STOCK OPTION AGREEMENT
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated September 16, 1997,
between THE QUICK & XXXXXX GROUP, INC., a Delaware corpora-
tion ("Issuer"), and FLEET FINANCIAL GROUP, INC., a Rhode Is-
land corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an
Agreement and Plan of Merger of even date herewith (the
"Merger Agreement"), which agreement has been executed by the
parties hereto immediately prior to this Agreement; and
WHEREAS, as a condition to Grantee's entering into
the Merger Agreement and in consideration therefor, Issuer
has agreed to grant Grantee the Option (as hereinafter de-
fined):
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 uncon-
ditional, irrevocable option (the "Option") to purchase, sub-
ject to the terms hereof, up to 7,688,241 fully paid and non-
assessable shares of Issuer's Common Stock, par value $0.10
per share ("Common Stock"), at a price of $35.04 per share
(the "Option Price"); provided further that in no event shall
the number of shares of Common Stock for which this Option is
exercisable exceed 19.9% of the Issuer's issued and outstand-
ing shares of Common Stock. The number of shares of Common
Stock that may be received upon the exercise of the Option
and the Option Price are subject to adjustment as herein set
forth.
(b) In the event that any additional shares of
Common Stock are issued or otherwise become outstanding after
the date of this Agreement (other than pursuant to this
Agreement), the number of shares of Common Stock subject to
the Option shall be increased so that, after such issuance,
it equals 19.9% of the number of shares of Common Stock then
issued and outstanding without giving effect to any shares
subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be
deemed to authorize Issuer or Grantee to breach any provision
of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may
exercise the Option, in whole or part, and from time to time,
if, but only if, both an Initial Triggering Event (as here-
inafter defined) and a Subsequent Triggering Event (as here-
inafter defined) shall have occurred prior to the occurrence
of an Exercise Termination Event (as hereinafter defined),
provided that the Holder shall have sent the written notice
of such exercise (as provided in subsection (e) of this Sec-
tion 2) within 90 days following such Subsequent Triggering
Event. Each of the following shall be an Exercise Termina-
tion Event: (i) the Effective Time of the Merger; (ii) ter-
mination of the Merger Agreement in accordance with the pro-
visions thereof if such termination occurs prior to the oc-
xxxxxxxx of an Initial Triggering Event except a termination
by Grantee pursuant to Section 8.1(b) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of
termination is non-volitional); or (iii) the passage of
twelve months after termination of the Merger Agreement if
such termination follows the occurrence of an Initial Trig-
xxxxxx Event or is a termination by Grantee pursuant to Sec-
tion 8.1(b) of the Merger Agreement (unless the breach by Is-
xxxx giving rise to such right of termination is non-
volitional) (provided that if an Initial Triggering Event
continues or occurs beyond such termination and prior to the
passage of such twelve-month period, the Exercise Termination
Event shall be twelve months from the expiration of the Last
Triggering Event but in no event more than 18 months after
such termination). The "Last Triggering Event" shall mean
the last Initial Triggering Event to expire. The term "Hold-
er" shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean
any of the following events or transactions occurring after
the date hereof:
(i) Issuer or any of its Subsidiaries (each
an "Issuer Subsidiary"), without having received Grant-
ee'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 as-
signed 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 its Subsidiaries (each a "Grantee
-2-
Subsidiary") or the Board of Directors of Issuer shall
have recommended that the stockholders of Issuer approve
or accept any Acquisition Transaction. For purposes of
this Agreement, "Acquisition Transaction" shall mean (w)
a merger or consolidation, or any similar transaction,
involving Issuer or any Significant Subsidiary (as de-
fined in Rule 1-02 of Regulation S-X promulgated by the
Securities and Exchange Commission (the "SEC")) of Is-
xxxx, (x) a purchase, lease or other acquisition of all
or a substantial portion of the assets of Issuer or any
Significant Subsidiary of Issuer, (y) a purchase or
other acquisition (including by way of merger, xxxxxxx-
dation, share exchange or otherwise) of securities rep-
resenting 10% or more of the voting power of Issuer or
any Significant Subsidiary of Issuer, or (z) any sub-
stantially similar transaction; provided, however, that
in no event shall any (i) merger, consolidation or simi-
lar transaction involving Issuer or any Significant Sub-
sidiary in which the voting securities of Issuer out-
standing immediately prior thereto continue to represent
(by either remaining outstanding or being converted into
the voting securities of the surviving entity of any
such transaction) at least 65% of the combined voting
power of the voting securities of the Issuer or the sur-
