EXHIBIT 2.2
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Option Agreement") is dated as of July 8,
1999, between Community Federal Bancorp, Inc., a Delaware corporation
("Community Federal") and First M&F Corporation ("First M&F"), a Mississippi
corporation.
WITNESSETH
WHEREAS, the Boards of Directors of Community Federal and First M&F have
approved an Agreement and Plan of Merger ("Merger Agreement") dated as of the
date hereof providing for the merger of Community Federal into First M&F;
WHEREAS, as a condition to First M&F's entry into the Merger Agreement
and to induce such entry, Community Federal has agreed to grant to First M&F the
option set forth herein to purchase authorized but unissued shares of Community
Federal Common Stock;
NOW, THEREFORE, in consideration of the premises herein contained, the
parties agree as follows:
1. Definitions.
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Capitalized terms defined in the Merger Agreement and used herein shall
have the same meanings as in the Merger Agreement.
2. Grant of Option.
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Subject to the terms and conditions set forth herein, Community Federal
hereby grants to First M&F an option ("Option") to purchase up to 848,960 shares
of Community Federal Common Stock, at a price of $17.00 per share payable in
cash as provided in Section 4 hereof; provided, however, that in the event
Community Federal issues or agrees to issue any shares of Community Federal
Common Stock (other than as permitted under the Merger Agreement) at a price
less than $17.00 per share (as adjusted pursuant to Section 6 hereof), the
exercise price shall be equal to such lesser price; in no event, however, shall
the number of shares for which the Option is exercisable exceed 19.9% of
Community Federal's issued and outstanding Common Stock.
3. Exercise of Option.
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(a) Subject to compliance with applicable laws and regulations and unless
First M&F shall have breached in any material respect and failed to cure any
covenant or representation contained in the Merger Agreement, First M&F may
exercise the Option, in whole or part, at any time following the occurrence of a
Purchase Event (as defined below).
(b) As used herein, a "Purchase Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) any person (other than First M&F) shall have commenced a bona
fide tender or exchange offer to purchase shares of Community Federal
Common Stock and upon consummation of such offer such person owns or
controls twenty percent (20%) or more of the outstanding shares of
Community Federal Common Stock; or
(ii) Community Federal, without having received First M&F's prior
written consent, shall have entered into an agreement with any person
(other than First M&F), other than in connection with a transaction to
which First M&F has given its prior written consent, to (x) merge or
consolidate, or enter into any similar transaction, with Community Federal
other than with respect to any requirement of divestiture in connection
with the Merger Agreement under the federal banking or antitrust laws, (y)
purchase, lease or otherwise acquire any substantial portion of the assets
of Community Federal other than in the ordinary course of business of
Community Federal, or (z) purchase or otherwise acquire (including by way
of merger, consolidation, share exchange or any similar transaction)
securities representing twenty percent (20%) or more of the voting power of
Community Federal and the transaction referred to in (x), (y) or (z) shall
have been consummated; or
(iii) any person (other than First M&F or a subsidiary of Community
Federal acting in a fiduciary capacity) shall have acquired beneficial
ownership or the right to acquire beneficial ownership of twenty percent
(20%) or more of the outstanding shares of Community Federal Common Stock
(the term "beneficial ownership" for purposes of this Option Agreement
having the meaning assigned thereto in Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act") and the regulations
promulgated thereunder); provided, however, that in calculating the number
of shares owned by any person, no shares which were beneficially owned
prior to the effective date of this Option Agreement shall be included.
(c) In the event First M&F wishes to exercise the Option, it shall send to
Community Federal 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 (3)
business days nor later than twenty (20) business days from the Notice Date for
the closing of such purchase ("Closing Date"); provided that if prior
notification to or approval of the Federal Deposit Insurance Corporation
("FDIC") or any other regulatory authority is required in connection with such
purchase, First M&F shall promptly file 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.
(d) The Option shall expire and terminate to the extent not previously
exercised, upon the earliest to occur of the following (each a "Termination
Event"):
(i) the Effective Date of the Merger; or
(ii) six (6) months after the occurrence of a Purchase Event; or
(iii) the Merger Agreement is terminated, except for a termination
resulting from a willful and material breach by Community Federal of any of
its covenants or agreements in the Merger Agreement or from the failure of
the stockholders of Community Federal to approve the Merger; or
(iv) March 31, 2000.
(e) Notwithstanding the termination of the Option, First M&F shall be
entitled to purchase any shares with respect to which it has exercised the
Option in accordance with the terms hereof prior to the termination of the
Option. The termination of the Option shall not affect any rights hereunder
which by their terms extend beyond the date of such termination.
