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Exhibit 11(c)(3)
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO CERTAIN
RESTRICTIONS CONTAINED HEREIN AND TO RESALE RESTRICTIONS UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of September 27, 1999 (the
"Agreement"), by and between XXXXXXXXX & XXXXX GROUP, a Delaware corporation
("Issuer"), and THE CHASE MANHATTAN CORPORATION, a Delaware corporation
("Grantee").
WHEREAS, Grantee and Issuer are concurrently herewith entering
into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), among Issuer, Grantee and Bridge Acquisition Corporation, a
Delaware corporation and a wholly-owned subsidiary of Grantee ("Sub"), pursuant
to which Sub will make an offer (the "Offer") for all of the issued and
outstanding shares of common stock, par value $0.01 per share, of Issuer (the
"Issuer Common Stock"), at a price of $50.00 per share, net in cash, the
consummation of which will be followed by the merger of Sub with and into
Issuer, with Issuer being the surviving corporation (the "Merger"); and
WHEREAS, as a condition and inducement to Grantee's and Sub's
execution of the Merger Agreement, Grantee has required that Issuer agree, and
Issuer has agreed, to grant Grantee the Option (as defined in Section 2).
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein and in the Merger Agreement, and intending to be legally bound hereby,
Issuer and Grantee agree as follows:
1. Defined Terms. Capitalized terms which are used but not
defined herein shall have the meanings ascribed to such terms in the Merger
Agreement.
2. Grant of Option. Subject to the terms and conditions set
forth herein, Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase up to 4,894,439 shares (as adjusted as set forth herein,
the "Option Shares") of Issuer Common Stock, at a purchase price per Option
Share (as adjusted as set forth herein, the "Purchase Price") equal to $50.00;
provided, that in no event shall the number of Option Shares for which this
Option is exercisable exceed 19.9% of the issued and outstanding shares of
Issuer Common Stock. Issuer shall make proper provision so that each Option
Share issued upon exercise of the Option shall be accompanied by the applicable
number of rights or other benefits as may be provided in any Issuer rights
agreement or similar agreement that may be adopted after the date hereof.
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3. Exercise of Option.
(a) Holder (as hereinafter defined) may exercise the Option,
in whole or in part, at any time and from time to time following the occurrence
of both an Initial Triggering Event (as defined in Section 3(b)) and a
Subsequent Triggering Event (as defined in Section 3(c)); provided, that the
Option shall terminate and be of no further force or effect upon the earliest to
occur of (A) the Effective Time, (B) termination of the Merger Agreement in
accordance with the terms thereof prior to the occurrence of an Initial
Triggering Event or (C) 18 months after termination of the Merger Agreement
following or in connection with the occurrence of an Initial Triggering Event;
and provided, further, that any purchase of shares upon exercise of the Option
shall be subject to compliance with applicable law; and, provided, further, that
the Holder shall have sent the written notice of such exercise (as provided in
subsection (e) of this Section 2) within 90 days following such Subsequent
Triggering Event. Notwithstanding the termination of the Option, Grantee or
Holder, as the case may be, shall be entitled to purchase those Option Shares
with respect to which it has exercised the Option in accordance herewith prior
to the termination of the Option. The term "Holder" shall mean the holder or
holders of the Option from time to time, which initially is Grantee. The
termination of the Option shall not affect any rights hereunder which by their
terms extend beyond the date of such termination.
(b) As used herein, an "Initial Triggering Event" means any of
the following events:
(i) without Grantee's prior written consent, Issuer
shall have authorized, recommended, publicly proposed or publicly disclosed an
intention to authorize, recommend or propose, or entered into one or more
agreements with any person (other than Grantee or any Subsidiary of Grantee) to
effect, or effected, in a single transaction or a series of related
transactions, any Transaction Proposal;
(ii) any person (other than Grantee or any Subsidiary
of Grantee) shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act) of or the right to acquire
beneficial ownership of, or any group (as such term is defined in Section
13(d)(3) of the Exchange Act), other than a group of which Grantee or any
Subsidiary of Grantee is a member, shall have been formed which beneficially
owns or has the right to acquire beneficial ownership of, shares of Issuer
Common Stock or other securities representing 10% or more of the voting power of
Issuer or any of its Significant Subsidiaries (as defined in Rule 1-02 of
Regulation S-X of the SEC);
(iii) any person (other than Grantee or any
Subsidiary of Grantee) shall have commenced (as such term is defined in Rule
14d-2 under the Exchange Act), or shall have filed a registration statement
under the Securities Act with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common Stock or other securities such that, upon
consummation of such offer, such person would own or control shares of Issuer
Common Stock or other securities representing 10% or more of the voting power of
Issuer or any of its
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Significant Subsidiaries (such an offer being referred to herein as a "Tender
Offer" or an "Exchange Offer," respectively);
(iv) Issuer or its Board of Directors shall have
withdrawn, modified, amended or materially qualified in any respect adverse to
Grantee the Company Board Recommendation, failed to mail the Schedule 14D-9 to
its stockholders as required by Section 1.2(b) of the Merger Agreement, or
failed to include in such Schedule 14D-9 the Company Board Recommendation or
resolved to take any of the foregoing actions; or
(v) the Merger Agreement shall have been terminated
in accordance with its terms and at the time of such termination the Termination
Fee or any portion thereof is or upon the occurrence of certain events specified
therein would become payable pursuant to Section 8.2 of the Merger Agreement.
As used in this Agreement, "person" shall have the
meaning specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(c) As used herein, a "Subsequent Triggering Event" means any
of the following events:
(i) the Initial Triggering Event described in
paragraph (ii) of subsection (b) of this Section 3 shall have occurred, except
that the percentage referred to in such paragraph shall be 20% for the purposes
of this paragraph (i); or
(ii) the Initial Triggering Event described in
paragraph (i) of subsection (b) of this Section 3 shall have occurred, except
that the percentages referred to in the definition of Transaction Proposal in
Section 6.9 of the Merger Agreement shall each be 20% for the purposes of this
paragraph (ii).
(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 Holder to exercise the
Option.
