Item 1.01. Entry into a Material Definitive Agreement.
On December 13, 2020, TCF Financial Corporation, a Michigan corporation ("TCF"),
entered into an Agreement and Plan of Merger (the "Merger Agreement") with
Huntington Bancshares Incorporated, a Maryland corporation ("Huntington"). The
Merger Agreement provides that, upon the terms and subject to the conditions set
forth therein, TCF will merge with and into Huntington (the "Merger"), with
Huntington continuing as the surviving corporation in the Merger (the "Surviving
Corporation"). Immediately following the Merger, TCF's wholly owned banking
subsidiary, TCF National Bank, will merge with and into Huntington's wholly
owned banking subsidiary, The Huntington National Bank (the "Bank Merger"),
which will continue as the surviving bank in the Bank Merger. The Merger
Agreement was unanimously approved by the Board of Directors of each of TCF and
Huntington.
Upon the terms and subject to the conditions set forth in the Merger Agreement,
at the effective time of the Merger (the "Effective Time"), each share of common
stock, par value $1.00 per share, of TCF ("TCF Common Stock") outstanding
immediately prior to the Effective Time, other than certain shares held by TCF
or Huntington, will be converted into the right to receive 3.0028 shares of
common stock (the "Exchange Ratio" and such shares, the "Merger Consideration"),
par value $0.01 per share, of Huntington ("Huntington Common Stock"). Holders of
TCF Common Stock will receive cash in lieu of fractional shares. At the
Effective Time, each share of 5.70% Series C Non-Cumulative Perpetual Preferred
Stock, no par value, of TCF outstanding immediately prior to the Effective Time
will be converted into the right to receive a share of a newly created series of
preferred stock of Huntington (the "New Huntington Preferred Stock").
At the Effective Time, each outstanding TCF equity award granted under TCF's
equity compensation plans, other than unvested TCF restricted stock awards held
by non-employee directors, will be converted into a corresponding award with
respect to Huntington Common Stock, with the number of shares underlying such
award (and, in the case of stock options, the applicable exercise price)
adjusted based on the Exchange Ratio. Each such converted Huntington equity
award will continue to be subject to the same terms and conditions as applied to
the corresponding TCF equity award immediately prior to the Effective Time,
except that, in the case of TCF restricted stock unit awards, the number of
shares underlying the converted Huntington equity award will be determined with
any performance goals deemed satisfied at the greater of the target and actual
level of performance through the most recently completed calendar quarter prior
to the Effective Time as reasonably determined by the Compensation Committee of
the Board of Directors of TCF in the ordinary course consistent with past
practice. At the Effective Time, each outstanding unvested restricted stock
award that is held by a non-employee director will vest and be converted into
the right to receive the Merger Consideration in respect of each share of TCF
Common Stock subject to such TCF restricted stock award immediately prior to the
Effective Time.
The Merger Agreement also provides, among other things, that Huntington will
take all appropriate action so that, as of the Effective Time, the number of
directors constituting the Board of Directors of Huntington will be increased by
five (5) for a total of eighteen (18) directors, and five (5) current directors
of TCF designated by TCF will be appointed to the Board of Directors of
Huntington, subject to the approval of the Board of Directors of Huntington (not
to be unreasonably withheld), and one of such five (5) directors will not stand
for re-election to the Board of Directors of Huntington at Huntington's 2022
annual meeting of shareholders. In addition, as of the effective time of the
Bank Merger, Gary Torgow, TCF's Executive Chairman, will be appointed as
Chairman of the Board of Directors of The Huntington National Bank. The Merger
Agreement provides that, following the Effective Time, the meetings of the Board
of Directors of Huntington and, following the effective time of the Bank Merger,
the Board of Directors of The Huntington National Bank, will rotate between (i)
Detroit, Michigan and Minneapolis, Minnesota and (ii) Columbus, Ohio.
