Exhibit 2.2
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STOCK OPTION AGREEMENT
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STOCK OPTION AGREEMENT, dated November 3 1997, between Xxxxxxxx & Xxxxxx
Corporation, a Wisconsin corporation ("Grantee"), and Advantage Bancorp, Inc., a
Wisconsin corporation ("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger (the "Merger Agreement");
WHEREAS, as a condition and an inducement to Grantee's entering into the
Merger Agreement, Issuer is granting Grantee the Option (as hereinafter
defined); and
WHEREAS, the Board of Directors of Issuer has approved the grant of the
Option and the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 643,930 (as adjusted or set forth in Sections 1(b) and 5(b) hereof)
fully paid and nonassessable, except as provided by Section 180.0622(2)(b) of
the Wisconsin Business Corporation Law ("WBCL"), shares of the common stock, par
value $0.01 per share, of Issuer ("Issuer Common Stock") at a price per share of
$56.00 (the "Option Price"); provided, however, that in the event Issuer issues
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or agrees to issue any shares of Issuer Common Stock (other than shares of
Issuer Common Stock issued pursuant to stock options granted pursuant to any
director or employee benefit or stock option plan prior to the date hereof) at a
price less than $56.00 (as adjusted pursuant to subsection (b) of Section 5
hereof), the Option Price shall be equal to such lesser price; provided,
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further, that in no event shall the number of shares for which this Option is
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exercisable exceed 19.9% of the issued and outstanding shares of Issuer Common
Stock. The number of shares of Issuer Common Stock that may be received upon
the exercise of the Option and the Option Price are subject to adjustment as
herein set forth.
(b) In the event that any additional shares of Issuer Common Stock are
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Issuer Common Stock subject to the
Option shall be increased so that, after such issuance, such number 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 or issued pursuant to the Option.
Nothing contained in this Section l(b) or elsewhere in this Agreement shall be
deemed to authorize Issuer
to issue shares of Issuer Common Stock in breach of any provision of the Merger
Agreement.
2. (a) Grantee may exercise the Option, in whole or part, if, but only
if, both an Initial Triggering Event (as hereinafter defined) and a Subsequent
Triggering Event (as hereinafter defined) shall have occurred prior to the
occurrence of an Exercise Termination Event (as hereinafter defined); provided,
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however, that Grantee shall have sent the written notice of such exercise (as
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provided in subsection (e) of this Section 2) within three (3) months following
such Subsequent Triggering Event (or such later period as provided in Section 10
hereof). Each of the following shall be an Exercise Termination Event: (i) the
Effective Time of the Merger; (ii) termination of the Merger Agreement in
accordance with the provisions thereof if such termination occurs prior to the
occurrence of an Initial Triggering Event except a termination by Grantee
pursuant to Section 8.1(a)(iii) or 8.1(a)(viii) of the Merger Agreement, or by
Grantee or Issuer pursuant to Section 8.1(a)(ii) of the Merger Agreement if
prior to, or within three months after, the duly held meeting of the
shareholders of the Issuer at which the required vote to approve the Merger was
not obtained it shall have been publicly announced or disclosed that any person
(other than Grantee or any Grantee Subsidiary (as defined below)) shall have
made, or disclosed an intention to make, a proposal to engage in an Acquisition
Transaction (as defined below) (each, a "Listed Termination"); or (iii) the
passage of twelve (12) months (or such longer period as provided in Section 10)
after termination of the Merger Agreement if such termination follows the
occurrence of an Initial Triggering Event or is a Listed Termination.