(e) In the event Holder wishes to exercise the Option, it
shall send to Issuer a written notice (the date of which is herein referred to
as the "Notice Date") specifying (i) the total number of Option Shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 60 business days from the Notice
Date for the closing (the "Closing") of such purchase (the "Closing Date");
provided, that if the Closing cannot be consummated by reason of any applicable
law, rule, regulation or order or the need to obtain any necessary approvals or
consents of applicable Governmental Entities, the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on which
such restriction on consummation has expired or been terminated; and provided,
further, without limiting the foregoing, that if prior notification or
application to, approval of or authorization by any Governmental Entity is
required in connection with such purchase, Issuer
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shall use its reasonable best efforts to cooperate with the Holder in the prompt
filing of the required notice or application for approval or authorization, and
the Closing shall occur immediately following the date on which such approvals
have been obtained or any required notification or waiting periods have expired.
Any exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
(f) Notwithstanding Section 3(e), in no event shall any
Closing Date be more than nine months after the related Notice Date, and if the
Closing Date shall not have occurred within nine months after the related Notice
Date due to the failure to obtain any such required approval, the exercise of
the Option effected on the Notice Date shall be deemed to have expired. In the
event (i) Holder receives official notice that an approval of any Governmental
Entity required for the purchase of Option Shares will not be issued or granted
or (ii) a Closing Date shall not have occurred within nine months after the
related Notice Date due to the failure to obtain any such required approval,
Grantee shall be entitled to exercise the Option (whether or not the Option
would have otherwise terminated) in connection with the resale of Issuer Common
Stock or other securities pursuant to a registration statement as provided in
Section 10. The provisions of this Section 3 and Section 4 shall apply with
appropriate adjustments to any such exercise.
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to
Issuer, in immediately available funds by wire transfer to a bank account
designated by Issuer (provided that the failure or refusal of Issuer to
designate a bank account shall not preclude the Holder from exercising the
Option), an amount equal to the Purchase Price multiplied by the number of
Option Shares to be purchased on such Closing Date, and (ii) present and
surrender this Agreement to the Issuer at the address of the Issuer specified in
Section 13(f).
(b) At each Closing, simultaneously with the delivery
of immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be fully paid, validly issued and non-assessable, free
and clear of all Liens and subject to no preemptive or other similar rights, and
(B) if the Option is exercised in part only, an executed new agreement with the
same terms as this Agreement evidencing the right to purchase the balance of the
shares of Issuer Common Stock purchasable hereunder, and (ii) Holder shall
deliver to Issuer a letter agreeing that Holder shall not offer to sell or
otherwise dispose of such Option Shares in violation of applicable federal and
state law or of the provisions of this Agreement.
(c) In addition to any other legend that is required
by applicable law, certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933,
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AS AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED
AS OF SEPTEMBER 27, 1999. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE SECRETARY OF THE
ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that (i) the portion of the above legend relating to
the Securities Act shall be removed by delivery of substitute certificate(s)
without such legend if such Option Shares have been registered pursuant to the
Securities Act, such Option Shares have been sold in reliance on and in
accordance with Rule 144 under the Securities Act or Holder 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 and its counsel, to the
effect that such legend is not required for purposes of the Securities Act, (ii)
the reference to restrictions pursuant to this Agreement in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Option Shares evidenced by certificate(s) containing such reference have
been sold or transferred in compliance with the provisions of this Agreement
under circumstances that do not require the retention of such reference and
(iii) such legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied.
(d) Upon the giving by Holder to Issuer of the
written notice of exercise of the Option provided for under Section 3(e), the
tender of the applicable Purchase Price in immediately available funds and the
tender of this Agreement to Issuer, Holder shall be deemed to be the holder of
record of the shares of Issuer Common Stock issuable upon such exercise,
regardless of whether the stock transfer books of Issuer are then closed or
certificates representing such shares of Issuer Common Stock are then actually
delivered to Holder. Issuer shall pay all expenses, and any and all federal,
foreign, state, and local taxes and other charges, that may be payable in
connection with the preparation, issuance and delivery of stock certificates
under this Section 4(d) in the name of Holder or its assignee, transferee, or
designee.
(e) Issuer agrees (i) that it shall at all times
maintain, free from Liens and preemptive or similar 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 then outstanding, (ii) that it will
not, by charter amendment or through reorganization, recapitalization,
consolidation, merger, dissolution, liquidation, spin-off, sale of assets or
similar transaction, or by any other voluntary act, avoid or seek to avoid the
observance or performance of any of the covenants, agreements, stipulations or
conditions to be observed or performed hereunder by Issuer, (iii) that it will
promptly take all action as may from time to time be required (including (A)
complying with all premerger notification, reporting and waiting period
requirements and (B) in the event prior approval or authorization of or notice
or application to any Governmental Entity is necessary before the Option may be
exercised, cooperating fully with Holder in preparing such applications or
notices and providing such information to such Governmental Entity as it may
require) in order to permit Holder to exercise the Option and Issuer to duly and
effectively issue shares of the Issuer
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Common Stock pursuant hereto, and (iv) that it will promptly take all action
provided herein to protect the rights of Holder against dilution.
5. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee (and Holder, if different than Grantee) as
follows:
(a) Corporate Authority. 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, subject to receiving any necessary approvals or authorizations from
Governmental Entities, the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of Issuer, 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 and (assuming due
authorization, execution and delivery by Grantee) constitutes a valid and
binding obligation of Issuer, enforceable against Issuer in accordance with its
terms, except that (i) such enforcement may be subject to applicable bankruptcy,
insolvency, fraudulent conveyance, moratorium or other similar laws, now or
hereinafter in effect, affecting creditors' rights generally, and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(b) Shares Reserved for Issuance; Capital Stock.
Issuer has taken all necessary corporate action to authorize and reserve and
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 and
other shares and securities which are at any time and from time to time
purchasable upon exercise of the Option, and all such shares and other
securities, upon issuance pursuant to the Option, will be duly authorized,
validly issued, fully paid and non-assessable, and will be delivered free and
clear of all Liens (other than those created by this Agreement) and not subject
to any preemptive or other similar rights.