The Merger Agreement provides that the Surviving Corporation will have dual
headquarters for banking operations in Detroit, Michigan and Columbus, Ohio,
with the headquarters of the Surviving Corporation's commercial banking
operations located in Detroit, Michigan and the headquarters of the Surviving
Corporation's consumer banking operations located in Columbus, Ohio. The Merger
Agreement provides that the headquarters of the Surviving Corporation and the
main office of The Huntington National Bank will be located in Columbus, Ohio.
Additionally, the Merger Agreement provides that prior to the closing of the
Merger, Huntington will contribute $50 million to establish a new Huntington
Donor Advised Fund at the Community Foundation for Southeast Michigan, to be
recommended and allocated by Gary Torgow and David T. Provost.
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At the Effective Time, Huntington's charter will also be amended to increase the
number of authorized shares of Huntington Common Stock from 1.5 billion to 2.25
billion (the "Charter Amendment").
The Merger Agreement contains customary representations and warranties from both
TCF and Huntington, and each party has agreed to customary covenants, including,
among others, covenants relating to (i) the conduct of its business during the
interim period between the execution of the Merger Agreement and the Effective
Time and (ii) its obligation to call a meeting of its shareholders to approve
the Merger and the Merger Agreement, and, subject to certain exceptions, to
recommend that its shareholders approve the Merger and the Merger Agreement. TCF
has also agreed to certain non-solicitation obligations related to alternative
business combination proposals.
The completion of the Merger is subject to customary conditions, including (i)
approval of the Merger and the Charter Amendment by Huntington's shareholders
and approval of the Merger Agreement by TCF's shareholders, (ii) authorization
for listing on the Nasdaq Stock Market of the shares of Huntington Common Stock
and New Huntington Preferred Stock (or depositary shares in respect thereof) to
be issued in the Merger, subject to official notice of issuance, (iii) the
receipt of required regulatory approvals, including the approval of the Board of
Governors of the Federal Reserve System and the Office of the Comptroller of the
Currency, (iv) effectiveness of the registration statement on Form S-4 for the
Huntington Common Stock and the New Huntington Preferred Stock (or depositary
shares in respect thereof) to be issued in the Merger, and (v) the absence of
any order, injunction, decree or other legal restraint preventing the completion
of the Merger, the Bank Merger or any of the other transactions contemplated by
the Merger Agreement or making the completion of the Merger, the Bank Merger or
any of the other transactions contemplated by the Merger Agreement illegal. Each
party's obligation to complete the Merger is also subject to certain additional
customary conditions, including (a) subject to certain exceptions, the accuracy
of the representations and warranties of the other party, (b) performance in all
material respects by the other party of its obligations under the Merger
Agreement and (c) receipt by such party of an opinion from counsel to the effect
that the Merger will qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended.
The Merger Agreement provides certain termination rights for both TCF and
Huntington and further provides that a termination fee of $238.8 million will be
payable by either TCF or Huntington, as applicable, upon termination of the
Merger Agreement under certain circumstances.
The foregoing description of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Merger Agreement, which is attached hereto as Exhibit 2.1 and is incorporated
herein by reference.
The representations, warranties and covenants of each party set forth in the
Merger Agreement have been made only for the purposes of, and were and are
solely for the benefit of the parties to, the Merger Agreement, may be subject
to limitations agreed upon by the contracting parties, including being qualified
by confidential disclosures made for the purposes of allocating contractual risk
between the parties to the Merger Agreement instead of establishing these
matters as facts, and may be subject to standards of materiality applicable to
the parties that differ from those applicable to investors. Accordingly, the
representations and warranties may not describe the actual state of affairs at
the date they were made or at any other time, and investors should not rely on
them as statements of fact. In addition, such representations and warranties (i)
will not survive consummation of the Merger, and (ii) were made only as of the
date of the Merger Agreement or such other date as is specified in the Merger
Agreement. Moreover, information concerning the subject matter of the
representations and warranties may change after the date of the Merger
Agreement, which subsequent information may or may not be fully reflected in the
parties' public disclosures. Accordingly, the Merger Agreement is included with
. . .
