been duly
given or delivered if delivered personally, telexed with receipt acknowledged,
mailed by registered or certified mail return receipt requested, sent by
facsimile with confirmation of receipt, or delivered by a recognized commercial
courier addressed as follows:
If to Company to:
Provident Financial Group, Inc.
Xxx Xxxx Xxxxxx Xxxxxx, XX-000
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, President and CEO
Fax No. (000) 000-0000
With copies to:
Xxxxxx & Xxxxxx LLP
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx Xxxxxx, Esquire
Fax No. (000) 000-0000
Xxxxxxx, Xxxxxxxx & Xxxxxxx PLL
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esquire
Fax No. (000) 000-0000
44
If to National City to:
National City Corporation
P. O. Xxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Chairman of the Board
Fax No. (000) 000-0000
With a copy to:
National City Corporation
Law Department
P. O. Xxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: General Counsel
Fax No. (000) 000-0000
or to such other address as any party may have furnished to the other
parties in writing in accordance with this Section 8.7.
8.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original but all of which
together will constitute but one agreement.
8.9 Parties in Interest; Assignment. Except for Sections 2.2 and 5.5 above
(which are intended to be for the benefit of the Continuing Employees and
holders of Unexercised Options under Company Option Plans to the extent
contemplated thereby and their beneficiaries, and may be enforced by such
Persons) and Section 5.9, this Agreement is not intended to nor will it confer
upon any other Person (other than the parties hereto) any rights or remedies.
Except as herein expressly provided, without the prior written consent of the
other party to this Agreement neither National City nor Company shall assign any
rights or delegate any obligations under this Agreement. Any such purported
assignment or delegation made without prior consent of the other party hereto
shall be null and void.
8.10 Effect of Termination and Termination Fee.
(a) In the event of termination of this Agreement by either National
City or Company as provided in Section 8.1 hereof, this Agreement shall
forthwith become void and have no effect except (i) as set forth in this Section
8.10, the last two sentences of Section 5.6 and Section 8.5, which shall survive
any termination of this Agreement, and (ii) notwithstanding anything to the
contrary contained in this Agreement, no party shall be relieved or released
from any liabilities or damages arising out of its willful or intentional breach
of any provision of this Agreement.
(b) In recognition of the efforts, expenses and other opportunities
foregone by National City while structuring and pursuing the Merger, the parties
hereto agree that Company
45
shall pay to National City a termination fee of $84,000,000 (the "Termination
Fee") in the manner set forth below, if this Agreement is terminated:
(i) (A) pursuant to Section 8.1(c) above and National City is
not in material breach of this Agreement and (B) prior to June 30, 2005, Company
enters into a written agreement for an Acquisition Transaction with a Person or
related Person that publicly announced an intention to enter into an Acquisition
Transaction with Company prior to the date of the Company Meeting, whereupon
Company shall pay the Termination Fee by wire transfer of immediately available
funds to an account designated by National City promptly upon the consummation
of such Acquisition Transaction;
(ii) (A) pursuant to Section 8.1(f) above and National City is
not in material breach of this Agreement and (B) following the initiation of
discussions with the Person or related Person that enters into a written
agreement for an Acquisition Transaction, prior to June 30, 2005, Company shall
have intentionally breached (and not cured after notice thereof) any of its
representations, warranties, covenants or agreements set forth in this
Agreement, which breach shall have materially contributed to the failure of the
Effective Time to occur prior to termination of this Agreement, whereupon
Company shall pay the Termination Fee by wire transfer of immediately available
funds to an account designated by National City promptly upon consummation of
such Acquisition Transaction;
(iii) pursuant to Section 8.1(g) above if a third Person
publicly announces its intent to engage in an Acquisition Transaction and such
third Person or a related Person initiates or instigates any of the proceedings
related to the enactment, issuance, promulgation, enforcement or entering a
final non-appealable injunction, order, decree or ruling that has the effect of
making consummation of the Merger illegal or otherwise preventing or prohibiting
consummation of the Merger, and the Company enters into a written agreement for
such Acquisition Transaction prior to June 30, 2005, whereupon Company shall pay
the Termination Fee by wire transfer of immediately available funds to an
account designated by National City promptly upon consummation of such
Acquisition Transaction; or
(iv) pursuant to Sections 8.1(h), 8.1(i), 8.1(j), or 8.1(k),
whereupon Company shall pay the Termination Fee by wire transfer of immediately
available funds to an account designated by National City promptly upon
termination.