(c) No Violations. The execution, delivery and
performance of this Agreement does not and will not, and the consummation by
Issuer of any of the transactions contemplated hereby will not, constitute or
result in (A) a breach or violation of, or a default under, its certificate of
incorporation or by-laws, or the comparable governing instruments of any of its
Subsidiaries, or (B) a breach or violation of, or a default under, any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation of it or any of its Subsidiaries (with or without the giving of
notice, the lapse of time or both) or under any law, rule, regulation or order
or governmental or non-governmental permit or license to which it or any of its
Subsidiaries is subject, that would, in any case give any other person the
ability to prevent or enjoin Issuer's performance under this Agreement in any
material respect.
(d) Board Action. The Board of Directors of Issuer
has approved this Agreement and the consummation of the transactions
contemplated hereby as required under
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Section 203 of the DGCL and any other applicable state takeover laws so that any
such state takeover laws do not or will not apply to this Agreement or any of
the transactions contemplated hereby (including the purchase of shares of Issuer
Common Stock pursuant to this Agreement).
6. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer as follows:
(a) Corporate Authority. Grantee has full corporate
power and authority to enter into this Agreement and, subject to obtaining the
approvals referred to in this Agreement, to consummate the transactions
contemplated by this Agreement; the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Grantee; and this
Agreement has been duly executed and delivered by Grantee and (assuming due
authorization, execution and delivery by Issuer) constitutes a valid and binding
obligation of the Grantee, enforceable against the Grantee in accordance with
its terms.
(b) Purchase Not for Distribution. Any Option Shares
or other securities acquired by Grantee upon exercise of the Option will not be
taken 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
registration under the Securities Act.
7. Adjustment upon Changes in Issuer Capitalization, Etc.
(a) In the event of any change from time to time in
Issuer Common Stock or any other shares or securities subject to the Option by
reason of a stock dividend, subdivision, spinoff, stock split, split-up, merger,
consolidation, recapitalization, combination, exchange of shares, dividend or
distribution on or in respect of the Issuer Common Stock, the type and number of
shares or securities subject to the Option, and the Purchase Price therefor,
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction, so that Holder shall receive, upon
exercise of the Option, the economic benefits provided hereunder, including the
number and class of shares or other securities or property that Holder would
have received in respect of Issuer Common Stock if the Option had been exercised
immediately prior to such event, or the record date therefor, as applicable. If
any additional shares of Issuer Common Stock are issued or otherwise become
outstanding after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 7(a) or upon exercise of the
Option) or are redeemed, repurchased, retired or otherwise cease to be
outstanding, the number of shares of Issuer Common Stock subject to the Option
shall be increased or decreased, as applicable, so that, after such issuance,
it, together with any shares of Issuer Common Stock previously issued pursuant
hereto, equals 19.9% of the number of shares of Issuer Common Stock then issued
and outstanding, without giving effect to any shares subject to or issued
pursuant to the Option. No provision of this Section 7 shall be deemed to affect
or change, or constitute authorization for any violation of, any of the
covenants, agreements, representations or warranties in the Merger Agreement.
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(b) Without limiting the parties' relative rights,
remedies, liabilities and obligations under the Merger Agreement or this
Agreement, in the event that, prior to the termination of the Option, Issuer
shall enter into an agreement (other than the Merger Agreement) (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Issuer Common Stock shall be changed into or exchanged for another
class or series of stock or other securities of Issuer or any other person or
cash or any other property or the outstanding shares of Issuer Common Stock
immediately prior to such merger shall, after such merger, represent less than
50% of the outstanding shares and share equivalents having general voting power
of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets or a substantial part of the assets of its
Subsidiaries taken as a whole, in one transaction or a series of related
transactions, to any person, other than Grantee or one of its Subsidiaries,
then, and in each such case, the agreement governing such transaction shall make
proper provisions so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
Holder, of either (x) the Acquiring Corporation (as hereinafter defined), (y)
any person that controls the Acquiring Corporation, or (z) in the case of a
merger described in clause (ii), Issuer (such person being referred to as
"Substitute Option Issuer").
(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 7 and the repurchase
rights relating thereto shall be as set forth in Section 9; provided, further,
that the Substitute Option shall be exercisable immediately upon issuance
without the occurrence of a further Triggering Event; 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 Holder. Substitute Option Issuer shall also enter into an
agreement with Holder in substantially the same form as this Agreement, which
shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for
such number of shares of Substitute Common Stock (as hereinafter defined) as is
equal to the Assigned Value (as hereinafter defined) multiplied by the number of
shares of Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The exercise price of the
Substitute Option per share of Substitute Common Stock (the "Substitute Option
Price") shall then be equal to the Purchase Price multiplied by a fraction in
which the numerator is the number of shares of Issuer Common Stock for which the
Option was theretofore exercisable and the denominator is the number of shares
of Substitute Common Stock for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
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(i) "Acquiring Corporation" shall mean (x)
the continuing or surviving corporation of a consolidation or merger with Issuer
(if other than Issuer), (y) Issuer in a merger in which Issuer is the continuing
or surviving person, or (z) the transferee of all or substantially all of
Issuer's assets (or a substantial part of the assets of its Subsidiaries taken
as a whole).
(ii) "Assigned Value" shall mean the highest
of (w) the highest price per share of Issuer Common Stock at which a Tender
Offer or an Exchange Offer therefor has been made, (x) the highest price per
share of Issuer Common Stock to be paid by any third party pursuant to an
agreement with Issuer, (y) the highest closing price for shares of Issuer Common
Stock within the 12-month period immediately preceding the date on which the
merger, consolidation, asset sale or other transaction in question is
consummated, and (z) in the event of a sale of all or substantially all of
Issuer's assets (or a substantial part of the assets of its Subsidiaries as a
whole) an amount equal to (I) the sum of the price paid in such sale for such
assets and the current market value of the remaining assets of Issuer, as
determined by a nationally-recognized investment banking firm selected by
Holder, divided by (II) the number of shares of Issuer Common Stock outstanding
at such time. In calculating the Assigned Value, in the event that a Tender
Offer or an Exchange Offer is made for Issuer Common Stock or an agreement is
entered into involving consideration other than cash, the value of the
securities or other property issuable or deliverable in exchange for Issuer
Common Stock shall be determined by a nationally-recognized investment banking
firm selected by Holder.
