Exhibit 2
AGREEMENT AND PLAN OF MERGER
by and between
NATIONAL CITY CORPORATION
and
FIDELITY BANKSHARES, INC.
dated as of July 26, 2006
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of July 26, 2006 (this
"Agreement"), is made by and between National City Corporation, a Delaware
corporation ("National City"), and Fidelity Bankshares, Inc., a Delaware
corporation ("Fidelity"). National City and Fidelity are sometimes referred to
herein collectively, as "Parties", and each, as a "Party".
WHEREAS, National City and Fidelity have each determined that it is in the
best interests of their respective stockholders for Fidelity to merge with and
into National City (the "Merger") with National City the surviving corporation,
upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the respective boards of directors of National City and Fidelity
have each approved this Agreement and the Merger and the consummation of the
transactions contemplated hereby and have approved the execution and delivery of
this Agreement; and
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and that this Agreement
be and hereby is adopted as a "plan of reorganization" within the meaning of
Sections 354 and 361 of the Code.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, the Parties hereby
agree as follows:
I. DEFINITIONS; INTERPRETATION
1.1 Certain Defined Terms. As used in this Agreement, in addition to the
terms defined elsewhere herein, the following terms shall have the following
meanings ascribed to them in this Section 1.1:
"Action" means any claim, action, suit, arbitration, inquiry, hearing,
investigation or proceeding by or before any Governmental Authority.
"Adjustment Price" means $25.88.
"Affiliate" has the meaning ascribed to such term in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the
date hereof.
"Aggregate Merger Consideration" is the sum of (i) the product of (A)
the Fidelity Conversion Shares multiplied by (B) $39.50 plus (ii) the
product of (A) the Fidelity Conversion Shares multiplied by (B) the Stock
Exchange Ratio multiplied by (C) the Market Price.
"Appraisal Rights" are those rights granted pursuant to Section 262 of
the DGCL.
"Associate" has the meaning ascribed to such term in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the
date hereof.
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"BHCA" means the Bank Holding Company Act of 1956, as amended through
the date hereof.
"Business Day" means any day excluding Saturdays, Sundays and any
other days on which The Federal Reserve Bank of Cleveland is closed.
"Cash Exchange Ratio" means $39.50, except if the Market Price falls
below the Adjustment Price, the Cash Exchange Ratio shall be calculated as
follows:
Aggregate Merger Consideration-(Stock Conversion Shares x
StockExchange Ratio x Market Price)
---------------------------------------------------------
(2 x Fidelity Conversion Shares)-Stock Conversion Shares
"Claim" shall mean a claim, demand, assessment, Governmental Order,
Action or settlement involving an Indemnifiable Loss.
"Commission" means the United States Securities and Exchange
Commission.
"Confidentiality Agreement" means the letter agreement dated June 23,
2006 between National City and Fidelity.
"Control" (including the term "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of stock,
as trustee or executor, by contract or credit arrangement or otherwise.
"DGCL" means the General Corporation Law of the State of Delaware.
"Disclosure Letters" means the Fidelity Disclosure Letter and the
National City Disclosure Letter, collectively.
"Dissenting Shares" means shares of Fidelity Common Stock the holders
of which have perfected and not withdrawn or lost their right to dissent
with respect to the shares pursuant to Section 262 of the DGCL.
"Environmental Law" means any Law relating to (i) the health,
protection, preservation, containment or restoration of the environment
including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil,
wetlands, plant and animal life or any other natural resource,
conservation, and/or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of Hazardous Substances. The term Environmental Law
includes, without limitation, (x) the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601, et
seq.; the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
9601(2)(D); the Resource Conservation and Recovery Act, as amended, 42
U.S.C. Section 6901, et seq.; the Clean Air Act, as amended, 42 U.S.C.
Section 7401, et seq.; the Federal Water Pollution Control Act, as amended
by the Clean Water Act, 33 U.S.C. Section 1251, et seq.; the Toxic
Substances Control Act, as amended, 15 U.S.C. Section 9601, et seq.; the
Emergency Planning and Community Right to Know Act, 42
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U.S.C. Section 11001, et seq.; the Safe Drinking Water Act, 42 U.S.C.
Section 300f, et seq.; and all comparable state and local Laws respecting
the interpretation or enforcement of same and (y) any common law (including
without limitation common law that may impose strict liability) that may
impose liability for injuries or damages due to the release of any
Hazardous Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended through the date hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
through the date hereof and the rules and regulations promulgated
thereunder.
"Federal Approval Date" means the day the FRB issues an order
approving consummation of the Merger.
"Fidelity Common Stock" means the common stock, par value $.10 per
share, of Fidelity.
"Fidelity Conversion Shares" means the quotient resulting from
dividing (i) the difference of (A) the number of issued and outstanding
shares of Fidelity Common Stock immediately prior to the Effective Time
less (B) the number of shares cancelled or retired pursuant to Section
3.1(a)(ii) of this Agreement divided by (ii) two (2).
"Fidelity Disclosure Letter" means a letter delivered by Fidelity to
National City on or before the execution and delivery of this Agreement
setting forth, among other things, items the disclosure of which is
required under this Agreement, either in response to an express disclosure
requirement contained in a provision of this Agreement or as an exception
to one or more of the representations, warranties or covenants of Fidelity
contained in this Agreement. The Fidelity Disclosure Letter is arranged in
a format in which the disclosures made therein are arranged in paragraphs
or sections corresponding to the numbered and lettered sections and
subsections of this Agreement. The matters expressly disclosed in the
Fidelity Disclosure Letter shall be deemed to be disclosed for all purposes
thereunder, so long as such disclosure contains sufficient factual detail
to render its relevance to such other purposes readily apparent. The
inclusion of any matter in the Fidelity Disclosure Letter shall not be
deemed an admission or otherwise to imply that any such matter is material
for purposes of this Agreement.
"Fidelity Federal Bank & Trust" means Fidelity Federal Bank & Trust, a
federally chartered savings bank and a wholly-owned Subsidiary of Fidelity.
"FRB" means the Federal Reserve Board.
"Governmental Authority" means (i) any United States federal, state or
local government, governmental, regulatory or administrative authority,
agency, panel instrumentality, political subdivision, branch, department,
official, entity or commission, (ii) any court, tribunal, or judicial or
arbitral body or (iii) governmental or quasi-governmental body exercising,
or entitled to exercise, any administrative, executive,
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judicial, legislative, police, regulatory or taxing authority or power of
any nature pertaining to government.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any
Governmental Authority.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended through the date hereof, and the rules and regulations
thereunder.
"Hazardous Substance" means (i) any hazardous wastes, toxic chemicals,
materials, substances or wastes as defined by or for the purposes of any
Environmental Law; (ii) any "oil," as defined by the Clean Water Act, as
amended from time to time, and regulations promulgated thereunder
(including crude oil or any fraction thereof and any petroleum products or
derivatives thereof); (iii) any substance, the presence of which is
prohibited, regulated or controlled by any applicable federal, state or
local Laws, regulations, statutes or ordinances now in force or hereafter
enacted relating to waste disposal or environmental protection with respect
to the exposure to, or manufacture, possession, presence, use, generation,
storage, transportation, treatment, release, emission, discharge, disposal,
abatement, cleanup, removal, remediation or handling of any such substance;
(iv) any asbestos or asbestos-containing materials, polychlorinated
biphenyls (PCBs) in the form of electrical equipment, fluorescent light
fixtures with ballasts, cooling oils or any other form, urea formaldehyde,
atmospheric radon; (v) any solid, liquid, gaseous or thermal irritant or
contaminant, such as smoke, vapor, soot, fumes, alkalis, acids, chemicals,
pesticides, herbicides, sewage, industrial sludge or other similar wastes;
(vi) industrial, nuclear or medical by-products; (vi) any lead based paint
or coating and (viii) any underground storage tank(s).
"HOLA" means the Home Owners' Loan Act of 1933, as amended through the
date hereof.
"Indemnifiable Loss" means any and all costs, damages, disbursements,
obligations, penalties, liabilities, losses, expenses, assessments,
judgments, settlements or deficiencies (including any interest, penalties,
investigation, legal, accounting and other costs and expenses reasonably
incurred in the investigation, collection, prosecution and defense of any
action and amounts paid in settlement), actually paid or incurred by a D&O
Indemnitee, as applicable; provided, however, Indemnifiable Loss shall not
include special or consequential damages and exemplary or punitive damages.
"IRS" means the United States Internal Revenue Service.
"Knowledge of Fidelity" means the actual knowledge, after reasonable
due inquiry, of the Persons identified in Section 1.1 of the Fidelity
Disclosure Letter.
"Knowledge of National City" means the actual knowledge, after
reasonable due inquiry, of the Persons identified in Section 1.1 of the
National City Disclosure Letter.
"Law" means any United States federal, state, local statute, law,
ordinance, regulation, rule, code, Governmental Order, license, permit,
authorization, approval,
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consent, agreement, or requirement enacted, adopted, issued or promulgated
by any Governmental Authority.
"Loan Portfolio Properties, Trust Properties and Other Properties"
means any real property, interest in real property, improvements,
appurtenances, rights and personal property attendant thereto, which is
owned, leased as a landlord or a tenant, licensed as a licensor or
licensee, managed or operated or upon which is held a mortgage, deed of
trust, deed to secure debt or other security interest by National City or
Fidelity, as the case may be, or any of their Subsidiaries whether
directly, as an agent, as trustee or other fiduciary or otherwise.
"Market Price" means the average of the per share closing price of the
National City Common Stock on the New York Stock Exchange (as reported by
The Wall Street Journal) for the five (5) trading-day period ending on the
Business Day before the date of the Effective Time (for the sake of
clarity, such fifth (5th) Business Day shall be considered the last full
trading day included within the valuation period). The Market Price shall
be calculated to the nearest one-hundredth of one cent.
"Material Adverse Effect" means, with respect to a Party, any event,
occurrence or effect that (i) has a material negative impact on the
financial condition, business or results of operations of the Party and its
Subsidiaries, taken as a whole, except as set forth in Section 1.1 of the
National City Disclosure Letter, or (ii) would materially impair the
ability of the Party to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby on a timely basis;
provided, however, that in determining whether a Material Adverse Effect
has occurred there shall be excluded (with respect to each of clause (A),
(B), (C) or (D), to the extent that the effect of a change on it is not
materially different than on comparable U.S. banking or financial services
organizations) any effect to the extent attributable to or resulting from
(A) any changes in Laws or interpretations of Laws generally affecting U.S.
banking or financial services organizations, (B) any change in U.S. GAAP or
regulatory accounting requirements, generally affecting U.S. banking or
financial services organizations, but not uniquely relating to the Party,
(C) events, conditions or trends in economic, business or financial
conditions generally or affecting U.S. banking or financial services
organizations specifically (including changes in interest rates and changes
in the markets for securities), (D) changes in national or international
political or social conditions including the engagement by the United
States in hostilities, whether or not pursuant to the declaration of a
national emergency or war, or the occurrence of any military or terrorist
attack upon or within the United States, or any of its territories,
possessions or diplomatic or consular offices or upon any military
installation, equipment or personnel of the United States, and (E) actions
or omissions of the Party taken with the prior written consent of the other
Party in contemplation of the transactions contemplated hereby; and
provided further, the effect of any action taken by Fidelity solely
pursuant to Section 6.2(f) below shall not be taken into consideration in
determining whether any Material Adverse Effect has occurred.
"National City Common Stock" means the common stock, par value $4.00
per share, of National City.
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"National City Disclosure Letter" means a letter delivered by National
City to Fidelity on or before the execution and delivery of this Agreement
setting forth, among other things, items the disclosure of which is
required under this Agreement, either in response to an express disclosure
requirement contained in a provision of this Agreement or as an exception
to one or more of the representations, warranties or covenants of National
City contained in this Agreement. The National City Disclosure Letter is
arranged in a format in which the disclosures made therein are arranged in
paragraphs or sections corresponding to the numbered and lettered sections
and subsections of this Agreement. The matters expressly disclosed in the
National City Disclosure Letter shall be deemed to be disclosed for all
purposes thereunder, so long as such disclosure contains sufficient factual
detail to render its relevance to such other purposes readily apparent. The
inclusion of any matter in the National City Disclosure Letter shall not be
deemed an admission or otherwise to imply that any such matter is material
for purposes of this Agreement.
"National City Non-Contributory Retirement Plan" means the National
City Corporation Non-Contributory Retirement Plan, a tax-qualified defined
benefit plan.
"National City Severance Benefit Plan" means the National City
Corporation Severance Benefit Plan.
"OTS" means the Office of Thrift Supervision.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" is to be interpreted broadly to include any Governmental
Authority, bank, savings association, joint-stock company, individual,
partnership, firm, corporation, limited liability company, association,
trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section
13(d)(3) of the Exchange Act.
"▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act" means the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the
rules and regulations promulgated thereunder.
"SBIA" means the Small Business Investment Act of 1958, as amended
through the date hereof, and the rules and regulations promulgated
thereunder.
"Secretary of State of Delaware" means the Secretary of State for the
State of Delaware.
"Securities Act" means the Securities Act of 1933, as amended through
the date hereof, and the rules and regulations promulgated thereunder.
"Stock Conversion Shares" means Fidelity Conversion Shares, except if
the Market Price falls below the Adjustment Price, Stock Conversion Shares
shall be calculated as follows:
((42% x Aggregate Merger Consideration) / the Market Price)
-----------------------------------------------------------
Stock Exchange Ratio
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"Stock Exchange Ratio" means 1.0977.
"Subsidiary" and "Significant Subsidiary" have the meanings ascribed
to those terms in Rule 1-02 of Regulation S-X promulgated by the SEC.
"Tax" or "Taxes" means any and all federal, state, local, or foreign
income, payroll, gross receipts, license, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Section 59A of the Code), capital stock, franchise, profits, real property,
personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes (including, without
limitation, returns for estimated and withholding Taxes), including any
schedule or attachment thereto, and including any amendment thereof.
"U.S. GAAP" means United States generally accepted accounting
principles and practices as in effect at the date of the financial
statement to which it refers, and applied consistently by a Person in the
preparation of such financial statements throughout the periods involved if
and to the extent such principles and practices are within United States
generally accepted accounting principles in effect on the date of the
relevant financial statement.
1.2 Other Terms. The following terms shall have the meanings defined in the
Preamble, Recital or Section indicated.
Acquisition Transactions ............................................ 6.1
Agreement ........................................................... Preamble
Allocation Date ..................................................... 3.3
Benefit Agreements .................................................. 4.10
Branch Lease ........................................................ 5.10
BSA ................................................................. 4.13(b)
Cash Consideration .................................................. 3.1(a)
Cash Election Shares ................................................ 3.2(a)
Closing Date ........................................................ 7.1
Closing ............................................................. 7.1
Code ................................................................ Recitals
Consents ............................................................ 8.1(c)
Constituent Corporations ............................................ 2.2
Continuing Employee ................................................. 6.5(b)
Covered Parties ..................................................... 6.9(b)
CRA ................................................................. 4.13(b)
D&O Indemnitees ..................................................... 6.9(a)
Delaware Certificate of Merger ...................................... 2.2
Dissenting Shares ................................................... 3.1(c)
Dissenting Stockholder .............................................. 3.1(c)
DPC Shares .......................................................... 3.1(a)
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Consents ............................................................ 8.1
Effective Time ...................................................... 2.2
Election Deadline ................................................... 3.2(c)
Election Form ....................................................... 3.2(b)
Election Form Record Date ........................................... 3.2(b)
Eligible Plans ...................................................... 6.5(d)
Exchange Agent ...................................................... 3.2(b)
FDIA ................................................................ 4.14
Fidelity ............................................................ Preamble
Fidelity Contracts .................................................. 5.10
Fidelity Employee Plans ............................................. 5.9(a)
Fidelity Insiders ................................................... 6.17
Fidelity Meeting .................................................... 6.15
Fidelity Option Plan ................................................ 3.5
Fidelity Option ..................................................... 3.5
Fidelity Reports .................................................... 5.7(a)
Fidelity Unaudited Interim Financial Information .................... 5.7(b)
Insurance Expense Cap ............................................... 6.9(c)
Insurance Policies .................................................. 6.9(c)
▇▇▇▇▇ Day ........................................................... 8.1(f)
KBW ................................................................. 5.16
Landlord Consent .................................................... 5.10
Mailing Date ........................................................ 3.2(b)
Merger Consideration ................................................ 3.1(a)
Merger .............................................................. Recitals
Monthly Financial Information ....................................... 6.2(h)
National City ....................................................... Preamble
National City Contracts ............................................. 4.10
National City Employee Plans ........................................ 4.9
National City Reports ............................................... 4.7(a)
National City Unaudited Interim Financial Information ............... 4.7(b)
National City Termination Fee ....................................... 9.2(b)
No-Election Shares .................................................. 3.2(a)
Old Certificates .................................................... 3.2(b)
Optionee ............................................................ 5.3
Owned Real Property ................................................. 5.26(a)
Party or Parties .................................................... Preamble
PBGC ................................................................ 4.9
Proxy Statement ..................................................... 4.5
Real Estate ......................................................... 5.26(a)
Registration Statement .............................................. 4.5
Shortfall Number .................................................... 3.3(c)
State Entities ...................................................... 4.6
Stock Consideration ................................................. 3.1(a)
Stock Election ...................................................... 3.2(b)
Stock Election Number ............................................... 3.2(a)
Stock Election Shares ............................................... 3.2(a)
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Surviving Corporation ............................................... 2.3
Trust Account Shares ................................................ 3.1(a)
Unexercised Options ................................................. 3.5
1.3 Interpretation and Rules of Construction. In this Agreement, except to
the extent that the context otherwise requires, (i) when a reference is made in
this Agreement to the Preamble, a Recital, Article, Section, Exhibit or
Schedule, such reference is to the Preamble, Recital, Article or Section of, or
an Exhibit or a Schedule to, this Agreement unless otherwise indicated, (ii) the
headings for this Agreement are for reference purposes only and do not affect in
any way the meaning or interpretation of this Agreement, (iii) whenever the
words "include," "includes" or "including" are used in this Agreement, they are
deemed to be followed by the words "without limitation", (iv) the words
"hereof," "herein," "below," "above" or "hereunder" and words of similar import,
when used in this Agreement, refer to this Agreement as a whole and not to any
particular provision of this Agreement, (v) all terms defined in this Agreement
have the defined meanings when used in any certificate or other document made or
delivered pursuant hereto, unless otherwise defined therein, (vi) the
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms, (vii) any Law defined or referred to herein
or in any agreement or instrument that is referred to herein means such Law or
statute as from time to time amended, modified or supplemented, including by
succession of comparable successor Laws, (viii) references to a Person are also
to its permitted successors and assigns, (ix) the use of "or" means "either or
both" unless expressly indicated otherwise, (x) unless otherwise specified in
this Agreement, all references to currency, monetary values and dollars set
forth herein shall mean United States (U.S.) dollars, (xi) references to "the
date of this Agreement" or "the date hereof" are to July 26, 2006, (xii)
references to any Governmental Authority include any successor to that
Governmental Authority and (xiii) references to the "transactions contemplated
hereby" includes the transactions provided in this Agreement and the Exhibits or
Schedules to it. The Parties acknowledge that each Party and its counsel have
reviewed and revised this Agreement and that no rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
be employed in the interpretation of this Agreement (including all Schedules and
Exhibits and Disclosure Letters) or any amendments, supplements or modifications
hereto. No provision of this Agreement is to be construed to require, directly
or indirectly, any person to take any action, or omit to take any action, to the
extent such action or omission would violate applicable Law (including statutory
and common law).
