-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E8pTHqEPxLimy1qHMlePQSMT0Br2+lFR+Ddgg9xueB4Ie4vWGpgJhrDJYDkkObQ6 9f4RGpkVDgh4vQtjss8Fnw== 0000898822-98-000404.txt : 19980415 0000898822-98-000404.hdr.sgml : 19980415 ACCESSION NUMBER: 0000898822-98-000404 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19980410 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980414 SROS: CSE SROS: CSX SROS: NASD SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANC ONE CORP /OH/ CENTRAL INDEX KEY: 0000036090 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 310738296 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08552 FILM NUMBER: 98593672 BUSINESS ADDRESS: STREET 1: 100 E BROAD ST CITY: COLUMBUS STATE: OH ZIP: 43271 BUSINESS PHONE: 6142485944 MAIL ADDRESS: STREET 1: 100 EAST BROAD STREET STREET 2: 18TH FLOOR CITY: COLUMBUS STATE: OH ZIP: 43271-0251 FORMER COMPANY: FORMER CONFORMED NAME: FIRST BANC GROUP OF OHIO INC /OH/ DATE OF NAME CHANGE: 19800301 8-K 1 CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): April 10, 1998 BANC ONE CORPORATION (Exact Name of Registrant as Specified in Charter) Ohio (State or Other Jurisdiction of Incorporation) 1-8552 31-0738296 (Commission File Number) (IRS Employer Identification No.) 100 East Broad Street, Columbus, Ohio 43271 (Address of Principal Executive (Zip Code) Offices) Registrant's telephone number, including area code: (614) 248-5944 N/A (Former Name or Former Address, If Changed Since Last Report) ITEM 5. OTHER EVENTS On April 10, 1998, the Registrant and First Chicago NBD Corporation, a Delaware corporation ("FCN") entered into an Agreement and Plan of Reorganization (the "Agreement"), pursuant to which, subject to the conditions and upon the terms stated therein, the Registrant and FCN will each merge into a new company ("Newco") organized to effect the Merger (such mergers, collectively, the "Merger"). Newco will be the surviving corporation in the Merger. In accordance with the Agreement, each share of the common stock, without par value, of the Registrant ( "ONE Common Stock") outstanding immediately prior to the effective time of the Merger (the "Effective Time") will at the Effective Time be converted into one share of the common stock, without par value, of Newco ("Newco Common Stock), and each share of the common stock, par value $1.00 per share, of FCN ("FCN Common Stock") outstanding immediately prior to the Effective Time will at the Effective Time be converted into the right to receive 1.62 shares of Newco Common Stock. In addition, each share of FCN's Preferred Stock with Cumulative and Adjustable Dividends, Series B, and Preferred Stock with Cumulative and Adjustable Dividends, Series C, in each case outstanding immediately prior to the Effective Time, will be converted into the right to receive one share of a series of corresponding preferred stock of Newco with substantially the same terms. Consummation of the transactions contemplated by the Agreement is subject to the terms and conditions contained in the Agreement, including, among other things, the receipt of approval of the Merger by the respective shareholders of FCN and the Registrant and the receipt of certain regulatory approvals. The Merger and the transactions contemplated by the Agreement will be submitted for approval at meetings of the shareholders of FCN and the Registrant that are expected to take place in the third quarter of 1998. The foregoing description is qualified in its entirety by reference to the complete text of the Agreement, which is filed as Exhibit 2.1 hereto and hereby incorporated herein by reference. Immediately following their execution and delivery of the Agreement, the Registrant and FCN entered into stock option agreements (the "Stock Option Agreements") pursuant to one of which FCN granted the Registrant the right, upon the terms and subject to the conditions set forth therein, to purchase up to 57,150,376 shares of FCN Common Stock at a price of $94.00 per share, and pursuant to the other of which the Registrant granted FCN the right, upon the terms and subject to the conditions set forth therein, to purchase up to 128,122,944 shares of ONE Common Stock at a price of $61.75 per share. The foregoing description of the Stock Option Agreements is qualified in its entirety by reference to the complete text of such Stock Option Agreements, which are filed as Exhibits 99.1 and 99.2 hereto, respectively, and hereby incorporated herein by reference. A copy of the press release, dated April 13, 1998, jointly issued by the Registrant and FCN relating to the Merger is attached as Exhibit 99.3 hereto and is hereby incorporated herein by reference. A copy of the presentation to investors, dated April 13, 1998, relating to the Merger and given jointly by the Registrant and FCN, is attached as Exhibit 99.4 hereto and is hereby incorporated herein by reference. This current report on Form 8-K, and the exhibits hereto, contain certain estimates and projections regarding the Registrant, FCN and the combined company following the Merger, including without limitation estimates and projections relating to the pro forma business and assets of the combined company, the cost savings, revenue increases and restructuring charges expected as a result of the Merger and the expected impact of the transaction on earnings per share of the constituent corporations. These estimates and projections constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995), and they involve significant risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, risks and uncertainties related to the consummation and execution of the Merger (including integration activities) and the factors discussed in the section captioned "Forward-Looking Statements" in Item 1 of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 as filed with the Securities and Exchange Commission, which section is hereby incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements. Not applicable. (b) Pro Forma Financial Information. Not applicable. (c) Exhibits. Exhibit 2.1 Agreement and Plan of Reorganization, dated as of April 10, 1998, by and among BANC ONE CORPORATION, First Chicago NBD Corporation and Hornet Reorganization Corporation. Exhibit 99.1 Stock Option Agreement, dated as of April 10, 1998, by and between First Chicago NBD Corporation, as issuer, and BANC ONE CORPORATION, as grantee. Exhibit 99.2 Stock Option Agreement, dated April 10, 1998, by and between BANC ONE CORPORATION, as issuer, and First Chicago NBD Corporation, as grantee. Exhibit 99.3 Joint Press Release, dated April 13, 1998. Exhibit 99.4 Investor Presentation, dated April 13, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: April 14, 1998 BANC ONE CORPORATION (Registrant) By: /s/ Steven Alan Bennett ------------------------- Steven Alan Bennett Senior Vice President, General Counsel and Secretary EX-2 2 EXHIBIT 2.1: MERGER AGREEMENT EXHIBIT 2.1 AGREEMENT AND PLAN OF REORGANIZATION by and among BANC ONE CORPORATION, FIRST CHICAGO NBD CORPORATION and HORNET REORGANIZATION CORPORATION ------------------------ DATED AS OF APRIL 10, 1998 ============================================================================== TABLE OF CONTENTS Page AGREEMENT AND PLAN OF REORGANIZATION ARTICLE I THE FIRST STEP MERGER 1.1 The First Step Merger....................................... 2 1.2 Effective Time.............................................. 2 1.3 Effects of the Second Step Merger........................... 2 1.4 Conversion of BANC ONE Common Stock......................... 2 1.5 Newco Common Stock.......................................... 3 1.6 Dissenting Shares........................................... 3 1.7 Options..................................................... 4 1.8 Certificate of Incorporation................................ 4 1.9 By-Laws..................................................... 4 1.10 Board of Directors; Management.............................. 4 ARTICLE II THE SECOND STEP MERGER 2.1 The Second Step Merger...................................... 5 2.2 Effective Time.............................................. 5 2.3 Effects of the Second Step Merger........................... 5 2.4 Conversion of FCN Common Stock; FCN Preferred Stock...................................... 5 2.5 Newco Common Stock.......................................... 7 2.6 Options..................................................... 7 2.7 Certificate of Incorporation................................ 8 2.8 By-Laws..................................................... 8 2.9 Tax and Accounting Consequences............................. 8 2.10 Management Succession....................................... 8 2.11 Board of Directors.......................................... 8 2.12 Headquarters of Surviving Corporation....................... 9 ARTICLE III EXCHANGE OF SHARES 3.1 Newco to Make Shares Available.............................. 9 3.2 Exchange of Shares.......................................... 9 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF FCN 4.1 Corporate Organization...................................... 12 4.2 Capitalization.............................................. 12 i 4.3 Authority; No Violation..................................... 14 4.4 Consents and Approvals...................................... 15 4.5 Reports..................................................... 16 4.6 Financial Statements........................................ 16 4.7 Broker's Fees............................................... 17 4.8 Absence of Certain Changes or Events........................ 17 4.9 Legal Proceedings........................................... 18 4.10 Taxes and Tax Returns....................................... 18 4.11 Employees................................................... 20 4.12 SEC Reports................................................. 21 4.13 Compliance with Applicable Law.............................. 22 4.14 Certain Contracts........................................... 22 4.15 Agreements with Regulatory Agencies......................... 23 4.16 Other Activities of FCN and its Subsidiaries............................................. 23 4.17 Investment Securities....................................... 24 4.18 Interest Rate Risk Management Instruments................... 24 4.19 Undisclosed Liabilities..................................... 25 4.20 Insurance................................................... 25 4.21 Environmental Liability..................................... 25 4.22 State Takeover Laws; FCN Certificate of Incorporation......................................... 26 4.23 Year 2000................................................... 26 4.24 Reorganization; Pooling of Interests........................ 26 ARTICLE V REPRESENTATIONS AND WARRANTIES OF BANC ONE AND NEWCO 5.1 Corporate Organization...................................... 26 5.2 Capitalization.............................................. 27 5.3 Authority; No Violation..................................... 29 5.4 Consents and Approvals...................................... 30 5.5 Reports..................................................... 31 5.6 Financial Statements........................................ 31 5.7 Broker's Fees............................................... 32 5.8 Absence of Certain Changes or Events........................ 32 5.9 Legal Proceedings........................................... 33 5.10 Taxes and Tax Returns....................................... 33 5.11 Employees................................................... 35 5.12 SEC Reports................................................. 36 5.13 Compliance with Applicable Law.............................. 37 5.14 Certain Contracts........................................... 37 5.15 Agreements with Regulatory Agencies......................... 38 5.16 Other Activities of BANC ONE and its Subsidiaries............................................. 38 5.17 Investment Securities....................................... 39 5.18 Interest Rate Risk Management Instruments................... 39 5.19 Undisclosed Liabilities..................................... 40 5.20 Insurance................................................... 40 5.21 Environmental Liability..................................... 40 5.22 State Takeover Laws......................................... 41 5.23 Interim Operations of Newco................................. 41 ii 5.24 Year 2000................................................... 41 5.25 Reorganization; Pooling of Interests........................ 41 ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS 6.1 Conduct of Businesses Prior to the Effective Time........................................... 41 6.2 Forbearances................................................ 42 ARTICLE VII ADDITIONAL AGREEMENTS 7.1 Regulatory Matters.......................................... 45 7.2 Access to Information....................................... 47 7.3 Stockholders' Approvals..................................... 47 7.4 Legal Conditions to Merger.................................. 48 7.5 Affiliates; Publication of Combined Financial Results........................................ 48 7.6 Stock Exchange Listing...................................... 49 7.7 Employee Benefit Plans; Certain Insurance................... 49 7.8 Indemnification; Directors' and Officers' Insurance................................................ 50 7.9 Additional Agreements....................................... 52 7.10 Advice of Changes........................................... 52 7.11 Dividends................................................... 52 7.12 Authorized Stock of Newco................................... 52 7.13 Pooling of Interests........................................ 53 ARTICLE VIII CONDITIONS PRECEDENT 8.1 Conditions to Each Party's Obligation To Effect the Second Step Merger......................... 53 8.2 Conditions to Obligations of BANC ONE and Newco................................................ 55 8.3 Conditions to Obligations of FCN............................ 55 ARTICLE IX TERMINATION AND AMENDMENT 9.1 Termination................................................. 56 9.2 Effect of Termination....................................... 57 9.3 Amendment................................................... 57 9.4 Extension; Waiver........................................... 58 iii ARTICLE X GENERAL PROVISIONS 10.1 Closing..................................................... 58 10.2 Nonsurvival of Representations, Warranties and Agreements........................................... 59 10.3 Expenses.................................................... 59 10.4 Notices..................................................... 59 10.5 Interpretation.............................................. 59 10.6 Counterparts................................................ 60 10.7 Entire Agreement............................................ 60 10.8 Governing Law............................................... 60 10.9 Severability................................................ 60 10.10 Publicity................................................... 60 10.11 Assignment; Third Party Beneficiaries....................... 61 10.12 Certain Agreements of Newco................................ 61 iv INDEX OF DEFINED TERMS Section Page No. Agreement...................................... Preamble.......... 1 BANC ONE....................................... Preamble.......... 1 BANC ONE 10-K.................................. 5.6............... 32 BANC ONE Articles.............................. 5.1(a)............ 27 BANC ONE Bank Subsidiary....................... 5.16(b)........... 39 BANC ONE Benefit Plans......................... 5.11(a)........... 35 BANC ONE Capital Stock......................... 5.2(a)............ 27 BANC ONE Class A Preferred Stock............... 5.2(a)............ 27 BANC ONE Class B Preferred Stock............... 5.2(a)............ 27 BANC ONE Common Certificate.................... 1.4(b)............ 2 BANC ONE Common Stock.......................... 1.4(a)............ 2 BANC ONE Contract.............................. 5.14(a)........... 38 BANC ONE Disclosure Schedule................... Article V......... 26 BANC ONE ERISA Affiliate....................... 5.11(a)........... 35 BANC ONE Option Agreement...................... Recitals.......... 1 BANC ONE Preferred Stock....................... 5.2(a)............ 27 BANC ONE Regulatory Agreement.................. 5.15.............. 38 BANC ONE Reports............................... 5.12.............. 36 BANC ONE Rights................................ 5.2(a)............ 28 BANC ONE Series C Preferred.................... 5.2(a)............ 27 BANC ONE Stock Plans........................... 1.7............... 4 BHC Act........................................ 4.1(a)............ 12 CERCLA......................................... 4.21.............. 25 Certificate.................................... 2.4(f)............ 6 Certificate of Merger.......................... 2.2............... 5 Claim.......................................... 7.8(a)............ 51 Closing........................................ 10.1.............. 58 Closing Date................................... 10.1.............. 59 Code........................................... 1.7............... 4 Common Certificate............................. 2.4(d)............ 6 Confidentiality Agreement...................... 7.2(b)............ 47 Delaware Secretary............................. 1.2............... 2 DGCL........................................... 1.1............... 2 Dissenting Shares.............................. 1.6............... 3 DPC Shares..................................... 1.4(c)............ 3 Effective Time................................. 2.2............... 4 ERISA.......................................... 4.11(a)........... 20 ESPSP.......................................... 4.2(a)............ 13 Exchange Act................................... 4.6............... 16 Exchange Agent................................. 3.1............... 9 Exchange Fund.................................. 3.1............... 9 Exchange Ratio................................. 2.4(a)............ 5 FCN............................................ Preamble.......... 1 FCN Bank Subsidiary............................ 4.16(b)........... 24 FCN Benefit Plans.............................. 4.11(a)........... 20 FCN Capital Stock.............................. 2.4(a)............ 5 FCN Certificate of Incorporation................................ 4.1(a)............ 12 FCN Common Stock............................... 2.4(a)............ 5 FCN Contract................................... 4.14(a)........... 23 FCN Disclosure Schedule........................ Article IV........ 11 FCN ERISA Affiliate............................ 4.11(a)........... 20 FCN Option Agreement........................... Recitals.......... 1 FCN Preferred Stock............................ 2.4(c)............ 6 FCN Regulatory Agreement....................... 4.15.............. 23 FCN Reports.................................... 4.12.............. 21 FCN Rights..................................... 4.2(a)............ 13 FCN Series B Preferred......................... 2.4(b)............ 5 FCN Series C Preferred......................... 2.4(c)............ 6 FCN Stock Plans................................ 2.6(a)............ 7 Federal Reserve Board.......................... 4.4(i)............ 15 First Commerce Merger Agreement................ 5.2(a)............ 28 First Effective Time........................... 1.2............... 2 First Merger Exchange Ratio.................... 1.4(a)............ 2 First Step Merger.............................. Recitals.......... 1 GAAP........................................... 2.9............... 8 Governmental Entity............................ 4.4(viii)......... 16 Indemnified Parties............................ 7.8(a)............ 50 Insurance Amount............................... 7.8(b)............ 51 Injunction..................................... 8.1(e)............ 54 IRS............................................ 4.10(a)........... 19 Joint Proxy Statement.......................... 4.4(iii).......... 15 Liens.......................................... 4.2(b)............ 14 Material Adverse Effect........................ 4.1(a)............ 12 Merger......................................... Recitals.......... 1 New Benefit Plans.............................. 7.7(a)............ 49 Newco.......................................... Preamble.......... 1 Newco Capital Stock............................ 2.4(a)............ 5 Newco Certificate of Incorporation............. 5.1(a)............ 27 Newco Common Stock............................. 1.4(a)............ 2 Newco New Preferred Stock...................... 2.4(c)............ 6 Newco Series B Adjustable Preferred............ 2.4(b)............ 5 Newco Series C Adjustable Preferred............ 2.4(c)............ 6 NYSE........................................... 3.2(e)............ 11 OCC............................................ 4.5(iv)........... 16 OGCL........................................... 1.1............... 2 Ohio Secretary................................. 1.2............... 2 Option Agreements.............................. Recitals.......... 1 Preferred Stock Certificate.................... 2.4(f)............ 7 Regulations.................................... 5.1(a)............ 27 Regulatory Agencies............................ 4.5(v)............ 16 Requisite Regulatory Approvals................. 8.1(c)............ 53 Roney Agreement................................ 4.2(a)............ 13 S-4............................................ 4.4(iii).......... 15 SBA............................................ 4.4(v)............ 15 SEC............................................ 4.4(iii).......... 15 Second Step Merger............................. Recitals.......... 1 Securities Act................................. 4.12.............. 21 -2- SRO............................................ 4.4(vi)........... 15 State Approvals................................ 4.4(ii)........... 15 State Regulator................................ 4.5(iii).......... 16 Subsidiary..................................... 4.1(a)............ 12 Surviving Corporation.......................... Recitals.......... 1 Tax............................................ 4.10(b)........... 19 Taxes.......................................... 4.10(b)........... 19 Trust Account Shares........................... 1.4(c)............ 3 Trust Activities............................... 4.16(b)........... 24 Year 2000 Issues............................... 4.23.............. 26 Year 2000 Deficiency Notification Letter....................................... 4.23.............. 26 -3- AGREEMENT AND PLAN OF REORGANIZATION AGREEMENT AND PLAN OF REORGANIZATION, dated as of April 10, 1998 (this "Agreement"), by and among BANC ONE CORPORATION, an Ohio corporation ("BANC ONE"), HORNET REORGANIZATION CORPORATION, a Delaware corporation ("Newco"), and FIRST CHICAGO NBD CORPORATION, a Delaware corporation ("FCN"). WHEREAS, the Boards of Directors of FCN, BANC ONE and Newco have determined that it is in the best interests of their respective companies and their stockholders to consummate the business combination transaction provided for herein in which (x) BANC ONE will, subject to the terms and conditions set forth herein, merge with and into Newco (the "First Step Merger") so that Newco is the surviving corporation in the First Step Merger, and (b) immediately thereafter FCN will, subject to the terms and conditions set forth herein, merge with and into Newco (the "Second Step Merger" and, together with the First Step Merger, the "Merger"), so that Newco is the surviving corporation (hereinafter sometimes referred to in such capacity as the "Surviving Corporation") in the Second Step Merger; and WHEREAS, it is the intent of the respective Boards of Directors of BANC ONE and FCN that the Merger be structured as a "merger of equals" of BANC ONE and FCN and that the Surviving Corporation be governed and operated on this basis; and WHEREAS, as a condition to, and immediately after the execution of, this Agreement, BANC ONE and FCN are entering into a BANC ONE stock option agreement (the "BANC ONE Option Agreement") in the form attached hereto as Exhibit C; and WHEREAS, as a condition to, and immediately after the execution of, this Agreement, BANC ONE and FCN are entering into a FCN stock option agreement (the "FCN Option Agreement"; and together with the BANC ONE Option Agreement, the "Option Agreements") in the form attached hereto as Exhibit D; and WHEREAS, the parties desire to make certain representations, warranties and agreements in connection with the Merger and also to prescribe certain conditions to the Merger. NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained herein, and intending to be legally bound hereby, the parties agree as follows: ARTICLE I THE FIRST STEP MERGER 1.1 The First Step Merger. Subject to the terms and conditions of this Agreement, in accordance with the General Corporation Law of the State of Ohio (the "OGCL") and the General Corporation Law of the State of Delaware (the "DGCL"), at the First Effective Time, BANC ONE shall merge with and into Newco. Newco shall be the surviving corporation in the First Step Merger, and shall continue its corporate existence under the laws of the State of Delaware. Upon consummation of the First Step Merger, the separate corporate existence of BANC ONE shall terminate. 1.2 Effective Time. The First Step Merger shall become effective as set forth in the certificate of merger which shall be filed with the Secretary of State of the State of Ohio (the "Ohio Secretary") and the certificate of merger which shall be filed with the Secretary of State of the State of Delaware (the "Delaware Secretary") on the Closing Date. The term "First Effective Time" shall be the date and time when the First Step Merger becomes effective, as set forth in the certificates of merger referred to in this Section 1.2. 1.3 Effects of the First Step Merger. At and after the First Effective Time, the First Step Merger shall have the effects set forth in Section 1701.82 of the OGCL and Sections 259 and 261 of the DGCL. 1.4 Conversion of BANC ONE Common Stock. (a) At the First Effective Time, by virtue of the First Step Merger and without any action on the part of BANC ONE, Newco or the holders of capital stock of BANC ONE or Newco, each share of the common stock, without par value, of BANC ONE (the "BANC ONE Common Stock") issued and outstanding immediately prior to the First Effective Time (other than Dissenting Shares and shares of BANC ONE Common Stock held in BANC ONE's treasury or directly or indirectly by BANC ONE or any of its wholly owned Subsidiaries or Newco (except for Trust Account Shares and DPC shares) shall be converted into one share (the "First Merger Exchange Ratio") of the common stock, without par value, of Newco (the "Newco Common Stock"). (b) All of the shares of BANC ONE Common Stock converted into the right to receive Newco Common Stock pursuant to this Article I shall no longer be outstanding and shall automatically be cancelled and shall cease to exist as of the First Effective Time, and each certificate (each a "BANC ONE Common Certificate") previously representing any such shares of BANC ONE Common Stock shall thereafter represent, without the requirement of any exchange thereof, only the number of shares of -2- Newco Common Stock into which the shares of BANC ONE Common Stock represented by such BANC ONE Common Certificate have been converted pursuant to this Section 1.4. (c) At the First Effective Time, all shares of BANC ONE Common Stock that are owned by BANC ONE as treasury stock and all shares of BANC ONE Common Stock that are owned, directly or indirectly, by BANC ONE or any of its wholly owned Subsidiaries or Newco (other than shares of BANC ONE Common Stock held, directly or indirectly, in trust accounts, managed accounts and the like or otherwise held in a fiduciary capacity that are beneficially owned by third parties (any such shares, and shares of Newco Common Stock and FCN Common Stock which are similarly held, whether held directly or indirectly by BANC ONE, Newco or FCN, as the case may be, being referred to herein as "Trust Account Shares") and other than any shares of BANC ONE Common Stock held by BANC ONE or FCN or any of their respective Subsidiaries or Newco in respect of a debt previously contracted (any such shares of BANC ONE Common Stock, and shares of FCN Common Stock and Newco Common Stock which are similarly held, whether held directly or indirectly by BANC ONE, Newco or FCN or any of their respective Subsidiaries, being referred to herein as "DPC Shares")) shall be cancelled and shall cease to exist and no stock of Newco or other consideration shall be delivered in exchange therefor. All shares of Newco Common Stock that are owned by BANC ONE or any of its wholly-owned Subsidiaries (other than Trust Account Shares and DPC Shares) shall become treasury stock of Newco. 1.5 Newco Common Stock. At and after the First Effective Time, each share of Newco Common Stock issued and outstanding immediately prior to the First Effective Time shall be cancelled and retired and shall resume the status of authorized and unissued shares of Newco Common Stock, and no shares of Newco Common Stock or other securities of Newco shall be issued in respect thereof. 1.6 Dissenting Shares. Notwithstanding anything in this Agreement to the contrary, shares of BANC ONE Common Stock which are outstanding immediately prior to the First Effective Time and with respect to which dissenters' rights shall have been properly demanded in accordance with Section 1701.85 of the OGCL ("Dissenting Shares") shall not be converted into Newco Common Stock; instead, the holders thereof shall be entitled to payment of the appraised value of such Dissenting Shares in accordance with the provisions of Section 1701.85 of the OGCL; provided, however, that (i) if any holder of Dissenting Shares shall subsequently deliver a written withdrawal of his demand for appraisal of such shares, or (ii) if any holder fails to establish his entitlement to dissenters' rights as provided in Section 1701.85 of the OGCL, such holder or holders (as the case may be) shall forfeit the right to appraisal of -3- such shares of BANC ONE Common Stock and each of such shares shall thereupon be deemed to have been converted into the right to receive, and to have become exchangeable for, as of the First Effective Time, Newco Common Stock, as provided in Section 1.4(a) hereof. 1.7 Options. At the First Effective Time, each option granted by BANC ONE to purchase shares of BANC ONE Common Stock which is outstanding and unexercised immediately prior thereto shall cease to represent a right to acquire shares of BANC ONE Common Stock and shall be converted automatically into an option to purchase a number of shares of Newco Common Stock equal to the number of shares of BANC ONE Common Stock subject to such option immediately prior to the First Effective Time at an exercise price per share of Newco Common Stock equal to the exercise price per share of BANC ONE Common Stock in effect immediately prior to the First Effective Time and otherwise subject to the terms of the appropriate BANC ONE Benefit Plan pursuant to which such options have been granted (such plans collectively the "BANC ONE Stock Plans") under which such option was issued and the agreements evidencing grants thereunder. The adjustment provided herein with respect to any options which are "incentive stock options" (as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")) shall be and is intended to be effected in a manner which is consistent with Section 424(a) of the Code. The duration and other terms of the new option shall be the same as the original option except that all references to BANC ONE shall be deemed to be references to Newco. 1.8 Certificate of Incorporation. Subject to the terms and conditions of this Agreement, at the First Effective Time, the Certificate of Incorporation of the surviving corporation in the First Step Merger shall be substantially in the form attached hereto as Exhibit A, with such changes thereto as shall be mutually agreed upon by BANC ONE and FCN, until thereafter amended in accordance with applicable law. 1.9 By-Laws. Subject to the terms and conditions of this Agreement, at the First Effective Time, the By-Laws of the surviving corporation in the First Step Merger shall be in substantially the form attached hereto as Exhibit B, with such changes as may be mutually agreed upon by BANC ONE and FCN, until thereafter amended in accordance with applicable law. 1.10 Board of Directors; Management. From and after the First Effective Time, until duly changed pursuant hereto or in accordance with applicable law, the directors of BANC ONE shall be the directors of Newco, and the officers of BANC ONE shall be the officers of Newco. -4- ARTICLE 2 THE SECOND STEP MERGER 2.1 The Second Step Merger. Subject to the terms and conditions of this Agreement, in accordance with the DGCL, at the Effective Time, FCN shall merge with and into Newco. Newco shall be the Surviving Corporation in the Second Step Merger, and shall continue its corporate existence under the laws of the State of Delaware. Upon consummation of the Second Step Merger, the separate corporate existence of FCN shall terminate. 2.2 Effective Time. The Second Step Merger shall become effective as set forth in the certificate of merger (the "Certificate of Merger") which shall be filed with the Delaware Secretary on the Closing Date. The term "Effective Time" shall be the date and time when the Second Step Merger becomes effective, as set forth in the Certificate of Merger. 