(iii) "Average Price" shall mean the average
closing sales price per share of a share of Substitute Common Stock quoted on
the NYSE (or if Substitute Common Stock is not quoted on the NYSE, the average
closing sales price per share as quoted on the Nasdaq National Market System or,
if the shares of Substitute Common Stock are not quoted thereon, the highest bid
price per share as quoted on the principal trading market on which such shares
are traded as reported by a recognized source) for the 12-month period
immediately preceding the date of consummation of the consolidation, merger or
sale in question, but in no event higher than the closing sales price of the
shares of Substitute Common Stock on the day preceding the date of consummation
of such consolidation, merger or sale; provided, that if Issuer is the issuer of
the Substitute Option, the Average Price shall be computed with respect to a
share of common stock issued by Issuer, by the person merging into Issuer or by
any company which controls such person, as Holder may elect.
(iv) "Substitute Common Stock" shall mean
the shares of capital stock (or similar equity interest) with the greatest
voting power in respect of the election of directors (or persons similarly
responsible for the direction of the business and affairs) of the Substitute
Option Issuer.
(f) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more than 19.9% of
the aggregate of the shares of Substitute Common Stock outstanding prior to
exercise of the Substitute Option. In the event that the Substitute Option would
be exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for the limitation in the first sentence of this Section 7(f),
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Substitute Option Issuer shall make a cash payment to Holder equal to the excess
of (i) the value of the Substitute Option without giving effect to the
limitation in the first sentence of this Section 7(f) over (ii) the value of the
Substitute Option after giving effect to the limitation in the first sentence of
this Section 7(f). This difference in value shall be determined by a
nationally-recognized investment banking firm selected by Holder.
(g) Issuer shall not enter into any transaction
described in Section 7(b) unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the 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 (other than any diminution in
value resulting from the fact that the Substitute Common Stock are restricted
securities, as defined in Rule 144 under the Securities Act or any successor
provision) than other shares of common stock issued by Substitute Option
Issuer).
8. Repurchase at the Option of Holder.
(a) At the request of Holder at any time (i)
commencing upon the first occurrence of a Repurchase Event (as defined in
Section 8(d)) and prior to the termination of the Option pursuant to Section
3(a), Issuer (or any successor) shall repurchase from Holder (x) the Option and
(y) all shares of Issuer Common Stock purchased by Holder pursuant hereto with
respect to which Holder then has beneficial ownership. The date on which Holder
exercises its rights under this Section 8 is referred to as the "Request Date".
Such repurchase shall be at an aggregate price (the "Section 8 Repurchase
Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by
Holder for any shares of Issuer Common Stock acquired pursuant to the Option
with respect to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the
Applicable Price (as defined below) for each share of Issuer Common Stock over
(y) the Purchase Price (subject to adjustment pursuant to Section 7), multiplied
by the number of shares of Issuer Common Stock with respect to which the Option
has not been exercised; and
(iii) the excess, if any, of the Applicable
Price over the Purchase Price (subject to adjustment pursuant to Section 7) paid
(or, in the case of Option Shares with respect to which the option has been
exercised but the Closing Date has not occurred, payable) by Holder for each
share of Issuer Common Stock with respect to which the Option has been exercised
and with respect to which Holder then has beneficial ownership, multiplied by
the number of such shares.
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(b) If Holder exercises its rights under this Section
8, Issuer shall, within 5 business days after the Request Date, pay the Section
8 Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment, Holder shall surrender to Issuer the Option
and the certificates evidencing the shares of Issuer Common Stock purchased
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all Liens. Notwithstanding
the foregoing, to the extent that prior notification to or approval of any
Governmental Entity is required in connection with the payment of all or any
portion of the Section 8 Repurchase Consideration, Holder shall have the ongoing
option to revoke its request for repurchase pursuant to Section 8, in whole or
in part, or to require that Issuer deliver from time to time that portion of the
Section 8 Repurchase Consideration that it is not then so prohibited from paying
and promptly file the required notice or application for approval and
expeditiously process the same (and each party shall cooperate with the other in
the filing of any such notice or application and the obtaining of any such
approval) and the period of time that would otherwise run pursuant to the
preceding sentence for the payment of the portion of the Section 8 Repurchase
Consideration shall run instead from the date on which, as the case may be, (i)
any required notification period has expired or been terminated or (ii) such
approval has been obtained and, in either event, any requisite waiting period
shall have passed. If any Governmental Entity disapproves of any part of
Issuer's proposed repurchase pursuant to this Section 8, Issuer shall promptly
give notice of such fact to Holder. If any Governmental Entity prohibits the
repurchase (and Issuer hereby undertakes to use its reasonable best efforts to
obtain all required approvals from Governmental Entities to accomplish such
repurchase) in part but not in whole, then Holder shall have the right (i) to
revoke the repurchase request or (ii) to the extent permitted by such
Governmental Entity, determine whether the repurchase should apply to the Option
and/or Option Shares and to what extent to each, and Holder shall thereupon have
the right to exercise the Option as to the number of Option Shares for which the
Option was exercisable at the Request Date less the sum of the number of shares
covered by the Option in respect of which payment has been made pursuant to
Section 8(a)(ii) and the number of shares covered by the portion of the Option
(if any) that has been repurchased; whereupon, in the case of clause (ii),
Issuer shall promptly (x) deliver to the Holder that portion of the Section 8
Repurchase Consideration that Issuer is not prohibited from delivering and (y)
deliver to the Holder, as appropriate, either (A) a new Stock Option Agreement
evidencing the right of the Holder to purchase that number of shares of Issuer
Common Stock obtained by multiplying the number of shares of Common Stock for
which the surrendered Stock Option Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Section 8 Repurchase Consideration less the portion thereof theretofore
delivered to the Holder and the denominator of which is the Section 8 Repurchase
Consideration, or (B) a certificate for the Option Shares it is then so
prohibited from repurchasing; provided, that if the Option shall have terminated
prior to the date of such notice or shall be scheduled to terminate at any time
before the expiration of a period ending on the thirtieth business day after
such date, Holder shall nonetheless have the right so to exercise the Option or
exercise its rights under Section 8 until the expiration of such period of 30
business days. Holder shall notify Issuer of its determination under the
preceding sentence within 10 business days of receipt of notice of disapproval
of the repurchase.
