EXHIBIT "B"
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT ("Option Agreement") dated as of October
15, 1996, between INDEPENDENCE BANCORP, INC. ("IBI"), a New Jersey business
corporation registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended ("Holding Company Act"), and COMMERCE BANCORP, INC.
("CBI"), a New Jersey business corporation registered as a bank holding company
under the Holding Company Act.
WITNESSETH
WHEREAS, the Boards of Directors of IBI and CBI have approved an
Agreement and Plan of Reorganization ("Reorganization Agreement") and have
adopted a related Agreement and Plan of Merger each dated as of the date hereof
(together referred to herein as the "Merger Agreements"), providing for certain
transactions pursuant to which IBI would be merged with and into CBI;
WHEREAS, as a condition to CBI's entry into the Merger Agreements and
to induce such entry, IBI has agreed to grant to CBI the option set forth herein
to purchase authorized but unissued shares of IBI Common Stock;
NOW, THEREFORE, in consideration of the premises herein contained and
intending to be legally bound hereby, the parties hereto agree as follows:
1. Definitions.
Capitalized terms defined in the Merger Agreements and used herein
shall have the same meanings as in the Merger Agreements.
2. Grant of Option.
Subject to the terms and conditions set forth herein, IBI hereby grants
to CBI an option ("Option") to purchase up to 564,910 shares of IBI Common
Stock, at a price of $21.00 per share payable in cash as provided in Section 4
hereof; provided, however, that in the event IBI issues or agrees to issue any
shares of IBI Common Stock in breach of its obligations under the Merger
Agreements at a price less than $21.00 per share (as adjusted pursuant to
Section 6 hereof), the exercise price shall be equal to such lesser price.
Notwithstanding anything else in this Option Agreement to the contrary, the
number of shares of IBI Common Stock subject to the Option shall be reduced to
such lesser number, if any, as may from time-to-time be necessary, but only for
so long as may be necessary, to cause CBI not to become an interested
stockholder for purposes of the New Jersey Shareholders Protection Act.
3. Exercise of Option
(a) CBI may exercise the Option, in whole or part, at any time or from
time to time if a Purchase Event (as defined below) shall have occurred and be
continuing; provided that to the extent the Option shall not have been
exercised, it shall terminate and be of no further force and effect upon the
earliest to occur of (i) the Effective Date of the Merger or (ii) termination of
the Merger Agreements in accordance with the provisions thereof prior to the
occurrence of a Purchase Event (other than a termination resulting from a
willful breach by IBI of any covenant contained therein) or (iii) twelve months
after termination of the Merger Agreements if such termination follows the
occurrence of a Purchase Event or is due to a willful breach by IBI of any
covenant contained therein; and provided further that any such exercise shall be
subject to compliance with applicable provisions of law.
(b) As used herein, a "Purchase Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) IBI or any IBI subsidiary, without having received
CBI's prior written consent, shall have entered into
an agreement (including without limitation a letter
of intent or similar-type document) with any person
(other than CBI or any CBI subsidiary) to (x) merge
or consolidate, or enter into any similar
transaction, with IBI or any IBI subsidiary, (y)
purchase, lease or otherwise acquire all or
substantially all of the assets of IBI or any IBI
subsidiary or (z) purchase or otherwise acquire
(including by way of merger, consolidation, share
exchange or any similar transaction) securities
representing 10% or more of the voting power of IBI
or any IBI subsidiary; provided, however, that in no
event shall any merger, consolidation, purchase or
similar transaction involving only IBI, IBI's
Employee Stock Ownership Plan ("ESOP") and one or
more of its subsidiaries or involving only any two or
more of such subsidiaries, be deemed to be a Purchase
Event, provided any such transaction is not entered
into in violation of the terms of the Merger
Agreements;
(ii) any person (other than IBI, any IBI subsidiary, the
IBI subsidiaries in a fiduciary capacity, the ESOP,
CBI, affiliates of CBI or subsidiaries of CBI in a
fiduciary capacity) shall have acquired beneficial
ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of
IBI Common Stock (the term "beneficial ownership" for
purposes of this Option Agreement having the meaning
assigned thereto in Section 13(d) of the Exchange Act
