| 0-2525 | 31-0724920 | |
| (Commission File Number) | (IRS Employer Identification No.) | |
| 41 South High Street, Columbus, Ohio | 43287 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
| Registrant’s telephone number, including area code: (614) 480-8300 |
| (Former Name or Former Address, if Changed Since Last Report) |
| Not Applicable |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| x | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
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Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement
On December 20, 2006, Huntington Bancshares Incorporated, a Maryland corporation (“ Huntington ”), Sky Financial Group, Inc., an Ohio corporation (“ Sky ”), and Penguin Acquisition, LLC, a Maryland limited liability company and a wholly owned subsidiary of Huntington (“ Merger Sub ”), entered into an Agreement and Plan of Merger (the “ Merger Agreement ”), pursuant to which Sky will be merged with and into Merger Sub (the “ Merger ”). Upon consummation of the Merger, the separate existence of Sky will cease, and Merger Sub will be the surviving company. The Merger has been approved by the Board of Directors of both Huntington and Sky.
Pursuant to the Merger Agreement, at the effective time of the Merger, each outstanding share of common stock, without par value, of Sky (“ Sky Common Stock” ), will be converted into the right to receive 1.098 shares of common stock, without par value, of Huntington (“ Huntington Common Stock ”), and $3.023 in cash, without interest (collectively, the “ Merger Consideration ”). Pursuant to the Merger Agreement, at the effective time of the Merger, (i) each outstanding option to acquire Sky Common Stock will immediately vest and become exercisable and will be converted into an option to purchase a number of shares of Huntington Common Stock equal to the number of shares of Sky Common Stock underlying such option immediately prior to the Merger multiplied by the Exchange Ratio (as defined below), with an exercise price that equals the exercise price of such option immediately prior to the Merger divided by the Exchange Ratio; (ii) each restricted share of Sky Common Stock will immediately vest and be converted into the right to receive the Merger Consideration, subject to applicable withholding tax; and (iii) each stock unit denominated in shares of Sky Common Stock will immediately vest and be converted into the right to receive a number of shares of Huntington Common Stock equal to the number of shares of Sky Common Stock underlying such unit immediately prior to the Merger multiplied by the Exchange Ratio. “ Exchange Ratio ” is the sum of (x) 1.098 and (y) the quotient of 3.023 divided by the average closing sale price of Huntington Common Stock over the five trading days immediately preceding the Merger.
The Merger Agreement includes customary representations, warranties and covenants of the parties. The covenants of the parties include, subject to certain exceptions, covenants not to (i) solicit, initiate, encourage, facilitate or take any other action designed to facilitate any inquiries or proposals regarding any alternative transaction, (ii) participate in any discussions or negotiations regarding an alternative transaction, or (iii) enter into any agreement regarding an alternative transaction. In addition, each party has agreed to submit the transaction to its stockholders for approval and use reasonable best efforts to obtain such approval.
The consummation of the Merger is subject to customary conditions, including obtaining the required approvals from the holders of Huntington Common Stock and Sky Common Stock, the absence of any legal prohibition on consummation of the Merger, obtaining required governmental and regulatory approvals, effectiveness of the Registration Statement on Form S-4 to be filed with the Securities and Exchange Commission, approval of Huntington’s common stock to be issued in the Merger for listing on the Nasdaq Stock Market, the accuracy of the representations and warranties of the parties to the Merger Agreement (subject to the materiality standards set forth in the Merger Agreement), material performance of all the covenants of the parties to the Merger Agreement, and the delivery of customary legal opinions as to the federal tax treatment of the Merger. In addition, Huntington’s obligation to close is subject to the condition that none of the required governmental or regulatory approvals results in the imposition of conditions that would reasonably be expected to have a material adverse effect on Huntington and Sky taken as a whole after the Merger.
Pursuant to the Merger Agreement, at the effective time of the Merger, the Board of Directors of Huntington will consist of fifteen members comprised of (i) Mr. Thomas Hoaglin, the current
chief executive officer of Huntington, plus nine current non-employee directors of Huntington designated by Huntington and (ii) Mr. Marty Adams, the current chief executive officer of Sky, plus four current non-employee directors of Sky designated
by Sky. At the effective time of the Merger, Mr. Hoaglin will continue to serve as Huntington's chief executive officer and the chairman of the Board of Directors, and Mr. Adams will become Huntington's president and chief operating officer. Mr.