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(c) For purposes of this Agreement, the "Applicable
Price" means the highest of (i) the highest price per share of Issuer Common
Stock paid for any such share by any person (other than Grantee or any
Subsidiary of Grantee) that shall have acquired beneficial ownership of (as such
term is defined in Rule 13d-3 promulgated under the Exchange Act), or the right
to acquire beneficial ownership of, or any group that shall have been formed
which beneficially owns or has the right to acquire beneficial ownership of, 15%
or more of the then outstanding shares of Issuer Common Stock, (ii) the price
per share of Issuer Common Stock received by holders of Issuer Common Stock in
connection with any merger or other business combination transaction described
in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), and (iii) the highest closing sales
price per share of Issuer Common Stock during the 60 business days preceding the
Request Date; provided, however, that in the event of a sale of less than all of
Issuer's assets, the Applicable Price shall be the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of
Issuer as determined by a nationally-recognized investment banking firm selected
by Holder, divided by the number of shares of the Issuer Common Stock
outstanding at the time of such sale. If any consideration to be offered, paid
or received pursuant to either of the foregoing clauses (i) or (ii) shall be
other than in cash, the value of such consideration shall be determined in good
faith by an independent nationally-recognized investment banking firm selected
by Holder, which determination shall be conclusive for all purposes of this
Agreement.
(d) As used herein, a "Repurchase Event" shall occur
if (A) (i) any person (other than Grantee or any Subsidiary of Grantee) shall
have acquired beneficial ownership of (as such term is defined in Rule 13d-3
promulgated under the Exchange Act), or the right to acquire beneficial
ownership of, or any group shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, 50% or more of the then
outstanding shares of Issuer Common Stock or (ii) any of the transactions
described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) has been consummated and (B)
a Subsequent Triggering Event shall have occurred prior to the termination of
the Option.
9. Repurchase of Substitute Option.
(a) At the request of Holder at any time, Substitute
Option Issuer (or any successor) shall repurchase from Holder (x) the Substitute
Option and (y) all shares of Substitute Common Stock purchased by Holder
pursuant hereto with respect to which Holder then has beneficial ownership. The
date on which Holder exercises its rights under this Section 9 is referred to as
the "Section 9 Request Date". Such repurchase shall be at an aggregate price
(the "Section 9 Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by
Holder for any shares of Substitute Common Stock acquired pursuant to the
Substitute Option with respect to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the
Substitute Applicable Price (as defined below) for each share of Substitute
Common Stock over (y) the Purchase Price (subject
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to adjustment pursuant to Section 7), multiplied by the number of shares of
Substitute Common Stock with respect to which the Substitute Option has not been
exercised; and
(iii) the excess, if any, of the Substitute
Applicable Price over the Purchase Price (subject to adjustment pursuant to
Section 7) paid (or, in the case of Option Shares (for purposes of this
Agreement, Option Shares shall include shares of Substitute Common Stock and
related securities subject to the Substitute Option) with respect to which the
Substitute Option has been exercised but the Closing Date has not occurred,
payable) by Holder for each share of Substitute Common Stock with respect to
which the Substitute Option has been exercised and with respect to which Holder
then has beneficial ownership, multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section
9, Substitute Option Issuer shall, within 5 business days after the Section 9
Request Date, pay the Section 9 Repurchase Consideration to Holder in
immediately available funds, and contemporaneously with such payment, Holder
shall surrender to Substitute Option Issuer the Substitute Option and the
certificates evidencing the shares of Substitute Common Stock purchased
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all Liens. Notwithstanding
the foregoing, to the extent that prior notification to or approval of any
Governmental Entity is required in connection with the payment of all or any
portion of the Section 9 Repurchase Consideration, Holder shall have the ongoing
option to revoke its request for repurchase pursuant to Section 9, in whole or
in part, or to require that Substitute Option Issuer deliver from time to time
that portion of the Section 9 Repurchase Consideration that it is not then so
prohibited from paying and promptly file the required notice or application for
approval and expeditiously process the same (and each party shall cooperate with
the other in the filing of any such notice or application and the obtaining of
any such approval) and the period of time that would otherwise run pursuant to
the preceding sentence for the payment of the portion of the Section 9
Repurchase Consideration shall run instead from the date on which, as the case
may be, (i) any required notification period has expired or been terminated or
(ii) such approval has been obtained and, in either event, any requisite waiting
period shall have passed. If any Governmental Entity disapproves of any part of
Substitute Option Issuer's proposed repurchase pursuant to this Section 9,
Substitute Option Issuer shall promptly give notice of such fact to Holder. If
any Governmental Entity prohibits the repurchase (and Substitute Option Issuer
hereby undertakes to use its reasonable best efforts to obtain all required
approvals from Governmental Entities to accomplish such repurchase) in part but
not in whole, then Holder shall have the right (i) to revoke the repurchase
request or (ii) to the extent permitted by such Governmental Entity, determine
whether the repurchase should apply to the Substitute Option and/or Option
Shares and to what extent to each, and Holder shall thereupon have the right to
exercise the Substitute Option as to the number of Option Shares for which the
Substitute Option was exercisable at the Section 9 Request Date less the sum of
the number of shares covered by the Substitute Option in respect of which
payment has been made pursuant to Section 9(a)(ii) and the number of shares
covered by the portion of the Substitute Option (if any) that has been
repurchased; whereupon, in the case of clause (ii), Substitute Option Issuer
shall promptly (x) deliver to the Holder that portion of the Section 9
Repurchase Consideration that Substitute
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Option Issuer is not prohibited from delivering and (y) deliver to the Holder,
as appropriate, either (A) a new Stock Option Agreement evidencing the right of
the Holder to purchase that number of shares of Substitute Common Stock obtained
by multiplying the number of shares of Substitute Common Stock for which the
surrendered Stock Option Agreement was exercisable at the time of delivery of
the notice of repurchase by a fraction, the numerator of which is the Section 9
Repurchase Consideration less the portion thereof theretofore delivered to the
Holder and the denominator of which is the Section 9 Repurchase Consideration or
(B) a certificate for the Option Shares it is then so prohibited from
repurchasing; provided, that if the Substitute Option shall have terminated
prior to the date of such notice or shall be scheduled to terminate at any time
before the expiration of a period ending on the thirtieth business day after
such date, Holder shall nonetheless have the right so to exercise the Substitute
Option or exercise its rights under Section 9 until the expiration of such
period of 30 business days. Holder shall notify Substitute Option Issuer of its
determination under the preceding sentence within ten (10) business days of
receipt of notice of disapproval of the repurchase.
