STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement") is made and entered into as
of this 23rd day of February 1999, by and between FIRST XXXXXXX FINANCIAL
CORPORATION, a Delaware corporation ("Issuer"),
and
BT FINANCIAL CORPORATION, a Pennsylvania corporation ("Grantee"), and is the
Option Agreement referred to in the Merger Agreement referred to herein.
WHEREAS, Grantee and Issuer contemplate entering into an Agreement and Plan
of Reorganization of even date herewith (the "Merger Agreement") providing for
the Merger of Issuer into Grantee, with Grantee as the surviving corporation
(the "Merger"); and
WHEREAS, in order to induce Grantee to enter into the Merger Agreement and
to provide reasonable assurances that the transactions contemplated by the
Merger Agreement will be consummated, Issuer desires to grant Grantee an option
to purchase 348,400 authorized but unissued shares of Issuer Common Stock, $2.50
par value ("Issuer Common Stock"), upon the terms and subject to the conditions
set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, and intending to be
legally bound, Issuer and Grantee agree as follows:
1. Grant. Subject to the terms and conditions set forth herein, Issuer
hereby grants to Grantee an exclusive and irrevocable option (the "Option") to
purchase from Issuer up to 348,400 authorized but unissued shares of Issuer
Common Stock (the "Option Shares") at a price of $45.00 per Option Share (the
"Exercise Price"); provided that in no event shall the number of shares for
which this Option is exercisable exceed the lesser of (i) 19.99% of the issued
and outstanding shares of Common Stock and (ii) such number of shares of Common
Stock that will avoid application of the provisions of Subchapter E of Chapter
25 of the BCL. The number of shares of Common Stock that may be received upon
the exercise of the Option and the Option Price are subject to adjustment as
herein set forth. Grantee and any person to whom it may assign its rights
hereunder is referred to as a "Holder."
2. Exercise. (a) The Option may be exercised by any Holder, in whole or
in part, at any time or from time to time, on or after the date hereof and
within six months following the occurrence of any of the Exercise Events
described in Subsection 2 (b). The Option will terminate and be of no further
force or effect (i) at the Effective Time or (ii) upon termination of the Merger
Agreement in accordance with the provisions thereof. Any such exercise will be
subject to compliance with applicable law, including receipt of all required
regulatory approvals. Issuer will not take any action which would have the
effect of preventing or disabling Issuer from delivering the Option Shares or
otherwise performing its obligations under this Agreement.
(b) Any of the following events occurring between the date hereof and
the Effective Time will be an "Exercise Event" for the purposes of this
Agreement:
(i) any corporation (other than Grantee or any Grantee Subsidiary),
partnership, individual, trust, unincorporated association, other
entity or group (as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934 (the "Exchange Act")) (collectively "Persons")
shall have (A) commenced a tender offer or exchange offer for at least
twenty percent (20%) of the then outstanding shares of Issuer Common
Stock or (B) acquired direct or indirect "beneficial ownership" (as
defined under the Exchange Act) of twenty percent (20%) or more of the
then outstanding shares of Issuer Common Stock;
(ii) Issuer shall have (A) acted or failed to act so as to have
caused the conditions specified in Section 6.01 of the Merger
Agreement to be met, whether or not the Merger Agreement shall have
been terminated, or (B) breached or violated Section 4.04(f) of the
Merger Agreement; or
(iii) any Person shall, with respect to Issuer Common Stock,
solicit proxies or written consents or become a "participant" in any
"solicitation" (as such terms are defined in Regulation 14A under the
Exchange Act) in opposition to the Merger.
(c) To exercise the Option, the Holder will send a written notice to
Issuer specifying the number of Option Shares Holder will purchase and the place
and date for closing the purchase. The date so specified is referred to herein
as the "Closing Date." The Closing Date shall be not later than ten business
days from the date such notice is mailed, but not earlier than the expiration or
termination of any applicable waiting period under the Bank Holding Company Act
of 1956, as amended (the "BHC Act"). If the Closing Date is to occur sooner
than two business days from the date such notice is mailed, telegraphic or
telephonic notice will also be given at the time such written notice is given.
(d) Upon any exercise of the Option hereunder, the Merger Agreement will
terminate, as provided in Section 2.07(g) of the Merger Agreement, without any
further action of the parties and the Plan of Merger will be deemed to be
abandoned. Exercise of the Option will not constitute a breach of the Merger
Agreement or a failure by Grantee to perform its obligations under the Merger
Agreement.