Item 5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
Executive Employment Agreement of David T. Provost
On December 13, 2020, TCF entered into an employment agreement with David T.
Provost, its Chief Executive Officer, which will continue for an initial two
(2)-year period (extending for an additional two (2)-year period from the date
of a "Change in Control" (as defined in Mr. Provost's employment agreement)).
Under Mr. Provost's employment agreement, he is entitled to receive:
•an annual salary of at least $1.00, subject to annual review and adjustment;
•participation in annual bonus opportunity and equity programs starting in
calendar year 2021, with a target bonus opportunity of $950,000;
•participation in long-term equity or equity-based incentive programs, with an
annual aggregate grant date target value equal to at least $1.9 million;
•participation in the same benefit plans as apply to TCF's senior executives
generally on the same terms and conditions; and
•certain specified perquisites, including an auto allowance and payment of
certain membership fees.
If Mr. Provost's employment is terminated by TCF without "Cause" or by him for
"Good Reason" (each as defined in his employment agreement, and each a
"qualifying termination"), not within six (6) months before or two (2) years
after a Change in Control, subject to the execution of a release, Mr. Provost
will be eligible to receive:
•the sum of (i) the greater of (a) $1.9 million and (b) two (2.0) times his then
base salary, plus (ii) two (2.0) times the average of his bonuses under TCF's
annual executive incentive plan for each of the three (3) most recently
completed calendar years of his employment with TCF (with each such bonus
calculated at the higher of $1.5 million and actual bonus paid);
•twelve (12) months of outplacement services through an external firm following
termination; and
•a lump sum health care stipend of $10,000 that may be used for any purpose.
In addition, under his employment agreement, in the event Mr. Provost (i) is
terminated by TCF without Cause, (ii) terminates his employment for Good Reason,
(iii) dies, (iv) is terminated due to a "Disability" (as defined in his
employment agreement) or (v) retires on one (1) year's advance notice, all
equity-based awards will be treated as follows: all unvested stock options will
immediately vest, the restrictions on all time-vesting restricted stock will
lapse, all time-based restricted stock units ("TRSUs") will immediately vest,
and all performance-based stock units ("PRSUs") will be settled at one hundred
percent (100%) of target.
Under his employment agreement, if Mr. Provost experiences a qualifying
termination within two (2) years following a Change in Control, or within six
(6) months before the date of a Change in Control, subject to the execution of a
release, he will be entitled to change in control severance as follows:
•the sum of (i) the greater of (a) $2.85 million and (b) three (3.0) times his
then base salary, plus (ii) three (3.0) times the average of his bonuses under
TCF's annual executive incentive plan for each of the three (3) most recently
completed calendar years of his employment with TCF, payable in one lump sum
cash payment (with each such bonus calculated at the higher of $1.5 million and
actual bonus paid);
•twelve (12) months of outplacement services through an external firm following
termination; and
•a lump sum health care stipend of $10,000 that may be used for any purpose.
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In addition, upon a qualifying termination within two (2) years following a
Change in Control, any outstanding unvested stock options on the employment
termination date will one hundred percent (100%) vest, any remaining unvested
TRSUs will automatically one hundred percent (100%) vest, and any unvested PRSUs
automatically will vest (converted at the greater of target and the level of
achievement of actual performance) at one hundred percent (100%).
Under his employment agreement, Mr. Provost agreed to covenants of
confidentiality, non-competition, non-solicitation and non-disparagement.