(c) For purposes of this Agreement, the "Substitute
Applicable Price" means the highest closing sales price per share of Substitute
Common Stock during the 60 business days preceding the Section 9 Request Date.
(d) Following the conversion of the Option into a
Substitute Option, all references to "Issuer", "Issuer Common Stock" and
"Section 8" contained herein shall also be deemed to be references to
"Substitute Option Issuer", "Substitute Common Stock" and "Section 9",
respectively.
10. Registration Rights.
(a) Demand Registration Rights. Issuer shall, subject
to the conditions of Section 10(c) below, if requested by any Holder following a
Subsequent Triggering Event that occurs prior to the termination of the Option,
including Grantee and any permitted transferee ("Selling Stockholder"), as
expeditiously as possible prepare, file and keep current a registration
statement under the Securities Act if such registration is necessary in order to
permit the sale or other disposition of any or all shares of Issuer Common Stock
or other securities that have been acquired by or are issuable to the Selling
Stockholder upon exercise of the Option in accordance with the intended method
of sale or other disposition stated by the Selling Stockholder in such request,
including, without limitation, a "shelf" registration statement under Rule 415
under the Securities Act or any successor provision, and Issuer shall use its
best efforts to qualify such shares or other securities for sale under any
applicable state securities laws.
(b) Additional Registration Rights. If Issuer at any
time after the exercise of the Option proposes to register any shares of Issuer
Common Stock under the Securities Act in connection with an underwritten public
offering of such Issuer Common Stock, Issuer will promptly give written notice
to the Holder of its intention to do so and, upon the written request of any
Selling Stockholder given within 30 days after receipt of any such notice (which
request shall specify the number of shares of Issuer Common Stock intended to be
included in such underwritten public offering by the Selling Stockholder),
Issuer will cause all
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such shares for which a Selling Stockholder requests participation in such
registration to be so registered and included in such underwritten public
offering; provided, however, that Issuer may elect to not cause any such shares
to be so registered (i) if in the reasonable good faith opinion of the
underwriters for such offering, the inclusion of all such shares by the Selling
Stockholder would materially interfere with the marketing of such offering (in
which case Issuer shall register as many shares as possible without materially
interfering with the marketing of the offering), or (ii) in the case of a
registration solely to implement an employee benefit plan or a registration
filed on Form S-4 of the Securities Act or any successor Form; provided,
further, however, that such election pursuant to (i) may only be made two times.
If some but not all the shares of Issuer Common Stock with respect to which
Issuer shall have received requests for registration pursuant to this Section
10(b) shall be excluded from such registration, Issuer shall make appropriate
allocation of shares to be registered among the Selling Stockholders desiring to
register their shares pro rata in the proportion that the number of shares
requested to be registered by each such Selling Stockholder bears to the total
number of shares requested to be registered by all such Selling Stockholders
then desiring to have Issuer Common Stock registered for sale.
(c) Conditions to Required Registration. Issuer shall
use its reasonable best efforts to cause each registration statement referred to
in Section 10(a) above to become effective and to obtain all consents or waivers
of other parties which are required therefor and to keep such registration
statement effective; provided, however, that Issuer may delay any registration
of Option Shares required pursuant to Section 10(a) above for a period not
exceeding 90 days provided Issuer shall in good faith determine that any such
registration would adversely affect an offering or contemplated offering of
other securities by Issuer, and Issuer shall not be required to register Option
Shares under the Securities Act pursuant to Section 10(a) above:
(i) prior to the earlier of (a) termination
of the Merger Agreement pursuant to Article VIII thereof and (b) a Subsequent
Triggering Event;
(ii) on more than two occasions during any
calendar year;
(iii) within 90 days after the effective
date of a registration referred to in Section 10(b) above pursuant to which the
Selling Stockholder or Selling Stockholders concerned were afforded the
opportunity to register all such shares under the Securities Act and shares were
registered to the extent requested; and
(iv) unless a request therefor is made to
Issuer by Selling Stockholders that hold at least 25% or more of the aggregate
number of Option Shares (including shares of Issuer Common Stock and other
securities issuable upon exercise of the Option) then outstanding.
In addition to the foregoing, Issuer shall not be required to
maintain the effectiveness of any registration statement after the expiration of
six months from the effective date of such registration statement. Issuer shall
use its reasonable best reasonable efforts to
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make any filings, and take all steps, under all applicable state securities laws
to the extent necessary to permit the sale or other disposition of the Option
Shares so registered in accordance with the intended method of distribution for
such shares; provided, however, that Issuer shall not be required to consent to
general jurisdiction or qualify to do business in any state where it is not
otherwise required to so consent to such jurisdiction or to so qualify to do
business. If requested by any such Holder in connection with such registration,
Issuer shall 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 in secondary offering underwriting agreements. Upon receiving any
request under this Section 10 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 10, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies.