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 representations, warranties, covenants or agreements contained in this
Agreement or in the Merger Agreement such that, in the case of the Merger
Agreement, Issuer shall be entitled to terminate the Merger Agreement pursuant
to Section 8.1(a)(iii) thereof and (ii) this Agreement shall automatically
terminate upon the proper termination of the Merger Agreement by Issuer either
pursuant to Section 8.1(a)(iii) thereof as a result of the material breach by
Grantee of its covenants or agreements contained in the Merger Agreement or
pursuant to Section 8.1 (vii) thereof. Notwithstanding the occurrence of an
Exercise Termination Event, Grantee shall be entitled to purchase those shares
of Issuer Common Stock with respect to which it has exercised the Option in
accordance with the terms hereof prior to the Exercise Termination Event.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any subsidiary of Issuer (an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder) other than Grantee or any of the subsidiaries
of Grantee (each a "Grantee Subsidiary") or the Board of Directors of
Issuer (the "Issuer Board") shall have recommended that the shareholders of
Issuer approve or accept any Acquisition Transaction other than the Merger
(as defined in the Merger Agreement). For purposes of this Agreement,
"Acquisition Transaction" shall mean either (x) a merger
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or consolidation, or any similar transaction, involving Issuer or Advantage
Bank, F.S.B. (other than internal mergers, consolidations or similar
transactions involving solely Issuer and/or one or more existing wholly-
owned Issuer Subsidiaries, provided, that any such transaction is not
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entered into in violation of the terms of the Merger Agreement), (y) a
purchase, lease or other disposition of 15% or more of the consolidated
assets, net revenues or net income of Issuer (on a consolidated basis), or
(z) an issuance, sale or other disposition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing 10%
or more of the voting power of Issuer or Advantage Bank, F.S.B.;
(ii) Any person (other than Grantee or any Grantee Subsidiary) shall
have acquired beneficial ownership (as such term is defined in Rule 13d-3
under the 0000 Xxx) or the right to acquire beneficial ownership of, or any
"group" (as such term is defined under the 0000 Xxx) shall have been formed
which beneficially owns or has the right to acquire beneficial ownership
of, 20% or more of the then outstanding shares of Issuer Common Stock
(other then shares held in accounts related to Issuer's employee benefit
plans);
(iii) The shareholders of Issuer shall have voted and failed to
approve the Merger Agreement and the Merger at a meeting which has been
held for that purpose, or such meeting, in violation of the Merger
Agreement, shall not have been held, or such meeting shall have been
canceled prior to termination of the Merger Agreement if, in any event,
prior to such meeting (or if such meeting shall not have been held or shall
have been canceled, prior to the termination of the Merger Agreement), it
shall have been publicly announced or disclosed that any person (other than
Grantee or any Grantee Subsidiary) shall have made, or disclosed an
intention to make, a proposal to engage in an Acquisition Transaction;
(iv) The Board of Directors of the Issuer shall have withdrawn or
modified (or publicly announced its intention to withdraw or modify), in
any manner adverse in any respect to Grantee, its recommendation that the
shareholders of Issuer approve the transactions contemplated by the Merger
Agreement, or Issuer or any Issuer Subsidiary shall have authorized,
recommended, proposed (or publicly announced its intention to authorize,
recommend or propose) an agreement to engage in an Acquisition Transaction
with any person other than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall
have made a proposal to Issuer or its shareholders to engage in an
Acquisition Transaction and such proposal shall have been publicly
announced;
(vi) Any person other than Grantee or any Grantee Subsidiary shall
have commenced (as such term is defined in Rule 17d-2 under the 1934 Act),
or shall have filed with the SEC a registration statement under the 1934
Act or tender offer materials with respect to, a potential exchange offer
or tender offer to purchase any shares of Issuer Common Stock such that,
upon consummation of such offer, such person or a "group" (as
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such term is defined under the 0000 Xxx) of which such person is a member,
would acquire beneficial ownership (as such term is defined in Rule 13d-3
of the 1934 Act), or the right to acquire beneficial ownership, of 20% or
more of the then outstanding shares of Issuer Common Stock;
(vii) Issuer shall have willfully breached any covenant or obligation
contained in the Merger Agreement in anticipation of and in order to
facilitate engaging in an Acquisition Transaction, and following such
breach Grantee would be entitled to terminate the Merger Agreement (whether
immediately or after the giving of notice or passage of time or both); or
(viii) Any person other than Grantee or any Grantee Subsidiary shall
have filed an application or notice with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"), the Office of Thrift
Supervision ("OTS"), or other federal or state bank regulatory or antitrust
authority, which application or notice has been accepted for processing,
for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 30% or more of the then
outstanding shares of Issuer Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (z) of the second sentence thereof shall be 30%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of Grantee to exercise the Option.