Adams will be the successor to Mr. Hoaglin as chief executive officer of Huntington on December 31, 2009 or such earlier date as of which Mr. Hoaglin ceases for any reason to serve as chief executive officer of
Huntington. The above provisions will be contained in a bylaw provision that until December 31, 2009 can only be amended by an affirmative vote of at least 75% of the directors that constitute the entire Board of Directors of Huntington.
The Merger Agreement contains certain termination rights of Huntington and Sky and further provides that, upon termination of the Merger Agreement under specified circumstances, Huntington and Sky may be required to pay the other party a termination fee of $125 million.
The foregoing description of the Merger Agreement and the Merger does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement attached hereto as Exhibit 2.1, which is incorporated herein by reference.
The Merger Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about Sky, Huntington, or their respective subsidiaries and affiliates. The Merger Agreement contains representations and warranties of each of Sky, on the one hand, and Huntington and Merger Sub, on the other hand, made solely for the benefit of the other. The assertions embodied in those representations and warranties are qualified by information in confidential disclosure schedules that the parties have exchanged in connection with signing the Merger Agreement. The disclosure schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Merger Agreement. Moreover, certain representations and warranties in the Merger Agreement were used for the purpose of allocating risk between Sky, on the one hand, and Huntington and Merger Sub, on the other hand. Accordingly, you should not rely on the representations and warranties in the Merger Agreement as characterizations of the actual state of facts about Sky, Huntington or Merger Sub.
Item 8.01 Other Events.
On December 20, 2006, Huntington and Sky issued a joint press release announcing that they had entered into the Merger Agreement. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| 2.1 | Agreement and Plan of Merger, dated as of December 20, 2006, by and among Huntington Bancshares Incorporated, Sky Financial Group, Inc. and Penguin Acquisition, LLC (the schedules and exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K * ). | |
| 99.1 | Press Release dated December 20, 2006. | |
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| * Huntington hereby agrees to furnish supplementally a copy of the omitted schedules and exhibits to the SEC upon its request. |
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.
| HUNTINGTON BANCSHARES INCORPORATED | |||||
| Date: | December 22, 2006 | By: | /s/ Richard A. Cheap | ||
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| Name: | Richard A. Cheap | ||||
| Title: | Secretary | ||||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 2.1 | Agreement and Plan of Merger, dated as of December 20, 2006, among Huntington Bancshares Incorporated, Sky Financial Group, Inc. and Penguin Acquisition, LLC. (the schedules and exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K * ). | |
| 99.1 | Press Release dated December 20, 2006. | |
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| * Huntington hereby agrees to furnish supplementally a copy of the omitted schedules and exhibits to the SEC upon its request. |
Exhibit 2.1
EXECUTION COPY
| AGREEMENT AND PLAN OF MERGER |
| by and among |
| HUNTINGTON BANCSHARES INCORPORATED, |
| PENGUIN ACQUISITION, LLC |
| and |
| SKY FINANCIAL GROUP, INC. |
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| DATED AS OF DECEMBER 20, 2006 |
| TABLE OF CONTENTS |
| ARTICLE I |
| THE MERGER |
i
ii
iii
| 9.5 | Interpretation | 58 |
| 9.6 | Counterparts | 58 |
| 9.7 | Entire Agreement | 58 |
| 9.8 | Governing Law | 59 |
| 9.9 | Publicity | 59 |
| 9.10 | Assignment; Third Party Beneficiaries | 59 |
| 9.11 | Specific Performance | 59 |
Exhibit A – Huntington Bylaw
Exhibit B – Form of Affiliate Letter
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INDEX OF DEFINED TERMS
| Section | |
| Acquisition Proposal | 6.13(a) |
| Agenc(y)(ies) | 3.27(d) |
| Agreement | Preamble |
| Alternative Transaction | 6.13(a) |
| Articles of Merger | 1.2 |
