EXHIBIT 99.3
ANNEX B
THE TRANSFER OF THIS AGREEMENT IS
SUBJECT TO CERTAIN PROVISIONS CONTAINED
HEREIN AND TO RESALE RESTRICTIONS UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 9, 1998 (the "Agreement"), by
and between Pulse Bancorp, Inc., a New Jersey corporation ("Issuer"), and First
Source Bancorp, Inc., a Delaware corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger (the "Merger Agreement"), dated July 9, 1998 herewith, providing for,
among other things, the merger of Issuer with and into Grantee; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement, Grantee has requested that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, and intending to be legally bound hereby, Issuer and
Grantee agree as follows:
1. Defined Terms. Capitalized terms which are used but not defined herein
shall have the meanings ascribed to such terms in the Merger Agreement.
2. Grant of option. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
620,940 shares (subject to adjustment as set forth herein) (the "Option Shares")
of common stock, par value $1.00 per share, of Issuer ("Issuer Common Stock") at
a purchase price (subject to adjustment as set forth herein) of $30.30 per
Option Share (the "Purchase Price").
3. Exercise of Option. (a) Grantee may exercise the Option, in whole or in
part, at any time and from time to time following the occurrence of a Purchase
Event (as defined below); provided, however, that the Option, to the extent not
previously exercised, shall terminate and be of no further force and effect upon
the earliest to occur of (i) the Effective Time, (ii) 12 months after the first
occurrence of a Purchase Event (as defined below), (iii) termination of the
Merger Agreement in accordance with the terms thereof prior to the occurrence of
a Purchase Event
ANNEX B
(other than a termination of the Merger Agreement by Grantee pursuant to Section
8.1 (f) thereof) or (iv) 12 months after the termination of the Merger Agreement
by Grantee pursuant to Section 8.1 (f) thereof, provided, however, that if
within 12 months after a termination of the Merger Agreement by Grantee pursuant
to Section 8.1 (f) thereof a Purchase Event shall occur, then notwithstanding
anything to the contrary contained herein, this Option shall terminate 12 months
after the first occurrence of such Purchase Event; and provided further,
however, that any purchase of shares upon exercise of the Option shall be
subject to compliance with applicable law, including, without limitation, the
Bank Holding Company Act of 1956, as amended (the "Act"); and provided further,
however, that if the Option cannot be exercised on any day because of any
injunction, order or similar restraint issued by a court of competent
jurisdiction, the period during which the Option may be exercised shall be
extended so that the Option shall expire no earlier than on the 10th business
day after such injunction, order or restraint shall have been dissolved or when
such injunction, order or restraint shall have become permanent and no longer
subject to appeal, as the case may be. Notwithstanding anything to the contrary
contained herein, (i) the Option may not be exercised at any time when Grantee
shall be in material breach of any of its covenants or agreements contained in
the Merger Agreement such that Issuer shall be entitled to terminate the Merger
Agreement pursuant to Section 8.1(f) thereof and (ii) this Agreement shall
automatically terminate upon the proper termination of the Merger Agreement by
Issuer pursuant to Section 8.1(f) thereof as a result of the material breach by
Grantee of its covenants or agreements contained in the Merger Agreement.