viving entity outstanding immediately after the consum-
mation of such merger, consolidation, or similar trans-
action, or (ii) any merger, consolidation, purchase or
similar transaction involving only the Issuer and one or
more of its Subsidiaries or involving only any two or
more of such Subsidiaries, be deemed to be an Acquisi-
tion Transaction, provided any such transaction is not
entered into in violation of the terms of the Merger
Agreement;
(ii) Issuer or any Issuer Subsidiary, without
having received Grantee's prior written consent, shall
have authorized, recommended, proposed or publicly an-
nounced its intention to authorize, recommend or pro-
pose, to engage in an Acquisition Transaction with any
person other than Grantee or a Grantee Subsidiary, or
the Board of Directors of Issuer shall have publicly
withdrawn or modified, or publicly announced its in-
terest to withdraw or modify, in any manner adverse to
Grantee, its recommendation that the stockholders of
Issuer approve the transactions contemplated by the
Merger Agreement;
(iii) Any person other than Grantee, any
Grantee Subsidiary or any Issuer Subsidiary acting in a
fiduciary capacity in the ordinary course of its
business shall have acquired beneficial ownership or the
right to
-3-
acquire beneficial ownership of 10% or more of the out-
standing shares of Common Stock (the term "beneficial
ownership" for purposes of this Option Agreement having
the meaning assigned thereto in Section 13(d) of the
1934 Act, and the rules and regulations thereunder);
(iv) Any person other than Grantee or any
Grantee Subsidiary shall have made a bona fide proposal
to Issuer or its stockholders by public announcement or
written communication that is or becomes the subject of
public disclosure to engage in an Acquisition Transac-
tion;
(v) After an overture is made by a third par-
ty to Issuer or its stockholders to engage in an Acqui-
sition Transaction, Issuer shall have breached any cov-
enant or obligation contained in the Merger Agreement
and such breach (x) would entitle Grantee to terminate
the Merger Agreement and (y) shall not have been cured
prior to the Notice Date (as defined below); or
(vi) Any person other than Grantee or any
Grantee Subsidiary, other than in connection with a
transaction to which Grantee has given its prior written
consent, shall have filed an application or notice with
the Federal Reserve Board, or other federal or state
bank regulatory 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 either of the following events or transactions occurring
after the date hereof:
(i) The acquisition by any person of benefi-
cial ownership of 20% or more of the then outstanding
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 (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in writ-
ing of the occurrence of any Initial Triggering Event or Sub-
sequent 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 the Holder to exer-
cise the Option.
-4-
(e) In the event the Holder is entitled to and
wishes to exercise the Option, 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
60 business days from the Notice Date for the closing of such
purchase (the "Closing Date"); provided that if prior notifi-
cation to or approval of the Federal Reserve Board or any
other regulatory agency is required in connection with such
purchase, the Holder shall promptly file the required notice
or application for approval and shall expeditiously process
the same and the period of time that otherwise would run pur-
suant 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 any req-
uisite waiting period or periods shall have passed. Any ex-
ercise 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, the Holder shall pay to Issuer the aggre-
gate purchase price for the shares of Common Stock purchased
pursuant to the exercise of the Option in immediately avail-
able funds by wire transfer to a bank account designated by
Issuer, provided that failure or refusal of Issuer to desig-
nate such a bank account shall not preclude the Holder from
exercising the Option.
(g) At such closing, simultaneously with the de-
livery of immediately available funds as provided in subsec-
tion (f) of this Section 2, Issuer shall deliver to the Hold-
er a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the
Option should be exercised in part only, a new Option evi-
dencing the rights of the Holder thereof to purchase the bal-
ance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer a copy of this Agreement and a letter
agreeing that the Holder will not offer to sell or otherwise
dispose of such shares in violation of applicable law or the
provisions of this Agreement.
(h) Certificates for Common Stock delivered at a
closing hereunder may be endorsed with a restrictive legend
that shall read substantially as follows:
"The transfer of the shares represented by this
certificate is subject to certain provisions of an
agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the
-5-
Securities Act of 1933, as amended. A copy of such
agreement is on file at the principal office of Is-
xxxx and will be provided to the holder hereof
without charge upon receipt by Issuer of a written
request therefor."