3. Payment and Delivery of Certificate(s). At the closing of any purchase
of any of the Option Shares hereunder, (a) Holder will pay to Issuer the
aggregate price for the Option Shares so purchased by certified or cashier's
check or wire transfer of immediately available funds and (b) Issuer will
deliver to Holder a duly issued certificate (or certificates in the
denominations designated by Holder in its notice of exercise) representing the
number of Option Shares purchased. The obligation of Issuer to deliver the
Option Shares at such closing will be subject only to the condition that no
preliminary or permanent injunction or other order, decree or ruling issued by a
court of competent jurisdiction will be in effect which would prohibit such sale
and delivery.
4. Notification of Record Date. Issuer will give Grantee at least ten
business days' prior written notice before setting the record date for
determining the holders of record of Issuer Common Stock entitled to notice of,
or to vote on, any matter, to receive any dividend or distribution, or to
participate in any rights offering or other matters, or to receive any other
benefit or right, with respect to Issuer Common Stock.
5. Postponement of Meeting. If the Holder elects to exercise the Option
granted hereunder after the record date set by Issuer for any shareholders'
meeting called to approve the Merger, or called for any other purpose, then,
subject to applicable law and Issuer's certificate of incorporation and bylaws,
Issuer will, upon request by Holder, promptly postpone the meeting to a later
date and set a later record date for such later meeting; provided, however, that
the record date for such later meeting will be a date that is not less than ten
nor more than thirty business days after the postponement of the originally
scheduled shareholders' meeting.
6. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:
(a) Due Authorization. This Agreement has been duly authorized by all
necessary corporate action on the part of Issuer, has been duly executed by a
duly authorized officer of Issuer and is valid, binding and enforceable against
Issuer in accordance with its terms.
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(b) Option Shares. Issuer has taken all necessary corporate action to
authorize and reserve for issuance, upon exercise of the Option, the Option
Shares, and at all times from the date hereof through the date of the exercise
in full or the termination of the Option, Issuer will have reserved for issuance
upon exercise of the 348,400 shares of Issuer Common Stock. The Option Shares,
upon purchase by Holder, will be fully and validly issued, fully paid and
nonassessable, and delivered free and clear of all claims, liens, encumbrances
and security interests, including any preemptive or similar rights.
7. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer as follows:
(a) Due Authorization. This Agreement has been duly authorized by all
necessary corporate action on the part of Grantee and has been duly executed by
a duly authorized officer of Grantee, and is valid, binding and enforceable
against Grantee in accordance with its terms.
(b) Investment Intent. Any Option Shares acquired upon exercise of
the Option will not be taken by Holder with a view to the public distribution
thereof, and will not be transferred, except in a transaction registered or
exempt from registration under the Securities Act of 1933 (the "Securities
Act").
8. Anti-dilution Provisions. In the event of any change in the
outstanding Issuer Common Stock by reason of stock dividends, stock splits,
split-ups, mergers, Mergers, recapitalizations, combinations, conversions,
exchanges of shares or otherwise, the number and kinds of shares or securities
subject to the Option and the purchase price per Option Share will be
appropriately adjusted so as to fairly and equitably preserve, as far as
practicable, the original Option rights granted hereby so that Holder will be
entitled to purchase the number of shares of Issuer Common Stock that will be
equal to 19.99% of the then outstanding shares of Issuer Common Stock (after
giving effect to such exercise and assuming all options and rights to purchase
or convert into shares of Issuer Common Stock will have been exercised and
taking into account shares of Issuer Common Stock held by Grantee or its
subsidiaries on the date hereof) for an aggregate purchase price of $15,678,000;
provided that in no event shall the number of shares for which this Option is
exercisable exceed the lesser of (i) 19.99% of the issued and outstanding shares
of Common Stock and (ii) such number of shares of Common Stock that will avoid
application of the provisions of Subchapter E of Chapter 25 of the BCL. The
number of shares of Common Stock that may be received upon the exercise of the
Option and the Option Price are subject to adjustment as herein set forth.
9. Registration Under the Securities Act. If the Option is exercised and
if Holder should so request by written notice, Issuer will use its best efforts
to promptly effect the registration ("Registration") under the Securities Act or
any successor statute then in effect and any applicable state laws covering such
Issuer Common Stock owned by Grantee and its subsidiaries and affiliates as such
notice will designate, but not less than 17,424 shares of Issuer Common Stock,
in accordance with the intended method of sale or other disposition requested by
Holder, and to keep such Registration effective for a period of not less than
twelve months, unless, in the written opinion of counsel to Issuer, which will
be delivered to Holder and which will be reasonably satisfactory to Holder and
its counsel, such Registration is not required to be made as a precondition to
the lawful sale and distribution of such shares in the manner contemplated;
provided that if in Issuer's reasonable judgment the Registration at the time
requested would impose material burdens on Issuer other than those routinely
associated with registration under the Securities Act, Issuer may elect to delay
the Registration for up to 30 days.