II. THE MERGER
2.1 Merger. Subject to the terms and conditions of this Agreement, at the
Effective Time, Fidelity will be merged with and into National City and the
separate corporate existence of Fidelity will thereupon cease in accordance with
the applicable provisions of the DGCL.
National City may at any time, upon prior written notice to Fidelity,
change the method of effecting the combination with Fidelity (including without
limitations the provisions of this Article II) if and to the extent it deems
such change to be desirable, including, without limitation, to provide for a
merger of Fidelity into a wholly-owned subsidiary of National City; provided,
however, that no such change shall (A) alter or change the amount or kind of the
Merger Consideration to be paid or issued to holders of Fidelity Common Stock as
provided for in this
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Agreement, (B) adversely affect the tax treatment of Fidelity's stockholders as
a result of receiving the Merger Consideration, (C) materially impede or delay
the Merger or the consummation of the transactions contemplated by this
Agreement or (D) relieve National City of any of its obligations hereunder.
2.2 Effective Time. As soon as practicable after satisfaction or waiver of
all conditions to the Merger and immediately prior to the Closing, which shall
occur at the time set forth in Section 7.1 below, National City and Fidelity
(sometimes together referred to herein as the "Constituent Corporations") shall
cause a certificate of merger complying with the requirements of the DGCL (the
"Delaware Certificate of Merger") to be filed with the Secretary of State of the
State of Delaware. The Merger will become effective at the later of the
following to occur: (a) the filing of the Delaware Certificate of Merger; or (b)
such later time as shall be specified in such filing (the "Effective Time").
2.3 Effect of the Merger. The Merger will have the effects specified in the
DGCL. Without limiting the generality of the foregoing, National City will be
the surviving corporation in the Merger (sometimes hereinafter referred to as
the "Surviving Corporation") and will continue to be governed by the Laws of the
State of Delaware, and the separate corporate existence of National City and all
of its rights, privileges, powers and franchises, public as well as private, and
all its debts, liabilities and duties as a corporation organized under the DGCL,
will continue unaffected by the Merger.
2.4 Certificate of Incorporation and By-laws. The certificate of
incorporation and by-laws of National City in effect immediately prior to the
Effective Time shall be the certificate of incorporation and by-laws of the
Surviving Corporation, until amended in accordance with applicable Law.
2.5 Directors and Officers. The directors and officers of National City
immediately prior to the Effective Time will be the directors and officers,
respectively, of the Surviving Corporation, from and after the Effective Time,
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the terms
of the Surviving Corporation's certificate of incorporation and by-laws and the
DGCL.
2.6 Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in Law or any other acts are necessary or desirable to
(i) vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Fidelity, or (ii) otherwise carry out the purposes of
this Agreement, Fidelity and its officers and directors (solely in their
capacity as such) shall be deemed to have granted to the Surviving Corporation
an irrevocable power of attorney to execute and deliver all such deeds,
assignments or assurances in Law or any other acts as are necessary or desirable
to (a) vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Fidelity or (b) otherwise carry out the purposes of this
Agreement, and the officers and directors of the Surviving Corporation are
authorized in the name of Fidelity or otherwise to take any and all such action.
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III. CONSIDERATION; CONVERSION OF SHARES; ELECTION PROCESS;
EXCHANGE PROCEDURE
3.1 Effect on Capital Stock.
(a) At the Effective Time, automatically by virtue of the Merger and
without any action on the part of any Person:
(i) Each outstanding share of National City Common Stock, that is
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding and shall be unchanged by the Merger.
(ii) Each outstanding share of Fidelity Common Stock held in the
treasury of Fidelity or owned by National City or any direct or indirect
wholly-owned Subsidiary of National City (except for any such shares of
Fidelity Common Stock held in trust accounts, managed accounts or in any
similar manner as trustee or in a fiduciary capacity ("Trust Account
Shares") or acquired in satisfaction of debts previously contracted ("DPC
Shares")) immediately prior to the Effective Time shall be cancelled and
retired at the Effective Time and no consideration shall be issued in
exchange therefor.
(iii) Each share of outstanding Fidelity Common Stock immediately
outstanding prior to the Effective Time (except for shares of Fidelity
Common Stock cancelled or retired pursuant to Section 3.1(a)(ii) above or
Dissenting Shares as set forth in Section 3.1(c) below) shall become and be
converted into, as provided in and subject to the limitations set forth in
this Agreement, the right to receive at the election of the holder thereof
as provided in Section 3.2 either (A) an amount equal to the Cash Exchange
Ratio, in cash (the "Cash Consideration") or (B) a number of shares of
National City Common Stock equal to the Stock Exchange Ratio (the "Stock
Consideration").
The Cash Consideration and the Stock Consideration and the consideration
provided in Section 3.4 below dealing with a fractional share, is sometimes
referred to herein collectively as the "Merger Consideration".
(b) If between the date of this Agreement and the Effective Time, the
shares of National City Common Stock shall be changed into a different number of
shares by reason of any reclassification, recapitalization, split-up,
combination or exchange of shares, or if a stock dividend thereon shall be
declared with a record date within said period, the Exchange Ratio shall be
adjusted accordingly.
(c) Each outstanding share of Fidelity Common Stock to which a holder has
perfected his or Appraisal Rights ("Dissenting Shares") shall not be converted
into or represent a right to receive the Merger Consideration hereunder, and the
holder thereof shall be entitled only to such rights as are granted by the DGCL.
Fidelity shall give National City prompt written notice upon receipt by Fidelity
of any such demands for payment of the fair value of such shares of Fidelity
Common Stock and of withdrawals of such notice and any other instruments
provided pursuant to applicable Law (any stockholder making such demand being
hereinafter called a "Dissenting Stockholder"), and National City shall have the
right to participate in all
11
negotiations and proceedings with respect to any such demands. Fidelity shall
not, except with the prior written consent of National City, voluntarily make
any payment with respect to, or settle or offer to settle, any such demand for
payment, or waive any failure to timely deliver a written demand for Appraisal
Rights or the taking of any other action by such Dissenting Stockholder as may
be necessary to perfect Appraisal Rights. Any payments made in respect of
Dissenting Shares shall be made by the Surviving Company.
(d) If any Dissenting Stockholder shall effectively withdraw or lose
(through failure to perfect or otherwise) his right to such payment at or prior
to the Effective Time, such holders' shares of Fidelity Common Stock shall be
converted into a right to receive the Merger Consideration in accordance with
the applicable provisions of this Agreement. If such holder shall effectively
withdraw or lose (through failure to perfect or otherwise) his or her Appraisal
Rights after the Election Deadline, each share of Fidelity Common Stock of such
holder shall be treated as a Non-Election Share.
(e) After the Effective Time, shares of Fidelity Common Stock shall no
longer be outstanding and shall automatically be canceled an shall cease to
exist, and shall represent only the right to receive the Merger Consideration.
3.2 Election Procedures.
(a) Holders of Fidelity Common Stock may elect to receive shares of
National City Common Stock or cash (in either case without interest) in exchange
for their shares of Fidelity Common Stock in accordance with the following
procedures. Holders of Certificates representing more than one share of Fidelity
Common Stock may elect to receive Stock Consideration for some of their shares
and Cash Consideration for the balance of their shares. Shares of Fidelity
Common Stock as to which Cash Consideration has been made are referred to herein
as "Cash Election Shares". Shares of Fidelity Common Stock as to which a Stock
Consideration has been made are referred to as "Stock Election Shares". Shares
of Fidelity Common Stock as to which no election has been made (or as to which
an Election Form is not properly returned or timely completed) are referred to
herein as "No-Election Shares". The aggregate number of shares of Fidelity
Common Stock with respect to which a Stock Election has been made is referred to
herein as the "Stock Election Number". Any Dissenting Shares shall be deemed to
be Cash Election Shares and the holders thereof shall in no event receive
consideration comprised of National City Common Stock with respect to such
shares.
(b) National City shall appoint National City Bank, or such other Person
with whom National City may enter into an agreement (the "Exchange Agent"),
whereby the Exchange Agent shall agree to act as agent for purposes of mailing
and receiving Election Forms, tabulating the results and distributing
consideration to Fidelity's stockholders in exchange for certificates that
immediately prior to the Effective Time evidenced shares of Fidelity Common
Stock ("Old Certificates") for the Merger Consideration. The Exchange Agent
shall mail an election form and other appropriate and customary transmittal
materials (which shall specify that delivery shall be effected, and risk of loss
and title to an Old Certificate shall pass, only upon proper delivery of such
Old Certificate to the Exchange Agent), in such form as Fidelity and National
City shall mutually agree (the "Election Form"), no later than fifteen (15)
Business Days prior to the anticipated Effective Time or on such earlier date as
National City and Fidelity may mutually agree (the "Mailing Date") to each
holder of record of Fidelity Common Stock as
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of five (5) Business Days prior to the Mailing Date (the "Election Form Record
Date"); provided, however, that Election Forms need not be mailed prior to the
receipt of required approvals of Government Authorities (exclusive of the
expiration or termination of statutory waiting periods). The Exchange Agent
shall make available an additional Election Form to all Persons who become
record holders of Fidelity Common Stock between the Election Form Record Date
and the Election Deadline. Each Election Form shall permit such holder, subject
to the allocation and election procedures set forth in Section 3.3, (i) to elect
to receive the Cash Consideration for all of the shares of Fidelity Common Stock
held by such holder, in accordance with Section 3.1(a)(iii), (ii) to elect to
receive the Stock Consideration for all of such shares (a "Stock Election"), in
accordance with Section 3.1(iii), (iii) to elect to receive the Stock
Consideration for a part of such holder's Fidelity Common Stock, or (iv) to
indicate that such record holder has no preference as to the recipient of cash
or National City Common Stock for such shares, which shall be deemed to be
No-Election Shares. All Dissenting Shares shall be deemed shares subject to a
Cash Election, and with respect to such shares the holders thereof shall in no
event receive consideration comprised of National City Common Stock.
(c) To be effective, a properly completed and executed Election Form shall
be submitted to the Exchange Agent on or before 4:00 p.m., Cleveland, Ohio time,
on a date to be decided by National City and reasonably acceptable to Fidelity
(which date shall not be earlier than fifteen (15) Business Days after the
Mailing Date and no later than the Effective Time) (the "Election Deadline"). An
election by a holder of shares of Fidelity Common Stock shall be validly made
only if the Exchange Agent shall have received an Election Form properly
completed and executed (with the signature or signatures thereon guaranteed as
required by the Election Form) by such stockholder accompanied either by the Old
Certificate(s) representing all shares of Fidelity Common Stock owned by such
stockholder, duly endorsed in blank or otherwise in form acceptable for transfer
on the books of Fidelity, or by an appropriate guaranty of delivery in the form
customarily used in transactions of this nature from a member of a national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company in the United States.
National City shall have the right to make reasonable determinations and to
establish reasonable procedures (not inconsistent with the terms of this
Agreement) in guiding the Exchange Agent in its determination as to validity of
Election Forms.
(d) Two or more holders of shares of Fidelity Common Stock who are
determined to constructively own the shares of Fidelity Common Stock owned by
each other by virtue of Section 318(a) of the Code and who so certify to
National City's satisfaction, and any single holder of shares of Fidelity Common
Stock who holds his or her shares in two or more different names and who so
certifies to National City's satisfaction, may submit a joint Election Form
covering the aggregate shares of Fidelity Common Stock owned by all such holders
or by such single holder as the case may be. For all purposes of this Agreement,
each such group of holders, and each such single holder, who submits a joint
Election Form shall be treated as a single holder of shares of Fidelity Common
Stock.
(e) Record holders of shares of Fidelity Common Stock who are nominees may
submit a separate Election Form for each beneficial owner for whom such record
holder is a nominee; provided, however, that on the request of National City,
such record holder shall certify to the satisfaction of National City that such
record holder holds such shares of Fidelity
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Common Stock as nominee for the beneficial owner thereof. For purposes of this
Agreement, each beneficial owner for which an Election Form is submitted will be
treated as a separate holder of shares of Fidelity Common Stock, subject,
however, to Section 3.2(d) above dealing with joint Election Forms.
(f) Any holder of shares of Fidelity Common Stock who has made an election
by submitting an Election Form to the Exchange Agent may at any time prior to
the Election Deadline change such holder's election by submitting a revised
Election Form, properly completed and signed, that is received by the Exchange
Agent prior to the Election Deadline. Any holder of shares of Fidelity Common
Stock may at any time prior to the Election Deadline revoke his or her election
and withdraw his or her Old Certificate(s) for shares of Fidelity Common Stock
deposited with the Exchange Agent by written notice to the Exchange Agent
received by the close of business on the Business Day prior to the Election
Deadline.
(g) In the event of the termination of this Agreement after holders of
shares of Fidelity Common Stock have deposited their Old Certificate(s) with the
Exchange Agent, National City and Fidelity shall jointly and promptly instruct
the Exchange Agent to return all Old Certificates to the Persons who deposited
the same. Holders of shares of Fidelity Common Stock shall continue to have the
right to vote and to receive all dividends paid on shares of Fidelity Common
Stock deposited by them with the Exchange Agent until the Effective Time.
3.3 Allocation. Not more than ten (10) Business Days after the Election
Deadline (the "Allocation Date"), the Exchange Agent shall effectuate the
allocation among holders of shares of Fidelity Common Stock of rights to receive
Stock Consideration and/or Cash Consideration in the Merger as follows:
(a) If the Stock Election Shares equals the Stock Conversion Shares,
then all Cash Election Shares and all No-Election Shares shall be converted
into the right to receive Cash Consideration, and each holder of Stock
Election Shares will be entitled to receive the Stock Consideration.
(b) If the Stock Election Shares exceeds the Stock Conversion Shares,
then all Cash Election Shares and all No-Election Shares shall be converted
into the right to receive Cash Consideration, and, subject to Section 3.4
hereof, each holder of Stock Election Shares will be entitled to receive
the Stock Consideration only with respect to that number of Stock Election
Shares held by such holder equal to the product obtained by multiplying (x)
the number of Stock Election Shares held by such holder by (y) a fraction,
the numerator of which is the Stock Conversion Shares and the denominator
of which is the Stock Election Number, with the remaining number of such
holder's Stock Election Shares being converted into the right to receive
the Cash Consideration.
(c) If the Stock Election Shares is less than the Stock Conversion
Shares (the amount by which the Stock Conversion Shares exceeds the Stock
Election Number being referred to herein as the "Shortfall Number"), then
all Stock Election shares shall be converted into the right to receive the
Stock Consideration and the No-Election Shares and Cash Election Shares
shall be treated in the following manner:
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(i) if the Shortfall Number is less than or equal to the number
of No-Election Shares, then all Cash Election Shares shall be
converted into the right to receive the Cash Consideration and,
subject to Section 3.4 hereof, each holder of No-Election Shares shall
receive the Stock Consideration in respect of that number of
No-Election Shares held by such holder equal to the product obtained
by multiplying (x) the number of No-Election Shares held by such
holder by (y) a fraction, the numerator of which is the Shortfall
Number and the denominator of which is the total number of No-Election
Shares, with the remaining number of such holder's No-Election Shares
being converted into the right to receive the Cash Consideration; or
(ii) if the Shortfall Number exceeds the number of No-Election
Shares, then, subject to Section 3.4 hereof, all No-Election Shares
shall be converted into the right to receive the Stock Consideration,
and each holder of Cash Election Shares shall receive the Stock
Consideration in respect of that number of Cash Election Shares held
by such holder equal to the product obtained by multiplying (x) the
number of Cash Election Shares held by such holder by (y) a fraction,
the numerator of which is the amount by which (1) the Shortfall Number
exceeds (2) the total number of No-Election Shares and the denominator
of which is the total number of Cash Election Shares, with the
remaining number of such holder's Cash Election Shares being converted
into the right to receive the Cash Consideration.
(d) National City shall have the right to make reasonable
determinations and to establish reasonable procedures in connection with
the allocation contemplated by this Section 3.3.
(e) As soon as practicable, after completion of the allocation
procedure described above, the Exchange Agent shall distribute the Merger
Consideration as provided herein, and the Old Certificates shall forthwith
be cancelled. National City will deliver to the Exchange Agent the number
of shares of National City Common Stock and the amount of Cash
Consideration payable in the Merger in sufficient time for the Exchange
Agent to make such distribution. The Exchange Agent shall not be entitled
to vote or exercise any rights of ownership with respect to the shares of
National City Common Stock held by it from time to time hereunder, except
that it shall receive and hold all dividends or other distributions paid or
distributed with respect to such shares for the account of the Persons
entitled thereto (without interest).