| Articles of Organization | 1.7 |
| Assumed Employees | 6.7(a) |
| Assumed Stock Option | 1.6(a) |
| Assumed Stock Unit Award | 1.6(c) |
| Bank Subsidiary | 3.15 |
| BHC Act | 3.1(b) |
| Cash Consideration | 1.4(a) |
| Certificate | 1.4(b) |
| Certificate of Merger | 1.2 |
| Closing | 9.1 |
| Closing Date | 9.1 |
| Code | Recitals |
| Confidentiality Agreement | 6.2(b) |
| Contracts | 5.2(j) |
| Controlled Group Liability | 3.11 |
| Credit Facilities | 5.2(f) |
| Derivative Transaction | 3.16 |
| Dissenting Shareholder | 1.10 |
| Dissenting Shares | 1.10 |
| DPC Common Shares | 1.4(a) |
| Effective Date | 1.2 |
| Effective Time | 1.2 |
| ERISA | 3.11 |
| ERISA Affiliate | 3.11 |
| ESPP | 1.6(d) |
| Exchange Act | 3.6 |
| Exchange Agent | 2.1 |
| Exchange Fund | 2.1 |
| Exchange Ratio | 1.6(a) |
| Federal Reserve Board | 3.4 |
| Form S-4 | 3.4 |
| GAAP | 3.1(c) |
| Governmental Entity | 3.4 |
| HSR Act | 3.4 |
| Huntington | Preamble |
| Huntington 10-Q | 4.6 |
| Huntington 2005 10-K | 4.6 |
| Huntington Benefit Plan | 4.11 |
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| Huntington Bylaws | 4.1(b) |
| Huntington Charter | 4.1(b) |
| Huntington Closing Price | 1.6(a) |
| Huntington Common Stock | 1.4(a) |
| Huntington Disclosure Schedule | Art. IV |
| Huntington Employment Agreement | 4.11 |
| Huntington Instrument of Indebtedness | 4.14(a) |
| Huntington Material Contracts | 4.14(a) |
| Huntington Plan | 4.11 |
| Huntington Preferred Stock | 4.2(a) |
| Huntington Qualified Plans | 4.11(d) |
| Huntington Recommendation | 6.3 |
| Huntington Regulatory Agreement | 4.15 |
| Huntington Reports | 4.12 |
| Huntington Stock Plans | 4.2(a) |
| Huntington Stockholder Meeting | 6.3 |
| Huntington Subsidiary | 3.1(c) |
| Indebtedness | 3.14(b) |
| Indemnified Parties | 6.8(a) |
| Injunction | 7.1(e) |
| Intellectual Property | 3.28 |
| IRS | 3.10(a) |
| Joint Proxy Statement | 3.4 |
| Leased Properties | 3.19(c) |
| Leases | 3.19(b) |
| Liens | 3.2(b) |
| LLC Agreement | 1.7 |
| Loans | 3.27(a) |
| Material Adverse Effect | 3.1(c) |
| Materially Burdensome Regulatory Condition | 6.1(b) |
| Maximum Amount | 6.8(b) |
| Merger | Recitals |
| Merger Consideration | 1.4(a) |
| Merger Sub | Preamble |
| Merger Sub Units | 4.2(a) |
| MLLCA | 1.1(a) |
| Multiemployer Plan | 3.11 |
| Multiple Employer Plan | 3.11(f) |
| Nasdaq | 1.6(a) |
| No-Shop Party | 6.13(a) |
| OCC | 3.4 |
| OGCL | 1.1(a) |
| Ohio DFI | 3.4 |
| Other Regulatory Approvals | 3.4 |
| Owned Properties | 3.19(a) |
| PBGC | 3.11(e) |
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| Person | 3.9(a) |
| Regulatory Agencies | 3.5 |
| Requisite Regulatory Approvals | 7.1(c) |
| Sarbanes-Oxley Act | 3.23(b) |
| SBA | 3.4 |
| SDAT | 1.2 |
| SEC | 3.4 |
| Section 16 Information | 6.12 |
| Shareholder Rights Agreement | 3.2(a) |
| Sky | Preamble |
| Sky 10-Q | 3.6 |
| Sky 2005 10-K | 3.6 |
| Sky Articles | 3.1(b) |
| Sky Benefit Plan | 3.11 |
| Sky Common Stock | 1.4(a) |
| Sky Disclosure Schedule | Art. III |
| Sky Employment Agreement | 3.11 |
| Sky Insiders | 6.12 |
| Sky Instruments of Indebtedness | 3.14(a) |
| Sky Material Contracts | 3.14(a) |
| Sky Plan | 3.11 |
| Sky Qualified Plans | 3.11(d) |
| Sky Recommendation | 6.3 |
| Sky Regulations | 3.1(b) |
| Sky Regulatory Agreement | 3.15 |
| Sky Reports | 3.12 |
| Sky Restricted Shares | 1.6(b) |
| Sky Shareholder Meeting | 6.3 |
| Sky Stock Option | 1.6(a) |
| Sky Stock Plans | 1.6(a) |
| Sky Stock Unit Awards | 1.6(c) |
| Sky Subsidiary | 3.1(c) |
| SRO | 3.4 |
| Stock Consideration | 1.4(a) |
| Subsidiary | 3.1(c) |
| Surviving Company | Recitals |
| Tax Return | 3.10(c) |
| Tax(es) | 3.10(b) |
| Termination Fee | 8.3(a) |
| Third Party Leases | 3.19(d) |
| Trust Account Common Shares | 1.4(a) |
| Withdrawal Liability | 3.11 |
vii
| AGREEMENT AND PLAN OF MERGER |
AGREEMENT AND PLAN OF MERGER, dated as of December 20, 2006 (this “ Agreement ”), by and among HUNTINGTON BANCSHARES INCORPORATED, a Maryland corporation (“ Huntington ”), PENGUIN ACQUISITION, LLC, a Maryland limited liability company and wholly owned subsidiary of Huntington that is disregarded as an entity separate from Huntington under Treasury Regulation Section 301.7701 -3 (“ Merger Sub ”) and SKY FINANCIAL GROUP, INC., an Ohio corporation (“ Sky ”).