2.3 Effects of the Second Step Merger. At and after the Effective Time, the Second Step Merger shall have the effects set forth in Sections 259 and 261 of the DGCL. 2.4 Conversion of FCN Common Stock; FCN Preferred Stock. At the Effective Time, by virtue of the Second Step Merger and without any action on the part of BANC ONE, Newco, FCN or the holder of any of the following securities: (a) Subject to Section 3.2(e), each share of the common stock, par value $1.00 per share, of FCN (the "FCN Common Stock" and, together with the FCN Preferred Stock, the "FCN Capital Stock") issued and outstanding immediately prior to the Effective Time (other than shares of FCN Capital Stock held in FCN's treasury or directly or indirectly by BANC ONE, Newco or FCN or any of their respective wholly owned Subsidiaries (except for Trust Account Shares and DPC shares) shall be converted into the right to receive 1.62 shares (the "Exchange Ratio") of Newco Common Stock (the Newco Common Stock and the Newco New Preferred Stock (as defined Section 2.4(c)) being referred to herein as the "Newco Capital Stock")). (b) Each share of FCN Preferred Stock with Cumulative and Adjustable Dividends, Series B, without par value (the "FCN Series B Preferred"), issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive one share of preferred stock with cumulative and adjustable dividends of Newco designated as the Preferred Stock with Cumulative and Adjustable Dividends, Series B, of Newco (the "Newco Series B Adjustable Preferred"). The terms of the Newco Series B Adjustable Preferred shall be substantially the same as the terms of the FCN Series B Preferred. -5- (c) Each share of FCN Preferred Stock with Cumulative and Adjustable Dividends, Series C, without par value (the "FCN Series C Preferred" and, together with the FCN Series B Preferred, the "FCN Preferred Stock"), issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive one share of preferred stock with cumulative and adjustable dividends of Newco designated as the Preferred Stock with Cumulative and Adjustable Dividends, Series C, of Newco (the "Newco Series C Adjustable Preferred" and, together with the Newco Series B Adjustable Preferred, the "Newco New Preferred Stock"). The terms of the Newco Series C Adjustable Preferred shall be substantially the same as the terms of the FCN Series C Preferred. (d) All of the shares of FCN Common Stock converted into the right to receive Newco Common Stock pursuant to this Article II shall no longer be outstanding and shall automatically be cancelled and shall cease to exist as of the Effective Time, and each certificate (each a "Common Certificate") previously representing any such shares of FCN Common Stock shall thereafter represent only the right to receive (i) a certificate representing the number of whole shares of Newco Common Stock and (ii) cash in lieu of fractional shares into which the shares of FCN Common Stock represented by such Common Certificate have been converted pursuant to this Section 2.4 and Section 3.2(e). Common Certificates previously representing shares of FCN Common Stock shall be exchanged for certificates representing whole shares of Newco Common Stock and cash in lieu of fractional shares issued in consideration therefor upon the surrender of such Common Certificates in accordance with Section 3.2, without any interest thereon. If, prior to the Effective Time, the outstanding shares of FCN Common Stock or BANC ONE Common Stock (or, following the consummation of the First Step Merger, the outstanding shares of Newco Common Stock) shall have been increased, decreased, changed into or exchanged for a different number or kind of shares or securities as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar change in capitalization (other than solely as a result of the First Step Merger), an appropriate and proportionate adjustment shall be made to the Exchange Ratio and to the FCN Maximum Share Amount. (e) At the Effective Time, all shares of FCN Common Stock that are owned by FCN as treasury stock and all shares of FCN Common Stock that are owned, directly or indirectly, by BANC ONE, Newco or FCN or any of their respective wholly owned Subsidiaries (other than Trust Account Shares and DPC Shares) shall be cancelled and shall cease to exist and no stock of Newco or other consideration shall be delivered in exchange therefor. All shares of Newco Common Stock that are owned by FCN or any of its wholly-owned Subsidiaries (other than Trust -6- Account Shares and DPC Shares) shall become treasury stock of Newco. (f) All of the shares of FCN Preferred Stock converted into Newco New Preferred Stock pursuant to this Article II shall no longer be outstanding and shall automatically be cancelled and shall cease to exist as of the Effective Time, and each certificate (each a "Preferred Stock Certificate"; and together with a Common Certificate, a "Certificate") previously representing any such shares of FCN Preferred Stock shall thereafter represent the right to receive a certificate representing the number of shares of corresponding Newco New Preferred Stock into which the shares of FCN Preferred Stock represented by such Preferred Stock Certificate have been converted pursuant to this Section 2.4. Preferred Stock Certificates previously representing shares of FCN Preferred Stock shall be exchanged for certificates representing shares of corresponding Newco New Preferred Stock issued in consideration therefor upon the surrender of such Preferred Stock Certificates in accordance with Section 3.2 hereof, without any interest thereon. 2.5 Newco Common Stock. At and after the Effective Time, each share of Newco Common Stock issued and outstanding immediately prior to the Closing Date shall remain an issued and outstanding share of common stock of the Surviving Corporation and shall not be affected by the Second Step Merger. 2.6 Options. (a) At the Effective Time, each option granted by FCN to purchase shares of FCN Common Stock which is outstanding and unexercised immediately prior thereto shall cease to represent a right to acquire shares of FCN Common Stock and shall be converted automatically into an option to purchase shares of Newco Common Stock in an amount and at an exercise price determined as provided below (and otherwise, in the case of options, subject to the terms of the FCN Benefit Plans pursuant to which such options have been issued (such plans collectively the "FCN Stock Plans") and the agreements evidencing grants thereunder)): (i) The number of shares of Newco Common Stock to be subject to the new option shall be equal to the product of the number of shares of FCN Common Stock subject to the original option and the Exchange Ratio, provided that any fractional shares of Newco Common Stock resulting from such multiplication shall be rounded to the nearest whole share; and (ii) The exercise price per share of Newco Common Stock under the new option shall be equal to the exercise price per share of FCN Common Stock under the original option divided by the Exchange Ratio, provided that such -7- exercise price shall be rounded down to the nearest whole cent. (b) The adjustment provided herein with respect to any options which are "incentive stock options" (as defined in Section 422 of the the Code) shall be and is intended to be effected in a manner which is consistent with Section 424(a) of the Code. The duration and other terms of the new option shall be the same as the original option except that all references to FCN shall be deemed to be references to Newco. 2.7 Certificate of Incorporation. Subject to the terms and conditions of this Agreement, at the Effective Time, the Certificate of Incorporation of Newco shall be the Certificate of Incorporation of the Surviving Corporation until thereafter amended in accordance with applicable law. 2.8 By-Laws. Subject to the terms and conditions of this Agreement, at the Effective Time, the By-Laws of Newco shall be the By-Laws of the Surviving Corporation until thereafter amended in accordance with applicable law. 2.9 Tax and Accounting Consequences. It is intended that the First Step Merger and the Second Step Merger shall each constitute a reorganization within the meaning of Section 368(a) of the Code, that this Agreement shall constitute a "plan of reorganization" for the purposes of Sections 354 and 361 of the Code and that the Merger be accounted for as a "pooling of interests" under generally accepted accounting principles ("GAAP"). 2.10 Management Succession. At the Effective Time, Verne G. Istock shall be Chairman of the Board of the Surviving Corporation and John B. McCoy shall be the President and Chief Executive Officer of the Surviving Corporation. 2.11 Board of Directors. (a) From and after the Effective Time, until duly changed in compliance with applicable law and the Certificate of Incorporation and Bylaws of the Surviving Corporation, the Board of Directors of the Surviving Corporation shall consist of 22 persons, including Messrs. Istock and McCoy, 10 additional persons to be named by Mr. McCoy and the Board of Directors of BANC ONE, and 10 additional persons to be named by Mr. Istock and the Board of Directors of FCN. (b) From and after the Effective Time, the representatives of BANC ONE and FCN shall be represented in proportion to the aggregate representation set forth above on all committees of the Board of Directors of the Surviving Corporation. -8- 2.12 Headquarters of Surviving Corporation. At the Effective Time, the location of the headquarters and principal executive offices of the Surviving Corporation shall be that of the headquarters and principal executive offices of FCN as of the date of this Agreement. ARTICLE III EXCHANGE OF SHARES 3.1 Newco to Make Shares Available. At or prior to the Effective Time, Newco shall deposit, or shall cause to be deposited, with FCN Trust Company of New York, or another bank or trust company reasonably acceptable to each of BANC ONE and FCN (the "Exchange Agent"), for the benefit of the holders of Certificates, for exchange in accordance with this Article III, certificates representing the shares of Newco Common Stock and Newco New Preferred Stock, and cash in lieu of any fractional shares (such cash and certificates for shares of Newco Common Stock and Newco New Preferred Stock, together with any dividends or distributions with respect thereto, being hereinafter referred to as the "Exchange Fund"), to be issued pursuant to Section 2.4 and paid pursuant to Section 3.2(a) in exchange for outstanding shares of FCN Capital Stock. 3.2 Exchange of Shares. (a) As soon as practicable after the Effective Time, and in no event later than five business days thereafter, the Exchange Agent shall mail to each holder of record of one or more Certificates a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent) and instructions for use in effecting the surrender of the Certificates in exchange for certificates representing the shares of Newco Common Stock, Newco New Preferred Stock and any cash in lieu of fractional shares into which the shares of FCN Common Stock or FCN Preferred Stock represented by such Certificate or Certificates shall have been converted pursuant to this Agreement. Upon proper surrender of a Certificate for exchange and cancellation to the Exchange Agent, together with such properly completed letter of transmittal, duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor, as applicable, (i) a certificate representing that number of whole shares of Newco Common Stock or Newco New Preferred Stock to which such holder of FCN Common Stock or FCN Preferred Stock shall have become entitled pursuant to the provisions of Article II and (ii) a check representing the amount of any cash in lieu of fractional shares which such holder has the right to receive in respect of the Certificate surrendered -9- pursuant to the provisions of this Article III, and the Certificate so surrendered shall forthwith be cancelled. No interest will be paid or accrued on any cash in lieu of fractional shares or on any unpaid dividends and distributions payable to holders of Certificates. (b) No dividends or other distributions declared with respect to Newco Common Stock or Newco New Preferred Stock shall be paid to the holder of any unsurrendered Certificate until the holder thereof shall surrender such Certificate in accordance with this Article III. After the surrender of a Certificate in accordance with this Article III, the record holder thereof shall be entitled to receive any such dividends or other distributions, without any interest thereon, which theretofore had become payable with respect to shares of Newco Common Stock or Newco New Preferred Stock represented by such Certificate. (c) If any certificate representing shares of Newco Common Stock or Newco New Preferred Stock is to be issued in a name other than that in which the Certificate surrendered in exchange therefor is registered, it shall be a condition of the issuance thereof that the Certificate so surrendered shall be properly endorsed (or accompanied by an appropriate instrument of transfer) and otherwise in proper form for transfer, and that the person requesting such exchange shall pay to the Exchange Agent in advance any transfer or other taxes required by reason of the issuance of a certificate representing shares of Newco Common Stock or Newco New Preferred Stock in any name other than that of the registered holder of the Certificate surrendered, or required for any other reason, or shall establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable. (d) After the Effective Time, there shall be no transfers on the stock transfer books of FCN of the shares of FCN Common Stock or FCN Preferred Stock which were issued and outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates representing such shares are presented for transfer to the Exchange Agent, they shall be cancelled and exchanged for certificates representing shares of Newco Common Stock or Newco New Preferred Stock as provided in this Article III. (e) Notwithstanding anything to the contrary contained herein, no certificates or scrip representing fractional shares of Newco Common Stock shall be issued upon the surrender for exchange of Certificates, no dividend or distribution with respect to Newco Common Stock shall be payable on or with respect to any fractional share, and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a stockholder of Newco. In lieu of the issuance of -10- any such fractional share, Newco shall pay to each former stockholder of FCN who otherwise would be entitled to receive such fractional share an amount in cash determined by multiplying (i) the average of the closing-sale prices of BANC ONE Common Stock on the New York Stock Exchange, Inc. (the "NYSE") as reported by The Wall Street Journal for the five trading days immediately preceding the date of the Effective Time by (ii) the fraction of a share (rounded to the nearest thousandth when expressed in decimal form) of Newco Common Stock to which such holder would otherwise be entitled to receive pursuant to Section 1.4. (f) Any portion of the Exchange Fund that remains unclaimed by the stockholders of FCN for 12 months after the Effective Time shall be paid to Newco. Any former stockholders of FCN who have not theretofore complied with this Article III shall thereafter look only to Newco for payment of the shares of Newco Common Stock or Newco New Preferred Stock, cash in lieu of any fractional shares and any unpaid dividends and distributions on the Newco Common Stock or Newco New Preferred Stock deliverable in respect of each share of FCN Common Stock or FCN Preferred Stock, as the case may be, such stockholder holds as determined pursuant to this Agreement, in each case, without any interest thereon. Notwithstanding the foregoing, none of BANC ONE, Newco, FCN, the Exchange Agent or any other person shall be liable to any former holder of shares of FCN Common Stock or FCN Preferred Stock for any amount delivered in good faith to a public official pursuant to applicable abandoned property, escheat or similar laws. (g) In the event any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if reasonably required by Newco, the posting by such person of a bond in such amount as Newco may determine is reasonably necessary as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Certificate the shares of Newco Capital Stock and any cash in lieu of fractional shares deliverable in respect thereof pursuant to this Agreement. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF FCN Except as disclosed in the FCN disclosure schedule delivered to BANC ONE concurrently herewith (the "FCN Disclosure Schedule") FCN hereby represents and warrants to BANC ONE as follows: -11- 4.1 Corporate Organization. (a) FCN is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. FCN has the corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would not have a Material Adverse Effect on FCN. As used in this Agreement, the term "Material Adverse Effect" means, with respect to BANC ONE, FCN or the Surviving Corporation, as the case may be, a material adverse effect on (i) the business, operations, results of operations or financial condition of such party and its Subsidiaries taken as a whole or (ii) the ability of such party to consummate the transactions contemplated hereby. As used in this Agreement, the word "Subsidiary" when used with respect to any party, means any bank, corporation, partnership, limited liability company, or other organization, whether incorporated or unincorporated, which is consolidated with such party for financial reporting purposes. FCN is duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended (the "BHC Act"). True and complete copies of the Restated Certificate of Incorporation (the "FCN Certificate of Incorporation") and By-Laws of FCN, as in effect as of the date of this Agreement, have previously been made available by FCN to BANC ONE. (b) Each FCN Subsidiary (i) is duly organized and validly existing as a bank, corporation, partnership or limited liability company under the laws of its jurisdiction of organization, (ii) is duly qualified to do business and in good standing in all jurisdictions (whether federal, state, local or foreign) where its ownership or leasing of property or the conduct of its business requires it to be so qualified and in which the failure to be so qualified would have a Material Adverse Effect on FCN and (iii) has all requisite corporate power and authority to own or lease its properties and assets and to carry on its business as now conducted. (c) The minute books of FCN accurately reflect in all material respects all corporate actions held or taken since January 1, 1996 of its stockholders and Board of Directors (including committees of the Board of Directors of FCN). 4.2 Capitalization. (a) The authorized capital stock of FCN consists of (i) 750,000,000 shares of FCN Common Stock, of which, as of March 31, 1998, 287,187,823 shares were issued and outstanding and 32,321,153 shares were held in treasury, and (ii) 10,000,000 shares of FCN Preferred Stock, of which, as of the date hereof, (A) 1,191,000 shares were designated, issued -12- and outstanding as FCN Series B Preferred, (B) 713,800 shares were designated, issued and outstanding as FCN Series C Preferred, (C) 160,000 shares were designated and no shares were issued and outstanding as 8.45% Cumulative Preferred Stock, Series E, stated value $625 per share, and (D) 40,000 shares were designated and no shares were issued and outstanding as 5 3/4% Cumulative Convertible Preferred Stock, Series B, stated value $5,000 per share. All of the issued and outstanding shares of FCN Capital Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. As of the date of this Agreement, except pursuant to the terms of (i) the FCN Option Agreement, (ii) options issued pursuant to the FCN Stock Plans, (iii) the FCN 7 1/2% preferred purchase units due May 10, 2023 and (iv) the Asset Purchase Agreement, dated as of November 18, 1997, between FCN and Roney & Co., L.L.C. (the "Roney Agreement"), FCN does not have and is not bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of FCN Capital Stock or any other equity securities of FCN or any securities representing the right to purchase or otherwise receive any shares of FCN Common Stock or FCN Preferred Stock (collectively, including the items contemplated by clauses (i) through (iv) of this sentence, the "FCN Rights"). As of the date of this Agreement, no shares of FCN Capital Stock are reserved for issuance, except for 63,582,286 shares of FCN Common Stock reserved for issuance upon exercise of the FCN Option Agreement, shares of FCN Common Stock reserved for issuance in connection with FCN Employee Stock Purchase and Savings Plan (the "ESPSP"), shares of FCN Common Stock reserved for issuance in connection with the FCN Dividend Reinvestment Plan, 13,100,000 shares of FCN Common Stock reserved for issuance upon the exercise of stock options pursuant to the FCN Stock Plans and shares of FCN Common Stock reserved for issuance in connection with the Roney Agreement. Since December 31, 1997, FCN has not issued any shares of its capital stock or any securities convertible into or exercisable for any shares of its capital stock, other than pursuant to the FCN Option Agreement, the ESPSP, the FCN Dividend Reinvestment Plan, the exercise of employee stock options granted prior to such date, the FCN Stock Performance Plan and the Roney Agreement. Assuming compliance by BANC ONE and Newco with Articles I and II of this Agreement, after the Effective Time, there will not be any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character by which FCN or any of its Subsidiaries or their respective successors will be bound calling for the purchase or issuance of any shares of the capital stock of FCN. FCN has previously provided BANC ONE with a list of the option holders, the date of each option to purchase FCN Common Stock granted, the number of shares subject to each such option, the expiration date of each such option, and the price -13- at which each such option may be exercised under an applicable FCN Stock Plan. In no event will the aggregate number of shares of FCN Common Stock outstanding at the Effective Time (including all shares of FCN Common Stock subject to FCN Rights other than the FCN Option Agreement) exceed the number specified in Section 4.2(a) of the FCN Disclosure Schedule. (b) FCN owns, directly or indirectly, all of the issued and outstanding shares of capital stock or other equity ownership interests of each of the FCN Subsidiaries, free and clear of any liens, pledges, charges, encumbrances and security interests whatsoever ("Liens"), and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. No FCN Subsidiary has or is bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other equity security of such Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary. 4.3 Authority; No Violation. (a) FCN has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly approved by the Board of Directors of FCN. The Board of Directors of FCN has directed that this Agreement and the transactions contemplated hereby be submitted to FCN's stockholders for approval at a meeting of such stockholders and, except for the adoption of this Agreement by the affirmative vote of the holders of a majority of the outstanding shares of FCN Common Stock, no other corporate proceedings on the part of FCN are necessary to approve this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by FCN and (assuming due authorization, execution and delivery by BANC ONE and Newco) constitutes a valid and binding obligation of FCN, enforceable against FCN in accordance with its terms. (b) Neither the execution and delivery of this Agreement by FCN nor the consummation by FCN of the transactions contemplated hereby, nor compliance by FCN with any of the terms or provisions hereof, will (i) violate any provision of the FCN Certificate of Incorporation or By-Laws or (ii) assuming that the consents and approvals referred to in Section 4.4 are duly obtained, (x) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to FCN or any of its Subsidiaries or any of their respective properties or assets, or (y) violate, conflict with, result in -14- a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of FCN or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which FCN or any of its Subsidiaries is a party, or by which they or any of their respective properties or assets may be bound or affected, except (in the case of clause (y) above) for such violations, conflicts, breaches or defaults which, either individually or in the aggregate, will not have or be reasonably likely to have a Material Adverse Effect on FCN. 4.4 Consents and Approvals. Except for (i) the filing of applications and notices, as applicable, with the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") under the BHC Act and approval of such applications and notices, (ii) the filing of any required applications or notices with any state or foreign agencies and approval of such applications and notices (the "State Approvals"), (iii) the filing with the Securities and Exchange Commission (the "SEC") of a joint proxy statement in definitive form relating to the meetings of BANC ONE's shareholders and FCN's stockholders to be held in connection with this Agreement and the transactions contemplated hereby (the "Joint Proxy Statement") and the registration statement on Form S-4 (the "S-4") in which the Joint Proxy Statement will be included as a prospectus, (iv) the filing of the Certificate of Merger with the Delaware Secretary pursuant to the DGCL, and certificate of merger with the Ohio Secretary pursuant to the OGCL and a certificate of merger with the Delaware Secretary pursuant to the DGCL in respect of the First Step Merger, (v) any notices to or filings with the Small Business Administration ("SBA"), (vi) any consents, authorizations, approvals, filings or exemptions in connection with compliance with the applicable provisions of federal and state securities laws relating to the regulation of broker-dealers or investment advisers, and federal commodities laws relating to the regulation of futures commission merchants and the rules and regulations thereunder and of any applicable industry self-regulatory organization ("SRO"), and the rules of the NYSE, or which are required under consumer finance, mortgage banking and other similar laws, (vii) such filings and approvals as are required to be made or obtained under the securities or "Blue Sky" laws of various states in connection with the issuance of the shares of Newco Common Stock pursuant to this Agreement and (viii) the approval of this Agreement by the requisite vote of the stockholders of BANC ONE and FCN, no consents or approvals of or filings or registrations with any court, administrative -15- agency or commission or other governmental authority or instrumentality (each a "Governmental Entity") or with any third party are necessary in connection with (A) the execution and delivery by FCN of this Agreement and (B) the consummation by FCN of the Second Step Merger and the other transactions contemplated hereby. 4.5 Reports. FCN and each of its Subsidiaries have timely filed all reports, registrations and statements, together with any amendments required to be made with respect thereto, that they were required to file since January 1, 1996 with (i) the Federal Reserve Board, (ii) the Federal Deposit Insurance Corporation, (iii) any state regulatory authority (each a "State Regulator"), (iv) the Office of the Comptroller of the Currency (the "OCC"), (v) the SEC and (vi) any SRO (collectively "Regulatory Agencies"), and all other reports and statements required to be filed by them since January 1, 1996, including, without limitation, any report or statement required to be filed pursuant to the laws, rules or regulations of the United States, any state, or any Regulatory Agency, and have paid all fees and assessments due and payable in connection therewith, except where the failure to file such report, registration or statement or to pay such fees and assessments, either individually or in the aggregate, will not have a Material Adverse Effect on FCN. Except for normal examinations conducted by a Regulatory Agency in the regular course of the business of FCN and its Subsidiaries, no Regulatory Agency has initiated any proceeding or, to the best knowledge of FCN, investigation into the business or operations of FCN or any of its Subsidiaries since January 1, 1996, except where such proceedings or investigation are not likely, either individually or in the aggregate, to have a Material Adverse Effect on FCN. There is no unresolved violation, criticism, or exception by any Regulatory Agency with respect to any report or statement relating to any examinations of FCN or any of its Subsidiaries which, in the reasonable judgment of FCN, is likely, either individually or in the aggregate, to have a Material Adverse Effect on FCN. 4.6 Financial Statements. FCN has previously made available to BANC ONE copies of the consolidated balance sheets of FCN and its Subsidiaries as of December 31, for the fiscal years 1996 and 1997, and the related consolidated statements of income, changes in stockholders' equity and cash flows for the fiscal years 1995 through 1997, inclusive, as reported in FCN's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 filed with the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in each case accompanied by the audit report of Arthur Andersen LLP, independent public accountants with respect to FCN. The December 31, 1997 consolidated balance sheet of FCN (including the related -16- notes, where applicable) fairly presents the consolidated financial position of FCN and its Subsidiaries as of the date thereof, and the other financial statements referred to in this Section 4.6 (including the related notes, where applicable) fairly present the results of the consolidated operations and changes in stockholders' equity and consolidated financial position of FCN and its Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth; each of such statements (including the related notes, where applicable) comply in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto; and each of such statements (including the related notes, where applicable) has been prepared in all material respects in accordance with GAAP consistently applied during the periods involved, except, in each case, as indicated in such statements or in the notes thereto. The books and records of FCN and its Subsidiaries have been, and are being, maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements and reflect only actual transactions. The reserve for possible loan and lease losses shown on the December 31, 1997 consolidated balance sheet of FCN is adequate in all material respects under the requirements of GAAP to provide for possible losses, net of recoveries relating to loans previously charged off, on loans outstanding (including, without limitation, accrued interest receivable) as of December 31, 1997. 4.7 Broker's Fees. Except as set forth in the engagement letter agreements between FCN and each of Lazard Freres & Co. LLC and Goldman, Sachs & Co., true and complete copies of which have previously been provided to BANC ONE, neither FCN nor any FCN Subsidiary nor any of their respective officers or directors has employed any broker or finder or incurred any liability for any broker's fees, commissions or finder's fees in connection with the Second Step Merger or related transactions contemplated by this Agreement or the Option Agreements. 4.8 Absence of Certain Changes or Events. (a) Except as publicly disclosed in FCN Reports filed prior to the date hereof, since December 31, 1997, no event or events have occurred which have had, individually or in the aggregate, a Material Adverse Effect on FCN. (b) Except as publicly disclosed in FCN Reports filed prior to the date hereof, since December 31, 1997, FCN and its Subsidiaries have carried on their respective businesses in all material respects in the ordinary and usual course. -17- (c) Since December 31, 1997, neither FCN nor any of its Subsidiaries has (i) except for such actions as are in the ordinary course of business consistent with past practice or except as required by applicable law, (A) increased the wages, salaries, compensation, pension, or other fringe benefits or perquisites payable to any executive officer, employee, or director from the amount thereof in effect as of December 31, 1997, or (B) granted any severance or termination pay, entered into any contract to make or grant any severance or termination pay, or paid any bonuses aggregating in excess of 5% of FCN's 1997 salary and employee benefits expenses, other than customary year-end bonuses for fiscal 1997, or (ii) suffered any strike, work stoppage, slowdown, or other labor disturbance which is likely, either individually or in the aggregate, to have a Material Adverse Effect on FCN. 4.9 Legal Proceedings. (a) Neither FCN nor any of its Subsidiaries is a party to any, and there are no pending or, to the best of FCN's knowledge, threatened, material legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any nature against FCN or any of its Subsidiaries or challenging the validity or propriety of the transactions contemplated by this Agreement or the FCN Option Agreement as to which there is a reasonable probability of an adverse determination and which, if adversely determined, would, individually or in the aggregate, have a Material Adverse Effect on FCN. (b) There is no injunction, order, judgment, decree, or regulatory restriction (other than those that apply to similarly situated bank holding companies or banks) imposed upon FCN, any of its Subsidiaries or the assets of FCN or any of its Subsidiaries which has had, or might reasonably be expected to have, a Material Adverse Effect on FCN. 4.10 Taxes and Tax Returns. (a) Each of FCN and its Subsidiaries has duly filed all federal, state, county, foreign and, to the best of FCN's knowledge, local information returns and tax returns required to be filed by it on or prior to the date hereof (all such returns being accurate and complete in all material respects) and has duly paid or made provisions for the payment of all Taxes and other governmental charges which have been incurred or are due or claimed to be due from it by federal, state, county, foreign or local taxing authorities on or prior to the date of this Agreement (including, without limitation, if and to the extent applicable, those due in respect of its properties, income, business, capital stock, deposits, franchises, licenses, sales and payrolls) other than (i) Taxes or other charges which are not yet delinquent or are being contested in good faith and have not been finally determined, or (ii) information returns, tax returns, Taxes or other governmental charges the failure to file, pay or make provision -18- for, either individually or in the aggregate, are not likely, in the reasonable judgment of FCN, to have a Material Adverse Effect on FCN. The income tax returns of FCN and its Subsidiaries have been examined by the Internal Revenue Service (the "IRS") and any liability with respect thereto has been satisfied for all years to and including 1982, and either no material deficiencies were asserted as a result of such examination for which FCN does not have adequate reserves or all such deficiencies were satisfied. To the best of FCN's knowledge, there are no material disputes pending, or claims asserted for, Taxes or assessments upon FCN or any of its Subsidiaries for which FCN does not have adequate reserves, nor has FCN or any of its Subsidiaries given any currently effective waivers extending the statutory period of limitation applicable to any federal, state, county or local income tax return for any period. In addition, (A) proper and accurate amounts have been withheld by FCN and its Subsidiaries from their employees for all prior periods in compliance in all material respects with the tax withholding provisions of applicable federal, state and local laws, except where failure to do so would not have a Material Adverse Effect on FCN, (B) federal, state, county and local returns which are accurate and complete in all material respects have been filed by FCN and its Subsidiaries for all periods for which returns were due with respect to income tax withholding, Social Security and unemployment taxes, except where failure to do so would not have a Material Adverse Effect on FCN, (C) the amounts shown on such federal, state, local or county returns to be due and payable have been paid in full or adequate provision therefor has been included by FCN in its consolidated financial statements as of December 31, 1997, except where failure to do so would not have a Material Adverse Effect on FCN and (D) there are no Tax liens upon any property or assets of FCN or its Subsidiaries except liens for current taxes not yet due or liens that would not have a Material Adverse Effect on FCN. Neither FCN nor any of its Subsidiaries has been required to include in income any adjustment pursuant to Section 481 of the Code by reason of a voluntary change in accounting method initiated by FCN or any of its Subsidiaries, and the IRS has not initiated or proposed any such adjustment or change in accounting method, in either case which has had or is reasonably likely to have a Material Adverse Effect on FCN. Except as set forth in the financial statements described in Section 4.6, neither FCN nor any of its Subsidiaries has entered into a transaction which is being accounted for as an installment obligation under Section 453 of the Code, which would be reasonably likely to have a Material Adverse Effect on FCN. (b) As used in this Agreement, the term "Tax" or "Taxes" means all federal, state, county, local, and foreign income, excise, gross receipts, gross income, ad valorem, profits, -19- gains, property, capital, sales, transfer, use, payroll, employment, severance, withholding, duties, intangibles, franchise, backup withholding, and other taxes, charges, levies or like assessments together with all penalties and additions to tax and interest thereon. (c) No disallowance of a deduction under Section 162(m) of the Code for employee remuneration of any amount paid or payable by FCN or any Subsidiary of FCN under any contract, plan, program, arrangement or understanding would be reasonably likely to have a Material Adverse Effect on FCN. 4.11 Employees. (a) The FCN Disclosure Schedule sets forth a true and complete list of each material employee or director benefit plan, arrangement or agreement that is maintained, or conributed to, as of the date of this Agreement (the "FCN Benefit Plans") by FCN or any of its Subsidiaries or by any trade or business, whether or not incorporated (a "FCN ERISA Affiliate"), all of which together with FCN would be deemed a "single employer" within the meaning of Section 4001 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). (b) FCN has heretofore made available to BANC ONE true and complete copies of each of the FCN Benefit Plans and certain related documents, including, but not limited to, (i) the actuarial report for such FCN Benefit Plan (if applicable) for each of the last two years, and (ii) the most recent determination letter from the IRS (if applicable) for such Plan. (c) (i) Each of the FCN Benefit Plans has been operated and administered in all material respects with applicable laws, including, but not limited to, ERISA and the Code, (ii) each of the FCN Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of the Code is so qualified, and there are no existing circumstances or any events that have occurred that could reasonably be expected to adversely affect the qualified status of any such plan, (iii) with respect to each Plan which is subject to Title IV of ERISA, the present value of accrued benefits under such Plan, based upon the actuarial assumptions used for funding purposes in the most recent actuarial report prepared by such Plan's actuary with respect to such Plan, did not, as of its latest valuation date, exceed the then current value of the assets of such Plan allocable to such accrued benefits, (iv) no FCN Benefit Plan provides benefits, including, without limitation, death or medical benefits (whether or not insured), with respect to current or former employees or directors of FCN, its Subsidiaries or any FCN ERISA Affiliate beyond their retirement or other termination of service, other than (A) coverage mandated by applicable law, (B) death benefits or retirement benefits under any "employee pension plan" (as such term is defined in Section -20- 3(2) of ERISA), (C) deferred compensation benefits accrued as liabilities on the books of FCN, its Subsidiaries or the FCN ERISA Affiliates or (D) benefits the full cost of which is borne by the current or former employee or director (or his beneficiary), (v) no material liability under Title IV of ERISA has been incurred by FCN, its Subsidiaries or any FCN ERISA Affiliate that has not been satisfied in full, and no condition exists that presents a material risk to FCN, its Subsidiaries or any FCN ERISA Affiliate of incurring a material liability thereunder, (vi) no FCN Benefit Plan is a "multiemployer pension plan" (as such term is defined in Section 3(37) of ERISA), (vii) all contributions or other amounts payable by FCN or its Subsidiaries as of the Effective Time with respect to each FCN Benefit Plan in respect of current or prior plan years have been paid or accrued in accordance with GAAP and Section 412 of the Code, (viii) neither FCN, its Subsidiaries nor any FCN ERISA Affiliate has engaged in a transaction in connection with which FCN, its Subsidiaries or any FCN ERISA Affiliate reasonably could be subject to either a material civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a material tax imposed pursuant to Section 4975 or 4976 of the Code, and (ix) to the best knowledge of FCN there are no pending, threatened or anticipated claims (other than routine claims for benefits) by, on behalf of or against any of the FCN Benefit Plans or any trusts related thereto which are, in the reasonable judgment of FCN, likely, either individually or in the aggregate, to have a Material Adverse Effect on FCN. (d) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (either alone or in conjunction with any other event) (i) result in any material payment (including, without limitation, severance, unemployment compensation, "excess parachute payment" (within the meaning of Section 280G of the Code), forgiveness of indebtedness or otherwise) becoming due to any director or any employee of FCN or any of its affiliates from FCN or any of its affiliates under any FCN Benefit Plan or otherwise, (ii) materially increase any benefits otherwise payable under any FCN Benefit Plan or (iii) result in any acceleration of the time of payment or vesting of any such benefits to any material extent. 