(e) In the event Grantee is entitled to and wishes to exercise the Option
(or any portion thereof), 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 shares it will 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 of such purchase (the "Closing Date"); provided,
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that if the closing of the purchase and sale pursuant to the Option cannot be
consummated by reason of any applicable judgment, decree, order, law or
regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction or
consummation has expired or been terminated; and, provided, further, without
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limiting the foregoing, that if prior notification to or approval of the Federal
Reserve Board, OTS or any other regulatory or antitrust authority is required in
connection with such purchase, Grantee shall promptly file the required notice
or application for approval, shall promptly notify Issuer of such
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filing (and the Issuer shall fully cooperate with Grantee in the filing of any
notice or application and the obtaining of any such 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 periods have expired or been terminated or such approvals have been
obtained, and in either event, any requisite waiting period or periods shall
have passed. Any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2,
Grantee shall (i) pay to Issuer the aggregate purchase price for the shares of
Issuer Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated by
Issuer and (ii) present and surrender this Agreement to Issuer at its principal
executive offices; provided, however, that the failure or refusal of the Issuer
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to designate such a bank account or accept surrender of this Agreement shall not
preclude Grantee from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to Grantee a certificate or certificates representing the number of
shares of Issuer Common Stock purchased by Grantee and, if the Option should be
exercised in part only, a new Option evidencing the rights of Grantee thereof to
purchase the balance of the shares purchasable hereunder.
(h) Certificates for Issuer Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend that shall read substantially as
follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS OR BLUE SKY LAWS, AND MAY BE REOFFERED OR SOLD ONLY IF SO
REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SUCH
SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET
FORTH IN THE STOCK OPTION AGREEMENT, DATED NOVEMBER 3, 1997, A COPY OF
WHICH MAY BE OBTAINED FROM THE ISSUER UPON REQUEST."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if Grantee shall have delivered to Issuer a copy of a letter from the staff of
the SEC, or an opinion of counsel, in form and substance reasonably satisfactory
to Issuer, to the effect that such legend is not required for purposes of the
1933 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 in the opinion of counsel to Grantee, which opinion
shall be reasonably satisfactory to Issuer; 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.
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(i) Upon the giving by Grantee to Issuer of the written notice of exercise
of the Option provided for under subsection (e) of this Section 2 and the tender
of the applicable purchase price in immediately available funds, the Issuer
shall deliver to Grantee a certificate or certificates in definitive form
representing the shares of Issuer Common Stock issued upon such exercise, which
shares shall be free and clear of all liens, claims, charges and encumbrances of
any kind whatsoever, except as provided by Section 180.0622(2)(b) of the WBCL,
and Grantee shall be deemed to be the holder of record of such shares,
notwithstanding that the stock transfer books of Issuer shall then be closed.
Issuer shall pay its out-of-pocket expenses payable in connection with the
preparation, issue and delivery of stock certificates under this Section 2 in
the name of Grantee or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Issuer Common Stock so that the Option may be exercised without additional
authorization of Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Issuer Common
Stock; (ii) that it will not, by charter amendment 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
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under any state or
federal banking law, prior approval of or notice to the Federal Reserve Board,
OTS or to any state or other federal regulatory authority is necessary before
the Option may be exercised, cooperating fully with Grantee in preparing such
applications or notices and providing such information to the Federal Reserve
Board, OTS or such state or other federal regulatory authority as they may
require) in order to permit Grantee to exercise the Option and Issuer duly and
effectively to issue shares of Issuer Common Stock pursuant hereto; and (iv)
promptly to take all action provided herein to protect the rights of Grantee
against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of Grantee, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling Grantee to purchase, on the
same terms and subject to the same conditions as are set forth herein, in the
aggregate the same number of shares of Issuer Common Stock purchasable
hereunder. The terms "Agreement" and "Option" as used herein include any
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.
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5. In addition to the adjustment in the number of shares of Issuer
Common Stock that are purchasable upon exercise of the Option pursuant to
Section 1 of this Agreement, the number of shares of Issuer Common Stock
purchasable upon the exercise of the Option and the Option Price shall be
subject to adjustment from time to time as provided in this Section 5.