(c) If the Merger is consummated, all expenses incurred in
connection with this Agreement and the transactions contemplated hereby will be
paid by the Surviving Corporation.
(d) Nothing contained in this Section 8.10 shall constitute or shall
be deemed to constitute liquidated damages for the willful breach by a party of
the terms of this Agreement or otherwise limit the rights of the non-breaching
party with respect to such a willful breach. In the absence of a willful breach,
however, if this Agreement is terminated by either party under circumstances
pursuant to which a Termination Fee becomes payable and is promptly paid,
Company shall have no further obligation or liability to National City and
National City agrees to
46
release Company, its officers, directors, employees, agents, attorneys and
advisors from any loss, claim or damages which might otherwise be asserted.
8.11 Enforcement of the Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties hereto will be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof.
8.12 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party hereto. Upon any such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
will negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated by this Agreement are consummated to
the extent possible.
[SIGNATURE PAGE FOLLOWS]
47
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Agreement as of the date first above written.
PROVIDENT FINANCIAL GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxxxx, President and CEO
NATIONAL CITY CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx, Chairman and CEO
48
EXHIBIT A
CERTIFICATE OF DESIGNATION
RIGHTS AND PREFERENCES
OF THE
SERIES D NON-VOTING CONVERTIBLE PREFERRED STOCK
WITHOUT PAR VALUE
OF
NATIONAL CITY CORPORATION
Pursuant to Section 151 (g) of the
General Corporation Law
of the State of Delaware
NATIONAL CITY CORPORATION, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: The Restated Certificate of Incorporation of the Corporation, as
amended, authorizes the issuance of 5,000,000 shares of preferred stock, without
par value, of the Corporation ("Preferred Stock") in one or more series, and
authorizes the Board of Directors to fix by resolution or resolutions and
designation of each series of Preferred Stock and the powers, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof.
SECOND: The Board of Directors of the Corporation, at a meeting duly held
and called on February 16, 2004, authorized the issuance of shares of Preferred
Stock of the Corporation in exchange for shares of Series D non-voting
convertible Preferred Stock, with $1.00 par value, of Provident Financial Group,
Inc. ("Company Series D Preferred Stock") and did duly adopt the following
resolution providing for the designation, powers, preferences and rights, and
the qualifications, limitations and/or restrictions thereof, of the Series D
Non-Voting Convertible Preferred Stock, without par value, of the Corporation.
THIRD: That a copy of this Certificate of Designation Rights and
Preferences of the Series D Non-Voting Convertible Preferred Stock, without par
value was presented to the meeting of the Board of Directors of National City
Corporation held on February 16, 2003
RESOLVED, that the Corporation authorize and issue Series D Non-Voting
Convertible Preferred Stock, without par value, up to an aggregate of 70,272
shares at such time or times and having such rights and preferences as provided
by the Certificate of Designation Rights and Preferences of the Series D
Non-Voting Preferred Stock Without Par Value of National City Corporation in the
form presented to and retained with the records of this meeting ("Preferred
Stock") together with an indeterminate number of shares of Common Stock as may
be issuable upon conversion of the Preferred Stock;
RIGHTS AND PREFERENCES
Section 1. Designation of Series and Number of Shares.
The shares of such series of Preferred Stock shall be designated "Series D
Non-Voting Convertible Preferred Stock" (hereinafter referred to as the "Series
D Preferred Stock"), and the number of shares which shall constitute such series
shall be not more than 70,272 shares, without par value, which number may be
decreased (but not below the number thereof then outstanding) from time to time
by the Board of Directors.
Section 2. Dividends.
