Annual Report — [x] Reg. S-K Item 405 — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K405 Annual Report -- [x] Reg. S-K Item 405 93 493K
2: EX-3.(A) Restated Certificate of Incorporation 64 227K
3: EX-3.(B) By-Laws 7 37K
15: EX-10.(AA) Merger Agreement 42 256K
4: EX-10.(D) Director Deferral Plan 7 20K
5: EX-10.(L) First Natl Bank of Chicago Comp. Agrmnt. 5 22K
6: EX-10.(M) First Chicago Corp. Comp. Agremnt. 5 22K
7: EX-10.(N) First Chicago Corp. Comp. Deferral Plan 13 32K
8: EX-10.(O) First Chicago Corp. Executive Estate Plan 5 23K
9: EX-10.(S) Individual Change of Control Employment Agremnt. 16 72K
10: EX-10.(T) Individual Executive Employment Agremnt. 14 61K
11: EX-10.(W) Letter to Richard L. Thomas 2± 11K
12: EX-10.(X) Director Stock Plan 5 32K
13: EX-10.(Y) Stock Performance Plan 7 42K
14: EX-10.(Z) Senior Management Annual Incentive Plan 4 23K
16: EX-12 Statements Re Computation of Ratios 1 7K
17: EX-21 First Chicago Nbd Corp. Subsidiaries 2 13K
18: EX-23 Consent of Independent Public Accountants 1 9K
19: EX-27 Financial Data Schedule 2 12K
AGREEMENT AND PLAN OF MERGER
BETWEEN
FIRST CHICAGO CORPORATION
AND
NBD BANCORP, INC.
AS AMENDED
----------------
DATED AS OF JULY 11, 1995
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
ARTICLE I
The Merger
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1.1 The Merger......................................................... 1
1.2 Effective Time..................................................... 1
1.3 Effects of the Merger.............................................. 1
1.4 Conversion of First Chicago Common Stock; First Chicago Preferred
Stock.............................................................. 1
1.5 NBD Common Stock................................................... 3
1.6 Options............................................................ 3
1.7 Certificate of Incorporation....................................... 4
1.8 By-Laws............................................................ 4
1.9 Tax Consequences................................................... 4
1.10 Management Succession.............................................. 4
1.11 Board of Directors................................................. 4
1.12 Headquarters of Surviving Corporation.............................. 4
ARTICLE II
Exchange of Shares
2.1 NBD to Make Shares Available....................................... 5
2.2 Exchange of Shares................................................. 5
ARTICLE III
Representations and Warranties of NBD
3.1 Corporate Organization............................................. 6
3.2 Capitalization..................................................... 7
3.3 Authority; No Violation............................................ 8
3.4 Consents and Approvals............................................. 8
3.5 Reports............................................................ 9
3.6 Financial Statements............................................... 9
3.7 Broker's Fees...................................................... 9
3.8 Absence of Certain Changes or Events............................... 9
3.9 Legal Proceedings.................................................. 10
3.10 Taxes and Tax Returns.............................................. 10
3.11 Employees.......................................................... 11
3.12 SEC Reports........................................................ 12
3.13 Compliance with Applicable Law..................................... 12
3.14 Certain Contracts.................................................. 12
3.15 Agreements with Regulatory Agencies................................ 13
3.16 Other Activities of NBD and its Subsidiaries....................... 13
3.17 Investment Securities.............................................. 14
3.18 Interest Rate Risk Management Instruments.......................... 14
3.19 Undisclosed Liabilities............................................ 14
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3.20 Environmental Liability............................................. 14
3.21 State Takeover Laws................................................. 14
3.22 Pooling of Interests................................................ 14
ARTICLE IV
Representations and Warranties of First Chicago
4.1 Corporate Organization.............................................. 15
4.2 Capitalization...................................................... 15
4.3 Authority; No Violation............................................. 16
4.4 Consents and Approvals.............................................. 17
4.5 Reports............................................................. 17
4.6 Financial Statements................................................ 17
4.7 Broker's Fees....................................................... 18
4.8 Absence of Certain Changes or Events................................ 18
4.9 Legal Proceedings................................................... 18
4.10 Taxes and Tax Returns............................................... 18
4.11 Employees........................................................... 19
4.12 SEC Reports......................................................... 20
4.13 Compliance with Applicable Law...................................... 20
4.14 Certain Contracts................................................... 21
4.15 Agreements with Regulatory Agencies................................. 21
4.16 Other Activities of First Chicago and its Subsidiaries.............. 21
4.17 Investment Securities............................................... 22
4.18 Interest Rate Risk Management Instruments........................... 22
4.19 Undisclosed Liabilities............................................. 22
4.20 Environmental Liability............................................. 22
4.21 State Takeover Laws................................................. 23
4.22 Rights Agreement.................................................... 23
4.23 Pooling of Interests................................................ 23
ARTICLE V
Covenants Relating to Conduct of Business
5.1 Conduct of Businesses Prior to the Effective Time................... 23
5.2 Forbearances........................................................ 23
ARTICLE VI
Additional Agreements
6.1 Regulatory Matters.................................................. 25
6.2 Access to Information............................................... 26
6.3 Stockholders' Approvals............................................. 26
6.4 Legal Conditions to Merger.......................................... 26
6.5 Affiliates; Publication of Combined Financial Results............... 26
6.6 Stock Exchange Listing.............................................. 27
6.7 Employee Benefit Plans.............................................. 27
6.8 Indemnification; Directors' and Officers' Insurance................. 27
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6.9 Additional Agreements............................................... 29
6.10 Advice of Changes................................................... 29
6.11 Dividends........................................................... 29
ARTICLE VII
Conditions Precedent
7.1 Conditions to Each Party's Obligation To Effect the Merger.......... 29
7.2 Conditions to Obligations of First Chicago.......................... 30
7.3 Conditions to Obligations of NBD.................................... 30
ARTICLE VIII
Termination and Amendment
8.1 Termination......................................................... 31
8.2 Effect of Termination............................................... 31
8.3 Amendment........................................................... 31
8.4 Extension; Waiver................................................... 31
ARTICLE IX
General Provisions
9.1 Closing............................................................. 32
9.2 Nonsurvival of Representations, Warranties and Agreements........... 32
9.3 Expenses............................................................ 32
9.4 Notices............................................................. 32
9.5 Interpretation...................................................... 33
9.6 Counterparts........................................................ 33
9.7 Entire Agreement.................................................... 33
9.8 Governing Law....................................................... 33
9.9 Severability........................................................ 33
9.10 Publicity........................................................... 33
9.11 Assignment; Third Party Beneficiaries............................... 33
Exhibit A--First Chicago Option Agreement
Exhibit B--NBD Option Agreement
Exhibit 6.5(a)(1)--Form of Affiliate Letter Addressed to NBD
Exhibit 6.5(a)(2)--Form of Affiliate Letter Addressed to First Chicago
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INDEX OF DEFINED TERMS
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BHC Act..................................................................... 7
CERCLA...................................................................... 14
Certificate................................................................. 3
Certificate of Merger....................................................... 1
Claim....................................................................... 28
Closing..................................................................... 32
Closing Date................................................................ 32
Code........................................................................ 4
Common Certificate.......................................................... 2
Confidentiality Agreement................................................... 26
Delaware Secretary.......................................................... 1
DGCL........................................................................ 1
DPC Shares.................................................................. 3
Effective Time.............................................................. 1
ERISA....................................................................... 11
Exchange Act................................................................ 9
Exchange Agent.............................................................. 5
Exchange Fund............................................................... 5
Exchange Ratio.............................................................. 2
Federal Reserve Board....................................................... 8
First Chicago............................................................... 1
First Chicago Bank Subsidiary............................................... 22
First Chicago Benefit Plans................................................. 19
First Chicago Capital Stock................................................. 2
First Chicago Common Stock.................................................. 2
First Chicago Contract...................................................... 21
First Chicago Convertible Preferred Stock................................... 15
First Chicago Disclosure Schedule........................................... 15
First Chicago DRIP.......................................................... 15
First Chicago ERISA Affiliate............................................... 19
First Chicago ESPSP......................................................... 16
First Chicago 8.45% Series E Cumulative Fixed Rate Preferred Stock.......... 15
First Chicago March 31, 1995 Form 10-Q...................................... 17
First Chicago Option Agreement.............................................. 1
First Chicago Preferred Stock............................................... 15
First Chicago Regulatory Agreement.......................................... 21
First Chicago Reports....................................................... 20
First Chicago Rights........................................................ 15
First Chicago Rights Agreement.............................................. 15
First Chicago Series A Cumulative Adjustable Rate Preferred Stock........... 15
First Chicago Series B Cumulative Adjustable Rate Preferred Stock........... 15
First Chicago Series C Cumulative Adjustable Rate Preferred Stock........... 15
First Chicago Stock Plans................................................... 3
GAAP........................................................................ 9
Governmental Entity......................................................... 8
HOLA........................................................................ 7
Indemnified Parties......................................................... 27
Injunction.................................................................. 29
Insurance Amount............................................................ 28
IRS......................................................................... 10
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Joint Proxy Statement....................................................... 8
Liens....................................................................... 7
LSARS....................................................................... 27
Material Adverse Effect..................................................... 6
Merger...................................................................... 1
NBD......................................................................... 1
NBD Bank Subsidiary......................................................... 13
NBD Benefit Plans........................................................... 11
NBD Capital Stock........................................................... 2
NBD Common Stock............................................................ 2
NBD Contract................................................................ 13
NBD Convertible Preferred Stock............................................. 2
NBD Disclosure Schedule..................................................... 6
NBD 8.45% Series E Cumulative Fixed Rate Preferred Stock.................... 2
NBD ERISA Affiliate......................................................... 11
NBD March 31, 1995 Form 10-Q................................................ 9
NBD New Preferred Stock..................................................... 2
NBD Option Agreement........................................................ 1
NBD Preferred Stock......................................................... 7
NBD Regulatory Agreement.................................................... 13
NBD Reports................................................................. 12
NBD Series A Cumulative Adjustable Rate Preferred Stock..................... 2
NBD Series B Cumulative Adjustable Rate Preferred Stock..................... 2
NBD Series C Cumulative Adjustable Rate Preferred Stock..................... 2
NBD Stock Plans............................................................. 27
NBD Units................................................................... 7
New Benefit Plans........................................................... 27
NYSE........................................................................ 6
OCC......................................................................... 9
Option Agreements........................................................... 1
OTS......................................................................... 8
Preferred Stock Certificate................................................. 3
Regulatory Agencies......................................................... 9
Requisite Regulatory Approvals.............................................. 29
S-4......................................................................... 8
SBA......................................................................... 8
SEC......................................................................... 8
Securities Act.............................................................. 12
Significant Subsidiary...................................................... 13
SRO......................................................................... 8
State Approvals............................................................. 8
State Regulator............................................................. 9
Subsidiary.................................................................. 7
Surviving Corporation....................................................... 1
Taxes....................................................................... 11
Trust Account Shares........................................................ 3
Trust Activities............................................................ 13
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 11, 1995, as amended by and
between FIRST CHICAGO CORPORATION, a Delaware corporation ("First Chicago")
and NBD BANCORP, INC., a Delaware corporation ("NBD").
WHEREAS, the Boards of Directors of NBD and First Chicago have determined
that it is in the best interests of their respective companies and their
stockholders to consummate the business combination transaction provided for
herein in which First Chicago will, subject to the terms and conditions set
forth herein, merge with and into NBD (the "Merger"), so that NBD is the
surviving corporation (hereinafter sometimes called the "Surviving
Corporation") in the Merger; and
WHEREAS, it is the intent of the respective Boards of Directors of First
Chicago and NBD that the Merger be structured as a "merger of equals" of First
Chicago and NBD and that the Surviving Corporation be governed and operated on
this basis; and
WHEREAS, as a condition to, and immediately after the execution of, this
Agreement, First Chicago and NBD are entering into a First Chicago stock
option agreement (the "First Chicago Option Agreement") attached hereto as
Exhibit A; and
WHEREAS, as a condition to, and immediately after the execution of, this
Agreement, First Chicago and NBD are entering into a NBD stock option
agreement (the "NBD Option Agreement"; and together with the First Chicago
Option Agreement, the "Option Agreements") attached hereto as Exhibit B; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
The Merger
1.1 The Merger. Subject to the terms and conditions of this Agreement, in
accordance with the Delaware General Corporation Law (the "DGCL"), at the
Effective Time (as defined in Section 1.2), First Chicago shall merge with and
into NBD. NBD shall be the Surviving Corporation in the Merger, and shall
continue its corporate existence under the laws of the State of Delaware. Upon
consummation of the Merger, the separate corporate existence of First Chicago
shall terminate.
1.2 Effective Time. The Merger shall become effective as set forth in the
certificate of merger (the "Certificate of Merger") which shall be filed with
the Secretary of State of the State of Delaware (the "Delaware Secretary") on
the Closing Date (as defined in Section 9.1). The term "Effective Time" shall
be the date and time when the Merger becomes effective, as set forth in the
Certificate of Merger.
1.3 Effects of the Merger. At and after the Effective Time, the Merger shall
have the effects set forth in Section 261 of the DGCL.
1.4 Conversion of First Chicago Common Stock; First Chicago Preferred
Stock. At the Effective Time, in each case, subject to Section 2.2(e), by
virtue of the Merger and without any action on the part of First Chicago, NBD
or the holder of any of the following securities:
(a) Each share of the common stock, par value $5.00 per share, of First
Chicago (the "First Chicago Common Stock"; and together with the First
Chicago Preferred Stock (as defined in Section 4.2(a)), the "First Chicago
Capital Stock") issued and outstanding immediately prior to the Effective
Time (other than shares of First Chicago Capital Stock held (x) in First
Chicago's treasury or (y) directly or indirectly by First Chicago or NBD or
any of their respective wholly owned Subsidiaries (as defined in Section
3.1) (except for Trust Account Shares and DPC shares, as such terms are
defined in Section 1.4(i) and as set forth in the First Chicago Disclosure
Schedule)) shall be converted into the right to receive 1.81 shares (the
"Exchange Ratio") of the common stock, par value $1.00 per share, of NBD
(the "NBD Common Stock"; the NBD Common Stock, the NBD Preferred Stock (as
defined in Section 3.2) and the NBD New Preferred Stock (as defined Section
1.4(f)) being referred to herein as the "NBD Capital Stock").
(b) Each share of First Chicago Series A Cumulative Adjustable Rate
Preferred Stock (as defined in Section 4.2(a)) issued and outstanding
immediately prior to the Effective Time shall be converted into the right
to receive one share of preferred stock with cumulative and adjustable
dividends of NBD (the "NBD Series A Cumulative Adjustable Rate Preferred
Stock"). The terms of the NBD Series A Cumulative Adjustable Rate Preferred
Stock shall be substantially the same as the terms of the First Chicago
Series A Cumulative Adjustable Rate Preferred Stock.
(c) Each share of First Chicago Series B Cumulative Adjustable Rate
Preferred Stock (as defined in Section 4.2(a)) issued and outstanding
immediately prior to the Effective Time shall be converted into the right
to receive one share of preferred stock with cumulative and adjustable
dividends of NBD (the "NBD Series B Cumulative Adjustable Rate Preferred
Stock"). The terms of the NBD Series B Cumulative Adjustable Rate Preferred
Stock shall be substantially the same as the terms of the First Chicago
Series B Cumulative Adjustable Rate Preferred Stock.