(a) In the event of any change in, or distributions (other than the
payment of cash dividends in the ordinary course consistent with past practice)
in respect of, the Issuer Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, subdivisions, conversions, exchanges
of shares or the like, the type and number of shares of Issuer Common Stock
purchasable upon exercise hereof shall be appropriately adjusted and proper
provision shall be made so that, in the event that any additional shares of
Issuer Common Stock are to be issued or otherwise become outstanding as a result
of any such change (other than pursuant to an exercise of the Option), the
number of shares of Issuer Common Stock that remain subject to the Option shall
be increased so that, after such issuance and together with shares of Issuer
Common Stock previously issued pursuant to the exercise of the Option (as
adjusted on account of any of the foregoing changes in the Issuer Common Stock),
it equals 19.9% of the number of shares of Issuer Common Stock then issued and
outstanding.
(b) Whenever the number of shares of Issuer Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Issuer Common Stock
purchasable prior to the adjustment and the denominator of which shall be equal
to the number of shares of Issuer Common Stock purchasable after the adjustment.
6. (a) Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event Grantee may, within twelve (12) months
(or such later period as provided in Section 10) of such Subsequent Triggering
Event, by written notice (the "Registration Notice") to Issuer request Issuer to
register under the 1933 Act all or any part of the shares of capital stock of
Issuer acquired by Grantee pursuant to this Agreement beneficially owned by
Grantee (the "Registrable Securities").
(b) Issuer shall thereupon have the option exercisable by written notice
delivered to Grantee within three (3) business days after the receipt of the
Registration Notice, irrevocably to agree to purchase all or any part of the
Registrable Securities proposed to be so sold for cash at a price equal to the
product of (i) the number of Registrable Securities to be so purchased by the
Issuer and (ii) the Fair Market Value (as defined below) of a share of such
Registrable Securities. As used herein, the "Fair Market Value" of any share of
Registrable Securities shall be the average of the daily closing sales price for
a share of Issuer Common Stock on the Nasdaq National Market during the five (5)
trading days prior to the date on which the Registration Notice for such share
is received by Issuer.
(c) Any purchase of Registrable Securities by Issuer under Section 6(b)
shall take place at a closing to be held at the principal executive offices of
Issuer or at the offices of its counsel at any reasonable date and time
designated by Issuer in such notice within ten (10) business days
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after delivery of such notice, and payment of the purchase price for the shares
to be so purchased shall be made by delivery at the time of such closing in
immediately available funds.
(d) If Issuer does not elect to exercise its option pursuant to this
Section 6 with respect to all Registrable Securities, it shall use its best
efforts to effect, as promptly as practicable, and keep current the registration
under the 1933 Act of the unpurchased Registrable Securities proposed to be
sold. Issuer will use its reasonable best efforts to cause such registration
statement promptly to become effective and then to remain effective for such
period not in excess of 120 days from the day such registration statement first
becomes effective or such shorter time as may be reasonably necessary to effect
the sale or other disposition of the Registrable Securities; provided, however,
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that
(i) Grantee shall not be entitled to demand more than two (2)
effective registration statements hereunder, and
(ii) Issuer will not be required to file any such registration
statement during any period of time (not to exceed 90 days after such
request in the case of clauses (A) and (B) below or 120 days in the case of
clause (C) below) when
(A) Issuer is in possession of material non-public information
which it reasonably believes would be detrimental to be disclosed at
such time and, in the opinion of counsel to Issuer, such information
would be required to be disclosed if a registration statement were
filed at that time;
(B) Issuer is required under the 1933 Act to include audited
financial statements for any period in such registration statement and
such financial statements are not yet available for inclusion in such
registration statement; or
(C) Issuer determines, in its reasonable judgment, that such
registration would interfere with any financing, acquisition or other
material transaction involving Issuer or any of its affiliates.
(e) Issuer shall use its reasonable best efforts to cause any Registrable
Securities registered pursuant to this Section 6 to be qualified for sale under
the securities or "blue sky" laws of such jurisdictions as Grantee may
reasonably request and shall continue such registration or qualification in
effect in such jurisdiction; provided, however, that Issuer shall not be
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required to qualify to do business in, or consent to general service of process
in, any jurisdiction by reason of this provision.
(f) The registration rights set forth in this Section 6 are subject to the
condition that Grantee shall provide Issuer with such information with respect
to the Registrable Securities, the plans for the distribution thereof, and such
other information with respect to such holder as, in the reasonable judgment of
counsel for Issuer, is necessary to enable Issuer to include in such
registration statement all material facts required to be disclosed with respect
to a registration thereunder.