(A) Dividends shall be paid on outstanding shares of Series D Preferred
Stock if, as and when dividends are paid on Common Stock of the Corporation at a
dividend rate per share of Series D Preferred Stock equal to the product of (i)
the number of shares of Common Stock of the Corporation into which each share of
Series D Preferred Stock is convertible, and (ii) the dividend paid by the
Corporation on each share of its outstanding Common Stock. "Common Stock" shall
have the definition set forth in Section 6(J) hereof.
(B) As used in this Section 2, the word "dividends" shall not include
dividends payable solely in shares of its capital stock (whether shares of
Common Stock or of capital stock of any other class) of the Corporation (if, but
only if, an adjustment to the Conversion Price is made with respect to such
dividend pursuant to Section 6(A) hereof) but shall include warrants or rights
to subscribe for or to purchase any security of the Corporation and any other
distribution made to holders of the Corporation's Common Stock.
Section 3. Liquidation Preference.
(A) The Series D Preferred Stock shall be preferred over the Common Stock
or any other class or series of stock ranking junior to the Series D Preferred
Stock as to distribution of assets in the event of any liquidation or
dissolution or winding up of the Corporation and, in any such event, the holders
of the Series D Preferred Stock shall be entitled to receive, after payment or
provision for payment of the debts and other liabilities of the Corporation, out
of the assets of
-2-
the Corporation available for distribution to its stockholders, $100 per share,
and no more, together with an amount equal to all dividends accrued and unpaid
thereon to the date of final distribution, for each share of the Series D
Preferred Stock held by them before any distribution of the assets shall be made
to the holders of the Common Stock or any other class or series of stock ranking
junior to the Series D Preferred Stock as to distribution of assets. Upon any
liquidation, dissolution or winding up of the Corporation, after payment shall
have been made in full on the Series D Preferred Stock as provided in the
preceding sentence, but not prior thereto, the Common Stock or any other series
or class of stock ranking junior to the Series D Preferred Stock as to
distribution of assets shall, subject to the respective terms and provisions, if
any, applying thereto, be entitled to receive any and all assets remaining to be
paid or distributed and the Series D Preferred Stock shall not be entitled to
share therein.
(B) If, upon any liquidation or dissolution or winding up of the
Corporation, the amounts payable on or with respect to the Series D Preferred
Stock are not paid in full, the holders of shares of the Series D Preferred
Stock, together with all classes or series of stock ranking on a parity with the
Series D Preferred Stock as to distribution of assets, shall share ratably in
any distribution of assets according to the respective amounts which would be
payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to the Series D Preferred Stock and any other
class or series of stock that so ranks on a parity with the Series D Preferred
Stock were paid in full.
(C) Neither the merger or consolidation of the Corporation with or into
another corporation nor the sale, lease or other transfer of all or
substantially all of the assets of the Corporation shall be deemed to be a
liquidation or dissolution or winding up of the Corporation.
(D) Written notice of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, stating the payment
date and the place where the distributable amount shall be payable and
containing a statement of the conversion right set forth hereinafter, shall be
given by mail, not less than thirty (30) days prior to the payment date stated
herein, to the holders of record of the Series D Preferred Stock at their
respective addresses as the same shall then appear on the books of the
Corporation.
Section 4. Automatic Conversion Upon Certain Transfers.
Any shares of Series D Preferred Stock that are transferred to any person,
other than Great American Insurance Company, Great American Life Insurance
Company or any of their respective affiliates ("Original Holders"), shall upon
such transfer be automatically converted into Common Stock at the Conversion
Price (as defined in Section 6 below) in effect on the date of such transfer.
For purposes of this provision, an "affiliate" of any person is another person
controlling, controlled by or under common control with such person.
Section 5. No Redemption.
The Corporation shall have no right to redeem any shares of Series D
Preferred Stock at any time.
-3-
Section 6. Conversion.
Shares of Series D Preferred Stock may be converted at any time and from
time to time at the option of the holder thereof into fully paid and
nonassessable shares of Common Stock of the Corporation at the rate of 15.96
shares of Common Stock as constituted on February 16, 2004 for each share of
Series D Preferred Stock surrendered for conversion. The conversion rate
expressed may also be expressed as a conversion price of $6.26 (the "Conversion
Price") based on a liquidation value of each share of Series D Preferred Stock
of $100.00.