Holder will provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder.
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The out-of-pocket expenses incurred in connection with such Registration
will be borne by Issuer except for underwriting discounts and commissions, any
transfer taxes and the fees and expenses of counsel for Holder. Issuer will
have no further obligation hereunder after two Registrations have been effected.
10. Transfer of Option to Issuer. If after the date hereof and before the
Effective Time,
(a) one of the Exercise Events specified in Subsection 2(b)(ii) will
have occurred; or
(b) Issuer's shareholders have failed to approve the Merger by the
earlier of (i) the conclusion of such meeting of Issuer shareholders as is
called for the purpose of approving the Merger and (ii) December 31, 1999 and
there shall have occurred and be continuing any of the Exercise Events specified
in Subsection 2(b)(i) or (iii);
then Holder will have the right (whether or not the Option will have previously
terminated) to notify Issuer of its election to transfer the Option to Issuer
together with any shares of Issuer Common Stock purchased by Holder pursuant
hereto, and within two business days after the giving by Holder of such notice,
Issuer will pay to Holder the sum of
(x) the Exercise Price paid by Holder for any shares of Issuer
Common Stock acquired pursuant to the Option;
(y) the difference between the "Market/Offer Price" for shares of
Issuer Common Stock (defined as the higher of the highest price per
share at which a tender or exchange offer has been made or the highest
sale price for shares of Issuer Common Stock on the principal trading
market on which shares are traded, as reported by a recognized source,
during the 365-day period preceding the notice of the required
purchase under this Section (10) and the Exercise Price paid by Holder
for any shares of Issuer Common Stock purchased pursuant to the
exercise of the Option, multiplied by the number of shares so
purchased, but only if the Market/Offer Price is greater than such
Exercise Price; and
(z) the difference between the Market/Offer Price and the Exercise
Price of the Option, multiplied by the number of shares of Issuer
Common Stock with respect to which the Option has not been exercised,
but only if the Market/Offer Price is greater than such exercise
price, payable in immediately available funds, at which time the
Option will terminate.
11. Right of First Refusal.
(a) At least five business days before making any sale or other
disposition of Option Shares, Holder will give Issuer a notice (the "Disposition
Notice") advising Issuer of the number and type of Option Shares proposed to be
disposed of and the proposed purchase price therefor, and, if Holder then
intends to tender such Shares into a tender or exchange offer by a Person other
than Holder or any subsidiary or affiliate of Holder, advising Issuer of such
specific offer to purchase such Shares, the price to be paid thereunder and the
identity of the offeror. For purposes hereof, a tender or exchange offer to
purchase Issuer Common Stock will be deemed to be an offer at the price
specified therein, without regard to any provisions thereof with respect to
proration or conditions to the offeror's obligation to purchase. Issuer will
have the right, exercisable by written notice given by Issuer to Holder within
five business days after receipt of the Disposition Notice, but in no event
later than 24 hours before the earlier of the proration date or the date on
which withdrawal rights expire for any such offer, to purchase (or to cause its
designee or designees to purchase) all, but not less than all, of the Option
Shares specified in such Disposition
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Notice for cash at the price set forth therein. If the purchase price specified
in the Disposition Notice includes any property other than cash, such purchase
price will be deemed to be the amount of any cash included in the purchase price
plus the value (as determined by a nationally recognized investment banking firm
mutually selected by the parties whose fees will be borne equally by Issuer and
Holder) of such other property included in such price; provided that the time
during which Issuer must exercise its right of first refusal and consummate the
purchase of the Issuer Common Stock will not be affected by the time required to
make such determination.
(b) If Issuer exercises its right of first refusal hereunder, the
closing of the purchase of the Option Shares with respect to which such right
has been exercised will take place within two business days after Issuer gives
notice of such exercise, but no later than 6 hours before the earlier of the
proration date or the date on which withdrawal rights expire for any such offer.