Executive Employment Agreement of Gary Torgow
On December 13, 2020, TCF entered into an employment agreement with Gary Torgow,
the Executive Chairman of TCF's Board of Directors, that supersedes his prior
amended and restated retention agreement with TCF, dated March 10, 2020 (the
"retention agreement"). Mr. Torgow's employment agreement provides for an
initial two (2)-year period (extending for an additional two (2)-year period
from the date of a "Change in Control" (as defined in his employment
agreement)). Under Mr. Torgow's employment agreement, the terms and conditions
of his employment with TCF are substantially similar as under the retention
agreement with the following notable changes.
Under Mr. Torgow's employment agreement, in the event of a termination by TCF
without "Cause," or by Mr. Torgow with "Good Reason" (each as defined in his
employment agreement and each referred to herein as a qualifying termination)
within two (2) years following a Change in Control, or within six (6) months
before the date of a Change in Control, subject to the execution of an effective
release, Mr. Torgow is entitled to receive:
•the sum of (i) three (3.0) times his then base salary, plus (ii) three (3.0)
times the average of his bonuses under TCF's annual executive inventive plan for
each of the three (3) most recently completed calendar years of his employment
with TCF (with each such bonus calculated at the higher of $1.5 million and
actual bonus paid), payable in one lump sum cash payment;
•twelve (12) months of outplacement services through an external firm following
termination; and
•a lump sum health care stipend of $10,000 that may be used for any purpose
(such $10,000 shall also be in place of the cost of 24 months of COBRA
continuation under a termination not in connection with a Change in Control).
In addition, upon a qualifying termination within two (2) years following a
Change in Control and subject to the execution of a release, any outstanding
unvested stock options on the employment termination date will one hundred
percent (100%) vest, any remaining unvested TRSUs will automatically one hundred
percent (100%) vest and any unvested PRSUs (converted at the greater of target
and the level of achievement of actual performance) automatically will vest at
one hundred percent (100%).
In the event Mr. Torgow retires on one (1) year's advance notice, all
equity-based awards will be treated as if his employment had been terminated by
TCF without Cause.
Mr. Torgow will no longer be entitled to the office of the chair benefits set
forth in the retention agreement. The other material terms of Mr. Torgow's
retention agreement, found in the section titled "Executive Compensation -
Employment, Retention and Equity Award Agreements" in TCF's definitive proxy
statement relating to its 2020 Annual Meeting of Shareholders , which was filed
with the SEC on March 25, 2020 and is incorporated herein by reference, remained
unchanged.
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Amended and Restated Executive Employment Agreement of Thomas C. Shafer
On December 13, 2020, TCF entered into an amended and restated employment
agreement with Thomas C. Shafer, Chief Executive Officer of TCF National Bank
and Vice Chair of TCF's Board of Directors, that amended and restated his prior
amended and restated employment agreement with TCF, dated July 31, 2019 (the
"prior Shafer agreement"). Under Mr. Shafer's amended and restated employment
agreement, Mr. Shafer is entitled to receive an annual equity grant with a
target grant date fair value equal to at least two (2.0) times his then current
base salary (an increase from one (1.0) times). In addition, in the event of a
termination by TCF without "Cause," or by Mr. Shafer with "Good Reason" (each as
defined in his amended and restated employment agreement and each referred to
herein as a qualifying termination) within six (6) months before or two (2)
years following a "Change in Control" (as defined in his amended and restated
employment agreement), he will be eligible to receive the sum of three (3.0)
times his then base salary, plus three (3.0) times the average of his bonuses
under TCF's annual executive incentive plan for each of the three (3) most
recently completed calendar years of his employment with TCF (with each such
bonus calculated at the higher of $1.5 million and actual bonus paid). This
change reflects an increase in the severance multiple from two (2.0) times to
three (3.0) times. In addition, with respect to the calculation of severance
outside of a Change in Control, the bonus component will be calculated as two
(2.0) times the average of his bonuses under TCF's annual executive incentive
plan for each of the three (3) most recently completed calendar years of his
employment with TCF (with each such bonus calculated at the higher of $1.5
million and actual bonus paid, unlike in the prior Shafer agreement).