4.12 SEC Reports. FCN has previously made available to BANC ONE an accurate and complete copy of each (a) final registration statement, prospectus, report, schedule and definitive proxy statement filed since January 1, 1996 by FCN with the SEC pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act (the "FCN Reports") and prior to the date hereof and (b) communication mailed by FCN to its stockholders since January 1, 1996 and prior to the date hereof, and no such registration statement, prospectus, report, schedule, proxy statement or communication contained any untrue -21- statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading, except that information as of a later date shall be deemed to modify information as of an earlier date. Since January 1, 1996, FCN has timely filed all FCN Reports and other documents required to be filed by it under the Securities Act and the Exchange Act, and, as of their respective dates, all FCN Reports complied in all material respects with the published rules and regulations of the SEC with respect thereto. 4.13 Compliance with Applicable Law. FCN and each of its Subsidiaries hold all material licenses, franchises, permits and authorizations necessary for the lawful conduct of their respective businesses under and pursuant to each, and have complied in all material respects with and are not in default in any material respect under any, applicable law, statute, order, rule, regulation, policy and/or guideline of any Governmental Entity relating to FCN or any of its Subsidiaries, except where the failure to hold such license, franchise, permit or authorization or such noncompliance or default would not, individually or in the aggregate, have a Material Adverse Effect on FCN. 4.14 Certain Contracts. (a) Neither FCN nor any of its Subsidiaries is a party to or bound by any contract, arrangement, commitment or understanding (whether written or oral) (i) with respect to the employment of any directors, officers or employees, other than in the ordinary course of business consistent with past practice, (ii) which, upon the consummation or stockholder approval of the transactions contemplated by this Agreement will (either alone or upon the occurrence of any additional acts or events) result in any payment (whether of severance pay or otherwise) becoming due from BANC ONE, FCN, the Surviving Corporation, or any of their respective Subsidiaries to any officer or employee thereof, (iii) which is a "material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed after the date of this Agreement that has not been filed or incorporated by reference in the FCN Reports, (iv) which materially restricts the conduct of any line of business by FCN, (v) with or to a labor union or guild (including any collective bargaining agreement) or (vi) (including any stock option plan, stock appreciation rights plan, restricted stock plan or stock purchase plan) any of the benefits of which will be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement, or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement. FCN has previously made available to BANC ONE true and correct copies of all employment and deferred compensation -22- agreements which are in writing and to which FCN is a party. Each contract, arrangement, commitment or understanding of the type described in this Section 4.14(a), whether or not set forth in the FCN Disclosure Schedule, is referred to herein as an "FCN Contract", and neither FCN nor any of its Subsidiaries knows of, or has received notice of, any violation of the above by any of the other parties thereto which, individually or in the aggregate, would have a Material Adverse Effect on FCN. (b) (i) Each FCN Contract is valid and binding on FCN or any of its Subsidiaries, as applicable, and in full force and effect, (ii) FCN and each of its Subsidiaries has in all material respects performed all obligations required to be performed by it to date under each FCN Contract, except where such noncompliance, individually or in the aggregate, would not have a Material Adverse Effect on FCN, and (iii) no event or condition exists which constitutes or, after notice or lapse of time or both, would constitute, a material default on the part of FCN or any of its Subsidiaries under any such FCN Contract, except where such default, individually or in the aggregate, would not have a Material Adverse Effect on FCN. 4.15 Agreements with Regulatory Agencies. Neither FCN nor any of its Subsidiaries is subject to any cease-and-desist or other order issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has been since January 1, 1996, a recipient of any supervisory letter from, or since January 1, 1996, has adopted any board resolutions at the request of any Regulatory Agency or other Governmental Entity that currently restricts in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its credit policies, its management or its business (each, whether or not set forth in the FCN Disclosure Schedule, an "FCN Regulatory Agreement"), nor has FCN or any of its Subsidiaries been advised since January 1, 1996, by any Regulatory Agency or other Governmental Entity that it is considering issuing or requesting any such Regulatory Agreement. 4.16 Other Activities of FCN and its Subsidiaries. (a) Neither of FCN nor any of its Subsidiaries that is not a bank, a bank operating subsidiary or a bank service corporation, directly or indirectly, engages in any activity prohibited by the Federal Reserve Board. Without limiting the generality of the foregoing, any equity investment of FCN and each Subsidiary that is not a bank, a bank operating subsidiary or a bank service corporation, is not prohibited by the Federal Reserve Board. -23- (b) To FCN's knowledge, each FCN Subsidiary which is a bank (a "FCN Bank Subsidiary") currently performs all personal trust, corporate trust and other fiduciary activities ("Trust Activities") with requisite authority under applicable law of Governmental Entities and in accordance in all material respects with the agreed-upon terms of the agreements and instruments governing such Trust Activities, sound fiduciary principles and applicable law and regulation (specifically including, but not limited to, Section 9 of Title 12 of the Code of Federal Regulations); there is no investigation or inquiry by any Governmental Entity pending, or to the knowledge of FCN, threatened, against or affecting FCN, or any Significant Subsidiary thereof relating to the compliance by FCN or any such Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X of the SEC) with sound fiduciary principles and applicable regulations; and except where any such failure would not have a Material Adverse Effect on FCN, each employee of a FCN Bank Subsidiary had the authority to act in the capacity in which he or she acted with respect to Trust Activities, in each case, in which such employee held himself or herself out as a representative of a FCN Bank Subsidiary; and each FCN Bank Subsidiary has established policies and procedures for the purpose of complying with applicable laws of Governmental Entities relating to Trust Activities, has followed such policies and procedures in all material respects and has performed appropriate internal audit reviews of, and has engaged independent accountants to perform audits of, Trust Activities, which audits since January 1, 1996 have disclosed no material violations of applicable laws of Governmental Entities or such policies and procedures. 4.17 Investment Securities. Each of FCN and its Subsidiaries has good and marketable title to all securities held by it (except securities sold under repurchase agreements or held in any fiduciary or agency capacity), free and clear of any Lien, except to the extent such securities are pledged in the ordinary course of business consistent with prudent banking practices to secure obligations of FCN or any of its Subsidiaries. Such securities are valued on the books of FCN in accordance with GAAP. 4.18 Interest Rate Risk Management Instruments. All interest rate swaps, caps, floors and option agreements and other interest rate risk management arrangements, whether entered into for the account of FCN or for the account of a customer of FCN or one of its Subsidiaries, were entered into in the ordinary course of business and, to FCN's knowledge, in accordance with prudent banking practice and applicable rules, regulations and policies of any Regulatory Authority and with counterparties believed to be financially responsible at the time and are legal, valid and binding obligations of FCN or one of its Subsidiaries enforceable in accordance with their terms (except as -24- may be limited by bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the rights of creditors generally and the availability of equitable remedies), and are in full force and effect. FCN and each of its Subsidiaries have duly performed in all material respects all of their material obligations thereunder to the extent that such obligations to perform have accrued; and, to FCN's knowledge, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereunder. 4.19 Undisclosed Liabilities. Except for those liabilities that are fully reflected or reserved against on the consolidated balance sheet of FCN included in the FCN December 31, 1997 Form 10-K and for liabilities incurred in the ordinary course of business consistent with past practice, since December 31, 1997, neither FCN nor any of its Subsidiaries has incurred any liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due) that, either alone or when combined with all similar liabilities, has had, or could reasonably be expected to have, a Material Adverse Effect on FCN. 4.20 Insurance. FCN and its Subsidiaries have in effect insurance coverage with reputable insurers, which in respect of amounts, premiums, types and risks insured, constitutes reasonably adequate coverage against all risks customarily insured against by bank holding companies and their subsidiaries comparable in size and operations to FCN and its Subsidiaries. 4.21 Environmental Liability. Except as set forth in the FCN Disclosure Schedule, there are no legal, administrative, arbitral or other proceedings, claims, actions, causes of action, private environmental investigations or remediation activities or governmental investigations of any nature seeking to impose, or that could reasonably result in the imposition, on FCN of any liability or obligation arising under common law or under any local, state or federal environmental statute, regulation or ordinance including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), pending or threatened against FCN, which liability or obligation could reasonably be expected to have a Material Adverse Effect on FCN. To the knowledge of FCN, there is no reasonable basis for any such proceeding, claim, action or governmental investigation that would impose any material liability or obligation that could reasonably be expected to have a Material Adverse Effect on FCN. FCN is not subject to any agreement, order, judgment, decree, letter or memorandum by or with any court, governmental authority, regulatory agency or third party imposing any material liability or obligation that could reasonably be expected to have a Material Adverse Effect on FCN. -25- 4.22 State Takeover Laws; FCN Certificate of Incorporation. The Board of Directors of FCN has approved the transactions contemplated by this Agreement and the Option Agreements (i) for purposes of Section 203(a)(1) of the DGCL such that the provisions of Section 203(a) of the DGCL and (ii) for purposes of Article Thirteenth of the FCN Certificate of Incorporation such that the provisions thereof will not apply to this Agreement or the Option Agreements or any of the transactions contemplated hereby or thereby. 4.23 Year 2000. None of FCN or any of the FCN Subsidiaries has received, or reasonably expects to receive, a "Year 2000 Deficiency Notification Letter" (as such term is employed in the Federal Reserve's Supervision and Regulation Letter No. SR 98-3(SUP), dated March 4, 1998). FCN has disclosed to BANC ONE a complete and accurate copy of FCN's plan, including an estimate of the anticipated associated costs, for addressing the issues ("Year 2000 Issues") set forth in the statements of the Federal Financial Institutions Examination Council, dated May 5, 1997, entitled "Year 2000 Project Management Awareness," and December 1997, entitled "Safety and Soundness Guidelines Concerning the Year 2000 Business Risk," as such issues affect FCN and its Subsidiaries. Between the date of this Agreement and the Effective Time, FCN shall use commercially practicable efforts to implement such plan. 4.24 Reorganization; Pooling of Interests. As of the date of this Agreement, assuming compliance by BANC ONE and FCN with the covenants and agreements set forth in Section 7.13 hereof, FCN has no reason to believe that the Second Step Merger will not qualify as a "reorganization" within the meaning of Section 368(a) of the Code and as a "pooling of interests" for accounting purposes. ARTICLE V REPRESENTATIONS AND WARRANTIES OF BANC ONE AND NEWCO Except as disclosed in the BANC ONE disclosure schedule delivered to FCN concurrently herewith (the "BANC ONE Disclosure Schedule") BANC ONE and Newco hereby represent and warrant to FCN as follows: 5.1 Corporate Organization. (a) BANC ONE is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio. BANC ONE has the corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted -26- by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would not have a Material Adverse Effect on BANC ONE. BANC ONE is, and at the Effective Time Newco will be, duly registered as a bank holding company under the BHC Act. True and complete copies of the Restated Articles of Incorporation (the "BANC ONE Articles") and Regulations (the "Regulations") of BANC ONE, and of the Certificate of Incorporation (the "Newco Certificate of Incorporation") and By-Laws of Newco, in each case as in effect as of the date of this Agreement, have previously been made available by BANC ONE to FCN. (b) Each BANC ONE Subsidiary (i) is duly organized and validly existing as a bank, corporation, partnership or limited liability company under the laws of its jurisdiction of organization, (ii) is duly qualified to do business and in good standing in all jurisdictions (whether Federal, state, local or foreign) where its ownership or leasing of property or the conduct of its business requires it to be so qualified and in which the failure to be so qualified would have a Material Adverse Effect on BANC ONE, and (iii) has all requisite corporate power and authority to own or lease its properties and assets and to carry on its business as now conducted. (c) The minute books of each of BANC ONE and Newco accurately reflect in all material respects all corporate actions held or taken since January 1, 1996 (or the date of its incorporation, in the case of Newco) of its stockholders and Board of Directors (including committees of the Board of Directors of BANC ONE). 5.2 Capitalization. (a) The authorized capital stock of BANC ONE consists of 950,000,000 shares of BANC ONE Common Stock, of which, as of March 31, 1998, 643,833,890 were issued and outstanding, and 35,000,000 shares of Preferred Stock, no par value (the "BANC ONE Preferred Stock" and, together with the BANC ONE Common Stock, the "BANC ONE Capital Stock"), of which (i) 10,000,000 shares were designated and no shares were issued and outstanding as Class A Preferred Stock ("BANC ONE Class A Preferred Stock"), (ii) 1,000,000 shares were designated and no shares were issued and outstanding as Class B Preferred Stock ("BANC ONE Class B Preferred Stock") and (iii) 24,000,000 shares were designated and 1,992,046 were issued and outstanding as Series C $3.50 Cumulative Convertible Preferred Stock, without par value, of BANC ONE (the "BANC ONE Series C Preferred"). BANC ONE has called the BANC ONE Series C Prerred for redemption and no shares of BANC ONE Series C Preferred will be outstanding at the First Effective Time. As of March 31, 1998, 3,742,299 shares of BANC ONE Common Stock were held in BANC ONE's treasury. As of the date hereof, no shares of BANC ONE Common Stock or BANC ONE Preferred Stock were reserved -27- for issuance, except for (i) 19,533,088 shares of BANC ONE Common Stock issuable upon the exercise of stock options pursuant to the BANC ONE Stock Plans, (ii) 62,599,680 shares of BANC ONE Common Stock issuable pursuant to the Agreement and Plan of Merger, dated as of October 20, 1997, by and between BANC ONE and First Commerce Corporation (the "First Commerce Merger Agreement") and (iii) the shares of BANC ONE Common Stock issuable pursuant to the BANC ONE Option Agreement. All of the issued and outstanding shares of BANC ONE Common Stock and BANC ONE Preferred Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. As of the date of this Agreement, except for the BANC ONE Option Agreement, the First Commerce Merger Agreement and the BANC ONE Stock Plans, BANC ONE does not have and is not bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of BANC ONE Common Stock or BANC ONE Preferred Stock or any other equity securities of BANC ONE or any securities representing the right to purchase or otherwise receive any shares of BANC ONE Common Stock or BANC ONE Preferred Stock (collectively, "BANC ONE Rights"). Since December 31, 1997, BANC ONE has not issued any shares of its capital stock or any securities convertible into or exercisable for any shares of its capital stock, other than in connection with a 10% stock dividend on the outstanding shares of BANC ONE Common Stock paid on February 26, 1998 and pursuant to (A) the exercise of employee stock options granted prior to such date, (B) the conversion of the BANC ONE Series C Preferred into shares of BANC ONE Common Stock in accordance with the terms thereof, (C) the consummation of the merger contemplated by the First Commerce Merger Agreement and (D) pursuant to the BANC ONE Option Agreement. BANC ONE has previously provided FCN with a list of the option holders, the date of each option to purchase BANC ONE Common Stock granted, the number of shares subject to each such option and the price at which each such option may be exercised under an applicable BANC ONE Stock Plan. In no event will the aggregate number of shares of BANC ONE Common Stock outstanding at the First Effective Time (including all shares of BANC ONE Common Stock subject to BANC ONE Rights other than the BANC ONE Option Agreement) exceed the number specified in Section 5.2(a) of the BANC ONE Disclosure Schedule. (b) The initial authorized capital stock of Newco consists of (i) 1,000 shares of Newco Common Stock, of which (x) as of the date hereof, no shares are issued and outstanding and (y) immediately prior to the First Effective Time, 100 shares will be issued and outstanding, and (ii) 1,000 shares of preferred stock, no par value per share, of which no shares are issued and outstanding. The authorized capital stock of Newco immediately following consummation of the First Step Merger -28- (and prior to the Effective Time) will be as set forth in the form of Newco Certificate of Incorporation annexed as Exhibit A hereto. No change in such capitalization has occurred since such date or will occur prior to the Effective Time except as provided in or contemplated by this Agreement. At the Effective Time, no capital stock of Newco (and no options, warrants or other rights to acquire, and no securities convertible into or exchangeable for, any such capital stock) will be outstanding other than capital stock, options, warrants, rights or securities issued or converted at the effective time of the First Step Merger in respect of BANC ONE Common Stock and any associated rights issued pursuant to and as described in Article I of this Agreement. The shares of Newco Capital Stock to be issued pursuant to the Merger will be duly authorized and validly issued and, at the Effective Time, all such shares will be fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. (c) BANC ONE owns (and will own at the First Effective Time, in the case of Newco), directly or indirectly, all of the issued and outstanding shares of capital stock or other ownership interests of each of the BANC ONE Subsidiaries and Newco, free and clear of any Liens, and all of such shares or ownership interests are duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. No BANC ONE Subsidiary has or is bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other equity security of such Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary. Newco has, and will have prior to the First Effective Time, no Subsidiaries or material investments of any kind in any entity. 5.3 Authority; No Violation. (a) Each of BANC ONE and Newco has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly approved by the Board of Directors of each of BANC ONE and Newco. As of the First Effective Time, BANC ONE, as sole stockholder of Newco, will have duly approved this Agreement and the transactions contemplated hereby. The Board of Directors of BANC ONE has directed that this Agreement and the transactions contemplated hereby be submitted to BANC ONE's shareholders for approval at a meeting of such shareholders and, except for (i) the adoption of this Agreement by the affirmative vote of the holders of a majority of the outstanding shares of BANC ONE Common Stock, (ii) the issuance to BANC ONE of shares of Newco Common Stock, (iii) the increase in -29- the number of shares of authorized capital stock of Newco contemplated by Section 7.12, (iv) the filing by Newco with the Delaware Secretary of certificates of designations with respect to the Newco New Preferred Stock and (v) the approval by BANC ONE contemplated by the prior sentence, no other corporate proceedings on the part of BANC ONE or Newco are necessary to approve this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by each of BANC ONE and Newco and (assuming due authorization, execution and delivery by FCN) constitutes a valid and binding obligation of each of BANC ONE and Newco, enforceable against each of BANC ONE and Newco in accordance with its terms. (b) Neither the execution and delivery of this Agreement by BANC ONE or Newco, nor the consummation by BANC ONE of the transactions contemplated hereby, nor compliance by BANC ONE with any of the terms or provisions hereof, will (i) violate any provision of the BANC ONE Articles or Regulations, or the Newco Certificate of Incorporation or Bylaws, or (ii) assuming that the consents and approvals referred to in Section 5.4 are duly obtained, (x) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to BANC ONE or any of its Subsidiaries or any of their respective properties or assets, or (y) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of BANC ONE or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which BANC ONE or any of its Subsidiaries is a party, or by which they or any of their respective properties or assets may be bound or affected, except (in the case of clause (y) above) for such violations, conflicts, breaches or defaults which either individually or in the aggregate will not have or be reasonably likely to have a Material Adverse Effect on BANC ONE. 5.4 Consents and Approvals. Except for (i) the filing of applications and notices, as applicable, with the Federal Reserve Board under the BHC Act and approval of such applications and notices, (ii) the State Approvals, (iii) the filing with the SEC of the Joint Proxy Statement and the S-4, (iv) the filing of the certificates of merger with the Ohio Secretary pursuant to the OGCL and with the Delaware Secretary in respect of the First Step Merger, and the Certificate of Merger with the Delaware Secretary pursuant to the DGCL, (v) any notices to -30- or filings with the SBA, (vi) any consent, authorizations, approvals, filings or exemptions in connection with compliance with the applicable provisions of federal and state securities laws relating to the regulation of broker-dealers or investment advisers, and federal commodities laws relating to the regulation of futures commission merchants and the rules and regulations thereunder and of any applicable SRO, and the rules of the NYSE, or which are required under consumer finance, mortgage banking and other similar laws, (vii) such filings and approvals as are required to be made or obtained under the securities or "Blue Sky" laws of various states in connection with the issuance of shares of Newco Common Stock pursuant to this Agreement and (viii) the approval of this Agreement by the requisite vote of the stockholders of BANC ONE and FCN, no consents or approvals of or filings or registrations with any Governmental Entity or with any third party are necessary in connection with (A) the execution and delivery by BANC ONE or Newco of this Agreement and (B) the consummation of the Merger and the other transactions contemplated hereby. 5.5 Reports. BANC ONE and each of its Subsidiaries have timely filed all reports, registrations and statements, together with any amendments required to be made with respect thereto, that they were required to file since January 1, 1996 with the Regulatory Agencies, and all other reports and statements required to be filed by them since January 1, 1996, including, without limitation, any report or statement required to be filed pursuant to the laws, rules or regulations of the United States, any state, or any Regulatory Agency and have paid all fees and assessments due and payable in connection therewith, except where the failure to file such report, registration or statement or to pay such fees and assessments, either individually or in the aggregate, will not have a Material Adverse Effect on BANC ONE. Except for normal examinations conducted by a Regulatory Agency in the regular course of the business of BANC ONE and its Subsidiaries, no Regulatory Agency has initiated any proceeding or, to the best knowledge of BANC ONE, investigation into the business or operations of BANC ONE or any of its Subsidiaries since January 1, 1996, except where such proceedings or investigation are not likely, either individually or in the aggregate, to have a Material Adverse Effect on BANC ONE. There is no unresolved violation, criticism, or exception by any Regulatory Agency with respect to any report or statement relating to any examinations of BANC ONE or any of its Subsidiaries which, in the reasonable judgment of BANC ONE, is likely, either individually or in the aggregate, to have a Material Adverse Effect on BANC ONE. 5.6 Financial Statements. BANC ONE has previously made available to FCN copies of the consolidated balance sheets of BANC ONE and its Subsidiaries as of December 31, for the fiscal years 1996 and 1997, and the related consolidated statements of -31- income, changes in stockholders' equity and cash flows for the fiscal years 1995 through 1997, inclusive, as reported in BANC ONE's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 filed with the SEC under the Exchange Act (the "BANC ONE 10-K"), in each case accompanied by the audit report of Coopers & Lybrand L.L.P., independent public accountants with respect to BANC ONE. The December 31, 1997 consolidated balance sheet of BANC ONE (including the related notes) fairly presents the consolidated financial position of BANC ONE and its Subsidiaries as of the date thereof, and the other financial statements referred to in this Section 5.6 (including the related notes) fairly present the results of the consolidated operations and changes in stockholders' equity and consolidated financial position of BANC ONE and its Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth; each of such statements (including the related notes) comply in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto; and each of such statements (including the related notes) has been prepared in all material respects in accordance with GAAP consistently applied during the periods involved, except in each case as indicated in such statements or in the notes thereto. The books and records of BANC ONE and its Subsidiaries have been, and are being, maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements and reflect only actual transactions. The reserve for possible loan and lease losses shown on the December 31, 1997 consolidated balance sheet of BANC ONE is adequate in all material respects under the requirements of GAAP to provide for possible losses, net of recoveries relating to loans previously charged off, on loans outstanding (including, without limitation, accrued interest receivable) as of December 31, 1997. 5.7 Broker's Fees. Except as set forth in the engagement letter agreements between BANC ONE and each of Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. Incorporated, true and complete copies of which have previously been provided to FCN, neither BANC ONE nor any BANC ONE Subsidiary nor any of their respective officers or directors has employed any broker or finder or incurred any liability for any broker's fees, commissions or finder's fees in connection with the Merger or related transactions contemplated by this Agreement or the Option Agreements. 5.8 Absence of Certain Changes or Events. (a) Except as publicly disclosed in BANC ONE Reports filed prior to the date hereof, since December 31, 1997, no event has occurred which has had, individually or in the aggregate, a Material Adverse Effect on BANC ONE. -32- (b) Except as publicly disclosed in BANC ONE Reports filed prior to the date hereof, since December 31, 1997, BANC ONE and its Subsidiaries have carried on their respective businesses in all material respects in the ordinary and usual course. (c) Since December 31, 1997, neither BANC ONE nor any of its Subsidiaries has (i) except for such actions as are in the ordinary course of business consistent with past practice or except as required by applicable law, (A) increased the wages, salaries, compensation, pension, or other fringe benefits or perquisites payable to any executive officer, employee, or director from the amount thereof in effect as of December 31, 1997, or (B) granted any severance or termination pay, entered into any contract to make or grant any severance or termination pay, or paid any bonuses aggregating in excess of 5% of BANC ONE's 1997 salary and employee benefit expenses, other than customary year-end bonuses for fiscal 1997 or (ii) suffered any strike, work stoppage, slowdown, or other labor disturbance which, in the reasonable judgment of BANC ONE is likely, either individually or in the aggregate, to have a Material Adverse Effect on BANC ONE. 5.9 Legal Proceedings. (a) Neither BANC ONE nor any of its Subsidiaries is a party to any and there are no pending or, to the best of BANC ONE's knowledge, threatened, material legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any nature against BANC ONE or any of its Subsidiaries or challenging the validity or propriety of the transactions contemplated by this Agreement or the BANC ONE Option Agreement as to which there is a reasonable probability of an adverse determination and which, if adversely determined, would, individually or in the aggregate, have a Material Adverse Effect on BANC ONE. (b) There is no injunction, order, judgment, decree, or regulatory restriction (other than those that apply to similarly situated bank holding companies or banks) imposed upon BANC ONE, any of its Subsidiaries or the assets of BANC ONE or any of its Subsidiaries which has had, or might reasonably be expected to have, a Material Adverse Effect on BANC ONE or the Surviving Corporation. 