Delivery of payment and certificates at such closing will be substantially as
set forth in Section 3 above; provided, however, that if the determination of
value of any noncash consideration has not yet been made, as to that portion of
the purchase price Issuer will pay an amount equal to such value as estimated by
the investment banking firm at closing, with an adjusting payment to be made by
the appropriate party when the final determination has been made. If Issuer
does not exercise its right of first refusal hereunder within the time specified
and pay to Holder the amount due for the Option "shares subject to such right of
first refusal, Holder will at all times thereafter be free to sell the Option
Share specified in such Disposition Notice to the offeror, if any, identified
therein or to any other party, at the price specified therein or at any price in
excess thereof.
12. Specific Performance. Issuer and Grantee acknowledge that the Option
granted to Grantee herein, the right of first refusal granted to Issuer in
Section 11 hereof and the Option Shares covered hereby, are unique and that
neither party hereto will have an adequate remedy at law if the other breaches
any covenant contained herein or fails to perform any of its obligations
hereunder. Accordingly, each party agrees that the other will have the right,
in addition to any other rights which it may have, to specific performance and
equitable and injunctive relief if the other party will fail or threaten to fail
to perform any of its obligations under this Agreement.
13. Miscellaneous.
(a) Assignability. Grantee's rights hereunder may be assigned to any
subsidiary or affiliate of Grantee. Issuer may not assign its rights hereunder
without the prior written consent of Grantee, and any purported assignment
without such prior written consent will be null and void.
(b) Third Parties. Nothing expressed or implied in this Agreement is
intended or will be construed to confer upon or give to any third party any
rights or remedies by virtue of this Agreement or any exercise or non-exercise
of the Option granted hereby.
(c) Entire Agreement; Amendments. Except as otherwise expressly
provided herein, this Agreement contains the entire agreement of the parties
hereto with respect to the transactions contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereto, written or oral.
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.
(d) Notices. Except as otherwise expressly provided herein, all
notices, requests, claims, demands and other communications hereunder will be in
writing and will be furnished by hand delivery, by telegram or telex, or by mail
(registered or certified, postage prepaid, return receipt requested) to the
parties at the addresses set forth below. Any such notice (except a notice
pursuant to Section 10 hereof) will be deemed duly given upon the date it is
actually received by the party to whom notice is intended to be given or is
actually delivered at his address as shown below:
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If to Issuer:
Xxxxxx X. Xxx
First Xxxxxxx Financial Corporation
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
with a copy to:
Xxxxxxx X. Xxxxxxx, Xx., Esq.
Xxxxxxx, Spiegel & Xxxxx
000 Xxxxx Xxxxxxxx
Xxxxxxxxxx, XX 00000
If to Grantee:
Xxxx X. Xxxxxxxx
BT Financial Corporation
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxx Xxxxxxxx, LLP
Xxx Xxxxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
The addresses set forth above may be changed by any party upon furnishing to the
other party a notice of change of address in accordance with the terms of this
paragraph.
(e) Governing Law. This Agreement will be governed by and construed in
accordance with the substantive law of the Commonwealth of Pennsylvania
applicable to contracts made and to be performed in such state.
(f) Counterparts. This Agreement may be executed in several
counterparts, each of which will be an original, but all of which together will
constitute one and the same agreement.
(g) Effect of Headings. The section and paragraph headings herein are
for convenience only and will not affect the construction hereof.
(h) Time of the Essence. The parties agree that time will be of the
essence in the performance of obligations hereunder.
(i) Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
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remainder of the terms, provisions, covenants and restrictions contained herein
will remain in full force and effect, and will in no way be effected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Option will not permit Holder to acquire or Issuer to repurchase
pursuant to Section 10 the full number of shares of Issuer Common Stock provided
in Section 8 hereof (as adjusted pursuant to Section 8 hereof), it is the
express intention of Issuer to allow Holder to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible, without amendment
or modification hereof.
(j) Definitions. Capitalized Terms used but not defined herein will
have the meanings ascribed to them in the Merger Agreement.
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IN WITNESS WHEREOF, Grantee and Issuer have caused this Agreement to be
duly executed on the day and year first above written.
ATTEST First Xxxxxxx Financial Corporation
By /s/ Xxxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxx
------------------------ -------------------------------------
Xxxxx X. Xxxxxxx Xxxxxx X. Xxx
Secretary President
(Corporate Seal)
BT Financial Corporation
By /s/ Xxxxx X. Xxxx By /s/ Xxxxxx X. Xxxxxxx
------------------------ -------------------------------------
Xxxxx X. Xxxx Xxxxxx X. Xxxxxxx
Secretary President
(Corporate Seal)
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