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 de-
livery of substitute certificate(s) without such reference if
the 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, to the ef-
fect that such legend is not required for purposes of the
1933 Act; (ii) the reference to the provisions to this Agree-
ment in the above legend shall be removed by delivery of sub-
stitute certificate(s) without such reference if the shares
have been sold or transferred in compliance with the provi-
sions of this Agreement and under circumstances that do not
require the retention of such reference; and (iii) the legend
shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addi-
tion, such certificates shall bear any other legend as may be
required by law.
(i) Upon the giving by the Holder 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 ap-
plicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwith-
standing that the stock transfer books of Issuer shall then
be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the
Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other
charges that may be payable in connection with the prepara-
tion, issue and delivery of stock certificates under this
Section 2 in the name of the Holder or its assignee, trans-
feree 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 Common Stock so that the
Option may be exercised without additional authorization of
Common Stock after giving effect to all other options, war-
rants, convertible securities and other rights to purchase
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
-6-
to avoid the observance or performance of any of the cove-
nants, 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 premerger notification, reporting and waiting period re-
quirements specified in 15 U.S.C. 18a and regulations pro-
mulgated thereunder and (y) in the event, under the Bank
Holding Company Act of 1956, as amended (the "BHCA"), or the
Change in Bank Control Act of 1978, as amended, or any state
banking law, prior approval of or notice to the Federal Re-
serve Board or to any state regulatory authority is necessary
before the Option may be exercised, cooperating fully with
the Holder in preparing such applications or notices and pro-
viding such information to the Federal Reserve Board or such
state regulatory authority as they may require) in order to
permit the Holder to exercise the Option and Issuer duly and
effectively to issue shares of Common Stock pursuant hereto;
and (iv) promptly to take all action provided herein to pro-
tect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of the Hold-
er, 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, on the same terms and subject to the
same conditions as are set forth herein, in the aggregate the
same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any
Stock Option 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 consti-
tute an additional contractual obligation on the part of Is-
xxxx, whether or not the Agreement so lost, stolen, destroyed
or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of
shares of Common Stock that are purchasable upon exercise of
the Option pursuant to Section 1 of this Agreement, the num-
ber of shares of Common Stock purchasable upon the exercise
of the Option and the Option Price shall be subject to ad-
justment from time to time as provided in this Section 5. In
the event of any change in, or distributions in respect of,
the Common Stock by reason of stock dividends, split-ups,
-7-
mergers, recapitalizations, combinations, subdivisions, con-
versions, exchanges of shares, distributions on or in respect
of the Common Stock that would be prohibited under the terms
of the Merger Agreement, or the like, the type and number of
shares of Common Stock purchasable upon exercise hereof and
the Option Price shall be appropriately adjusted in such man-
ner as shall fully preserve the economic benefits provided
hereunder and proper provision shall be made in any agreement
governing any such transaction to provide for such proper ad-
justment and the full satisfaction of the Issuer's obliga-
tions hereunder.
6. Upon the occurrence of a Subsequent Triggering
Event that occurs prior to an Exercise Termination Event, Is-
xxxx shall, at the request of Grantee delivered within 90
days of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option
(or part thereof) or any of the shares of Common Stock issued
pursuant hereto), promptly prepare, file and keep current a
shelf registration statement under the 1933 Act covering this
Option and any shares issued and issuable pursuant to this
Option and shall use its reasonable best efforts to cause
such registration statement to become effective and remain
current in order to permit the sale or other disposition of
this Option and any shares of Common Stock issued upon total
or partial exercise of this Option ("Option Shares") in ac-
cordance with any plan of disposition requested by Grantee.