and the regulations promulgated thereunder);
(iii) any person (other than IBI, any IBI subsidiary, the
ESOP, CBI or any CBI affiliate) (x) shall have made a
bona fide proposal to IBI by public
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announcement or written communication that is or
becomes the subject of public disclosure to acquire
IBI or any IBI subsidiary by merger, consolidation,
purchase of all or substantially all of its assets or
any other similar transaction, (y) shall have
commenced a bona fide tender or exchange offer to
purchase shares of IBI Common Stock such that upon
consummation of such offer such person would own or
control 10% or more of the outstanding shares of IBI
Common Stock, or (z) shall have filed an application
or notice with the Federal Reserve Board or any other
federal or state regulatory agency for clearance or
approval to engage in any transaction described in
clause (i) or (ii) above, and thereafter the holders
of IBI Common Stock shall have not approved the
Merger Agreements and the transactions contemplated
thereby at the meeting of such stockholders held for
such purpose or such meeting shall not have been held
or shall have been cancelled prior to termination of
the Merger Agreements; or
(iv) IBI or any IBI subsidiary shall have breached any of
its obligations under the Merger Agreements.
If more than one of the transactions giving rise to a Purchase Event under this
Section 3(b) is undertaken or effected, then all such transactions shall give
rise only to one Purchase Event, which Purchase Event shall be deemed continuing
for all purposes hereunder until all such transactions are abandoned. As used in
this Option Agreement, "person" shall have the meanings specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event CBI wishes to exercise the Option, it shall send to
IBI a written notice, (the date of which being herein referred to as "Notice
Date") specifying (i) the total number of shares it will purchase pursuant to
such exercise, and (ii) a place and date not earlier than three business days
nor later than 60 business days from the Notice Date for the closing of such
purchase ("Closing Date"); provided that if prior notification to or approval of
any federal or state regulatory agency is required in connection with such
purchase, CBI shall promptly file (with the full cooperation and assistance of
IBI) the required notice or application for approval and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
period has expired or been terminated or such approval has been obtained and any
requisite waiting period shall have passed. Notwithstanding the foregoing, the
obligation of IBI to issue shares upon exercise of the Option and/or repurchase
the Option as set forth in Section 7 hereof shall be deferred (but shall not
terminate) (i) until the receipt of all required governmental or regulatory
approvals or consents necessary for IBI to issue the shares (or repurchase the
Option), or CBI to exercise the Option, or until the expiration or termination
of any waiting period required by law, or (ii) so long as any injunction or
other order, decree or ruling issued by any federal or state court of competent
jurisdiction is in effect which prohibits the sale or delivery of the shares (or
repurchase of the Option), and, in each case, notwithstanding any provision to
the contrary set forth
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herein, the Option (and obligation to repurchase the Option) shall not expire or
otherwise terminate.
(d) IBI shall notify CBI promptly in writing of the occurrence of any
Purchase Event known to it, it being understood that the giving of such notice
by IBI shall not be a condition to the right of CBI to exercise the Option. IBI
will not take any action which would have the effect of preventing or disabling
IBI from delivering the shares to CBI upon exercise of the Option or otherwise
performing its obligations under this Option Agreement.
4. Payment and Delivery of Certificates.
(a) At the closing referred to in Section 3 hereof, CBI shall pay to
IBI the aggregate purchase price for the shares of IBI Common Stock purchased
pursuant to the exercise of the option in immediately available funds by a wire
transfer to a bank account designated by IBI.
(b) At such closing, simultaneously with the delivery of cash as
provided in subsection (a), IBI shall deliver to CBI a certificate or
certificates representing the number of shares of IBI Common Stock purchased by
CBI, and CBI shall deliver to IBI a letter agreeing that CBI will not offer to
sell or otherwise dispose of such shares in violation of applicable law or the
provisions of this Option Agreement.
