STOCK OPTION AGREEMENT dated as of February
4, 1995, among NATIONAL AUSTRALIA BANK LIMITED
A.C.N. 004044937, an Australian corporation
("Grantee"), MNC ACQUISITION CO., a Michigan
corporation and a wholly owned subsidiary of
Grantee ("Sub"), and MICHIGAN NATIONAL CORPO-
RATION, a Michigan corporation ("Issuer").
WHEREAS Issuer is a registered bank holding company
under the Bank Holding Company Act of 1956, as amended (the
"BHC Act");
WHEREAS Grantee is a commercial bank under Australian
law and is a foreign bank within the meaning of the Interna-
tional Banking Act of 1978, as amended;
WHEREAS Grantee, Sub and Issuer propose to enter into
an Agreement and Plan of Merger dated as of the date hereof
(the "Merger Agreement");
WHEREAS, as a condition and inducement to Grantee's
and Sub's willingness to enter into the Merger Agreement,
Grantee and Sub have required that Issuer grant to Grantee the
Option (as defined in Section 2); and
WHEREAS the Board of Directors of Issuer, believing
it to be in the best interests of Issuer, has approved this
Agreement and the grant by Issuer of the Option.
NOW THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants and
agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. Definitions; Interpretation. Capitalized terms
used but not defined herein shall have the meanings set forth
in the Merger Agreement, which also contains in Section 8.03(b)
thereof certain rules of construction and interpretation that
shall be applicable hereto as if set forth herein.
2. Grant of Option. Issuer hereby grants to Grantee
an unconditional, irrevocable option (the "Option") to pur-
chase, subject to the terms hereof, up to 2,633,502 fully paid
and nonassessable shares (such amount, as may be adjusted from
time to time as set forth herein, the "Option Shares") of
Common Stock, par value $10 per share ("Issuer Common Stock"),
of the Issuer at a purchase price of U.S. $89.00 per Option
Share (such price, as may be adjusted from time to time as set
forth herein, the "Option Price"). The number of Option Shares
that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as set forth in Section
6.
2. Exercise of Option. (a) Grantee may exercise
the Option, in whole or part, at any time and from time to time
on or after the date hereof if a Triggering Event (as defined
below) shall have occurred; provided, however, that, to the
extent the Option shall not have been exercised, it shall
terminate and be of no further force and effect upon the ear-
liest of (i) the Effective Time of the Merger, (ii) termination
of the Merger Agreement pursuant to Section 7.01 thereof (other
than for any of the reasons described in clause (iii) below) or
(iii) 18 months after termination of the Merger Agreement (x)
by either party under Section 7.01(c) or (d) thereof, (y) by
Grantee under Section 7.01(b)(ii) thereof or (z) by Issuer
under Section 7.01(b)(iv) under circumstances where Grantee
could effect termination pursuant to Section 7.01(c); provided
further that, any such exercise and purchase of Option Shares
shall be subject to compliance with applicable laws, including
the BHC Act. The rights set forth in Sections 8, 9 and 10
shall not terminate when the right to exercise the option
terminates as set forth herein, but shall extend to such time
as is provided in such Sections 8, 9 and 10. Notwithstanding
the termination of the Option, Grantee shall be entitled to
purchase those Option Shares with respect to which it has ex-
ercised the Option in accordance with the terms hereof prior to
the termination of the Option.
(b) A "Triggering Event" means the occurrence of an
Acquisition Event, as defined in Section 5.07(b) of the Merger
Agreement (without regard to whether the Merger Agreement is
terminated).
(c) Issuer shall notify Grantee promptly in writing
of the occurrence of any Triggering Event; provided that it is
understood that the giving of such notice by Issuer shall not
be a condition to the right of Grantee to exercise the Option.
(d) In the event Grantee is entitled to and wishes
to exercise the Option, it shall send to Issuer a written no-
tice (the date of which being referred to herein as the "Notice
Date") specifying (i) the total number of Option 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 (a
"Closing Date"); provided that if prior notification to or
approval of the Federal Reserve Board (the "Federal Reserve")
or any other Governmental Entity is required in connection with
such purchase, Grantee shall promptly file the required notice
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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, as
the case may be, (A) any required notification periods have
expired or been terminated or (B) such approvals have been
obtained and any requisite waiting period or periods shall have
passed.