(f) If National City receives written notice from its counsel to the
effect that such counsel is unable to deliver a tax opinion required
pursuant to Section 8.1(f) on the date of the Effective Time,
notwithstanding anything to the contrary contained in this Article III,
National City shall have the right, at its sole and absolute discretion, to
increase the Stock Consideration and decrease the Cash Consideration in
equal amounts to the extent necessary (as reasonably determined by National
City based on the advice of its counsel) to cause the aggregate value of
the Stock Consideration to at least equal forty percent (40%) of the
Aggregate Merger Consideration (which determination shall be made based on
the average of the high and low trading prices for National City Common
Stock on the date of the Effective Time or, if the Closing occurs before
the opening of the
15
markets, the last business day immediately preceding the date of the
Effective Time; and for this purpose total Aggregate Merger Consideration
may be deemed to include cash paid to holders of Dissenting Shares, cash
paid in lieu of fractional shares, and other amounts paid in connection
with the Merger).
3.4 No Fractional Shares. Notwithstanding any other provision of this
Agreement to the contrary, neither certificates nor scrip for fractional shares
of National City Common Stock shall be issued in the Merger. Each holder of
shares of Fidelity Common Stock who otherwise would have been entitled to a
fraction of a share of National City Common Stock shall receive in lieu thereof
cash (without interest) in an amount determined by multiplying the fractional
share interest to which such holder would otherwise be entitled (after taking
into account all shares of Fidelity Common Stock owned by such holder at the
Effective Time) by the Market Price. No such holder shall be entitled to
dividends, voting rights or any other rights of a stockholder of National City
in respect of any fractional share of National City Common Stock.
3.5 Stock Options. Except as expressly provided in this Section 3.5, at the
Effective Time, by virtue of the Merger and without any action on the part of
any Person, all rights under any stock option granted by Fidelity or its
predecessors pursuant to the Fidelity Bankshares, Inc. 2002 Incentive Stock
Benefit Plan (the "Fidelity Option Plan") that remain outstanding and
unexercised, whether vested or unvested, immediately prior to the Effective Time
("Unexercised Options") shall cease to represent a right to acquire shares of
Fidelity Common Stock (each a "Fidelity Option") and shall be converted
automatically into the right to receive cash equal to the product of (a) the
number of shares of Fidelity Common Stock subject to the Unexercised Option,
multiplied by (b) the positive difference, if any, resulting from subtracting
the exercise price of such Fidelity Option from $39.50. At the Effective Time,
the Fidelity Option Plan shall be terminated with respect to the granting of any
additional options or option rights.
3.6 Exchange of Certificates.
(a) Exchange Agent. Except as set forth herein, from and after the
Effective Time each holder of an Old Certificate shall be entitled to receive in
exchange therefor, upon surrender thereof to the Exchange Agent, the Merger
Consideration for each share of Fidelity Common Stock so represented by the Old
Certificate surrendered by such holder thereof. The certificates representing
shares of National City Common Stock that constitute the Merger Consideration
shall be properly issued and countersigned and executed and authenticated, as
appropriate.
(b) Notice of Exchange. Promptly after the Effective Time, and in any event
no later than five (5) Business Days after the allocation contemplated by
Section 3.3 above is completed, National City and the Surviving Corporation
shall cause the Exchange Agent to mail and/or make available to each record
holder of a Certificate that has not yet surrendered their shares of Fidelity
Common Stock a notice and letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificate shall
pass, only upon proper delivery of the Certificate to the Exchange Agent)
advising such holder of the effectiveness of the Merger and the procedures to be
used in effecting the surrender of the Certificate for exchange therefore. Upon
surrender to the Exchange Agent of a Certificate, together with such letter of
transmittal duly executed and completed in accordance with the instructions
thereon, and such other documents as may reasonably be requested, the Exchange
Agent shall promptly deliver to the Person entitled thereto the appropriate
Merger Consideration for each share of Fidelity Common
16
Stock so represented by the Certificate surrendered by such holder thereof, and
such Certificate shall forthwith be canceled.
(c) Exchange Fund. As of the Effective Time, for the benefit of the holders
of Old Certificates, National City shall make available to the Exchange Agent
(i) the number of shares of National City Common Stock issuable to holders of
Old Certificates pursuant to Section 3.1 above, (ii) the aggregate Cash
Consideration payable to holders of Old Certificates pursuant to Section 3.1
above, and (iii) the estimated cash payable pursuant to Section 3.4 above
dealing with fractional shares. Any net profit resulting from, or interest or
income produced by any funds deposited with the Exchange Agent will be payable
to National City. The Exchange Agent shall not be entitled to vote or exercise
any rights of ownership with respect to the shares of National City Common Stock
held by it from time to time hereunder, except that it shall receive and hold
all dividends or other distributions paid or distributed with respect to such
shares for the account of the Persons entitled thereto.
(d) Transfer. If delivery of all or part of the Merger Consideration is to
be made to a Person other than the Person in whose name a surrendered Old
Certificate is registered, it shall be a condition to such delivery or exchange
that the Old Certificate surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the Person requesting such
delivery or exchange shall have paid any transfer and other taxes required by
reason of such delivery or exchange in a name other than that of the registered
holder of the Old Certificate surrendered or shall have established to the
reasonable satisfaction of the Exchange Agent that such tax either has been paid
or is not payable.
(e) Right to Merger Consideration. Subject to Section 3.6(e) below, until
surrendered and exchanged in accordance with this Section 3.6, each Old
Certificate shall, after the Effective Time, represent solely the right to
receive the Merger Consideration, together with any dividends or other
distributions as provided in Sections 3.6(e) and 3.6(f) below, and shall have no
other rights. From and after the Effective Time, National City shall be entitled
to treat such Old Certificates that have not yet been surrendered for exchange
as evidencing the ownership of the aggregate Merger Consideration into which the
shares of Fidelity Common Stock represented by such Old Certificates may be
converted, notwithstanding any failure to surrender such Old Certificates. One
hundred eighty (180) days following the Effective Time, the Exchange Agent shall
deliver to National City any shares of National City Common Stock and funds
(including any interest received with respect thereto) which National City has
made available to the Exchange Agent and which have not been disbursed to
holders of Old Certificates, and thereafter such holders shall be entitled to
look to National City (subject to abandoned property, escheat or other similar
Laws) with respect to the shares of National City Common Stock and cash in lieu
of fractional shares deliverable or payable upon due surrender of their Old
Certificates. Neither Exchange Agent nor any party hereto shall be liable to any
holder of shares of Fidelity Common Stock for any Merger Consideration (or
dividends, distributions or interest with respect thereto) delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
(f) Distributions with Respect to Unexchanged Certificates. Whenever a
dividend or other distribution is declared by National City on shares of
National City Common Stock, the record date for which is at or after the
Effective Time, the declaration shall include dividends or other distributions
on all shares issuable pursuant to this Agreement, provided that no dividends
17
or other distributions declared or made with respect to shares of National City
Common Stock shall be paid to the holder of any unsurrendered Old Certificate
with respect to the shares of National City Common Stock represented thereby
until the holder of such Old Certificate shall surrender such Old Certificate in
accordance with this Article III. The Surviving Corporation shall pay any
dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by Fidelity on Fidelity
Common Stock in accordance with the terms of this Agreement on or prior to the
Effective Time and which remain unpaid at the Effective Time.
(g) Lost or Destroyed Certificates. In the event that any Old Certificate
shall have been lost, stolen or destroyed, the Exchange Agent shall deliver in
exchange for such lost, stolen or destroyed Old Certificate, upon the making of
an affidavit of that fact by the holder thereof in form satisfactory to the
Exchange Agent, the Merger Consideration, as may be required pursuant to this
Agreement; provided, however, that the Exchange Agent may, in its sole
discretion and as a condition precedent to the delivery of the Merger
Consideration to which the holder of such Old Certificate is entitled as a
result of the Merger, require the owner of such lost, stolen or destroyed Old
Certificate to deliver a bond in such sum as it may direct as indemnity against
any claim that may be made against Fidelity, National City or the Exchange Agent
or any other party with respect to the Old Certificate alleged to have been
lost, stolen or destroyed.
(h) Voting With Respect to Unexchanged Certificates. Holders of
unsurrendered Old Certificates will not be entitled to vote at any meeting of
National City stockholders.
3.7 Closing of Fidelity's Transfer Books. The stock transfer books of
Fidelity shall be closed at the close of business on the Business Day
immediately preceding the date of the Effective Time. In the event of a transfer
of ownership of shares of Fidelity Common Stock which is not registered in the
transfer records of Fidelity, the Merger Consideration to be distributed
pursuant to this Agreement may be delivered to a transferee, if an Old
Certificate is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by payment of any applicable
stock transfer taxes. National City and the Exchange Agent shall be entitled to
rely upon the stock transfer books of Fidelity to establish the identity of
those Persons entitled to a notice and letter of transmittal pursuant to Section
3.6(c) and receive the Merger Consideration specified in this Agreement for
their shares of Fidelity Common Stock, which books shall be conclusive with
respect to the ownership of such shares. In the event of a dispute with respect
to the ownership of any such shares, the Surviving Corporation and the Exchange
Agent shall be entitled to deposit any Merger Consideration not already paid
represented thereby in escrow and thereafter be relieved with respect to any
claims to such Merger Consideration.
IV. REPRESENTATIONS AND WARRANTIES OF NATIONAL CITY
Except as disclosed in the National City Disclosure Letter, National City
hereby represents and warrants to Fidelity that:
4.1 Corporate Organization.
(a) National City is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware and is duly qualified to
do business as a
18
foreign corporation in each jurisdiction in which its ownership or lease of
property or the nature of the business conducted by it makes such qualification
necessary, except for such jurisdictions in which the failure to be so qualified
would not have a Material Adverse Effect. National City is registered as a
financial holding company under the BHCA. National City has the requisite
corporate power and authority to own, lease and operate its properties and
assets and to carry on its business as it is now being conducted. National City
has heretofore delivered to Fidelity true and complete copies of its certificate
of incorporation and by-laws.
(b) National City Bank is a national bank organized, validly existing and
in good standing under the Laws of the United States of America.
4.2 Authority. National City has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated in this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have been
duly approved by the board of directors of National City and no other corporate
proceedings on the part of National City are necessary to authorize this
Agreement or to consummate the transactions so contemplated in this Agreement.
This Agreement has been duly executed and delivered by, and (assuming the due
authorization, execution and delivery of this Agreement by Fidelity) constitutes
valid and binding obligations of National City enforceable against National City
in accordance with its terms, except as enforceability thereof may be limited by
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar Laws affecting the enforcement of creditors' rights
generally and except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceedings may be brought.
4.3 Capitalization. As of the date hereof, the authorized capital stock of
National City consists of 1,400,000,000 shares of National City Common Stock and
5,000,000 shares of National City preferred stock. As of the close of business
on July 21, 2006 (i) 610,491,250 shares of National City Common Stock were
validly issued and outstanding, fully paid and nonassessable and (ii) 70,272
shares of preferred stock were issued, outstanding, fully paid and
nonassessable. As of the date hereof, except as set forth in this Section 4.3,
pursuant to the exercise of employee stock options under National City's various
plans that authorize the issuance of stock in effect, National City's dividend
reinvestment plan and stock grants made pursuant to National City's various
plans that authorize the issuance of stock options, there are no other shares of
capital stock of National City authorized, issued or outstanding and there are
no outstanding subscriptions, options, warrants, rights, convertible securities
or any other agreements or commitments of any character relating to the issued
or unissued capital stock or other securities of National City obligating
National City to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of National City or obligating National
City to grant, extend or enter into any subscription, option, warrant, right,
convertible security or other similar agreement or commitment. As of the date
hereof, except as provided in this Agreement, there are no voting trusts or
other agreements or understandings to which National City or any National City
Subsidiary is a party with respect to the voting of the capital stock of
National City. All of the shares of National City Common Stock issuable in
exchange for shares of Fidelity Common Stock at the Effective Time in accordance
with this Agreement
19
will be, when so issued, duly authorized, validly issued, fully paid and
nonassessable and will not be subject to preemptive rights.
4.4 Subsidiaries. The name and state of incorporation of each Significant
Subsidiary of National City is set forth in Section 4.4 of the National City
Disclosure Letter. Each Significant Subsidiary is a bank, a corporation or a
limited liability company or other business entity duly organized, validly
existing and in good standing (or the local Law equivalent) under the Laws of
its respective jurisdiction of incorporation or organization and is qualified to
do business as a foreign corporation or foreign business entity in each
jurisdiction in which its ownership or lease of property or the nature of the
business conducted by it makes such qualification necessary, except for such
jurisdictions in which the failure to be so qualified would not have a Material
Adverse Effect. Each Significant Subsidiary has the requisite corporate power
and authority to own, lease and operate its properties and assets and to carry
on its businesses as they are now being conducted. All outstanding shares of
capital stock of each Significant Subsidiary are owned by National City or a
National City Subsidiary and are validly issued, fully paid and (except pursuant
to 12 USC Section 55 in the case of each national bank subsidiary and applicable
state Law in the case of each state bank subsidiary) nonassessable, are not
subject to preemptive rights and are owned free and clear of all liens, claims
and encumbrances. There are no outstanding subscriptions, options, warrants,
rights, convertible securities or any other agreements or commitments of any
character relating to the issued or unissued capital stock or other securities
of any Significant Subsidiary obligating any Significant Subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold additional shares of
its capital stock or obligating any Significant Subsidiary to grant, extend or
enter into any subscription, option, warrant, right, convertible security or
other similar agreement or commitment.
4.5 Information in Registration Statement; Proxy Statement and Other
Communications. The information with respect to National City or any of National
City's Subsidiaries prepared or provided by National City for inclusion in (i)
the registration statement to be filed with the Commission by National City on
Form S-4 under the Securities Act (the "Registration Statement"), for the
purpose of registering the shares of National City Common Stock to be issued in
the Merger, which shall include the proxy statement of Fidelity required to be
mailed to the stockholders of Fidelity in connection with the Fidelity Meeting
(the "Proxy Statement"), (ii) any filing made pursuant to Rule 165 or 425 under
the Securities Act or Rule 14a-12 under the Exchange Act, or (iii) any other
document filed with or submitted to any Governmental Authority in connection
with the transactions contemplated by this Agreement will not, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Registration Statement will comply as to form in all material respects with the
provisions of the Securities Act and the rules and regulations promulgated
thereunder.
4.6 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by National City nor the consummation by National
City of the transactions contemplated hereby will (a) conflict with or result in
any breach of any provision of its certificate of incorporation or by-laws of
National City, (b) violate, conflict with, constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default)
20
under, or result in the termination of, or accelerate the performance required
by, or result in the creation of any lien or other encumbrance upon any of the
properties or assets of National City or any of National City's Subsidiaries
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which National City or any of National City's Subsidiaries is a
party or to which they or any of their respective properties or assets are
subject, except for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens or other encumbrances, which
will not have a Material Adverse Effect or (c) require any consent, approval,
authorization or permit of or from, or filing with or notification to, any
Governmental Authority, except (i) pursuant to the Exchange Act and the
Securities Act, (ii) filing the Delaware Certificate of Merger pursuant to the
DGCL, (iii) filings required under the securities or Blue Sky Laws of the
various states, (iv) filings under the HSR Act, (v) filings with, and approval
by, the FRB, (vi) filings with, and approvals by the OTS, (vii) filings with,
and approvals by, any state regulatory agencies (including, but not limited to,
other state bank and insurance regulatory agencies) as may be required
(collectively, the "State Entities"), (viii) filings and approvals pursuant to
any applicable state takeover Law, (ix) filings and approvals under the SBIA or
(x) consents, approvals, authorizations, permits, filings or notifications
which, if not obtained or made will not, individually or in the aggregate, have
a Material Adverse Effect.
4.7 Reports and Financial Statements.
(a) Since January 1, 2001, National City and each of National City's
Subsidiaries have timely filed all reports, registrations and statements,
together with any required amendments thereto, that they were required to file
with the Commission under Sections 12(b), 12(g), 13(a) or 14(a) of the Exchange
Act, including, but not limited to Forms 10-K, Forms 10-Q and proxy statements
(the "National City Reports"). National City has previously furnished or will
promptly furnish Fidelity with true and complete copies of each of National
City's annual reports on Form 10-K for the years 2001 through 2005 and its
quarterly report on Form 10-Q for March 31, 2006. As of their respective dates,
the National City Reports complied with the requirements of the Exchange Act and
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstance under which they were made, not
misleading. The audited consolidated financial statements and unaudited interim
financial statements of National City included in the National City Reports have
been prepared in accordance with U.S. GAAP applied on a consistent basis (except
as may be indicated therein or in the notes thereto) and fairly present the
consolidated financial position of National City and National City's
Subsidiaries taken as a whole as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended subject,
in the case of the unaudited interim financial statements, to normal year-end
and audit adjustments and any other adjustments described therein. There exist
no material liabilities of National City and its consolidated subsidiaries,
contingent or otherwise of a type required to be disclosed in accordance with
U.S. GAAP, except as disclosed in the National City Reports.
(b) National City has previously furnished Fidelity with true and complete
copies of an unaudited income statement and balance sheet of National City for
the period of January 1, 2006 through June 30, 2006 (the "National City
Unaudited Interim Financial Information"). The National City Unaudited Interim
Financial Information (i) has been accurately derived from the
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books and records of National City, (ii) fairly presents, in all material
respects, the financial condition and the results of operations of National City
as of the respective dates and for the periods indicated, and (iii) were
prepared on a basis consistent with the accounting principles and practices that
National City used to prepare its periodic income and financial statements for
its quarterly report on Form 10-Q for March 31, 2006. National City's reserve
for possible loan losses as shown in the National City Unaudited Interim
Financial Information was adequate, within the meaning of U.S. GAAP and safe and
sound banking practices.