| W I T N E S S E T H: |
WHEREAS, the Boards of Directors of Sky and Huntington, and the managing member of Merger Sub, have determined that it is in the best interests of their respective companies and their shareholders and stockholders and sole member, respectively, to consummate the strategic business combination transaction provided for in this Agreement in which Sky will, on the terms and subject to the conditions set forth in this Agreement, merge with and into Merger Sub (the “ Merger ”), so that Merger Sub is the surviving company in the Merger (sometimes referred to in such capacity as the “ Surviving Company ”); and
WHEREAS, for federal income Tax purposes, it is intended that the Merger shall qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “ Code ”), and this Agreement is intended to be and is adopted as a “plan of reorganization” for purposes of Sections 354 and 361 of the Code; 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 in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:
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ARTICLE I
THE MERGER |
1.1 The Merger . (a) Subject to the terms and conditions of this Agreement, in accordance with the Ohio General Corporation Law (the “ OGCL ”) and the Maryland Limited Liability Company Act (the “ MLLCA ”), at the Effective Time, Sky shall merge with and into Merger Sub. Merger Sub shall be the Surviving Company in the Merger, and shall continue its limited liability company existence under the laws of the State of Maryland. As of the Effective Time, the separate corporate existence of Sky shall cease.
(b) Huntington and Merger Sub may at any time change the method of effecting the combination (including by providing for the merger of Sky directly into Huntington, with Huntington surviving the merger), and Sky shall cooperate in such efforts,
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including by entering into an appropriate amendment to this Agreement (to the extent such amendment only changes the method of effecting the business combination and does not substantively affect this Agreement or the rights and obligations of the parties or their respective shareholders or stockholders, as applicable, hereunder); provided , however , that no such change shall (i) alter or change the amount or kind of the Merger Consideration (as defined in Section 1.4(a) ) provided for in this Agreement, (ii) adversely affect the Tax treatment of Sky’s shareholders as a result of receiving the Merger Consideration or the Tax treatment of either party pursuant to this Agreement or (iii) materially impede or delay consummation of the transactions contemplated by this Agreement.
1.2 Effective Time . The Merger shall become effective as set forth in the articles of merger (the “ Articles of Merger ”) that shall be filed with the Maryland State Department of Assessments and Taxation (“ SDAT”) and the certificate of merger (the “ Certificate of Merger ”) that shall be filed with the Secretary of State of the State of Ohio on or before the Closing Date. The term “ Effective Time ” shall be the date and time when the Merger becomes effective as set forth in the Articles of Merger and the Certificate of Merger. “ Effective Date ” shall mean the date on which the Effective Time occurs.
1.3 Effects of the Merger . At and after the Effective Time, the Merger shall have the effects set forth in Section 1701.82 of the OGCL and Section 4A-709 of the MLLCA.
1.4 Conversion of Sky Capital Stock . At the Effective Time, by virtue of the Merger and without any action on the part of Huntington, Merger Sub, Sky or the holder of any of the following securities:
(a) Subject to Section 2.2(e) , each share of the common stock, without par value, of Sky issued and outstanding immediately prior to the Effective Time (“ Sky Common Stock ”), except for shares of Sky Common Stock owned by Huntington, Merger Sub or Sky (other than shares of Sky Common Stock held in trust accounts, managed accounts and the like, or otherwise held in a fiduciary or agency capacity, that are beneficially owned by third parties (any such shares, “ Trust Account Common Shares ”) and other than shares of Sky Common Stock held, directly or indirectly, by Huntington, Merger Sub or Sky in respect of a debt previously contracted (any such shares, “ DPC Common Shares ”)) and for Dissenting Shares (as defined in Section 1.10 ), shall be converted into the right to receive (i) 1.098 shares (the “ Stock Consideration ”) of common stock, without par value, of Huntington (“ Huntington Common Stock ”) and (ii) an amount in cash equal to $3.023, without interest (the “ Cash Consideration ”). The Cash Consideration and the Stock Consideration are sometimes referred to collectively herein as the “ Merger Consideration .”