(d) Each share of First Chicago Series C Cumulative Adjustable Rate
Preferred Stock (as defined in Section 4.2(a)) issued and outstanding
immediately prior to the Effective Time shall be converted into the right
to receive one share of preferred stock with cumulative and adjustable
dividends of NBD (the "NBD Series C Cumulative Adjustable Rate Preferred
Stock"). The terms of the NBD Series C Cumulative Adjustable Rate Preferred
Stock shall be substantially the same as the terms of the First Chicago
Series C Cumulative Adjustable Rate Preferred Stock.
(e) Each share of First Chicago 8.45% Series E Cumulative Fixed Rate
Preferred Stock (as defined in Section 4.2(a)) issued and outstanding
immediately prior to the Effective Time shall be converted into the right
to receive one share of preferred stock with a fixed rate dividend of NBD
(the "NBD 8.45% Series E Cumulative Fixed Rate Preferred Stock"). The terms
of the NBD 8.45% Series E Cumulative Fixed Rate Preferred Stock shall be
substantially the same as the terms of the First Chicago 8.45% Series E
Cumulative Fixed Rate Preferred Stock.
(f) Each share of First Chicago Convertible Preferred Stock (as defined
in Section 4.2(a)) issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive one share of
convertible preferred stock with a fixed rate dividend of NBD (the "NBD
Convertible Preferred Stock", and together with the NBD Series A Cumulative
Adjustable Rate Preferred Stock, NBD Series B Cumulative Adjustable Rate
Preferred Stock, NBD Series C Cumulative Adjustable Rate Preferred Stock,
and NBD 8.45% Series E Cumulative Fixed Rate Preferred Stock, the "NBD New
Preferred Stock"). The terms of the NBD Convertible Preferred Stock shall
be substantially the same as the terms of the First Chicago Convertible
Preferred Stock.
(g) At the Effective Time, any deposit agreements pursuant to which
shares of First Chicago Preferred Stock are held subject to depositary
receipts shall automatically, and without further action on the part of the
Surviving Corporation, be assumed by the Surviving Corporation.
(h) All of the shares of First Chicago Common Stock converted into NBD
Common Stock pursuant to this Article I shall no longer be outstanding and
shall automatically be cancelled and shall cease to exist as of the
Effective Time, and each certificate (each a "Common Certificate")
previously representing any such shares of First Chicago Common Stock shall
thereafter represent the right to receive (i) a certificate
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representing the number of whole shares of NBD Common Stock and (ii) cash
in lieu of fractional shares into which the shares of First Chicago Common
Stock represented by such Common Certificate have been converted pursuant
to this Section 1.4 and Section 2.2(e). Common Certificates previously
representing shares of First Chicago Common Stock shall be exchanged for
certificates representing whole shares of NBD Common Stock and cash in lieu
of fractional shares issued in consideration therefor upon the surrender of
such Common Certificates in accordance with Section 2.2, without any
interest thereon. If, prior to the Effective Time, the outstanding shares
of NBD Common Stock or First Chicago Common Stock shall have been
increased, decreased, changed into or exchanged for a different number or
kind of shares or securities as a result of a reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse
stock split, or other similar change in capitalization, then an appropriate
and proportionate adjustment shall be made to the Exchange Ratio.
(i) At the Effective Time, all shares of First Chicago Common Stock that
are owned by First Chicago as treasury stock and all shares of First
Chicago Common Stock that are owned, directly or indirectly, by First
Chicago or NBD or any of their respective wholly owned Subsidiaries (other
than shares of First Chicago Common Stock held, directly or indirectly, in
trust accounts, managed accounts and the like or otherwise held in a
fiduciary capacity that are beneficially owned by third parties (any such
shares, and shares of NBD Common Stock which are similarly held, whether
held directly or indirectly by First Chicago or NBD, as the case may be,
being referred to herein as "Trust Account Shares") and other than any
shares of First Chicago Common Stock held by First Chicago or NBD or any of
their respective Subsidiaries in respect of a debt previously contracted
(any such shares of First Chicago Common Stock, and shares of NBD Common
Stock which are similarly held, whether held directly or indirectly by
First Chicago or NBD or any of their respective Subsidiaries, being
referred to herein as "DPC Shares") and as set forth in the First Chicago
Disclosure Schedule) shall be cancelled and shall cease to exist and no
stock of NBD or other consideration shall be delivered in exchange
therefor. All shares of NBD Common Stock that are owned by First Chicago or
any of its wholly owned Subsidiaries (other than Trust Account Shares and
DPC Shares) shall become treasury stock of NBD.
(j) All of the shares of First Chicago Preferred Stock converted into NBD
New Preferred Stock pursuant to this Article I shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist
as of the Effective Time, and each certificate (each a "Preferred Stock
Certificate"; and together with a Common Certificate, a "Certificate")
previously representing any such shares of First Chicago Preferred Stock
shall thereafter represent the right to receive a certificate representing
the number of whole shares of corresponding NBD New Preferred Stock into
which the shares of First Chicago Preferred Stock represented by such
Preferred Stock Certificate have been converted pursuant to this Section
1.4. Preferred Stock Certificates previously representing shares of First
Chicago Preferred Stock shall be exchanged for certificates representing
whole shares of corresponding NBD New Preferred Stock issued in
consideration therefor upon the surrender of such Preferred Stock
Certificates in accordance with Section 2.2 hereof, without any interest
thereon.
1.5 NBD Common Stock. At and after the Effective Time, each share of NBD
Common Stock issued and outstanding immediately prior to the Closing Date
shall remain an issued and outstanding share of common stock of the Surviving
Corporation and shall not be affected by the Merger.
1.6 Options. (a) At the Effective Time, each option granted by First Chicago
to purchase shares of First Chicago Common Stock which is outstanding and
unexercised immediately prior thereto shall cease to represent a right to
acquire shares of First Chicago Common Stock and shall be converted
automatically into an option to purchase shares of NBD Common Stock in an
amount and at an exercise price determined as provided below (and otherwise,
in the case of options, subject to the terms of the First Chicago benefit
plans under which they were issued (collectively, the "First Chicago Stock
Plans") and the agreements evidencing grants thereunder)):
(i) The number of shares of NBD Common Stock to be subject to the new
option shall be equal to the product of the number of shares of First
Chicago Common Stock subject to the original option and the Exchange Ratio,
provided that any fractional shares of NBD Common Stock resulting from such
multiplication shall be rounded to the nearest whole share; and
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(ii) The exercise price per share of NBD Common Stock under the new
option shall be equal to the exercise price per share of First Chicago
Common Stock under the original option divided by the Exchange Ratio,
provided that such exercise price shall be rounded down to the nearest
whole cent.
(b) The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code")) shall be and is intended to be effected
in a manner which is consistent with Section 424(a) of the Code. The duration
and other terms of the new option shall be the same as the original option
except that all references to First Chicago shall be deemed to be references
to NBD.
1.7 Certificate of Incorporation. Subject to the terms and conditions of
this Agreement, at the Effective Time, the Certificate of Incorporation of NBD
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended in accordance with applicable law, except that such
Certificate of Incorporation shall be amended to provide: (a) that the number
of shares of authorized Common Stock of the Surviving Corporation shall be
increased to 750,000,000; (b) that the name of the Surviving Corporation shall
be "First Chicago NBD Corporation"; (c) for the deletion of the Series A
Preferred Stock, par value $1.00 per share; and (d) for the NBD New Preferred
Stock.
1.8 By-Laws. Subject to the terms and conditions of this Agreement, at the
Effective Time, the By-Laws of NBD, shall be the By-Laws of the Surviving
Corporation until thereafter amended in accordance with applicable law.
1.9 Tax Consequences. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a)(i)(A) of the Code, and
that this Agreement shall constitute a "plan of reorganization" for the
purposes of Section 368 of the Code.
1.10 Management Succession. (a) At the Effective Time, Mr. Richard L. Thomas
shall be Chairman of the Board of the Surviving Corporation, and shall serve
in such capacity until the annual meeting of stockholders of the Surviving
Corporation (anticipated to be held on May 20, 1996). At the Effective Time,
Mr. Verne G. Istock shall be the President and Chief Executive Officer of the
Surviving Corporation. Mr. Istock shall immediately and without further action
of the Board of Directors become Chairman of the Board of the Surviving
Corporation on the date (which in no event shall be later than May 31, 1996)
upon which Mr. Thomas ceases to be Chairman of the Board.
(b) At the annual meeting of stockholders of the Surviving Corporation
(anticipated to be held on May 20, 1996), Mr. Thomas shall retire from all
positions he then holds as an officer of the Surviving Corporation or as an
officer or employee of any of its Subsidiaries.
1.11 Board of Directors. (a) From and after the Effective Time, the Board of
Directors of the Surviving Corporation shall consist of 22 persons, including
Messrs. Thomas and Istock, 10 additional persons, two of whom may be executive
officers of First Chicago, to be named by Mr. Thomas and the Board of
Directors of First Chicago, and 10 additional persons, one of whom may be an
executive officer of NBD, to be named by Mr. Istock and the Board of Directors
of NBD.
(b) The representatives selected by First Chicago and NBD, respectively,
shall be divided as equally as practicable among the three classes of
directors in proportion to the aggregate representation set forth above. From
and after the Effective Time, the representatives of First Chicago and NBD
shall also be represented in proportion to the aggregate representation set
forth above on all committees of the Board of Directors of the Surviving
Corporation.
1.12 Headquarters of Surviving Corporation. At the Effective Time, the
headquarters and principal executive offices of the Surviving Corporation
shall be Chicago, Illinois.
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ARTICLE II
Exchange of Shares
2.1 NBD to Make Shares Available. At or prior to the Effective Time, NBD
shall deposit, or shall cause to be deposited, with First Chicago Trust
Company of New York, or another bank or trust company reasonably acceptable to
each of First Chicago and NBD (the "Exchange Agent"), for the benefit of the
holders of Certificates, for exchange in accordance with this Article II,
certificates representing the shares of NBD Common Stock and NBD New Preferred
Stock and cash in lieu of any fractional shares (such cash and certificates
for shares of NBD Common Stock and NBD New Preferred Stock, together with any
dividends or distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund") to be issued pursuant to Section 1.4 and paid pursuant
to Section 2.2(a) in exchange for outstanding shares of First Chicago Common
Stock.
2.2 Exchange of Shares. (a) As soon as practicable after the Effective Time,
and in no event later than five business days thereafter, the Exchange Agent
shall mail to each holder of record of one or more Certificates a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing, the
shares of NBD Common Stock, NBD New Preferred Stock and any cash in lieu of
fractional shares into which the shares of First Chicago Common Stock or First
Chicago Preferred Stock represented by such Certificate or Certificates shall
have been converted pursuant to this Agreement. Upon proper surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together with
such properly completed letter of transmittal, duly executed, the holder of
such Certificate shall be entitled to receive in exchange therefor, as
applicable, (i) a certificate representing that number of whole shares of NBD
Common Stock or NBD New Preferred Stock to which such holder of First Chicago
Common Stock or First Chicago Preferred Stock shall have become entitled
pursuant to the provisions of Article I, and (ii) a check representing the
amount of any cash in lieu of fractional shares which such holder has the
right to receive in respect of the Certificate surrendered pursuant to the
provisions of this Article II, and the Certificate so surrendered shall
forthwith be cancelled. No interest will be paid or accrued on any cash in
lieu of fractional shares or on any unpaid dividends and distributions payable
to holders of Certificates.
(b) No dividends or other distributions declared with respect to NBD Common
Stock or NBD New Preferred Stock with a record date following the 30th day to
occur after the Effective Time shall be paid to the holder of any
unsurrendered Certificate until the holder thereof shall surrender such
Certificate in accordance with this Article II. Subject to Section 6.11 and to
the effect of applicable laws, (i) until such 30th day, there shall be paid to
each former holder of shares of First Chicago Common Stock or First Chicago
Preferred Stock, the amount of dividends or other distributions with a record
date after the Effective Time but on or before such 30th day payable with
respect to the shares of NBD Common Stock or NBD New Preferred into which such
First Chicago Common Stock or First Chicago Preferred Stock has been converted
pursuant to this Article II and (ii) after the surrender of a Certificate in
accordance with this Article II, the record holder thereof shall be entitled
to receive any such dividends or other distributions with a record date
following the 30th day to occur after the Effective Time, without any interest
thereon, which theretofore had become payable with respect to shares of NBD
Common Stock or NBD New Preferred Stock represented by such Certificate.
(c) If any certificate representing shares of NBD Common Stock or NBD New
Preferred Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be a
condition of the issuance thereof that the Certificate so surrendered shall be
properly endorsed (or accompanied by an appropriate instrument of transfer)
and otherwise in proper form for transfer, and that the person requesting such
exchange shall pay to the Exchange Agent in advance any transfer or other
taxes required by reason of the issuance of a certificate representing shares
of NBD Common Stock or NBD New Preferred Stock in any name other than that of
the registered holder of the Certificate surrendered, or required for any
other reason, or shall establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
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(d) After the Effective Time, there shall be no transfers on the stock
transfer books of First Chicago of the shares of First Chicago Common Stock or
First Chicago Preferred Stock which were issued and outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates
representing such shares are presented for transfer to the Exchange Agent,
they shall be cancelled and exchanged for certificates representing shares of
NBD Common Stock or NBD New Preferred Stock as provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of NBD Common Stock shall
be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to NBD Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a stockholder of
First Chicago. In lieu of the issuance of any such fractional share, NBD shall
pay to each former stockholder of First Chicago who otherwise would be
entitled to receive such fractional share an amount in cash determined by
multiplying (i) the average of the closing-sale prices of NBD Common Stock on
the New York Stock Exchange, Inc. (the "NYSE") as reported by The Wall Street
Journal for the five trading days immediately preceding the date of the
Effective Time by (ii) the fraction of a share (rounded to the nearest
thousandth when expressed as an Arabic number) of NBD Common Stock to which
such holder would otherwise be entitled to receive pursuant to Section 1.4.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of First Chicago for 12 months after the Effective Time shall be
paid to NBD. Any stockholders of First Chicago who have not theretofore
complied with this Article II shall thereafter look only to NBD for payment of
the shares of NBD Common Stock or NBD New Preferred Stock, cash in lieu of any
fractional shares and any unpaid dividends and distributions on the NBD Common
Stock or NBD New Preferred Stock deliverable in respect of each share of First
Chicago Common Stock or First Chicago Preferred Stock, as the case may be,
such stockholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon. Notwithstanding the foregoing, none of First
Chicago, NBD, the Exchange Agent or any other person shall be liable to any
former holder of shares of First Chicago Common Stock or First Chicago
Preferred Stock for any amount delivered in good faith to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if reasonably required by
NBD, the posting by such person of a bond in such amount as NBD may determine
is reasonably necessary as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the shares of NBD
Capital Stock and any cash in lieu of fractional shares deliverable in respect
thereof pursuant to this Agreement.