(d) Expenses. Except where applicable state law
prohibits such payments, Issuer will pay all expenses (including, without
limitation, registration fees, qualification fees, blue sky fees and expenses
(including the fees and expenses of counsel), legal fees and expenses, including
the reasonable fees and expenses of one counsel to the holders whose Option
Shares are being registered, printing expenses and the costs of special audits
or "cold comfort" letters, expenses of underwriters, excluding discounts and
commissions but including liability insurance if Issuer so desires or the
underwriters so require, and the reasonable fees and expenses of any necessary
special experts) in connection with each registration pursuant to Section 10(a)
or 10(b) above (including the related offerings and sales by holders of Option
Shares) and all other qualifications, notifications or exemptions pursuant to
Section 10(a) or 10(b) above.
(e) Indemnification. In connection with any
registration under Section 10(a) or 10(b) above Issuer hereby indemnifies the
Selling Stockholders, and each underwriter thereof, including each person, if
any, who controls such Selling Stockholders or underwriter within the meaning of
Section 15 of the Securities Act, and including each director, officer,
stockholder, partner, member, employee, representative and agent of any thereof,
against all expenses, losses, claims, damages and liabilities caused by any
untrue, or alleged untrue, statement of a material fact contained in any
registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission, or alleged omission, to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such expenses, losses, claims, damages or
liabilities of such indemnified party are caused by any untrue statement or
alleged untrue statement that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon and in conformity with,
information furnished in writing to Issuer by such indemnified party expressly
for use therein, and Issuer and each person, if any, who controls Issuer within
the meaning of Section 15 of the Securities Act, and each director, officer,
stockholder, partner, member, employee, representative and agent of Issuer shall
be indemnified by such Selling Stockholders, or by such underwriter, as the case
may be, for all such expenses, losses, claims, damages and liabilities caused by
any untrue, or alleged untrue, statement, that was included by Issuer in any
such registration statement or
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prospectus or notification or offering circular (including any amendments or
supplements thereto) in reliance upon, and in conformity with, information
furnished in writing to Issuer by such Selling Stockholders or such underwriter,
as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this
Section 10(e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be sought
against any indemnifying party under this Section 10(e), such indemnified party
shall notify the indemnifying party in writing of the commencement of such
action, but the failure so to notify the indemnifying party shall not relieve it
of any liability which it may otherwise have to any indemnified party under this
Section 10(e) unless the failure so to notify the indemnified party results in
substantial prejudice thereto. In case notice of commencement of any such action
shall be given to the indemnifying party as above provided, the indemnifying
party shall be entitled to participate in and, to the extent it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense of such action at its own expense, with counsel chosen by it and
satisfactory to such indemnified party. The indemnified party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party unless
(i) the indemnifying party agrees to pay the same, (ii) the indemnifying party
fails to assume the defense of such action with counsel satisfactory to the
indemnified party, or (iii) the indemnified party has been advised by counsel
that one or more legal defenses may be available to the indemnifying party that
may be contrary to the interest of the indemnified party, in which case the
indemnifying party shall be entitled to assume the defense of such action
notwithstanding its obligation to bear fees and expenses of such counsel. No
indemnifying party shall be liable for any settlement entered into without its
consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 10(e) is
unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by such party to be
indemnified as a result of such expenses, losses, claims, damages or liabilities
in such proportion as is appropriate to reflect the relative benefits received
by Issuer, the Selling Stockholders and the underwriters from the offering of
the securities and also the relative fault of Issuer, the Selling Stockholders
and the underwriters in connection with the statements or omissions which
resulted in such expenses, losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The amount paid or payable by a
party as a result of the expenses, losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim; provided, however, that in no case shall any Selling
Stockholder be responsible, in the aggregate, for any amount in excess of the
net offering proceeds attributable to its Option Shares included in the
offering. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent
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misrepresentation. Any obligation by any Selling Stockholder to indemnify shall
be several and not joint with other Selling Stockholders.
In connection with any registration pursuant to Section 10(a)
or 10(b) above, Issuer and each Selling Stockholder (other than Grantee) shall
enter into an agreement containing the indemnification provisions of this
Section 10(e).
(f) Miscellaneous Reporting. Issuer shall comply with
all reporting requirements and will do all such other things as may be necessary
to permit the expeditious sale at any time of any Option Shares by the Selling
Stockholders thereof in accordance with and to the extent permitted by any rule
or regulation promulgated by the SEC from time to time, including, without
limitation, Rule 144. Issuer shall at its expense provide the Selling
Stockholders with any information necessary in connection with the completion
and filing of any reports or forms required to be filed by them under the
Securities Act or the Exchange Act, or required pursuant to any state securities
laws or the rules of the NASD or any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes in
connection with the issuance and the sale of the Option Shares and in connection
with the exercise of the Option, and will save the Selling Stockholders
harmless, without limitation as to time, against any and all liabilities with
respect to all such taxes.
11. Quotation: Listing. If Issuer Common Stock or any other
securities to be acquired in connection with the exercise of the Option are then
authorized for quotation or trading or listing on the NYSE, the Nasdaq National
Market System or any other securities exchange or securities quotation system,
Issuer, upon the request of Holder, will promptly file an application, if
required, to authorize for quotation or trading or listing the shares of Issuer
Common Stock or any other securities to be acquired upon exercise of the Option
on the NYSE, the Nasdaq National Market System or such other securities exchange
or securities quotation system and will use its reasonable best efforts to
obtain approval, if required, of such quotation or listing as soon as
practicable.
12. Division of Option. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Holder, upon
presentation and surrender of this Agreement at the principal office of Issuer
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Issuer Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any other Stock Option Agreement 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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13. Limitation of Grantee Profit. (a) Notwithstanding any
other provision herein, in no event shall Grantee's Total Profit (as defined
below) exceed $57.5 million (the "Maximum Profit"), and, if it otherwise would
exceed such amount, Grantee, at its sole discretion, shall either (i) reduce the
number of shares subject to the Option (and any Substitute Option), (ii) deliver
to Issuer, or the Substitute Issuer, as the case may be, for cancellation shares
of Issuer Common Stock or Substitute Common Stock, as the case may be (or other
securities into which such Option Shares are converted or exchanged), (iii) pay
cash to Issuer, or the Substitute Issuer, as the case may be, or (iv) any
combination of the foregoing, so that Grantee's actually realized Total Profit
shall not exceed the Maximum Profit after taking into account the foregoing
actions. Notwithstanding any other provision of this Agreement, the Option may
not be exercised for a number of shares as would, as of the date of exercise,
result in a Notional Total Profit (as defined below) of more than $57.5 million
and, if exercise of the Option would otherwise result in the Notional Total
Profit exceeding such amount, Grantee, in its discretion, may take any of the
actions specified in this Section 13(a); provided, that nothing in this sentence
shall restrict any subsequent exercise of the Option which at such time complies
with this sentence.