(e) Notwithstanding Section 3(d), in no event shall
any Closing Date be more than 18 months after the related No-
tice Date, and if the Closing Date shall not have occurred
within 18 months after the related Notice Date due to the
failure to obtain any such required approval, the exercise of
the Option effected on the Notice Date shall be deemed to have
expired. In the event (i) Grantee receives official notice
that an approval of the Federal Reserve or any other Govern-
mental Entity required for the purchase of the Option Shares
would not be issued or granted or (ii) a Closing Date shall not
have occurred within 18 months after the related Notice Date
due to the failure to obtain any such required approval,
Grantee shall nevertheless be entitled to exercise its right as
set forth in Section 8 or to exercise the Option in connection
with the resale of Issuer Common Stock or other securities
pursuant to a registration statement as provided in Section 10.
The provisions of this Section 3 and Section 4 shall apply with
appropriate adjustments to any such exercise.
4. Payment and Delivery of Certificates. (a) On
each Closing Date referred to in Section 3(d), Grantee shall
pay to Issuer in immediately available funds by a wire transfer
to a bank account designated by Issuer an amount equal to the
Option Price multiplied by the number of Option Shares to be
purchased on such Closing Date.
(b) On each Closing Date, simultaneously with the
delivery of immediately available funds as provided in Section
4(a), Issuer shall deliver to Grantee a certificate or cer-
tificates representing the Option Shares to be purchased on
such Closing Date. If the Option should be exercised in part
only, a new Option evidencing the rights of Grantee to purchase
the balance of the Option Shares purchasable hereunder shall be
issued to Grantee, and Grantee shall deliver to Issuer a copy
of this Agreement and a letter agreeing that Grantee will not
offer to sell or otherwise dispose of such Option Shares in
violation of applicable law or the provisions of this Agree-
ment.
(c) Certificates for Issuer Common Stock delivered
on a Closing Date hereunder shall be endorsed with a restric-
tive legend that shall read substantially as follows:
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THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO CERTAIN RESALE RESTRICTIONS ARISING UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT TO
THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF FEBRUARY
4, 1995, A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF ISSUER. A COPY OF SUCH AGREEMENT WILL
BE MAILED 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 "Securities Act"), in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if
Grantee shall have delivered to Issuer a copy of a letter from
the staff of the Securities and Exchange Commission, or an
opinion of counsel, in form and substance satisfactory to Is-
suer, to the effect that such legend is not required for pur-
poses of the Securities Act; (ii) the reference to the provi-
sions of this Agreement in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if
the Option 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.
(d) Upon the giving by Grantee to Issuer of the
written notice of exercise of the Option provided for under
Section 3(d), the tender of the applicable purchase price in
immediately available funds and the tender of a copy of this
Agreement to Issuer, Grantee shall be deemed to be the holder
of record of the Option Shares issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such Option
Shares shall not then be actually delivered to Grantee. 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 4 in the name of Grantee or its
assignee, transferee or designee.
(e) If, at the time of issuance of any Option Shares
pursuant to an exercise of all or a portion of the Option here-
under, Issuer shall not have redeemed the Rights or shall have
issued any similar securities, then each Option Share issued
pursuant to such exercise shall also represent Rights or new
rights with terms substantially identical to and at least
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as favorable to Grantee as are provided under the Rights
Agreement or any similar agreement then in effect.