ARTICLE III
Representations and Warranties of NBD
Except as disclosed in the NBD disclosure schedule delivered to First
Chicago concurrently herewith (the "NBD Disclosure Schedule") NBD hereby
represents and warrants to First Chicago as follows:
3.1 Corporate Organization. (a) NBD is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. NBD has
the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the nature
of the business conducted by it or the character or location of the properties
and assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified would not
have a Material Adverse Effect on NBD. As used in this Agreement, the term
"Material Adverse Effect" means, with respect to First Chicago, NBD or the
6
Surviving Corporation, as the case may be, a material adverse effect on the
business, results of operations, financial condition, or (insofar as they can
reasonably be foreseen) prospects of such party and its Subsidiaries taken as
a whole. As used in this Agreement, the word "Subsidiary" when used with
respect to any party means any bank, corporation, partnership, limited
liability company, or other organization, whether incorporated or
unincorporated, which is consolidated with such party for financial reporting
purposes. NBD is duly registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHC Act") and as a savings and
loan holding company under the Home Owners' Loan Act ("HOLA"). True and
complete copies of the Certificate of Incorporation and By-Laws of NBD, as in
effect as of the date of this Agreement, have previously been made available
by NBD to First Chicago.
(b) Each NBD Subsidiary (i) is duly organized and validly existing as a
bank, corporation, partnership or limited liability company under the laws of
its jurisdiction of organization, (ii) is duly qualified to do business and in
good standing in all jurisdictions (whether federal, state, local or foreign)
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and in which the failure to be so qualified
would have a Material Adverse Effect on NBD, and (iii) has all requisite
corporate power and authority to own or lease its properties and assets and to
carry on its business as now conducted.
(c) The minute books of NBD accurately reflect in all material respects all
corporate actions held or taken since January 1, 1993 of its stockholders and
Board of Directors (including committees of the Board of Directors of NBD).
3.2 Capitalization. (a) The authorized capital stock of NBD consists of (i)
500,000,000 shares of NBD Common Stock, of which as of June 30, 1995,
157,139,395 shares were issued and outstanding and 3,743,613 shares were held
in treasury, and (ii) 10,460,000 shares of Preferred Stock (the "NBD Preferred
Stock"), of which as of June 30, 1995, (A) 10,000,000 shares were designated
and no shares were issued and outstanding as Preferred Stock, no par value,
and (B) 460,000 shares were designated and no shares were issued and
outstanding as Series A Preferred Stock, par value $1.00 per share. All of the
issued and outstanding shares of NBD Capital Stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. As of
the date of this Agreement, except pursuant to the terms of NBD's issued and
outstanding Preferred Stock Purchase Units ("NBD Units") and for the NBD
Option Agreement, NBD does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of NBD Capital
Stock or any other equity securities of NBD or any securities representing the
right to purchase or otherwise receive any shares of NBD Common Stock or NBD
Preferred Stock. As of June 30, 1995, no shares of NBD Common Stock were
reserved for issuance, except for (i) 2,152,022 shares reserved for issuance
upon the exercise of stock options pursuant to the NBD Stock Plans (as defined
in Section 6.7), (ii) 32,243 shares reserved for issuance as awards under the
NBD Directors Stock Award Plans and (iii) 546,170 shares reserved for issuance
upon the exercise of options granted in substitution for options assumed in
prior NBD acquisitions. The only shares of NBD Preferred Stock reserved for
issuance were 1,500,000 shares reserved pursuant to NBD Units. Since June 30,
1995, NBD has not issued any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock, other
than pursuant to the exercise of employee stock options granted prior to such
date. The shares of NBD Capital Stock to be issued pursuant to the Merger will
be duly authorized and validly issued and, at the Effective Time, all such
shares will be fully paid, nonassessable and free of preemptive rights, with
no personal liability attaching to the ownership thereof.
(b) NBD owns, directly or indirectly, all of the issued and outstanding
shares of capital stock of each of the NBD Subsidiaries, free and clear of any
liens, pledges, charges, encumbrances and security interests whatsoever
("Liens"), and all of such shares are duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. No NBD Subsidiary has or is
bound by any outstanding subscriptions, options, warrants, calls, commitments
or agreements of any character calling for the purchase or issuance of any
shares of capital stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise receive any shares
of capital stock or any other equity security of such Subsidiary.
7
3.3 Authority; No Violation. (a) NBD has full corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of NBD. The Board of Directors of
NBD has directed that this Agreement and the transactions contemplated hereby
be submitted to NBD's stockholders for approval at a meeting of such
stockholders and, except for the adoption of this Agreement by the affirmative
vote of the holders of a majority of the outstanding shares of NBD Common
Stock, no other corporate proceedings on the part of NBD are necessary to
approve this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by NBD and
(assuming due authorization, execution and delivery by First Chicago)
constitutes a valid and binding obligation of NBD, enforceable against NBD in
accordance with its terms.
(b) Neither the execution and delivery of this Agreement by NBD nor the
consummation by NBD of the transactions contemplated hereby, nor compliance by
NBD with any of the terms or provisions hereof, will (i) violate any provision
of the Certificate of Incorporation or By-Laws of NBD or (ii) assuming that
the consents and approvals referred to in Section 3.4 are duly obtained, (x)
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to NBD or any of its Subsidiaries or any of
their respective properties or assets, or (y) violate, conflict with, result
in a breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of NBD or any of its Subsidiaries under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which NBD or any of its
Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in the case of clause
(y) above) for such violations, conflicts, breaches or defaults which, either
individually or in the aggregate, will not have or be reasonably likely to
have a Material Adverse Effect on NBD or the Surviving Corporation.
3.4 Consents and Approvals. Except for (i) the filing of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act and approval of such
applications and notices, (ii) the filing of any required applications with
the Office of Thrift Supervision (the "OTS") (iii) the filing of any required
applications or notices with any state or foreign agencies and approval of
such applications and notices (the "State Approvals"), (iv) the filing with
the Securities and Exchange Commission (the "SEC") of a joint proxy statement
in definitive form relating to the meetings of First Chicago's and NBD's
stockholders to be held in connection with this Agreement and the transactions
contemplated hereby (the "Joint Proxy Statement") and the registration
statement on Form S-4 (the "S-4") in which the Joint Proxy Statement will be
included as a prospectus, (v) the filing of the Certificate of Merger with the
Delaware Secretary pursuant to the DGCL, (vi) any notices to or filings with
the Small Business Administration ("SBA"), (vii) any consent, authorizations,
approvals, filings or exemptions in connection with compliance with the
applicable provisions of federal and state securities laws relating to the
regulation of broker-dealers or investment advisers, and federal commodities
laws relating to the regulation of futures commission merchants and the rules
and regulations thereunder and of any applicable industry self-regulatory
organization ("SRO"), and the rules of the NYSE, or which are required under
consumer finance, mortgage banking and other similar laws, (viii) such filings
and approvals as are required to be made or obtained under the securities or
"Blue Sky" laws of various states in connection with the issuance of the
shares of NBD Common Stock pursuant to this Agreement, and (ix) the approval
of this Agreement by the requisite vote of the stockholders of First Chicago
and NBD, no consents or approvals of or filings or registrations with any
court, administrative agency or commission or other governmental authority or
instrumentality (each a "Governmental Entity") or with any third party are
necessary in connection with (A) the execution and delivery by NBD of this
Agreement and (B) the consummation by NBD of the Merger and the other
transactions contemplated hereby.
8
3.5 Reports. NBD and each of its Subsidiaries have timely filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that they were required to file since January 1, 1993
with (i) the Federal Reserve Board, (ii) the Federal Deposit Insurance
Corporation, (iii) any state regulatory authority (each a "State Regulator"),
(iv) the Office of the Comptroller of the Currency (the "OCC"), (v) the OTS,
(vi) the SEC and (vii) any SRO (collectively "Regulatory Agencies"), and all
other reports and statements required to be filed by them since January 1,
1993, including, without limitation, any report or statement required to be
filed pursuant to the laws, rules or regulations of the United States, any
state, or any Regulatory Agency and have paid all fees and assessments due and
payable in connection therewith, except where the failure to file such report,
registration or statement or to pay such fees and assessments, either
individually or in the aggregate, will not have a Material Adverse Effect on
NBD. Except for normal examinations conducted by a Regulatory Agency in the
regular course of the business of NBD and its Subsidiaries, no Regulatory
Agency has initiated any proceeding or, to the best knowledge of NBD,
investigation into the business or operations of NBD or any of its
Subsidiaries since January 1, 1993, except where such proceedings or
investigation are not likely, either individually or in the aggregate, to have
a Material Adverse Effect on NBD. There is no unresolved violation, criticism,
or exception by any Regulatory Agency with respect to any report or statement
relating to any examinations of NBD or any of its Subsidiaries which, in the
reasonable judgment of NBD, is likely, either individually or in the
aggregate, to have a Material Adverse Effect on NBD.
3.6 Financial Statements. NBD has previously made available to First Chicago
copies of (a) the consolidated balance sheets of NBD and its Subsidiaries as
of December 31, for the fiscal years 1993 and 1994, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the fiscal years 1992 through 1994, inclusive, as reported in NBD's
Annual Report on Form 10-K for the fiscal year ended December 31, 1994 filed
with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in each case accompanied by the audit report of Deloitte &
Touche LLP, independent public accountants with respect to NBD, and (b) the
unaudited consolidated balance sheet of NBD and its Subsidiaries as of March
31, 1994 and March 31, 1995 and the related unaudited consolidated statements
of income, cash flows and changes in stockholders' equity for the three-month
periods then ended as reported in NBD's Quarterly Report on Form 10-Q for the
period ended March 31, 1995 filed with the SEC under the Exchange Act (the
"NBD March 31, 1995 Form 10-Q"). The December 31, 1994 consolidated balance
sheet of NBD (including the related notes, where applicable) fairly presents
the consolidated financial position of NBD and its Subsidiaries as of the date
thereof, and the other financial statements referred to in this Section 3.6
(including the related notes, where applicable) fairly present (subject, in
the case of the unaudited statements, to recurring audit adjustments normal in
nature and amount) the results of the consolidated operations and changes in
stockholders' equity and consolidated financial position of NBD and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto; and each of such statements (including the related notes,
where applicable) has been prepared in all material respects in accordance
with generally accepted accounting principles ("GAAP") consistently applied
during the periods involved, except, in each case, as indicated in such
statements or in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. The books and records of NBD and its Subsidiaries have
been, and are being, maintained in all material respects in accordance with
GAAP and any other applicable legal and accounting requirements and reflect
only actual transactions.
3.7 Broker's Fees. Neither NBD nor any NBD Subsidiary nor any of their
respective officers or directors has employed any broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by this
Agreement or the Option Agreements.
3.8 Absence of Certain Changes or Events. (a) Except as publicly disclosed
in NBD Reports (as defined in Section 3.12) filed prior to the date hereof,
since March 31, 1995, (i) NBD and its Subsidiaries taken as a whole have not
incurred any material liability, except in the ordinary course of their
business, and (ii) no event has occurred which has had, individually or in the
aggregate, a Material Adverse Effect on NBD or the Surviving Corporation.
9
(b) Except as publicly disclosed in NBD Reports filed prior to the date
hereof, since March 31, 1995, NBD and its Subsidiaries have carried on their
respective businesses in all material respects in the ordinary and usual
course.
(c) Since December 31, 1994, neither NBD nor any of its Subsidiaries has (i)
except for such actions as are in the ordinary course of business consistent
with past practice or except as required by applicable law, (A) increased the
wages, salaries, compensation, pension, or other fringe benefits or
perquisites payable to any executive officer, employee, or director from the
amount thereof in effect as of December 31, 1994, or (B) granted any severance
or termination pay, entered into any contract to make or grant any severance
or termination pay, or paid any bonuses aggregating in excess of 5% of NBD's
1994 salary and employee benefits expenses, other than customary year-end
bonuses for fiscal 1994 and 1995, or (ii) suffered any strike, work stoppage,
slowdown, or other labor disturbance which, in the reasonable judgment of NBD,
is likely, either individually or in the aggregate, to have a Material Adverse
Effect on NBD.
3.9 Legal Proceedings. (a) Neither NBD nor any of its Subsidiaries is a
party to any, and there are no pending or, to the best of NBD's knowledge,
threatened, material legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against NBD or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement or the NBD Option
Agreement as to which there is a reasonable probability of an adverse
determination and which, if adversely determined, would, individually or in
the aggregate, have a Material Adverse Effect on NBD.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply to similarly situated bank holding
companies or banks) imposed upon NBD, any of its Subsidiaries or the assets of
NBD or any of its Subsidiaries which has had, or might reasonably be expected
to have, a Material Adverse Effect on NBD.
3.10 Taxes and Tax Returns. (a) Each of NBD and its Subsidiaries has duly
filed all federal, state, county, foreign and, to the best of NBD's knowledge,
local information returns and tax returns required to be filed by it on or
prior to the date hereof (all such returns being accurate and complete in all
material respects) and has duly paid or made provisions for the payment of all
Taxes (as defined in Section 3.10(b)) and other governmental charges which
have been incurred or are due or claimed to be due from it by federal, state,
county, foreign or local taxing authorities on or prior to the date of this
Agreement (including, without limitation, if and to the extent applicable,
those due in respect of its properties, income, business, capital stock,
deposits, franchises, licenses, sales and payrolls) other than (i) Taxes or
other charges which are not yet delinquent or are being contested in good
faith and have not been finally determined, or (ii) information returns, tax
returns, Taxes or other governmental charges the failure to file, pay or make
provision for, either individually or in the aggregate, are not likely, in the
reasonable judgment of NBD, to have a Material Adverse Effect on NBD. The
income tax returns of NBD and its Subsidiaries have been examined by the
Internal Revenue Service (the "IRS") and any liability with respect thereto
has been satisfied for all years to and including 1987, and either no material
deficiencies were asserted as a result of such examination for which NBD does
not have adequate reserves or all such deficiencies were satisfied. To the
best of NBD's knowledge, there are no material disputes pending, or claims
asserted for, Taxes or assessments upon NBD or any of its Subsidiaries for
which NBD does not have adequate reserves, nor has NBD or any of its
Subsidiaries given any currently effective waivers extending the statutory
period of limitation applicable to any federal, state, county or local income
tax return for any period. In addition, (A) proper and accurate amounts have
been withheld by NBD and its Subsidiaries from their employees for all prior
periods in compliance in all material respects with the tax withholding
provisions of applicable federal, state and local laws, except where failure
to do so would not have a Material Adverse Effect on NBD, (B) federal, state,
county and local returns which are accurate and complete in all material
respects have been filed by NBD and its Subsidiaries for all periods for which
returns were due with respect to income tax withholding, Social Security and
unemployment taxes, except where failure to do so would not have a Material
Adverse Effect on NBD, (C) the amounts shown on such federal, state, local or
county returns to be due and payable have been paid in full or adequate
provision therefor has been included by NBD in its consolidated
10
financial statements as of December 31, 1994, except where failure to do so
would not have a Material Adverse Effect on NBD and (D) there are no Tax liens
upon any property or assets of NBD or its Subsidiaries except liens for
current taxes not yet due or liens that would not have a Material Adverse
Effect on NBD. Neither NBD nor any of its Subsidiaries has been required to
include in income any adjustment pursuant to Section 481 of the Code by reason
of a voluntary change in accounting method initiated by NBD or any of its
Subsidiaries, and the IRS has not initiated or proposed any such adjustment or
change in accounting method, in either case which has had or is reasonably
likely to have a Material Adverse Effect on NBD. Except as set forth in the
financial statements described in Section 3.6, neither NBD nor any of its
Subsidiaries has entered into a transaction which is being accounted for as an
installment obligation under Section 453 of the Code, which would be
reasonably likely to have a Material Adverse Effect on NBD.