(A) The Conversion Price shall be subject to adjustment from time to time
in case the Corporation shall (a) pay a dividend, or make a distribution, to all
holders of its Common Stock in shares of its capital stock (whether shares of
Common Stock or of capital stock of any other class) (b) subdivide its
outstanding shares of Common Stock into a greater number of shares, (c) combine
its outstanding shares of Common Stock into a smaller number of shares, or (d)
issue by reclassification of its shares of Common Stock any securities, in which
case the Conversion Price and terms of conversion in effect immediately prior to
such action shall be adjusted so that the holder of any share of Series D
Preferred Stock thereafter surrendered for conversion shall be entitled to
receive the kind and number of shares of Common Stock or other securities of the
Corporation which such holder would have owned or been entitled to receive
immediately following such action had such share of Series D Preferred Stock
been converted immediately prior thereto. An adjustment made pursuant to this
Section 6(A) shall become effective immediately after the record date in the
case of a dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision, combination or
reclassification.
All calculations under this Section 6 shall be rounded to the nearest cent
or to the nearest one hundredth of a share, as the case may be.
Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall mail a copy of a statement setting forth the adjusted
Conversion Price determined as provided herein and setting forth the method of
calculation and the facts requiring such adjustment and upon which such
calculation is based to each person who is a registered holder of Series D
Preferred Stock at such person's last address as the same appears on the books
of the Corporation. Each adjustment shall remain in effect until a subsequent
adjustment is required hereunder.
(B) If, at any time while shares of Series D Preferred Stock are
outstanding, the Corporation shall (i) declare a dividend (or any other
distribution) on its Common Stock, other than in cash out of current or retained
earnings, or (ii) reclassify its Common Stock (other than through a subdivision
or combination thereof) or become a party to any consolidation or merger for
which approval of the holders of its stock is required, or sell or transfer all
or substantially all of the assets of the Corporation, then the Corporation
shall cause to be mailed to registered holders of Series D Preferred Stock, at
their last addresses as they shall appear on the books of the Corporation at
least twenty days prior to the applicable record date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend or distribution, or if a record is not to be taken, the date as of
which holders of Common Stock of
-4-
record to be entitled to such dividend or distribution are to be determined, or
(y) the date on which any such reclassification, consolidation, merger, sale or
transfer is expected to become effective, and the date as of which it is
expected that holders of record of Common Stock shall be entitled to exchange
their Common Stock for securities or other property, if any, deliverable upon
such reclassification, consolidation, merger, sale or transfer. Failure to give
or receive the notice required by this Section 6(B) or any defect therein shall
not affect the legality or validity of any such dividend, distribution,
reclassification, consolidation, merger, sale, transfer or other action.
(C) In case of a merger or consolidation of the Corporation with or into
another corporation, or the sale of the Corporation's property or assets as, or
substantially as, an entirety, to another corporation, or the reclassification
of the Common Stock (other than through a subdivision or combination thereof, or
change in par value), holders of shares of Series D Preferred Stock shall
thereafter have the right to convert each of such shares into the kind and
amount of shares of stock and other securities and property receivable upon such
merger, consolidation, sale or reclassification by a holder of the number of
shares of Common Stock (whether whole or fractional) into which such shares of
Series D Preferred Stock might have been converted immediately prior to such a
merger, consolidation, sale or reclassification, and shall have no other
conversion rights under these provisions; and effective provision shall be made
in the charter of the resulting or surviving corporation or otherwise, so that
the provisions set forth herein for the protection of conversion rights of
Series D Preferred Stock shall thereafter be applicable, as nearly as reasonably
may be, to any other shares of stock and other securities and property
deliverable upon conversion of Series D Preferred Stock remaining outstanding or
other convertible preferred stock received in place thereof. Any such resulting
or surviving corporation shall expressly assume the obligation to deliver, upon
the exercise of the conversion right, such shares, securities or property as
holders of Series D Preferred Stock remaining outstanding, or other convertible
preferred stock received by such holders in place thereof, shall be entitled to
receive pursuant to the provisions hereof, and to make provision for protection
of conversion rights as above provided.