(b) As used herein, a "Purchase Event" means any of the following
events:
(i) Issuer shall have authorized, recommended, publicly
proposed or entered into an agreement with any person (other than
Grantee or any affiliate of Grantee or any person acting in concert in
any respect with Grantee) to effect an Acquisition Transaction (as
defined below). As used herein, the term Acquisition Transaction shall
mean (A) a merger, consolidation or similar transaction involving
Issuer or any of its Subsidiaries (other than internal mergers,
reorganizations, consolidations or dissolutions involving only existing
Subsidiaries), (B) the disposition, by sale, lease, exchange or
otherwise, of assets of Issuer or any of its Subsidiaries representing
25% or more of the consolidated assets of Issuer and its Subsidiaries
or (C) the issuance, sale or other disposition of (including by way of
merger, consolidation, share exchange or any similar transaction)
securities representing 25% or more of the voting power of Issuer or
any of its Subsidiaries;
(ii) any person (other than Grantee or any affiliate of
Grantee or any person acting in concert in any respect with Grantee)
shall have acquired Beneficial Ownership (as such term is defined in
Rule l3d-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of, or the right to acquire Beneficial
Ownership of, or any Group (as such term is defined under the Exchange
Act) shall have been formed which
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ANNEX B
shall have acquired Beneficial Ownership of, or the right to acquire
Beneficial Ownership of, 25% or more of the then outstanding shares of
Issuer Common stock,
(iii) any person (other than Grantee or any affiliate of
Grantee or any person acting in concert in any respect with Grantee)
shall have commenced (as such term is defined in Rule l4d-2 under the
Exchange Act) or shall have filed a registration statement under the
Securities Act of 1933, as amended (the "Securities Act") with respect
to, a tender offer or exchange offer to purchase any shares of Issuer
Common Stock and, upon consummation of such offer, such person owns or
controls 25% or more of the then outstanding shares of Issuer Common
Stock (such an offer being referred to herein as a "Tender Offer" or an
"Exchange Offer," respectively);
(iv) the holders of Issuer Common Stock shall not have
approved the Merger Agreement and the transactions contemplated
thereby, at the meeting of such stockholders held for the purpose of
voting on such agreement, or such meeting shall not have been held or
shall have been cancelled prior to termination of the Merger Agreement,
in each case after it shall have been publicly announced that any
person (other than Grantee or any affiliate of Grantee or any person
acting in concert in any respect with Grantee) shall have made, or
disclosed an intention to make, a proposal to engage in an Acquisition
Transaction; or
(v) Issuer's Board of Directors shall not have
recommended to the stockholders of Issuer that such stockholders vote
in favor of the approval of the Merger Agreement and the transactions
contemplated thereby or shall have withdrawn or modified such
recommendation in a manner adverse to Grantee.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3 (a) (9) and 13 (d) (3) of the Exchange Act.
(c) In the event Grantee wishes to exercise the Option, it shall send
to Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 30 business days from the Notice Date for the
closing (the "Closing") of such purchase (the "Closing Date"). If prior
notification to or approval of the Office of Thrift Supervision (the "OTS") or
any other regulatory authority is required in connection with such purchase,
Issuer shall cooperate in good faith with Grantee in the filing of the required
notice or application for approval and the obtaining of any such approval and
the period of time that otherwise would run pursuant to the preceding sentence
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.
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ANNEX B
4. Payment and Delivery of Certificates. (a) On each Closing Date,
Grantee shall (i) pay to Issuer, in immediately available funds by wire transfer
to a bank account designated by Issuer, an amount equal to the Purchase Price
multiplied by the number of Option Shares to be purchased on such Closing Date
and (ii) present and surrender this Agreement to the Issuer at the address of
the Issuer specified in Section 12(f) hereof. In addition to any other amounts
payable pursuant to this Section 4(a), upon the first exercise of the Option,
Grantee shall pay an amount, if any, by which (i) $1,055,600 plus the product of
(A) the total number of Option Shares and (B) the difference between the
Market/Tender Offer Price (as defined below) and the Purchase Price exceeds (ii)
$32.00 provided, however, that in no event shall the amount payable pursuant to
this sentence exceed $3,780,000. As used herein, the "Market/Tender Offer Price"
shall mean the higher of the highest price per share at which a Tender Offer or
Exchange Offer has been made by any person other than Grantee or any affiliate
of Grantee or person acting in concert in any respect with Grantee for at least
25% of the shares of Issuer Common Stock then outstanding or the highest closing
sales price per share of Issuer Common Stock quoted on the Nasdaq Stock Market
("Nasdaq") (or if Issuer Common Stock is not quoted on the Nasdaq, the highest
bid price per share as quoted on the principal trading market or securities
exchange on which such shares are traded as reported by a recognized source)
within the six-month period immediately preceding this Agreement.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a)
hereof, Issuer shall deliver to Grantee (A) a certificate or certificates
representing the Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all liens, claims, charges and encumbrances of
any kind whatsoever, other than any such lien or encumbrance created by Grantee
and (B) if the Option is exercised in part only, an executed new agreement with
the same terms as this Agreement evidencing the right to purchase the balance of
the shares of Issuer Common Stock purchasable hereunder. If Issuer shall have
issued rights or any similar securities ("Rights") pursuant to any shareholder
rights, poison pill or similar plan (a "Shareholder Rights Plan") prior or
subsequent to the date of this Agreement and such Rights remain outstanding and
attached to shares of Issuer Common Stock at the time of the issuance of any
Option Shares pursuant to an exercise of all or part of the Option hereunder,
then each Option Share issued pursuant to such exercise shall also represent the
number of Rights issued per share of Issuer Common Stock with terms
substantially the same as and at least as favorable to Grantee as are provided
under the Shareholder Rights Plan as then in effect.