(c) Certificates for IBI Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend which shall read substantially as
follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the
registered holder hereof and Independence Bancorp, Inc. and to
resale restrictions arising under the Securities Act of 1933,
as amended, a copy of which agreement is on file at the
principal office of Independence Bancorp, Inc. A copy of such
agreement will be provided to the holder hereof without charge
upon receipt by Independence Bancorp, Inc. of a written
request."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if CBI shall have delivered to
IBI a copy of a letter from the Staff of the Commission, or an opinion of
counsel, in form and substance satisfactory to IBI, to the effect that such
legend is not required for purposes of the Securities Act.
5. Representations.
IBI hereby represents, warrants and covenants to CBI as follows:
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(a) IBI shall at all times maintain sufficient authorized but unissued
shares of IBI Common Stock so that the Option may be exercised without
authorization of additional shares of IBI Common Stock.
(b) The shares to be issued upon due exercise, in whole or in part, of
the Option, when paid for as provided herein, will be duly authorized, validly
issued, fully paid and nonassessable.
(c) IBI has full corporate power and authority to execute, deliver and
perform this Option Agreement and all corporate action necessary for execution,
delivery and performance of this Option Agreement has been duly taken by IBI.
This Option Agreement constitutes a legal, valid and binding obligation of IBI,
enforceable against IBI in accordance with its terms.
6. Adjustment Upon Changes in Capitalization.
In the event of any change in IBI Common Stock by reason of stock
dividends, split-ups, recapitalizations, combinations, exchanges of shares or
the like, the type and number of shares subject to the Option, and the purchase
price per share, as the case may be, shall be adjusted appropriately. In the
event that any additional shares of IBI Common Stock are issued or otherwise
become outstanding after the date of this Option Agreement (other than pursuant
to this Option Agreement), the number of shares of IBI Common Stock subject to
the Option shall be adjusted so that, after such issuance, it equals 19.99% of
the number of shares of IBI Common Stock then issued and outstanding without
giving effect to any shares subject or issued pursuant to the Option. Nothing
contained in this Section 6 shall be deemed to authorize IBI to breach any
provision of the Merger Agreements.
7. Repurchase of Option.
(a) Upon the occurrence of a Purchase Event, at the request of CBI,
delivered within 60 days of such occurrence, IBI shall repurchase the Option
from CBI at a price (the "Option Repurchase Price") equal to the amount by which
the market/offer price (as defined below) exceeds the exercise price, multiplied
by the number of shares for which this Option may then be exercised. The term
"market/offer price" shall mean the highest of (i) the price per share of IBI
Common Stock at which a tender offer or exchange offer therefor has been made,
(ii) the price per share of IBI Common Stock to be paid by any third party
pursuant to an agreement with IBI, or (iii) in the event of a sale of all or
substantially all of IBI's and any IBI subsidiary's assets, the sum of the price
paid in such sale for such assets and the current market value of the remaining
assets of IBI as determined by an investment banking firm selected by CBI,
divided by the number of shares of IBI Common Stock outstanding at the time of
such sale. In determining the market/offer price, the value of consideration
other than cash shall be determined by an investment banking firm selected by
CBI.
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(b) CBI may exercise its right to require IBI to repurchase the Option
pursuant hereto by surrendering for such purpose to IBI, at its principal
office, a copy of this Option Agreement, accompanied by a written notice or
notices stating that CBI elects to require IBI to repurchase this Option in
accordance with the provisions hereof. As promptly as practicable, and in any
event within five business days after the surrender of the Option and the
receipt of such notice or notices relating thereto, IBI shall deliver or cause
to be delivered to CBI the Option Repurchase Price thereof.
8. Filings and Consents.
Each of CBI and IBI will use its best efforts to make all filings with,
and to obtain consents of, all third parties and governmental authorities
necessary to the consummation of the transactions contemplated by this Option
Agreement.