(b) As used in this Agreement, the term "Tax" or "Taxes" means all federal,
state, county, local, and foreign income, excise, gross receipts, gross
income, ad valorem, profits, gains, property, capital, sales, transfer, use,
payroll, employment, severance, withholding, duties, intangibles, franchise,
backup withholding, and other taxes, charges, levies or like assessments
together with all penalties and additions to tax and interest thereon.
(c) Any amount that is reasonably likely to be received (whether in cash or
property or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer or director of NBD or
any of its affiliates who is a "Disqualified Individual" (as such term is
defined in proposed Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, other compensation arrangement
or NBD Benefit Plan (as defined in Section 3.11(a)) currently in effect should
not be characterized as an "excess parachute payment" (as such term is defined
in Section 280G(b)(1) of the Code).
(d) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by NBD or any Subsidiary
of NBD under any contract, plan, program, arrangement or understanding would
be reasonably likely to have a Material Adverse Effect on NBD.
3.11 Employees. (a) The NBD Disclosure Schedule sets forth a true and
complete list of each material employee benefit plan, arrangement or agreement
that is maintained as of the date of this Agreement (the "NBD Benefit Plans")
by NBD or any of its Subsidiaries or by any trade or business, whether or not
incorporated (an "NBD ERISA Affiliate"), all of which together with NBD would
be deemed a "single employer" within the meaning of Section 4001 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(b) NBD has heretofore delivered to First Chicago true and complete copies
of each of the NBD Benefit Plans and certain related documents, including, but
not limited to, (i) the actuarial report for such NBD Benefit Plan (if
applicable) for each of the last two years, and (ii) the most recent
determination letter from the IRS (if applicable) for such Plan.
(c) (i) Each of the NBD Benefit Plans has been operated and administered in
all material respects with applicable laws, including, but not limited to,
ERISA and the Code, (ii) each of the NBD Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code is so qualified,
(iii) with respect to each Plan which is subject to Title IV of ERISA, the
present value of accrued benefits under such Plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such Plan's actuary with respect to such Plan, did not, as of its
latest valuation date, exceed the then current value of the assets of such
Plan allocable to such accrued benefits, (iv) no NBD Benefit Plan provides
benefits, including, without limitation, death or medical benefits (whether or
not insured), with respect to current or former employees of NBD, its
Subsidiaries or any ERISA Affiliate beyond their retirement or other
termination of service, other than (A) coverage mandated by applicable law,
(B) death benefits or retirement benefits under any "employee pension plan"
(as such term is defined in Section 3(2) of ERISA), (C) deferred compensation
benefits accrued as liabilities on the books of NBD, its Subsidiaries or the
ERISA Affiliates or (D) benefits the full cost of which is borne by the
current or former employee (or his beneficiary), (v) no material liability
under Title IV of ERISA has been incurred by NBD, its Subsidiaries or any
ERISA Affiliate that has not been satisfied in full, and no condition exists
that presents a material risk to NBD, its Subsidiaries or any ERISA Affiliate
of incurring
11
a material liability thereunder, (vi) no Plan is a "multiemployer pension
plan" (as such term is defined in Section 3(37) of ERISA), (vii) all
contributions or other amounts payable by NBD or its Subsidiaries as of the
Effective Time with respect to each NBD Benefit Plan in respect of current or
prior plan years have been paid or accrued in accordance with GAAP and Section
412 of the Code, (viii) neither NBD, its Subsidiaries nor any ERISA Affiliate
has engaged in a transaction in connection with which NBD, its Subsidiaries or
any ERISA Affiliate reasonably could be subject to either a material civil
penalty assessed pursuant to Section 409 or 502(i) of ERISA or a material tax
imposed pursuant to Section 4975 or 4976 of the Code, and (ix) to the best
knowledge of NBD there are no pending, threatened or anticipated claims (other
than routine claims for benefits) by, on behalf of or against any of the NBD
Benefit Plans or any trusts related thereto which are, in the reasonable
judgment of NBD, likely, either individually or in the aggregate, to have a
Material Adverse Effect on NBD.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or
any employee of NBD or any of its affiliates from NBD or any of its affiliates
under any NBD Benefit Plan or otherwise, (ii) materially increase any benefits
otherwise payable under any NBD Benefit Plan or (iii) result in any
acceleration of the time of payment or vesting of any such benefits to any
material extent.
3.12 SEC Reports. NBD has previously made available to First Chicago an
accurate and complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since
January 1, 1993 by NBD with the SEC pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act (the "NBD Reports") and
prior to the date hereof and (b) communication mailed by NBD to its
stockholders since January 1, 1993 and prior to the date hereof, and no such
registration statement, prospectus, report, schedule, proxy statement or
communication contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances in which they were
made, not misleading, except that information as of a later date shall be
deemed to modify information as of an earlier date. Since January 1, 1993, NBD
has timely filed all NBD Reports and other documents required to be filed by
it under the Securities Act and the Exchange Act, and, as of their respective
dates, all NBD Reports complied in all material respects with the published
rules and regulations of the SEC with respect thereto.
3.13 Compliance with Applicable Law. NBD and each of its Subsidiaries hold
all material licenses, franchises, permits and authorizations necessary for
the lawful conduct of their respective businesses under and pursuant to all,
and have complied in all material respects with and are not in default in any
material respect under any, applicable law, statute, order, rule, regulation,
policy and/or guideline of any Governmental Entity relating to NBD or any of
its Subsidiaries, except where the failure to hold such license, franchise,
permit or authorization or such noncompliance or default would not,
individually or in the aggregate, have a Material Adverse Effect on NBD.
3.14 Certain Contracts. (a) Neither NBD nor any of its Subsidiaries is a
party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) with respect to the employment of any directors,
officers or employees other than in the ordinary course of business consistent
with past practice, (ii) which, upon the consummation of the transactions
contemplated by this Agreement will (either alone or upon the occurrence of
any additional acts or events) result in any payment (whether of severance pay
or otherwise) becoming due from First Chicago, NBD, the Surviving Corporation,
or any of their respective Subsidiaries to any officer or employee thereof,
(iii) which is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) to be performed after the date of
this Agreement that has not been filed or incorporated by reference in the NBD
Reports, (iv) which materially restricts the conduct of any line of business
by NBD, (v) with or to a labor union or guild (including any collective
bargaining agreement) or (vi) (including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan) any of
the benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits of which
will be
12
calculated on the basis of any of the transactions contemplated by this
Agreement. NBD has previously made available to First Chicago true and correct
copies of all employment and deferred compensation agreements which are in
writing and to which NBD is a party. Each contract, arrangement, commitment or
understanding of the type described in this Section 3.14(a), whether or not
set forth in the NBD Disclosure Schedule, is referred to herein as an "NBD
Contract", and neither NBD nor any of its Subsidiaries knows of, or has
received notice of, any violation of the above by any of the other parties
thereto which, individually or in the aggregate, would have a Material Adverse
Effect on NBD.
(b) (i) Each NBD Contract is valid and binding on NBD or any of its
Subsidiaries, as applicable, and in full force and effect, (ii) NBD and each
of its Subsidiaries has in all material respects performed all obligations
required to be performed by it to date under each NBD Contract, except where
such noncompliance, individually or in the aggregate, would not have a
Material Adverse Effect on NBD, and (iii) no event or condition exists which
constitutes or, after notice or lapse of time or both, would constitute, a
material default on the part of NBD or any of its Subsidiaries under any such
NBD Contract, except where such default, individually or in the aggregate,
would not have a Material Adverse Effect on NBD.
3.15 Agreements with Regulatory Agencies. Neither NBD nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or
is a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or has been since
January 1, 1993, a recipient of any supervisory letter from, or since January
1, 1993, has adopted any board resolutions at the request of any Regulatory
Agency or other Governmental Entity that currently restricts in any material
respect the conduct of its business or that in any material manner relates to
its capital adequacy, its credit policies, its management or its business
(each, whether or not set forth in the NBD Disclosure Schedule, an "NBD
Regulatory Agreement"), nor has NBD or any of its Subsidiaries been advised
since January 1, 1993, by any Regulatory Agency or other Governmental Entity
that it is considering issuing or requesting any such Regulatory Agreement.
3.16 Other Activities of NBD and its Subsidiaries.
(a) Neither NBD nor any of its Subsidiaries that is neither a bank, a bank
operating subsidiary or a bank service corporation, directly or indirectly,
engages in any activity prohibited by the Federal Reserve Board. Without
limiting the generality of the foregoing, any equity investment of NBD and
each Subsidiary that is not a bank, a bank operating subsidiary or a bank
service corporation, is not prohibited by the Federal Reserve Board.
(b) To NBD's knowledge, each NBD Subsidiary which is a bank (a "NBD Bank
Subsidiary") currently performs all personal trust, corporate trust and other
fiduciary activities ("Trust Activities") with requisite authority under
applicable law of Governmental Entities and in accordance in all material
respects with the agreed-upon terms of the agreements and instruments
governing such Trust Activities, sound fiduciary principles and applicable law
and regulation (specifically including, but not limited to, Section 9 of Title
12 of the Code of Federal Regulations); there is no investigation or inquiry
by any Governmental Entity pending, or to the knowledge of NBD, threatened,
against or affecting NBD, or any Significant Subsidiary thereof relating to
the compliance by NBD or any such Significant Subsidiary (as such term is
defined in Rule 1-02(w) of Regulation S-X of the SEC) with sound fiduciary
principles and applicable regulations; and except where any such failure would
not have a Material Adverse Effect on NBD, each employee of a NBD Bank
Subsidiary had the authority to act in the capacity in which he or she acted
with respect to Trust Activities, in each case, in which such employee held
himself or herself out as a representative of a NBD Bank Subsidiary; and each
NBD Bank Subsidiary has established policies and procedures for the purpose of
complying with applicable laws of Governmental Entities relating to Trust
Activities, has followed such policies and procedures in all material respects
and has performed appropriate internal audit reviews of, and has engaged
independent accountants to perform audits of, Trust Activities, which audits
since January 1, 1993 have disclosed no material violations of applicable laws
of Governmental Entities or such policies and procedures.
13
3.17 Investment Securities. Each of NBD and its Subsidiaries has good and
marketable title to all securities held by it (except securities sold under
repurchase agreements or held in any fiduciary or agency capacity), free and
clear of any Lien, except to the extent such securities are pledged in the
ordinary course of business consistent with prudent banking practices to
secure obligations of NBD or any of its Subsidiaries. Such securities are
valued on the books of NBD in accordance with GAAP.
3.18 Interest Rate Risk Management Instruments. All interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements, whether entered into for the account of NBD or for the account
of a customer of NBD or one of its Subsidiaries, were entered into in the
ordinary course of business and, to NBD's knowledge, in accordance with
prudent banking practice and applicable rules, regulations and policies of any
Regulatory Authority and with counterparties believed to be financially
responsible at the time and are legal, valid and binding obligations of NBD or
one of its Subsidiaries enforceable in accordance with their terms (except as
may be limited by bankruptcy, insolvency, moratorium, reorganization or
similar laws affecting the rights of creditors generally and the availability
of equitable remedies), and are in full force and effect. NBD and each of its
Subsidiaries have duly performed in all material respects all of their
material obligations thereunder to the extent that such obligations to perform
have accrued; and, to NBD's knowledge, there are no material breaches,
violations or defaults or allegations or assertions of such by any party
thereunder.
3.19 Undisclosed Liabilities. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of NBD
included in the NBD March 31, 1995 Form 10-Q and for liabilities incurred in
the ordinary course of business consistent with past practice, since March 31,
1995, neither NBD nor any of its Subsidiaries has incurred any liability of
any nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether due or to become due) that, either alone or when combined with all
similar liabilities, has had, or could reasonably be expected to have, a
Material Adverse Effect on NBD.
3.20 Environmental Liability. Except as set forth in the NBD Disclosure
Schedule, there are no legal, administrative, arbitral or other proceedings,
claims, actions, causes of action, private environmental investigations or
remediation activities or governmental investigations of any nature seeking to
impose, or that could reasonably result in the imposition, on NBD of any
liability or obligation arising under common law or under any local, state or
federal environmental statute, regulation or ordinance including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), pending or threatened against
NBD, which liability or obligation could reasonably be expected to have a
Material Adverse Effect on NBD. To the knowledge of NBD, there is no
reasonable basis for any such proceeding, claim, action or governmental
investigation that would impose any material liability or obligation that
could reasonably be expected to have a Material Adverse Effect on NBD. NBD is
not subject to any agreement, order, judgment, decree, letter or memorandum by
or with any court, governmental authority, regulatory agency or third party
imposing any material liability or obligation that could reasonably be
expected to have a Material Adverse Effect on NBD.
3.21 State Takeover Laws. The Board of Directors of NBD has approved the
transactions contemplated by this Agreement and the Option Agreements such
that the provisions of Section 203 of the DGCL will not apply to this
Agreement or the Option Agreements or any of the transactions contemplated
hereby or thereby.
3.22 Pooling of Interests. As of the date of this Agreement, NBD has no
reason to believe that the Merger will not qualify as a "pooling of interests"
for accounting purposes.
14
ARTICLE IV
Representations and Warranties of First Chicago
Except as disclosed in the First Chicago disclosure schedule delivered to
NBD concurrently herewith (the "First Chicago Disclosure Schedule") First
Chicago hereby represents and warrants to NBD as follows:
4.1 Corporate Organization. (a) First Chicago is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. First Chicago has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it is
now being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on First
Chicago. First Chicago is duly registered as a bank holding company under the
BHC Act. True and complete copies of the Certificate of Incorporation and By-
Laws of First Chicago, as in effect as of the date of this Agreement, have
previously been made available by First Chicago to NBD.
(b) Each First Chicago Subsidiary (i) is duly organized and validly existing
as a bank, corporation, partnership or limited liability company under the
laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether Federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would have a Material Adverse Effect on First Chicago, and (iii) has
all requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
(c) The minute books of First Chicago accurately reflect in all material
respects all corporate actions held or taken since January 1, 1993 of its
stockholders and Board of Directors (including committees of the Board of
Directors of First Chicago).