(c) Certificates for the Option Shares delivered at each Closing shall
be endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE MAY
BE SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION
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ANNEX B
AGREEMENT DATED AS OF July 9, 1998. A COPY OF SUCH AGREEMENT WILL BE
PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER
OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that: (i) the reference to the
resale restrictions of the Securities Act in the above legend shall be
removed by delivery of substitute certificate (s) without such legend
if Grantee shall have delivered to Issuer a copy of a letter from the
staff of the Securities and Exchange Commission (the "SEC"), or an
opinion of outside counsel reasonably satisfactory to Issuer in form
and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities
Act; (ii) the reference to the provisions of this Agreement in the
above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in
compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and
(iii) the legend shall be removed in its entirety if the conditions in
the preceding clauses (i) and (ii) are both satisfied. In addition,
such certificates shall bear any other legend as may be required by
law.
5. Representations and Warranties of Issuer. Issuer hereby represents
and warrants to Grantee as follows:
(a) Due Authorization. Issuer has full corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Issuer. This Agreement has been duly and validly
executed and delivered by Issuer.
(b) No Violation. Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, nor compliance by
Issuer with any of the terms or provisions hereof, will (i) violate any
provision of the Certificate of Incorporation (the "Certificate of
Incorporation") or By-Laws of Issuer or the certificates of incorporation,
by-laws or similar governing documents of any of its Subsidiaries or (ii) (x)
assuming that all of the consents and approvals required under applicable law
for the purchase of shares upon the exercise of the Option are duly obtained,
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to Issuer or any of its Subsidiaries, or any of
their respective properties or assets, or (y) violate, conflict with, result in
a breach of any provisions of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or
B-5
ANNEX B
assets of Issuer or any of its Subsidiaries under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Issuer or any of its
Subsidiaries is a party, or by which they or any of their respective properties
or assets may be bound or affected.
(c) Authorized Stock. Issuer has taken all necessary corporate and other
action to authorize and reserve and to permit it to issue, and, at all times
from the date of this Agreement until the obligation to deliver Issuer Common
Stock upon the exercise of the Option, will have reserved for issuance, upon
exercise of the Option, shares of Issuer Common Stock necessary for Grantee to
exercise the Option, and Issuer will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Issuer Common Stock
(together with any Rights which may have been issued with respect thereto) or
other securities which may be issued pursuant to Section 7 upon exercise of the
Option. The shares of Issuer Common Stock to be issued upon due exercise of the
Option, including all additional shares of Issuer Common Stock (together with
any Rights which may have been issued with respect thereto) or other securities
which may be issuable pursuant to Section 7, upon issuance pursuant hereto,
shall be duly and validly issued, fully paid and nonassessable, and shall be
delivered free and clear of all liens, claims, charges and encumbrances of any
kind or nature whatsoever (except any such lien or encumbrance created by
Grantee), including any preemptive rights of any stockholder of Issuer.