5. Authorizations, etc. Issuer agrees (i) that it
shall at all times maintain, free from preemptive rights or
Liens, sufficient authorized but unissued shares of Issuer
Common Stock so that the Option may be exercised without ad-
ditional authorization of Issuer Common Stock after giving
effect to all other options, warrants, convertible securities
and other rights to purchase Issuer Common Stock, (ii) that it
will not, by charter amendment or through reorganization, re-
capitalization, reclassification, consolidation, merger, dis-
solution 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 and (iii) promptly to take all
action as may from time to time be required (including, in the
event, under the BHC Act or the Change in Bank Control Act of
1978, as amended, or a state banking law, prior approval of or
notice to the Federal Reserve or to any state regulatory au-
thority is necessary before the Option may be exercised, co-
operating fully with Grantee in preparing such applications or
notices and providing such information to the Federal Reserve
or such state regulatory authority as they may require) in
order to permit Grantee to exercise the Option and so that the
Option Shares, when issued, shall be duly authorized, validly
issued, fully paid and nonassessable and free and clear of all
Liens and not subject to any preemptive rights.
6. Adjustments. (a) In the event that any addi-
tional shares of Issuer Common Stock are issued or otherwise
become outstanding after the date of this Agreement (other than
pursuant to an exercise of the Option or an event described in
Section 6(b)), including pursuant to stock option plans and in
connection with acquisitions and other transactions permitted
by the Merger Agreement, the number of Option Shares shall be
increased so that, after such issuance, it equals 19.9% of the
number of shares of Issuer Common Stock then issued and out-
standing (without giving pro forma effect to the issuance of
the Option Shares). Nothing contained in this Section 6(a) or
elsewhere in this Agreement shall be deemed to authorize Issuer
to issue shares of Issuer Common Stock in breach of, or oth-
erwise breach any of, the provisions of the Merger Agreement.
(b) In the event of any change in Issuer Common
Stock by reason of a stock dividend, split-up, recapitaliza-
tion, combination, subdivision, conversion, exchange of shares
or similar transaction, the type and number of Option Shares
shall be appropriately adjusted and proper provision shall be
made in the agreements governing any such transaction, so that
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Grantee shall receive upon exercise of the Option the number
and class of shares, other securities, property or cash that
Grantee would have received in respect of Issuer Common Stock
if the Option had been exercised in full and the Option Shares
had been issued to Grantee immediately prior to such event or
the record date therefor, as applicable. Whenever the number
of Option Shares is adjusted as provided in this Section 6(b),
the Option Price shall be adjusted by multiplying the Option
Price by a fraction, the numerator of which is equal to the
number of Option Shares purchasable prior to the adjustment and
the denominator of which is equal to the number of Option
Shares purchasable after the adjustment.
7. Replacement Options. (a) In the event that
Issuer shall enter into an agreement (i) to consolidate with or
merge into any person, other than Grantee or one of its sub-
sidiaries, and shall not be the continuing or surviving cor-
poration 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 Issuer Common Stock shall be changed into
or exchanged for stock or other securities of Issuer or any
other person or cash or any other property or the then out-
standing shares of Issuer Common Stock shall after such merger
represent less than 50% of the outstanding shares and share
equivalents of the merged company or (iii) to sell or otherwise
transfer all or substantially all 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 con-
summation of any such transaction and upon the terms and con-
ditions set forth herein, be converted into, or exchanged for,
an option (the "Substitute Option"), at the election of
Grantee, of either (A) the Acquiring Corporation (as defined
below) or (B) any person that controls the Acquiring Corpora-
tion.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (A) the con-
tinuing or surviving corporation of a consolidation or
merger with Issuer (if other than Issuer), (B) Issuer in a
merger in which Issuer is the continuing or surviving
person or (C) the transferee of all or substantially all
of Issuer's assets.
(ii) "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon
exercise of the Substitute Option.
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(iii) "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 the 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 con-
trolled by such person, as Grantee 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 Grantee. The issuer of the Substitute Option
(the "Substitute Option Issuer") shall also enter into an
agreement with Grantee in substantially the same form as this
Agreement, which shall be applicable to the Substitute Option.
Without limiting the generality of the foregoing, the provi-
sions of Sections 8, 9, 10, 11 and 12 shall apply with respect
to the Substitute Option and any securities for which the
Substitute Option becomes exercisable with the same effect as
if all references to "Issuer" in such Sections were references
to "Substitute Option Issuer", all references to "Issuer Common
Stock" were references to "Substitute Common Stock", all ref-
erences to the "Option" were references to the "Substitute
Option" and all references to "Option Shares" were references
to "Substitute Option Shares".