(D) The holder of any shares of Series D Preferred Stock may exercise its
option to convert such shares into shares of Common Stock only by surrendering
for such purpose to the Corporation at its principal office the certificates
representing the shares to be converted, accompanied by written notice that such
holder elects to convert such shares in accordance with the provisions of this
Section 6. Said notice shall also state the name or names (with addresses) in
which the certificate or certificates for shares of Common Stock which shall be
issuable on conversion are to be issued. Each certificate or certificates
surrendered for conversion shall, unless the shares issuable on conversion are
to be issued in the same name as that in which such certificate or certificates
are registered, be accompanied by instruments of transfer, in form reasonably
satisfactory to the Corporation, duly executed by the holder or its duly
authorized attorney. Each conversion shall be deemed to have been effected on
the date on which such certificate or certificates shall have been surrendered
and such notice received by the Corporation as aforesaid, and the person or
person in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become on said date the holder or holders of record of the shares represented
thereby notwithstanding that the transfer books of the Corporation may then be
closed or that certificates representing such shares of Common Stock shall not
then be actually delivered to such person.
-5-
As promptly as practicable on or after the conversion date, the Corporation
shall issue and deliver to the person or persons entitled to receive the same a
certificate or certificates representing the number of full shares of Common
Stock issuable upon such conversion.
(E) In connection with the conversion of shares of Series D Preferred
Stock into Common Stock, no fractional shares of Series D Preferred Stock or of
Common Stock shall be issued, but the Corporation shall pay a cash adjustment in
respect of such fractional interest, calculated on the market price of the
Common Stock on the date of conversion.
(F) Upon any conversion of shares of Series D Preferred Stock, no
allowance, adjustment or payment shall be made with respect to accrued but
unpaid dividends upon such Series D Preferred Stock or with respect to dividends
on the Common Stock to be issued upon conversion.
(G) The issuance of stock certificates on conversions of shares of Series
D Preferred Stock shall be made without charge to converting shareholders for
any tax in respect of the issuance thereof. The Corporation shall not, however,
be required to pay any tax which may be payable in respect of any registration
of transfer involved in the issue and delivery of stock in any name other than
that of the holder of the shares of Series D Preferred Stock converted, and the
Corporation shall not be required to so issue or deliver any stock certificate
unless and until the person or persons requesting the registration of transfer
shall have paid to the Corporation the amount of such tax or shall have
established to the satisfaction of the Corporation that such tax has been paid.
(H) The Corporation shall at all times reserve and keep available out of
its authorized Common Stock the full number of shares of Common Stock
deliverable upon the conversion of all outstanding shares of Series D Preferred
Stock.
(I) Any shares of Series D Preferred Stock converted shall be retired and
shall assume the status of authorized and unissued Preferred Stock, undesignated
as to series, subject to reissuance by the Corporation as shares of Preferred
Stock of one or more series, as may be determined from time to time by the Board
of Directors, but such shares shall not be reissued as Series D Preferred Stock.
(J) For purposes of this Xxxxxxx 0, Xxxxxx Xxxxx" shall mean (a) the
Corporation's Common Stock, without par value, or (b) any other class of stock
resulting from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value; provided, however, that in the event that at any
time as a result of an adjustment made pursuant to Section 6(A) above, the
holder of any share of Series D Preferred Stock thereafter surrendered for
conversion would become entitled to receive any stock of the Corporation other
than shares of its Common Stock, thereafter the conversion rate and price with
respect to such other shares so receivable upon conversion of any share of
Series D Preferred Stock shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to Common Stock contained in this Section 6.
-6-
Section 7. Voting Rights.
(A) The holders of the Series D Preferred Stock shall not be entitled to
vote except as provided in this Section 7 and as otherwise provided by law.