(b) All of the shares of Sky Common Stock converted into the right to receive the Merger Consideration pursuant to this Article I shall no longer be outstanding and shall automatically be cancelled and shall cease to exist as of the Effective Time, and, subject to Section 1.10 , each certificate previously representing any such shares of Sky Common Stock (each a “ Certificate ”) shall thereafter represent only the right to receive (A) the Merger Consideration and (B) cash in lieu of fractional shares into which the shares of Sky Common Stock represented by such Certificate have been converted pursuant to this Section 1.4 and Section 2.2(e) , as well as any dividends or distributions to which holders of Sky Common Stock
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are entitled in accordance with Section 2.2(b) . If, prior to the Effective Time, the outstanding shares of Huntington Common Stock or Sky 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, an appropriate and proportionate adjustment shall be made to the Merger Consideration.
(c) Notwithstanding anything in this Agreement to the contrary, at the Effective Time, all shares of Sky Common Stock that are owned by Sky, Huntington or Merger Sub (other than Trust Account Common Shares and DPC Common Shares) shall be cancelled and shall cease to exist and no stock of Huntington or Merger Sub or other consideration shall be delivered in exchange therefor.
1.5 Huntington Common Stock . At and after the Effective Time, each share of Huntington capital stock issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and shall not be affected by the Merger.
1.6 Sky Equity and Equity-Based Awards . (a) Sky Stock Options . Effective as of the Effective Time, each then outstanding option to purchase shares of Sky Common Stock (each a “ Sky Stock Option ”), pursuant to the equity-based compensation plans identified on Section 3.11(a) of the Sky Disclosure Schedule (the “ Sky Stock Plans ”) and the award agreements evidencing the grants thereunder, granted to any current or former employee or director of, or consultant to, Sky or any of its Subsidiaries shall immediately vest and become exercisable and shall be assumed by Huntington and converted into an option to purchase a number of shares of Huntington Common Stock (an “ Assumed Stock Option ”) equal to (i) the number of shares of Sky Common Stock subject to such Sky Stock Option immediately prior to the Effective Time multiplied by (ii) the Exchange Ratio (rounded down to the nearest whole share); and the per share exercise price for Huntington Common Stock issuable upon the exercise of such Assumed Stock Option shall be equal to (i) the exercise price per share of Sky Common Stock at which such Sky Stock Option was exercisable immediately prior to the Effective Time divided by (ii) the Exchange Ratio (rounded up to the nearest whole cent); provided , however , that in the case of any Sky Stock Option to which Section 421 of the Code applies by reason of its qualification under Section 422 of the Code, Huntington shall use reasonable best efforts to procure compliance with Section 424(a) of the Code. Except as otherwise provided herein, the Assumed Stock Options shall be subject to the same terms and conditions (including expiration date and exercise provisions, after taking into account the accelerated vesting of the Sky Stock Options as of the Effective Time) as were applicable to the corresponding Sky Stock Options immediately prior to the Effective Time.
“ Exchange Ratio ” shall mean the sum of (x) the Stock Consideration and (y) the quotient of the Cash Consideration divided by the Huntington Closing Price, rounded to the nearest one ten thousandth.
“ Huntington Closing Price ” shall mean the average, rounded to the nearest one ten thousandth, of the closing sale prices of Huntington Common Stock on the Nasdaq Stock Market (the “ Nasdaq ”) as reported by The Wall Street Journal for the five full Nasdaq trading days immediately preceding (but not including) the Effective Date (as defined in Section 1.2 ).
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(b) Sky Restricted Shares . Effective immediately prior to the Effective Time, any restrictions or vesting requirements with respect to outstanding restricted shares of Sky Common Stock granted to any employee or director of Sky or any of its Subsidiaries under any Sky Stock Plan that is outstanding immediately prior to the Effective Time (collectively, the “ Sky Restricted Shares ”) (and any accrued dividends thereon) shall lapse and such shares shall vest in full. As of the Effective Time, each Sky Restricted Share shall, by virtue of the Merger and without any action on the part of the holder thereof, be cancelled and converted into the right to receive the Merger Consideration; provided , however , that, upon the lapsing of restrictions with respect to each such Sky Restricted Share Right, in addition to the entitlement to withhold under Section 2.3 , Huntington, Merger Sub or Sky as applicable, shall be entitled to deduct and withhold such amounts as may be required to be deducted and withheld under the Code and any applicable state or local Tax law with respect to the lapsing of such restrictions (without duplication with respect to amounts withheld under Section 2.3 ).