(b) For purposes of this Agreement, "Total Profit" shall mean:
(i) the aggregate amount of (A) the excess of (x) the net cash amounts received
by Grantee pursuant to a sale of Option Shares (or securities into which such
shares are converted or exchanged) to any unaffiliated third party or a
repurchase of Option Shares by Issuer pursuant hereto, over (y) the Grantee's
aggregate purchase price for such Option Shares (or other securities), plus (B)
all amounts received by Grantee on the transfer of the Option to an unaffiliated
third party (whether upon repurchase by Issuer pursuant hereto or otherwise),
plus (C) all equivalent amounts with respect to the Substitute Option, plus (D)
all amounts received by Grantee pursuant to Sections 8.2(b) and (c) of the
Merger Agreement, minus (ii) all amounts of cash previously paid to Issuer
pursuant to this Section 13(b) plus the value of the Option Shares (or other
securities) previously delivered to Issuer for cancellation pursuant to this
Section 13(b). For purposes of this Agreement, "Notional Total Profit" with
respect to any number of shares as to which Grantee may propose to exercise the
Option, shall be the Total Profit, determined as of the date of such proposed
exercise assuming that the Option were exercised on such date for such number of
shares, and assuming that such shares, together with all other Option Shares
held by Grantee and its affiliates as of such date, were sold for cash at the
closing market price for the Issuer Common Stock as of the close of business on
the preceding trading day (less customary brokerage commissions).
(c) Notwithstanding any other provision of this Agreement,
nothing in this Agreement shall affect the ability of Grantee to receive, nor
relieve Issuer's obligation to pay, any payment provided for in Section 8.2 (b)
or (c) of the Merger Agreement; provided, that if and to the extent the Total
Profit received by Grantee would exceed the Maximum Profit following receipt of
such payment, Grantee shall be obligated to comply with the terms of Section
13(a) within 30 days of the latest of (i) the date of receipt of such payment,
(ii) the date of receipt of the net cash by Grantee pursuant to the sale of
Option Shares (or securities into which such Option Shares are converted or
exchanged) to any unaffiliated party, (iii) the date of receipt of net cash from
the disposition of the Option or Substitute Option, as the case
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may be, and (iv) the date of receipt of equivalent amounts pursuant to the sale
of the Substitute Option or shares of Substitute Common Stock (or other
securities into which such Substitute Common Stock is converted or exchanged).
(d) For purposes of paragraph (a) of this Section and clause
(b)(ii) of this Section, the value of any Option Shares delivered to Issuer
shall be the closing market price of such Option Shares as of the close of
business on the preceding trading day and the value of any Substitute Common
Stock delivered to Substitute Issuer shall be the closing market price of such
Substitute Common Stock as of the close of business on the preceding trading
day.
14. Miscellaneous.
(a) Expenses. Except as otherwise provided herein or
in the 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, without limitation, fees and expenses of its
own financial consultants, investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this
Agreement may be waived at any time by the party that is entitled to the
benefits of such provision. This Agreement may not be modified, amended, altered
or supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights. No single or partial exercise of any right, remedy,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. Any
waiver shall be effective only in the specific instance and for the specific
purpose for which given and shall not constitute a waiver to any subsequent or
other exercise of any right, remedy, power or privilege hereunder.
(c) Entire Agreement: No Third-Party Beneficiaries;
Severability. This Agreement, together with the Merger Agreement and the other
documents and instruments referred to herein and therein, between Grantee and
Issuer (i) constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof and (ii) is not intended to confer upon any person
other than the parties hereto (or their respective successors and assigns)
(other than any transferees of the Option Shares or any permitted transferee of
this Agreement pursuant to Section 14(h)) any rights, remedies, obligations or
liabilities hereunder. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or Governmental Entity to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected impaired or invalidated. If for any
reason such court or Governmental Entity determines that the Option does not
permit Holder to acquire, or does not require Issuer to repurchase, the full
number of shares of Issuer Common Stock as provided in Section 2 (as may be
adjusted herein), it is the express intention of Issuer to allow Holder to
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acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of New York.
(e) Descriptive Headings. The descriptive headings
contained herein are for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to the parties at the addresses set forth in the Merger
Agreement (or at such other address for a party as shall be specified by like
notice).
(g) Counterparts. This Agreement and any amendments
hereto may be executed in two counterparts, each of which shall be considered
one and the same agreement and shall become effective when both counterparts
have been signed, it being understood that both parties need not sign the same
counterpart.
(h) Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder or under the Option shall be assigned
by any of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other party, except that Holder may assign this
Agreement to a wholly-owned Subsidiary of Holder and Holder may assign its
rights hereunder in whole or in part after the occurrence of a Subsequent
Triggering Event. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
(i) Further Assurances. In the event of any exercise
of the Option by the Holder, Issuer and the Holder shall execute and deliver all
other documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(j) Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any Federal court or
New York State court sitting in the Borough of Manhattan, City of New York, this
being in addition to any other remedy to which they are entitled at law or in
equity.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock
Option Agreement to be signed by their respective officers thereunto duly
authorized, all as of the day and year first written above.
THE CHASE MANHATTAN CORPORATION
By: /s/ Xxxxxxx X. XxXxxxx
-------------------------------------
Name: Xxxxxxx X. XxXxxxx
Title: General Counsel
XXXXXXXXX & XXXXX GROUP
By: /s/ Xxxxxx X. Case III
-------------------------------------
Name:
Title:
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