(d) The Substitute Option shall be exercisable for
such number of shares of Substitute Common Stock as is equal to
the then-current Applicable Price (as defined in Section 8(c))
multiplied by the number of shares of Issuer Common Stock for
which the Option is then exercisable, divided by the then-
current 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 in which the nu-
merator is the number of shares of Issuer Common Stock for
which the Option is then exercisable and the denominator is the
number of shares of the 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 the 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
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prior to such exercise but for the limitation in this paragraph
(e), the Substitute Option Issuer shall make a cash payment to
Grantee equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this para-
graph (e) over (ii) the value of the Substitute Option after
giving effect to the limitation in this paragraph (e). This
difference in value shall be determined by a nationally rec-
ognized investment banking firm selected by Grantee.
(f) Issuer shall not enter into any transaction de-
scribed in Section 7(a) unless the Acquiring Corporation and
any person that controls the Acquiring Corporation assume in
writing all the obligations of Issuer hereunder.
8. Repurchase at the Option of Grantee. (a) At the
request of Grantee at any time during (i) the period during
which the Option is exercisable pursuant to Section 3 or (ii)
the period of 30 business days immediately following the oc-
currence of either of the events set forth in clauses (i) and
(ii) of the second sentence of Section 3(e) (but solely as to
the shares of Issuer Common Stock with respect to which the
required approval was not received) (either such period being
referred to herein as the "Repurchase Period"), Issuer (or any
successor entity thereof) shall repurchase from Grantee (A) the
Option (or, in the circumstances set forth in clause (ii)
above, that portion thereof relating to shares of Issuer Common
Stock with respect to which required approvals were not re-
ceived) unless the Option has expired or been terminated in
accordance with the terms hereof and (B) all Option Shares
purchased by Grantee pursuant hereto with respect to which
Grantee then has beneficial ownership. The date on which
Grantee exercises its rights under this Section 8 is referred
to as the "Request Date". Such repurchase shall be at an ag-
gregate price (the "Section 8 Repurchase Consideration") equal
to the sum of:
(1) the aggregate exercise price paid by Grantee for
any Option Shares acquired with respect to which Grantee
then has beneficial ownership;
(2) the excess, if any, of (x) the Applicable Price
for shares of Issuer Common Stock over (y) the Option
Price, with such excess multiplied by the number of Option
Shares with respect to which the Option has not been ex-
ercised; and
(3) the excess, if any, of (x) the Applicable Price
over (y) the Option Price paid (or, in the case of Option
Shares with respect to which the Option has been exercised
but the Closing Date has not occurred, payable) by Grantee
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for each Option Share with respect to which the Option has
been exercised, with such excess multiplied by the number
of such Option Shares.
(b) If Grantee exercises its rights under this Sec-
tion 8, Issuer shall, within 10 business days after the Request
Date, pay the Section 8 Repurchase Consideration to Grantee in
immediately available funds, and Grantee shall surrender to
Issuer the Option and the certificates evidencing the shares of
Issuer Common Stock purchased thereunder with respect to which
Grantee then has beneficial ownership, and Grantee shall war-
rant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all Liens.