(c) Stock Units . As of the Effective Time, each outstanding stock unit denominated in shares of Sky Common Stock granted to, or held in a deferral account for the benefit of, any employee or director of Sky or any of its Subsidiaries under any Sky Stock Plan or non-qualified deferred compensation or retirement plan that is unsettled immediately prior to the Effective Time (collectively, the “ Sky Stock Unit Awards ”) shall, by virtue of the Merger and without any action on the part of the holder thereof, be assumed by Huntington and converted into the right to receive the number of shares of Huntington Common Stock (or an amount in respect thereof for cash settled Sky Stock Unit Awards) equal to the number of shares of Sky Common Stock underlying or subject to the Sky Stock Unit Award, multiplied by the Exchange Ratio (rounded down to the nearest whole number of shares of Huntington Common Stock) (each an “ Assumed Stock Unit Award ”). Each Assumed Stock Unit Award shall have the same terms and conditions as were in effect immediately prior to the Effective Time, except that any vesting requirements of the Sky Stock Unit Awards shall lapse or be deemed satisfied effective as of the Effective Time.
(d) ESPP . Sky shall take all action as is necessary to cause Sky’s Employee Stock Purchase Plan (the “ ESPP ”) to be suspended effective as of Sky's payroll period ending immediately prior to the Effective Time, such that the offering period in effect as of such date will be the final offering period under the ESPP, and, as of the Effective Time and subject to the consummation of the transactions contemplated by this Agreement, Sky shall terminate the ESPP.
(e) Reservation of Shares . Huntington has taken all corporate actions necessary to reserve for issuance a sufficient number of shares of Huntington Common Stock upon the exercise of the Assumed Stock Options and Assumed Stock Unit Awards. As soon as practicable following the Closing, Huntington shall file a registration statement on an appropriate form or a post-effective amendment to a previously filed registration statement under the Securities Act with respect to the issuance of the shares of Huntington Common Stock subject to the Assumed Stock Options and Assumed Stock Unit Awards and shall use its best efforts to maintain the effectiveness of such registration statement or registration statements (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such equity awards remain outstanding.
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1.7 Articles of Organization and Limited Liability Company Agreement of the Surviving Company . The articles of organization of Merger Sub (the “ Articles of Organization ”) as in effect immediately prior to the Effective Time shall be the articles of organization of the Surviving Company until thereafter amended in accordance with applicable law. The limited liability company agreement of Merger Sub (the “ LLC Agreement ”) as in effect immediately prior to the Effective Time shall be the limited liability company agreement of the Surviving Company until thereafter amended in accordance with applicable law.
1.8 Bylaws of Huntington; Governance . At the Effective Time, the Huntington Bylaws, as amended to reflect the terms of Exhibit A hereof, shall be the Bylaws of Huntington until thereafter amended in accordance with applicable law. Prior to the Effective Time, Huntington shall take all actions necessary to adopt the amendment to the By-laws of Huntington provided for in Exhibit A hereto and to effect the requirements and adopt the resolutions referenced therein. On or prior to the Effective Time, Huntington’s Board of Directors shall cause the number of directors that will comprise the full Board of Directors of Huntington to be fifteen (15). The initial Board of Directors of Huntington at the Effective Time shall be comprised of nine (9) current non-employee Huntington directors designated by Huntington, the current Chief Executive Officer of Huntington, four (4) current non-employee Sky directors designated by Sky, and the current Chief Executive Officer of Sky. In accordance with, and to the extent provided in, the By-laws of Huntington (as amended as provided in Exhibit A ), (i) effective as of the Effective Time, Mr. Thomas E. Hoaglin shall continue to serve as Chairman of the Board and Chief Executive Officer of Huntington, and Mr. Mr. Marty E. Adams shall become President and Chief Operating Officer of Huntington, and (ii) Mr. Adams shall be the successor to Mr. Hoaglin as Chief Executive Officer of Huntington, with such succession to become effective as of December 31, 2009 or any such earlier date as of which Mr. Hoaglin ceases for any reason to serve in the position of Chief Executive Officer of Huntington.