4.8 Taxes. National City has made available to Fidelity true and correct
copies of the federal, state and local income Tax Returns, and state and local
property and sales tax returns and any other tax returns filed by National City
and any of National City's Subsidiaries for each of the fiscal years that
remains open, as of the date hereof, for examination or assessment of tax.
National City and each National City Subsidiary has prepared in good faith and
duly and timely filed, or caused to be duly and timely filed, all federal,
state, local and foreign income, estimated tax, withholding tax, franchise,
sales and other tax returns or reports required to be filed by them on or before
the date hereof, except to the extent that all such failures to file, taken
together, would not have a Material Adverse Effect. National City and each of
its Subsidiaries have paid, or have made adequate provision or set up an
adequate accrual or reserve for the payment of, all taxes, shown or required to
be shown to be owing on all such returns or reports, together with any interest,
additions or penalties related to any such taxes or to any open taxable year or
period. Neither National City nor any National City Subsidiary has consented to
extend the statute of limitations with respect to the assessment of any tax.
Neither National City nor any National City Subsidiary is a party to any action
or proceeding, nor to the Knowledge of National City, is any such action or
proceeding threatened, by any Governmental Authority in connection with the
determination, assessment or collection of any taxes, and no deficiency notices
or reports have been received by National City or any of National City's
Subsidiaries in respect of any material deficiencies for any tax, assessment, or
government charge.
4.9 Employee Plans. All employee benefit, welfare, bonus, deferred
compensation, pension, profit sharing, stock option, employee stock ownership,
consulting, severance, or fringe benefit plans, formal or informal, written or
oral, and all trust agreements related thereto, relating to any present or
former directors, officers or employees of National City or its Subsidiaries
("National City Employee Plans") have been maintained, operated, and
administered in compliance with their terms and currently comply, and have at
all relevant times complied, in all material respects with the applicable
requirements of ERISA, the Code, and any other applicable Laws. With respect to
each National City Employee Plan which is a pension plan (as defined in Section
3(2) of ERISA): (a) except for recent amendment(s) to the plans not materially
affecting the qualified status of the plans (which are disclosed in, and copies
of which are attached to, the National City Disclosure Letter), each pension
plan as amended (and any trust relating thereto) intended to be a qualified plan
under Section 401(a) of the Code either: (i) has been determined by the IRS to
be so qualified, (ii) is the subject of a pending application for such
determination that was timely filed, or (iii) will be submitted for such a
determination prior to the end of the "remedial amendment period" within the
meaning of Section 401(b) of the Code, (b) there is no accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, and no waiver of the minimum funding standards of such
sections has been requested from the IRS, (c) neither National City nor any of
its Subsidiaries has provided, or is required to provide, security to any
pension plan pursuant to Section 401(a)(29)
22
of the Code, (d) the fair market value of the assets of each defined benefit
plan (as defined in Section 3(35) of ERISA) exceeds the value of the "benefit
liabilities" within the meaning of Section 4001(a)(16) of ERISA under such
defined benefit plan as of the end of the most recent plan year thereof ending
prior to the date hereof, calculated on the basis of the actuarial assumptions
used in the most recent actuarial valuation for such defined benefit plan as of
the date hereof, (e) no reportable event described in Section 4043 of ERISA for
which the 30 day reporting requirement has not been waived has occurred, (f) no
defined benefit plan has been terminated, nor has the Pension Benefit Guaranty
Corporation ("PBGC") instituted proceedings to terminate a defined benefit plan
or to appoint a trustee or administrator of a defined benefit plan, and no
circumstances exist that constitute grounds under Section 4042(a)(2) of ERISA
entitling the PBGC to institute any such proceedings, and (g) no pension plan is
a "multiemployer plan" within the meaning of Section 3(37) of ERISA or a
"multiple employer plan" within the meaning of 413(c) of the Code. Neither
National City nor any of its Subsidiaries has incurred any liability to the PBGC
with respect to any "single-employer plan" within the meaning of Section
4001(a)(15) of ERISA currently or formerly maintained by any Person considered
one employer with it under Section 4001 of ERISA or Section 414 of the Code,
except for premiums all of which have been paid when due. Neither National City
nor any of its Subsidiaries has incurred any withdrawal liability with respect
to a multiemployer plan under Subtitle E of Title IV of ERISA.
4.10 Material Contracts. Except as disclosed in the National City Reports,
neither National City nor any of its Subsidiaries is a party to, or is bound or
affected by, or receives benefits under (a) any employment, severance,
termination, consulting or retirement agreement (collectively, "Benefit
Agreements") that was required to be filed with the SEC pursuant to Item 402 of
Regulation S-K of the Exchange Act as of the date thereof, (b) any material
agreement, indenture or other instrument relating to the borrowing of money by
National City or any of its Subsidiaries or the guarantee by National City or
any of its Subsidiaries of any such obligation (other than trade payables and
instruments relating to borrowings or guaranties made in the ordinary course of
business) or (c) any other contract or agreement or amendment thereto that would
be required to be filed as an exhibit to a Form 10-K filed by National City with
the Commission as of the date thereof (collectively, the "National City
Contracts"). Neither National City nor any of National City's Subsidiaries is in
default under any of the National City Contracts, which default is reasonably
likely to have, either individually or in the aggregate, a Material Adverse
Effect and there has not occurred any event that with the lapse of time or the
giving of notice or both would constitute such a default.
4.11 Absence of Certain Changes or Events. Except as disclosed in the
National City Reports filed by National City with the Commission prior to the
date of this Agreement, since December 31, 2005, there has not been any change
in the financial condition, results of operations or business of National City
and its Subsidiaries which would, to the Knowledge of National City, now or in
the future have a Material Adverse Effect.
4.12 Litigation. Except as disclosed in the National City Reports filed by
National City with the Commission prior to the date of this Agreement, there is
no suit, action or proceeding pending, or, to the Knowledge of National City,
threatened against or affecting National City or any of National City's
Subsidiaries which, if decided adversely to National City, would be reasonably
expected to result in a Material Adverse Effect, nor is there any
23
judgment, decree, injunction, rule or order of any Governmental Authority or
arbitrator, outstanding, or to the Knowledge of National City, threatened
against National City or any of National City's Subsidiaries having, or which
would, to the Knowledge of National City, now or in the future have, a Material
Adverse Effect.
4.13 Compliance with Laws and Orders.
(a) National City and each National City Subsidiary hold all licenses,
franchises, permits and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to each, and have complied in all
respects with and are not in default in any respect under any, applicable Law of
any Governmental Authority relating to National City or National City
Subsidiary, except where the failure to hold such license, franchise, permit or
authorization or such noncompliance or default is not reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect.
(b) Except as disclosed in the National City Reports filed by National City
with the Commission prior to the date of this Agreement, the businesses of
National City and of National City's Subsidiaries are not being conducted in
violation of any Law or Governmental Order of any Governmental Authority
(including, without limitation, in the case of National City's Subsidiaries that
are banks, all Laws pertaining to the conduct of the banking business and the
exercise of trust powers), except for violations which individually or in the
aggregate do not, and, to the Knowledge of National City, will not, have a
Material Adverse Effect. National City's Subsidiaries that are banks are not in
violation of those Laws applicable to depository institutions, and corresponding
regulations and policies relating to the Community Reinvestment Act ("CRA"),
privacy Laws, the Bank Security Act, as amended (the "BSA"), or anti-money
laundering statutes in a manner that would materially delay the receipt of
approvals of Governmental Authorities required to consummate the transactions
contemplated in this Agreement. Other than regulatory examinations conducted in
the ordinary course, no investigation or review by any Governmental Authority
with respect to National City or any of National City's Subsidiaries is pending
or, to the Knowledge of National City, threatened, nor has any Governmental
Authority indicated an intention to conduct the same in each case other than
those the outcome of which will not have a Material Adverse Effect.
(c) Except as is not reasonably likely to have, either individually or in
the aggregate, a Material Adverse Effect, National City and each National City
Subsidiary have properly administered all accounts for which it acts as a
fiduciary, including accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor,
in accordance with the terms of the governing documents, applicable state and
federal Law and common law. None of National City, any National City Subsidiary,
or any director, officer or employee of National City or of any National City
Subsidiary, has committed any breach of trust or fiduciary duty with respect to
any such fiduciary account that is reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect, and, except as
would not be reasonably likely to have, either individually or in the aggregate,
a Material Adverse Effect, and the accountings for each such fiduciary account
are true and correct and accurately reflect the assets of such fiduciary
account.
4.14 Agreements with Bank Regulators, Etc. Neither National City nor any
National City Subsidiary is a party to any written agreement or memorandum of
understanding with, or a
24
party to any commitment letter, board resolution or similar undertaking to, or
is subject to any order or directive by, or is a recipient of any extraordinary
supervisory letter from, any Governmental Authority, which (i) restricts
materially the conduct of its business, (ii) would materially delay the receipt
of approvals of Governmental Authorities required to consummate the transactions
contemplated by this Agreement, or (iii) in any manner relates to its capital
adequacy, its credit or reserve policies or its management, nor has National
City been advised by any Governmental Authority that it is contemplating issuing
or requesting (or is considering the appropriateness of issuing or requesting)
any such order, decree, agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar submission. Neither National
City nor any of National City's Subsidiaries is required by Section 32 of the
Federal Deposit Insurance Act, as amended ("FDIA") to give prior notice to a
Federal banking agency of the proposed addition of an individual to its board of
directors or the employment of an individual as a senior executive officer. To
the Knowledge of National City, there is no reason why the regulatory approvals
referred to in Section 4.6(c) above should not be obtained.
4.15 National City Ownership of Stock. As of the date of this Agreement,
neither National City nor any of its Affiliates or Associates (i) beneficially
owns, directly or indirectly, or (ii) are parties to any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting or disposing of,
Fidelity Common Stock (other than DPC Shares or Trust Account Shares), which in
the aggregate, represent five percent (5%) or more of the outstanding shares of
Fidelity Common Stock.
4.16 Tax Treatment. As of the date hereof, to the Knowledge of National
City there is no reason why the Merger will fail to qualify as a reorganization
under Section 368(a) of the Code.
4.17 Fees. Neither National City nor any of National City's Subsidiaries
has paid or will become obligated to pay any fee or commission to any broker,
finder or intermediary or any other Person in connection with, or as a result
of, the transactions contemplated by this Agreement.
4.18 National City Action. The board of directors of National City (at a
meeting duly called, constituted and held) has by the requisite vote of all
directors present (a) determined that the Merger is advisable and in the best
interests of National City and its stockholders and (b) approved this Agreement
and the transactions contemplated hereby, including the Merger.
4.19 Material Interests of Certain Persons. Except as disclosed in National
City's Reports, no officer or director of National City, or any Associate of any
such officer or director, has any material interest in any contract or property
(real or personal), tangible or intangible, used in or pertaining to the
business of National City or any of its Subsidiaries that is required to be
disclosed under the requirements of the Exchange Act.
4.20 Environmental Matters. To the Knowledge of National City, (i) neither
National City nor any of its Subsidiaries is in violation of or has any
liability, absolute or contingent, in connection with or under any Environmental
Law, except any such violations or liabilities which would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect;
(ii) none of the Loan Portfolio Properties, Trust Properties and Other
Properties of National City or its Subsidiaries is in violation of or has any
liability, absolute or contingent,
25
under any Environmental Law, except any such violations or liabilities which,
individually or in the aggregate would not have a Material Adverse Effect; and
(iii) there are no actions, suits, demands, notices, claims, investigations or
proceedings pending or, to the Knowledge of National City, threatened relating
to any Loan Portfolio Properties, Trust Properties and Other Properties,
including, without limitation, any notices, demand letters or requests for
information from any federal or state environmental agency relating to any such
liability under or violation of Environmental Law, which would impose a
liability upon National City or its Subsidiaries pursuant to any Environmental
Law, except such as would not, individually or in the aggregate have a Material
Adverse Effect.
4.21 Labor Matters. (a) Neither National City nor its Subsidiaries are
engaged in, or have engaged in, any unfair labor practice; (b) there is no labor
strike, dispute, slowdown or stoppage actually pending, threatened against or
directly affecting National City or its Subsidiaries; (c) no union is currently
certified, and there is no union representation question and no union or other
organizational activity that would be subject to the National Labor Relations
Act (29 U.S.C. Section 151 et seq.) exists or is threatened; (d) no grievance or
arbitration proceeding arising out of or under collective bargaining agreements
is pending and no claims therefore exist or to the Knowledge of National City,
are threatened; (e) no collective bargaining agreement exists which is binding
on National City and/or its Subsidiaries; (f) neither National City nor its
Subsidiaries have experienced any material work stoppage or other material labor
difficulty; and (g) neither National City nor its Subsidiaries are delinquent in
any material payments to any of its current or former officers, directors,
employees or agents for any wages, salaries, commissions, bonuses, benefits or
other compensation for any services performed by them or amounts required to be
reimbursed to them.
4.22 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. National City is in compliance with the
provisions, including Section 404, of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, and the
certifications provided and to be provided pursuant to Sections 302 and 906
thereof are accurate.
4.23 Notice of Breach or Potential Breach. National City shall promptly
notify Fidelity of any change, circumstance or event which would cause any of
the representations or warranties made by National City pursuant to this
Agreement to be untrue as of the date hereof or at the Closing Date or which
prevent National City from complying with any of its obligations hereunder. To
the Knowledge of National City, there is no fact or development that would have
a Material Adverse Effect, or which might in the future, in National City's
reasonable judgment, have a Material Adverse Effect, on National City's or its
Subsidiaries' continuing business, which has not been set forth in this
Agreement, the National City Reports or the National City Disclosure Letter.
4.24 Disclosure. No representation or warranty by National City in this
Agreement after giving effect to the disclosures set forth in the National City
Disclosure Letter, contains any untrue statement of a material fact or omits to
state a material fact required to be stated herein or therein or necessary to
make any statement herein or therein not materially misleading. Any claim by
Fidelity of a breach of representation, warranty, covenant, agreement or
obligation of National City hereunder will not be affected by any investigation
conducted by Fidelity with respect to, or knowledge acquired (or capable of
being acquired), with respect to the accuracy or inaccuracy of or compliance
with any such representation, warranty, covenant, agreement or obligation.
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V. REPRESENTATIONS AND WARRANTIES OF FIDELITY
Except as disclosed in the Fidelity Disclosure Letter, Fidelity hereby
represents and warrants to National City that:
5.1 Corporate Organization.
(a) Fidelity is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware and is duly qualified to do
business as a foreign corporation in each jurisdiction in which its ownership or
lease of property or the nature of the business conducted by it makes such
qualification necessary, except for such jurisdictions in which the failure to
be so qualified would not have a Material Adverse Effect. Fidelity is registered
as a savings and loan holding company under the HOLA. Fidelity has the requisite
corporate power and authority to own, lease and operate its properties and
assets and to carry on its business as it is now being conducted. Fidelity has
heretofore delivered to National City true and complete copies of its
certificate of incorporation and by-laws.
(b) Fidelity Federal Bank & Trust is a savings bank organized with valid
corporate existence under the Laws of the United States of America.
5.2 Authority. Fidelity has the requisite corporate power and authority to
execute and deliver this Agreement and, except for any required approval of
Fidelity's stockholders, to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated herein have been duly approved by the Board of
Directors of Fidelity and no other corporate proceedings on the part of Fidelity
are necessary to authorize this Agreement or to consummate the transactions so
contemplated by this Agreement, subject only to approval by the stockholders of
Fidelity as provided in Section 6.15 below. This Agreement has been duly
executed and delivered by, and constitutes the valid and binding obligation of
Fidelity, enforceable against Fidelity in accordance with its terms, except as
the enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and other similar Laws affecting
the enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceedings may be brought.
5.3 Capitalization. As of the date hereof, the authorized capital stock of
Fidelity consists of 30,000,000 shares of Fidelity Common Stock and 2,000,000
shares of Fidelity preferred stock. As of the close of business on the date
hereof, 25,335,470 shares of Fidelity Common Stock were validly issued and
outstanding, fully paid and nonassessable (including 87,844 restricted shares of
Fidelity Common Stock that have been previously awarded pursuant to the Fidelity
Bankshares, Inc. 2002 Incentive Stock Benefit Plan, and not yet certificated as
contemplated by such awards) and no shares of preferred stock were issued or
outstanding. As of the date of this Agreement except as set forth in this
Section 5.3, there are no shares of capital stock of Fidelity authorized, issued
or outstanding and there are no outstanding subscriptions, options, warrants,
rights, convertible securities or any other agreements or commitments of any
character relating to the issued or unissued capital stock or other securities
of Fidelity obligating Fidelity to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of Fidelity or
obligating Fidelity to grant, extend or enter into any subscription,
27
option, warrant, right, convertible security or other similar agreement or
commitment. There are no voting trusts or other agreements or understandings to
which Fidelity or any of Fidelity's Subsidiaries is a party with respect to the
voting of the capital stock of Fidelity. As of the date of this Agreement, there
were outstanding under the Fidelity Option Plan options to purchase 1,125,827
shares of Fidelity Common Stock, which Fidelity Options had an average exercise
price of $15.29 and for which adequate shares of Fidelity Common Stock have been
reserved for issuance under the Fidelity Option Plan. Section 5.3 to the
Fidelity Disclosure Letter sets forth as of the close of business on the date of
this Agreement, with respect to each Fidelity Option, a true, accurate complete
list of (i) the name of each optionee (each, an "Optionee"), (ii) the number of
shares of Fidelity Common Stock the Optionee has the right to purchase under the
Fidelity Option, (iii) the exercise price for the Fidelity Option and (iv) the
date the Fidelity Option was granted to the Optionee. The exercise price per
share of Fidelity Common Stock under the Fidelity Options was determined based
on the market value of such shares of Fidelity Common Stock at the time such
Fidelity Options were granted. No Fidelity Option (a) has a stated exercise
price lower than the fair market value for shares of the Fidelity Common Stock
on the date the grant of the Fidelity Option as determined under the Fidelity
Option Plan, or (b) has had its exercise date or grant date delayed or
"backdated".