Notwithstanding the foregoing, to the extent that prior noti-
fication to or approval of the Federal Reserve or other Gov-
ernmental Entity is required in connection with the payment of
all or any portion of the Section 8 Repurchase Consideration,
Issuer shall deliver from time to time that portion of the
Section 8 Repurchase Consideration that it is not then so
prohibited from paying and shall promptly file the required
notice or application for approval and shall expeditiously
process the same (and Grantee shall cooperate with Issuer in
the filing of any such notice or application and the obtaining
of any such approval), and the period of time that otherwise
would run pursuant to the preceding sentence for the payment of
the portion of the Section 8 Repurchase Consideration requiring
such notification or approval shall run instead from the date
on which, as the case may be, (i) any required notification
period has expired or been terminated or (ii) such approval has
been obtained and, in either event, any requisite waiting pe-
riod shall have passed. If the Federal Reserve or any other
Governmental Entity disapproves of any part of Issuer's pro-
posed repurchase pursuant to this Section 8, Issuer shall
promptly give notice of such fact to Grantee and redeliver to
Grantee the Option Shares it is then prohibited from repur-
chasing, and Grantee shall have the right to exercise the Op-
tion as to the number of Option Shares for which the Option was
exercisable at the Request Date less the number of shares as to
which payment has been made pursuant to Section 8(a)(2); pro-
vided that if the Option shall have terminated prior to the
date of such notice or shall be scheduled to terminate prior to
the date of such notice or shall be scheduled to terminate at
any time before the expiration of a period ending on the 30th
business day after such date, Grantee shall nonetheless have
the right so to exercise the Option or exercise its rights
under Section 10 until the expiration of such period of 30
business days. Notwithstanding anything herein to the con-
trary, Grantee shall be entitled to exercise its right under
this Section 8 on only one occasion.
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(c) For purposes of this Agreement, the "Applicable
Price" means the highest of (i) the highest price per share at
which a tender offer or exchange offer has been made for shares
of Issuer Common Stock after the date hereof and on or prior to
the Request Date (or any other applicable determination date),
(ii) the price per share to be paid by any third party for
shares of Issuer Common Stock or the consideration per share to
be received by holders of Issuer Common Stock, in each case
pursuant to an agreement with Issuer for a merger or other
business combination entered into on or prior to the Request
Date (or any other applicable determination date), (iii) the
highest price per share paid by any third party to acquire from
a stockholder of Issuer, in one transaction or in a series of
related transactions, an aggregate amount of Issuer Common
Stock of 5% or more of the outstanding Issuer Common Stock or
(iv) the highest bid price per share of Issuer Common Stock as
quoted on the Nasdaq over-the-counter quotations system or, if
not so quoted, on the principal trading market on which such
shares are traded as reported by a recognized source during the
60 business days preceding the Request Date (or any other ap-
plicable determination date). If the consideration to be of-
fered, paid or received pursuant to a transaction described in
either clause (i) or (ii) above shall be other than cash, the
value of such consideration shall be determined in good faith
by an independent nationally recognized investment banking firm
selected by Grantee and reasonably acceptable to Issuer, which
determination shall be conclusive for all purposes of this
Agreement.
9. Repurchase at the Option of Issuer. (a) Except
to the extent that Grantee shall have previously exercised its
rights under Section 8, at the request of Issuer during the
six-month period commencing 15 months following the first oc-
currence of a Triggering Event, Issuer may repurchase from
Grantee, and Grantee shall sell to Issuer, all (but not less
than all) the shares of Issuer Common Stock acquired by Grantee
pursuant hereto and with respect to which Grantee has benefi-
cial ownership at the time of such repurchase at a price equal
to the greater of (i) 110% of the Current Market Price (as
defined below) or (ii) the sum of (A) the Option Price in re-
spect of the shares so acquired and (B) Grantee's pre-tax per
share carrying cost (as defined below), multiplied in the case
of either clause (i) or (ii) above by the number of shares so
acquired (the "Section 9 Repurchase Consideration"); provided
that Grantee, within 30 days following Issuer's notice of its
intention to purchase shares pursuant to this Section 9, may
deliver an Offeror's Notice (as defined in Section 11) pursuant
to Section 11, in which case the provisions of Section 11 and
not those of this Section 9 shall control; and provided further
that Issuer's rights under this Section 9 shall be suspended
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(with any such rights being extended accordingly) during any
period when the exercise of such rights would subject Grantee
to liability pursuant to Section 16(b) of the Exchange Act by
reason of Grantee's purchase of shares of Issuer Common Stock
pursuant to this Agreement.