5.10 Taxes and Tax Returns. (a) Each of BANC ONE and its Subsidiaries has duly filed all federal, state, county, foreign and, to the best of BANC ONE's knowledge, local information returns and tax returns required to be filed by it on or prior to the date hereof (all such returns being accurate and complete in all material respects) and has duly paid or made provisions for the payment of all Taxes and other governmental charges which have been incurred or are due or claimed to be due from it by federal, state, county, foreign or local taxing -33- authorities on or prior to the date of this Agreement (including, without limitation, if and to the extent applicable, those due in respect of its properties, income, business, capital stock, deposits, franchises, licenses, sales and payrolls) other than (i) Taxes or other charges which are not yet delinquent or are being contested in good faith and have not been finally determined, or (ii) information returns, tax returns, Taxes or other governmental charges the failure to file, pay or make provision for, either individually or in the aggregate, is not likely, in the reasonable judgment of BANC ONE, to have a Material Adverse Effect on BANC ONE. The income tax returns of BANC ONE and its Subsidiaries have been examined by the IRS through 1992 and any liability with respect thereto has been satisfied, and either no material deficiencies were asserted as a result of such examination for which BANC ONE does not have adequate reserves or all such deficiencies were satisfied. To the best of BANC ONE's knowledge, there are no material disputes pending, or claims asserted for, Taxes or assessments upon BANC ONE or any of its Subsidiaries for which BANC ONE does not have adequate reserves, nor has BANC ONE or any of its Subsidiaries given any currently effective waivers extending the statutory period of limitation applicable to any federal, state, county or local income tax return for any period. In addition, (A) proper and accurate amounts have been withheld by BANC ONE and its Subsidiaries from their employees for all prior periods in compliance in all material respects with the tax withholding provisions of applicable federal, state and local laws, except where failure to do so would not have a Material Adverse Effect on BANC ONE, (B) federal, state, county and local returns which are accurate and complete in all material respects have been filed by BANC ONE and its Subsidiaries for all periods for which returns were due with respect to income tax withholding, Social Security and unemployment taxes, except where failure to do so would not have a Material Adverse Effect on BANC ONE, (C) the amounts shown on such federal, state, local or county returns to be due and payable have been paid in full or adequate provision therefor has been included by BANC ONE in its consolidated financial statements as of December 31, 1997, except where failure to do so would not have a Material Adverse Effect on BANC ONE and (D) there are no Tax liens upon any property or assets of BANC ONE or its Subsidiaries except liens for current taxes not yet due or liens that would not have a Material Adverse Effect on BANC ONE. Neither BANC ONE nor any of its Subsidiaries has been required to include in income any adjustment pursuant to Section 481 of the Code by reason of a voluntary change in accounting method initiated by BANC ONE or any of its Subsidiaries, and the IRS has not initiated or proposed any such adjustment or change in accounting method, in either case, which has had or is reasonably likely to have a Material Adverse Effect on BANC ONE. Except as set forth in the financial statements described in Section 5.6, neither BANC ONE nor any of its Subsidiaries has entered -34- into a transaction which is being accounted for as an installment obligation under Section 453 of the Code, which would be reasonably likely to have a Material Adverse Effect on BANC ONE. (b) No disallowance of a deduction under Section 162(m) of the Code for employee remuneration of any amount paid or payable by BANC ONE or any Subsidiary of BANC ONE under any contract, plan, program, arrangement or understanding would be reasonably likely to have a Material Adverse Effect on BANC ONE. 5.11 Employees. (a) The BANC ONE Disclosure Schedule sets forth a true and complete list of each material employee benefit plan, arrangement or agreement that is maintained, or contributed to, as of the date of this Agreement (the "BANC ONE Benefit Plans") by BANC ONE, any of its Subsidiaries or by any trade or business, whether or not incorporated (a "BANC ONE ERISA Affiliate"), all of which together with BANC ONE would be deemed a "single employer" within the meaning of Section 4001 of ERISA. (b) BANC ONE has heretofore made available to FCN true and complete copies of each of the BANC ONE Benefit Plans and certain related documents, including, but not limited to, (i) the actuarial report for such BANC ONE Benefit Plan (if applicable) for each of the last two years, and (ii) the most recent determination letter from the IRS (if applicable) for such BANC ONE Benefit Plan. (c) (i) Each of the BANC ONE Benefit Plans has been operated and administered in all material respects in accordance with applicable laws, including, but not limited to, ERISA and the Code, (ii) each of the BANC ONE Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of the Code is so qualified, and there are no existing circumstances or any events that have occurred that could reasonably be expected to adversely affect the qualified status of any such Plan, (iii) with respect to each BANC ONE Benefit Plan which is subject to Title IV of ERISA, the present value of accrued benefits under such BANC ONE Benefit Plan, based upon the actuarial assumptions used for funding purposes in the most recent actuarial report prepared by such BANC ONE Benefit Plan's actuary with respect to such BANC ONE Benefit Plan, did not, as of its latest valuation date, exceed the then current value of the assets of such BANC ONE Benefit Plan allocable to such accrued benefits, (iv) no BANC ONE Benefit Plan provides benefits, including, without limitation, death or medical benefits (whether or not insured), with respect to current or former employees or directors of BANC ONE, its Subsidiaries or any BANC ONE ERISA Affiliate beyond their retirement or other termination of service, other than (A) coverage mandated by applicable law, (B) -35- death benefits or retirement benefits under any "employee pension plan" (as such term is defined in Section 3(2) of ERISA), (C) deferred compensation benefits accrued as liabilities on the books of BANC ONE, its Subsidiaries or the BANC ONE ERISA Affiliates or (D) benefits the full cost of which is borne by the current or former employee or director (or his beneficiary), (v) no material liability under Title IV of ERISA has been incurred by BANC ONE, its Subsidiaries or any BANC ONE ERISA Affiliate that has not been satisfied in full, and no condition exists that presents a material risk to BANC ONE, its Subsidiaries or any BANC ONE ERISA Affiliate of incurring a material liability thereunder, (vi) no BANC ONE Benefit Plan is a "multiemployer pension plan" (as such term is defined in Section 3(37) of ERISA), (vii) all contributions or other amounts payable by BANC ONE or its Subsidiaries as of the Effective Time with respect to each BANC ONE Benefit Plan in respect of current or prior plan years have been paid or accrued in accordance with GAAP and Section 412 of the Code, (viii) neither BANC ONE, its Subsidiaries nor any BANC ONE ERISA Affiliate has engaged in a transaction in connection with which BANC ONE, its Subsidiaries or any BANC ONE ERISA Affiliate reasonably could be subject to either a material civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a material tax imposed pursuant to Section 4975 or 4976 of the Code, and (ix) to the best knowledge of BANC ONE there are no pending, threatened or anticipated claims (other than routine claims for benefits) by, on behalf of or against any of the BANC ONE Benefit Plans or any trusts related thereto which are, in the reasonable judgment of BANC ONE, likely, either individually or in the aggregate, to have a Material Adverse Effect on BANC ONE. (d) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (either alone or in conjunction with any other event) (i) result in any material payment (including, without limitation, severance, unemployment compensation, "excess parachute payment" (within the meaning of Section 280G of the Code), forgiveness of indebtedness or otherwise) becoming due to any director or any employee of BANC ONE or any of its affiliates from BANC ONE or any of its affiliates under any BANC ONE Benefit Plan or otherwise, (ii) materially increase any benefits otherwise payable under any BANC ONE Benefit Plan or (iii) result in any acceleration of the time of payment or vesting of any such benefits to any material extent. 5.12 SEC Reports. BANC ONE has previously made available to FCN an accurate and complete copy of each (a) final registration statement, prospectus, report, schedule and definitive proxy statement filed since January 1, 1996 by BANC ONE with the SEC pursuant to the Securities Act or the Exchange Act (the "BANC ONE Reports") and prior to the date hereof and (b) communication mailed by BANC ONE to its stockholders since -36- January 1, 1996 and prior to the date hereof, and no such registration statement, prospectus, report, schedule, proxy statement or communication contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading, except that information as of a later date shall be deemed to modify information as of an earlier date. Since January 1, 1996, BANC ONE has timely filed all BANC ONE Reports and other documents required to be filed by it under the Securities Act and the Exchange Act, and, as of their respective dates, all BANC ONE Reports complied in all material respects with the published rules and regulations of the SEC with respect thereto. 5.13 Compliance with Applicable Law. BANC ONE and each of its Subsidiaries hold all material licenses, franchises, permits and authorizations necessary for the lawful conduct of their respective businesses under and pursuant to each, and have complied in all material respects with and are not in default in any material respect under any, applicable law, statute, order, rule, regulation, policy and/or guideline of any Governmental Entity relating to BANC ONE or any of its Subsidiaries, except where the failure to hold such license, franchise, permit or authorization or such noncompliance or default would not, individually or in the aggregate, have a Material Adverse Effect on BANC ONE. 5.14 Certain Contracts. (a) Neither BANC ONE nor any of its Subsidiaries is a party to or bound by any contract, arrangement, commitment or understanding (whether written or oral) (i) with respect to the employment of any directors, officers or employees other than in the ordinary course of business consistent with past practice, (ii) which, upon the consummation or stockholder approval of the transactions contemplated by this Agreement will (either alone or upon the occurrence of any additional acts or events) result in any payment (whether of severance pay or otherwise) becoming due from BANC ONE, FCN, the Surviving Corporation, or any of their respective Subsidiaries to any officer or employee thereof, (iii) which is a "material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed after the date of this Agreement that has not been filed or incorporated by reference in the BANC ONE Reports, (iv) which materially restricts the conduct of any line of business by BANC ONE, (v) with or to a labor union or guild (including any collective bargaining agreement) or (vi) (including any stock option plan, stock appreciation rights plan, restricted stock plan or stock purchase plan) any of the benefits of which will be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement, or the value of any of the benefits of which will be -37- calculated on the basis of any of the transactions contemplated by this Agreement. BANC ONE has previously made available to FCN true and correct copies of all employment and deferred compensation agreements which are in writing and to which BANC ONE is a party. Each contract, arrangement, commitment or understanding of the type described in this Section 5.14(a), whether or not set forth in the BANC ONE Disclosure Schedule, is referred to herein as a "BANC ONE Contract", and neither BANC ONE nor any of its Subsidiaries knows of, or has received notice of, any violation of the above by any of the other parties thereto which, individually or in the aggregate, would have a Material Adverse Effect on BANC ONE. (b) (i) Each BANC ONE Contract is valid and binding on BANC ONE or any of its Subsidiaries, as applicable, and in full force and effect, (ii) BANC ONE and each of its Subsidiaries has in all material respects performed all obligations required to be performed by it to date under each BANC ONE Contract, except where such noncompliance, individually or in the aggregate, would not have a Material Adverse Effect on BANC ONE, and (iii) no event or condition exists which constitutes or, after notice or lapse of time or both, would constitute, a material default on the part of BANC ONE or any of its Subsidiaries under any such BANC ONE Contract, except where such default, individually or in the aggregate, would not have a Material Adverse Effect on BANC ONE. 5.15 Agreements with Regulatory Agencies. Neither BANC ONE nor any of its Subsidiaries is subject to any cease-and-desist or other order issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has been since January 1, 1996, a recipient of any supervisory letter from, or since January 1, 1996, has adopted any board resolutions at the request of any Regulatory Agency or other Governmental Entity that currently restricts in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its credit policies, its management or its business (each, whether or not set forth in the BANC ONE Disclosure Schedule, a "BANC ONE Regulatory Agreement"), nor has BANC ONE or any of its Subsidiaries been advised since January 1, 1996, by any Regulatory Agency or other Governmental Entity that it is considering issuing or requesting any such Regulatory Agreement. 5.16 Other Activities of BANC ONE and its Subsidiaries. (a) Neither BANC ONE nor any of its Subsidiaries that is not a bank, a bank operating subsidiary or a bank service corporation, directly or indirectly engages in any activity prohibited by the Federal Reserve Board. Without limiting the -38- generality of the foregoing, any equity investment of BANC ONE and each Subsidiary that is not a bank, a bank operating subsidiary or a bank service corporation, is not prohibited by the Federal Reserve Board. (b) To BANC ONE's knowledge, each BANC ONE Subsidiary which is a bank (a "BANC ONE Bank Subsidiary") currently performs all Trust Activities with requisite authority under applicable law of Governmental Entities and in accordance in all material respects with the agreed-upon terms of the agreements and instruments governing such Trust Activities, sound fiduciary principles and applicable law and regulation (specifically including, but not limited to, Section 9 of Title 12 of the Code of Federal Regulations); there is no investigation or inquiry by any Governmental Entity pending, or, to the knowledge of BANC ONE, threatened, against or affecting BANC ONE or any Significant Subsidiary thereof relating to the compliance by BANC ONE or any such Significant Subsidiary with sound fiduciary principles and applicable regulations; and except where any such failure would not have a Material Adverse Effect on BANC ONE, each employee of a BANC ONE Bank Subsidiary had the authority to act in the capacity in which he or she acted with respect to Trust Activities, in each case, in which such employee held himself or herself out as a representative of a BANC ONE Bank Subsidiary; and each BANC ONE Bank Subsidiary has established policies and procedures for the purpose of complying with applicable laws of Governmental Entities relating to Trust Activities, has followed such policies and procedures in all material respects and has performed appropriate internal audit reviews of, and has engaged independent accountants to perform audits of, Trust Activities, which audits since January 1, 1996 have disclosed no material violations of applicable laws of Governmental Entities or such policies and procedures. 5.17 Investment Securities. Each of BANC ONE and its Subsidiaries has good and marketable title to all securities held by it (except securities sold under repurchase agreements or held in any fiduciary or agency capacity), free and clear of any Lien, except to the extent such securities are pledged in the ordinary course of business consistent with prudent banking practice to secure obligations of BANC ONE or any of its Subsidiaries. Such securities are valued on the books of BANC ONE in accordance with GAAP. 5.18 Interest Rate Risk Management Instruments. All interest rate swaps, caps, floors and option agreements and other interest rate risk management arrangements, whether entered into for the account of BANC ONE or for the account of a customer of BANC ONE or one of its Subsidiaries, were entered into -39- in the ordinary course of business and, to BANC ONE's knowledge, in accordance with prudent banking practice and applicable rules, regulations and policies of any Regulatory Authority and with counterparties believed to be financially responsible at the time and are legal, valid and binding obligations of BANC ONE or one of its Subsidiaries enforceable in accordance with their terms (except as may be limited by bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the rights of creditors generally and the availability of equitable remedies), and are in full force and effect. BANC ONE and each of its Subsidiaries has duly performed in all material respects all of its material obligations thereunder to the extent that such obligations to perform have accrued; and to BANC ONE's knowledge, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereunder. 5.19 Undisclosed Liabilities. Except for those liabilities that are fully reflected or reserved against on the consolidated balance sheet of BANC ONE included in the BANC ONE Form 10-K and for liabilities incurred in the ordinary course of business consistent with past practice, since December 31, 1997, neither BANC ONE nor any of its Subsidiaries has incurred any liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due) that, either alone or when combined with all similar liabilities, has had, or could reasonably be expected to have, a Material Adverse Effect on BANC ONE. 5.20 Insurance. BANC ONE and its Subsidiaries have in effect insurance coverage with reputable insurers, which in respect of amounts, premiums, types and risks insured, constitutes reasonably adequate coverage against all risks customarily insured against by bank holding companies and their subsidiaries comparable in size and operations to BANC ONE and its Subsidiaries. 5.21 Environmental Liability. Except as set forth in the BANC ONE Disclosure Schedule, there are no legal, administrative, arbitral or other proceedings, claims, actions, causes of action, private environmental investigations or remediation activities or governmental investigations of any nature seeking to impose, or that reasonably could result in the imposition, on BANC ONE of any liability or obligation arising under common law or under any local, state or federal environmental statute, regulation or ordinance including, without limitation, CERCLA, pending or threatened against BANC ONE, which liability or obligation could reasonably be expected to have a Material Adverse Effect on BANC ONE. To the knowledge of BANC ONE, there is no reasonable basis for any such proceeding, claim, action or governmental investigation that would impose any material liability or obligation that could reasonably be expected to -40- have a Material Adverse Effect on BANC ONE. BANC ONE is not subject to any agreement, order, judgment, decree, letter or memorandum by or with any court, governmental authority, regulatory agency or third party imposing any material liability or obligation that could reasonably be expected to have a Material Adverse Effect on BANC ONE. 5.22 State Takeover Laws. (a) The Board of Directors of BANC ONE has approved the transactions contemplated by this Agreement and the Option Agreements pursuant to (i) Section 1704 of the OGCL such that the provisions thereof, and (ii) Article Tenth of the BANC ONE Articles such that the provisions thereof, will not apply to this Agreement or the Option Agreements or any of the transactions contemplated hereby or thereby. 5.23 Interim Operations of Newco. Newco has been incorporated on behalf of BANC ONE solely for the purposes of accomplishing the First Step Merger, has not engaged in any other business activity and has conducted its operations only as contemplated hereby. 5.24 Year 2000. None of BANC ONE or any of the BANC ONE Subsidiaries has received, or reasonably expects to receive, a Year 2000 Deficiency Notification Letter. BANC ONE has disclosed to FCN a complete and accurate copy of BANC ONE's plan, including an estimate of the anticipated associated costs, for addressing Year 2000 Issues as such issues affect BANC ONE and its Subsidiaries. Between the date of this Agreement and the Effective Time, BANC ONE shall use commercially practicable efforts to implement such plan. 5.25 Reorganization; Pooling of Interests. As of the date of this Agreement, assuming compliance by BANC ONE and FCN with the covenants and agreements set forth in Section 7.13 hereof, BANC ONE has no reason to believe that the Merger will not qualify as a "reorganization" within the meaning of Section 368(a) of the Code and as a "pooling of interests" for accounting purposes. ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS 6.1 Conduct of Businesses Prior to the Effective Time. During the period from the date of this Agreement to the Effective Time, except as expressly contemplated or permitted by this Agreement (including the FCN Disclosure Schedule and the BANC ONE Disclosure Schedule) or the Option Agreements, each of BANC ONE and FCN shall, and shall cause each of their respective Subsidiaries to, (a) conduct its business in the usual, -41- regular and ordinary course consistent with past practice, (b) use reasonable best efforts to maintain and preserve intact its business organization, employees and advantageous business relationships and retain the services of its key officers and key employees and (c) take no action which would adversely affect or delay the ability of either BANC ONE or FCN to obtain any necessary approvals of any Regulatory Agency or other governmental authority required for the transactions contemplated hereby or to perform its covenants and agreements under this Agreement or the Option Agreements or to consummate the transactions contemplated hereby or thereby. 6.2 Forbearances. During the period from the date of this Agreement to the Effective Time, except as set forth in the BANC ONE Disclosure Schedule or the FCN Disclosure Schedule, as the case may be, and, except as expressly contemplated or permitted by this Agreement or the Option Agreements, none of BANC ONE, Newco and FCN shall, and neither BANC ONE nor FCN shall permit any of their respective Subsidiaries to, without the prior written consent of BANC ONE, in the case of actions proposed to be undertaken by FCN, or of FCN, in the case of actions proposed to be undertaken by BANC ONE or Newco: (a) other than in the ordinary course of business consistent with past practice, incur any indebtedness for borrowed money (other than short-term indebtedness incurred to refinance short-term indebtedness and indebtedness of FCN or any of its wholly-owned Subsidiaries to FCN or any of its Subsidiaries, on the one hand, or of BANC ONE or any of its Subsidiaries to BANC ONE or any of its wholly-owned Subsidiaries, on the other hand), assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other individual, corporation or other entity, or make any loan or advance (it being understood and agreed that incurrence of indebtedness in the ordinary course of business shall include, without limitation, the creation of deposit liabilities, purchases of Federal funds, sales of certificates of deposit and entering into repurchase agreements); (b)(i) adjust, split, combine or reclassify any capital stock; (ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire, any shares of its capital stock or any securities or obligations convertible into or exchangeable for any shares of its capital stock (except (A) in the case of FCN, for regular quarterly cash dividends at a rate not in excess of $0.44 per share -42- of FCN Common Stock and regular quarterly cash dividends on the FCN Preferred Stock outstanding as of the date hereof at the rate set forth in the applicable certificate of designation, (B) in the case of BANC ONE, for regular quarterly cash dividends on BANC ONE Common Stock at a rate not in excess of $0.38 per share of BANC ONE Common Stock and regular quarterly cash dividends on the BANC ONE Preferred Stock outstanding as of the date hereof at the rates set forth in the BANC ONE Articles for such BANC ONE Preferred Stock, (C) dividends paid by any of the Subsidiaries of each of BANC ONE and FCN to BANC ONE or FCN or any of their Subsidiaries, respectively, and dividends paid in the ordinary course of business consistent with past practice by any subsidiaries (whether or not wholly owned) of each of BANC ONE and FCN) and (D) in the case of BANC ONE, for the redemption of all of the shares of BANC ONE Series C Preferred Stock outstanding as of the date hereof as described in the BANC ONE 10-K; (iii) grant any stock appreciation rights or grant any individual, corporation or other entity any right to acquire any shares of its capital stock (except options converted in connection with the transactions contemplated by the First Commerce Merger Agreement and for regular periodic grants of options to purchase stock made in the ordinary course of business consistent with past practice pursuant to the BANC ONE Stock Plans and the FCN Stock Plans); or (iv) issue any additional shares of capital stock except pursuant to (A) the exercise of stock options or warrants outstanding as of the date hereof and options issued thereafter in compliance with Section 6.2(b)(iii) hereof, (B) the Option Agreements, (C) in the case of BANC ONE, the consummation of the transactions contemplated by the First Commerce Merger Agreement or (D) in the case of FCN, (x) in the ordinary course of business and consistent with past practice, in connection with the ESPSP and the FCN Dividend Reinvestment Plan and (y) the Roney Agreement; -43- (c) sell, transfer, mortgage, encumber or otherwise dispose of any of its properties or assets to any individual, corporation or other entity other than a Subsidiary, or cancel, release or assign any indebtedness to any such person or any claims held by any such person, except in the ordinary course of business consistent with past practice or pursuant to contracts or agreements in force at the date of this Agreement; (d) except for transactions in the ordinary course of business consistent with past practice or pursuant to contracts or agreements in force at the date of this Agreement, make any material investment either by purchase of stock or securities, contributions to capital, property transfers, or purchase of any property or assets of any other individual, corporation or other entity other than a Subsidiary thereof; (e) except for transactions in the ordinary course of business consistent with past practice, enter into or terminate any material contract or agreement, or make any change in any of its material leases or contracts, other than renewals of contracts and leases without material adverse changes of terms; (f) increase in any manner the compensation or fringe benefits of any of its employees or pay any pension or retirement allowance not required by any existing plan or agreement to any such employees or become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment agreement with or for the benefit of any employee other than in the ordinary course of business consistent with past practice, or accelerate the vesting of, or the lapsing of restrictions with respect for any stock options or other stock-based compensation; (g) solicit, encourage or authorize any individual, corporation or other entity to solicit or encourage from any third party any inquiries or proposals relating to the disposition of its business or assets, or the acquisition of its voting securities, or the merger of it or any of its Subsidiaries with any corporation or other entity other than as provided by this Agreement (and each party shall promptly notify the other of all of the relevant details relating to all inquiries and proposals which it may receive relating to any of such matters); (h) settle any claim, action or proceeding involving money damages, except in the ordinary course of business consistent with past practice; -44- (i) take any action that would prevent or impede the Second Step Merger from qualifying (i) for "pooling of interests" accounting treatment or (ii) as a reorganization within the meaning of Section 368 of the Code; provided, however, that nothing contained herein shall limit the ability of BANC ONE or FCN to exercise its rights under the FCN Option Agreement or the BANC ONE Option Agreement, as the case may be; (j) amend its certificate of incorporation or articles of incorporation, as the case may be, or its bylaws or regulations, as the case may be; (k) other than in prior consultation with the other party to this Agreement, restructure or materially change its investment securities portfolio or its gap position, through purchases, sales or otherwise, or the manner in which the portfolio is classified or reported; (l) take any action that is intended or may reasonably be expected to result in any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect at any time prior to the Effective Time, or in any of the conditions to the Merger set forth in Article VIII not being satisfied or in a violation of any provision of this Agreement, except, in every case, as may be required by applicable law; (m) implement or adopt any change in its accounting principles, practices or methods, other than as may be required by GAAP; or (n) agree to, or make any commitment to, take any of the actions prohibited by this Section 6.2. ARTICLE VII ADDITIONAL AGREEMENTS 7.1 Regulatory Matters. (a) BANC ONE and FCN shall promptly prepare and file with the SEC the Joint Proxy Statement and BANC ONE and Newco shall promptly prepare and file with the SEC the S-4, in which the Joint Proxy Statement will be included as a prospectus. Each of BANC ONE, FCN and Newco shall use all reasonable efforts to have the S-4 declared effective under the Securities Act as promptly as practicable after such filing, and BANC ONE and FCN shall thereafter mail or deliver the Joint Proxy Statement to their respective stockholders. BANC ONE shall also use all reasonable efforts to obtain all necessary state securities law or "Blue Sky" permits -45- and approvals required to carry out the transactions contemplated by this Agreement, and FCN shall furnish all information concerning FCN and the holders of FCN Capital Stock as may be reasonably requested in connection with any such action. (b) The parties hereto shall cooperate with each other and use their best efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, to obtain as promptly as practicable all permits, consents, approvals and authorizations of all third parties and Governmental Entities which are necessary or advisable to consummate the transactions contemplated by this Agreement (including, without limitation, the Second Step Merger), and to comply with the terms and conditions of all such permits, consents, approvals and authorizations of all such Governmental Entities. BANC ONE and FCN shall have the right to review in advance, and, to the extent practicable, each will consult the other on, in each case subject to applicable laws relating to the exchange of information, all the information relating to FCN or BANC ONE, as the case may be, and any of their respective Subsidiaries, which appear in any filing made with, or written materials submitted to, any third party or any Governmental Entity in connection with the transactions contemplated by this Agreement. In exercising the foregoing right, each of the parties hereto shall act reasonably and as promptly as practicable. The parties hereto agree that they will consult with each other with respect to the obtaining of all permits, consents, approvals and authorizations of all third parties and Governmental Entities necessary or advisable to consummate the transactions contemplated by this Agreement and each party will keep the other apprised of the status of matters relating to completion of the transactions contemplated herein. (c) BANC ONE and FCN shall, upon request, furnish each other with all information concerning themselves, their Subsidiaries, directors, officers and stockholders and such other matters as may be reasonably necessary or advisable in connection with the Joint Proxy Statement, the S-4 or any other statement, filing, notice or application made by or on behalf of BANC ONE, FCN or any of their respective Subsidiaries to any Governmental Entity in connection with the Second Step Merger and the other transactions contemplated by this Agreement. (d) BANC ONE and FCN shall promptly advise each other upon receiving any communication from any Governmental Entity whose consent or approval is required for consummation of the transactions contemplated by this Agreement which causes such party to believe that there is a reasonable likelihood that any Requisite Regulatory Approval will not be obtained or that the receipt of any such approval will be materially delayed. -46- 7.2 Access to Information. (a) Upon reasonable notice and subject to applicable laws relating to the exchange of information, each of BANC ONE and FCN, for the purposes of verifying the representations and warranties of the other and preparing for the Merger and the other matters contemplated by this Agreement, shall, and shall cause each of their respective Subsidiaries to, afford to the officers, employees, accountants, counsel and other representatives of the other party, access, during normal business hours during the period prior to the Effective Time, to all its properties, books, contracts, commitments and records and, during such period, each of BANC ONE and FCN shall, and shall cause their respective Subsidiaries to, make available to the other party (i) a copy of each report, schedule, registration statement and other document filed or received by it during such period pursuant to the requirements of federal securities laws or federal or state banking laws, savings and loan or savings association laws (other than reports or documents which BANC ONE or FCN, as the case may be, is not permitted to disclose under applicable law) and (ii) all other information concerning its business, properties and personnel as such party may reasonably request. Neither BANC ONE nor FCN nor any of their respective Subsidiaries shall be required to provide access to or to disclose information where such access or disclosure would violate or prejudice the rights of BANC ONE's or FCN's, as the case may be, customers, jeopardize the attorney-client privilege of the institution in possession or control of such information or contravene any law, rule, regulation, order, judgment, decree, fiduciary duty or binding agreement entered into prior to the date of this Agreement. The parties hereto will make appropriate substitute disclosure arrangements under circumstances in which the restrictions of the preceding sentence apply. (b) Each of BANC ONE and FCN shall hold all information furnished by or on behalf of the other party or any of such party's Subsidiaries or representatives pursuant to Section 7.2(a) in confidence to the extent required by, and in accordance with, the provisions of the confidentiality agreement, dated March 25, 1998, between BANC ONE and FCN (the "Confidentiality Agreement"). (c) No investigation by either of the parties or their respective representatives shall affect the representations and warranties of the other set forth herein. 