1.9 Tax Consequences . It is intended that the Merger shall constitute a “reorganization” within the meaning of Section 368(a) of the Code, and that this Agreement shall constitute a “plan of reorganization” for purposes of Sections 354 and 361 of the Code.
1.10 Dissenting Shares . No outstanding shares of Sky Common Stock as to which rights have been asserted pursuant to Section 1701.85 of the OGCL and duly perfected in accordance therewith and not effectively withdrawn (“ Dissenting Shares ”) shall be converted into or represent a right to receive the Merger Consideration in the Merger, and the holder thereof shall be entitled only to such rights as are granted by the OGCL. Sky shall give Huntington and Merger Sub (i) prompt notice upon receipt by Sky of the assertion of any such rights and of withdrawals thereof (any holder of such shares, a “ Dissenting Shareholder ”) and (ii) the opportunity to participate in and direct all negotiations and proceedings with respect to any such demands or notices. Sky shall not, without the prior written consent of Huntington and Merger Sub, make any payment with respect to, or settle, offer to settle or otherwise negotiate, any such demands. If any Dissenting Shareholder shall effectively withdraw or lose (through failure to perfect or otherwise) his right to such payment, such holder’s shares of the Sky Common Stock shall be converted into a right to receive the Merger Consideration in accordance with Section 1.4(a) and the other applicable provisions of this Agreement.
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1.11 Headquarters of Huntington and the Surviving Company . From and after the Effective Time, the location of the headquarters and principal executive offices of Huntington and the Surviving Company shall be Columbus, Ohio.
| ARTICLE II |
| EXCHANGE OF SHARES |
2.1 Huntington to Make Merger Consideration Available . As promptly as practicable following the Effective Time, Huntington shall deposit, or shall cause to be deposited, with a bank or trust company Subsidiary of Huntington, or another bank or trust company reasonably acceptable to each of Sky and Huntington (the “ Exchange Agent ”), for the benefit of the holders of Certificates, for exchange in accordance with this Article II , (i) certificates representing the shares of Huntington Common Stock sufficient to deliver the aggregate Stock Consideration, (ii) immediately available funds equal to any dividends or distributions payable in accordance with Section 2.2(b) , (iii) immediately available funds equal to the aggregate Cash Consideration and (iv) cash in lieu of any fractional shares (such cash and certificates for shares of Huntington Common Stock, collectively being referred to as the “ Exchange Fund ”), to be issued pursuant to Section 1.4 and paid pursuant to Section 2.2(e) in exchange for outstanding shares of Sky Common Stock (other than Dissenting Shares).
2.2 Exchange of Shares . (a) As soon as practicable after the Effective Time, the Exchange Agent shall mail to each holder of record of one or more Certificates (except to the extent representing Dissenting Shares) a letter of transmittal in customary form as prepared by Huntington and reasonably acceptable to Sky (which shall specify, among other things, 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 the Merger Consideration and any cash in lieu of fractional shares into which the shares of Sky Common Stock represented by such Certificate or Certificates shall have been converted pursuant to this Agreement and any dividends or distributions to which such holder is entitled pursuant to Section 2.2(b) . Upon proper surrender of a Certificate or Certificates for exchange and cancellation to the Exchange Agent, together with such properly completed letter of transmittal, duly executed, the holder of such Certificate or Certificates shall be entitled to receive in exchange therefor, as applicable, (i) a certificate representing the number of whole shares of Huntington Common Stock to which such holder of Sky Common Stock shall have become entitled pursuant to the provisions of Article I , (ii) a check representing the amount of the aggregate Cash Consideration (rounded up to the nearest whole cent) and any cash in lieu of fractional shares which such holder has the right to receive in respect of the Certificate or Certificates surrendered pursuant to the provisions of this Article II , and (iii) a check representing the amount of any dividends or distributions then payable pursuant to Section 2.2(b)(i) , and the Certificate or Certificates 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. Until so surrendered, each Certificate shall represent after the Effective Time for all purposes only the right to receive the Merger Consideration, together with any cash in lieu of fractional shares and any dividends or distributions as contemplated by Section 2.2(b) .