(b) If Issuer exercises its rights under this Sec-
tion 9 and Grantee does not deliver an Offeror's Notice or
Grantee does not sell the shares to a third party pursuant
thereto, Issuer shall, within 10 business days after the ex-
piration of the 30-day period referred to in paragraph (a)
above or, if applicable, upon abandonment of the transaction
covered by the Offeror's Notice, pay the Section 9 Repurchase
Consideration in immediately available funds, and Grantee shall
surrender to Issuer the certificates evidencing the shares of
Issuer Common Stock purchased hereunder with respect to which
Grantee then has beneficial ownership, and Grantee shall war-
rant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all Liens.
(c) As used herein, (i) "Current Market Price" means
the average closing bid price per share of Issuer Common Stock
as quoted on the Nasdaq over-the-counter quotations system or,
if not so quoted, on the principal trading market on which such
shares are traded as reported by a recognized source for the 10
business days preceding the date of the Issuer's request for
repurchase pursuant to this Section 9 and (ii) "Grantee's pre-
tax per share carrying cost" shall be the amount equal to the
interest on the aggregate Option Price paid for the shares of
Issuer Common Stock purchased from the date of purchase to the
date of repurchase at the rate of interest announced by
Parent's New York branch as its prime or base lending or ref-
erence rate during such period, less any dividends received on
the shares so purchased, divided by the number of shares so
purchased.
10. Registration Rights; Listing. (a) Issuer shall,
if requested by Grantee at any time and from time to time (i)
within three years of the first exercise of the Option or (ii)
for 30 business days following the occurrence of either of the
events set forth in clauses (i) and (ii) of the second sentence
of Section 3(e) or receipt by Grantee of official notice that
an approval of the Federal Reserve or any other Governmental
Entity required for a repurchase as contemplated by Section
8(b) would not be issued or granted (but solely as to the
shares of Issuer Common Stock or portion of the Option with
respect to which the required approval was not received), as
expeditiously as practicable prepare and file up to two
registration statements under the Securities Act if necessary
in order to permit the sale or other disposition of the shares
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of Issuer Common Stock or other securities that have been ac-
quired by or are issuable to Grantee upon exercise of the Op-
tion in accordance with the intended method of sale or other
disposition stated by Grantee, including a "shelf" registration
statement under Rule 415 under the Securities Act or any suc-
cessor provision. Issuer shall use its best efforts to cause
each such registration statement to become effective and to
remain effective for such period not in excess of 180 days from
the day such registration statement first becomes effective as
may be reasonably necessary to effect such sale or other dis-
position. Issuer shall also use its best efforts to qualify
such shares or other securities under any applicable state
securities laws. Grantee agrees to use all reasonable efforts
to cause, and to cause any underwriters or agents of any sale
or other disposition to cause, any sale or other disposition
pursuant to such registration statement to be effected on a
widely distributed basis so that upon consummation thereof no
purchaser or transferee shall own beneficially more than 2% of
the then outstanding voting power of Issuer. In the event that
Grantee requests Issuer to file a registration statement fol-
lowing the failure to obtain a required approval for an exer-
cise of the Option as described in Section 3(e), the closing of
the sale or other disposition of Issuer Common Stock or other
securities pursuant to such registration statement shall occur
substantially simultaneously with the exercise of the Option,
and Grantee shall be entitled to cause the Option Shares to be
issued directly to the underwriters or agents named in such
registration statement. The obligations of Issuer hereunder to
file a registration statement and to maintain its effectiveness
may be suspended for one or more periods of time that do not
exceed 60 days in the aggregate for all such periods if the
Board of Directors of Issuer shall have determined that the
filing of such registration statement or the maintenance of its
effectiveness would require disclosure of nonpublic information
that would materially and adversely affect Issuer. Any regis-
tration effected under this Section 10 shall be at Issuer's ex-
pense, except for underwriting discounts or commissions,
brokers' fees and the fees and disbursements of Grantee's
counsel related thereto. Grantee shall provide all information
reasonably requested by Issuer for inclusion in any registra-
tion statement to be filed hereunder. If requested by Grantee
in connection with any such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of
such shares or other securities, but only to the extent of
obligating itself in respect of representations, warranties,
covenants, indemnities, contribution and other agreements
customarily included in such underwriting agreements for the
issuer. If, during the time periods referred to in the first
sentence of this Section 10, Issuer effects a registration
under the Securities Act of Issuer Common Stock for its own
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account or for any other stockholders of Issuer (other than on
Form S-4 or S-8, or any successor form), it shall allow Grantee
the right to participate in such registration, and such par-
ticipation shall not affect the obligation of Issuer to effect
two registration statements for Grantee under this Section 10;
provided that, if the managing underwriters of such offering
advise Issuer in writing that in their opinion the number of
shares of Issuer Common Stock requested to be included in such
registration exceeds the number which can be sold in such of-
fering, Issuer shall include the shares requested to be in-
cluded therein by Grantee pro rata with the shares intended to
be included therein by Issuer or other stockholders, taken as a
single group.