The other material terms of the prior Shafer agreement, found in the section
titled "Executive Compensation - Employment, Retention and Equity Award
Agreements" in TCF's definitive proxy statement relating to its 2020 Annual
Meeting of Shareholders , which was filed with the SEC on March 25, 2020 and is
incorporated herein by reference, remained unchanged.
Amended and Restated Executive Employment Agreement of Brian Maass
On December 13, 2020, TCF entered into an amended and restated employment
agreement with Brian Maass, its Chief Financial Officer, that amended and
. . .
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
Agreement and Plan of Merger, by and between TCF Financial Corporation and
2.1 Huntington Bancshares Incorporated, dated as of December 13, 2020*
Executive Employment Agreement, by and between David T. Provost and TCF
10.1 Financial Corporation, dated as of December 13, 2020
Executive Employment Agreement, by and between Gary Torgow and TCF Financial
10.2 Corporation, dated as of December 13, 2020
Amended and Restated Executive Employment Agreement, by and between Thomas
10.3 C. Shafer and TCF Financial Corporation, dated as of December 13, 2020
Amended and Restated Executive Employment Agreement, by and among TCF
Financial Corporation, TCF National Bank and Brian Maass, dated as of December
10.4 13, 2020
104 Interactive Data File
*Pursuant to Item 601(b)(2) of Regulation S-K, certain schedules and similar
attachments have been omitted. The registrant hereby agrees to furnish a copy of
any omitted schedule or similar attachment to the SEC upon request.
Caution Regarding Forward-Looking Statements
This communication may contain certain forward-looking statements, including,
but not limited to, certain plans, expectations, goals, projections, and
statements about the benefits of the proposed transaction, the plans,
objectives, expectations and intentions of TCF and Huntington, the expected
timing of completion of the transaction, and other statements that are not
historical facts. Such statements are subject to numerous assumptions, risks,
and uncertainties. Statements that do not describe historical or current facts,
including statements about beliefs and expectations, are forward-looking
statements. Forward-looking statements may be identified by words such as
expect, anticipate, believe, intend, estimate, plan, target, goal, or similar
expressions, or future or conditional verbs such as will, may, might, should,
would, could, or similar variations. The forward-looking statements are intended
to be subject to the safe harbor provided by Section 27A of the Securities Act
of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private
Securities Litigation Reform Act of 1995.
While there is no assurance that any list of risks and uncertainties or risk
factors is complete, below are certain factors which could cause actual results
to differ materially from those contained or implied in the forward-looking
statements: changes in general economic, political, or industry conditions; the
magnitude and duration of the COVID-19 pandemic and its impact on the global
economy and financial market conditions and our business, results of operations,
and financial condition; uncertainty in U.S. fiscal and monetary policy,
including the interest rate policies of the Federal Reserve Board; volatility
and disruptions in global capital and credit markets; movements in interest
rates; reform of LIBOR; competitive pressures on product pricing and services;
success, impact, and timing of our business strategies, including market
acceptance of any new products or services; the nature, extent, timing, and
results of governmental actions, examinations, reviews, reforms, regulations,
and interpretations, including those related to the Dodd-Frank Wall Street
Reform and Consumer Protection Act and the Basel III regulatory capital reforms,
as well as those involving the OCC, Federal Reserve, FDIC, and CFPB; the
occurrence of any event, change or other circumstances that could give rise to
the right of one or both of the parties to terminate the merger agreement
between TCF and Huntington; the outcome of any legal proceedings that may be
instituted against TCF or Huntington; delays in completing the transaction; the
failure to obtain necessary regulatory approvals (and the risk that such
approvals may result in the imposition of conditions that could adversely affect
the combined company or the expected benefits of the transaction); the failure
to obtain shareholder approvals or to satisfy any of the other conditions to the
transaction on a timely basis or at all; the possibility that the anticipated
benefits of the transaction are not realized when expected or at all, including
as a result of the impact of, or problems arising from, the integration of the
two companies or as a result of the strength of the economy and competitive