(d) Board Action. By action of the Board of Directors of Issuer prior to the
execution of this Agreement, resolutions were duly adopted approving the
execution, delivery and performance of this Agreement, any purchase or other
transaction respecting Issuer Common Stock provided for herein, and the other
transactions contemplated hereby. Accordingly, the provisions of the New Jersey
Business Corporations Act as they relate to Issuer and Article XV of Issuer's
Certificate of Incorporation do not and will not apply to this Agreement or any
of the other transactions contemplated hereby.
6. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer that:
(a) Due Authorization. Grantee has corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by Grantee.
(b) Purchase Not for Distribution. This Option is not being acquired with a
view to the public distribution thereof and neither this Option nor any Option
Shares will be transferred or
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ANNEX B
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
7. Adjustment upon Changes in Capitalization, etc. (a) In the event (i)
of any change in Issuer Common Stock by reason of a stock dividend, stock split,
split-up, recapitalization, combination, exchange of shares or similar
transaction or (ii) that any Rights issued by Issuer shall become exercisable,
the type and number of shares or securities subject to the Option, and the
Purchase Price therefor, shall be adjusted appropriately, and, in the case of
any of the transactions described in clause (i) above, proper provision shall be
made in the agreements governing such transaction so that Grantee shall receive,
upon exercise of the Option, the number and class of shares or other securities
or property that Grantee would have received in respect of Issuer Common Stock
if the Option had been exercised immediately prior to such event, or the record
date therefor, as applicable. If any additional shares of Issuer Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 7 (a), the number of shares of
Issuer Common Stock subject to the option shall be adjusted so that, after such
issuance, the Option, together with any shares of Issuer Common Stock previously
issued pursuant hereto, equals 19.9% of the number of shares of Issuer Common
Stock then issued and outstanding, without giving effect to any shares subject
to or Previously issued pursuant to the option.
(b) 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
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of 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 outstanding shares of Issuer Common Stock immediately prior to such merger
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 of its assets to any person, other than Grantee or one
of its Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (I) the Acquiring Corporation
(as defined below), (II) any person that controls the Acquiring Corporation, or
(III) in the case of a merger described in clause (ii), the Issuer (such person
being referred to as the "Substitute Option Issuer").
(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 Substitute Option Issuer
B-7
ANNEX B
shall also enter into an agreement with the then holder or holders of the
Substitute Option in substantially the same form as this Agreement, which shall
be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
the Substitute Common Stock (as hereinafter defined) as is equal to the Assigned
Value (as hereinafter defined) multiplied by the number of shares of Issuer
Common Stock for which the Option was theretofore exercisable, divided by the
Average Price (as hereinafter defined). The exercise price of the Substitute
Option per share of the Substitute Common Stock (the "Substitute Purchase
Price") shall then be equal to the Purchase Price multiplied by a fraction in
which the numerator is the number of shares of the Issuer Common Stock for which
the Option was theretofore exercisable and the denominator is the number of
shares of the Substitute Common Stock for which the Substitute Option is
exercisable.
(e) The following terms have the meanings indicated:
(I) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, and (iii) the transferee of all or
substantially all of the Issuer's assets (or the assets of its
Subsidiaries).
(II) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the Substitute
Option.
(III) "Assigned Value" shall mean the highest of (i) the price
per share of Issuer Common Stock at which a tender offer or exchange
offer therefor has been made by any person (other than Grantee), (ii)
the price per share of Issuer Common Stock to be paid by any person
(other than the Grantee) pursuant to an agreement with Issuer, and
(iii) the highest closing sales price per share of Issuer Common Stock
quoted on the Nasdaq (or if Issuer Common Stock is not quoted on the
Nasdaq, the highest bid price per share as quoted on the principal
trading market or securities exchange on which such shares are traded
as reported by a recognized source) within the six-month period
immediately preceding the agreement; provided, however, that in the
event of a sale of less than all of Issuer's assets, the Assigned Value
shall be the sum of the price paid in such sale for such assets and the
current market value of the remaining assets of Issuer as determined by
a nationally recognized investment banking firm selected by Grantee or
by a Grantee Majority, divided by the number of shares of Issuer Common
Stock outstanding at the time of such sale. In the event that an
exchange offer is made for the Issuer Common Stock or an agreement is
entered into for a merger or consolidation involving consideration
other than cash, the value of the securities or other property issuable
or deliverable in exchange for the Issuer Common Stock shall be
determined by a nationally recognized investment banking firm mutually
selected by Grantee and Issuer (or if
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ANNEX B
applicable, Acquiring Corporation), provided that if a mutual
selection cannot be made as to such investment banking firm, it shall
be selected by Grantee (or a majority of interest of the Grantees if
there shall be more than one Grantee (a "Grantee Majority").