5.4 Subsidiaries. The Fidelity Disclosure Letter sets forth the name and
state of incorporation of each Subsidiary of Fidelity. Each Fidelity Subsidiary
is a bank, a corporation or other business entity duly organized, validly
existing and in good standing (or the local Law equivalent) under the Laws of
its respective jurisdiction of incorporation or organization and is qualified to
do business as a foreign corporation or foreign business entity in each
jurisdiction in which its ownership or lease of property or the nature of the
business conducted by it makes such qualification necessary, except for such
jurisdictions in which the failure to be so qualified would not have a Material
Adverse Effect. Each Fidelity Subsidiary has the requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its businesses as they are now being conducted. All outstanding shares of
capital stock of each Fidelity Subsidiary are owned by Fidelity or another
Fidelity Subsidiary and are validly issued, fully paid and nonassessable, are
not subject to preemptive rights and are owned free and clear of all liens,
claims and encumbrances. There are no outstanding subscriptions, options,
warrants, rights, convertible securities or any other agreements or commitments
of any character relating to the issued or unissued capital stock or other
securities of any Fidelity Subsidiary obligating any Fidelity Subsidiary to
issue, deliver or sell, or cause to be issued, delivered or sold additional
shares of its capital stock or obligating any Fidelity Subsidiary to grant,
extend or enter into any subscription, option, warrant, right, convertible
security or other similar agreement or commitment.
5.5 Information in Disclosure Documents, Registration Statement, Etc. None
of the information with respect to Fidelity or any Fidelity Subsidiary prepared
or provided by Fidelity for (i) inclusion in the Registration Statement will at
the time of the mailing of the Proxy Statement and any amendments or supplements
thereto, and at the time of the Fidelity Meeting, (ii) any filing made pursuant
to Rules 165 or 425 under the Securities Act or Rule 14a-12 under the Exchange
Act, or (iii) any other document filed with or submitted to any Governmental
Authority in connection with the transactions contemplated by this Agreement,
will not contain any untrue statement of material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under
28
which they are made, not misleading. The Proxy Statement will comply as to form
in all material respects with the provisions of the Exchange Act.
5.6 Consent and Approvals; No Violation. Neither the execution and delivery
of this Agreement by Fidelity nor the consummation by Fidelity of the
transactions contemplated hereby will (a) conflict with or result in any breach
of any provision of its certificate of incorporation or by-laws of Fidelity, (b)
violate, conflict with, constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in the
creation of any lien or other encumbrance upon any of the properties or assets
of Fidelity or any Fidelity Subsidiary under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Fidelity or any
Fidelity Subsidiary is a party or to which they or any of their respective
properties or assets are subject, except for such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of liens or other
encumbrances, which will not have a Material Adverse Effect, or (c) require any
consent, approval, authorization or permit of or from, or filing with or
notification to, any Governmental Authority, except (i) pursuant to the Exchange
Act and the Securities Act, (ii) filing the Delaware Certificate of Merger,
(iii) filings required under the securities or blue sky laws of the various
states, (iv) filing under the HSR Act, (v) filings with, and approval by, the
FRB, (vi) filings with, and approval by, the OTS, (vii) filings with, and
approvals by, the State Entities, (viii) filings and approvals under the SBIA or
(ix) consents, approvals, authorizations, permits, filings or notifications
which, if not obtained or made will not, individually or in the aggregate, have
a Material Adverse Effect.
5.7 Reports and Financial Statements.
(a) Since January 1, 2001, Fidelity and each Fidelity Subsidiary have filed
all reports, registrations and statements, together with any required amendments
thereto, that they were required to file with the Commission under Sections
12(b), 12(g), 13(a) or 14(a) of the Exchange Act, including, but not limited to
Forms 10-K, Forms 10-Q and proxy statements (the "Fidelity Reports"). Fidelity
has previously furnished or will promptly furnish National City with true and
complete copies of each of Fidelity's annual reports on Form 10-K for the years
2001 through 2005 and its quarterly report on Form 10-Q for March 31, 2006. As
of their respective dates, the Fidelity Reports complied with the requirements
of the Exchange Act and did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstance under which they were
made, not misleading. The audited consolidated financial statements and
unaudited interim financial statements of Fidelity included in the Fidelity
Reports have been prepared in accordance with U.S. GAAP applied on a consistent
basis (except as may be indicated therein or in the notes thereto) and fairly
present the financial position of Fidelity and Fidelity Subsidiaries taken as a
whole as at the dates thereof and the consolidated results of their operations
and cash flows for the periods then ended subject, in the case of the unaudited
interim financial statements, to normal year-end and audit adjustments and any
other adjustments described therein. There exist no material liabilities of
Fidelity and its consolidated Subsidiaries, contingent or otherwise of a type
required to be disclosed in accordance with generally accepted accounting
practices, except as disclosed in the Fidelity Reports.
29
(b) Fidelity has previously furnished National City with true and complete
copies of an unaudited income statement and balance sheet of Fidelity for the
period of January 1, 2006 through June 30, 2006 (the "Fidelity Unaudited Interim
Financial Information"). The Fidelity Unaudited Interim Financial Information
(i) has been accurately derived from the books and records of Fidelity, (ii)
fairly presents, in all material respects, the financial condition and the
results of operations of Fidelity as of the respective dates and for the periods
indicated, and (iii) were prepared on a basis consistent with the accounting
principles and practices that Fidelity used to prepare its periodic income and
financial statements for its quarterly report on Form 10-Q for March 31, 2006.
Fidelity's reserve for possible loan losses as shown in the Fidelity Unaudited
Interim Financial Information was adequate, within the meaning of U.S. GAAP and
safe and sound banking practices. Fidelity's reserve for possible loan losses as
shown in the Fidelity Unaudited Interim Financial Information was adequate,
within the meaning of U.S. GAAP and safe and sound banking practices.
5.8 Taxes. Fidelity has made available to National City true and correct
copies of the federal, state and local income tax returns, and state and local
property and sales tax returns and any other tax returns filed by Fidelity and
any of Fidelity Subsidiaries for each of the fiscal years that remains open, as
of the date hereof, for examination or assessment of tax. Fidelity and each
Fidelity Subsidiary have prepared in good faith and duly and timely filed, or
caused to be duly and timely filed, all federal, state, local and foreign
income, estimated tax, withholding tax, franchise, sales and other tax returns
or reports required to be filed by them on or before the date hereof, except to
the extent that all such failures to file, taken together, would not have a
Material Adverse Effect. Fidelity and each Fidelity Subsidiary have paid, or
have made adequate provision or set up an adequate accrual or reserve for the
payment of, all taxes shown or required to be shown to be owing on all such
returns or reports, together with any interest, additions or penalties related
to any such taxes or to any open taxable year or period. Neither Fidelity nor
any Fidelity Subsidiary has consented to extend the statute of limitations with
respect to the assessment of any tax. Neither Fidelity nor any Fidelity
Subsidiary is a party to any action or proceeding, nor to the Knowledge of
Fidelity, is any such action or proceeding threatened, by any Governmental
Authority in connection with the determination, assessment or collection of any
taxes, and no deficiency notices or reports have been received by Fidelity or
any Fidelity Subsidiary in respect of any material deficiencies for any tax,
assessment, or government charge.
5.9 Employee Plans.
(a) All employee benefit, welfare, bonus, deferred compensation, pension,
profit sharing, stock option, employee stock ownership, consulting, severance,
or fringe benefit plans, formal or informal, written or oral and all trust
agreements related thereto, relating to any present or former directors,
officers or employees of Fidelity or Fidelity Subsidiaries ("Fidelity Employee
Plans") have been maintained, operated, and administered in compliance with
their terms and currently comply, and have at all relevant times complied, in
all material respects with the applicable requirements of ERISA, the Code, and
any other applicable Laws. With respect to each Fidelity Employee Plan which is
a pension plan (as defined in Section 3(2) of ERISA): (a) except for recent
amendment(s) to the plans not materially affecting the qualified status of the
plans (which are disclosed in, and copies of which are attached to, the Fidelity
Disclosure Letter), each pension plan as amended (and any trust relating
thereto) intended to be a qualified
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plan under Section 401(a) of the Code either (i) has been determined by the IRS
to be so qualified or (ii) is the subject of a pending application for such
determination that was timely filed, (b) there is no accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, and no waiver of the minimum funding standards of such
sections has been requested from the IRS, (c) neither Fidelity nor any of
Fidelity Subsidiary has provided, or is required to provide, security to any
pension plan pursuant to Section 401(a)(29) of the Code, (d) the fair market
value of the assets of each defined benefit plan (as defined in Section 3(35) of
ERISA) exceeds the value of the "benefit liabilities" within the meaning of
Section 4001(a)(16) of ERISA under such defined benefit plan as of the end of
the most recent plan year thereof ending prior to the date hereof, calculated on
the basis of the actuarial assumptions used in the most recent actuarial
valuation for such defined benefit plan as of the date hereof, (e) no reportable
event described in Section 4043 of ERISA for which the 30 day reporting
requirement has not been waived has occurred, (f) no defined benefit plan has
been terminated, nor has the PBGC instituted proceedings to terminate a defined
benefit plan or to appoint a trustee or administrator of a defined benefit plan,
and no circumstances exist that constitute grounds under Section 4042(a)(2) of
ERISA entitling the PBGC to institute any such proceedings, and (g) no pension
plan is a "multiemployer plan" within the meaning of Section 3(37) of ERISA or a
"multiple employer plan" within the meaning of 413(c) of the Code. Neither
Fidelity nor any Fidelity Subsidiary has incurred any liability to the PBGC with
respect to any "single-employer plan" within the meaning of action 4001(a)(15)
of ERISA currently or formerly maintained by any entity considered one employer
with it under Section 4001 of ERISA or Section 414 of the Code, except for
premiums all of which have been paid when due. Neither Fidelity nor any of its
Subsidiaries has incurred any withdrawal liability with respect to a
multiemployer plan under Subtitle E of Title IV of ERISA. There is no basis for
any Person to assert that Fidelity or any of its Subsidiaries has an obligation
to institute any Employee Plan or any such other arrangement, agreement or plan.
With respect to any insurance policy that heretofore has or currently does
provide funding for benefits under any Fidelity Employee Plan, (A) there is no
liability on the part of Fidelity or any of its subsidiaries in the nature of a
retroactive or retrospective rate adjustment, loss sharing arrangement, or other
actual or contingent liability, nor would there be any such liability if such
insurance policy were terminated, and (B) no insurance company issuing such
policy is in receivership, conservatorship, liquidation or similar proceeding
and, to the Knowledge of Fidelity, no such proceeding with respect to any such
insurer is imminent. Neither the execution of this Agreement, nor the
consummation of the transactions contemplated hereby will (A) constitute a
stated triggering event under any Fidelity Employee Plan that will result in any
payment (whether of severance pay or otherwise) becoming due from Fidelity or
any of its subsidiaries to any present or former officer, employee, director,
stockholder, consultant or dependent of any of the foregoing or (B) accelerate
the time of payment or vesting, or increase the amount of compensation due to
any present or former officer, employee, director, stockholder, consultant, or
dependent of any of the foregoing. Neither Fidelity nor any of its Subsidiaries
has any obligations for retiree health and life benefits under any Fidelity
Employee Plan. There are no restrictions on the rights of Fidelity or Fidelity
Subsidiaries to amend or terminate any such Fidelity Employee Plan without
incurring any liability thereunder.
(b) Fidelity and Fidelity's Subsidiaries have accrued expenses for the
value of all of the "benefit liabilities" due and owing or to become due and
owing under any and all non-qualified plans as of the end of the most recent
fiscal quarter end and will have accrued expenses
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for the value of all of the "benefit liabilities" due and owing or to become due
and owing under any and all non-qualified plans as of the Effective Time,
calculated on the basis of appropriate actuarial assumptions. Any "Rabbi Trusts"
maintained by Fidelity for the benefit of the participants in Fidelity's
non-qualified plans has adequate balances to pay any and all "benefit
liabilities" due or owing or to become due and owing under any and all
non-qualified plans following a change in control, as such term may be defined
in each and every plan.
5.10 Material Contracts. Except as disclosed in Fidelity Reports, neither
Fidelity nor any Fidelity Subsidiary is a party to, or is bound or affected by,
or receives benefits under (a) any Benefit Agreements providing for aggregate
payments to any Person in any calendar year in excess of $100,000, (b) any
material agreement, indenture or other instrument relating to the borrowing of
money by Fidelity or any Fidelity Subsidiary or the guarantee by Fidelity or any
Fidelity Subsidiary of any such obligation (other than trade payables and
instruments relating to transactions entered into in the ordinary course of
business), (c) any other contract or agreement or amendment thereto that would
be required to be filed as an exhibit to a Form 10-K filed by Fidelity with the
Commission as of the date of this Agreement, (d) any contract, agreement,
license, lease or sublease (each, a "Branch Lease") relating to the use or
occupancy of a Fidelity or a Fidelity Subsidiary branch that will require
Fidelity or such Fidelity Subsidiary to obtain the prior consent of the lessor
as a result of the transactions contemplated hereunder (each, a "Landlord
Consent"), or (e) any contract, agreement, plan, policy or understanding
providing for aggregate payments in excess of $100,000 that by its terms is
affected (including, but not limited to, accelerated vesting or payment, setting
of benefits, change in payment, establishing benefits or payments) by a change
in control (as to items (a)-(e), collectively, the "Fidelity Contracts").
Neither Fidelity nor any Fidelity Subsidiary is in default under any Fidelity
Contract, which default is reasonably likely to have, either individually or in
the aggregate, a Material Adverse Effect, and there has not occurred any event
that with the lapse of time or the giving of notice or both would constitute
such a default. Neither Fidelity nor any Fidelity Subsidiary is a party to, or
is bound by, any collective bargaining agreement, contract, or other agreement
or understanding with a labor union or labor organization, nor is Fidelity or
any Fidelity Subsidiary the subject of a proceeding asserting that is or any
Fidelity Subsidiary has committed an unfair labor practice or seeking to compel
it or such subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike or other labor dispute
involving it or any Fidelity Subsidiary pending or, to the Knowledge of
Fidelity, threatened.
5.11 Absence of Certain Changes or Events. Except as disclosed in Fidelity
Reports filed by Fidelity with the Commission prior to the date of this
Agreement, since December 31, 2005, there has not been any change in the
financial condition, results of operations or business of Fidelity or any
Fidelity Subsidiary which would, to the Knowledge of Fidelity, or in the future
have a Material Adverse Effect.
5.12 Litigation. There is no suit, action or proceeding pending, or, to the
Knowledge of Fidelity, threatened against or affecting Fidelity or any Fidelity
Subsidiary which, if decided adversely to Fidelity, would be reasonably expected
to have a Material Adverse Effect, nor is there any judgment, decree,
injunction, rule or order of any Governmental Authority or arbitrator,
outstanding, or to the Knowledge of Fidelity, threatened against Fidelity or any
Fidelity Subsidiary having, or which would, to the Knowledge of Fidelity, now or
in the future have, a Material Adverse Effect.
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5.13 Compliance with Laws and Orders.
(a) Fidelity and each Fidelity Subsidiary hold all licenses, franchises,
permits and authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to each, and have complied in all respects with
and are not in default in any respect under any, applicable Law, statute, order,
rule, regulation, policy or guideline of any Governmental Authority relating to
Fidelity or Fidelity Subsidiary, except where the failure to hold such license,
franchise, permit or authorization or such noncompliance or default is not
reasonably likely to have, either individually or in the aggregate, a Material
Adverse Effect.
(b) Except as disclosed in Fidelity Reports filed by Fidelity with the
Commission prior to the date of this Agreement, the businesses of Fidelity and
each Fidelity Subsidiary are not being conducted in violation of any Law or
Governmental Order of any Governmental Authority (including, without limitation,
in the case of a Fidelity Subsidiary that is a thrift, all Laws pertaining to
the conduct of the banking business and the exercise of trust powers), except
for violations which individually or in the aggregate do not, and, to the
Knowledge of Fidelity, will not, have a Material Adverse Effect. Fidelity's
Subsidiaries that are thrifts are not in violation of those Laws applicable to
depository institutions, and corresponding regulations and policies relating to
the CRA, privacy Laws, the BSA or anti-money laundering statutes in a manner
that would materially delay the receipt of approvals of Governmental Authorities
required to consummate the transactions contemplated in this Agreement. Other
than regulatory examinations conducted in the ordinary course, no investigation
or review by any Governmental Authority with respect to Fidelity or any Fidelity
Subsidiary is pending or, to the Knowledge of Fidelity, threatened, nor has any
Governmental Authority indicated an intention to conduct the same in each case
other than those the outcome of which will not have a Material Adverse Effect.
(c) Except as is not reasonably likely to have, either individually or in
the aggregate, a Material Adverse Effect, Fidelity and each Fidelity Subsidiary
have properly administered all accounts for which acts as a fiduciary, including
accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with
the terms of the governing documents, applicable state and federal Law and
common law. None of Fidelity, any Fidelity Subsidiary, or any director, officer
or employee of Fidelity or of any Fidelity Subsidiary, has committed any breach
of trust or fiduciary duty with respect to any such fiduciary account that is
reasonably likely to have, either individually or in the aggregate, a Material
Adverse Effect, and, except as would not be reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect, and the accountings
for each such fiduciary account are true and correct and accurately reflect the
assets of such fiduciary account.