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(g) A registration effected under this Section 6 shall be effected at
Issuer's expense, except for underwriting discounts and commissions, broker'
fees and the fees and the expenses of counsel and other advisors to Grantee, and
Issuer shall provide to the underwriters, if any, such documentation (including
certificates, opinions of counsel and "comfort" letters from auditors) as is
customary in connection with underwritten public offerings as such underwriters
may reasonably require.
(h) In connection with any registration effected under this Section 6, the
parties agree
(i) to indemnify each other and the underwriters, if any, in the
customary manner,
(ii) to enter into an underwriting agreement if the offering is an
underwritten offering in form and substance customary for transactions of
such type with the underwriters participating in such offering, and
(iii) to take all reasonable further actions which shall be
reasonably necessary to effect such registration and sale (including if the
managing underwriter, if any, reasonably deems it necessary, participating
in road-show presentations).
(i) If Issuer Common Stock or any other securities to be acquired upon
exercise of the Option are then listed on the Nasdaq National Market or a
national securities exchange, Issuer, upon the request of Grantee, will promptly
file an application to list the shares of Issuer Common Stock or other
securities to be acquired upon exercise of the Option on the Nasdaq National
Market or a national securities exchange, as the case may be, and will its best
efforts to obtain approval of such listing as soon as practicable.
7. (a) At any time after the occurrence of a Repurchase Event (as
defined below), (i) at the request of Grantee, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from Grantee at a price (the
"Option Repurchase Price") equal to the amount by which (A) the market/offer
price (as defined below) exceeds (B) the Option Price, multiplied by the number
of shares for which this Option may then be exercised and (ii) at the request of
Grantee delivered prior to an Exercise Termination Event (or such later period
as provided in Section 10), Issuer (or any successor thereto) shall repurchase
such number of the Option Shares from Grantee as Grantee shall designate at a
price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term "market/offer
price" shall mean the highest of (i) the price per share of Issuer Common Stock
at which a tender or exchange offer therefor has been made, (ii) the price per
share of Issuer Common Stock to be paid by any third party pursuant to an
agreement with Issuer, (iii) the highest closing price for shares of Issuer
Common Stock within the six-month period immediately preceding the date Grantee
gives notice of the required repurchase of this Option or Grantee gives notice
of the required repurchase of Option Shares, as the case may be, or (iv) in the
event of a sale of all or any substantial part of Issuer's assets or deposits,
the sum of the net price paid in such sale for such assets or deposits and the
current market value of the remaining
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net assets of Issuer as determined by a nationally recognized investment banking
firm selected by Grantee and reasonably acceptable to Issuer, divided by the
number of shares of Issuer Common Stock of Issuer 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 Grantee and reasonably acceptable to Issuer.
(b) Grantee may exercise its right to require Issuer to repurchase the
Option and any Option Shares pursuant to this Section 7 by surrendering for such
purpose to Issuer, at its principal office, a copy of this Agreement or
certificates for Option Shares, as applicable, accompanied by a written notice
or notices stating that Grantee elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to Grantee the Option Repurchase Price and/or
to Grantee the Option Share Repurchase Price therefor or the portion thereof
that Issuer is not then prohibited under applicable law and regulation from so
delivering.