(IV) "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 Issuer, the person merging into Issuer or by any company
which controls or is controlled by such merging person, as Grantee may
elect.
(f) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of Substitute Common Stock
but for this clause (f), 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 clause (f) over (ii) the value of the
Substitute Option after giving effect to the limitation in this clause (f). This
difference in value shall be determined by a nationally recognized investment
banking firm selected by Grantee (or a Grantee Majority).
(g) Issuer shall not enter into any transaction described in subsection (b)
of this Section 7 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the shares of Substitute
Common Stock are in no way distinguishable from or have lesser economic value
than other shares of common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8 and 9 shall apply to any securities for
which the Option becomes exercisable pursuant to this Section 7 and as
applicable, references in such sections to "Issuer", "Option", "Purchase Price"
and "Issuer Common Stock" shall be deemed to be references to "Substitute Option
Issuer", "Substitute Option", "Substitute Purchase Price" and "Substitute Common
Stock", respectively.
8. Registration Rights. Issuer shall, if requested by Grantee (or if
applicable, a Grantee Majority) at any time and from time to time within three
years of the date on which the Option first becomes exercisable, as
expeditiously as possible prepare and file up to two registration statements
under the Securities Act if such registration is necessary in order to permit
the sale or
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ANNEX B
other disposition of any or all shares of Issuer Common Stock or other
securities that have been acquired by or are issuable to Grantee upon exercise
of the Option 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 successor provision, and Issuer shall
use its best efforts to qualify such shares or other securities under any
applicable state securities laws. Issuer shall use its best efforts to cause
each such registration statement to become effective, to obtain all consents or
waivers of other parties which are required therefor and to keep such
registration statement 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 disposition. Any registration statement
prepared and filed under this Section 8, and any sale covered thereby, shall be
at Issuer's expense 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 registration statement to be filed hereunder. If during the
time periods referred to in the first sentence of this Section 8 Issuer effects
a registration under the Securities Act of Issuer Common Stock for its own
account or for any other stockholders of Issuer (other than on Form S-4 or Form
S-8, or any successor forms or any form with respect to a dividend reinvestment
or similar plan), it shall allow Grantee the right to participate in such
registration, and such participation shall not affect the obligation of Issuer
to effect two registration statements for Grantee under this Section 8;
provided, however, 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 by Grantee to be included in such registration, together with
the shares of Issuer Common Stock proposed to be included in such registration,
exceeds the number which can be sold in such offering, Issuer shall include the
shares requested to be included therein by Grantee pro rata with the shares
intended to be included therein by Issuer. In connection with any registration
pursuant to this Section 8, Issuer and Grantee shall provide each other and any
underwriter of the offering with customary representations, warranties,
covenants, indemnification and contribution in connection with such
registration. Notwithstanding anything to the contrary contained herein, in no
event shall Issuer be obligated to effect more than two registrations pursuant
to the first sentence of this Section 8 by reason of the fact that there shall
be more than one Grantee as a result of any assignment of this Agreement or
division of this Agreement pursuant to Section 10 hereof.
9. Listing. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then authorized for quotation on the
Nasdaq or any securities exchange, Issuer, upon the request of Grantee, will
promptly file an application to authorize for quotation the shares of Issuer
Common Stock or other securities to be acquired upon exercise of the Option on
the Nasdaq or such other securities exchange and will use its best efforts to
obtain approval of such listing as soon as practicable.