4.2 Capitalization. (a) The authorized capital stock of First Chicago
consists of 150,000,000 shares of First Chicago Common Stock, of which, as of
June 30, 1995, 89,719,497 were issued and outstanding, and 15,000,000 shares
of Preferred Stock, no par value (the "First Chicago Preferred Stock", of
which (i) 2,500,000 shares were designated and 2,410,000 shares were issued
and outstanding as Preferred Stock with Cumulative and Adjustable Dividends
("First Chicago Series A Cumulative Adjustable Rate Preferred Stock"), (ii)
1,250,000 shares were designated and 1,191,000 shares were issued and
outstanding as Preferred Stock with Cumulative and Adjustable Dividends,
Series B ("First Chicago Series B Cumulative Adjustable Rate Preferred
Stock"), (iii) 750,000 shares were designated and 713,800 were issued and
outstanding as Preferred Stock with Cumulative and Adjustable Dividends,
Series C ("First Chicago Series C Cumulative Adjustable Rate Preferred
Stock"), (iv) 160,000 shares were designated and 160,000 shares were issued
and outstanding as 8.45% Cumulative Preferred Stock, Series E ("First Chicago
8.45% Series E Cumulative Fixed Rate Preferred Stock"), and (v) 40,000 shares
were designated and 40,000 shares were issued and outstanding as 5 3/4%
Cumulative Convertible Preferred Stock, Series B ("First Chicago Convertible
Preferred Stock"). As of June 30, 1995, 3,710,822 shares of First Chicago
Common Stock were held in First Chicago's treasury. On June 30, 1995, no
shares of First Chicago Common Stock or First Chicago Preferred Stock were
reserved for issuance, except for (i) 5,877,204 shares of First Chicago Common
Stock reserved for issuance upon the exercise of stock options pursuant to the
First Chicago Stock Plans, (ii) shares of First Chicago Series A Junior
Participating Preferred Stock were reserved for issuance upon exercise of the
rights (the "First Chicago Rights") distributed to holders of First Chicago
Common Stock pursuant to the Rights Agreement, dated as of November 18, 1988,
between First Chicago and Bankers Trust Company, as Rights Agent (the "First
Chicago Rights Agreement"), (iii) the shares of First Chicago Common Stock
issuable pursuant to the First Chicago Option Agreement, (iv) shares of First
Chicago Common Stock reserved for issuance pursuant to the First Chicago
Dividend Reinvestment and Stock Purchase Plan (the "First Chicago DRIP"), (v)
shares of First Chicago Common Stock reserved for issuance pursuant to the
1994 offering of the First Chicago Employee Stock Purchase and Savings Plan
(as in
15
effect as of the Effective Time, the "First Chicago ESPSP"), and (vi) shares
of First Chicago Common Stock reserved for issuance upon conversion of First
Chicago Convertible Preferred Stock. All of the issued and outstanding shares
of First Chicago Common Stock and First Chicago Preferred Stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, except for the First Chicago Rights
Agreement, the First Chicago Option Agreement, the First Chicago Convertible
Preferred Stock, the First Chicago DRIP, the First Chicago ESPSP and the First
Chicago Stock Plans, First Chicago does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of First
Chicago Common Stock or First Chicago Preferred Stock or any other equity
securities of First Chicago or any securities representing the right to
purchase or otherwise receive any shares of First Chicago Common Stock or
First Chicago Preferred Stock. Assuming compliance by NBD with Article I of
this Agreement, after the Effective Time, there will not be any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character by which First Chicago or any of its Subsidiaries will be bound
calling for the purchase or issuance of any shares of the capital stock of
First Chicago. First Chicago has previously provided NBD with a list of the
option holders, the date of each option to purchase First Chicago Common Stock
granted, the number of shares subject to each such option, the expiration date
of each such option, and the price at which each such option may be exercised
under an applicable First Chicago Stock Plan. Since June 30, 1995, First
Chicago has not issued any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock, other
than pursuant to (i) the exercise of employee stock options granted prior to
such date, (ii) the First Chicago DRIP, and (iii) the First Chicago ESPSP.
(b) First Chicago owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of the First Chicago Subsidiaries,
free and clear of any Liens, and all of such shares are duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. No
First Chicago Subsidiary has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling
for the purchase or issuance of any shares of capital stock or any other
equity security of such Subsidiary or any securities representing the right to
purchase or otherwise receive any shares of capital stock or any other equity
security of such Subsidiary.
4.3 Authority; No Violation. (a) First Chicago has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
and validly approved by the Board of Directors of First Chicago. The Board of
Directors of First Chicago has directed that this Agreement and the
transactions contemplated hereby be submitted to First Chicago's stockholders
for approval at a meeting of such stockholders and except for the adoption of
this Agreement by the affirmative vote of the holders of a majority of the
outstanding shares of First Chicago Common Stock, no other corporate
proceedings on the part of First Chicago are necessary to approve this
Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by First Chicago
and (assuming due authorization, execution and delivery by NBD) constitutes a
valid and binding obligation of First Chicago, enforceable against First
Chicago in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by First Chicago,
nor the consummation by First Chicago of the transactions contemplated hereby,
nor compliance by First Chicago with any of the terms or provisions hereof,
will (i) violate any provision of the Certificate of Incorporation or By-Laws
of First Chicago or (ii) assuming that the consents and approvals referred to
in Section 4.4 are duly obtained, (x) violate any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable to
First Chicago or any of its Subsidiaries or any of their respective properties
or assets, or (y) violate, conflict with, result in a breach of any provision
of or the loss of any benefit under, constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any Lien
upon any of the respective properties or assets of First Chicago or any of its
Subsidiaries under, any of the terms, conditions
16
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which First Chicago or
any of its Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected, except (in the case
of clause (y) above) for such violations, conflicts, breaches or defaults
which either individually or in the aggregate will not have or be reasonably
likely to have a Material Adverse Effect on First Chicago.
4.4 Consents and Approvals. Except for (i) the filing of applications and
notices, as applicable, with the Federal Reserve Board under the BHC Act and
approval of such applications and notices, (ii) the State Approvals, (iii) the
filing with the SEC of the Joint Proxy Statement and the S-4, (iv) the filing
of the Certificate of Merger with the Delaware Secretary pursuant to the DGCL,
(v) any notices to or filings with the SBA, (vi) any consent, authorizations,
approvals, filings or exemptions in connection with compliance with the
applicable provisions of federal and state securities laws relating to the
regulation of broker-dealers or investment advisers, and federal commodities
laws relating to the regulation of futures commission merchants and the rules
and regulations thereunder and of any applicable SRO, and the rules of the
NYSE, or which are required under consumer finance, mortgage banking and other
similar laws and (vii) the approval of this Agreement by the requisite vote of
the stockholders of First Chicago and NBD, no consents or approvals of or
filings or registrations with any Governmental Entity or with any third party
are necessary in connection with (A) the execution and delivery by First
Chicago of this Agreement and (B) the consummation by First Chicago of the
Merger and the other transactions contemplated hereby.
4.5 Reports. First Chicago and each of its Subsidiaries have timely filed
all reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file
since January 1, 1993 with the Regulatory Agencies, and all other reports and
statements required to be filed by them since January 1, 1993, including,
without limitation, any report or statement required to be filed pursuant to
the laws, rules or regulations of the United States, any state, or any
Regulatory Agency and have paid all fees and assessments due and payable in
connection therewith, except where the failure to file such report,
registration or statement or to pay such fees and assessments, either
individually or in the aggregate, will not have a Material Adverse Effect on
First Chicago. Except for normal examinations conducted by a Regulatory Agency
in the regular course of the business of First Chicago and its Subsidiaries,
no Regulatory Agency has initiated any proceeding or, to the best knowledge of
First Chicago, investigation into the business or operations of First Chicago
or any of its Subsidiaries since January 1, 1993, except where such
proceedings or investigation are not likely, either individually or in the
aggregate, to have a Material Adverse Effect on First Chicago. There is no
unresolved violation, criticism, or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of First
Chicago or any of its Subsidiaries which, in the reasonable judgment of First
Chicago, is likely, either individually or in the aggregate, to have a
Material Adverse Effect on First Chicago.
4.6 Financial Statements. First Chicago has previously made available to NBD
copies of (a) the consolidated balance sheets of First Chicago and its
Subsidiaries as of December 31, for the fiscal years 1993 and 1994, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1992 through 1994, inclusive, as reported in
First Chicago's Annual Report on Form 10-K for the fiscal year ended December
31, 1994 filed with the SEC under the Exchange Act, in each case accompanied
by the audit report of Arthur Andersen LLP, independent public accountants
with respect to First Chicago, and (b) the unaudited consolidated balance
sheet of First Chicago and its Subsidiaries as of March 31, 1994 and March 31,
1995 and the related unaudited consolidated statements of income, cash flows
and changes in stockholders' equity for the three-month periods then ended as
reported in First Chicago's Quarterly Report on Form 10-Q for the period ended
March 31, 1995 filed with the SEC under the Exchange Act (the "First Chicago
March 31, 1995 Form 10-Q"). The December 31, 1994 consolidated balance sheet
of First Chicago (including the related notes, where applicable) fairly
presents the consolidated financial position of First Chicago and its
Subsidiaries as of the date thereof, and the other financial statements
referred to in this Section 4.6 (including the related notes, where
applicable) fairly present (subject, in the case of the unaudited statements,
to recurring audit adjustments normal in nature and amount) the results of the
consolidated operations and changes in stockholders' equity and consolidated
financial position of First Chicago and its Subsidiaries for the respective
17
fiscal periods or as of the respective dates therein set forth; each of such
statements (including the related notes, where applicable) comply in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto; and each of
such statements (including the related notes, where applicable) has been
prepared in all material respects in accordance with GAAP consistently applied
during the periods involved, except in each case as indicated in such
statements or in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. The books and records of First Chicago and its
Subsidiaries have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions.
4.7 Broker's Fees. Neither First Chicago nor any First Chicago Subsidiary
nor any of their respective officers or directors has employed any broker or
finder or incurred any liability for any broker's fees, commissions or
finder's fees in connection with the Merger or related transactions
contemplated by this Agreement or the Option Agreements.
4.8 Absence of Certain Changes or Events. (a) Except as publicly disclosed
in First Chicago Reports (as defined in Section 4.12) filed prior to the date
hereof, since March 31, 1995, (i) First Chicago and its Subsidiaries taken as
a whole have not incurred any material liability, except in the ordinary
course of their business and (ii) no event has occurred which has had,
individually or in the aggregate, a Material Adverse Effect on First Chicago.
(b) Except as publicly disclosed in First Chicago Reports filed prior to the
date hereof, since March 31, 1995, First Chicago and its Subsidiaries have
carried on their respective businesses in all material respects in the
ordinary and usual course.
(c) Since December 31, 1994, neither First Chicago nor any of its
Subsidiaries has (i) except for such actions as are in the ordinary course of
business consistent with past practice or except as required by applicable
law, (A) increased the wages, salaries, compensation, pension, or other fringe
benefits or perquisites payable to any executive officer, employee, or
director from the amount thereof in effect as of December 31, 1994, or (B)
granted any severance or termination pay, entered into any contract to make or
grant any severance or termination pay, or paid any bonuses aggregating in
excess of 5% of First Chicago's 1994 salary and employee benefit expenses,
other than customary year-end bonuses for fiscal 1994 and 1995, or (ii)
suffered any strike, work stoppage, slowdown, or other labor disturbance
which, in the reasonable judgment of First Chicago is likely, either
individually or in the aggregate, to have a Material Adverse Effect on First
Chicago.
4.9 Legal Proceedings. (a) Neither First Chicago nor any of its Subsidiaries
is a party to any and there are no pending or, to the best of First Chicago's
knowledge, threatened, material legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of
any nature against First Chicago or any of its Subsidiaries or challenging the
validity or propriety of the transactions contemplated by this Agreement or
the First Chicago Option Agreement as to which there is a reasonable
probability of an adverse determination and which, if adversely determined,
would, individually or in the aggregate, have a Material Adverse Effect on
First Chicago.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply to similarly situated bank holding
companies or banks) imposed upon First Chicago, any of its Subsidiaries or the
assets of First Chicago or any of its Subsidiaries which has had, or might
reasonably be expected to have, a Material Adverse Effect on First Chicago or
the Surviving Corporation.
4.10 Taxes and Tax Returns. (a) Each of First Chicago and its Subsidiaries
has duly filed all federal, state, county, foreign and, to the best of First
Chicago's knowledge, local information returns and tax returns required to be
filed by it on or prior to the date hereof (all such returns being accurate
and complete in all material respects) and has duly paid or made provisions
for the payment of all Taxes and other governmental charges which have been
incurred or are due or claimed to be due from it by federal, state, county,
foreign or local taxing authorities on or prior to the date of this Agreement
(including, without limitation, if and to the extent applicable,
18
those due in respect of its properties, income, business, capital stock,
deposits, franchises, licenses, sales and payrolls) other than (i) Taxes or
other charges which are not yet delinquent or are being contested in good
faith and have not been finally determined, or (ii) information returns, tax
returns, Taxes or other governmental charges the failure to file, pay or make
provision for, either individually or in the aggregate, is not likely, in the
reasonable judgment of First Chicago, to have a Material Adverse Effect on
First Chicago. The income tax returns of First Chicago and its Subsidiaries
have been examined by the IRS through 1991 and any liability with respect
thereto has been satisfied for all years to and including 1976, and either no
material deficiencies were asserted as a result of such examination for which
First Chicago does not have adequate reserves or all such deficiencies were
satisfied. To the best of First Chicago's knowledge, there are no material
disputes pending, or claims asserted for, Taxes or assessments upon First
Chicago or any of its Subsidiaries for which First Chicago does not have
adequate reserves, nor has First Chicago or any of its Subsidiaries given any
currently effective waivers extending the statutory period of limitation
applicable to any federal, state, county or local income tax return for any
period. In addition, (A) proper and accurate amounts have been withheld by
First Chicago and its Subsidiaries from their employees for all prior periods
in compliance in all material respects with the tax withholding provisions of
applicable federal, state and local laws, except where failure to do so would
not have a Material Adverse Effect on First Chicago, (B) federal, state,
county and local returns which are accurate and complete in all material
respects have been filed by First Chicago and its Subsidiaries for all periods
for which returns were due with respect to income tax withholding, Social
Security and unemployment taxes, except where failure to do so would not have
a Material Adverse Effect on First Chicago, (C) the amounts shown on such
federal, state, local or county returns to be due and payable have been paid
in full or adequate provision therefor has been included by First Chicago in
its consolidated financial statements as of December 31, 1994, except where
failure to do so would not have a Material Adverse Effect on First Chicago and
(D) there are no Tax liens upon any property or assets of First Chicago or its
Subsidiaries except liens for current taxes not yet due or liens that would
not have a Material Adverse Effect on First Chicago. Neither First Chicago nor
any of its Subsidiaries has been required to include in income any adjustment
pursuant to Section 481 of the Code by reason of a voluntary change in
accounting method initiated by First Chicago or any of its Subsidiaries, and
the IRS has not initiated or proposed any such adjustment or change in
accounting method, in either case, which has had or is reasonably likely to
have a Material Adverse Effect on First Chicago. Except as set forth in the
financial statements described in Section 4.6, neither First Chicago nor any
of its Subsidiaries has entered into a transaction which is being accounted
for as an installment obligation under Section 453 of the Code, which would be
reasonably likely to have a Material Adverse Effect on First Chicago.
(b) Any amount that is reasonably likely to be received (whether in cash or
property or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer or director of First
Chicago or any of its affiliates who is a "Disqualified Individual" (as such
term is defined in proposed Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, other compensation arrangement
or First Chicago Benefit Plan currently in effect should not be characterized
as an "excess parachute payment" (as such term is defined in Section
280G(b)(1) of the Code).
(c) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by First Chicago or any
Subsidiary of First Chicago under any contract, plan, program, arrangement or
understanding would be reasonably likely to have a Material Adverse Effect on
First Chicago.
4.11 Employees. (a) The First Chicago Disclosure Schedule sets forth a true
and complete list of each material employee benefit plan, arrangement or
agreement that is maintained as of the date of this Agreement (the "First
Chicago Benefit Plans") by First Chicago, any of its Subsidiaries or by any
trade or business, whether or not incorporated (a "First Chicago ERISA
Affiliate"), all of which together with First Chicago would be deemed a
"single employer" within the meaning of Section 4001 of ERISA.