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(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify
Grantee and thereafter deliver or cause to be delivered, from time to time, to
Grantee the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
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notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from delivering to Grantee the Option Repurchase Price and the Option
Share Repurchase Price in full (and Issuer hereby undertakes to use its
reasonable 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), Grantee may revoke its notice of repurchase of the
Option and/or the Option Shares whether in whole or to the extent of the
prohibition, whereupon, in the latter case, Issuer shall promptly (i) deliver to
Grantee that portion of the Option Repurchase Price and/or the Option Share
Repurchase Price that Issuer is not prohibited from delivering; and (ii) deliver
to Grantee either (A) a new Agreement evidencing the right of Grantee to
purchase that number of shares of Issuer Common Stock obtained by multiplying
the number of shares of Issuer Common Stock for which the surrendered Agreement
was exercisable at the time of delivery of the notice of repurchase by a
fraction, the numerator of which is the Option Repurchase Price less the portion
thereof theretofore delivered to Grantee and the denominator of which is the
Option Repurchase Price, and/or (B) a certificate for the Option Shares it is
then so prohibited from repurchasing. If an Exercise Termination Event shall
have occurred prior to the date of the notice by Issuer described in the first
sentence of this subsection (c), or shall be scheduled to occur at any time
before the expiration of a period ending on the thirtieth day after such date,
Grantee shall nonetheless have the right to exercise the Option until the
expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed
to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 50% or more of the then outstanding
Issuer Common Stock; or
(ii) the consummation of any Acquisition Transaction described in
Section 2(b)(i) hereof, except that the percentage referred to in clause
(z) shall be 50%.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person
(other than Grantee or a Grantee Subsidiary), or engage in a plan of exchange
with any person (other than Grantee or a Grantee Subsidiary) and Issuer shall
not be the continuing or surviving corporation of such consolidation or merger
or the acquirer in such plan of exchange, (ii) to permit any person, other than
Grantee or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer
in a plan of exchange and Issuer shall be the continuing or surviving or
acquiring corporation, but, in connection with such merger or plan of exchange,
the then outstanding shares of Issuer Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash or any other
11
property or the then outstanding shares of Issuer Common Stock shall after such
merger or plan of exchange represent less than 50% of the outstanding shares and
share equivalents of the merged or acquiring company, or (iii) to sell or
otherwise transfer all or a substantial part of its or an Issuer Subsidiary's
assets or deposits to any person, other than Grantee or a Grantee Subsidiary,
then, and in each such case, the agreement governing such transaction shall make
proper provision 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 (x) the Acquiring Corporation (as hereinafter defined) or (y)
any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer is
acquired, (iii) the Issuer in a merger or plan of exchange in which Issuer
is the continuing or surviving or acquiring person, and (iv) the transferee
of all or a substantial part of Issuer's assets or deposits (or the assets
or deposits of the Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the market/offer price, as defined
in Section 7.
(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for one year immediately preceding the
consolidation, merger or sale referred to in Section 8(a), but in no event
higher than the closing price of the shares of 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 the person
merging into Issuer or by any company which controls or is controlled by
such person, as Grantee may elect.
(v) "Person" as used in this Agreement shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(c) The Substitute Option shall have the same terms as the Option;
provided, that the exercise price therefor and number of shares subject thereto
--------
shall be as set forth in this Section 8; provided, further, that the Substitute
-------- -------
Option shall be exercisable immediately upon issuance without the occurrence of
a Triggering Event; and provided, further 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 issuer
of the Substitute Option shall also enter into an agreement with Grantee in
substantially the same form as this Agreement (subject to the variations
described in the foregoing provisos), which agreement shall
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be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares
of Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Issuer Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price, rounded up to the nearest whole share. The
exercise price of the Substitute Option per share of Substitute Common Stock
shall then be equal to the Option Price multiplied by a fraction, the numerator
of which shall be the number of shares of Issuer Common Stock for which the
Option was exercisable immediately
13
prior to the event described in the first sentence of Section 8(a) and the
denominator of which shall be the number of shares of Substitute Common Stock
for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of 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
shares of Substitute Common Stock outstanding prior to exercise but for this
Section 8(e), the issuer of the Substitute Option (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
Section 8(e) over (ii) the value of the Substitute Option after giving effect to
the limitation in this Section 8(e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by
Grantee.
(f) Issuer shall not enter into any transaction described in subsection
(a) of this Section 8 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 8 are given full force and effect (including, without
limitation, any action that may be necessary so that the holders of the other
shares of common stock issued by Substitute Option Issuer are not entitled to
exercise any rights by reason of the issuance or exercise of the Substitute
Option and the shares of Substitute Common Stock are otherwise in no way
distinguishable from or have lesser economic value then other share of common
stock issued by Substitute Option Issuer (other than any diminution in value
resulting from the fact that the shares of Substitute Common Stock are
restricted securities, as defined in Rule 144 under the 1934 Act or any
successor provision)).