7.3 Stockholders' Approvals. Each of BANC ONE and FCN shall call a meeting of its stockholders to be held as soon as reasonably practicable for the purpose of voting upon the requisite stockholder approvals required in connection with this Agreement, the First Step Merger and the Second Step Merger, and each shall use its best efforts to cause such meetings to occur on the same date. The Board of Directors of each of BANC -47- ONE and FCN shall recommend to its shareholders the approval of the Merger, this Agreement and the transactions contemplated hereby. 7.4 Legal Conditions to Merger. Each of BANC ONE and FCN shall, and shall cause its Subsidiaries to, use their best efforts (a) to take, or cause to be taken, all actions necessary, proper or advisable to comply promptly with all legal requirements which may be imposed on such party or its Subsidiaries with respect to the First Step Merger and the Second Step Merger and, subject to the conditions set forth in Article VIII hereof, to consummate the transactions contemplated by this Agreement, and (b) to obtain (and to cooperate with the other party to obtain) any consent, authorization, order or approval of, or any exemption by, any Governmental Entity and any other third party which is required to be obtained by FCN or BANC ONE or any of their respective Subsidiaries in connection with the Merger and the other transactions contemplated by this Agreement. 7.5 Affiliates; Publication of Combined Financial Results. (a) Each of BANC ONE and FCN shall use its best efforts to cause each director, executive officer and other person who is an "affiliate" (for purposes of Rule 145 under the Securities Act and for purposes of qualifying the Second Step Merger for "pooling of interests" accounting treatment) of such party to deliver to the other party hereto, as soon as practicable after the date of this Agreement, and prior to the date of the stockholders meetings called by BANC ONE and FCN to approve this Agreement, a written agreement, in the form of Exhibit 6.5(a)(1) or (2), as applicable, hereto, providing that such person will not sell, pledge, transfer or otherwise dispose of any shares of BANC ONE Capital Stock, Newco Capital Stock or FCN Capital Stock held by such "affiliate" and, in the case of the "affiliates" of FCN, the shares of Newco Capital Stock to be received by such "affiliate" in the Second Step Merger: (i) in the case of shares of Newco Capital Stock to be received by "affiliates" of FCN in the Second Step Merger, except in compliance with the applicable provisions of the Securities Act and the rules and regulations thereunder; and (ii) except to the extent and under the conditions permitted therein, during the period commencing 30 days prior to the Effective Time and ending at the time of the publication of financial results covering at least 30 days of combined operations of Newco and FCN. (b) The Surviving Corporation shall use its best efforts to publish as promptly as reasonably practical, but in no event later than 90 days after the end of the first month after the Effective Time in which there are at least 30 days of post-Merger combined operations (which month may be the month in which the Effective Time occurs), combined sales and net income -48- figures as contemplated by and in accordance with the terms of SEC Accounting Series Release No. 135. 7.6 Stock Exchange Listing. BANC ONE shall cause the shares of Newco Common Stock and the Newco New Preferred Stock to be issued in the Merger to be approved for listing on the NYSE, subject to official notice of issuance, prior to the First Effective Time. 7.7 Employee Benefit Plans; Certain Insurance. (a) From and after the Effective Time, unless otherwise mutually determined, the FCN Benefit Plans and BANC ONE Benefit Plans in effect as of the date of this Agreement shall remain in effect with respect to employees of FCN or Newco (or their Subsidiaries), respectively, covered by such plans at the Effective Time until such time as the Surviving Corporation shall, subject to applicable law, the terms of this Agreement and the terms of such plans, adopt new benefit plans with respect to employees of the Surviving Corporation and its Subsidiaries (the "New Benefit Plans"). Prior to the Closing Date, FCN and BANC ONE shall cooperate in reviewing, evaluating and analyzing the BANC ONE Benefit Plans and FCN Benefit Plans with a view towards developing appropriate New Benefit Plans for the employees covered thereby subsequent to the Second Step Merger. It is the intention of FCN and BANC ONE to develop New Benefit Plans, as soon as reasonably practicable after the Effective Time, which, among other things, (i) treat similarly situated employees on a substantially equivalent basis, taking into account all relevant factors, including, without limitation, duties, geographic location, tenure, qualifications and abilities, and (ii) do not discriminate between employees of the Surviving Corporation who were covered by FCN Benefit Plans, on the one hand, and those covered by BANC ONE Benefit Plans, on the other, at the Effective Time. (b) The foregoing notwithstanding, the Surviving Corporation agrees to honor in accordance with their terms all benefits vested as of the date hereof under the BANC ONE Benefit Plans or the FCN Benefit Plans or under other contracts, arrangements, commitments, or understandings described in the BANC ONE Disclosure Schedule and the FCN Disclosure Schedule. (c) Nothing in this Section 7.7 shall be interpreted as preventing the Surviving Corporation from amending, modifying or terminating any BANC ONE Benefit Plans, FCN Benefit Plans, or other contracts, arrangements, commitments or understandings, in accordance with their terms and applicable law. (d) From and after the Effective Time, the policy of Newco in respect of directors' and officers' insurance (including but not limited to persons covered and the scope and amount -49- of coverage thereunder) shall be the same as the policy of FCN in effect as of the date of this Agreement. (e) Certain additional agreements of BANC ONE and FCN with respect to compensation and benefits matters are set forth on Schedule 7.7(e) hereto. 7.8 Indemnification; Directors' and Officers' Insurance. (a) In the event of any threatened or actual claim, action, suit, proceeding or investigation, whether civil, criminal or administrative, including, without limitation, any such claim, action, suit, proceeding or investigation in which any individual who is now, or has been at any time prior to the date of this Agreement, or who becomes prior to the Effective Time, a director or officer or employee of BANC ONE, FCN, Newco or any of their respective Subsidiaries, including any entity specified in the BANC ONE Disclosure or the FCN Disclosure Schedule (the "Indemnified Parties"), is, or is threatened to be, made a party based in whole or in part on, or arising in whole or in part out of, or pertaining to (i) the fact that he is or was a director, officer or employee of BANC ONE, FCN, Newco any of their respective Subsidiaries or any entity specified in the BANC ONE Disclosure Schedule or the FCN Disclosure Schedule or any of their respective predecessors or (ii) this Agreement, the Option Agreements or any of the transactions contemplated hereby or thereby, whether in any case asserted or arising before or after the Effective Time, the parties hereto agree to cooperate and use their best efforts to defend against and respond thereto. It is understood and agreed that after the Effective Time, Newco shall indemnify and hold harmless, as and to the fullest extent permitted by law, each such Indemnified Party against any losses, claims, damages, liabilities, costs, expenses (including reasonable attorney's fees and expenses in advance of the final disposition of any claim, suit, proceeding or investigation to each Indemnified Party to the fullest extent permitted by law upon receipt of any undertaking required by applicable law), judgments, fines and amounts paid in settlement in connection with any such threatened or actual claim, action, suit, proceeding or investigation, and in the event of any such threatened or actual claim, action, suit, proceeding or investigation (whether asserted of arising before or after the Effective Time); and Newco, after consultation with an Indemnified Party, shall retain counsel and direct the defense thereof, provided, however, that by virtue of the obligations herein set forth, Newco shall not be liable to any Indemnified Party for any legal expenses of other counsel or any other expenses incurred by any Indemnified Party in connection with the defense thereof, except that if Newco fails or elects not to assume such defense or counsel for the Indemnified Parties reasonably advises the Indemnified Parties that there are issues -50- which raise conflicts of interest between Newco and the Indemnified Parties, the Indemnified Parties may retain counsel reasonably satisfactory to them after consultation with Newco, and Newco shall pay the reasonable fees and expenses of such counsel for the Indemnified Parties, (B) Newco shall be obligated pursuant to this paragraph to pay for only one firm of counsel for all Indemnified Parties, unless an Indemnified Party shall have reasonably concluded, based on the advice of counsel and after consultation with Newco, that in order to be adequately represented, separate counsel is necessary for such Indemnified Party, in which case, Newco shall be obligated to pay for such separate counsel, (C) Newco shall not be liable for any settlement effected without its prior written consent (which consent shall not be unreasonably withheld) and (D) Newco shall have no obligation hereunder to any Indemnified Party when and if a court of competent jurisdiction shall ultimately determine, and such determination shall have become final and nonappealable, that indemnification of such Indemnified Party in the manner contemplated hereby is prohibited by applicable law. Any Indemnified Party wishing to claim Indemnification under this Section 7.8, upon learning of any such claim, action, suit, proceeding or investigation, shall notify Newco thereof, provided that the failure to so notify shall not affect the obligations of Newco under this Section 7.8 except to the extent such failure to notify materially prejudices Newco. Newco's obligations under this Section 7.8 continue in full force and effect for a period of six years from the Effective Time (or the period of the applicable statute of limitations, if longer); provided, however, that all rights to indemnification in respect of any claim (a "Claim") asserted or made within such period shall continue until the final disposition of such Claim. (b) BANC ONE (and Newco, from and after the First Effective Time) shall use its best efforts to cause the individuals serving as officers and directors of FCN, its Subsidiaries or any entity specified in the FCN Disclosure Schedule immediately prior to the Effective Time to be covered for a period of six (6) years from the Effective Time (or the period of the applicable statute of limitations, if longer) by the directors' and officers' liability insurance policy maintained by FCN (provided that Newco may substitute therefor policies of at least the same coverage and amounts containing terms and conditions which are not less advantageous than such policy) with respect to acts or omissions occurring prior to the Effective Time which were committed by such officers and directors in their capacity as such; provided, however, that in no event shall Newco be required to expend more than 200% of the current amount expended by FCN (the "Insurance Amount") to maintain or procure insurance coverage pursuant hereto and provided further that if Newco is unable to maintain or obtain the insurance called for by this Section 7.8(b), Newco shall use its best -51- efforts to obtain as much comparable insurance as available for the Insurance Amount. (c) In the event Newco or any of its successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any person, then, and in each such case, to the extent necessary, proper provision shall be made so that the successors and assigns of Newco assume the obligations set forth in this section. (d) The provisions of this Section 7.8 are intended to be for the benefit of, and shall be enforceable by, each Indemnified Party and his or her heirs and representatives. 7.9 Additional Agreements. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement (including, without limitation, any merger between a Subsidiary of FCN, on the one hand, and a Subsidiary of BANC ONE or Newco, on the other) or to vest the surviving corporation in the First Step Merger or the Surviving Corporation with full title to all properties, assets, rights, approvals, immunities and franchises of any of the parties to the First Step Merger or the Second Step Merger, as the case may be, the proper officers and directors of each party to this Agreement and their respective Subsidiaries shall take all such necessary action as may be reasonably requested by, and at the sole expense of, BANC ONE. 7.10 Advice of Changes. BANC ONE and FCN shall each promptly advise the other party of any change or event (i) having a Material Adverse Effect on it or (ii) which it believes would or would be reasonably likely to cause or constitute a material breach of any of its representations, warranties or covenants contained herein. 7.11 Dividends. After the date of this Agreement, each of BANC ONE and FCN shall coordinate with the other the declaration of any dividends in respect of BANC ONE Common Stock and FCN Common Stock and the record dates and payment dates relating thereto, it being the intention of the parties hereto that holders of BANC ONE Common Stock or FCN Common Stock shall not receive two dividends, or fail to receive one dividend, for any quarter with respect to their shares of BANC ONE Common Stock and/or FCN Common Stock and any shares of Newco Capital Stock any such holder receives in exchange therefor in the Second Step Merger. 7.12 Authorized Stock of Newco. BANC ONE and Newco shall, prior to the First Effective Time, take such corporate, -52- stockholder and other action as is required to amend the Newco Certificate of Incorporation in order to authorize sufficient shares of Newco Capital Stock to complete the transactions contemplated hereby. 7.13 Pooling of Interests. Each of BANC ONE and FCN shall, prior to the First Effective Time, coordinate with the other party with respect to the issuance of, and pursuant thereto shall issue, shares of BANC ONE Common Stock or FCN Common Stock, as may be appropriate, in such manner, and limited to such number, as is necessary to reduce the aggregate number of "tainted treasury shares" of such parties to a number that is consistent with the accounting of the Merger as a "pooling of interests" under GAAP. ARTICLE VIII CONDITIONS PRECEDENT 8.1 Conditions to Each Party's Obligation To Effect the Second Step Merger. The respective obligations of the parties to effect the Second Step Merger, and of BANC ONE and Newco to effect the First Step Merger, shall be subject to the satisfaction at or prior to the Effective Time (and the First Effective Time, in the case of the consummation of the First Step Merger) of the following conditions: (a) Stockholder Approval. This Agreement and the transactions contemplated hereby, including the Second Step Merger and, in the case of the holders of BANC ONE Common Stock, the First Step Merger, shall have been approved and adopted by the respective requisite affirmative votes of the holders of FCN Common Stock and BANC ONE Common Stock entitled to vote thereon. (b) NYSE Listing. The shares of Newco Common Stock and Newco New Preferred which shall be issued to the stockholders of FCN upon consummation of the Merger shall have been authorized for listing on the NYSE, subject to official notice of issuance. (c) Other Approvals. All regulatory approvals required to consummate the transactions contemplated hereby shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired (all such approvals and the expiration of all such waiting periods being referred to herein as the "Requisite Regulatory Approvals"). -53- (d) S-4. The S-4 shall have become effective under the Securities Act and no stop order suspending the effectiveness of the S-4 shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC. (e) No Injunctions or Restraints; Illegality. No order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition (an "Injunction") preventing the consummation of the First Step Merger, the Second Step Merger or any of the other transactions contemplated by this Agreement shall be in effect. No statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced by any Governmental Entity which prohibits, materially restricts or makes illegal consummation of the First Step Merger or the Second Step Merger. (f) Federal Tax Opinion. FCN and BANC ONE each shall have received an opinion of Wachtell, Lipton, Rosen & Katz, in form and substance reasonably satisfactory to BANC ONE and FCN, dated the Closing Date, substantially to the effect that, on the basis of facts, representations and assumptions set forth in such opinion which are consistent with the state of facts existing at the Effective Time: (i) Each of the First Step Merger and the Second Step Merger will constitute a reorganization under Section 368(a) of the Code; BANC ONE and Newco will each be a party to the reorganization in respect of the First Step Merger; and Newco and FCN will each be a party to the reorganization in respect of the Second Step Merger; (ii) No gain or loss will be recognized by BANC ONE or Newco as a result of the First Step Merger or Newco or FCN as a result of the Second Step Merger; (iii) No gain or loss will be recognized by stockholders of BANC ONE who receive solely Newco Capital Stock for their BANC ONE Capital Stock pursuant to the First Step Merger; and (iv) No gain or loss will be recognized by the stockholders of FCN who exchange their FCN Capital Stock solely for Newco Capital Stock pursuant to the Second Step Merger (except with respect to cash received in lieu of a fractional share interest in Newco Capital Stock). -54- In rendering such opinion, counsel may require and rely upon representations contained in certificates of officers of BANC ONE, Newco, FCN and others. (g) Pooling of Interests. BANC ONE and FCN shall each have received a letter from their respective independent accountants addressed to FCN or BANC ONE, as the case may be, to the effect that the First Step Merger and the Second Step Merger, taken together, will qualify for "pooling of interests" accounting treatment. 8.2 Conditions to Obligations of BANC ONE and Newco. The obligations of BANC ONE and Newco to effect the First Step Merger, and the obligation of Newco to effect the Second Step Merger, are also subject to the satisfaction, or waiver by BANC ONE or Newco, at or prior to the Effective Time, of the following conditions: (a) Representations and Warranties. The representations and warranties of FCN set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date, provided, however, that for purposes of this paragraph, such representations and warranties shall be deemed to be true and correct unless the failure or failures of such representations and warranties to be so true and correct, individually or in the aggregate, and without giving effect to any qualification as to materiality set forth in such representations or warranties, would have a Material Adverse Effect on FCN. BANC ONE shall have received a certificate signed on behalf of FCN by the Chief Executive Officer and the Chief Financial Officer of FCN to the foregoing effect. (b) Performance of Obligations of FCN. FCN shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and BANC ONE shall have received a certificate signed on behalf of FCN by the Chief Executive Officer and the Chief Financial Officer of FCN to such effect. 8.3 Conditions to Obligations of FCN. The obligation of FCN to effect the Second Step Merger is also subject to the satisfaction or waiver by FCN at or prior to the Effective Time of the following conditions: (a) Representations and Warranties. The representations and warranties of BANC ONE and Newco set forth in this Agreement shall be true and correct in all material -55- respects as of the date of this Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date, provided, however, that for purposes of this paragraph, such representations and warranties shall be deemed to be true and correct unless the failure or failures of such representations and warranties to be so true and correct, individually or in the aggregate, and without giving effect to any qualification as to materiality set forth in such representations or warranties, would have a Material Adverse Effect on BANC ONE. FCN shall have received a certificate signed on behalf of BANC ONE by the Chief Executive Officer and the Chief Financial Officer of BANC ONE to the foregoing effect. (b) Performance of Obligations of BANC ONE. Each of BANC ONE and Newco shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and FCN shall have received a certificate signed on behalf of BANC ONE by the Chief Executive Officer and the Chief Financial Officer of BANC ONE to such effect. (c) Consummation of the First Step Merger. The First Effective Time shall have occurred and the First Step Merger shall have been consummated. ARTICLE IX TERMINATION AND AMENDMENT 9.1 Termination. This Agreement may be terminated at any time prior to the First Effective Time, whether before or after approval of the matters presented in connection with the Second Step Merger by the stockholders of BANC ONE or FCN: (a) by mutual consent of BANC ONE and FCN in a written instrument, if the Board of Directors of each so determines by a vote of a majority of the members of its entire Board; (b) by either the Board of Directors of BANC ONE or the Board of Directors of FCN if any Governmental Entity which must grant a Requisite Regulatory Approval has denied approval of the Merger and such denial has become final and nonappealable or any Governmental Entity of competent jurisdiction shall have issued a final nonappealable order permanently enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement; -56- (c) by either the Board of Directors of BANC ONE or the Board of Directors of FCN if the Second Step Merger shall not have been consummated on or before the first anniversary of the date of this Agreement, unless the failure of the Closing to occur by such date shall be due to the failure of the party seeking to terminate this Agreement to perform or observe the covenants and agreements of such party set forth herein; (d) by either the Board of Directors of BANC ONE or the Board of Directors of FCN (provided that the terminating party is not then in breach of any representation, warranty, covenant or other agreement contained herein) if there shall have been a breach of any of the covenants or agreements or any of the representations or warranties set forth in this Agreement on the part of FCN, in the case of a termination by BANC ONE, or BANC ONE or Newco, in the case of a termination by FCN, which breach, individually or together with other such breaches, would constitute, if occurring or continuing on the Closing Date, the failure of the conditions set forth in Section 8.2 or 8.3, as the case may be, and which is not cured within 45 days following written notice to the party committing such breach or by its nature or timing cannot be cured prior to the Closing Date; or (e) by either BANC ONE or FCN if any approval of the stockholders of BANC ONE or FCN required for the consummation of the Second Step Merger, or the approval of the shareholders of BANC ONE required for the consummation of the First Step Merger, shall not have been obtained by reason of the failure to obtain the required vote at a duly held meeting of stockholders or at any adjournment or postponement thereof. 9.2 Effect of Termination. In the event of termination of this Agreement by either BANC ONE or FCN as provided in Section 9.1, this Agreement shall forthwith become void and have no effect, and none of BANC ONE, FCN, Newco, any of their respective Subsidiaries or any of the officers or directors of any of them shall have any liability of any nature whatsoever hereunder, or in connection with the transactions contemplated hereby, except that (i) Sections 7.2(b), 9.2, 10.2 and 10.3 shall survive any termination of this Agreement, and (ii) notwithstanding anything to the contrary contained in this Agreement, neither BANC ONE nor FCN shall be relieved or released from any liabilities or damages arising out of its willful breach of any provision of this Agreement. 9.3 Amendment. Subject to compliance with applicable law, this Agreement may be amended by the parties hereto, by -57- action taken or authorized by their respective Boards of Directors, at any time before or after approval of the matters presented in connection with Merger by the stockholders of BANC ONE and FCN; provided, however, that after any approval of the transactions contemplated by this Agreement by the respective stockholders of BANC ONE or FCN, there may not be, without further approval of such stockholders, any amendment of this Agreement which changes the amount or the form of the consideration to be delivered hereunder to the holders of FCN Common Stock, or into which shares of BANC ONE Capital Stock shall be converted pursuant to the First Step Merger, other than as contemplated by this Agreement. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. 9.4 Extension; Waiver. At any time prior to the Effective Time, the parties hereto, by action taken or authorized by their respective Board of Directors, may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions contained herein; provided, however, that after any approval of the transactions contemplated by this Agreement by the respective stockholders of BANC ONE or FCN, there may not be, without further approval of such stockholders, any extension or waiver of this Agreement or any portion thereof which reduces the amount or changes the form of the consideration to be delivered to the holders of FCN Common Stock hereunder, or into which shares of BANC ONE Capital Stock shall be converted pursuant to the First Step Merger, other than as contemplated by this Agreement. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party, but such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. ARTICLE X GENERAL PROVISIONS 10.1 Closing. Subject to the terms and conditions of this Agreement and the Option Agreements, the closing of the Second Step Merger (the "Closing") will take place at 10:00 a.m. on a date and at a place to be specified by the parties, which shall be no later than five business days after the satisfaction or waiver (subject to applicable law) of the latest to occur of the conditions set forth in Article VIII hereof, -58- unless extended by mutual agreement of the parties (the "Closing Date"). 10.2 Nonsurvival of Representations, Warranties and Agreements. None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement (other than the Option Agreements and the Confidentiality Agreement, which shall terminate in accordance with terms) shall survive the Effective Time, except for those covenants and agreements contained herein and therein which by their terms apply in whole or in part after the Effective Time. 10.3 Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expense, provided, however, that the costs and expenses of printing and mailing the Joint Proxy Statement, and all filing and other fees paid to the SEC in connection with the Merger, shall be borne equally by BANC ONE and FCN. 10.4 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, telecopied (with confirmation), mailed by registered or certified mail (return receipt requested) or delivered by an express courier (with confirmation) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to BANC ONE or Newco, to: BANC ONE CORPORATION 100 East Broad Street Columbus, Ohio 43271 Attn: General Counsel Fax: (614) 248-2010 and (b) if to FCN, to: First Chicago NBD Corporation One First National Plaza Chicago, Illinois 60670 Attn: General Counsel Fax: (312) 732-6393 10.5 Interpretation. When a reference is made in this Agreement to Sections, Exhibits or Schedules, such reference -59- shall be to a Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". No provision of this Agreement shall be construed to require FCN, BANC ONE, Newco or any of their respective Subsidiaries or affiliates to take any action which would violate any applicable law, rule or regulation. 10.6 Counterparts. This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 10.7 Entire Agreement. This Agreement (including the documents and the instruments referred to herein) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof other than the Option Agreements and the Confidentiality Agreement. 10.8 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of New York, without regard to any applicable conflicts of law (except to the extent that mandatory provisions of federal law or of the DGCL or OGCL are applicable). 10.9 Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable. 10.10 Publicity. Except as otherwise required by applicable law or the rules of the NYSE, none of BANC ONE, Newco or FCN shall, or shall permit any of its Subsidiaries to, issue or cause the publication of any press release or other public announcement with respect to, or otherwise make any public statement concerning, the transactions contemplated by this Agreement without the consent of FCN, in the case of a proposed announcement or statement by BANC ONE or Newco, or BANC ONE, in -60- the case of a proposed announcement or statement by FCN, which consent shall not be unreasonably withheld. 10.11 Assignment; Third Party Beneficiaries. Neither this Agreement nor any of the rights, interests or obligations shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Except as otherwise specifically provided in Section 7.8, this Agreement (including the documents and instruments referred to herein) is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. 10.12 Certain Agreements of Newco. Newco hereby consents, effective as of the First Effective Time, to be sued and served with process in the State of Ohio and irrevocably appoints the Ohio Secretary as its agent to accept service of process in any proceeding in the State of Ohio to enforce against it any obligation of BANC ONE or to enforce the rights of a BANC ONE shareholder who dissents from the First Step Merger pursuant to Section 1.6. -61- IN WITNESS WHEREOF, BANC ONE, FCN and Newco have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written. FIRST CHICAGO NBD CORPORATION BANC ONE CORPORATION By: /s/ Verne G. Istock By: /s/ John B. McCoy -------------------- -------------------- Chairman, President and Chairman and Chief Executive Officer Chief Executive Officer HORNET REORGANIZATION CORPORATION By: /s/ John B. McCoy -------------------- Chairman and Chief Executive Officer EX-10 3 EXHIBIT 99.1: STOCK OPTION AGREEMENT EXHIBIT 99.1 THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO CERTAIN PROVISIONS CONTAINED HEREIN AND TO RESALE RESTRICTIONS UNDER THE SECURITIES ACT OF 1933, AS AMENDED STOCK OPTION AGREEMENT, dated April 10, 1998, between First Chicago NBD Corporation, a Delaware corporation ("Issuer"), and BANC ONE CORPORATION, an Ohio corporation ("Grantee"). W I T N E S S E T H: WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of Reorganization of even date herewith (the "Merger Agreement"), which agreement has been executed by the parties hereto immediately prior to this Stock Option Agreement (the "Agreement"); and WHEREAS, as a condition to Grantee's entering into the Merger Agreement and in consideration therefor, Issuer has agreed to grant Grantee the Option (as hereinafter defined); NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth herein and in the Merger Agreement, the parties hereto agree as follows: 1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option (the "Option") to purchase, subject to the terms hereof, up to 57,150,376 fully paid and nonassessable shares of Issuer's Common Stock, par value $1.00 per share ("Common Stock"), at a price of $94.00 per share (the "Option Price"); provided, however, that in no event shall the number of shares of Common Stock for which this Option is exercisable exceed 19.9% of the Issuer's issued and outstanding shares of Common Stock without giving effect to any shares subject to or issued pursuant to the Option. The number of shares of Common Stock that may be received upon the exercise of the Option and the Option Price are subject to adjustment as herein set forth. (b) In the event that any additional shares of Common Stock are either (i) issued or otherwise become outstanding after the date of this Agreement (other than pursuant to this Agreement) or (ii) redeemed, repurchased, retired or otherwise cease to be outstanding after the date of the Agreement, the number of shares of Common Stock subject to the Option shall be increased or decreased, as appropriate, so that, after such issuance, such number equals 19.9% of the number of shares of Common Stock then issued and outstanding without giving effect to any shares subject or issued pursuant to the Option. Nothing contained in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize Issuer or Grantee to breach any provision of the Merger Agreement. 