10. 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
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XXXXX X
the principal office of Issuer for other Agreements providing for Options of
different denominations entitling 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 other
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
11. Rights Agreement. Issuer shall not approve or adopt, or propose the
approval and adoption of, any Shareholder Rights Plan unless such Shareholder
Rights Plan contains terms which provide, to the reasonable satisfaction of
Grantee, that (a) the Rights issued pursuant thereto will not become exercisable
by virtue of the fact that (i) Grantee is the Beneficial Owner of shares of
Issuer Common Stock (x) acquired or acquirable pursuant to the grant or exercise
of this Option and (y) held by Grantee or any of its Subsidiaries as Trust
Account Shares or DPC Shares or (ii) while Grantee is the Beneficial Owner of
the shares of Issuer Common Stock described in clause (a) (i), an Acquisition
Transaction involving Issuer or any of its Subsidiaries, on the one hand, and
Grantee, any of its Subsidiaries, on the other hand, is proposed, agreed to or
consummated and (b) no restrictions or limitations with respect to the exercise
of any Rights acquired or acquirable by Grantee will result or be imposed by
virtue of the fact that Grantee is the Beneficial Owner of the shares of Issuer
Common Stock described in clause (a) (i) of this Section 11.
12. Miscellaneous. (a) Expenses. Except as otherwise provided in Section 8
hereof, each of the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be waived
at any time by the party that is entitled 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.
(c) Entire Agreement; No Third-Party Beneficiary; Severability. This
Agreement, together with the Merger Agreement and the other agreements and
instruments referred to herein and therein, (a) constitutes the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (b) is not
intended to confer upon any person other than the parties hereto any rights
B-11
ANNEX B
or remedies hereunder. Notwithstanding anything to the contrary contained in
this Agreement or the Merger Agreement, this Agreement shall be deemed to amend
the confidentiality agreement between Issuer and Grantee so as to permit Grantee
to enter into this Agreement and exercise all of its rights hereunder, including
its right to acquire Issuer Common Stock upon exercise of the Option. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or a federal or state regulatory agency to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit Grantee to acquire
the full number of shares of Issuer Common Stock as provided in Section 3 hereof
(as adjusted pursuant to Section 7 hereof), it is the express intention of
Issuer to allow Grantee to acquire such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New Jersey without regard to any
applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to Issuer to:
Pulse Bancorp, Inc.
0 Xxxxxxx Xxxxxx
P.O. Box 193
South River, New Jersey
Attention: Xxxxxx X. Xxxxxxx, Xx.
President and Chief Executive Officer
with a copy to:
Xxxxxxx, Spidi, Sloane & Xxxxx, P.C.
One Franklin Square
0000 X Xxxxxx, X.X.
Xxxxx 000 Xxxx
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
B-12
ANNEX B
If to Grantee to:
First Source Bancorp, Inc.
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
President and Chief Executive Officer
with a copy to:
Xxxxxx Xxxxx LLP
0000 X Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Passaic, Jr., Esq.
(g) Counterparts. This Agreement and any amendments hereto may be executed
in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder or under 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 party, except that Grantee may assign this
Agreement to a wholly owned subsidiary of Grantee and after the occurrence of a
Purchase Event Grantee may assign its rights under this Agreement to one or more
third parties, provided, however, that Grantee may not assign this Agreement,
without the written consent of Issuer, to any third party who, to Grantee's
knowledge, would, upon exercise of the Option, own in excess of 6% of Issuer's
then issued and outstanding common stock. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. As used in this
Agreement, Grantee shall include any person to whom this Agreement or the Option
shall be assigned by a previous Grantee in accordance with the terms hereof.
(i) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this Agreement may
be enforced by either party through specific performance, injunctive relief and
other equitable relief. Both parties
B-13
ANNEX B
further agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such equitable relief and that this
provision is without prejudice to any other rights that the parties hereto may
have for any failure to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
PULSE BANCORP, INC.
BY: /s/ Xxxxxx X. Xxxxxxx, Xx.
----------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President and Chief Executive Officer
FIRST SOURCE BANCORP, INC.
BY: /s/ Xxxx X. Xxxxxxxx
----------------------------
Name: Xxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
B-14