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective rights to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and/or certificates for
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Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable and in any event within five business
days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or the portion thereof which the Substitute Option Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Option
Repurchase Price and/or the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five (5) business days
after the date on which the Substitute Option Issuer is no longer so prohibited;
provided, however, that if the Substitute Option Issuer is at any time after
-------- -------
delivery of a notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder and/or
the Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its reasonable best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder and/or Substitute
Share Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of prohibition, whereupon, in
the latter case, the Substitute Option Issuer shall promptly (i) deliver to the
Substitute Option Holder or Substitute Share Owner, as appropriate, that portion
of the Substitute Option Repurchase Price or the Substitute Share Repurchase
Price that the Substitute Option Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, the Substitute Option
Holder shall nevertheless have the right to exercise the Substitute Option until
the
15
expiration of such 30-day period.
10. The 30-day, 3-month, 6-month, or 12-month periods for exercise of
certain rights under Sections 2, 6, 7 and 9 shall be extended: (i) to the extent
necessary to obtain all regulatory approvals for the exercise of such rights
(for so long as Grantee, Substitute Option Holder or Substitute Share Owner, as
the case may be, is using commercially reasonable efforts to obtain such
regulatory approvals), 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.
11. (a) Issuer hereby represents and warrants to Grantee as follows:
(i) Issuer has full corporate power and authority to execute and
deliver 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 and validly
authorized by the Issuer Board prior to the date hereof and no other
corporate proceedings on the part of Issuer are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Issuer.
(ii) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the
date hereof through the termination of this Agreement in accordance with
its terms will have reserved for issuance upon the exercise of the Option,
that number of shares of Issuer Common Stock equal to the maximum number of
shares of Issuer Common Stock at any time and from time to time issuable
hereunder, and all such shares, upon issuance pursuant thereto, will be
duly authorized, validly issued, fully paid, nonassessable (except as
provided in Section 180.0622(2)(b) of the WBCL, and will be delivered free
and clear of all claims, liens, encumbrance and security interests and not
subject to any preemptive rights.
(b) Grantee hereby represents and warrants to Issuer as follows:
(i) Grantee has corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement by Grantee and the performance of
its obligations hereunder by Grantee have been duly and validly authorized
by the Board of Directors of Grantee and no other corporate proceedings on
the part of Grantee are necessary to authorize this Agreement or for
Grantee to perform its obligations hereunder. This Agreement has been duly
and validly executed and delivered by Grantee.
(ii) Any Option Shares acquired upon exercise of this Option by
Grantee will be acquired for Grantee's own account and for investment
purposes only. This Option is not being, and any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from
16
registration under the 1933 Act. Grantee acknowledges the limitations
which may be imposed on the transactions contemplated by this Agreement by
Article 4.c of Issuer's Articles of Incorporation.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party. Certificates
representing shares sold in a registered public offering pursuant to Section 9
shall not be required to bear the legend set forth in Section 2(h).
13. Each of Grantee and Issuer will use its reasonable 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 Agreement, including, without limitation, applying to the
Federal Reserve Board and OTS for approval to acquire the shares issuable
hereunder, but Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Issuer Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
14. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief, this being in addition to any
other remedy to which they are entitled at law or in equity. In connection
therewith both parties waive the posting of any bond or similar requirement.
15. 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 remainder of
the terms, provisions and covenants and restrictions contained in 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 Grantee is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Issuer Common
Stock provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or
Section 5 hereof), it is the express intention of Issuer to allow Grantee to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible, without any amendment or modification hereof.
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
17. This Agreement shall be governed by and construed in accordance with
the laws of the State of Wisconsin, without regard to the conflict of law
principles thereof.
18. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
17
19. Except as otherwise expressly 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.
20. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assignees.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assignees, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
21. Each party shall execute and deliver such other documents and
instruments and take such further action that may be necessary in order to
consummate the transactions contemplated hereby.
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
18
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
ADVANTAGE BANCORP, INC.
By:/s/ Xxxx X. Xxxxxx
-------------------------------
Xxxx X. Xxxxxx
Chairman of the Board, President and
Chief Executive Officer
XXXXXXXX & XXXXXX CORPORATION
By:/s/ Xxxxx X. Xxxxxxx
-------------------------------
Xxxxx X. Xxxxxxx
Chairman of the Board and
Chief Executive Officer
19