2. (a) The Holder (as hereinafter defined) may exercise the Option, in whole or part, and from time to time, if, but only if, both an Initial Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as hereinafter defined) shall have occurred prior to the occurrence of an Exercise Termination Event (as hereinafter defined), provided that the Holder shall have sent the written notice of such exercise (as provided in subsection (e) of this Section 2) within 90 days following such Subsequent Triggering Event. Each of the following shall be an "Exercise Termination Event": (i) the Effective Time (as defined in the Merger Agreement) of the Merger; (ii) termination of the Merger Agreement in accordance with the provisions thereof if such termination occurs prior to the occurrence of an Initial Triggering Event, except a termination by Grantee pursuant to Section 9.1(d) of the Merger Agreement (unless the breach by Issuer giving rise to such right of termination is non-volitional); or (iii) the passage of 12 months after termination of the Merger Agreement if such termination follows the occurrence of an Initial Triggering Event or is a termination by Grantee pursuant to Section 9.1(d) of the Merger Agreement (unless the breach by Issuer giving rise to such right of termination is non-volitional) (provided that if an Initial Triggering Event continues or occurs beyond such termination and prior to the passage of such 12-month period, the Exercise Termination Event shall be 12 months from the expiration of the Last Triggering Event but in no event more than 18 months after such termination). The "Last Triggering Event" shall mean the last Initial Triggering Event to expire. The term "Holder" shall mean the holder or holders of the Option. (b) The term "Initial Triggering Event" shall mean any of the following events or transactions occurring after the date hereof: (i) Issuer or any of its Subsidiaries (each an "Issuer Subsidiary"), without having received Grantee's prior written consent, shall have entered into an agreement to engage in an Acquisition Transaction (as hereinafter defined) with any person (the term "person" for purposes of this Agreement having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules and regulations thereunder) other than Grantee or any of its Subsidiaries (each a "Grantee Subsidiary") or the Board of Directors of Issuer shall have recommended that the stockholders of Issuer approve or accept any Acquisition Transaction. For purposes of this Agreement, "Acquisition Transaction" shall mean (w) a merger or consolidation, or any similar transaction, involving Issuer or any Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange Commission (the "SEC")) of Issuer, (x) a purchase, lease or other acquisition or assumption of all or a substantial portion of the assets or deposits of Issuer or any Significant Subsidiary of Issuer, (y) a purchase or other acquisition (including by way of merger, consolidation, share exchange or otherwise) of securities representing 10% or more of the voting power of Issuer, or (z) any substantially similar transaction; provided, however, that in no event shall any merger, consolidation, purchase or similar transaction involving only the Issuer and one or more of its Subsidiaries or involving only any two or more of such Subsidiaries, be deemed to be an Acquisition Transaction, provided that any such transaction is not entered into in violation of the terms of the Merger Agreement; (ii) Issuer or any Issuer Subsidiary, without having received Grantee's prior written consent, shall have authorized, recommended, proposed or publicly announced its intention to authorize, recommend or propose, to engage in an Acquisition Transaction with any person other than Grantee or a Grantee Subsidiary, or the Board of Directors of Issuer shall have publicly withdrawn or modified, or publicly announced its interest to withdraw or modify, in any manner adverse to Grantee, its recommendation that the stockholders of Issuer approve the transactions contemplated by the Merger Agreement in anticipation of engaging in an Acquisition Transaction; (iii) Any person other than Grantee, any Grantee Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of its business shall have acquired beneficial ownership or the right to acquire beneficial ownership of 10% or more of the outstanding shares of Common Stock (the term "beneficial ownership" for purposes of this Agreement having the meaning assigned thereto in Section 13(d) of the 1934 Act, and the rules and regulations thereunder); (iv) Any person other than Grantee or any Grantee Subsidiary shall have made a bona fide proposal to Issuer or its stockholders by public announcement or written communication that is or becomes the subject of public disclosure to engage in an Acquisition Transaction; (v) After an overture is made by a third party to Issuer or its stockholders to engage in an Acquisition Transaction, Issuer shall have breached any covenant or obligation contained in the Merger Agreement and such breach (x) would entitle Grantee to terminate the Merger Agreement and (y) shall not have been cured prior to the Notice Date (as defined below); or (vi) Any person other than Grantee or any Grantee Subsidiary, other than in connection with a transaction to which Grantee has given its prior written consent, shall have filed an application or notice with the Federal Reserve Board, or other federal or state bank regulatory authority, which application or notice has been accepted for processing, for approval to engage in an Acquisition Transaction. (c) The term "Subsequent Triggering Event" shall mean either of the following events or transactions occurring after the date hereof: (i) The acquisition by any person of beneficial ownership of 20% or more of the then outstanding Common Stock; or (ii) The occurrence of the Initial Triggering Event described in paragraph (i) of subsection (b) of this Section 2, except that the percentage referred to in clause (y) shall be 20%. (d) Issuer shall notify Grantee promptly in writing of the occurrence of any Initial Triggering Event or Subsequent Triggering Event of which it has notice (together, a "Triggering Event"), it being understood that the giving of such notice by Issuer shall not be a condition to the right of the Holder to exercise the Option. (e) In the event the Holder is entitled to and wishes to exercise the Option, it shall send to Issuer a written notice (the date of which being herein referred to as the "Notice Date") specifying (i) the total number of shares it will purchase pursuant to such exercise and (ii) a place and date not earlier than three business days nor later than 60 business days from the Notice Date for the closing of such purchase (the "Closing Date"); provided that if prior notification to or approval of the Federal Reserve Board or any other regulatory agency is required in connection with such purchase, the Holder shall promptly file the required notice or application for approval and shall expeditiously process the same and the period of time that otherwise would run pursuant to this sentence shall run instead from the date on which any required notification periods have expired or been terminated or such approvals have been obtained and any requisite waiting period or periods shall have passed. Any exercise of the Option shall be deemed to occur on the Notice Date relating thereto. (f) At the closing referred to in subsection (e) of this Section 2, the Holder shall pay to Issuer the aggregate purchase price for the shares of Common Stock purchased pursuant to the exercise of the Option in immediately available funds by wire transfer to a bank account designated by Issuer, provided that failure or refusal of Issuer to designate such a bank account shall not preclude the Holder from exercising the Option. (g) At such closing, simultaneously with the delivery of immediately available funds as provided in subsection (f) of this Section 2, Issuer shall deliver to the Holder a certificate or certificates representing the number of shares of Common Stock purchased by the Holder and, if the Option should be exercised in part only, a new Option evidencing the rights of the Holder thereof to purchase the balance of the shares purchasable hereunder, and the Holder shall deliver to Issuer a copy of this Agreement and a letter agreeing that the Holder will not offer to sell or otherwise dispose of such shares in violation of applicable law or the provisions of this Agreement. (h) Certificates for Common Stock delivered at a closing hereunder may be endorsed with a restrictive legend that shall read substantially as follows: "The transfer of the shares represented by this certificate is subject to certain provisions of an agreement between the registered holder hereof and Issuer and to resale restrictions arising under the Securities Act of 1933, as amended. A copy of such agreement is on file at the principal office of Issuer and will be provided to the holder hereof without charge upon receipt by Issuer of a written request therefor." It is understood and agreed that: (i) the reference to the resale restrictions of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend shall be removed by delivery of substitute certificate(s) without such reference if the Holder shall have delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel, in form and substance reasonably satisfactory to Issuer, to the effect that such legend is not required for purposes of the 1933 Act; (ii) the reference to the provisions to this Agreement in the above legend shall be removed by delivery of substitute certificate(s) without such reference if the shares have been sold or transferred in compliance with the provisions of this Agreement and under circumstances that do not require the retention of such reference; and (iii) the legend shall be removed in its entirety if the conditions in the preceding clauses (i) and (ii) are both satisfied. In addition, such certificates shall bear any other legend as may be required by law. (i) Upon the giving by the Holder to Issuer of the written notice of exercise of the Option provided for under subsection (e) of this Section 2 and the tender of the applicable purchase price in immediately available funds, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of Issuer shall then be closed or that certificates representing such shares of Common Stock shall not then be actually delivered to the Holder. Issuer shall pay all expenses, and any and all United States federal, state and local taxes and other charges that may be payable in connection with the preparation, issue and delivery of stock certificates under this Section 2 in the name of the Holder or its assignee, transferee or designee. 3. Issuer agrees: (i) that it shall at all times maintain, free from preemptive rights, sufficient authorized but unissued or treasury shares of Common Stock so that the Option may be exercised without additional authorization of Common Stock after giving effect to all other options, warrants, convertible securities and other rights to purchase Common Stock; (ii) that it will not, by charter amendment or through reorganization, consolidation, merger, dissolution or sale of assets, or by any other voluntary act, avoid or seek to avoid the observance or performance of any of the covenants, stipulations or conditions to be observed or performed hereunder by Issuer; (iii) promptly to take all action as may from time to time be required (including (x) complying with all premerger notification, reporting and waiting period requirements specified in 15 U.S.C. sections. 18a and regulations promulgated thereunder and (y) in the event, under the Bank Holding Company Act of 1956, as amended (the "BHCA"), or the Change in Bank Control Act of 1978, as amended, or any state banking law, prior approval of or notice to the Federal Reserve Board or to any state regulatory authority is necessary before the Option may be exercised, cooperating fully with the Holder in preparing such applications or notices and providing such information to the Federal Reserve Board or such state regulatory authority as they may require) in order to permit the Holder to exercise the Option and Issuer duly and effectively to issue shares of Common Stock pursuant hereto; and (iv) promptly to take all action provided herein to protect the rights of the Holder against dilution. 4. This Agreement (and the Option granted hereby) are exchangeable, without expense, at the option of the Holder, upon presentation and surrender of this Agreement at the principal office of Issuer, for other Agreements providing for Options of different denominations entitling the holder thereof to purchase, on the same terms and subject to the same conditions as are set forth herein, in the aggregate the same number of shares of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein include any Stock Option Agreements and related Options for which this Agreement (and the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Agreement, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like tenor and date. Any such new Agreement executed and delivered shall constitute an additional contractual obligation on the part of Issuer, whether or not the Agreement so lost, stolen, destroyed or mutilated shall at any time be enforceable by anyone. 5. In addition to the adjustment in the number of shares of Common Stock that are purchasable upon exercise of the Option pursuant to Section 1 of this Agreement, the number of shares of Common Stock purchasable upon the exercise of the Option and the Option Price shall be subject to adjustment from time to time as provided in this Section 5. In the event of any change in, or distributions in respect of, the Common Stock by reason of stock dividends, split-ups, mergers, recapitalizations, combinations, subdivisions, conversions, exchanges of shares, distributions on or in respect of the Common Stock that would be prohibited under the terms of the Merger Agreement, or the like, the type and number of shares of Common Stock purchasable upon exercise hereof and the Option Price shall be appropriately adjusted in such manner as shall fully preserve the economic benefits provided hereunder and proper provision shall be made in any agreement governing any such transaction to provide for such proper adjustment and the full satisfaction of the Issuer's obligations hereunder. 6. Upon the occurrence of a Subsequent Triggering Event that occurs prior to an Exercise Termination Event, Issuer shall, at the request of Grantee delivered within 90 days of such Subsequent Triggering Event (whether on its own behalf or on behalf of any subsequent holder of this Option (or part thereof) or any of the shares of Common Stock issued pursuant hereto), promptly prepare, file and keep current a shelf registration statement under the 1933 Act covering this Option and any shares issued and issuable pursuant to this Option and shall use its reasonable best efforts to cause such registration statement to become effective and remain current in order to permit the sale or other disposition of this Option and any shares of Common Stock issued upon total or partial exercise of this Option ("Option Shares") in accordance with any plan of disposition requested by Grantee. Issuer will use its reasonable best efforts to cause such registration statement first to become effective and then to remain effective for such period not in excess of 180 days from the day such registration statement first becomes effective or such shorter time as may be reasonably necessary to effect such sales or other dispositions. Grantee shall have the right to demand two such registrations. The foregoing notwithstanding, if, at the time of any request by Grantee for registration of the Option or Option Shares as provided above, Issuer is in registration with respect to an underwritten public offering of shares of Common Stock, and if in the good faith judgment of the managing underwriter or managing underwriters, or, if none, the sole underwriter or underwriters, of such offering the inclusion of the Holder's Option or Option Shares would interfere with the successful marketing of the shares of Common Stock offered by Issuer, the number of Option Shares otherwise to be covered in the registration statement contemplated hereby may be reduced; and provided, however, that after any such required reduction the number of Option Shares to be included in such offering for the account of the Holder shall constitute at least 25% of the total number of shares to be sold by the Holder and Issuer in the aggregate; and provided further, however, that if such reduction occurs, then the Issuer shall file a registration statement for the balance as promptly as practical and no reduction shall thereafter occur. Each such Holder shall provide all information reasonably requested by Issuer for inclusion in any registration statement to be filed hereunder. If requested by any such Holder in connection with such registration, Issuer shall become a party to any underwriting agreement relating to the sale of such shares, but only to the extent of obligating itself in respect of representations, warranties, indemnities and other agreements customarily included in secondary offering underwriting agreements for the Issuer. Upon receiving any request under this Section 6 from any Holder, Issuer agrees to send a copy thereof to any other person known to Issuer to be entitled to registration rights under this Section 6, in each case by promptly mailing the same, postage prepaid, to the address of record of the persons entitled to receive such copies. Notwithstanding anything to the contrary contained herein, in no event shall Issuer be obligated to effect more than two registrations pursuant to this Section 6 by reason of the fact that there shall be more than one Grantee as a result of any assignment or division of this Agreement. 7. (a) Immediately prior to the occurrence of a Repurchase Event (as defined below), (i) following a request of the Holder, delivered prior to an Exercise Termination Event, Issuer (or any successor thereto) shall repurchase the Option from the Holder at a price (the "Option Repurchase Price") equal to the amount by which (A) the Market/Offer Price (as defined below) exceeds (B) the Option Price, multiplied by the number of shares for which this Option may then be exercised and (ii) at the request of the owner of Option Shares from time to time (the "Owner"), delivered within 90 days of such occurrence (or such later period as provided in Section 10), Issuer shall repurchase such number of the Option Shares from the Owner as the Owner shall designate at a price (the "Option Share Repurchase Price") equal to the Market/Offer Price multiplied by the number of Option Shares so designated. The term "Market/Offer Price" shall mean the highest of (i) the price per share of Common Stock at which a tender offer or exchange offer therefor has been made, (ii) the price per share of Common Stock to be paid by any third party pursuant to an agreement with Issuer, (iii) the highest closing price for shares of Common Stock within the six-month period immediately preceding the date the Holder gives notice of the required repurchase of this Option or the Owner gives notice of the required repurchase of Option Shares, as the case may be, or (iv) in the event of a sale of all or a substantial portion of Issuer's assets, the sum of the price paid in such sale for such assets and the current market value of the remaining assets of Issuer as determined by a nationally recognized investment banking firm selected by the Holder or the Owner, as the case may be, and reasonably acceptable to the Issuer, divided by the number of shares of Common Stock of Issuer outstanding at the time of such sale. In determining the Market/Offer Price, the value of consideration other than cash shall be determined by a nationally recognized investment banking firm selected by the Holder or Owner, as the case may be, and reasonably acceptable to the Issuer. (b) The Holder and the Owner, as the case may be, may exercise its right to require Issuer to repurchase the Option and any Option Shares pursuant to this Section 7 by surrendering for such purpose to Issuer, at its principal office, a copy of this Agreement or certificates for Option Shares, as applicable, accompanied by a written notice or notices stating that the Holder or the Owner, as the case may be, elects to require Issuer to repurchase this Option and/or the Option Shares in accordance with the provisions of this Section 7. Within the latter to occur of (x) five business days after the surrender of the Option and/or certificates representing Option Shares and the receipt of such notice or notices relating thereto and (y) the time that is immediately prior to the occurrence of a Repurchase Event, Issuer shall deliver or cause to be delivered to the Holder the Option Repurchase Price and/or to the Owner the Option Share Repurchase Price therefor or the portion thereof, if any, that Issuer is not then prohibited under applicable law and regulation from so delivering. (c) To the extent that Issuer is prohibited under applicable law or regulation from repurchasing the Option and/or the Option Shares in full, Issuer shall immediately so notify the Holder and/or the Owner and thereafter deliver or cause to be delivered, from time to time, to the Holder and/or the Owner, as appropriate, the portion of the Option Repurchase Price and the Option Share Repurchase Price, respectively, that it is no longer prohibited from delivering, within five business days after the date on which Issuer is no longer so prohibited; provided, however, that if Issuer at any time after delivery of a notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited under applicable law or regulation from delivering to the Holder and/or the Owner, as appropriate, the Option Repurchase Price and the Option Share Repurchase Price, respectively, in full (and Issuer hereby undertakes to use its best efforts to obtain all required regulatory and legal approvals and to file any required notices, in each case as promptly as practicable in order to accomplish such repurchase), the Holder or Owner may revoke its notice of repurchase of the Option or the Option Shares either in whole or to the extent of the prohibition, whereupon, in the latter case, Issuer shall promptly (i) deliver to the Holder and/or the Owner, as appropriate, that portion of the Option Repurchase Price or the Option Share Repurchase Price that Issuer is not prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the Holder, a new Stock Option Agreement evidencing the right of the Holder to purchase that number of shares of Common Stock obtained by multiplying the number of shares of Common Stock for which the surrendered Stock Option Agreement was exercisable at the time of delivery of the notice of repurchase by a fraction, the numerator of which is the Option Repurchase Price less the portion thereof theretofore delivered to the Holder and the denominator of which is the Option Repurchase Price, or (B) to the Owner, a certificate for the Option Shares it is then so prohibited from repurchasing. (d) For purposes of this Section 7, a Repurchase Event shall be deemed to have occurred (i) upon the consummation of any merger, consolidation or similar transaction involving Issuer or any purchase, lease or other acquisition of all or a substantial portion of the assets of Issuer, other than any such transaction which would not constitute an Acquisition Transaction pursuant to the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition by any person of beneficial ownership of 50% or more of the then outstanding shares of Common Stock, provided that no such event shall constitute a Repurchase Event unless a Subsequent Triggering Event shall have occurred prior to an Exercise Termination Event. The parties hereto agree that Issuer's obligations to repurchase the Option or Option Shares under this Section 7 shall not terminate upon the occurrence of an Exercise Termination Event unless no Subsequent Triggering Event shall have occurred prior to the occurrence of an Exercise Termination Event. 8. (a) In the event that prior to an Exercise Termination Event, Issuer shall enter into an agreement (i) to consolidate with or merge into any person, other than Grantee or one of its Subsidiaries, and shall not be the continuing or surviving corporation of such consolidation or merger, (ii) to permit any person, other than Grantee or one of its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or surviving corporation, but, in connection with such merger, the then outstanding shares of Common Stock shall be changed into or exchanged for stock or other securities of any other person or cash or any other property or the then outstanding shares of Common Stock shall after such merger represent less than 50% of the outstanding voting shares and voting share equivalents of the merged company, or (iii) to sell or otherwise transfer all or substantially all of its assets to any person, other than Grantee or one of its Subsidiaries, then, and in each such case, the agreement governing such transaction shall make proper provision so that the Option shall, upon the consummation of any such transaction and upon the terms and conditions set forth herein, be converted into, or exchanged for, an option (the "Substitute Option"), at the election of the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or (y) any person that controls the Acquiring Corporation. (b) The following terms have the meanings indicated: (A) "Acquiring Corporation" shall mean (i) the continuing or surviving corporation of a consolidation or merger with Issuer (if other than Issuer), (ii) Issuer in a merger in which Issuer is the continuing or surviving person, and (iii) the transferee of all or substantially all of Issuer's assets. (B) "Substitute Common Stock" shall mean the common stock issued by the issuer of the Substitute Option upon exercise of the Substitute Option. (3) "Assigned Value" shall mean the Market/Offer Price, as defined in Section 7. (4) "Average Price" shall mean the average closing price of a share of the Substitute Common Stock for the one year immediately preceding the consolidation, merger or sale in question, but in no event higher than the closing price of the shares of Substitute Common Stock on the day preceding such consolidation, merger or sale; provided that if Issuer is the issuer of the Substitute Option, the Average Price shall be computed with respect to a share of common stock issued by the person merging into Issuer or by any company which controls or is controlled by such person, as the Holder may elect. (c) The Substitute Option shall have the same terms as the Option, provided, that if the terms of the Substitute Option cannot, for legal reasons, be the same as the Option, such terms shall be as similar as possible and in no event less advantageous to the Holder. The issuer of the Substitute Option shall also enter into an agreement with the then Holder or Holders of the Substitute Option in substantially the same form as this Agreement, which shall be applicable to the Substitute Option. (d) The Substitute Option shall be exercisable for such number of shares of Substitute Common Stock as is equal to the Assigned Value multiplied by the number of shares of Common Stock for which the Option is then exercisable, divided by the Average Price. The exercise price of the Substitute Option per share of Substitute Common Stock shall then be equal to the Option Price multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock for which the Option is then exercisable and the denominator of which shall be the number of shares of Substitute Common Stock for which the Substitute Option is exercisable. (e) In no event, pursuant to any of the foregoing paragraphs, shall the Substitute Option be exercisable for more than 19.9% of the shares of Substitute Common Stock outstanding prior to exercise of the Substitute Option. In the event that the Substitute Option would be exercisable for more than 19.9% of the shares of Substitute Common Stock outstanding prior to exercise but for this clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer") shall make a cash payment to Holder equal to the excess of (i) the value of the Substitute Option without giving effect to the limitation in this clause (e) over (ii) the value of the Substitute Option after giving effect to the limitation in this clause (e). This difference in value shall be determined by a nationally recognized investment banking firm selected by the Holder or the Owner, as the case may be, and reasonably acceptable to the Acquiring Corporation. (f) Issuer shall not enter into any transaction described in subsection (a) of this Section 8 unless the Acquiring Corporation and any person that controls the Acquiring Corporation assume in writing all the obligations of Issuer hereunder. 9. (a) At the request of the holder of the Substitute Option (the "Substitute Option Holder"), the Substitute Option Issuer shall repurchase the Substitute Option from the Substitute Option Holder at a price (the "Substitute Option Repurchase Price") equal to the amount by which (i) the Highest Closing Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute Option, multiplied by the number of shares of Substitute Common Stock for which the Substitute Option may then be exercised, and at the request of the owner (the "Substitute Share Owner") of shares of Substitute Common Stock (the "Substitute Shares"), the Substitute Option Issuer shall repurchase the Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to the Highest Closing Price multiplied by the number of Substitute Shares so designated. The term "Highest Closing Price" shall mean the highest closing price for shares of Substitute Common Stock within the six-month period immediately preceding the date the Substitute Option Holder gives notice of the required repurchase of the Substitute Option or the Substitute Share Owner gives notice of the required repurchase of the Substitute Shares, as applicable. (b) The Substitute Option Holder and the Substitute Share Owner, as the case may be, may exercise its respective right to require the Substitute Option Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to this Section 9 by surrendering for such purpose to the Substitute Option Issuer, at its principal office, the agreement for such Substitute Option (or, in the absence of such an agreement, a copy of this Agreement) and certificates for Substitute Shares accompanied by a written notice or notices stating that the Substitute Option Holder or the Substitute Share Owner, as the case may be, elects to require the Substitute Option Issuer to repurchase the Substitute Option and/or the Substitute Shares in accordance with the provisions of this Section 9. As promptly as practicable, and in any event within five business days after the surrender of the Substitute Option and/or certificates representing Substitute Shares and the receipt of such notice or notices relating thereto, the Substitute Option Issuer shall deliver or cause to be delivered to the Substitute Option Holder the Substitute Option Repurchase Price and/or to the Substitute Share Owner the Substitute Share Repurchase Price therefor or, in either case, the portion thereof which the Substitute Option Issuer is not then prohibited under applicable law and regulation from so delivering. (c) To the extent that the Substitute Option Issuer is prohibited under applicable law or regulation from repurchasing the Substitute Option and/or the Substitute Shares in part or in full, the Substitute Option Issuer following a request for repurchase pursuant to this Section 9 shall immediately so notify the Substitute Option Holder and/or the Substitute Share Owner and thereafter deliver or cause to be delivered, from time to time, to the Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the portion of the Substitute Share Repurchase Price, respectively, which it is no longer prohibited from delivering, within five business days after the date on which the Substitute Option Issuer is no longer so prohibited; provided, however, that if the Substitute Option Issuer is at any time after delivery of a notice of repurchase pursuant to subsection (b) of this Section 9 prohibited under applicable law or regulation from delivering to the Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the Substitute Option Repurchase Price and the Substitute Share Repurchase Price, respectively, in full (and the Substitute Option Issuer shall use its best efforts to obtain all required regulatory and legal approvals, in each case as promptly as practicable, in order to accomplish such repurchase), the Substitute Option Holder or Substitute Share Owner may revoke its notice of repurchase of the Substitute Option or the Substitute Shares either in whole or to the extent of the prohibition, whereupon, in the latter case, the Substitute Option Issuer shall promptly (i) deliver to the Substitute Option Holder or Substitute Share Owner, as appropriate, that portion of the Substitute Option Repurchase Price or the Substitute Share Repurchase Price that the Substitute Option Issuer is not prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the Substitute Option Holder, a new Substitute Option evidencing the right of the Substitute Option Holder to purchase that number of shares of the Substitute Common Stock obtained by multiplying the number of shares of the Substitute Common Stock for which the surrendered Substitute Option was exercisable at the time of delivery of the notice of repurchase by a fraction, the numerator of which is the Substitute Option Repurchase Price less the portion thereof theretofore delivered to the Substitute Option Holder and the denominator of which is the Substitute Option Repurchase Price, or (B) to the Substitute Share Owner, a certificate for the Substitute Common Shares it is then so prohibited from repurchasing. 10. The 90-day period for exercise of certain rights under Sections 2, 6, 7 and 13 shall be extended: (i) to the extent necessary to obtain all regulatory approvals for the exercise of such rights, for the expiration of all statutory waiting periods; and (ii) to the extent necessary to avoid liability under Section 16(b) of the 1934 Act by reason of such exercise. 11. Issuer hereby represents and warrants to Grantee as follows: (a) Issuer has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of Issuer and no other corporate proceedings on the part of Issuer are necessary to authorize this Agreement or to consummate the transactions so contemplated. This Agreement has been duly and validly executed and delivered by Issuer. (b) Issuer has taken all necessary corporate action to authorize and reserve and to permit it to issue, and at all times from the date hereof through the termination of this Agreement in accordance with its terms will have reserved for issuance upon the exercise of the Option, that number of shares of Common Stock equal to the maximum number of shares of Common Stock at any time and from time to time issuable hereunder, and all such shares, upon issuance pursuant hereto, will be duly authorized, validly issued, fully paid, nonassessable, and will be delivered free and clear of all claims, liens, encumbrance and security interests and not subject to any preemptive rights. (c) Issuer has taken all action (including if required redeeming all of the Rights or amending or terminating the Rights Agreement) so that the entering into of this Option Agreement, the acquisition of shares of Common Stock hereunder and the other transactions contemplated hereby do not and will not result in the grant of any rights to any person under the Rights Agreement or enable or require the Rights to be exercised, distributed or triggered. 12. Grantee hereby represents and warrants to Issuer that: (a) Grantee has all requisite corporate power and authority to enter into this Agreement and, subject to any approvals or consents referred to herein, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Grantee. This Agreement has been duly executed and delivered by Grantee. (b) The Option is not being, and any shares of Common Stock or other securities acquired by Grantee upon exercise of the Option will not be, acquired with a view to the public distribution thereof and will not be transferred or otherwise disposed of except in a transaction registered or exempt from registration under the Securities Act. 13. Neither of the parties hereto may assign any of its rights or obligations under this Option Agreement or the Option created hereunder to any other person, without the express written consent of the other party, except that in the event a Subsequent Triggering Event shall have occurred prior to an Exercise Termination Event, Grantee, subject to the express provisions hereof, may assign in whole or in part its rights and obligations hereunder within 90 days following such Subsequent Triggering Event (or such later period as provided in Section 10); provided, however, that until the date 15 days following the date on which the Federal Reserve Board approves an application by Grantee under the BHCA to acquire the shares of Common Stock subject to the Option, Grantee may not assign its rights under the Option except in (i) a widely dispersed public distribution, (ii) a private placement in which no one party acquires the right to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment to a single party (e.g., a broker or investment banker) for the purpose of conducting a widely dispersed public distribution on Grantee's behalf, or (iv) any other manner approved by the Federal Reserve Board. 