(b) If Issuer Common Stock or any other securities
to be acquired upon exercise of the Option are then listed on a
national or regional securities exchange or quoted on a na-
tional or regional quotation system, Issuer, upon request of
Grantee, shall use its best efforts to make any filings and
obtain any approvals necessary in order to cause the Option
Shares or other securities acquired upon exercise of the Option
to be so listed or quoted.
11. First Refusal. At any time after the first oc-
currence of a Triggering Event and prior to the later of (a)
expiration of 24 months immediately following the first pur-
chase of shares of Issuer Common Stock pursuant to the Option
and (b) the termination of the Option pursuant to Section 3(a),
if Grantee shall desire to sell, assign, transfer or otherwise
dispose of all or any of the shares of Issuer Common Stock or
other securities acquired by it pursuant to the Option, it
shall give Issuer written notice of the proposed transaction
(an "Offeror's Notice"), identifying the proposed transferee,
accompanied by a copy of a binding offer to purchase such
shares or other securities from such transferee and setting
forth the terms of the proposed transaction. An Offeror's
Notice shall be deemed an offer by Grantee to Issuer, which may
be accepted within 10 business days of the receipt of such
Offeror's Notice, on the same terms and conditions and at the
same price at which Grantee is proposing to transfer such
shares or other securities to such transferee. The purchase of
any such shares or other securities by Issuer shall be settled
within 10 business days of the date of the acceptance of the
offer and the purchase price shall be paid to Grantee in im-
mediately available funds; provided that, if prior notification
to or approval of the Federal Reserve or any other Governmental
Entity is required in connection with such purchase, Issuer
shall promptly file the required notice or application for
approval and shall expeditiously process the same (and Grantee
shall cooperate with Issuer in the filing of any such notice or
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application and the obtaining of any such approval) and the
period of time that otherwise would run pursuant to this sen-
tence shall run instead from the date on which, as the case may
be, (i) any required notification period has expired or been
terminated or (ii) such approval has been obtained and, in
either event, any requisite waiting period shall have passed.
In the event of the failure or refusal of Issuer to purchase
all the shares or other securities covered by an Offeror's
Notice or if the Federal Reserve or any other Governmental
Entity disapproves Issuer's proposed purchase of such shares or
other securities, Grantee may, within 60 days from the date of
the Offeror's notice (subject to any necessary extension for
regulatory notification, approval or waiting periods), sell
all, but not less than all, of such shares or other securities
to the proposed transferee at no less than the price specified,
and on terms no more favorable than those specified, in the
Offeror's Notice. The requirements of this Section 11 shall
not apply to (A) any disposition as a result of which the
proposed transferee would own beneficially not more than 2% of
the outstanding voting power of Issuer, (B) any disposition of
Issuer Common Stock or other securities by a person to whom
Grantee has assigned its rights under the Option with the
consent of Issuer, (C) any sale by means of a public offering
registered under the Securities Act in which steps are taken to
reasonably assure that no purchaser will acquire securities
representing more than 2% of the outstanding voting power of
Issuer or (D) any transfer to Sub or to any other wholly owned
subsidiary of Parent that agrees in writing to be bound by the
terms hereof.