(b) First Chicago has heretofore delivered to NBD true and complete copies
of each of the First Chicago Benefit Plans and certain related documents,
including, but not limited to, (i) the actuarial report for such First Chicago
Plan (if applicable) for each of the last two years, and (ii) the most recent
determination letter from the IRS (if applicable) for such First Chicago Plan.
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(c) (i) Each of the First Chicago Benefit Plans has been operated and
administered in all material respects with applicable laws, including, but not
limited to, ERISA and the Code, (ii) each of the First Chicago Benefit Plans
intended to be "qualified" within the meaning of Section 401(a) of the Code is
so qualified, (iii) with respect to each First Chicago Plan which is subject
to Title IV of ERISA, the present value of accrued benefits under such First
Chicago Plan, based upon the actuarial assumptions used for funding purposes
in the most recent actuarial report prepared by such First Chicago Plan's
actuary with respect to such First Chicago Plan, did not, as of its latest
valuation date, exceed the then current value of the assets of such First
Chicago Plan allocable to such accrued benefits, (iv) no First Chicago Plan
provides benefits, including, without limitation, death or medical benefits
(whether or not insured), with respect to current or former employees of First
Chicago, its Subsidiaries or any First Chicago ERISA Affiliate beyond their
retirement or other termination of service, other than (A) coverage mandated
by applicable law, (B) death benefits or retirement benefits under any
"employee pension plan" (as such term is defined in Section 3(2) of ERISA),
(C) deferred compensation benefits accrued as liabilities on the books of
First Chicago, its Subsidiaries or the First Chicago ERISA Affiliates or (D)
benefits the full cost of which is borne by the current or former employee (or
his beneficiary), (v) no material liability under Title IV of ERISA has been
incurred by First Chicago, its Subsidiaries or any First Chicago ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a material risk to First Chicago, its Subsidiaries or any First
Chicago ERISA Affiliate of incurring a material liability thereunder, (vi) no
First Chicago Plan is a "multiemployer pension plan" (as such term is defined
in Section 3(37) of ERISA), (vii) all contributions or other amounts payable
by First Chicago or its Subsidiaries as of the Effective Time with respect to
each First Chicago Plan in respect of current or prior plan years have been
paid or accrued in accordance with GAAP and Section 412 of the Code, (viii)
neither First Chicago, its Subsidiaries nor any First Chicago ERISA Affiliate
has engaged in a transaction in connection with which First Chicago, its
Subsidiaries or any First Chicago ERISA Affiliate reasonably could be subject
to either a material civil penalty assessed pursuant to Section 409 or 502(i)
of ERISA or a material tax imposed pursuant to Section 4975 or 4976 of the
Code, and (ix) to the best knowledge of First Chicago there are no pending,
threatened or anticipated claims (other than routine claims for benefits) by,
on behalf of or against any of the First Chicago Benefit Plans or any trusts
related thereto which are, in the reasonable judgment of First Chicago,
likely, either individually or in the aggregate, to have a Material Adverse
Effect on NBD.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or
any employee of First Chicago or any of its affiliates from First Chicago or
any of its affiliates under any First Chicago Benefit Plan or otherwise, (ii)
materially increase any benefits otherwise payable under any First Chicago
Benefit Plan or (iii) result in any acceleration of the time of payment or
vesting of any such benefits to any material extent.
4.12 SEC Reports. First Chicago has previously made available to NBD an
accurate and complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since
January 1, 1993 by First Chicago with the SEC pursuant to the Securities Act
or the Exchange Act (the "First Chicago Reports") and prior to the date hereof
and (b) communication mailed by First Chicago to its stockholders since
January 1, 1993 and prior to the date hereof, and no such registration
statement, prospectus, report, schedule, proxy statement or communication
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading, except that information as of a later date shall be deemed to
modify information as of an earlier date. Since January 1, 1993, First Chicago
has timely filed all First Chicago Reports and other documents required to be
filed by it under the Securities Act and the Exchange Act, and, as of their
respective dates, all First Chicago Reports complied in all material respects
with the published rules and regulations of the SEC with respect thereto.
4.13 Compliance with Applicable Law. First Chicago and each of its
Subsidiaries hold all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses
20
under and pursuant to all, and have complied in all material respects with and
are not in default in any material respect under any, applicable law, statute,
order, rule, regulation, policy and/or guideline of any Governmental Entity
relating to First Chicago or any of its Subsidiaries, except where the failure
to hold such license, franchise, permit or authorization or such noncompliance
or default would not, individually or in the aggregate, have a Material
Adverse Effect on First Chicago.
4.14 Certain Contracts. (a) Neither First Chicago nor any of its
Subsidiaries is a party to or bound by any contract, arrangement, commitment
or understanding (whether written or oral) (i) with respect to the employment
of any directors, officers or employees other than in the ordinary course of
business consistent with past practice, (ii) which, upon the consummation of
the transactions contemplated by this Agreement will (either alone or upon the
occurrence of any additional acts or events) result in any payment (whether of
severance pay or otherwise) becoming due from First Chicago, NBD, the
Surviving Corporation, or any of their respective Subsidiaries to any officer
or employee thereof, (iii) which is a "material contract" (as such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed after
the date of this Agreement that has not been filed or incorporated by
reference in the First Chicago Reports, (iv) which materially restricts the
conduct of any line of business by First Chicago, (v) with or to a labor union
or guild (including any collective bargaining agreement) or (vi) (including
any stock option plan, stock appreciation rights plan, restricted stock plan
or stock purchase plan) any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement, or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. First Chicago has previously made available to
NBD true and correct copies of all employment and deferred compensation
agreements which are in writing and to which First Chicago is a party. Each
contract, arrangement, commitment or understanding of the type described in
this Section 4.14(a), whether or not set forth in the First Chicago Disclosure
Schedule, is referred to herein as a "First Chicago Contract", and neither
First Chicago nor any of its Subsidiaries knows of, or has received notice of,
any violation of the above by any of the other parties thereto which,
individually or in the aggregate, would have a Material Adverse Effect on
First Chicago.
(b) (i) Each First Chicago Contract is valid and binding on First Chicago or
any of its Subsidiaries, as applicable, and in full force and effect, (ii)
First Chicago and each of its Subsidiaries has in all material respects
performed all obligations required to be performed by it to date under each
First Chicago Contract, except where such noncompliance, individually or in
the aggregate, would not have a Material Adverse Effect on First Chicago, and
(iii) no event or condition exists which constitutes or, after notice or lapse
of time or both, would constitute, a material default on the part of First
Chicago or any of its Subsidiaries under any such First Chicago Contract,
except where such default, individually or in the aggregate, would not have a
Material Adverse Effect on First Chicago.
4.15 Agreements with Regulatory Agencies. Neither First Chicago nor any of
its Subsidiaries is subject to any cease-and-desist or other order issued by,
or is a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or has been since
January 1, 1993, a recipient of any supervisory letter from, or since January
1, 1993, has adopted any board resolutions at the request of any Regulatory
Agency or other Governmental Entity that currently restricts in any material
respect the conduct of its business or that in any material manner relates to
its capital adequacy, its credit policies, its management or its business
(each, whether or not set forth in the First Chicago Disclosure Schedule, a
"First Chicago Regulatory Agreement"), nor has First Chicago or any of its
Subsidiaries been advised since January 1, 1993, by any Regulatory Agency or
other Governmental Entity that it is considering issuing or requesting any
such Regulatory Agreement.
4.16 Other Activities of First Chicago and its Subsidiaries.
(a) Neither First Chicago nor any of its Subsidiaries that is neither a
bank, a bank operating subsidiary or a bank service corporation, directly or
indirectly engages in any activity prohibited by the Federal Reserve Board.
Without limiting the generality of the foregoing, any equity investment of
First Chicago and each Subsidiary that is not a bank, a bank operating
subsidiary or a bank service corporation, is not prohibited by the Federal
Reserve Board.
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(b) To First Chicago's knowledge, each First Chicago Subsidiary which is a
bank (a "First Chicago Bank Subsidiary") currently performs all Trust
Activities with requisite authority under applicable law of Governmental
Entities and in accordance in all material respects with the agreed-upon terms
of the agreements and instruments governing such Trust Activities, sound
fiduciary principles and applicable law and regulation (specifically
including, but not limited to, Section 9 of Title 12 of the Code of Federal
Regulations); there is no investigation or inquiry by any Governmental Entity
pending, or, to the knowledge of First Chicago, threatened, against or
affecting First Chicago or any Significant Subsidiary thereof relating to the
compliance by First Chicago or any such Significant Subsidiary with sound
fiduciary principles and applicable regulations; and except where any such
failure would not have a Material Adverse Effect on First Chicago, each
employee of a First Chicago Bank Subsidiary had the authority to act in the
capacity in which he or she acted with respect to Trust Activities, in each
case, in which such employee held himself or herself out as a representative
of a First Chicago Bank Subsidiary; and each First Chicago Bank Subsidiary has
established policies and procedures for the purpose of complying with
applicable laws of Governmental Entities relating to Trust Activities, has
followed such policies and procedures in all material respects and has
performed appropriate internal audit reviews of, and has engaged independent
accountants to perform audits of, Trust Activities, which audits have
disclosed no material violations of applicable laws of Governmental Entities
or such policies and procedures.
4.17 Investment Securities. Each of First Chicago and its Subsidiaries has
good and marketable title to all securities held by it (except securities sold
under repurchase agreements or held in any fiduciary or agency capacity), free
and clear of any Lien, except to the extent such securities are pledged in the
ordinary course of business consistent with prudent banking practice to secure
obligations of First Chicago or any of its Subsidiaries. Such securities are
valued on the books of First Chicago in accordance with GAAP.
4.18 Interest Rate Risk Management Instruments. All interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements, whether entered into for the account of First Chicago or for the
account of a customer of First Chicago or one of its Subsidiaries, were
entered into in the ordinary course of business and, to First Chicago's
knowledge, in accordance with prudent banking practice and applicable rules,
regulations and policies of any Regulatory Authority and with counterparties
believed to be financially responsible at the time and are legal, valid and
binding obligations of First Chicago or one of its Subsidiaries enforceable in
accordance with their terms (except as may be limited by bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting the rights of
creditors generally and the availability of equitable remedies), and are in
full force and effect. First Chicago and each of its Subsidiaries has duly
performed in all material respects all of its material obligations thereunder
to the extent that such obligations to perform have accrued; and to First
Chicago's knowledge, there are no material breaches, violations or defaults or
allegations or assertions of such by any party thereunder.
4.19 Undisclosed Liabilities. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of First
Chicago included in the First Chicago March 31, 1995 Form 10-Q and for
liabilities incurred in the ordinary course of business consistent with past
practice, since March 31, 1995, neither First Chicago nor any of its
Subsidiaries has incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due)
that, either alone or when combined with all similar liabilities, has had, or
could reasonably be expected to have, a Material Adverse Effect on First
Chicago.
4.20 Environmental Liability. Except as set forth in the First Chicago
Disclosure Schedule, there are no legal, administrative, arbitral or other
proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that reasonably could result in the imposition,
on First Chicago of any liability or obligation arising under common law or
under any local, state or federal environmental statute, regulation or
ordinance including, without limitation, CERCLA, pending or threatened against
First Chicago, which liability or obligation could reasonably be expected to
have a Material Adverse Effect on First Chicago. To the knowledge of First
Chicago, there is no reasonable basis for any such proceeding, claim, action
or governmental investigation that would impose any
22
material liability or obligation that could reasonably be expected to have a
Material Adverse Effect on First Chicago. First Chicago is not subject to any
agreement, order, judgment, decree, letter or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any material
liability or obligation that could reasonably be expected to have a Material
Adverse Effect on First Chicago.
4.21 State Takeover Laws. The Board of Directors of First Chicago has
approved the transactions contemplated by this Agreement and the Option
Agreements such that the provisions of Section 203 of the DGCL will not apply
to this Agreement or the Option Agreements or any of the transactions
contemplated hereby or thereby.
4.22 Rights Agreement. First Chicago has taken all action (including, if
required, redeeming all of the outstanding preferred stock purchase rights
issued pursuant to the First Chicago Rights Agreement or amending or
terminating the First Chicago Rights Agreement) so that the entering into of
this Agreement and the Option Agreements, the Merger, the acquisition of
shares pursuant to the Option Agreements and the other transactions
contemplated hereby and thereby do not and will not result in the grant of any
rights to any person under the First Chicago Rights Agreement or enable or
require the First Chicago Rights to be exercised, distributed or triggered.
4.23 Pooling of Interests. As of the date of this Agreement, First Chicago
has no reason to believe that the Merger will not qualify as a "pooling of
interests" for accounting purposes.
ARTICLE V
Covenants Relating to Conduct of Business
5.1 Conduct of Businesses Prior to the Effective Time.
During the period from the date of this Agreement to the Effective Time,
except as expressly contemplated or permitted by this Agreement (including the
NBD Disclosure Schedule and the First Chicago Disclosure Schedule) or the
Option Agreements, each of First Chicago and NBD shall, and shall cause each
of their respective Subsidiaries to, (a) conduct its business in the usual,
regular and ordinary course consistent with past practice, (b) use reasonable
best efforts to maintain and preserve intact its business organization,
employees and advantageous business relationships and retain the services of
its key officers and key employees and (c) take no action which would
adversely affect or delay the ability of either First Chicago or NBD to obtain
any necessary approvals of any Regulatory Agency or other governmental
authority required for the transactions contemplated hereby or to perform its
covenants and agreements under this Agreement or the Option Agreements.