14. Each of Grantee and Issuer will use its best efforts to make all filings with, and to obtain consents of, all third parties and governmental authorities necessary to the consummation of the transactions contemplated by this Agreement, including without limitation making application to list the shares of Common Stock issuable hereunder on the New York Stock Exchange upon official notice of issuance and applying to the Federal Reserve Board under the BHCA for approval to acquire the shares issuable hereunder, but Grantee shall not be obligated to apply to state banking authorities for approval to acquire the shares of Common Stock issuable hereunder until such time, if ever, as it deems appropriate to do so. 15. The parties hereto acknowledge that damages would be an inadequate remedy for a breach of this Agreement by either party hereto and that the obligations of the parties hereto shall be enforceable by either party hereto through injunctive or other equitable relief. 16. If any term, provision, covenant or restriction contained in this Agreement is held by a court or a federal or state regulatory agency of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions and covenants and restrictions contained in this Agreement shall remain in full force and effect, and shall in no way be affected, impaired or invalidated. If for any reason such court or regulatory agency determines that the Holder is not permitted to acquire, or Issuer is not permitted to repurchase pursuant to Section 7, the full number of shares of Common Stock provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5 hereof), it is the express intention of Issuer to allow the Holder to acquire or to require Issuer to repurchase such lesser number of shares as may be permissible, without any amendment or modification hereof. 17. All notices, requests, claims, demands and other communications hereunder shall be deemed to have been duly given when delivered in person, by cable, telegram, telecopy or telex, or by registered or certified mail (postage prepaid, return receipt requested) at the respective addresses of the parties set forth in the Merger Agreement. 18. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof (except to the extent that mandatory provisions of federal law, the DGCL or the OGCL apply). 19. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. 20. Except as otherwise expressly provided herein, each of the parties hereto shall bear and pay all costs and expenses incurred by it or on its behalf in connection with the transactions contemplated hereunder, including fees and expenses of its own financial consultants, investment bankers, accountants and counsel. 21. Except as otherwise expressly provided herein or in the Merger Agreement, this Agreement contains the entire agreement between the parties with respect to the transactions contemplated hereunder and supersedes all prior arrangements or understandings with respect thereof, written or oral. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer upon any party, other than the parties hereto, and their respective successors except as assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein. 22. Capitalized terms used in this Agreement and not defined herein shall have the meanings assigned thereto in the Merger Agreement. IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by its officers thereunto duly authorized, all as of the date first above written. FIRST CHICAGO NBD CORPORATION By: /s/ Verne G. Istock --------------------------- Name: Verne G. Istock Title: Chairman, President and Chief Executive Officer BANC ONE CORPORATION By: /s/ John B. McCoy --------------------------- Name: John B. McCoy Title: Chairman and Chief Executive Officer EX-10 4 EXHIBIT 99.2: STOCK OPTION AGREEMENT EXHIBIT 99.2 THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO CERTAIN PROVISIONS CONTAINED HEREIN AND TO RESALE RESTRICTIONS UNDER THE SECURITIES ACT OF 1933, AS AMENDED STOCK OPTION AGREEMENT, dated April 10, 1998, between BANC ONE CORPORATION, an Ohio corporation ("Issuer"), and First Chicago NBD Corporation, a Delaware corporation ("Grantee"). W I T N E S S E T H: WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of Reorganization of even date herewith (the "Merger Agreement"), which agreement has been executed by the parties hereto immediately prior to this Stock Option Agreement (the "Agreement"); and WHEREAS, as a condition to Grantee's entering into the Merger Agreement and in consideration therefor, Issuer has agreed to grant Grantee the Option (as hereinafter defined); NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth herein and in the Merger Agreement, the parties hereto agree as follows: 1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option (the "Option") to purchase, subject to the terms hereof, up to 128,122,944 fully paid and nonassessable shares of Issuer's Common Stock, without par value ("Common Stock"), at a price of $61.75 per share (the "Option Price"); provided, however, that in no event shall the number of shares of Common Stock for which this Option is exercisable exceed 19.9% of the Issuer's issued and outstanding shares of Common Stock without giving effect to any shares subject to or issued pursuant to the Option. The number of shares of Common Stock that may be received upon the exercise of the Option and the Option Price are subject to adjustment as herein set forth. (b) In the event that any additional shares of Common Stock are either (i) issued or otherwise become outstanding after the date of this Agreement (other than pursuant to this Agreement) or (ii) redeemed, repurchased, retired or otherwise cease to be outstanding after the date of the Agreement, the number of shares of Common Stock subject to the Option shall be increased or decreased, as appropriate, so that, after such issuance, such number equals 19.9% of the number of shares of -1- Common Stock then issued and outstanding without giving effect to any shares subject or issued pursuant to the Option. Nothing contained in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize Issuer or Grantee to breach any provision of the Merger Agreement. 2. (a) The Holder (as hereinafter defined) may exercise the Option, in whole or part, and from time to time, if, but only if, both an Initial Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as hereinafter defined) shall have occurred prior to the occurrence of an Exercise Termination Event (as hereinafter defined), provided that the Holder shall have sent the written notice of such exercise (as provided in subsection (e) of this Section 2) within 90 days following such Subsequent Triggering Event. Each of the following shall be an "Exercise Termination Event": (i) the Effective Time (as defined in the Merger Agreement) of the Merger; (ii) termination of the Merger Agreement in accordance with the provisions thereof if such termination occurs prior to the occurrence of an Initial Triggering Event, except a termination by Grantee pursuant to Section 9.1(d) of the Merger Agreement (unless the breach by Issuer giving rise to such right of termination is non-volitional); or (iii) the passage of 12 months after termination of the Merger Agreement if such termination follows the occurrence of an Initial Triggering Event or is a termination by Grantee pursuant to Section 9.1(d) of the Merger Agreement (unless the breach by Issuer giving rise to such right of termination is non-volitional) (provided that if an Initial Triggering Event continues or occurs beyond such termination and prior to the passage of such 12-month period, the Exercise Termination Event shall be 12 months from the expiration of the Last Triggering Event but in no event more than 18 months after such termination). The "Last Triggering Event" shall mean the last Initial Triggering Event to expire. The term "Holder" shall mean the holder or holders of the Option. (b) The term "Initial Triggering Event" shall mean any of the following events or transactions occurring after the date hereof: (i) Issuer or any of its Subsidiaries (each an "Issuer Subsidiary"), without having received Grantee's prior written consent, shall have entered into an agreement to engage in an Acquisition Transaction (as hereinafter defined) with any person (the term "person" for purposes of this Agreement having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules and regulations thereunder) other than Grantee or any of its Subsidiaries (each a "Grantee Subsidiary") or the Board of Directors of Issuer shall -2- have recommended that the stockholders of Issuer approve or accept any Acquisition Transaction. For purposes of this Agreement, "Acquisition Transaction" shall mean (w) a merger or consolidation, or any similar transaction, involving Issuer or any Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange Commission (the "SEC")) of Issuer, (x) a purchase, lease or other acquisition or assumption of all or a substantial portion of the assets or deposits of Issuer or any Significant Subsidiary of Issuer, (y) a purchase or other acquisition (including by way of merger, consolidation, share exchange or otherwise) of securities representing 10% or more of the voting power of Issuer, or (z) any substantially similar transaction; provided, however, that in no event shall any merger, consolidation, purchase or similar transaction involving only the Issuer and one or more of its Subsidiaries or involving only any two or more of such Subsidiaries, be deemed to be an Acquisition Transaction, provided that any such transaction is not entered into in violation of the terms of the Merger Agreement; (ii) Issuer or any Issuer Subsidiary, without having received Grantee's prior written consent, shall have authorized, recommended, proposed or publicly announced its intention to authorize, recommend or propose, to engage in an Acquisition Transaction with any person other than Grantee or a Grantee Subsidiary, or the Board of Directors of Issuer shall have publicly withdrawn or modified, or publicly announced its interest to withdraw or modify, in any manner adverse to Grantee, its recommendation that the stockholders of Issuer approve the transactions contemplated by the Merger Agreement in anticipation of engaging in an Acquisition Transaction; (iii) Any person other than Grantee, any Grantee Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of its business shall have acquired beneficial ownership or the right to acquire beneficial ownership of 10% or more of the outstanding shares of Common Stock (the term "beneficial ownership" for purposes of this Agreement having the meaning assigned thereto in Section 13(d) of the 1934 Act, and the rules and regulations thereunder); (iv) Any person other than Grantee or any Grantee Subsidiary shall have made a bona fide proposal to Issuer or its stockholders by public announcement or written communication that is or becomes the subject of public disclosure to engage in an Acquisition Transaction; -3- (v) After an overture is made by a third party to Issuer or its stockholders to engage in an Acquisition Transaction, Issuer shall have breached any covenant or obligation contained in the Merger Agreement and such breach (x) would entitle Grantee to terminate the Merger Agreement and (y) shall not have been cured prior to the Notice Date (as defined below); or (vi) Any person other than Grantee or any Grantee Subsidiary, other than in connection with a transaction to which Grantee has given its prior written consent, shall have filed an application or notice with the Federal Reserve Board, or other federal or state bank regulatory authority, which application or notice has been accepted for processing, for approval to engage in an Acquisition Transaction. (c) The term "Subsequent Triggering Event" shall mean either of the following events or transactions occurring after the date hereof: (i) The acquisition by any person of beneficial ownership of 20% or more of the then outstanding Common Stock; or (ii) The occurrence of the Initial Triggering Event described in paragraph (i) of subsection (b) of this Section 2, except that the percentage referred to in clause (y) shall be 20%. (d) Issuer shall notify Grantee promptly in writing of the occurrence of any Initial Triggering Event or Subsequent Triggering Event of which it has notice (together, a "Triggering Event"), it being understood that the giving of such notice by Issuer shall not be a condition to the right of the Holder to exercise the Option. (e) In the event the Holder is entitled to and wishes to exercise the Option, it shall send to Issuer a written notice (the date of which being herein referred to as the "Notice Date") specifying (i) the total number of shares it will purchase pursuant to such exercise and (ii) a place and date not earlier than three business days nor later than 60 business days from the Notice Date for the closing of such purchase (the "Closing Date"); provided that if prior notification to or approval of the Federal Reserve Board or any other regulatory agency is required in connection with such purchase, the Holder shall promptly file the required notice or application for approval and shall expeditiously process the same and the period of time that otherwise would run pursuant to this sentence shall run instead from the date on which any required notification periods have expired or been -4- terminated or such approvals have been obtained and any requisite waiting period or periods shall have passed. Any exercise of the Option shall be deemed to occur on the Notice Date relating thereto. (f) At the closing referred to in subsection (e) of this Section 2, the Holder shall pay to Issuer the aggregate purchase price for the shares of Common Stock purchased pursuant to the exercise of the Option in immediately available funds by wire transfer to a bank account designated by Issuer, provided that failure or refusal of Issuer to designate such a bank account shall not preclude the Holder from exercising the Option. (g) At such closing, simultaneously with the delivery of immediately available funds as provided in subsection (f) of this Section 2, Issuer shall deliver to the Holder a certificate or certificates representing the number of shares of Common Stock purchased by the Holder and, if the Option should be exercised in part only, a new Option evidencing the rights of the Holder thereof to purchase the balance of the shares purchasable hereunder, and the Holder shall deliver to Issuer a copy of this Agreement and a letter agreeing that the Holder will not offer to sell or otherwise dispose of such shares in violation of applicable law or the provisions of this Agreement. (h) Certificates for Common Stock delivered at a closing hereunder may be endorsed with a restrictive legend that shall read substantially as follows: "The transfer of the shares represented by this certificate is subject to certain provisions of an agreement between the registered holder hereof and Issuer and to resale restrictions arising under the Securities Act of 1933, as amended. A copy of such agreement is on file at the principal office of Issuer and will be provided to the holder hereof without charge upon receipt by Issuer of a written request therefor." It is understood and agreed that: (i) the reference to the resale restrictions of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend shall be removed by delivery of substitute certificate(s) without such reference if the Holder shall have delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel, in form and substance reasonably satisfactory to Issuer, to the effect that such legend is not required for purposes of the 1933 Act; (ii) the reference to the provisions to this Agreement in the above legend shall be removed by delivery of substitute certificate(s) without such reference if the shares -5- have been sold or transferred in compliance with the provisions of this Agreement and under circumstances that do not require the retention of such reference; and (iii) the legend shall be removed in its entirety if the conditions in the preceding clauses (i) and (ii) are both satisfied. In addition, such certificates shall bear any other legend as may be required by law. (i) Upon the giving by the Holder to Issuer of the written notice of exercise of the Option provided for under subsection (e) of this Section 2 and the tender of the applicable purchase price in immediately available funds, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of Issuer shall then be closed or that certificates representing such shares of Common Stock shall not then be actually delivered to the Holder. Issuer shall pay all expenses, and any and all United States federal, state and local taxes and other charges that may be payable in connection with the preparation, issue and delivery of stock certificates under this Section 2 in the name of the Holder or its assignee, transferee or designee. 3. Issuer agrees: (i) that it shall at all times maintain, free from preemptive rights, sufficient authorized but unissued or treasury shares of Common Stock so that the Option may be exercised without additional authorization of Common Stock after giving effect to all other options, warrants, convertible securities and other rights to purchase Common Stock; (ii) that it will not, by charter amendment or through reorganization, consolidation, merger, dissolution or sale of assets, or by any other voluntary act, avoid or seek to avoid the observance or performance of any of the covenants, stipulations or conditions to be observed or performed hereunder by Issuer; (iii) promptly to take all action as may from time to time be required (including (x) complying with all premerger notification, reporting and waiting period requirements specified in 15 U.S.C. ss. 18a and regulations promulgated thereunder and (y) in the event, under the Bank Holding Company Act of 1956, as amended (the "BHCA"), or the Change in Bank Control Act of 1978, as amended, or any state banking law, prior approval of or notice to the Federal Reserve Board or to any state regulatory authority is necessary before the Option may be exercised, cooperating fully with the Holder in preparing such applications or notices and providing such information to the Federal Reserve Board or such state regulatory authority as they may require) in order to permit the Holder to exercise the Option and Issuer duly and effectively to issue shares of Common Stock pursuant hereto; and (iv) promptly to take all action provided herein to protect the rights of the Holder against dilution. -6- 4. This Agreement (and the Option granted hereby) are exchangeable, without expense, at the option of the Holder, upon presentation and surrender of this Agreement at the principal office of Issuer, for other Agreements providing for Options of different denominations entitling the holder thereof to purchase, on the same terms and subject to the same conditions as are set forth herein, in the aggregate the same number of shares of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein include any Stock Option Agreements and related Options for which this Agreement (and the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Agreement, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like tenor and date. Any such new Agreement executed and delivered shall constitute an additional contractual obligation on the part of Issuer, whether or not the Agreement so lost, stolen, destroyed or mutilated shall at any time be enforceable by anyone. 5. In addition to the adjustment in the number of shares of Common Stock that are purchasable upon exercise of the Option pursuant to Section 1 of this Agreement, the number of shares of Common Stock purchasable upon the exercise of the Option and the Option Price shall be subject to adjustment from time to time as provided in this Section 5. In the event of any change in, or distributions in respect of, the Common Stock by reason of stock dividends, split-ups, mergers, recapitalizations, combinations, subdivisions, conversions, exchanges of shares, distributions on or in respect of the Common Stock that would be prohibited under the terms of the Merger Agreement, or the like, the type and number of shares of Common Stock purchasable upon exercise hereof and the Option Price shall be appropriately adjusted in such manner as shall fully preserve the economic benefits provided hereunder and proper provision shall be made in any agreement governing any such transaction to provide for such proper adjustment and the full satisfaction of the Issuer's obligations hereunder. 6. Upon the occurrence of a Subsequent Triggering Event that occurs prior to an Exercise Termination Event, Issuer shall, at the request of Grantee delivered within 90 days of such Subsequent Triggering Event (whether on its own behalf or on behalf of any subsequent holder of this Option (or part thereof) or any of the shares of Common Stock issued pursuant hereto), promptly prepare, file and keep current a shelf registration statement under the 1933 Act covering this Option and any shares issued and issuable pursuant to this Option and shall use its reasonable best efforts to cause -7- such registration statement to become effective and remain current in order to permit the sale or other disposition of this Option and any shares of Common Stock issued upon total or partial exercise of this Option ("Option Shares") in accordance with any plan of disposition requested by Grantee. Issuer will use its reasonable best efforts to cause such registration statement first to become effective and then to remain effective for such period not in excess of 180 days from the day such registration statement first becomes effective or such shorter time as may be reasonably necessary to effect such sales or other dispositions. Grantee shall have the right to demand two such registrations. The foregoing notwithstanding, if, at the time of any request by Grantee for registration of the Option or Option Shares as provided above, Issuer is in registration with respect to an underwritten public offering of shares of Common Stock, and if in the good faith judgment of the managing underwriter or managing underwriters, or, if none, the sole underwriter or underwriters, of such offering the inclusion of the Holder's Option or Option Shares would interfere with the successful marketing of the shares of Common Stock offered by Issuer, the number of Option Shares otherwise to be covered in the registration statement contemplated hereby may be reduced; and provided, however, that after any such required reduction the number of Option Shares to be included in such offering for the account of the Holder shall constitute at least 25% of the total number of shares to be sold by the Holder and Issuer in the aggregate; and provided further, however, that if such reduction occurs, then the Issuer shall file a registration statement for the balance as promptly as practical and no reduction shall thereafter occur. Each such Holder shall provide all information reasonably requested by Issuer for inclusion in any registration statement to be filed hereunder. If requested by any such Holder in connection with such registration, Issuer shall become a party to any underwriting agreement relating to the sale of such shares, but only to the extent of obligating itself in respect of representations, warranties, indemnities and other agreements customarily included in secondary offering underwriting agreements for the Issuer. Upon receiving any request under this Section 6 from any Holder, Issuer agrees to send a copy thereof to any other person known to Issuer to be entitled to registration rights under this Section 6, in each case by promptly mailing the same, postage prepaid, to the address of record of the persons entitled to receive such copies. Notwithstanding anything to the contrary contained herein, in no event shall Issuer be obligated to effect more than two registrations pursuant to this Section 6 by reason of the fact that there shall be more than one Grantee as a result of any assignment or division of this Agreement. -8- 7. (a) Immediately prior to the occurrence of a Repurchase Event (as defined below), (i) following a request of the Holder, delivered prior to an Exercise Termination Event, Issuer (or any successor thereto) shall repurchase the Option from the Holder at a price (the "Option Repurchase Price") equal to the amount by which (A) the Market/Offer Price (as defined below) exceeds (B) the Option Price, multiplied by the number of shares for which this Option may then be exercised and (ii) at the request of the owner of Option Shares from time to time (the "Owner"), delivered within 90 days of such occurrence (or such later period as provided in Section 10), Issuer shall repurchase such number of the Option Shares from the Owner as the Owner shall designate at a price (the "Option Share Repurchase Price") equal to the Market/Offer Price multiplied by the number of Option Shares so designated. The term "Market/Offer Price" shall mean the highest of (i) the price per share of Common Stock at which a tender offer or exchange offer therefor has been made, (ii) the price per share of Common Stock to be paid by any third party pursuant to an agreement with Issuer, (iii) the highest closing price for shares of Common Stock within the six-month period immediately preceding the date the Holder gives notice of the required repurchase of this Option or the Owner gives notice of the required repurchase of Option Shares, as the case may be, or (iv) in the event of a sale of all or a substantial portion of Issuer's assets, the sum of the price paid in such sale for such assets and the current market value of the remaining assets of Issuer as determined by a nationally recognized investment banking firm selected by the Holder or the Owner, as the case may be, and reasonably acceptable to the Issuer, divided by the number of shares of Common Stock of Issuer outstanding at the time of such sale. In determining the Market/Offer Price, the value of consideration other than cash shall be determined by a nationally recognized investment banking firm selected by the Holder or Owner, as the case may be, and reasonably acceptable to the Issuer. (b) The Holder and the Owner, as the case may be, may exercise its right to require Issuer to repurchase the Option and any Option Shares pursuant to this Section 7 by surrendering for such purpose to Issuer, at its principal office, a copy of this Agreement or certificates for Option Shares, as applicable, accompanied by a written notice or notices stating that the Holder or the Owner, as the case may be, elects to require Issuer to repurchase this Option and/or the Option Shares in accordance with the provisions of this Section 7. Within the latter to occur of (x) five business days after the surrender of the Option and/or certificates representing Option Shares and the receipt of such notice or notices relating thereto and (y) the time that is immediately prior to the occurrence of a Repurchase Event, Issuer shall -9- deliver or cause to be delivered to the Holder the Option Repurchase Price and/or to the Owner the Option Share Repurchase Price therefor or the portion thereof, if any, that Issuer is not then prohibited under applicable law and regulation from so delivering. (c) To the extent that Issuer is prohibited under applicable law or regulation from repurchasing the Option and/or the Option Shares in full, Issuer shall immediately so notify the Holder and/or the Owner and thereafter deliver or cause to be delivered, from time to time, to the Holder and/or the Owner, as appropriate, the portion of the Option Repurchase Price and the Option Share Repurchase Price, respectively, that it is no longer prohibited from delivering, within five business days after the date on which Issuer is no longer so prohibited; provided, however, that if Issuer at any time after delivery of a notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited under applicable law or regulation from delivering to the Holder and/or the Owner, as appropriate, the Option Repurchase Price and the Option Share Repurchase Price, respectively, in full (and Issuer hereby undertakes to use its best efforts to obtain all required regulatory and legal approvals and to file any required notices, in each case as promptly as practicable in order to accomplish such repurchase), the Holder or Owner may revoke its notice of repurchase of the Option or the Option Shares either in whole or to the extent of the prohibition, whereupon, in the latter case, Issuer shall promptly (i) deliver to the Holder and/or the Owner, as appropriate, that portion of the Option Repurchase Price or the Option Share Repurchase Price that Issuer is not prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the Holder, a new Stock Option Agreement evidencing the right of the Holder to purchase that number of shares of Common Stock obtained by multiplying the number of shares of Common Stock for which the surrendered Stock Option Agreement was exercisable at the time of delivery of the notice of repurchase by a fraction, the numerator of which is the Option Repurchase Price less the portion thereof theretofore delivered to the Holder and the denominator of which is the Option Repurchase Price, or (B) to the Owner, a certificate for the Option Shares it is then so prohibited from repurchasing. (d) For purposes of this Section 7, a Repurchase Event shall be deemed to have occurred (i) upon the consummation of any merger, consolidation or similar transaction involving Issuer or any purchase, lease or other acquisition of all or a substantial portion of the assets of Issuer, other than any such transaction which would not constitute an Acquisition Transaction pursuant to the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition by any person of beneficial ownership of 50% or more of the then outstanding -10- shares of Common Stock, provided that no such event shall constitute a Repurchase Event unless a Subsequent Triggering Event shall have occurred prior to an Exercise Termination Event. The parties hereto agree that Issuer's obligations to repurchase the Option or Option Shares under this Section 7 shall not terminate upon the occurrence of an Exercise Termination Event unless no Subsequent Triggering Event shall have occurred prior to the occurrence of an Exercise Termination Event. 8. (a) In the event that prior to an Exercise Termination Event, Issuer shall enter into an agreement (i) to consolidate with or merge into any person, other than Grantee or one of its Subsidiaries, and shall not be the continuing or surviving corporation of such consolidation or merger, (ii) to permit any person, other than Grantee or one of its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or surviving corporation, but, in connection with such merger, the then outstanding shares of Common Stock shall be changed into or exchanged for stock or other securities of any other person or cash or any other property or the then outstanding shares of Common Stock shall after such merger represent less than 50% of the outstanding voting shares and voting share equivalents of the merged company, or (iii) to sell or otherwise transfer all or substantially all of its assets to any person, other than Grantee or one of its Subsidiaries, then, and in each such case, the agreement governing such transaction shall make proper provision so that the Option shall, upon the consummation of any such transaction and upon the terms and conditions set forth herein, be converted into, or exchanged for, an option (the "Substitute Option"), at the election of the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or (y) any person that controls the Acquiring Corporation. (b) The following terms have the meanings indicated: (A) "Acquiring Corporation" shall mean (i) the continuing or surviving corporation of a consolidation or merger with Issuer (if other than Issuer), (ii) Issuer in a merger in which Issuer is the continuing or surviving person, and (iii) the transferee of all or substantially all of Issuer's assets. (B) "Substitute Common Stock" shall mean the common stock issued by the issuer of the Substitute Option upon exercise of the Substitute Option. (3) "Assigned Value" shall mean the Market/Offer Price, as defined in Section 7. -11- (4) "Average Price" shall mean the average closing price of a share of the Substitute Common Stock for the one year immediately preceding the consolidation, merger or sale in question, but in no event higher than the closing price of the shares of Substitute Common Stock on the day preceding such consolidation, merger or sale; provided that if Issuer is the issuer of the Substitute Option, the Average Price shall be computed with respect to a share of common stock issued by the person merging into Issuer or by any company which controls or is controlled by such person, as the Holder may elect. (c) The Substitute Option shall have the same terms as the Option, provided, that if the terms of the Substitute Option cannot, for legal reasons, be the same as the Option, such terms shall be as similar as possible and in no event less advantageous to the Holder. The issuer of the Substitute Option shall also enter into an agreement with the then Holder or Holders of the Substitute Option in substantially the same form as this Agreement, which shall be applicable to the Substitute Option. (d) The Substitute Option shall be exercisable for such number of shares of Substitute Common Stock as is equal to the Assigned Value multiplied by the number of shares of Common Stock for which the Option is then exercisable, divided by the Average Price. The exercise price of the Substitute Option per share of Substitute Common Stock shall then be equal to the Option Price multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock for which the Option is then exercisable and the denominator of which shall be the number of shares of Substitute Common Stock for which the Substitute Option is exercisable. (e) In no event, pursuant to any of the foregoing paragraphs, shall the Substitute Option be exercisable for more than 19.9% of the shares of Substitute Common Stock outstanding prior to exercise of the Substitute Option. In the event that the Substitute Option would be exercisable for more than 19.9% of the shares of Substitute Common Stock outstanding prior to exercise but for this clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer") shall make a cash payment to Holder equal to the excess of (i) the value of the Substitute Option without giving effect to the limitation in this clause (e) over (ii) the value of the Substitute Option after giving effect to the limitation in this clause (e). This difference in value shall be determined by a nationally recognized investment banking firm selected by the Holder or the Owner, as the case may be, and reasonably acceptable to the Acquiring Corporation. -12- (f) Issuer shall not enter into any transaction described in subsection (a) of this Section 8 unless the Acquiring Corporation and any person that controls the Acquiring Corporation assume in writing all the obligations of Issuer hereunder. 