Issuer will use its reasonable best efforts to cause such
registration statement first to become effective and then to
remain effective for such period not in excess of 180 days
from the day such registration statement first becomes effec-
tive or such shorter time as may be reasonably necessary to
effect such sales or other dispositions. Grantee shall have
the right to demand two such registrations. The foregoing
notwithstanding, if, at the time of any request by Grantee
for registration of the Option or Option Shares as provided
above, Issuer is in registration with respect to an under-
written public offering of shares of Common Stock, and if in
the good faith judgment of the managing underwriter or manag-
ing underwriters, or, if none, the sole underwriter or under-
writers, of such offering the inclusion of the Holder's Op-
tion or Option Shares would interfere with the successful
marketing of the shares of Common Stock offered by Issuer,
the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced;
and provided, however, that after any such required reduction
the number of Option Shares to be included in such offering
for the account of the Holder shall constitute at least 25%
of the total number of shares to be sold by the Holder and
Issuer in the aggregate; and provided further, however, that
-8-
if such reduction occurs, then the Issuer shall file a reg-
istration statement for the balance as promptly as practical
and no reduction shall thereafter occur. Each such Holder
shall provide all information reasonably requested by Issuer
for inclusion in any registration statement to be filed here-
under. If requested by any such Holder in connection with
such registration, Issuer shall become a party to any under-
writing agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of repre-
sentations, warranties, indemnities and other agreements cus-
tomarily included in such underwriting agreements for the Is-
xxxx. Upon receiving any request under this Section 6 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 6, in each case by promptly mailing the
same, postage prepaid, to the address of record of the per-
sons entitled to receive such copies. Notwithstanding any-
thing to the contrary contained herein, in no event shall Is-
xxxx be obligated to effect more than two registrations pur-
suant to this Section 6 by reason of the fact that there
shall be more than one Grantee as a result of any assignment
or division of this Agreement.
7. (a) Immediately prior to the occurrence of a
Repurchase Event (as defined below), (i) following a request
of the Holder, delivered prior to an Exercise Termination
Event, Issuer (or any successor thereto) shall repurchase the
Option from the Holder 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, mul-
tiplied by the number of shares for which this Option may
then be exercised and (ii) at the request of the owner of Op-
tion Shares from time to time (the "Owner"), delivered within
90 days of such occurrence (or such later period as provided
in Section 10), Issuer shall repurchase such number of the
Option Shares from the Owner as the Owner 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 Common Stock at which a
tender offer or exchange offer therefor has been made, (ii)
the price per share of Common Stock to be paid by any third
party pursuant to an agreement with Issuer, (iii) the highest
closing price for shares of Common Stock within the six-month
period immediately preceding the date the Holder gives notice
of the required repurchase of this Option or the Owner 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 a sub-
stantial portion of Issuer's assets, the sum of the price
paid in such sale for such assets and the current market
-9-
value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, divided by the num-
ber of shares of 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 deter-
mined by a nationally recognized investment banking firm se-
lected by the Holder or Owner, as the case may be and reason-
ably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be,
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 of-
fice, a copy of this Agreement or certificates for Option
Shares, as applicable, accompanied by a written notice or no-
tices stating that the Holder or the Owner, as the case may
be, elects to require Issuer to repurchase this Option and/or
the Option Shares in accordance with the provisions of this
Section 7. Within the latter to occur of (x) 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 and (y) the time that is immediately
prior to the occurrence of a Repurchase Event, Issuer shall
deliver or cause to be delivered to the Holder the Option Re-
purchase Price and/or to the Owner the Option Share Repur-
chase Price therefor or the portion thereof that Issuer is
not then prohibited under applicable law and regulation from
so delivering.
(c) To the extent that Issuer is prohibited under
applicable law or regulation from repurchasing the Option
and/or the Option Shares in full, Issuer shall immediately so
notify the Holder and/or the Owner and thereafter deliver or
cause to be delivered, from time to time, to the Holder and/
or the Owner, as appropriate, the portion of the Option Re-
purchase Price and the Option Share Repurchase Price, respec-
tively, 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 notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under ap-
plicable law or regulation from delivering to the Holder
and/or the Owner, as appropriate, the Option Repurchase Price
and the Option Share Repurchase Price, respectively, in full
(and Issuer hereby undertakes to use its best efforts to ob-
tain all required regulatory and legal approvals and to file
any required notices as promptly as practicable in order to
accomplish such repurchase), the Holder or Owner may revoke
its notice of repurchase of the Option or the Option Shares
-10-
either in whole or to the extent of the prohibition, where-
upon, in the latter case, Issuer shall promptly (i) deliver
to the Holder and/or the Owner, as appropriate, that portion
of the Option Repurchase Price or the Option Share Repurchase
Price that Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Holder, a new
Stock Option Agreement evidencing the right of the Holder to
purchase that number of shares of 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 Option Repurchase Price less
the portion thereof theretofore delivered to the Holder and
the denominator of which is the Option Repurchase Price, or
(B) to the Owner, a certificate for the Option Shares it is
then so prohibited from repurchasing.