5.14 Agreements with Regulators, Etc. Neither Fidelity nor any Fidelity
Subsidiary is a party to any written agreement or memorandum of understanding
with, or a party to any commitment letter, board resolution or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, any Governmental Authority, which (i)
restricts materially the conduct of its business, (ii) materially delays the
receipt of approvals of Governmental Authorities required to consummate the
transactions contemplated in this Agreement or (iii) in any manner relates to
its capital adequacy, its credit or reserve policies or its management, nor has
Fidelity been advised by any Governmental Authority that it is contemplating
issuing or requesting (or is considering the appropriateness of
33
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or similar
submission. Neither Fidelity nor any Fidelity Subsidiary is required by Section
32 of the FDIA to give prior notice to a Federal banking agency of the proposed
addition of an individual to its board of directors or the employment of an
individual as a senior or executive officer. To the Knowledge of Fidelity, there
is no reason why the regulatory approvals referred to in Section 5.6(c) above
should not be obtained.
5.15 Tax Treatment. As of the date hereof, to the Knowledge of Fidelity
there is no reason why the Merger will fail to qualify as a reorganization under
Section 368(a) of the Code.
5.16 Fees. Except for fees paid and payable to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
("KBW"), neither Fidelity nor any Fidelity Subsidiary has paid or will become
obligated to pay any fee (including any break-up or termination fee) or
commission to any broker, finder, intermediary or any other Person in connection
with, or as a result of, the transactions contemplated by this Agreement.
Attached as Schedule 5.16 to the Fidelity Disclosure Letter, is a true, accurate
and complete copy of the engagement letter between Fidelity and KBW for any fees
paid and payable by Fidelity to KBW, in connection with, or as a result of, the
transactions contemplated by this Agreement. As of the date of this Agreement,
Fidelity has received an opinion of KBW, issued to the board of directors of
Fidelity, to the effect that, as of the date of the opinion, the Merger
Consideration is fair from a financial point of view to holders of Fidelity
Common Stock.
5.17 Fidelity Action. The board of directors of Fidelity (at a meeting duly
called, constituted and held) has by the requisite vote of all directors present
(a) determined that the Merger is advisable and in the best interests of
Fidelity and its stockholders, (b) approved this Agreement and the transactions
contemplated herein, including the Merger, and (c) has directed that the Merger
be submitted for consideration by Fidelity's stockholders at the Fidelity
Meeting. The board of directors of Fidelity has approved the transactions
contemplated herein and taken all steps necessary to exempt (i) the execution of
this Agreement, (ii) the Merger and (iii) the transactions described herein
from, any provision of the DGCL that purports to limit or restrict business
combinations or the ability to acquire or to vote shares and any other
applicable state business combination or anti-takeover provisions of Fidelity's
certificate of incorporation and by-laws.
5.18 Vote Required. The affirmative vote of a majority of the outstanding
shares of Fidelity Common Stock entitled to vote thereon is the only vote of the
holders of any class or series of Fidelity capital stock necessary to approve
this Agreement and the transactions contemplated by this Agreement.
5.19 Material Interests of Certain Persons. Except as disclosed in
Fidelity's Reports, no officer or director of Fidelity, or any Associate of any
such officer or director, has any material interest in any contract or property
(real or personal), tangible or intangible, used in or pertaining to the
business of Fidelity or any of its Subsidiaries that is required to be disclosed
under the requirements of the Exchange Act.
5.20 Environmental Matters. To the Knowledge of Fidelity (i) neither
Fidelity nor any of its Subsidiaries is in violation of or has any liability,
absolute or contingent, in connection
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with or under any Environmental Law, except any such violations or liabilities
which would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect; (ii) none of the Loan Portfolio Properties,
Trust Properties and Other Properties of Fidelity or any Fidelity Subsidiaries
is in violation of or has any liability, absolute or contingent, under any
Environmental Law, except any such violations or liabilities which, individually
or in the aggregate would not have a Material Adverse Effect; and (iii) there
are no actions, suits, demands, notices, claims, investigations or proceedings
pending or, to the Knowledge of Fidelity, threatened relating to any Loan
Portfolio Properties, Trust Properties and Other Properties including, without
limitation, any notices, demand letters or requests for information from any
federal or state environmental agency relating to any such liability under or
violation of Environmental Law, which would impose a liability upon Fidelity or
any Fidelity Subsidiary pursuant to any Environmental Law, except such as would
not, individually or in the aggregate have a Material Adverse Effect.
5.21 Labor Matters. (a) Fidelity or its Subsidiaries are not engaged in,
and have not engaged in, any unfair labor practice; (b) there is no labor
strike, dispute, slowdown or stoppage actually pending threatened against or
directly affecting Fidelity or its Subsidiaries; (c) no union is currently
certified, and there is no union representation question and no union or other
organizational activity that would be subject to the National Labor Relations
Act (29 U.S.C. Section 151 et seq.) exists or is threatened; (d) no grievance or
arbitration proceeding arising out of or under collective bargaining agreements
is pending and no claims therefore exist or to the Knowledge of Fidelity, are
threatened; (e) no collective bargaining agreement exists which is binding on
Fidelity and/or its Subsidiaries; (f) neither Fidelity nor its Subsidiaries have
experienced during the seven (7) years prior to the date of this Agreement any
material work stoppage or other material labor difficulty; and (g) neither
Fidelity nor its Subsidiaries are delinquent in any material payments to any of
its current or former officers, directors, employees or agents for any wages,
salaries, commissions, bonuses, benefits or other compensation for any services
performed by them or amounts required to be reimbursed to them.
5.22 Minute Books. The minute books of Fidelity and each Fidelity
Subsidiary contain with respect to all meetings and actions that occurred during
the period from January 1, 1996 through and including July 15, 2006 and will
contain at Closing with respect to meetings and actions occurring after July 15,
2006, accurate records of all corporate actions of their respective
stockholder(s) and boards of directors (including committees of the board of
directors), and the signatures contained therein are true signatures of the
persons whose signatures they represent.
5.23 Loans. Except as is not reasonably likely to have, either individually
or in the aggregate, a Material Adverse Effect, all of the loans, leases,
installment sales contracts and other credit transactions on the books of
Fidelity and the Fidelity Subsidiaries are valid and properly documented and
were made in the ordinary course of business, and the security therefor, if any,
is valid and properly perfected. Except as is not reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect, neither the
terms of such loans, leases, installment sales contracts and other credit
transactions, nor any of the documentation evidencing such transactions, nor the
manner in which such loans, leases, installment sales contracts and other credit
transactions have been administered and serviced, nor Fidelity's procedures and
practices of approving or rejecting applications for such transactions, violates
35
any federal, state or local Law applicable thereto, including without limitation
the TILA, Regulations O and Z of the Federal Reserve Board, the CRA, the Equal
Credit Opportunity Act, as amended, and state Laws relating to consumer
protection, installment sales and usury.
5.24 Transactions. None of Fidelity or any of its Subsidiaries has entered
into any contract, agreement or is subject to any Governmental Order, subject to
any restrictions concerning (i) any of its businesses, (ii) businesses it may
engage in, (iii) the conduct of its business, (iv) customers it may solicit or
accept business from or (v) Persons it may solicit for employment or hire.
5.25 State Takeover Statutes. Fidelity is exempt from and the Merger shall
not be subject to any state takeover Law.
5.26 Real Property.
(a) Section 5.26 of the Fidelity Disclosure Letter identifies each
parcel of real property owned ("Owned Real Property") or occupied by
Fidelity or a Fidelity Subsidiary (collectively "Real Estate") and
accompanying the Fidelity Disclosure Letter is a complete copy of each
lease pertaining to Real Estate to which Fidelity or a Fidelity Subsidiary
is a party.
(b) To the Knowledge of Fidelity, the building, structures and
improvements located on, fixtures contained in, and appurtenances attached
to, each Real Estate conform and are in compliance, in all material
respects, with all applicable Laws, including Environmental Laws and the
Americans With Disabilities Act. Fidelity has not received any notice from
a lessor, any Governmental Authority or any other Person requiring any work
or repairs to Real Estate that the tenant has not completed in compliance
with such notice. To the Knowledge of Fidelity, in their present state of
repair all structural and mechanical components of the facilities serving
the Real Estate (including the roof, all heating, ventilation, plumbing and
electrical systems used in the operation thereof) are adequate for
Fidelity's or the applicable Fidelity Subsidiary's purposes, and sufficient
to permit the use of the Real Estate in a manner consistent with Fidelity's
or the applicable Fidelity Subsidiary's past practice.
5.27 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. Fidelity is in compliance with the provisions,
including Section 404, of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, and the certifications
provided and to be provided pursuant to Sections 302 and 906 thereof are
accurate.
5.28 Notice of Breach or Potential Breach. Fidelity shall promptly notify
National City of any change, circumstance or event which would cause any of the
representations or warranties made by Fidelity pursuant to this Agreement to be
untrue as of the date hereof or at Closing Date or which prevents Fidelity from
complying with any of its obligations hereunder. To the Knowledge of Fidelity,
there is no fact or development that would have a Material Adverse Effect, or
which might in the future, in Fidelity's reasonable judgment, have a Material
Adverse Effect, on Fidelity's or its Subsidiaries' continuing business, which
has not been set forth in this Agreement, the Fidelity Reports or the Fidelity
Disclosure Letter.
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5.29 Disclosure. No representation or warranty by Fidelity in this
Agreement after giving effect to the disclosures set forth in the Fidelity
Disclosure Letter, contains any untrue statement of a material fact or omits to
state a material fact required to be stated herein or therein or necessary to
make any statement herein or therein not materially misleading. Any claim by
National City of a breach of representation, warranty, covenant, agreement or
obligation of Fidelity hereunder will not be affected by any investigation
conducted by National City with respect to, or knowledge acquired (or capable of
being acquired), with respect to the accuracy or inaccuracy of or compliance
with any such representation, warranty, covenant, agreement or obligation.
VI. COVENANTS
6.1 Acquisition Proposals. Fidelity and each Fidelity Subsidiary shall not,
directly or indirectly, and shall instruct and otherwise use its best efforts to
cause their respective officers, directors, employees, agents or advisors or
other representatives or consultants not to, directly or indirectly, (i) other
than purchases or sales of loans or securities in the ordinary course of its
business consistent with past practice, solicit or initiate any proposals or
offers from any Person relating to any acquisition or purchase of all or a
material amount of the assets of or any securities of (including any tender
offer or exchange offer), or any proposal for merger, consolidation or business
combination recapitalization, liquidation, dissolution or similar transaction
involving Fidelity or a Fidelity Subsidiary (such transactions are referred to
herein as "Acquisition Transactions") or (ii) except to the extent that the
board of directors of Fidelity determines in good faith, after consultation with
outside legal counsel, in the exercise of its fiduciary duties in accordance
with applicable Law, to participate in any discussions or negotiation regarding,
or furnish to any other Person any information with respect to, an Acquisition
Transaction; provided, however, that nothing contained in this Section 6.1 shall
restrict or prohibit any disclosure by Fidelity that is required in any document
to be filed with the Commission after the date of this Agreement or any
disclosure that, the board of directors of Fidelity determines in good faith,
after consultation with outside legal counsel, is otherwise required under
applicable Law. Fidelity will, and cause each Fidelity Subsidiary to,
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. Fidelity will notify National City immediately if any
such inquiries or proposals are received by, any such information is requested
from, or any such negotiations or discussions are sought to be initiated or
continued with Fidelity or any Fidelity Subsidiary.
6.2 Interim Operations of Fidelity. During the period from the date of this
Agreement to the Effective Time, except as specifically contemplated by this
Agreement or as otherwise approved expressly in writing by National City (which
approval will not be unreasonably withheld or delayed), Fidelity agrees for
itself and its Subsidiaries as follows:
(a) Conduct of Business. Fidelity shall, and shall cause each Fidelity
Subsidiary to, conduct their respective businesses only in, and not take
any action except in, the ordinary course of business consistent with past
practice. Fidelity shall use reasonable efforts to preserve intact the
business organization of Fidelity and each Fidelity Subsidiary, to keep
available the services of its and their present key officers and employees
and to preserve the goodwill of those having business relationships with
Fidelity or any Fidelity Subsidiary. Other than in the ordinary course of
business
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consistent with past practice, Fidelity shall not (i) incur any
indebtedness for borrowed money (it being understood and agreed that
incurrence of indebtedness in the ordinary course of business shall
include, without limitation, the creation of deposit liabilities, purchases
of federal funds, entering into short-term borrowings with federal home
loan banks, sales of certificates of deposit and entering into repurchase
agreements), (ii) assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other Person,
or (iii) make any loan or advance. Fidelity shall not, and shall not permit
any of the Fidelity Subsidiaries to adopt a plan of complete or partial
liquidation or resolutions providing for or authorizing such a liquidation
or dissolution, restructuring, recapitalization or reorganization.
(b) Certificates and By-Laws. Fidelity shall not and shall not permit
any Fidelity Subsidiary to make any change or amendment to their respective
certificates of incorporation or by-laws (or comparable governing
instruments) in a manner that would materially and adversely effect either
party's ability to consummate the Merger or the economic benefits of the
Merger to either Party.
(c) Capital Stock. Fidelity shall not, and shall not permit any
Fidelity Subsidiary to, issue or sell any shares of capital stock or any
other securities of any of them (other than pursuant to outstanding
exercisable stock options granted prior to the date of this Agreement
pursuant to the Fidelity Option Plan) or issue any securities convertible
into or exchangeable for, or options, warrants to purchase, scrip, rights
to subscribe for, calls or commitments of any character whatsoever relating
to, or enter into any contract, understanding or arrangement with respect
to the issuance of, any shares of capital stock or any other securities of
any of them or enter into any arrangement or contract with respect to the
purchase or voting of shares of their capital stock, or adjust, split,
combine or reclassify any of their capital stock or other securities or
make any other changes in their capital structures. Neither Fidelity nor
any Fidelity Subsidiary shall grant any awards under any Fidelity Employee
Plan, including, without limitation, stock options, restricted stock, stock
units or stock.
(d) Dividends. Fidelity shall not, and shall not permit any Fidelity
Subsidiary to, declare, set aside, pay or make any dividend or other
distribution or payment (whether in cash, stock or property) with respect
to, or purchase or redeem, any shares of the capital stock of any of them
other than (i) regular quarterly cash dividends in an amount not to exceed
$0.08 per share of Fidelity Common Stock payable on the regular historical
payment dates, (ii) dividends paid by any Fidelity Subsidiary to Fidelity
or another Fidelity Subsidiary with respect to its capital stock between
the date hereof and the Effective Time and (iii) regular quarterly cash
dividends paid on the preferred stock of Fidelity Capital Trust II and
Fidelity Capital Trust III. It is agreed by the Parties that they will
cooperate to assure that, during any quarter, there shall not be a
duplication of nor omission of payment of dividends to stockholders of
Fidelity.
(e) Employee Plans, Compensation, Etc. Except as otherwise provided in
this Agreement and Section 6.5(g) of the National City Disclosure Letter,
Fidelity shall not, and shall not permit any Fidelity Subsidiary (i) to
adopt or amend (except as required by Law (including as required to
maintain qualification under Section 401(a) of the Code) or other
contractual obligations existing on the date hereof so long as Fidelity
provides
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advance written notice to National City of such adoption or amendment) any
bonus, profit sharing, compensation, severance, termination, stock option,
pension, retirement, deferred compensation, employment or other employee
benefit agreements, trusts, plans, funds or other arrangements for the
benefit or welfare of any director, officer or employee, (ii) (except for
normal merit increases to employees in the ordinary course of business
consistent with past practice not to exceed the limit set forth in Section
6.5(g) of the National City Disclosure Letter) to increase the compensation
or fringe benefits of any director, officer or employee or pay any benefit
not required by any existing plan, agreement or arrangement (including,
without limitation, the granting of stock options or stock appreciation
rights), (iii) to promote any officer or employee or change the title of
any officer or employee or (iv) to take any action or grant any benefit not
required under the terms of any existing agreements, trusts, plans, funds
or other such arrangements or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
(f) Certain Policies. Fidelity will modify and change its loan,
litigation, real estate valuation asset, liquidity and investment portfolio
policies and practices (including loan classifications and level of
reserves) immediately prior to the Effective Time so as to be consistent on
a mutually satisfactory basis with those of National City and U.S. GAAP and
in a manner that does not violate applicable Law. Any modification or
change made or action taken pursuant to this Section 6.2(f) shall not
impact (by either increasing or decreasing) the benefits or bonuses to the
officers, directors or employees of Fidelity or any Fidelity Subsidiary
under the Fidelity Employee Plans. Fidelity's representations, warranties
or covenants contained in this Agreement shall not be deemed to be untrue
or breached in any respect for any purpose as a consequence of any such
modifications or changes.
(g) Other Operations. During the period from the date of this
Agreement to the Effective Time, Fidelity will not take any action that
could (i) materially delay or adversely affect the ability of National City
to obtain any approvals of Government Entities required to permit
consummation of the Merger or (ii) materially and adversely affect its
ability to perform its obligations under this Agreement or to consummate
the transactions contemplated hereby.
(h) Delivery of Monthly Financial Information. Fidelity shall promptly
after (i) the end of each month (and in no event later than twenty (20)
days after the last day of such month) deliver to National City an
unaudited balance sheet and a statement of income of Fidelity as of and for
such month then ended (the "Monthly Financial Information"). The Monthly
Financial Information shall be prepared on a basis consistent with the
interim Fidelity Financial Statements.
6.3 Interim Operations of National City. During the period from the date of
this Agreement to the Effective Time, without the prior written consent of
Fidelity, National City will not take any action that would (a) materially delay
or adversely affect the ability of National City to obtain any approvals of
Governmental Authorities required to permit consummation of the Merger or (b)
materially and adversely affect its ability to perform its obligations under
this Agreement or to consummate the transaction contemplated hereby.
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6.4 Control of Other Party's Business. Nothing contained in this Agreement
shall give National City, directly or indirectly, the right to control or direct
the operations of Fidelity or shall give Fidelity, directly or indirectly, the
right to control or direct the operations of National City prior to the
Effective Time. Prior to the Effective Time, each of Fidelity and National City
shall exercise, consistent with the terms and conditions of this Agreement,
complete control and supervision over its and its Subsidiaries' respective
operations.