5.2 Forbearances. During the period from the date of this Agreement to the
Effective Time, except as set forth in the First Chicago Disclosure Schedule
or the NBD Disclosure Schedule, as the case may be, and, except as expressly
contemplated or permitted by this Agreement or the Option Agreements, neither
First Chicago nor NBD shall, and neither First Chicago nor NBD shall permit
any of their respective Subsidiaries to, without the prior written consent of
the other:
(a) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money (other than short-term
indebtedness incurred to refinance short-term indebtedness and indebtedness
of NBD or any of its Subsidiaries to NBD or any of its Subsidiaries, on the
one hand, or of First Chicago or any of its Subsidiaries to First Chicago
or any of its Subsidiaries, on the other hand), assume, guarantee, endorse
or otherwise as an accommodation become responsible for the obligations of
any other individual, corporation or other entity, or make any loan or
advance (it being understood and agreed that 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);
23
(b) (i) adjust, split, combine or reclassify any capital stock; (ii)
make, declare or pay any dividend or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any shares of
its capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock (except, (A) in the case
of NBD, for regular quarterly cash dividends at a rate not in excess of
$.33 per share of NBD Common Stock, (B) in the case of First Chicago, for
regular quarterly cash dividends on First Chicago Common Stock at a rate
not in excess of $.60 per share of First Chicago Common Stock, (C) in the
case of First Chicago Preferred Stock, for regular quarterly or semiannual
cash dividends thereon at the rates set forth in the applicable certificate
of incorporation or certificate of designation for such securities and
except for dividends paid by any of the Subsidiaries of each of First
Chicago and NBD to First Chicago or NBD or any of their Subsidiaries,
respectively, and (D) except for dividends paid in the ordinary course of
business by any subsidiaries (whether or not wholly owned) of each of First
Chicago and NBD), (iii) grant any stock appreciation rights or grant any
individual, corporation or other entity any right to acquire any shares of
its capital stock (except for options to purchase stock granted in the
ordinary course of business consistent with past practice pursuant to the
First Chicago Stock Plans, the First Chicago ESPSP, and the NBD Stock
Plans) or (iv) issue any additional shares of capital stock except pursuant
to (A) the exercise of stock options or warrants outstanding as of the date
hereof, (B) the First Chicago Convertible Preferred Stock, (C) the Option
Agreements, (D) the First Chicago Rights Agreement, (E) the First Chicago
DRIP, or (F) the First Chicago ESPSP;
(c) sell, transfer, mortgage, encumber or otherwise dispose of any of its
properties or assets to any individual, corporation or other entity other
than a Subsidiary, or cancel, release or assign any indebtedness to any
such person or any claims held by any such person, except in the ordinary
course of business consistent with past practice or pursuant to contracts
or agreements in force at the date of this Agreement;
(d) except for transactions in the ordinary course of business consistent
with past practice or pursuant to contracts or agreements in force at the
date of this Agreement, make any material investment either by purchase of
stock or securities, contributions to capital, property transfers, or
purchase of any property or assets of any other individual, corporation or
other entity other than a Subsidiary thereof;
(e) except for transactions in the ordinary course of business consistent
with past practice, enter into or terminate any material contract or
agreement, or make any change in any of its material leases or contracts,
other than renewals of contracts and leases without material adverse
changes of terms;
(f) increase in any manner the compensation or fringe benefits of any of
its employees or pay any pension or retirement allowance not required by
any existing plan or agreement to any such employees or become a party to,
amend or commit itself to any pension, retirement, profit-sharing or
welfare benefit plan or agreement or employment agreement with or for the
benefit of any employee other than in the ordinary course of business
consistent with past practice or accelerate the vesting of any stock
options or other stock-based compensation;
(g) solicit, encourage or authorize any individual, corporation or other
entity to solicit from any third party any inquiries or proposals relating
to the disposition of its business or assets, or the acquisition of its
voting securities, or the merger of it or any of its Subsidiaries with any
corporation or other entity other than as provided by this Agreement (and
each party shall promptly notify the other of all of the relevant details
relating to all inquiries and proposals which it may receive relating to
any of such matters);
(h) settle any claim, action or proceeding involving money damages,
except in the ordinary course of business consistent with past practice;
(i) take any action that would prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; provided,
however, that nothing contained herein shall limit the ability of First
Chicago or NBD to exercise its rights under the NBD Option Agreement or the
First Chicago Option Agreement, as the case may be;
(j) amend its certificate of incorporation or articles of incorporation,
as the case may be, or its bylaws; or
24
(k) other than in prior consultation with the other party to this
Agreement, restructure or materially change its investment securities
portfolio or its gap position, through purchases, sales or otherwise, or
the manner in which the portfolio is classified or reported;
(l) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Merger set
forth in Article VII not being satisfied or in a violation of any provision
of this Agreement, except, in every case, as may be required by applicable
law; or
(m) agree to, or make any commitment to, take any of the actions
prohibited by this Section 5.2.
ARTICLE VI
Additional Agreements
6.1 Regulatory Matters. (a) First Chicago and NBD shall promptly prepare and
file with the SEC the Joint Proxy Statement and NBD shall promptly prepare and
file with the SEC the S-4, in which the Joint Proxy Statement will be included
as a prospectus. Each of First Chicago and NBD shall use all reasonable
efforts to have the S-4 declared effective under the Securities Act as
promptly as practicable after such filing, and First Chicago and NBD shall
thereafter mail or deliver the Joint Proxy Statement to their respective
stockholders. NBD shall also use all reasonable efforts to obtain all
necessary state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement, and First Chicago
shall furnish all information concerning First Chicago and the holders of
First Chicago Capital Stock as may be reasonably requested in connection with
any such action.
(b) The parties hereto shall cooperate with each other and use their best
efforts to promptly prepare and file all necessary documentation, to effect
all applications, notices, petitions and filings, to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement (including, without
limitation, the Merger), and to comply with the terms and conditions of all
such permits, consents, approvals and authorizations of all such Governmental
Entities. First Chicago and NBD shall have the right to review in advance,
and, to the extent practicable, each will consult the other on, in each case
subject to applicable laws relating to the exchange of information, all the
information relating to NBD or First Chicago, as the case may be, and any of
their respective Subsidiaries, which appear in any filing made with, or
written materials submitted to, any third party or any Governmental Entity in
connection with the transactions contemplated by this Agreement. In exercising
the foregoing right, each of the parties hereto shall act reasonably and as
promptly as practicable. The parties hereto agree that they will consult with
each other with respect to the obtaining of all permits, consents, approvals
and authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and
each party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein.
(c) First Chicago and NBD shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or
advisable in connection with the Joint Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of First
Chicago, NBD or any of their respective Subsidiaries to any Governmental
Entity in connection with the Merger and the other transactions contemplated
by this Agreement.
(d) First Chicago and NBD shall promptly advise each other upon receiving
any communication from any Governmental Entity whose consent or approval is
required for consummation of the transactions contemplated by this Agreement
which causes such party to believe that there is a reasonable likelihood that
any Requisite Regulatory Approval will not be obtained or that the receipt of
any such approval will be materially delayed.
25
6.2 Access to Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each of First Chicago
and NBD shall, and shall cause each of their respective Subsidiaries to,
afford to the officers, employees, accountants, counsel and other
representatives of the other party, access, during normal business hours
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, each of First
Chicago and NBD shall, and shall cause their respective Subsidiaries to, make
available to the other party (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period
pursuant to the requirements of federal securities laws or federal or state
banking laws, savings and loan or savings association laws (other than reports
or documents which First Chicago or NBD, as the case may be, is not permitted
to disclose under applicable law) and (ii) all other information concerning
its business, properties and personnel as such party may reasonably request.
Neither First Chicago nor NBD nor any of their respective Subsidiaries shall
be required to provide access to or to disclose information where such access
or disclosure would violate or prejudice the rights of First Chicago's or
NBD's, as the case may be, customers, jeopardize the attorney-client privilege
of the institution in possession or control of such information or contravene
any law, rule, regulation, order, judgment, decree, fiduciary duty or binding
agreement entered into prior to the date of this Agreement. The parties hereto
will make appropriate substitute disclosure arrangements under circumstances
in which the restrictions of the preceding sentence apply.
(b) Each of First Chicago and NBD shall hold all information furnished by or
on behalf of the other party or any of such party's Subsidiaries or
representatives pursuant to Section 6.2(a) in confidence to the extent
required by, and in accordance with, the provisions of the confidentiality
agreement, dated June 25, 1995, between First Chicago and NBD (the
"Confidentiality Agreement").
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other
set forth herein.
6.3 Stockholders' Approvals. Each of First Chicago and NBD shall call a
meeting of its stockholders to be held as soon as reasonably practicable for
the purpose of voting upon the requisite stockholder approvals required in
connection with this Agreement and the Merger, and each shall use its best
efforts to cause such meetings to occur on the same date.
6.4 Legal Conditions to Merger. Each of First Chicago and NBD shall, and
shall cause its Subsidiaries to, use their best efforts (a) to take, or cause
to be taken, all actions necessary, proper or advisable to comply promptly
with all legal requirements which may be imposed on such party or its
Subsidiaries with respect to the Merger and, subject to the conditions set
forth in Article VII hereof, to consummate the transactions contemplated by
this Agreement and (b) to obtain (and to cooperate with the other party to
obtain) any consent, authorization, order or approval of, or any exemption by,
any Governmental Entity and any other third party which is required to be
obtained by NBD or First Chicago or any of their respective Subsidiaries in
connection with the Merger and the other transactions contemplated by this
Agreement.
6.5 Affiliates; Publication of Combined Financial Results. (a) Each of First
Chicago and NBD shall use its best efforts to cause each director, executive
officer and other person who is an "affiliate" (for purposes of Rule 145 under
the Securities Act and for purposes of qualifying the Merger for "pooling of
interests" accounting treatment) of such party to deliver to the other party
hereto, as soon as practicable after the date of this Agreement, and prior to
the date of the stockholders meetings called by First Chicago and NBD to
approve this Agreement, a written agreement, in the form of Exhibit 6.5(a)(1)
or (2), as applicable, hereto, providing that such person will not sell,
pledge, transfer or otherwise dispose of any shares of First Chicago Capital
Stock or NBD Capital Stock held by such "affiliate" and, in the case of the
"affiliates" of First Chicago, the shares of NBD Capital Stock to be received
by such "affiliate" in the Merger: (i) in the case of shares of NBD Capital
Stock to be received by "affiliates" of First Chicago in the Merger, except in
compliance with the applicable provisions of the Securities Act and the rules
and regulations thereunder; and (ii) except to the extent and under the
conditions permitted therein, during the period commencing 30 days prior to
the Merger and ending at the time of the publication of financial results
covering at least 30 days of combined operations of First Chicago and NBD.
26
(b) The Surviving Corporation shall use its best efforts to publish as
promptly as reasonably practical but in no event later than 90 days after the
end of the first month after the Effective Time in which there are at least 30
days of post-Merger combined operations (which month may be the month in which
the Effective Time occurs), combined sales and net income figures as
contemplated by and in accordance with the terms of SEC Accounting Series
Release No. 135.
6.6 Stock Exchange Listing. NBD shall cause the shares of NBD Common Stock
to be issued in the Merger to be approved for listing on the NYSE, subject to
official notice of issuance, prior to the Effective Time and shall use its
best efforts to cause the shares of NBD Preferred Stock to be so approved.
6.7 Employee Benefit Plans. (a) From and after the Effective Time, unless
otherwise mutually determined, the NBD Benefit Plans and First Chicago Benefit
Plans in effect as of the date of this Agreement shall remain in effect with
respect to employees of NBD or First Chicago (or their Subsidiaries) covered
by such plans at the Effective Time until such time as the Surviving
Corporation shall, subject to applicable law, the terms of this Agreement and
the terms of such plans, adopt new benefit plans with respect to employees of
the Surviving Corporation and its Subsidiaries (the "New Benefit Plans").
Prior to the Closing Date, NBD and First Chicago shall cooperate in reviewing,
evaluating and analyzing the First Chicago Benefit Plans and NBD Benefit Plans
with a view towards developing appropriate New Benefit Plans for the employees
covered thereby subsequent to the Merger. It is the intention of NBD and First
Chicago to develop New Benefit Plans, effective as of the Effective Time,
which, among other things, (i) treat similarly situated employees on a
substantially equivalent basis, taking into account all relevant factors,
including, without limitation, duties, geographic location, tenure,
qualifications and abilities, and (ii) do not discriminate between employees
of the Surviving Corporation who were covered by NBD Benefit Plans, on the one
hand, and those covered by First Chicago Benefit Plans, on the other, at the
Effective Time.
(b) The foregoing nothwithstanding, the Surviving Corporation agrees to
honor in accordance with their terms all benefits vested as of the date hereof
under the First Chicago Benefit Plans or the NBD Benefit Plans or under other
contracts, arrangements, commitments, or understandings described in the First
Chicago Disclosure Schedule and the NBD Disclosure Schedule.
(c) Nothing in this Section 6.7 shall be interpreted as preventing the
Surviving Corporation from amending, modifying or terminating any First
Chicago Benefit Plans, NBD Benefit Plans, or other contracts, arrangements,
commitments or understandings, in accordance with their terms and applicable
law.
(d) NBD and First Chicago shall take all actions necessary, including
securing the consent of optionees, to amend the terms of NBD Benefits Plans
pursuant to which options to purchase NBD Common Stock have been issued or
granted ("NBD Stock Plans") and the First Chicago Stock Plans and any
severance or other agreements that provide for the surrender of stock options
issued thereunder in exchange for a cash payment ("LSARs") as a result of or
in connection with the Merger to provide that such LSARs shall be settled in
stock with a fair market value equal to the cash that would otherwise have
been payable thereunder.
6.8 Indemnification; Directors' and Officers' Insurance. (a) 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 individual
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 or employee of
First Chicago or any of its Subsidiaries, including any entity specified in
the First Chicago Disclosure Schedule (the "Indemnified Parties"), 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 First Chicago, any of the First Chicago
Subsidiaries or any entity specified in the First Chicago Disclosure Schedule
or any of their respective predecessors or (ii) this Agreement, the Option
Agreements or any of the transactions contemplated hereby or thereby, whether
in any case asserted or arising before or after the Effective Time, the
parties hereto agree to cooperate and use their best efforts to defend against
and respond thereto. It is understood and agreed that after the Effective
Time, NBD shall indemnify and hold harmless, as
27
and to the fullest extent permitted by law, each such Indemnified Party
against any 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 Indemnified Party 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 of arising before
or after the Effective Time), the Indemnified Parties may retain counsel
reasonably satisfactory to them after consultation with NBD; provided,
however, that (A) NBD shall have the right to assume the defense thereof and
upon such assumption NBD shall not be liable to any Indemnified Party for any
legal expenses of other counsel or any other expenses subsequently incurred by
any Indemnified Party in connection with the defense thereof, except that if
NBD elects not to assume such defense or counsel for the Indemnified Parties
reasonably advises the Indemnified Parties that there are issues which raise
conflicts of interest between NBD and the Indemnified Parties, the Indemnified
Parties may retain counsel reasonably satisfactory to them after consultation
with NBD, and NBD shall pay the reasonable fees and expenses of such counsel
for the Indemnified Parties, (B) NBD shall be obligated pursuant to this
paragraph to pay for only one firm of counsel for all Indemnified Parties,
unless an Indemnified Party shall have reasonably concluded, based on the
advice of counsel, that in order to be adequately represented, separate
counsel is necessary for such Indemnified Party, in which case, NBD shall be
obligated to pay for such separate counsel, (C) NBD shall not be liable for
any settlement effected without its prior written consent (which consent shall
not be unreasonably withheld) and (D) NBD shall have no obligation hereunder
to any Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any Indemnified Party
wishing to claim Indemnification under this Section 6.8, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify NBD
thereof, provided that the failure to so notify shall not affect the
obligations of NBD under this Section 6.8 except to the extent such failure to
notify materially prejudices NBD. NBD's obligations under this Section 6.8
continue in full force and effect for a period of six years from the Effective
Time (or the period of the applicable statute of limitations, if longer);
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) NBD shall use its best efforts to cause the individuals serving as
officers and directors of First Chicago, its Subsidiaries or any entity
specified in the First Chicago Disclosure Schedule immediately prior to the
Effective Time to be covered for a period of six (6) years from the Effective
Time (or the period of the applicable statute of limitations, if longer) by
the directors' and officers' liability insurance policy maintained by First
Chicago (provided that NBD may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are not less
advantageous than such policy) with respect to acts or omissions occurring
prior to the Effective Time which were committed by such officers and
directors in their capacity as such; provided, however, that in no event shall
NBD be required to expend more than 200% of the current amount expended by
First Chicago (the "Insurance Amount") to maintain or procure insurance
coverage pursuant hereto and provided further that if NBD is unable to
maintain or obtain the insurance called for by this Section 6.8(b), NBD shall
use its best efforts to obtain as much comparable insurance as available for
the Insurance Amount.
(c) In the event NBD or any of its successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or
(ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of NBD
assume the obligations set forth in this section.
(d) The provisions of this Section 6.8 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs
and representatives.