factors in the areas where TCF and Huntington do business; the possibility that
the transaction may be more expensive to complete than anticipated, including as
a result of unexpected factors or events; diversion of management's attention
from ongoing business operations and opportunities; potential adverse reactions
or changes to business or employee relationships, including those resulting from
the announcement or completion of the transaction; the ability to complete the
transaction and integration of TCF and Huntington successfully; and other
factors that may affect the future results of TCF and Huntington. Additional
factors that could cause results to
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differ materially from those described above can be found in TCF's Annual Report
on Form 10-K for the year ended December 31, 2019 and in its subsequent
Quarterly Reports on Form 10-Q, including for the quarter ended September 30,
2020, each of which is on file with the SEC and available on TCF's investor
relations website, ir.tcfbank.com, under the heading "Financial Information" and
in other documents TCF files with the SEC, and in Huntington's Annual Report on
Form 10-K for the year ended December 31, 2019 and in its subsequent Quarterly
Reports on Form 10-Q, including for the quarter ended September 30, 2020, each
of which is on file with the Securities and Exchange Commission (the "SEC") and
available in the "Investor Relations" section of Huntington's website,
http://www.huntington.com, under the heading "Publications and Filings" and in
other documents Huntington files with the SEC.
All forward-looking statements speak only as of the date they are made and are
based on information available at that time. Neither TCF nor Huntington assumes
any obligation to update forward-looking statements to reflect circumstances or
events that occur after the date the forward-looking statements were made or to
reflect the occurrence of unanticipated events except as required by federal
securities laws. As forward-looking statements involve significant risks and
uncertainties, caution should be exercised against placing undue reliance on
such statements.
Important Additional Information
In connection with the proposed transaction, Huntington will file with the SEC a
Registration Statement on Form S-4 that will include a Joint Proxy Statement of
TCF and Huntington and a Prospectus of Huntington, as well as other relevant
documents concerning the proposed transaction. The proposed transaction
involving TCF and Huntington will be submitted to TCF's shareholders and
Huntington's shareholders for their consideration. This communication does not
constitute an offer to sell or the solicitation of an offer to buy any
securities or a solicitation of any vote or approval, nor shall there be any
sale of securities in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities
laws of any such jurisdiction. INVESTORS AND SHAREHOLDERS OF TCF AND
SHAREHOLDERS OF HUNTINGTON ARE URGED TO READ THE REGISTRATION STATEMENT AND THE
JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION WHEN IT BECOMES
AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY
AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Shareholders will be able to obtain a free copy of the
definitive joint proxy statement/prospectus, as well as other filings containing
information about TCF and Huntington, without charge, at the SEC's website
(http://www.sec.gov). Copies of the joint proxy statement/prospectus and the
filings with the SEC that will be incorporated by reference in the joint proxy
statement/prospectus can also be obtained, without charge, by directing a
request to TCF Investor Relations, TCF Financial Corporation, 333 W. Fort
Street, Suite 1800, Detroit, Michigan 48226, (866) 258-1807 or to Huntington
Investor Relations, Huntington Bancshares Incorporated, Huntington Center,
HC0935, 41 South High Street, Columbus, Ohio 43287, (800) 576-5007.
Participants in Solicitation
TCF, Huntington and certain of their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies from the
shareholders of TCF and Huntington in connection with the proposed transaction
under the rules of the SEC. Information regarding TCF's directors and executive
officers is available in its definitive proxy statement relating to its 2020
Annual Meeting of Shareholders, which was filed with the SEC on March 25, 2020,
and other documents filed by TCF with the SEC. Information regarding
Huntington's directors and executive officers is available in its definitive
proxy statement relating to its 2020 Annual Meeting of Shareholders, which was
filed with the SEC on March 12, 2020, and other documents filed by Huntington
with the SEC. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the joint proxy
. . .
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