6.5 Employee Matters.
(a) Benefit Agreements. National City shall honor, maintain and
perform at and after the Effective Time, without deduction, counterclaims,
interruptions or deferment (other than withholding under applicable Law),
all of Fidelity's and Fidelity's Subsidiaries' vested obligations under
Fidelity Employee Plans. This provision shall not be construed as
precluding the merger of a Fidelity Employee Plan into a National City
Employee Plan; provided, however, that National City shall have the right
to delay the payment, or limit the form of payment of any amount under any
Fidelity Employee Plan to the extent National City and Fidelity jointly
and, in good faith, determine that such delay or limitation is necessary to
avoid adverse tax consequences under Section 409A of the Code and the
regulations promulgated thereunder; provided, however, that any delay or
limitation in the form of payment shall be no longer than reasonably
necessary to avoid such adverse tax consequences and such payment shall be
made, to the maximum extent possible, in accordance with the payment
election so made, if any, or to give effect to the plan or agreement under
which the payment is made.
(b) Employment of Continuing Employees. To the extent permitted by
Law, National City agrees that it will use its reasonable best efforts so
that each Person who is an employee of Fidelity or any Fidelity Subsidiary
immediately prior to the Effective Time (individually, a "Continuing
Employee" and, collectively, the "Continuing Employees") shall be an
employee of National City or one of its Subsidiaries as of the Effective
Time. After the conversion of the Continuing Employees to National City's
welfare plans as contemplated by Section 6.5(d) below, each Continuing
Employee, while employed by National City or one of its Subsidiaries, shall
continue to receive base pay and benefits under the Eligible Plans that in
the aggregate are no less favorable than the benefits under the Eligible
Plans enjoyed generally by National City employees working in similar
business lines.
(c) Employment and Change in Control Agreements. National City
acknowledges that, and will cause the Surviving Corporation to acknowledge
that, the consummation of the Merger shall be considered a "change in
control" under the agreements set forth in Section 6.5(c) of the National
City Disclosure Letter. The acceleration of the amounts required to be paid
under this paragraph shall not be considered compensation, annual
compensation or final monthly compensation for purposes of increasing any
payment made under any employment, change in control or other severance
agreement or any nonqualified deferred compensation plan to which such
person is a party.
(d) Participation in National City Employee Plans. As soon as
practicable after the Effective Time, National City and its Subsidiaries
shall cause the Continuing
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Employees, while employed by National City or any of its Subsidiaries, to
be eligible to participate in the plans listed in Section 6.5(d) of the
National City Disclosure Letter (the "Eligible Plans") that similarly
situated National City employees participate. In the event that applicable
Law or the terms of National City Employee Plans do not permit immediate
eligibility for the Continuing Employees for any Eligible Plans, the
Continuing Employees shall be eligible to participate in such Eligible Plan
as of the earliest eligibility date. Prior to such time as a Continuing
Employee becomes eligible to participate in the Eligible Plans, National
City covenants that it will sponsor and maintain the Fidelity Employee
Plans as listed in Section 6.5(d) of the National City Disclosure Letter to
permit the continued participation of Continuing Employees to the extent
permitted by contract and Law in the best efforts of National City to avoid
a gap in coverage.
(e) Credit for Service. For purposes of all Eligible Plans covering
Continuing Employees or any of their dependents or beneficiaries, National
City shall credit or shall cause Surviving Corporation to credit the
Continuing Employees with all service with, Fidelity or any Fidelity
Subsidiaries for purposes of eligibility and vesting as if such service had
been performed for National City, but not for purposes of eligibility,
vesting or benefits under National City's retiree welfare benefit plan and
the National City Non-Contributory Retirement Plan. Notwithstanding
anything herein to the contrary, years of service for Fidelity or any
Fidelity Subsidiary shall be counted for benefit accrual purposes under
National City's vacation pay plan and National City Severance Benefit Plan
to which a Continuing Employee may become subject.
(f) Severance Upon Termination of Continuing Employee. If a Continuing
Employee is terminated without cause at or after the Effective Time by
National City or any of its Subsidiaries, (i) on or prior to the first
anniversary of the Effective Time, such Continuing Employee shall be
entitled to severance benefits from National City and its Subsidiaries that
would have been paid under the severance benefit plan or program of
Fidelity applicable to such Continuing Employee immediately prior to the
Effective Time, and (ii) after the first anniversary of the Effective Time,
such Continuing Employee shall be entitled to severance benefits from
National City and its Subsidiaries in accordance with the National City
Severance Benefit Plan for similarly situated employees.
(g) Additional Agreements. Notwithstanding anything to the contrary in
this Agreement, Fidelity and National City shall take all actions necessary
to enact the items set forth on Section 6.5(g) of the National City
Disclosure Letter, and Section 6.5(g) of the National City Disclosure
Letter shall be deemed incorporated into this Section 6.5(g).
(h) Employee Stock Ownership Plan. Promptly after the execution of
this Agreement, Fidelity shall take such action as is necessary in order to
seek a favorable determination letter on the termination of Fidelity's
employee stock ownership plan ("ESOP") in accordance with the ESOP's
provisions. As of or immediately prior to the Effective Time, the ESOP
would be terminated in accordance with its provisions and any terminating
amendments, and the outstanding balance of the ESOP loan would be repaid
with the merger consideration received on shares held in the suspense
account (i.e., the account that holds shares purchased with the ESOP loan
prior to allocation to
41
participants). Any remaining merger consideration in the ESOP suspense
account will be allocated to participants' accounts upon the repayment of
the ESOP loan. Promptly upon the latter of (i) the receipt of the favorable
determination letter and (ii) the Effective Time, the ESOP account balances
shall be distributed to the ESOP participants.
6.6 Access and Information. Upon reasonable notice, National City and
Fidelity shall, and shall cause its respective Subsidiaries to, afford to the
other party hereto and its representatives (including, without limitation,
directors, officers and employees of such investigating party and its
Affiliates, and counsel, accountants and other professionals retained) such
access during normal business hours throughout the period prior to the Effective
Time to the books, records (including, without limitation, tax returns and work
papers of independent auditors), properties, personnel and to such other
information as such investigating party may reasonably request; provided,
however, that a party shall not be required to provide access to any such
information if the providing of such access (i) would be reasonably likely, in
the advice of counsel, to result in the loss or impairment of any privilege
generally recognized under Law with respect to such information, (ii) would be
precluded by any Law or Governmental Order of any Governmental Authority, or
(iii) subject to Section 6.1 above, relates to confidential board deliberations
relating to such Party's discussions of this Agreement or an Acquisition
Proposal. Any claim by a Party for a breach of representation, warranty,
covenant, agreement or obligation of such Party hereunder shall not be affected
by any investigation conducted by such Party with respect to, or knowledge
acquired (or capable of being acquired), with respect to the accuracy or
inaccuracy of or compliance with any such representation, warranty, covenant,
agreement or obligation. All information contemplated hereby shall be subject to
the terms and conditions of the Confidentiality Agreement.
6.7 Certain Filings, Consents and Arrangements. National City and Fidelity
each shall (a) by a date mutually agreeable to the parties, make any required
filings and applications required to be filed with Governmental Authorities
between the date of this Agreement and the Effective Time, (b) cooperate with
one another (i) in promptly determining whether any other filings are required
to be made or consents, approvals, permits or authorizations are required to be
obtained under any other relevant Law and (ii) in promptly making any such
filings, furnishing information required in connection therewith and seeking
timely to obtain any such consents, approvals, permits or authorizations, and
(c) deliver to the other Party copies of the publicly available portions of all
such reports promptly after they are filed.
6.8 State Takeover Statutes. Fidelity shall take all necessary steps to (i)
exempt Fidelity and the Merger from the requirements of any state or federal
takeover Law by action of Fidelity's board of directors or otherwise and (ii),
upon the request of National City, assist in any challenge by National City to
the applicability to the Merger of any state takeover Law.
6.9 Indemnification.
(a) From and after the Effective Time, in the event of any threatened
or actual claim, action, suit, proceeding or investigation, whether civil,
criminal or administrative, including, without limitation, any such claim,
action, suit, proceeding or investigation in which any Person who is now,
or has been at any time prior to the date of this Agreement, or who becomes
prior to the Effective Time, a director or officer of Fidelity or any
Fidelity Subsidiary (the "D&O Indemnitees") is, or is threatened to be,
made a
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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 Fidelity, any of the Fidelity Subsidiaries or any of their
respective predecessors; or (ii) this Agreement or any of the transactions
contemplated hereby, whether in any case asserted or arising before or
after the Effective Time, National City shall assume and honor any
obligation Fidelity had immediately prior to the Effective Time with
respect to the indemnification of each such D&O Indemnitee 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 D&O Indemnitee to the
fullest extent permitted by Law upon receipt of any undertaking required by
applicable Law), judgments, fines and amounts paid in settlement in
connection with any such threatened or actual claim, action, suit,
proceeding or investigation, and in the event of any such threatened or
actual claim, action, suit, proceeding or investigation (whether asserted
or arising before or after the Effective Time). National City's obligations
under this Section 6.9(a) shall continue in full force and effect for a
period of six (6) years from the Effective Time; provided, however, that
all rights to indemnification in respect of any Claim asserted or made
within such period shall continue until the final disposition of such
Claim.
(b) National City agrees that all rights to indemnification and all
limitations on liability existing in favor of the directors, officers and
employees of Fidelity and the Fidelity Subsidiaries, and their respective
heirs and assigns (the "Covered Parties") as provided in their respective
articles or certificate of incorporation or code of regulations or by-laws
as in effect as of the date hereof with respect to matters occurring prior
to the Effective Time shall survive the Merger and shall continue in full
force and effect, without any amendment thereto.
(c) National City, from and after the Effective Time, shall (i) cause
the Persons who served as directors or officers of Fidelity and the
Fidelity Subsidiaries on or before the Effective Time to be covered by
Fidelity's existing directors' and officers' liability insurance policy or
an equivalent "tail" directors and officers liability insurance policy for
a period of not less than six (6) years from the Effective Time (provided,
that National City may maintain policies that provide at least similar
coverage and amounts containing terms and conditions which are not
materially less favorable than such policy) (the "Insurance Policies");
provided, however, that (i) after the first year of coverage under the
Insurance Policies, National City shall not be obligated to make annual
premium payments (or the annualized equivalent in premium payments for
whatever period may be covered) pursuant to this Section 6.9(c) for the
Insurance Policies to the extent such premiums exceed 150% of the annual
premiums paid as of the date hereof by Fidelity for its current premiums
for such insurance (the "Insurance Expense Cap"), and (ii) National City
shall use its reasonable best efforts to obtain the Insurance Policies
commencing on the Effective Time and, within the Insurance Expense Cap,
keep such Insurance Policies in effect until the sixth anniversary of the
Effective Time. If National City is unable to obtain such Insurance Policy
with the coverage required hereby within the Insurance Expense Cap, then
National City shall use the full amount of the Insurance Expense Cap to
obtain one or more alternate insurance policies with as much coverage as is
commercially obtainable.
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(d) If National City or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation 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
National City assume the obligations set forth in this Section 6.9.
(e) The provisions of this Section 6.9 are intended to be for the
benefit of, and shall be enforceable by, as the case may be, each
Indemnitee or director or officer of Fidelity and each Fidelity Subsidiary
and their respective heirs, representatives and assigns. National City
agrees to pay all costs and expenses (including fees and expenses of
counsel) that may be incurred by any such Person or his or her personal
representatives in successfully enforcing the obligations of National City
under this Section 6.9. The provisions of this Section 6.9 shall survive
the Closing for an indefinite period of time and are in addition to any
other rights to which a D&O Indemnitee may be entitled.
6.10 Additional Agreements.
(a) Subject to the terms and conditions herein provided, each Party agrees
to use its reasonable best efforts to take promptly, or cause to be taken
promptly, all actions and to do promptly, or cause to be done promptly, all
things necessary, proper or advisable under applicable Laws to consummate and
make effective as promptly as practicable the transactions contemplated by this
Agreement, including using its reasonable best efforts to obtain all necessary
actions or non-actions, extensions, waivers, consents and approvals from all
applicable Governmental Authorities or Persons, effecting all necessary
registrations, applications and filings and obtaining any required contractual
consents and regulatory approvals, except Fidelity shall use its best efforts to
take or obtain all necessary actions or non-actions, extensions, waivers,
consents and approvals from all applicable Governmental Authorities or Persons
for the contracts identified on Section 6.10(a) of the National City Disclosure
Letter.
(b) Each Party covenants, for itself and its Affiliates, not to take
intentionally any action that would, or reasonably might be expected to, result
in any of its representations and warranties set forth in this Agreement being
or becoming untrue, subject to such exceptions as do not have, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on National City or on the Surviving Corporation following the
Effective Time, or in any of the conditions to the Merger not being satisfied or
in a violation of any provision of this Agreement, or (unless such action is
required by applicable Law) which would adversely affect the ability of the
Parties to obtain any approval required for the consummation of the Merger
without imposition of conditions or restrictions.
(c) Notwithstanding anything to the contrary in this Agreement, Fidelity
and National City shall take all actions necessary to enact the items set forth
on Section 6.10(c) of the National City Disclosure Letter, and Section 6.10(c)
of the National City Disclosure Letter shall be deemed incorporated into this
Section 6.10(c).
6.11 Publicity. The initial press release announcing this Agreement shall
be a joint press release and thereafter Fidelity and National City shall consult
with each other in issuing
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any press releases or otherwise making public statements with respect to the
transactions contemplated hereby, including, any statements or announcements to
employees or customers of Fidelity, and in making any filings with any
Governmental Authority or with any national securities exchange with respect
thereto.
6.12 Registration Statement. National City shall prepare and file the
Registration Statement with the Commission as soon as is reasonably practicable
following receipt of final comments from the Staff of the Commission on the
Proxy Statement (or advice that such Staff will not review such filing) and
shall use all reasonable efforts to have the Registration Statement declared
effective by the Commission as promptly as practicable and to maintain the
effectiveness of such Registration Statement. National City shall also take any
action required to be taken under state blue sky or securities Laws in
connection with the issuance of the National City Common Stock pursuant to the
Merger, and Fidelity shall promptly furnish National City all information
concerning Fidelity and the holders of its capital stock and shall take any
action as National City may reasonably request in connection with any such
action.
6.13 Proxy Statement. As soon as practicable after the date hereof,
Fidelity shall prepare the Proxy Statement. Promptly after the Registration
Statement becomes effective, Fidelity shall mail the Proxy Statement to all
holders of shares of Fidelity Common Stock. National City and Fidelity shall
reasonably cooperate with each other in the preparation of the Registration
Statement.
6.14 Stock Exchange Listings. National City shall assure that the National
City Common Stock to be issued pursuant to the Merger is properly listed on the
New York Stock Exchange.
6.15 Stockholders' Meeting. Fidelity shall take all action necessary, in
accordance with applicable Law and its certificate of incorporation and by-laws,
to convene a special meeting of the holders of Fidelity Common Stock (the
"Fidelity Meeting") as promptly as practicable for the purpose of considering
and taking action upon this Agreement. Unless the board of directors of Fidelity
shall have determined in good faith, after consultation with outside legal
counsel, that making such a recommendation would cause the board of directors of
Fidelity to violate its fiduciary duty under applicable Law, the board of
directors of Fidelity shall recommend that the holders of Fidelity Common Stock
vote in favor of and approve the Merger and adopt this Agreement at the Fidelity
Meeting.
6.16 Tax-Free Reorganization Treatment. Neither National City nor Fidelity
shall intentionally take or cause to be taken any action, whether before or
after the Effective Time, which would disqualify the Merger as a
"reorganization" within the meaning of Section 368(a) of the Code.
6.17 Section 16. National City and Fidelity agree that, in order to most
effectively compensate and retain Fidelity Insiders (as defined below) in
connection with the Merger, both prior to and after the Effective Time, it is
desirable that Fidelity Insiders not be subject to a risk of liability under
Section 16(b) of the Exchange Act to the fullest extent permitted by applicable
Law in connection with the conversion of shares of Fidelity Common Stock and
Unexercised Options into Merger Consideration, and for that compensatory and
retentive purpose agree to the provisions of this Section 6.17. "Fidelity
Insiders" shall mean those officers and directors of
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Fidelity who are subject to the reporting requirements of Section 16(a) of the
Exchange Act. Fidelity shall, reasonably promptly following the date hereof,
provide to National City a list of (a) the Fidelity Insiders, (b) the number of
shares of National City Common Stock expected to be received pursuant to the
Merger, as appropriate, by each Fidelity Insider at the Effective Time on
account of shares of Fidelity Common Stock thereon, reasonably expected to be
held by such Fidelity Insider immediately prior to the Effective Time and (c) a
description of the material terms of such Unexercised Options. Prior to the
Effective Time, (x) Fidelity's board of directors shall take such actions
consistent with the Commission's interpretive guidance to approve the
disposition of shares of Fidelity Common Stock and Unexercised Options thereon,
by each Fidelity Insider for purposes of Rule 16b-3(e) such that the deemed
"sale" of such shares of Fidelity Common Stock and Fidelity Options thereon by
such Persons pursuant to the Merger shall be exempt from liability pursuant to
Section 16(b) of the Exchange Act, and (y) the National City board of directors
shall take such action consistent with the Commission's interpretive guidance to
approve the acquisition of shares of National City Common Stock by each director
and officer of National City for purposes of Rule 16b-3(d) under the Exchange
Act such that the deemed "purchase" of such shares of National City Common
Stock, by such Persons pursuant to the Merger shall be exempt from liability
pursuant to Section 16(b) of the Exchange Act.
6.18 Title Examinations. As soon as practicable but in no event later than
October 31, 2006, Fidelity shall cause, at its sole cost and expense, a title
company, mutually acceptable to National City and Fidelity, to deliver title
examinations for each Owned Real Property.