12. Division of Option. This Agreement (and the
Option granted hereby) are exchangeable, without expense, at
the option of Grantee, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other Agree-
ments providing for Options of different denominations enti-
tling the holder thereof to purchase in the aggregate the same
number of shares of Issuer 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 ex-
ecute 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.
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13. Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement or
the Option 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, except that Grantee may
assign in whole or in part its rights and obligations hereunder
to Sub or to any other direct or indirect wholly owned sub-
sidiary of Grantee without the consent of Issuer. Subject to
the preceding sentence, 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.
14. Further Assurances. Each party hereto will use
its best efforts to make all filings with, and to obtain con-
sent of, all third parties and governmental authorities nec-
essary or advisable to the consummation of the transactions
contemplated by this Agreement, including applying to the
Federal Reserve under the BHC Act for approval to acquire the
shares issuable hereunder. In the event of any exercise of the
Option by Grantee, Issuer, Grantee and Sub shall execute and
deliver all other documents and instruments and take all other
action that may be reasonably necessary or advisable in order
to consummate the transactions provided for by such exercise.
15. Specific Performance. The parties hereto ac-
knowledge 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 ei-
ther party hereto through specific performance, injunctive
relief or other equitable relief. This provision is without
prejudice to any other rights that the parties hereto may have
for any failure to perform this Agreement.
16. Severability. 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 juris-
diction to be invalid, void or unenforceable, the remainder of
the terms, provisions, 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 Grantee
is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 8, the full number of Option
Shares provided in Section 1(a) hereof (as adjusted pursuant to
Section 6), it is the express intention of Issuer to allow
Grantee to acquire or to require Issuer to repurchase such
lesser number of Option Shares as may be permissible without
any amendment or modification hereof.
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17. Notices. All notices, requests, claims, demands
and other communications hereunder shall be deemed to have been
duly given when delivered in the manner and to the addresses
specified in accordance with Section 8.02 of the Merger
Agreement.
18. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Michigan without regard to any applicable principles of con-
flicts of laws.
19. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and
delivered to the other parties.
20. Expenses. Except as otherwise expressly pro-
vided herein, each of the parties hereto shall bear and pay all
costs and expenses incurred by it or on its behalf in connec-
tion with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
21. Limitation on Maximum Gain. Notwithstanding
anything to the contrary contained herein or in the Merger
Agreement, the aggregate amount of gain realized by Grantee
pursuant to this Stock Option Agreement from Issuer (or the
Substitute Option Issuer), when added to the Termination Fee
(as defined in Section 5.07(b) of the Merger Agreement), if
any, received by Grantee pursuant to such Section 5.07(b),
shall not in the aggregate exceed U.S. $75,000,000, and, in the
event Grantee realizes gain in excess of such amount hereunder
from Issuer (or the Substitute Option Issuer) or under the
Termination Fee, Grantee hereby undertakes promptly to pay back
to Issuer, by wire transfer of immediately available funds, the
amount of such excess.
22. Waiver and Amendment. Any provision of this
Agreement may be waived at any time by the party that is en-
titled to the benefits of such provision. This Agreement may
not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by
the parties hereto.
23. Entire Agreement; No Third-Party Beneficiaries.
Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement (and the Merger Agreement and the
other documents and instruments referred to herein and therein)
contains the entire agreement between the parties with respect
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to the transactions contemplated hereunder and supersedes all
prior arrangements or understandings with respect thereof,
written or oral. Nothing in this Agreement, expressed or im-
plied, is intended to confer upon any party, other than the
parties hereto, and their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement, except as expressly provided
herein.
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 day and year first
above written.
NATIONAL AUSTRALIA BANK
LIMITED A.C.N. 004044937,
by
/s/ Bruce S. McComish
Name: Bruce S. McComish
Title: Chief Financial
Officer
MNC ACQUISITION CO.
by
/s/ Bruce S. McComish
Name: Bruce S. McComish
Title: Chairman, President
and Chief Executive
Officer
MICHIGAN NATIONAL CORPORATION
by
/s/ Robert J. Mylod
Name: Robert J. Mylod
Title: Chairman and Chief
Executive Officer
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