28
6.9 Additional Agreements. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement (including, without limitation, any merger between a Subsidiary of
NBD and a Subsidiary of First Chicago) or to vest the Surviving Corporation
with full title to all properties, assets, rights, approvals, immunities and
franchises of any of the parties to the Merger, the proper officers and
directors of each party to this Agreement and their respective Subsidiaries
shall take all such necessary action as may be reasonably requested by, and at
the sole expense of, NBD.
6.10 Advice of Changes. First Chicago and NBD shall promptly advise the
other party of any change or event having a Material Adverse Effect on it or
which it believes would or would be reasonably likely to cause or constitute a
material breach of any of its representations, warranties or covenants
contained herein.
6.11 Dividends. After the date of this Agreement, each of First Chicago and
NBD shall coordinate with the other the declaration of any dividends in
respect of First Chicago Common Stock and NBD Common Stock and the record
dates and payment dates relating thereto, it being the intention of the
parties hereto that holders of First Chicago Common Stock or NBD Common Stock
shall not receive two dividends, or fail to receive one dividend, for any
quarter with respect to their shares of First Chicago Common Stock and/or NBD
Common Stock and any shares of NBD Capital Stock any such holder receives in
exchange therefor in the Merger.
ARTICLE VII
Conditions Precedent
7.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the respective
requisite affirmative votes of the holders of NBD Common Stock and First
Chicago Common Stock entitled to vote thereon.
(b) NYSE Listing. The shares of NBD Common Stock which shall be issued to
the stockholders of First Chicago upon consummation of the Merger shall
have been authorized for listing on the NYSE, subject to official notice of
issuance.
(c) Other Approvals. All regulatory approvals required to consummate the
transactions contemplated hereby shall have been obtained and shall remain
in full force and effect and all statutory waiting periods in respect
thereof shall have expired (all such approvals and the expiration of all
such waiting periods being referred to herein as the "Requisite Regulatory
Approvals").
(d) S-4. The S-4 shall have become effective under the Securities Act and
no stop order suspending the effectiveness of the S-4 shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other
legal restraint or prohibition (an "Injunction") preventing the
consummation of the Merger or any of the other transactions contemplated by
this Agreement shall be in effect. No statute, rule, regulation, order,
injunction or decree shall have been enacted, entered, promulgated or
enforced by any Governmental Entity which prohibits, materially restricts
or makes illegal consummation of the Merger.
(f) Federal Tax Opinion. First Chicago and NBD each shall have received
an opinion of Wachtell, Lipton, Rosen & Katz, in form and substance
reasonably satisfactory to First Chicago and NBD, dated as of the Effective
Time, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time:
29
(i) The Merger will constitute a tax free reorganization under
Section 368(a)(1)(A) of the Code and First Chicago and NBD will each be
a party to the reorganization;
(ii) No gain or loss will be recognized by First Chicago or NBD as a
result of the Merger;
(iii) No gain or loss will be recognized by the stockholders of First
Chicago who exchange their First Chicago Capital Stock solely for NBD
Capital Stock pursuant to the Merger (except with respect to cash
received in lieu of a fractional share interest in NBD Capital Stock);
(iv) The tax basis of the NBD Capital Stock received by stockholders
who exchange all of their First Chicago Capital Stock solely for NBD
Capital Stock in the Merger will be the same as the tax basis of the
First Chicago Capital Stock surrendered in exchange therefor (reduced
by any amount allocable to a fractional share interest for which cash
is received); and
(v) The holding period of NBD Capital Stock received by stockholders
of First Chicago in the Merger will include the period during which the
shares of First Chicago Capital Stock surrendered in exchange therefor
were held; provided, such First Chicago Capital Stock was held as a
capital asset by the holder of such First Chicago Capital Stock at the
Effective Time.
In rendering such opinion, counsel may require and rely upon
representations contained in certificates of officers of First Chicago, NBD
and others.
(g) Pooling of Interests. First Chicago and NBD shall each have received
a letter from their respective independent accountants addressed to NBD or
First Chicago, as the case may be, to the effect that the Merger will
qualify for "pooling of interests" accounting treatment.
7.2 Conditions to Obligations of First Chicago. The obligation of First
Chicago to effect the Merger is also subject to the satisfaction or waiver by
First Chicago at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties of
NBD set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date. First Chicago
shall have received a certificate signed on behalf of NBD by the Chief
Executive Officer and the Chief Financial Officer of NBD to the foregoing
effect.
(b) Performance of Obligations of NBD. NBD shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and First Chicago shall have
received a certificate signed on behalf of NBD by the Chief Executive
Officer and the Chief Financial Officer of NBD to such effect.
7.3 Conditions to Obligations of NBD. The obligation of NBD to effect the
Merger is also subject to the satisfaction or waiver by NBD at or prior to the
Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties of
First Chicago set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as
of the Closing Date as though made on and as of the Closing Date. NBD shall
have received a certificate signed on behalf of First Chicago by the Chief
Executive Officer and the Chief Financial Officer of First Chicago to the
foregoing effect.
(b) Performance of Obligations of First Chicago. First Chicago shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and NBD shall
have received a certificate signed on behalf of First Chicago by the Chief
Executive Officer and the Chief Financial Officer of First Chicago to such
effect.
(c) First Chicago Rights Agreement. The rights issued pursuant to the
First Chicago Rights Agreement shall not have become nonredeemable,
exercisable, distributed or triggered pursuant to the terms of such
agreement.
30
ARTICLE VIII
Termination and Amendment
8.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of First Chicago or NBD:
(a) by mutual consent of First Chicago and NBD in a written instrument,
if the Board of Directors of each so determines by a vote of a majority of
the members of its entire Board;
(b) by either the Board of Directors of First Chicago or the Board of
Directors of NBD if any Governmental Entity which must grant a Requisite
Regulatory Approval has denied approval of the Merger and such denial has
become final and nonappealable or any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order permanently
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement;
(c) by either the Board of Directors of First Chicago or the Board of
Directors of NBD if the Merger shall not have been consummated on or before
the first anniversary of the date of this Agreement, unless the failure of
the Closing (as defined in Section 9.1) to occur by such date shall be due
to the failure of the party seeking to terminate this Agreement to perform
or observe the covenants and agreements of such party set forth herein;
(d) by either the Board of Directors of First Chicago or the Board of
Directors of NBD (provided that the terminating party is not then in
material breach of any representation, warranty, covenant or other
agreement contained herein) if there shall have been a material breach of
any of the covenants or agreements or any of the representations or
warranties set forth in this Agreement on the part of the other party,
which breach is not cured within 45 days following written notice to the
party committing such breach, or which breach, by its nature or timing,
cannot be cured prior to the Closing Date; or
(e) by either First Chicago or NBD if any approval of the stockholders of
First Chicago or NBD required for the consummation of the Merger shall not
have been obtained by reason of the failure to obtain the required vote at
a duly held meeting of stockholders or at any adjournment or postponement
thereof.
8.2 Effect of Termination. In the event of termination of this Agreement by
either First Chicago or NBD as provided in Section 8.1, this Agreement shall
forthwith become void and have no effect, and none of First Chicago, NBD, any
of their respective Subsidiaries or any of the officers or directors of any of
them shall have any liability of any nature whatsoever hereunder, or in
connection with the transactions contemplated hereby, except that (i) Sections
6.2(b), 8.2, 9.2 and 9.3, shall survive any termination of this Agreement, and
(ii) notwithstanding anything to the contrary contained in this Agreement,
neither First Chicago nor NBD shall be relieved or released from any
liabilities or damages arising out of its willful breach of any provision of
this Agreement.
8.3 Amendment. Subject to compliance with applicable law, this Agreement may
be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the stockholders of NBD;
provided, however, that after any approval of the transactions contemplated by
this Agreement by the respective stockholders of First Chicago or NBD, there
may not be, without further approval of such stockholders, any amendment of
this Agreement which changes the amount or the form of the consideration to be
delivered to the holders of First Chicago Common Stock hereunder other than as
contemplated by this Agreement. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time, the parties
hereto, by action taken or authorized by their respective Board of Directors,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (b) waive
any inaccuracies in the
31
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein; provided, however, that after any approval of the
transactions contemplated by this Agreement by the respective stockholders of
First Chicago or NBD, there may not be, without further approval of such
stockholders, any extension or waiver of this Agreement or any portion thereof
which reduces the amount or changes the form of the consideration to be
delivered to the holders of First Chicago Common Stock hereunder other than as
contemplated by this Agreement. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party, but such extension or waiver or
failure to insist on strict compliance with an obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this Agreement and the
Option Agreements, the closing of the Merger (the "Closing") will take place
at 10:00 a.m. on a date and at a place to be specified by the parties, which
shall be no later than five business days after the satisfaction or waiver
(subject to applicable law) of the latest to occur of the conditions set forth
in Article VII hereof, unless extended by mutual agreement of the parties (the
"Closing Date").
9.2 Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement (other than pursuant to
the Option Agreements, which shall terminate in accordance with its terms)
shall survive the Effective Time, except for those covenants and agreements
contained herein and therein which by their terms apply in whole or in part
after the Effective Time.
9.3 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, provided, however, that the costs and expenses of
printing and mailing the Joint Proxy Statement, and all filing and other fees
paid to the SEC in connection with the Merger, shall be borne equally by First
Chicago and NBD.
9.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt
requested) or delivered by an express courier (with confirmation) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to First Chicago, to:
First Chicago Corporation
One First National Plaza, Suite O276
Chicago, Illinois 60670
Attn: General Counsel
Fax: (312) 732-1069
and
(b) if to NBD, to:
NBD Bancorp, Inc.
611 Woodward Avenue
Detroit, Michigan 48226
Attn: General Counsel
Fax: (313) 225-2070
32
9.5 Interpretation. When a reference is made in this Agreement to Sections,
Exhibits or Schedules, such reference shall be to a Section of or Exhibit or
Schedule to this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". No provision of this Agreement shall be construed to require NBD,
First Chicago or any of their respective Subsidiaries or affiliates to take
any action which would violate any applicable law, rule or regulation.
9.6 Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
9.7 Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof other than the
Option Agreements and the Confidentiality Agreement.
9.8 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to any
applicable conflicts of law.
9.9 Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
9.10 Publicity. Except as otherwise required by applicable law or the rules
of the NYSE, neither First Chicago nor NBD shall, or shall permit any of its
Subsidiaries to, issue or cause the publication of any press release or other
public announcement with respect to, or otherwise make any public statement
concerning, the transactions contemplated by this Agreement without the
consent of the other party, which consent shall not be unreasonably withheld.
9.11 Assignment; Third Party Beneficiaries. Neither this Agreement nor any
of the rights, interests or obligations shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. Except as otherwise
specifically provided in Section 6.8, this Agreement (including the documents
and instruments referred to herein) is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
IN WITNESS WHEREOF, First Chicago and NBD have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
NBD Bancorp, Inc. First Chicago Corporation
/s/ Verne G. Istock /s/ Richard L. Thomas
By: _________________________________ By: _________________________________
Verne G. Istock Richard L. Thomas
Chairman and Chief Executive Chairman and Chief Executive
Officer Officer
33
AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
AMENDMENT NO. 1, dated as of September 18, 1995, to the AGREEMENT AND PLAN
OF MERGER, dated as of July 11, 1995 (the "Merger Agreement"), by and between
FIRST CHICAGO CORPORATION, a Delaware corporation ("First Chicago") and NBD
BANCORP, INC., a Delaware corporation ("NBD").
1. Pursuant to Section 8.3 of the Merger Agreement, NBD and First Chicago
hereby amend and restate Section 1.7 thereof in its entirety as follows:
"1.7 Certificate of Incorporation. Subject to the terms and conditions
of this Agreement, at the Effective Time, the Certificate of Incorporation
of NBD shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended in accordance with applicable law,
except that such Certificate of Incorporation shall be amended to provide:
(a) that the number of shares of authorized Common Stock of the Surviving
Corporation shall be increased to 750,000,000; (b) that the name of the
Surviving Corporation shall be "First Chicago NBD Corporation"; (c) for
the deletion of the Series A Preferred Stock, par value $1.00 per share;
and (d) for the NBD New Preferred Stock."
2. The Merger Agreement, as hereby amended, is ratified and confirmed in
all respects and remains in full force and effect.
IN WITNESS WHEREOF, First Chicago and NBD have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
NBD BANCORP, INC. FIRST CHICAGO CORPORATION
By: /s/ Verne G. Istock By: /s/ Richard L. Thomas
------------------------- -------------------------
Verne G. Istock Richard L. Thomas
Chairman and Chairman, President and
Chief Executive Officer Chief Executive Officer
AMENDMENT NO. 2
TO
AGREEMENT AND PLAN OF MERGER
AMENDMENT NO. 2, dated as of October 20, 1995, to the AGREEMENT AND PLAN
OF MERGER, dated as of July 11, 1995, as amended as of September 18, 1995 (the
"Merger Agreement"), by and between FIRST CHICAGO CORPORATION, a Delaware
corporation ("First Chicago") and NBD BANCORP, INC., a Delaware corporation
("NBD").
1. Pursuant to Section 8.3 of the Merger Agreement, NBD and First Chicago
hereby amend and restate Section 1.11(a) thereof in its entirety as follows:
"1.11 Board of Directors. (a) At the Effective Time, the Board of
Directors of the Surviving Corporation shall consist of 20 persons,
including Messrs. Thomas and Istock, 9 additional persons, two of whom may
be executive officers of First Chicago, to be named by Mr. Thomas and the
Board of Directors of First Chicago, and 9 additional persons, one of whom
may be an executive officer of NBD, to be named by Mr. Istock and the Board
of Directors of NBD."
2. The Merger Agreement, as hereby amended, is ratified and confirmed in
all respects and remains in full force and effect.
IN WITNESS WHEREOF, First Chicago and NBD have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
NBD BANCORP, INC. FIRST CHICAGO CORPORATION
By: /s/ Verne G. Istock By: /s/ Richard L. Thomas
------------------------- -------------------------
Verne G. Istock Richard L. Thomas
Chairman and Chairman, President and
Chief Executive Officer Chief Executive Officer
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AMENDMENT NO. 3
TO
AGREEMENT AND PLAN OF MERGER
AMENDMENT NO. 3, dated as of November 20, 1995, to the AGREEMENT AND PLAN
OF MERGER, dated as of July 11, 1995, as amended as of September 18, 1995 and
October 20, 1995 (the "Merger Agreement"), by and between FIRST CHICAGO
CORPORATION, a Delaware corporation ("First Chicago") and NBD BANCORP, INC., a
Delaware corporation ("NBD").
1. Pursuant to Section 8.3 of the Merger Agreement, NBD and First Chicago
hereby amend Section 1.7 thereof by adding a second sentence as follows:
"Notwithstanding the foregoing, the amendment to the Certificate of
Incorporation increasing the number of shares of authorized Common Stock of
the Surviving Corporation may be made effective on any date within 60 days
after the Effective Time."
2. The Merger Agreement, as hereby amended, is ratified and confirmed in
all respects and remains in full force and effect.
IN WITNESS WHEREOF, First Chicago and NBD have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
NBD BANCORP, INC. FIRST CHICAGO CORPORATION
By: /s/ Verne G. Istock By: /s/ Richard L. Thomas
------------------------- -------------------------
Verne G. Istock Richard L. Thomas
Chairman and Chairman, President and
Chief Executive Officer Chief Executive Officer
Dates Referenced Herein and Documents Incorporated by Reference
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