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(b) No dividends or other distributions declared with respect to Huntington Common Stock shall be paid to the holder of any unsurrendered Certificate until the holder thereof shall surrender such Certificate in accordance with this Article II . After the surrender of a Certificate in accordance with this Article II , the record holder thereof shall be entitled to receive (i) the amount of any dividends or distributions with a record date prior to the Effective Time which have been declared by Sky in respect of the shares of Sky Common Stock after the date of this Agreement in accordance with the terms of this Agreement and which remain unpaid at the Effective Time, (ii) the amount of dividends or other distributions with a record date after the Effective Time theretofore paid, without any interest thereon, with respect to the whole shares of Huntington Common Stock represented by such Certificate, and (iii), at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to surrender and a payment date subsequent to surrender, with respect to shares of Huntington Common Stock represented by such Certificate.
(c) If any certificate representing shares of Huntington Common Stock is to be issued in, or any cash is paid to, a name other than that in which the Certificate or Certificates surrendered in exchange therefor is or are registered, it shall be a condition to the issuance or payment thereof that the Certificate or Certificates 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 payment or issuance in any name other than that of the registered holder of the Certificate or Certificates 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 Sky of the shares of Sky Common Stock that were issued and outstanding immediately prior to the Effective Time other than to settle transfers of Sky Common Stock that occurred 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 the Merger Consideration as provided in this Article II .
(e) Notwithstanding anything to the contrary contained in this Agreement, no certificates or scrip representing fractional shares of Huntington Common Stock shall be issued upon the surrender of Certificates for exchange, no dividend or distribution with respect to Huntington 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 Huntington. In lieu of the issuance of any such fractional share, Huntington shall pay to each former shareholder of Sky who otherwise would be entitled to receive such fractional share an amount in cash (rounded to the nearest cent) determined by multiplying (i) Huntington Closing Price by (ii) the fraction of a share (rounded to the nearest thousandth when expressed in decimal form) of Huntington 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 shareholders of Sky as of the first anniversary of the Effective Time shall be paid to Huntington. Any former shareholders of Sky who have not theretofore complied with this Article II shall
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thereafter look only to Huntington for payment of the Merger Consideration, cash in lieu of any fractional shares and any unpaid dividends and distributions payable in accordance with Section 2.2(b) in respect of each share of Sky Common Stock, as the case may be, such shareholder holds as determined pursuant to this Agreement, in each case, without any interest thereon. Notwithstanding the foregoing, none of Huntington, Merger Sub, Sky, the Exchange Agent or any other person shall be liable to any former holder of shares of Sky Common 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 Huntington, the posting by such person of a bond in such amount as Huntington 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 Merger Consideration and any cash in lieu of fractional shares deliverable in respect thereof pursuant to this Agreement.
2.3 Withholding Rights . The Exchange Agent (or, subsequent to the first anniversary of the Effective Time, Huntington) shall be entitled to deduct and withhold from any cash portion of the Merger Consideration, any cash in lieu of fractional shares of Huntington Common Stock, cash dividends or distributions payable pursuant to Section 2.2(b) hereof and any other cash amounts otherwise payable pursuant to this Agreement to any holder of Sky Common Stock such amounts as the Exchange Agent or Huntington, as the case may be, is required to deduct and withhold under the Code, or any provision of state, local or foreign Tax law, with respect to the making of such payment. To the extent the amounts are so withheld by the Exchange Agent or Huntington, as the case may be, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of shares of Sky Common Stock in respect of whom such deduction and withholding was made by the Exchange Agent or Huntington, as the case may be.
| ARTICLE III |
REPRESENTATIONS AND WARRANTIES OF SKY
Except as disclosed in a correspondingly numbered section of the disclosure schedule (the “ Sky Disclosure Schedule ”) delivered by Sky to Huntington and Merger Sub prior to the execution of this Agreement (which schedule sets forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in this Article III , or to one or more of Sky’s covenants contained herein, provided , however , that notwithstanding anything in this Agreement to the contrary, the mere inclusion of an item in such schedule as an exception to a representation or warranty shall not be deemed an admission that such item represents a material exception or material fact, event or circumstance or that such item has had or would be reasonably likely to have a Material Adverse Effect on Sky), Sky hereby represents and warrants to Huntington and Merger Sub as follows:
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3.1 Corporate Organization .
(a) Sky is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio. Sky 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.
(b) Sky is duly registered as a bank holding company and is a financial holding company under the Bank Holding Company Act of 1956, as amended (the “ BHC Act ”). True and complete copies of the Amended and Restated Articles of Incorporation of Sky (the “ Sky Articles ”) and the Amended and Restated Regulations of Sky (the “ Sky Regulations ”), as in effect as of the date of this Agreement, have previously been made available to Huntington.
(c) Each of Sky’s Subsidiaries (i) is duly organized and validly existing 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