VII. CLOSING MATTERS
7.1 The Closing. Subject to satisfaction or waiver of all conditions
precedent set forth in Article VII below, the closing (the "Closing") shall
occur at such location mutually agreeable to the Parties and on a date (the
"Closing Date") which is seven (7) Business Days after the latest of:
(a) January 5, 2007;
(b) the first date on which the Merger may be consummated in
accordance with the approvals of any Governmental Authorities; and
(c) the date the required approvals of Fidelity's stockholders have
been obtained,
or such other date to which the Parties agree in writing. If all conditions are
determined to be satisfied in all material respects (or are duly waived) at the
Closing, the Closing shall be consummated by the making of all necessary filings
required by all Governmental Authorities to effect the Closing.
7.2 Documents and Certificates. National City and Fidelity shall use their
respective reasonable best efforts, on or prior to Closing, to execute and
deliver all such instruments, documents or certificates as may be necessary or
advisable, on the advice of counsel, for the consummation at the Closing of the
transactions contemplated by this Agreement to occur as soon as practicable.
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VIII. CONDITIONS
8.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) The Merger shall have been approved and adopted by the requisite
vote of the holders of shares of Fidelity Common Stock.
(b) The shares of National City Common Stock issuable in the Merger
shall have been authorized for listing on the New York Stock Exchange.
(c) All authorizations, consents, orders or approvals of, and all
expirations of waiting periods imposed by, any Governmental Authority
(collectively, "Consents") which are necessary for the consummation of the
Merger, (other than immaterial Consents, the failure to obtain of which
would not have a Material Adverse Effect to, National City and National
City's Subsidiaries taken as a whole or Fidelity and Fidelity Subsidiaries
taken as a whole) shall have been obtained or shall have occurred and shall
be in full force and effect at the Effective Time; provided, however, that
no Consent shall be deemed to have been received if it shall include any
conditions or requirements which would so materially adversely impact the
economic or business benefits of the transactions contemplated by this
Agreement so as to render inadvisable in the reasonable opinion of National
City the consummation of the Merger.
(d) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act. No stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the Commission and remain in effect; provided, however, that
prior to June 30, 2007, the fact that a stop order has been issued and
remains in effect shall not be the sole basis for termination of this
Agreement by a Party pursuant to Sections 9.1(d) or 9.1(e) of this
Agreement so long as the other party is taking, or cooperating in taking,
all commercially reasonable actions to obtain the lifting of such stop
order.
(e) No temporary restraining order, preliminary or permanent
injunction or other order by any federal or state court in the United
States which prevents the consummation of the Merger shall have been issued
and remain in effect; provided, however, that prior to the earlier of (i)
June 30, 2007 or (ii) the time at which such injunction or order becomes
final and non-appealable, the entry of any such injunction or order shall
not be the sole basis for termination of this Agreement by a Party pursuant
to Section 9.1(d) of this Agreement so long as the other Party is taking,
or cooperating in taking, all commercially reasonable actions to cause such
injunction or order to be appealed, vacated, lifted or otherwise modified
to permit the Merger to become effective.
(f) ▇▇▇▇▇ Day ("▇▇▇▇▇ Day") shall have delivered to Fidelity and
National City, respectively, their opinion, dated the day of the Effective
Time, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of
47
Section 368(a) of the Code and that, accordingly: (i) no gain or loss will
be recognized by National City or Fidelity as a result of the Merger; (ii)
no gain or loss will be recognized by the stockholders of Fidelity who
exchange their shares of Fidelity Common Stock solely for shares of
National City Common Stock pursuant to the Merger (except with respect to
cash received in lieu of a fractional share interest in shares of National
City Common Stock); (iii) the tax basis of the shares of National City
Common Stock received by stockholders who exchange all of their shares of
Fidelity Common Stock solely for shares of National City Common Stock in
the Merger will be the same as the tax basis of the shares of Fidelity
Common Stock surrendered in exchange therefor (reduced by any amount
allocable to a fractional share interest for which cash is received); and
(iv) the holding period of the shares of National City Common Stock
received in the Merger will include the period during which the shares of
Fidelity Common Stock surrendered in exchange therefor were held, provided
such shares of Fidelity Common Stock were held as capital assets at the
Effective Time. In rendering such opinion, counsel may require and rely
upon representations contained in certificates of officers of Fidelity,
National City, and others.
8.2 Conditions to Obligation of Fidelity to Effect the Merger. The
obligation of Fidelity to effect the Merger shall be subject to the fulfillment
or waiver at or prior to the Closing Date of the additional following
conditions:
(a) National City shall have performed in all material respects its
covenants contained in this Agreement required to be performed at or prior
to the Effective Time.
(b) The representations and warranties of National City contained in
this Agreement shall be true and correct when made and shall be true and
correct as of the Effective Time as if made at and as of such time, except
as expressly contemplated or permitted by this Agreement, except for
representations and warranties relating to a time or times other than the
Effective Time which were or will be true and correct at such time or
times.
(c) National City shall have furnished Fidelity a certificate dated
the date of the Closing, signed by the Chief Executive Officer and Chief
Financial Officer of National City that, to the Knowledge of National City,
the conditions set forth in Subsections 8.2(a) and 8.2(b) above have been
satisfied.
8.3 Conditions to Obligation of National City to Effect the Merger. The
obligation of National City to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Closing Date of the additional
following conditions:
(a) Fidelity shall have performed in all material respects its
covenants contained in this Agreement required to be performed at or prior
to the Effective Time.
(b) The representations and warranties of Fidelity contained in this
Agreement shall be true and correct when made and shall be true and correct
as of the Effective Time as if made on and as of such time, except as
expressly contemplated or permitted by this Agreement, except for
representations and warranties relating to a time
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or times other than the Effective Time which were or will be true and
correct at such time or times.
(c) Fidelity shall have furnished National City a certificate dated
the date of the Closing signed by the Chief Executive Officer and Chief
Financial Officer of Fidelity that, to the Knowledge of Fidelity, the
conditions set forth in Subsections 8.3(a) and 8.3(b) above have been
satisfied.
IX. TERMINATION
9.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, notwithstanding any approval or adoption of this Agreement by
the stockholders of Fidelity:
(a) by mutual written consent of the board of directors of National
City and the board of directors of Fidelity;
(b) by National City or Fidelity if the Merger shall not have been
consummated on or before June 30, 2007 and such terminating party is not in
material breach hereof;
(c) by National City or Fidelity if the condition specified in Section
8.1(a) has not been met.
(d) by National City or Fidelity if any of the conditions specified in
Sections 8.1(b), (c), (d) or (e) have not been met or waived by Fidelity
and National City at such time as such condition can no longer be
satisfied;
(e) by National City or Fidelity if the condition specified in Section
8.1(f) has not been met or waived by National City and Fidelity, and an
equivalent opinion from a nationally recognized law firm reasonably
acceptable to the Parties within thirty (30) days of being notified that
▇▇▇▇▇ Day is unwilling or unable to provide the opinion set for in Section
8.1(f);
(f) by Fidelity (i) if any condition specified in Sections 8.2 (b) or
(c) above has not been met or waived by Fidelity at such time as such
condition is no longer capable of being satisfied or (ii) if the condition
specified in Section 8.2(a) has not been met or waived by Fidelity, but in
connection with this clause (ii) only after Fidelity has furnished written
notice to National City of its failure to perform and such failure has not
been cured or waived by the earlier of thirty (30) days after the date of
such notice or June 30, 2007;
(g) by National City (i) if any condition specified in Sections 8.3
(b) or (c) above has not been met or waived by National City at such time
as such condition is no longer capable of being satisfied or (ii) if the
condition specified in Section 8.3(a) has not been met or waived by
National City, but in connection with this clause (ii) only after National
City has furnished written notice to Fidelity of its failure to perform and
such
49
failure has not been cured or waived by the earlier of thirty (30) days
after the date of such notice or June 30, 2007;
(h) by National City or Fidelity if any Governmental Authority shall
have enacted, issued, promulgated, enforced or entered any final and
non-appealable injunction, order, decree or ruling that has the effect of
making consummation of the Merger illegal or otherwise preventing or
prohibiting consummation of the Merger;
(i) by National City if the Fidelity Meeting shall not have been
convened by the later of (A) November 30, 2006 or (B) sixty-five (65) days
after the Registration Statement becomes effective;
(j) by National City, if after recommending that the stockholders of
Fidelity approve and adopt this Agreement, the board of directors of
Fidelity shall have withdrawn, modified or amended such recommendation in
any manner adverse to National City, except for a withdrawal, modification
or amendment following (i) a breach of a representation or warranty of
National City contained in this Agreement, (ii) a failure of National City
to perform in all material respects its covenants contained in this
Agreement, but only after Fidelity has furnished National City written
notice to National City of its failure to perform and such failure has not
been cured or waived by the earlier of thirty (30) days after the date of
such notice or June 30, 2007, or (iii) a Material Adverse Effect occurring
with respect to National City;
(k) by National City if the board of directors of Fidelity does not
publicly recommend in the Proxy Statement that Fidelity's stockholders
approve and adopt the Agreement, except for the failure to make a
recommendation following (i) a breach of a representation or warranty of
National City contained in this Agreement, (ii) a failure of National City
to perform in all material respects its covenants contained in this
Agreement, but only after Fidelity has furnished National City written
notice to National City of its failure to perform and such failure has not
been cured or waived by the earlier of thirty (30) days after the date of
such notice or June 30, 2007, or (iii) a Material Adverse Effect occurring
with respect to National City;
(l) by National City if the board of directors of Fidelity shall have
recommended to the stockholders of Fidelity an Acquisition Transaction with
a third party or shall have resolved to do so or shall have entered into
any agreement for the consummation of an Acquisition Transaction with a
third party;
(m) by National City if a tender offer or exchange offer that if
consummated would result in any Person beneficially owning twenty-five
percent (25%) or more of any class of equity securities of Fidelity is
commenced, and the board of directors of Fidelity fails to recommend
against acceptance of such tender offer or exchange offer by its
stockholders (including by taking no position with respect to the
acceptance of such tender offer or exchange offer by its stockholders); it
being understood that the fact that Fidelity or any of the other Persons
described in Section 6.1 has taken any of the actions set forth in Section
6.1 in compliance with the terms of Section 6.1, together with a statement
that the board of directors of Fidelity continues to recommend the Merger
and this Agreement, shall not be considered to be a withdrawal, adverse
modification or
50
adverse amendment in any material respect of such approval or
recommendation of this Agreement;
(n) by National City, if Fidelity shall have suffered a Material
Adverse Effect that cannot be cured within thirty (30) days the occurrence
of the action or event that gave rise to Material Adverse Effect, and
National City is not the cause of the Material Adverse Effect; or
(o) by Fidelity, if National City shall have suffered a Material
Adverse Effect that cannot be cured within thirty (30) days the occurrence
of the action or event that gave rise to Material Adverse Effect, and
Fidelity is not the cause of the Material Adverse Effect.
9.2 Effect of Termination.
(a) In the event of termination of this Agreement by any Party as provided
in Section 9.1 above, this Agreement shall forthwith become void and there shall
be no liability on the party of either Party except (i) as set forth in this
Section 9.2, all of Sections 10.1 and 10.4, and the last sentence of Section
6.6, which shall survive any termination of this Agreement, and (ii)
notwithstanding anything to the contrary contained in this Agreement, neither
Party shall be relieved or released from any liabilities or damages arising out
of its willful or intentional breach of any provision of this Agreement.
(b) In recognition of the efforts, expenses and other opportunities
foregone by National City while structuring and pursuing the Merger, the Parties
hereto agree that Fidelity shall pay to National City a termination fee of $31
million (the "National City Termination Fee") in the manner set forth below, if
this Agreement is terminated:
(A) Each of (1) pursuant to (I) Sections 9.1(g) or (i) above or (II)
pursuant to Sections 9.1(d) (solely with respect to Section 8.1 (e)) or (h)
as a result of any third Person or its Affiliate having initiated or
instigated any such proceedings and if such third Person or its Affiliate
announces its intent to engage in a bona fide Acquisition Transaction as
determined by the board of directors of Fidelity in good faith, after
consultation with outside legal counsel and financial consultants, and (2)
if within eighteen (18) months following the effective date of termination
described in Section 9.2 (b)(A)(1), Fidelity or any Fidelity Subsidiary
enters into any agreement, contract, letter of intent or understanding with
a third Person relating to any direct or indirect acquisition or purchase
by such Person of Fidelity, any Fidelity Subsidiary or any business line of
Fidelity or any equity securities of Fidelity or of any Fidelity
Subsidiary, any tender offer or exchange offer that if consummated would
result in any Person beneficially owning 10% or more of any class of equity
securities of Fidelity or any Fidelity Subsidiary, any merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Fidelity or any Fidelity
Subsidiary; or
(B) pursuant to Section 9.1(j), (k), (l) or (m).
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(c) If the Merger is consummated, all costs and expenses incurred by the
Parties in connection with this Agreement and the transactions contemplated
hereby will be paid by the Surviving Corporation.
(d) Nothing contained in Section 9.2(b) shall constitute or shall be deemed
to constitute liquidated damages for the willful breach by Fidelity of the terms
of this Agreement.
X. MISCELLANEOUS
10.1 Non-Survival of Representations, Warranties and Agreements. The
representations and warranties or covenants in this Agreement will terminate at
the Effective Time or the earlier termination of this Agreement pursuant to
Section 9.1, as the case may be; provided, however, that if the Merger is
consummated, Sections 2.6, 3.1 3.2, 6.5, 6.9 and 6.16 hereof will survive the
Effective Time to the extent contemplated by such Sections; provided, further,
that all of this Section 10.1, the last sentence of Section 6.6 and all of
Sections 9.1, 9.2 and 10.4 will in all events survive any termination of this
Agreement.
10.2 Waiver and Amendment. Subject to applicable provisions of the DGCL,
any provision of this Agreement may be waived at any time by the Party which is,
or whose stockholders are, entitled to the benefits thereof, and this Agreement
may be amended or supplemented at any time, provided that no amendment will be
made after any stockholder approval of the Merger which reduces or changes the
form of the Merger Consideration without further stockholder approval. No such
waiver, amendment or supplement will be effective unless in a writing that makes
express reference to this Section 10.2 and is signed by the Party or Parties
sought to be bound thereby.
10.3 Entire Agreement. This Agreement, the Confidentiality Agreement and
Disclosure Letters contain the entire agreement between National City and
Fidelity with respect to the Merger and the other transactions contemplated
hereby, and supersede all prior agreements between the Parties with respect to
such matters.
10.4 Applicable Law; Consent to Jurisdiction. This Agreement will be
governed by and construed in accordance with the Laws of the State of Delaware.
National City and Fidelity consent to personal jurisdiction in any action
brought in any federal or state court within the city of Cleveland, Ohio, having
subject matter jurisdiction in the matter for purposes of any action arising out
of this Agreement.
10.5 Notices. All notices, consents, requests, demands and other
communications hereunder will be in writing and will be deemed to have been duly
given or delivered if delivered personally, telexed with receipt acknowledged,
mailed by registered or certified mail return receipt requested, sent by
facsimile with confirmation of receipt, or delivered by a recognized commercial
courier addressed as follows:
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If to Fidelity to:
Fidelity Bankshares, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman, President and Chief Executive Officer
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇, Esq. and ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
If to National City to:
National City Corporation
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chairman of the Board
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
National City Corporation
Law Department
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as a Party may have furnished to the other Party in
writing in accordance with this Section 10.5.
10.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original but all of which
together will constitute but one agreement.
10.7 Parties in Interest; Assignment. Except for Section 3.5 above (which
is intended to be for the benefit of the holders of Unexercised Options under
the Fidelity Option Plan to the extent contemplated thereby and their
beneficiaries, and may be enforced by such Persons) and Sections 6.5 and 6.9
hereof (which is intended to be for the benefit of directors, officers or
employees to the extent contemplated thereby and their beneficiaries, and may be
enforced by such Persons), this Agreement is not intended to nor will it confer
upon any other Person (other
53
than the parties hereto) any rights or remedies. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors. Except as herein expressly provided, without the prior written
consent of the other Party, neither National City nor Fidelity shall assign any
rights or delegate any obligations under this Agreement. Any such purported
assignment or delegation made without prior consent of the other Party shall be
null and void.
10.8 Expenses. Each party will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby.
10.9 Severability. If any term or other provision of this Agreement is
determined by judicial order or bank regulatory authority to be invalid, illegal
or incapable of being enforced under any Law or public policy, all other terms
and provisions of this Agreement will nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to either
Party. Upon any such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties will negotiate in good faith
to modify this Agreement so as to effect the original intent of the Parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated by this Agreement are consummated to the extent possible.
10.10 Update and Supplement to Disclosure Letters. Fidelity and National
City shall be permitted to update and supplement their respective Disclosure
Letters so as to disclose other information or exceptions to one or more
representations or warranties contained in Article IV hereof in the case of
National City and Article V hereof in the case of Fidelity which are a result of
events which occur, or knowledge first obtained, after the date hereof;
provided, however, that, anything herein to the contrary notwithstanding, (i) no
exceptions or other information set forth on any such updated or supplemented
Disclosure Letter shall be deemed to cure any representation or warranty which
was not true and correct as of the date hereof, and (ii) the exceptions and
other information set forth on any such updated or supplemented Disclosure
Letter shall not be taken into consideration in determining, for purposes of
this Agreement, whether the conditions set forth in Section 8.3 in the case of
National City, and Section 8.2 hereof in the case of Fidelity shall have been
satisfied, and (iii) this Section 10.10 shall not relieve any party of its
obligations under any covenant set forth herein.
10.11 Enforcement of the Agreement. The Parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Parties will be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof.
[Remainder of this page left intentionally blank]
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AGREEMENT AND PLAN OF MERGER SIGNATURE PAGE
IN WITNESS WHEREOF, the Parties have caused their duly authorized
representatives to execute this Agreement as of the date first above written.
FIDELITY BANKSHARES, INC. ("Fidelity")
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman, President and Chief
Executive Officer
NATIONAL CITY CORPORATION ("National
City")
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice Chairman and Chief Financial
Officer