9. Registration Rights.
IBI shall, if requested by CBI, as expeditiously as possible following
the occurrence of a Purchase Event and prior to the second anniversary thereof,
file a registration statement on a form of general use under the Securities Act
if necessary in order to permit the sale or other disposition of the shares of
IBI Common Stock that have been acquired upon exercise of the option in
accordance with the intended method of sale or other disposition requested by
CBI. CBI shall provide all information reasonably requested by IBI for inclusion
in any registration statement to be filed hereunder. IBI will use its best
efforts to cause such registration statement first to become effective and then
to remain effective for such period not in excess of 180 days from the day such
registration statement first becomes effective as may be reasonably necessary to
effect such sales or other dispositions by CBI. The obligations of IBI hereunder
to file a registration statement and to maintain its effectiveness may be
suspended for one or more periods of time not exceeding 60 days in the aggregate
if the Board of Directors of IBI shall have determined that the filing of such
registration statement or the maintenance of its effectiveness would require
disclosure of non-public information that would materially and adversely affect
IBI. The first registration effected under this Section 9 shall be at IBI's
expense except for underwriting commissions and the fees and disbursements of
CBI's counsel attributable to the registration of such IBI Common Stock. A
second registration may be requested hereunder at CBI's expense. In no event
shall IBI be required to effect more than two registrations hereunder. The
filing of any registration statement hereunder may be delayed for such period of
time as may reasonably be required to facilitate any public distribution by IBI
of IBI Common Stock. If requested by CBI, in connection with any such
registration, IBI will become a party to any underwriting agreement relating to
the sale of such shares, but only to the extent of obligating itself in respect
of representations, warranties, indemnities and other agreements customarily
included by an issuing company in such underwriting agreements between an
underwriter and selling shareholder. Upon receiving any request from CBI or
assignee thereof under this Xxxxxxx 0, XXX agrees to send a copy thereof to CBI
and to any assignee
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thereof known to IBI, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies.
10. Severability.
If any term, provision, covenant or restriction contained in this
Option Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Option
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 will not permit the holder to acquire the full
number of shares of IBI Common Stock provided in Section 2 hereof (as adjusted
pursuant to Section 6 hereof), it is the express intention of IBI to allow the
holder to acquire or to require IBI to repurchase such lesser number of shares
as may be permissible, without any amendment or modification hereof.
11. Miscellaneous.
(a) Expenses. Except as otherwise provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
(b) Entire Agreement. Except as otherwise expressly provided herein,
this Option Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereto, written or oral. The terms
and conditions of this Option Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.
Nothing in this Option Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by reason
of this Option Agreement, except as expressly provided herein.
(c) Assignment. Neither of the parties hereto may assign any of its
rights or obligations under this Option Agreement or the Option created
hereunder to any other person, without the express written consent of the other
party, except that in the event a Purchase Event shall have occurred and be
continuing CBI may assign in whole or in part its rights and obligations
hereunder; provided, however, that until the date 30 days following the date on
which the Federal Reserve Board approves an application by CBI under the Holding
Company Act to acquire the shares of IBI Common Stock subject to the Option, CBI
may not assign its rights under the option except in (i) a widely dispersed
public distribution, (ii) a private placement in which no one party acquires the
right to purchase
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in excess of 5% of the voting shares of IBI, (iii) an assignment to a single
party (e.g., a broker or investment banker) for the purpose of conducting a
widely dispersed public distribution on CBI's behalf, or (iv) any other manner
approved by the Federal Reserve Board.
(d) Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by overnight express or by registered or certified mail, postage
prepaid, addressed as provided in the Reorganization Agreement. A party may
change its address for notice purposes by written notice to the other party
hereto.
(e) Counterparts. This Option Agreement may be executed in any number
of counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(f) Specific Performance. The parties agree that damages would be an
inadequate remedy for a breach of the provisions of this Option Agreement by
either party hereto and that this Option Agreement may be enforced by either
party hereto through injunctive or other equitable relief.
(g) Governing Law. This Option Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey applicable to
agreements made and entirely to be performed within such state and such federal
laws as may be applicable.
IN WITNESS WHEREOF, each of the parties hereto has executed this Option
Agreement as of the day and year first written above.
COMMERCE BANCORP, INC.
By: /s/ Xxxxxx X. Xxxx, XX
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Xxxxxx X. Xxxx, XX, Chairman
INDEPENDENCE BANCORP, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
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Xxxxx X. Xxxxxxxxxx, Chairman
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