4. Payment and Delivery of Certificates.
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(a) At the closing referred to in Section 3 hereof, First M&F shall pay to
Community Federal the aggregate purchase price for the shares of Community
Federal Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by a wire transfer to a bank account designated by
Community Federal or by federal funds check if no account has been designated.
(b) At such closing, simultaneously with the delivery of cash as provided
in subsection (a), Community Federal shall deliver to First M&F a certificate or
certificates representing the number of shares of Community Federal Common Stock
purchased by First M&F and First M&F shall deliver to Community Federal a letter
agreeing that First M&F will not offer to sell or otherwise dispose of such
shares in violation of applicable law or the provisions of this Option
Agreement.
5. Representations.
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Community Federal hereby represents, warrants and covenants to First M&F
as follows:
(a) Community Federal shall at all times maintain sufficient authorized
but unissued shares of Community Federal Common Stock so that the Option may be
exercised without authorization of additional shares of Community Federal 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 and will be delivered free and clear of all
claims, liens, encumbrances and security interests and not subject to any
preemptive rights.
(c) Community Federal will not, by amendment of its articles of
incorporation or through reorganization, consolidation, merger, dissolution or
sale of assets, or by any other voluntary act, avoid or seek to avoid the
observance or performance of any of the covenants, stipulations or conditions to
be observed or performed hereunder by it; and will promptly take all action as
may from time to time be required (including cooperating fully with First M&F in
preparing applications or notices and providing information with respect to
regulatory approval) in order to permit First M&F to exercise the Option and
Community Federal duly and effectively to issue shares of Community Federal
Common Stock pursuant hereto.
6. Adjustment Upon Changes in Capitalization.
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If Community Federal should split or combine the Community Federal Common
Stock, or pay a stock dividend or other stock distribution in Community Federal
Common Stock, or otherwise change the Community Federal Common Stock into any
other securities, or make any other dividend or distribution in respect of the
Community Federal Common Stock (other than normal cash dividends), then the
number of shares of Community Federal Common Stock subject to the Option shall
be adjusted so that, after such issuance, it equals 19.9% of the number of
shares of Community Federal 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 Community Federal to
breach any provisions of the Merger Agreement. Whenever the number of shares of
Community Federal Common Stock purchasable upon exercise hereof is adjusted as
provided in this Section 6, the Option exercise price shall be adjusted by
multiplying the Option exercise price by a fraction, the numerator of which
shall be equal to the number of shares of Community Federal Common Stock
purchasable prior to the adjustment and the denominator of which shall be equal
to the number of shares of Community Federal Common Stock purchasable after the
adjustment.
7. Registration Rights.
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Community Federal shall, if requested by First M&F, as expeditiously as
possible file a registration statement with the FDIC, if necessary, in order to
permit the sale or other disposition of this Option and/or the shares of
Community Federal Common Stock acquired upon exercise of the Option in
accordance with the intended method of sale or other disposition requested by
First M&F. First M&F shall provide all information reasonably requested by
Community Federal for inclusion in any registration statement to be filed
hereunder. Community Federal will use its reasonable best efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 270 days from the day such registration
statement first becomes effective as may be reasonably necessary to effect such
sales or other dispositions. The first registration effected under this Section
7 shall be at Community Federal's expense except for underwriting commissions
and the fees and disbursements of First M&F's counsel attributable to the
registration. A second registration may be requested hereunder at First M&F's
expense. In no event shall Community Federal be required to effect more than
two registrations hereunder. If requested by Community Federal, in connection
with any such registration, First M&F 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 a selling shareholder in such
underwriting agreements.
8. Certain Puts.
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(a) Upon the occurrence of a Purchase Event that occurs prior to
termination of the Option, (i) at the request of First M&F, delivered while the
Option (in whole or part) is exercisable, Community Federal shall repurchase
the Option from First M&F at a price equal to (x) the amount by which (a) the
market/offer price (as defined below) exceeds (b) the Option exercise price,
multiplied by (y) the number of shares for which the Option may then be
exercised; and (ii) at the request from time to time of the owner of shares
purchased pursuant to the Option, delivered while the Option (in whole or part)
is exercisable (or, if it has been fully exercised, would have been exercisable
had such exercise not been made). Community Federal shall repurchase such number
of the shares issued pursuant to the Option from the owner as the owner shall
designate at a price equal to (x) the market/offer price multiplied by the
number of such shares so designated. The term "market/offer price" shall mean
the highest of (i) the price per share of Community Federal Common Stock at
which a tender offer or exchange offer therefor has been made after the date
hereof, (ii) the price per share of Community Federal Common Stock to be paid
by any third party pursuant to any merger, consolidation, share exchange or
other agreement with Community Federal entered into after the date hereof, (iii)
the average closing price for shares of Community Federal Common Stock within
the 30-day period immediately preceding the date First M&F gives notice of the
required repurchase of this Option or the owner gives notice of the required
repurchase of shares, as the case may be, or (iv) in the event of a sale of all
or substantially all of Community Federal's assets, the sum of the price paid in
such sale for such assets and the current market value of the remaining assets
of Community Federal as determined by a nationally recognized investment banking
firm selected by the parties (or by an arbitrator if they cannot agree) divided
by the number of shares of Community Federal 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 a nationally recognized
investment banking firm selected by the parties (or by an arbitrator if they
cannot agree), and such determination shall be conclusive and binding on all
parties.