9. (a) At the request of the holder of the Substitute Option (the "Substitute Option Holder"), the Substitute Option Issuer shall repurchase the Substitute Option from the Substitute Option Holder at a price (the "Substitute Option Repurchase Price") equal to the amount by which (i) the Highest Closing Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute Option, multiplied by the number of shares of Substitute Common Stock for which the Substitute Option may then be exercised, and at the request of the owner (the "Substitute Share Owner") of shares of Substitute Common Stock (the "Substitute Shares"), the Substitute Option Issuer shall repurchase the Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to the Highest Closing Price multiplied by the number of Substitute Shares so designated. The term "Highest Closing Price" shall mean the highest closing price for shares of Substitute Common Stock within the six-month period immediately preceding the date the Substitute Option Holder gives notice of the required repurchase of the Substitute Option or the Substitute Share Owner gives notice of the required repurchase of the Substitute Shares, as applicable. (b) The Substitute Option Holder and the Substitute Share Owner, as the case may be, may exercise its respective right to require the Substitute Option Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to this Section 9 by surrendering for such purpose to the Substitute Option Issuer, at its principal office, the agreement for such Substitute Option (or, in the absence of such an agreement, a copy of this Agreement) and certificates for Substitute Shares accompanied by a written notice or notices stating that the Substitute Option Holder or the Substitute Share Owner, as the case may be, elects to require the Substitute Option Issuer to repurchase the Substitute Option and/or the Substitute Shares in accordance with the provisions of this Section 9. As promptly as practicable, and in any event within five business days after the surrender of the Substitute Option and/or certificates representing Substitute Shares and the receipt of such notice or notices relating thereto, the Substitute Option Issuer shall deliver or cause to be delivered to the Substitute Option Holder the Substitute Option Repurchase Price and/or to the Substitute Share Owner the Substitute Share Repurchase Price therefor or, in either case, the portion thereof which the Substitute Option Issuer is not then prohibited under applicable law and regulation from so delivering. -13- (c) To the extent that the Substitute Option Issuer is prohibited under applicable law or regulation from repurchasing the Substitute Option and/or the Substitute Shares in part or in full, the Substitute Option Issuer following a request for repurchase pursuant to this Section 9 shall immediately so notify the Substitute Option Holder and/or the Substitute Share Owner and thereafter deliver or cause to be delivered, from time to time, to the Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the portion of the Substitute Share Repurchase Price, respectively, which it is no longer prohibited from delivering, within five business days after the date on which the Substitute Option Issuer is no longer so prohibited; provided, however, that if the Substitute Option Issuer is at any time after delivery of a notice of repurchase pursuant to subsection (b) of this Section 9 prohibited under applicable law or regulation from delivering to the Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the Substitute Option Repurchase Price and the Substitute Share Repurchase Price, respectively, in full (and the Substitute Option Issuer shall use its best efforts to obtain all required regulatory and legal approvals, in each case as promptly as practicable, in order to accomplish such repurchase), the Substitute Option Holder or Substitute Share Owner may revoke its notice of repurchase of the Substitute Option or the Substitute Shares either in whole or to the extent of the prohibition, whereupon, in the latter case, the Substitute Option Issuer shall promptly (i) deliver to the Substitute Option Holder or Substitute Share Owner, as appropriate, that portion of the Substitute Option Repurchase Price or the Substitute Share Repurchase Price that the Substitute Option Issuer is not prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the Substitute Option Holder, a new Substitute Option evidencing the right of the Substitute Option Holder to purchase that number of shares of the Substitute Common Stock obtained by multiplying the number of shares of the Substitute Common Stock for which the surrendered Substitute Option was exercisable at the time of delivery of the notice of repurchase by a fraction, the numerator of which is the Substitute Option Repurchase Price less the portion thereof theretofore delivered to the Substitute Option Holder and the denominator of which is the Substitute Option Repurchase Price, or (B) to the Substitute Share Owner, a certificate for the Substitute Common Shares it is then so prohibited from repurchasing. 10. The 90-day period for exercise of certain rights under Sections 2, 6, 7 and 13 shall be extended: (i) to the extent necessary to obtain all regulatory approvals for the exercise of such rights, for the expiration of all statutory waiting periods; and (ii) to the extent necessary -14- to avoid liability under Section 16(b) of the 1934 Act by reason of such exercise. 11. Issuer hereby represents and warrants to Grantee as follows: (a) Issuer has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of Issuer and no other corporate proceedings on the part of Issuer are necessary to authorize this Agreement or to consummate the transactions so contemplated. This Agreement has been duly and validly executed and delivered by Issuer. (b) Issuer has taken all necessary corporate action to authorize and reserve and to permit it to issue, and at all times from the date hereof through the termination of this Agreement in accordance with its terms will have reserved for issuance upon the exercise of the Option, that number of shares of Common Stock equal to the maximum number of shares of Common Stock at any time and from time to time issuable hereunder, and all such shares, upon issuance pursuant hereto, will be duly authorized, validly issued, fully paid, nonassessable, and will be delivered free and clear of all claims, liens, encumbrance and security interests and not subject to any preemptive rights. (c) Issuer has taken all action (including if required redeeming all of the Rights or amending or terminating the Rights Agreement) so that the entering into of this Option Agreement, the acquisition of shares of Common Stock hereunder and the other transactions contemplated hereby do not and will not result in the grant of any rights to any person under the Rights Agreement or enable or require the Rights to be exercised, distributed or triggered. 12. Grantee hereby represents and warrants to Issuer that: (a) Grantee has all requisite corporate power and authority to enter into this Agreement and, subject to any approvals or consents referred to herein, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Grantee. This Agreement has been duly executed and delivered by Grantee. -15- (b) The Option is not being, and any shares of Common Stock or other securities acquired by Grantee upon exercise of the Option will not be, acquired with a view to the public distribution thereof and will not be transferred or otherwise disposed of except in a transaction registered or exempt from registration under the Securities Act. 13. Neither of the parties hereto may assign any of its rights or obligations under this Option Agreement or the Option created hereunder to any other person, without the express written consent of the other party, except that in the event a Subsequent Triggering Event shall have occurred prior to an Exercise Termination Event, Grantee, subject to the express provisions hereof, may assign in whole or in part its rights and obligations hereunder within 90 days following such Subsequent Triggering Event (or such later period as provided in Section 10); provided, however, that until the date 15 days following the date on which the Federal Reserve Board approves an application by Grantee under the BHCA to acquire the shares of Common Stock subject to the Option, Grantee may not assign its rights under the Option except in (i) a widely dispersed public distribution, (ii) a private placement in which no one party acquires the right to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment to a single party (e.g., a broker or investment banker) for the purpose of conducting a widely dispersed public distribution on Grantee's behalf, or (iv) any other manner approved by the Federal Reserve Board. 14. Each of Grantee and Issuer will use its best efforts to make all filings with, and to obtain consents of, all third parties and governmental authorities necessary to the consummation of the transactions contemplated by this Agreement, including without limitation making application to list the shares of Common Stock issuable hereunder on the New York Stock Exchange upon official notice of issuance and applying to the Federal Reserve Board under the BHCA for approval to acquire the shares issuable hereunder, but Grantee shall not be obligated to apply to state banking authorities for approval to acquire the shares of Common Stock issuable hereunder until such time, if ever, as it deems appropriate to do so. 15. The parties hereto acknowledge that damages would be an inadequate remedy for a breach of this Agreement by either party hereto and that the obligations of the parties hereto shall be enforceable by either party hereto through injunctive or other equitable relief. 16. If any term, provision, covenant or restriction contained in this Agreement is held by a court or a federal or state regulatory agency of competent jurisdiction to -16- be invalid, void or unenforceable, the remainder of the terms, provisions and covenants and restrictions contained in this Agreement shall remain in full force and effect, and shall in no way be affected, impaired or invalidated. If for any reason such court or regulatory agency determines that the Holder is not permitted to acquire, or Issuer is not permitted to repurchase pursuant to Section 7, the full number of shares of Common Stock provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5 hereof), it is the express intention of Issuer to allow the Holder to acquire or to require Issuer to repurchase such lesser number of shares as may be permissible, without any amendment or modification hereof. 17. All notices, requests, claims, demands and other communications hereunder shall be deemed to have been duly given when delivered in person, by cable, telegram, telecopy or telex, or by registered or certified mail (postage prepaid, return receipt requested) at the respective addresses of the parties set forth in the Merger Agreement. 18. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof (except to the extent that mandatory provisions of federal law, the DGCL or the OGCL apply). 19. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. 20. Except as otherwise expressly provided herein, each of the parties hereto shall bear and pay all costs and expenses incurred by it or on its behalf in connection with the transactions contemplated hereunder, including fees and expenses of its own financial consultants, investment bankers, accountants and counsel. 21. Except as otherwise expressly provided herein or in the Merger Agreement, this Agreement contains the entire agreement between the parties with respect to the transactions contemplated hereunder and supersedes all prior arrangements or understandings with respect thereof, written or oral. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer upon any party, other than the parties hereto, and their -17- respective successors except as assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein. 22. Capitalized terms used in this Agreement and not defined herein shall have the meanings assigned thereto in the Merger Agreement. -18- IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by its officers thereunto duly authorized, all as of the date first above written. BANC ONE CORPORATION By: /s/ John B. McCoy ------------------------- Name: John B. McCoy Title: Chairman and Chief Executive Officer FIRST CHICAGO NBD CORPORATION By: /s/ Verne G. Istock ------------------------- Name: Verne G. Istock Title: Chairman, President and Chief Executive Officer EX-99 5 EXHIBIT 99.3: PRESS RELEASE EXHIBIT 99.3 BANC ONE CORPORATION LETTERHEAD For further information contact: BANC ONE: John A. Russel (614) 248-5989 Holly Hobson (614) 248-1280 First Chicago NBD: Tom Kelly (312) 732-7007 Harry Hallowell (312) 732-4812 FOR RELEASE: April 13, 1998 BANC ONE AND FIRST CHICAGO NBD AGREE TO MERGE BANC ONE CORPORATION (NYSE:ONE) and FIRST CHICAGO NBD CORPORATION (NYSE:FCN) announced today a merger of equals, forming one of the country's largest financial institutions. The company will be called BANC ONE CORPORATION, one of the strongest brand names in America. Its headquarters will be in Chicago. The announcement was made by John B. McCoy, Chairman and Chief Executive Officer of BANC ONE, and Verne G. Istock, Chairman, President and Chief Executive Officer of First Chicago NBD. Highlights of the new BANC ONE include: - A premier national retail and business banking franchise, and the largest in the Midwest - No. 2 credit card issuer with $60 billion in managed receivables - No. 1 lender to small business - An investment management business with more than $100 billion in assets under management - More than 2,000 offices nationwide - Total managed assets of $279 billion - Nearly $19 billion of common equity - Market capitalization of approximately $72 billion McCoy said, "This merger leverages the many strengths of both companies to create a powerful national banking franchise. With greater economies of scale and skill, we will be an even stronger player in the financial services industry. We will be able to enhance our technological capabilities and will be a major competitive force in credit cards, retail and business banking across the country." Istock added, "This combination is a win-win proposition for our shareholders, employees and customers. Our earnings growth potential and financial returns will be among the strongest of the nation's financial institutions. (over) BANC ONE/First Chicago NBD: Page 2 The terms of the agreement include: - John B. McCoy will become President and Chief Executive Officer of the combined company. Verne G. Istock will become Chairman. Vice Chairmen of the new BANC ONE will be Richard J. Lehmann, currently President and Chief Operating Officer of BANC ONE, and David J. Vitale, now Vice Chairman of First Chicago NBD. - The new Board of Directors will total 22 - 11 from each company - including the four individuals listed above. - Common shareholders of First Chicago NBD will receive 1.62 shares of BANC ONE common stock for each share of First Chicago NBD. The agreement contains no collars and no walkways, and each company has granted the other a 19.9% stock option. - Current BANC ONE shareholders will own approximately 60% of the common equity of the new company and First Chicago NBD shareholders approximately 40%. - The merger will be accounted for as a pooling of interests; First Chicago NBD's stock repurchase program has been terminated. - Pending approvals, the merger is targeted to be completed during the fourth quarter of 1998. The new company expects synergies of $1.2 billion, composed of $930 million in annual cost savings and revenue increases of $275 million. The transaction is expected to be accretive to earnings per share in 1999. The restructuring charge for severance payments, facilities writedowns and other merger-related costs is estimated to be $1.25 billion. BANC ONE CORPORATION had managed total assets of $147.0 billion, total assets of $115.9 billion, and common equity of $10.2 billion at December 31, 1997. BANC ONE operates more than 1,300 banking centers in 12 states and more than 7,750 cash dispensing and automated teller machines in 49 states. BANC ONE owns several additional corporations that engage in a full range of financial services. Information about BANC ONE's financial results and its products can be accessed on the Internet at: http://www.bankone.com; through InvestQuest at: http://www.investquest.com; or through Fax-on-demand at: (614) 844-3860. First Chicago NBD had managed total assets of $122.7 billion, total assets of $114.1 billion and common equity of $7.8 billion at December 31, 1997. First Chicago NBD operates more than 650 banking branches, 1,400 automated teller machines and 14 international offices. Information about First Chicago NBD's financial results and its products can be accessed on the Internet at http://www.fcnbd.com, or through First Chicago NBD Shareholder Direct at 1-888-FCN-FACT. # EX-99 6 EXHIBIT 99.4: ANALYSTS' PRESENTATION EXHIBIT 99.4 BANC ONE CORPORATION FIRST CHICAGO NBD CORPORATION Merger Presentation April 13, 1998 +------------------------------------------------------------------------------+ 1 BANC ONE CORPORATION First Chicago NBD Corporation MERGER PRESENTATION April 13, 1998 +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 2 Introducing the New . . . [BANC ONE CORPORATION logo] +------------------------------------------------------------------------------+ 1 +------------------------------------------------------------------------------+ 3 Presentation Outline Verne G. Istock - --------------- * Transaction Overview * A Great Merger for... Shareholders... Customers... & Employees * The New Management Team John B. McCoy - ------------- * A Compelling Combination * Financial Review * Strategic Imperatives [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 4 The New Company * Name BANC ONE CORPORATION * Headquarters Chicago * Management * Board of Directors 50/50 Split; 22 Members * Chairman Verne G. Istock * President & CEO John B. McCoy * Vice Chairmen Richard J. Lehmann David J. Vitale [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 2 +------------------------------------------------------------------------------+ 5 Transaction Summary * Terms 1.62 Shares of ONE for each FCN 1.00 Shares of ONE for each Old ONE No Collars No Walkaway * Structure Merger of Equals Tax Free Exchange Pooling of Interests 19.9% Cross Options Granted Due Diligence Completed [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 6 Transaction Summary * Accretive to All 1999 1.2% Shareholders 2000 5.9% 2001 6.2% * Targeted Close 1998 Fourth Quarter * Approvals Required Normal Regulatory ONE Shareholders FCN Shareholders Creates Shareholder Value without Heroic Execution Risk [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 3 +------------------------------------------------------------------------------+ 7 Why This Merger * High Earnings Growth Rate Profile * Tremendous Cross-sell Opportunities * Nationwide Credit Card Business Leadership * Primary Position in Midwestern and Southwestern Retail and Business Banking Markets [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 8 Why This Merger * National Financial Services Powerhouse * A Management Team... ... With a Proven Track Record ... With a Common Culture ... With Complementary Skills and Expertise [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 4 +------------------------------------------------------------------------------+ 9 +----------------+---Verne G. Istock---+-----------+-------------+ | | Chairman* | | | Thomas Hoagland William Boardman | John Ballantine Timothy Moen Sherman Goldberg Operations Acquisitions | Risk Human General | Management Resources Counsel | John B. McCoy, President & CEO*----------| | Robert Rosholt | Chief Financial Officer |--------------------------+--------------------| David Vitale, Vice Chairman* Richard Lehmann, Vice Chairman* |--+--------------|------------| |---+-------------|-------| Thomas McDowell Susan Moody Ronald Steinhart Kenneth Stevens Richard Vague | Corporate Domestic Middle Market Retail Credit Card | Banking and | Products International Markets Donald Winkler Consumer Finance *Member "Office of the Chief Executive" [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 10 A Compelling Combination* * Leading Retail Bank in 8 States and 2,000 Offices * #2 Credit Card Issuer * Over $100 Billion in Assets Under Management * Premier Business Bank in Midwest and Top 4 National Player * Financial Scale $ 72 Billion - Market Capitalization $279 Billion - Managed Total Assets $ 19 Billion - Common Equity $ 20 Billion - Annual Revenues *Includes First Commerce acquisition [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 5 +------------------------------------------------------------------------------+ 11 Significant Pro-forma Customer Bases Retail & Finance 10,000,000 Households Credit Card 56,000,000 Customers Small Business 425,000 Customers Private Banking 112,000 Customers Middle Market 32,000 Customers Large Corporate 5,000 Customers [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 12 Retail Banking [Map of the United States reflecting competitive ranking of retail bank business of First Chicago NBD Corporation and BANC ONE CORPORATION combined by deposit market share, as follows: #1: Arizona, Illinois, Indiana, Louisiana, Michigan #2: Kentucky, Ohio, West Virginia #3: Oklahoma, Texas #4: Colorado, Utah, Wisconsin] [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 6 +------------------------------------------------------------------------------+ 13 Pro-forma Credit Card Market Share Total Domestic Managed Outstandings - ----------------------------------- $ Bill Market Share ------ ------------ Citibank $63.5 12% +----------------------------------------------------------------------+ |ONE/FCN* 60.0 11 | +----------------------------------------------------------------------+ MBNA 46.6 8 Discover 36.0 7 Chase 32.5 6 Source: The Nilson Report * Includes pending acquisition [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 14 Investment Management Over $100 Billion in Assets Under Management - -------------------------------------------- * #3 in Bank Mutual Fund Assets +-------------+ | $39 Billion | +-------------+ * Personal and Institutional Trust Assets +-------------+ | $61 Billion | +-------------+ [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 7 +------------------------------------------------------------------------------+ 15 Commercial Lending Market Share New BANC ONE Lead Bank Relationship ---------------------- Midwest National ------- -------- Middle Market Sales <$150 MM #1 n/a Mid-Corporate Sales $150-$500 MM #1 #1 Large Corporate Sales > $500 MM #1 #4 [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 16 Financial Impact * Accretive to All Shareholders in First Full Year * $1,205 Million Pre-tax in Synergies... $930 Million Pre-tax Cost Saves $275 Million Pre-tax Revenue Enhancements * $1,250 Million Pre-tax Restructuring Charge High Earnings Growth Rate [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 8 +------------------------------------------------------------------------------+ 17 Targeted Synergies $ in Millions Expense Revenue Total Saves Enhancements Targeted ----- ------------ -------- Credit Cards $130 $155 $285 Operations/Technology 225 -- 225 Retail 135 50 185 Commercial 115 70 185 General & Admin. 150 -- 150 Vendor Leverage 75 -- 75 Invest. Mgmt/Cap Mkts. 50 -- 50 Indirect Lending 20 -- 20 Other 30 -- 30 -- -- -- Total $930 $275 $1,205 [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 18 Pro-forma Financial Analysis $ in Millions 1999 e 2000 e 2001 e ------ ------ ------ ONE Stand-alone EPS* $4.18 $4.68 $5.24 ONE Stand-alone Net Income $3,007 $3,368 $3,772 FCN Stand-alone Net Income 1,716 1,864 2,050 ----- ----- ----- Pro-forma 4,723 5,232 5,822 After-tax Synergies 362 651 723 Incremental Income from Higher LOB growth 0 55 115 Transaction Adjustment** (2) 20 33 --- -- -- Adjusted Net Income $5,083 $5,958 $6,693 Pro-forma EPS $4.23 $4.96 $5.57 +------------------------------------------------------------------------------+ |EPS Accretion 1.2% 5.8% 6.2% | +------------------------------------------------------------------------------+ * Based on consensus Street estimates on a diluted basis [BANC ONE ** On-going effect of divestitures, one-time charge, etc. CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 9 +------------------------------------------------------------------------------+ 19 Pro-forma Financial Highlights - 1999 $ in Millions, except per share Pro-forma --------- Return on Common Equity 21.0% Efficiency Ratio 51 Common Equity/Assets 9.28 Tangible Common Equity/Assets 8.78 Book Value - 12/31 $20.40 13%-15% Earnings Growth Target [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 20 Pro-form Earnings Contribution* [Pie chart reflecting the pro forma contribution to total earnings of the combined company byline of business, as follows: Private Banking & Investments: 37% Credit Card: 31% Retail: 23% Financial Services: 9%] *Targeted 1998 before any merger-related impacts [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 10 +------------------------------------------------------------------------------+ 21 Pro-forma Managed Loan Portfolio Balance* 12/31/97 $193 Billion [Pie chart reflecting the pro forma composition of the managed loan portfolio of the combined company by type of borrower, as follows: Consumer: 60$ Commercial: 40%] *Includes securitized loans and loans held for sale [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 22 Strategic Imperatives Vision to be a Nationwide Financial Services Provider ----------------------------------------------------- * Premier Midwestern and Southwestern Consumer and Business Banking * High Earnings Growth Rate * Accretive to All Shareholders * Creates Shareholder Value * Compatible Credit & Management Cultures * Exceptional and Complementary Businesses and Customer Bases * Improved Technology and Operational Economies of Scale [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 11 +------------------------------------------------------------------------------+ 23 The New [BANC ONE CORPORATION logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 24 SELECTED LINE OF BUSINESS HIGHTLIGHTS APPENDIX +------------------------------------------------------------------------------+ 12 +------------------------------------------------------------------------------+ 25 Retail Banking Overview Business Profile * #1 Retail Banking System -- 2,000 Centers * #1 or #2 Deposit Market Share in 8 States * #1 ATM Distribution Network -- 8,650 ATMs * 8 Million Consumer Households Opportunity Examples * Leverage Retail Banking Sales, Marketing, and Branding Model Across Expanded Retail Franchise * Cross-sell and Marketing of Credit Card [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 26 Retail Banking Overview A Significant Presence in the Largest MSA's Representing 1/3 of U.S. Population ------------------------------------------------------------------------------- #1 in... #2 in... #3 in... - -------- -------- -------- Chicago, IL Detroit, MI Milwaukee, WI Phoenix, AZ Dallas, TX Louisville, KY Fort Worth, TX Fort Wayne, IN Dayton, OH Indianapolis, IN Flint, MI Wilmington, DE Columbus, OH Grand Rapids, MI New Orleans, LA Okalhoma City, OK Tucson, AZ Gary, IN Baton Rouge, LA Lexington, KY [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 13 +------------------------------------------------------------------------------+ 27 Retail Banking Deposit Share* Combined Combined -------- -------- % Rank % Rank Arizona 30% 1 W. Virginia 11% 2 Illinois 33% 1 Oklahoma 7% 3 Indiana 19% 1 Texas 7% 3 Louisiana 26% 1 Colorado 5% 4 Michigan 14% 1 Utah 4% 4 Kentucky 9% 2 Wisconsin 6% 4 Ohio 11% 2 * 6/30/97 - Includes pending acquisition & excludes pending branch sales [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 28 Credit Card Overview Business Profile - ---------------- * #2 Credit Card Business * 56 Million Customers Opportunity Examples - -------------------- * Leverage First USA's Los Cost/High Revenue Growth Model Across Expanded Credit Card Business * Cross-sell and Marketing of Retail [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 14 +------------------------------------------------------------------------------+ 29 Finance Company Overview Business Profile - ---------------- * #2 Bank-owned Finance Company * #1 Non-captive Indirect Auto Financing * #3 Student Loans Originator * #2 Million Households Opportunity Example - ------------------- * Leverage Loan Reclaim Model Across Expanded Retail Banking Franchise [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 30 Commercial Banking Overview Business Profile - ---------------- * #1 Lender in the Midwest & Arizona * #1 Joint Venture in Shareholder Services * #2 Lender * #2 Lock Box * #3 ACH * #4 Bank-owned Equipment Leasing * #5 Corporate Cash Management Opportunity Examples - --------------------- * Leverage Treasury and Cash Management Expertise * Leverage Syndication Expertise [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 15 +------------------------------------------------------------------------------+ 31 Investment Management Overview Business Profile - ---------------- * Over $100 Billion in Assets Under Management * #1 Bank Annuity Sales * #3 Bank Mutual Funds with $39 Billion in Assets Under Management * #2 Performing Equity Mutual Fund Family for 1997 - Mutual Fund Magazine Opportunity Example - ------------------- * Leverage Annuity and Mutual Fund Expertise throughout Expanded Franchise [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 32 Pro-Forma Mutual Fund Assets 12/31/97 $ in Billions Bank Rank --------- Equity $13 #3 Money Market 17 #3 Fixed Income 6 #1 Muni 3 #4 Total Mutual Fund Assets $39 #3 [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 16 +------------------------------------------------------------------------------+ 33 PRO-FORMA FINANCIALS APPENDIX +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 34 Financial Highlights - 1997 $ in Millions, except per share ONE FCN | Pro-forma --- --- | --------- Net Income $1,811 * $1,525 | $3,336 EPS 2.76 * 4.90 | 2.88 | ROCE 18.5%* 18.6% | 18.6% ROA 1.61 1.41 | 1.51 Net Int. Margin - Reported 5.41 3.95 | 4.71 - Managed 6.26 4.54 | 5.51 Efficiency Ratio 62 52 | 58 | Common Equity/Assets 8.84 6.81 | 7.83 Tangible Common Equity 7.84 6.46 | 7.15 | Book Value - 12/31 $15.89 $26.87 | $16.05 *Excludes FUSA-related charges & other one time items [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 17 +------------------------------------------------------------------------------+ 35 Balance Sheet - 12/31/97 $ in Billions ONE FCN | Pro-forma --- --- | --------- Loans $84.4* $68.7 | $153.1 Securities 15.3 9.3 | 24.6 Other Earning Assets 0.8 24.2 | 25.0 Loan Loss Reserve (1.3) (1.4) | (2.7) Other Assets 16.7 13.3 | 30.0 ---- ---- | ---- Total Assets $115.9 $114.1 | $230.0 Deposits $77.4 $68.5 | $145.9 Borrowings 24.9 29.1 | 54.0 Other Liabilities 3.2 8.6 | 11.8 --- --- | ---- Total Liabilities $105.5 $106.2 | $211.7 Common Equity $10.2 $7.8 | $18.0 Preferred Equity 0.2 0.1 | 0.3 --- --- | --- Total Equity $10.4 $7.9 | $18.3 * Includes loans held for sale [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 36 MANAGED LOAN DETAIL - 12/31/97* $ in Billions ONE FCN | PRO-FORMA --- --- | --------- Commercial $22.4 $29.0 | $51.4 R.E. - Construction 3.8 1.4 | 5.2 R.E. - Other 5.6 5.3 | 10.9 Leases 2.8 2.1 | 4.9 Foreign 0.0 4.5 | 4.5 --- --- | --- Total Commercial $34.6 $42.3 | $76.9 Credit Cards $40.8 $18.3 | $59.1 R.E. / Home Equity 17.4 8.9 | 26.3 Indirect / Auto Lease 16.1 4.0 | 20.1 Other 6.6 3.8 | 10.4 --- --- | ---- Total Consumer $80.9 $35.0 | $115.9 Total Managed Loans $115.5 $77.3 | $192.8 * Includes securitized loans & loans held for sale [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 18 +------------------------------------------------------------------------------+ 37 PRO-FORMA MANAGED COMMERCIAL LOAN PORTFOLIO 12/31/97 $77 BILLION ----------- [PARTIAL PIE CHART REFLECTING THE PRO FORMA COMPOSITION OF THE MANAGED COMMERCIAL LOAN PORTFOLIO OF THE COMBINED COMPANY BY TYPE OF LOAN, AS FOLLOWS: Commercial 27% R.E. - Other 6% R.E. - Construction 3% Leases 2% Foreign 2%] [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 38 PRO-FORMA MANAGED COMMERCIAL LOAN PORTFOLIO 12/31/97 $116 BILLION ------------ [PARTIAL PIE CHART REFLECTING THE PRO FORMA COMPOSITION OF THE MANAGED COMMERCIAL LOAN PORTFOLIO OF THE COMBINED COMPANY BY TYPE OF LOAN, AS FOLLOWS: Credit Card 31% R.E. / Home Equity 13% Indirect / Auto Lease 10% Other 6%] [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 19 +------------------------------------------------------------------------------+ 39 MANAGED INCOME STATEMENT - 1997 $ in Millions ONE* FCN | PRO-FORMA ---- --- | --------- Net Interest Income - TE $7,978 $4,419 | $12,397 Provision for Credit Losses 2,462 1,368 | 3,830 Credit Card Fee Revenue 836 795 | 1,631 Fiduciary & Invst. Mgmt. 316 407 | 723 Deposit Svc. Chg & Comm. 1,080 936 | 2,016 Equity Securities Gains 145 182 | 327 Other Fee Income 586 322 | 908 --- --- | --- Total Noninterest Inc. 2,963 2,642 | 5,605 Salaries & Emp. Benefits 2,368 1,748 | 4,116 Other Operating Expense 3,351 1,584 | 4,935 ----- ----- | ----- Total Noninterest Exp 5,719 3,332 | 9,051 ----- ----- | ----- | Income Before Taxes - TE $2,760 $2,361 | $5,121 Net Income $1,811 $1,525 | $3,336 * Excludes FUSA merger-related and other one time items [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 40 CREDIT QUALITY - 1997 $ in Millions ONE* FCN | PRO-FORMA --- --- | --------- Net Charge Off Ratio | Commercial 0.14% 0.11% | 0.12% Credit Card - Managed 5.74 7.20 | 6.21 Other Consumer 0.91 0.45 | 0.76 | 12/31 - Nonperf. Loans - $ $410 $311 | $721 - % 0.49% 0.45% | 0.47% - Nonperf.Assets - $ $476 $326 | $802 - % 0.56% 0.47% | 0.52% Reserve / Loans 1.62% 2.05% | 1.81% Reserve / NPL 323 453 | 379 * Includes loans held for sale [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 20 +------------------------------------------------------------------------------+ 41 Capital Adequacy - 12/31/97 $ in Millions ONE FCN | PRO-FORMA --- --- | --------- Common Equity / Assets 8.84% 6.81% | 7.83% Tangible Common Equity 7.84 6.46 | 7.15 Risk-based Capital Ratios | Tier 1 8.50 7.87 | 8.18 Total 13.11 11.66 | 12.36 Leverage Ratio 7.91 7.79 | 7.82 Tangible Common Equity / | Tangible Managed Assets 6.16 6.03 | 6.10 Double Leverage Ratio 97 117 | 107 Sr. Debt Ratings - Moody's Aa3 A1 | - S&P AA- A+ | [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ +------------------------------------------------------------------------------+ 42 PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 "FORWARD-LOOKING STATEMENT" DISCLOSURE Certain statements made by management of BANC ONE CORPORATION and First Chicago NBD Corporation in this presentation and these materials are not statements of historical fact, but are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 These "forward-looking statements" involve risks and uncertainties which may cause actual results to differ materially from those in such statements. Additional discussion of factors that could cause actual results to differ materially from projections, forecasts, estimates and expectations is contained in our respective SEC filings, including our Annual Report on Form 10-K for the year ending December 31, 1997. [BANC ONE CORPORATION logo] [First Chicago NBD Corporation logo] +------------------------------------------------------------------------------+ 21 +------------------------------------------------------------------------------+ 43 THE NEW [BANC ONE CORPORATION LOGO] +------------------------------------------------------------------------------+ 22 -----END PRIVACY-ENHANCED MESSAGE-----