(B) So long as any shares of Series D Preferred Stock are outstanding, the
Corporation shall not, in any manner, whether by amendment to its Certificate of
Incorporation or By-Laws, by merger (whether or not the Corporation is the
surviving corporation in such merger), by consolidation, or otherwise, without
the written consent of the affirmative vote at a meeting called for that purpose
of the holders of at least two-thirds of the votes of the shares of Series D
Preferred Stock then outstanding, voting separately as a class, (i) amend, alter
or repeal any of the provisions of any resolution or resolutions establishing
the Series D Preferred Stock so as to affect adversely the powers, preferences
or special rights of such Series D Preferred Stock or (ii) authorize the
issuance of, or authorize any obligation or security convertible into,
exchangeable for or evidencing the right to purchase shares of, any additional
class or series of stock ranking prior to the Series D Preferred Stock in the
payment of dividends or the preferential distribution of assets.
(C) Nothing in this Section 7 shall be deemed to require any vote or
consent of the holders of shares of Series D Preferred Stock in connection with
the authorization or issuance of any series of Preferred Stock ranking on a
parity with or junior to the Series D Preferred Stock as to dividends and/or
distribution of assets.
Section 8. Restrictions on Transfer.
The Original Holders of the Series D Preferred Stock shall be entitled to
transfer ownership of their shares only as follows:
(A) in a widely dispersed public offering;
(B) in sales pursuant to Rule 144 of the Securities Act of 1933 or rules
of similar import;
(C) in sales pursuant to Rule 144A of the Securities Act of 1933, or in
any other private sale in which no single purchaser acquires more than 2% of the
voting shares of the Corporation; or
(D) to the Corporation, to a third party that has acquired a majority of
the shares of the Corporation or to any other Original Holder.
Section 9. Reports.
(A) So long as any shares of the Series D Preferred Stock shall be
outstanding, the Corporation shall provide to each holder of such shares a copy
of the annual report to shareholders distributed pursuant to Rule 14a-3 of the
Securities Exchange Act of 1934.
-7-
(B) The Board of Directors of the Corporation shall have the right to
adopt amendments to the Certificate of Incorporation in respect of any unissued
or treasury shares of any class and thereby to fix or change: the division of
such shares into series and the description and authorized number of shares of
each series; the dividend rate; the dates of payment of dividends and the dates
from which they are cumulative; liquidation price; redemption rights and price;
sinking fund requirements; conversion rights; and restrictions on the issuance
of shares of any class or series.
(C) No holder of shares of any class of the corporation shall be entitled
as such, as a matter of right, to subscribe for or purchase shares of any class,
now or hereafter authorized, or to purchase or subscribe for securities
convertible into or exchangeable for shares of the corporation or to which shall
be attached or appertain any warrants or rights entitling the holder thereof to
subscribe for or purchase shares, except such rights of subscription or
purchase, if any, at such price or prices, and upon such terms and conditions as
the Board of Directors in its discretion from time to time may determine.
RESOLVED, that all actions taken by the officers and directors of the
Corporation or any of them in connection with the foregoing resolutions through
the date hereof be, and they hereby are, ratified and approved.
IN WITNESS WHEREOF, NATIONAL CITY CORPORATION has caused this Certificate
of Designation to be signed Xxxxx X. Xxxxxxx, its Chairman and Xxxxx X. Xxxxxxx,
its Secretary, and its Corporate Seal to be hereunder affixed this ___ day of
___________, 2004.
NATIONAL CITY CORPORATION
[Seal]
By:
---------------------------------
Xxxxx X. Xxxxxxx, Chairman & CEO
---------------------------------
Xxxxx X. Xxxxxxx, Secretary
-8-
EXHIBIT B
Company Option Plans
1. Provident Financial Group, Inc. 2000 Stock Option Plan
2. Provident Financial Group, Inc.1997 Stock Option Plan
3. Provident Financial Group, Inc. 1996 Stock Option Plan
4. Provident Financial Group, Inc. 1988 Stock Option Plan
5. Provident Financial Group, Inc. 1992 Outside Director Amended and Restated
Stock Option Plan
6. Provident Financial Group, Inc. 2002 Outside Director Stock Option Plan