(b) First M&F or the owner, as the case may be, may exercise its right to
require Community Federal to repurchase the Option and any shares pursuant to
this Section 8 by surrendering for such purpose to Community Federal, at its
principal office, this Option Agreement or certificates for the shares, as
applicable, accompanied by a written notice or notices stating that First M&F or
the owner, as the case may be, elects to require Community Federal to repurchase
the Option and/or the shares in accordance with the provisions of this Section
8. As promptly as practicable, and in any event within five (5) business days
after the surrender of the Option and/or certificates representing shares and
the receipt of such notice or notices relating thereto, Community Federal shall
deliver or cause to be delivered to First M&F or the owner of the applicable
repurchase price therefor or the portion thereof that Community Federal is not
then prohibited from so delivering under applicable law and regulation or as a
consequence of administrative policy.
(c) Community Federal hereby undertakes to use its best efforts to obtain
all required regulatory and legal consents and to file any required notices in
order to accomplish any repurchase contemplated by this Section 8. Nonetheless,
to the extent that Community Federal is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the shares in full, Community Federal shall immediately so notify
First M&F and the owner and thereafter deliver or cause to be delivered, from
time to time, the portion of the repurchase price that it is no longer
prohibited from delivering. If Community Federal at any time after delivery of a
notice of repurchase pursuant to Section 8 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering the
repurchase price in full (and Community Federal hereby undertakes to use its
best efforts to obtain all required regulatory and legal approvals and to file
any required notices as promptly as practicable in order to accomplish such
repurchase), First M&F and/or the owner may revoke its notice of repurchase
either in whole or to the extent of the prohibition.
9. Severability.
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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 Community Federal Common Stock provided in Section 2 hereof
(as adjusted pursuant to Section 6 hereof), it is the express intention of
Community Federal to allow the holder to acquire or to require Community Federal
to repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
10. Miscellaneous.
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(a) Extension. The period for exercise by First M&F and its assignees of
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any rights under this Option Agreement shall be extended (i) to the extent
necessary to obtain all regulatory approvals for the exercise of such rights,
and for the expiration of all statutory waiting periods; and (ii) to the extent
necessary to avoid liability under Section 16(b) of the 1934 Act by reason of
such exercise.
(b ) Consents. Each of First M&F and Community Federal will use its best
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efforts to make all filings with, and to obtain consents of, all third parties
and regulatory authorities necessary to the consummation of the transactions
contemplated by this Option Agreement.
(c) Expenses. Except as otherwise expressly provided herein or in the
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Merger Agreement 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.
(d) Entire Agreement. Except as otherwise expressly provided herein or in
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the Merger Agreement, this Option Agreement contains the entire agreement
between the parties with respect to the transactions contemplated hereunder and
supersedes all prior agreements 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 hereof, 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.
(e) Assignment. Neither of the parties hereto may assign any of its
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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 First M&F may assign in whole or in part its rights and obligations
hereunder; provided, however, that until the date thirty (30) days following the
date on which the FDIC approves an application by First M&F to acquire the
shares of Community Federal Common Stock subject to the Option, First M&F 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 rights
to purchase in excess of two percent (2%) of the Community Federal Common Stock,
(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 First M&F's
behalf or (iv) any other manner approved by the FDIC.
(f) Notices. All notices or other communications which are required or
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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 follows:
Community Federal
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Community Federal Bancorp, Inc.
000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: H. Xxxxx Xxxxxxxxx
Fax Number: (000) 000-0000
Copy to: Xxxx X. Xxxxxxxx, Esq.
Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P.
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Fax Number: (000) 000-0000
First M&F
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First M&F Corporation
000 X. Xxxxxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
Fax Number: (000) 000-0000
Copy to: Xxxxx X. Xxxxxxx, Esq.
Xxxxxxx Xxxxxx Winter & Stennis, P.A.
000 X. Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Fax Number: (000) 000-0000
A party may change its address for notice purposes by written notice to the
other party hereto.
(g) Counterparts. This Option Agreement may be executed in any number of
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counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(h) Specific Performance. The parties agree that damages would be an
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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.
(i) Governing Law. This Option Agreement shall be governed by and
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construed in accordance with the laws of the Mississippi 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.
[signatures omitted]