(d) For purposes of this Section 7, a Repurchase
Event shall be deemed to have occurred (i) upon the consum-
mation of any merger, consolidation or similar transaction
involving Issuer or any purchase, lease or other acquisition
of all or a substantial portion of the assets of Issuer,
other than any such transaction which would not constitute an
Acquisition Transaction pursuant to the proviso to Section
2(b)(i) hereof or (ii) upon the acquisition by any person of
beneficial ownership of 50% or more of the then outstanding
shares of Common Stock, provided that no such event shall
constitute a Repurchase Event unless a Subsequent Triggering
Event shall have occurred prior to an Exercise Termination
Event. The parties hereto agree that Issuer's obligations to
repurchase the Option or Option Shares under this Section 7
shall not terminate upon the occurrence of an Exercise Ter-
mination Event unless no Subsequent Triggering Event shall
have occurred prior to the occurrence of an Exercise Termi-
nation Event.
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 one of its Subsidiaries, and shall not be the con-
tinuing 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 Common Stock
shall be changed into or exchanged for stock or other securi-
ties of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such mer-
ger represent less than 50% of the outstanding voting shares
and voting share equivalents of the merged company, or (iii)
-11-
to sell or otherwise transfer all or substantially all of its
assets to any person, other than Grantee or one of its Sub-
sidiaries, then, and in each such case, the agreement govern-
ing 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 con-
verted into, or exchanged for, an option (the "Substitute Op-
tion"), at the election of the Holder, of either (x) the Ac-
xxxxxxx Corporation (as hereinafter defined) or (y) any per-
son that controls the Acquiring Corporation.
(b) The following terms have the meanings indi-
cated:
(1) "Acquiring Corporation" shall mean (i)
the continuing or surviving corporation of a consolida-
tion or merger with Issuer (if other than Issuer), (ii)
Issuer in a merger in which Issuer is the continuing or
surviving person, and (iii) the transferee of all or
substantially all of Issuer's assets.
(2) "Substitute Common Stock" shall mean the
common stock issued by the issuer of the Substitute Op-
tion upon exercise of the Substitute Option.
(3) "Assigned Value" shall mean the market/
offer price, as defined in Section 7.
(4) "Average Price" shall mean the average
closing price of a share of the Substitute Common Stock
for the one year immediately preceding the consolida-
tion, merger or sale in question, but in no event higher
than the closing price of the shares of Substitute Com-
mon Stock on the day preceding such consolidation, merg-
er 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 con-
trols or is controlled by such person, as the Holder may
elect.
(c) The Substitute Option shall have the same
terms as the Option, provided, that if the terms of the Sub-
stitute 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 the Holder. The issuer of the
Substitute Option shall also enter into an agreement with the
then Holder or Holders of the Substitute Option in substan-
tially the same form as this Agreement, which shall be appli-
cable to the Substitute Option.
-12-
(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
Common Stock for which the Option is then exercisable, divid-
ed by the Average Price. The exercise price of the Substi-
tute 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 Common
Stock for which the Option is then exercisable and the denom-
inator 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 out-
standing 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 out-
standing prior to exercise but for this clause (e), the is-
xxxx of the Substitute Option (the "Substitute Option Is-
xxxx") shall make a cash payment to Holder equal to the ex-
cess of (i) the value of the Substitute Option without giving
effect to the limitation in this clause (e) over (ii) the
value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value
shall be determined by a nationally recognized investment
banking firm selected by the Holder or the Owner, as the case
may be, and reasonably acceptable to the Acquiring Corpora-
tion.
(f) Issuer shall not enter into any transaction
described in subsection (a) of this Section 8 unless the Ac-
xxxxxxx Corporation and any person that controls the Acquir-
ing Corporation assume in writing all the obligations of Is-
xxxx hereunder.
9. (a) At the request of the holder of the Sub-
stitute Option (the "Substitute Option Holder"), the issuer
of the Substitute Option (the "Substitute Option Issuer")
shall repurchase the Substitute Option from the Substitute
Option Holder at a price (the "Substitute Option Repurchase
Price") equal to (x) the amount by which (i) the Highest
Closing Price (as hereinafter defined) exceeds (ii) the exer-
cise price of the Substitute Option, multiplied by the number
of shares of Substitute Common Stock for which the Substitute
Option may then be exercised plus (y) Grantee's Out-of-Pocket
Expenses (to the extent not previously reimbursed), 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
-13-
Shares at a price (the "Substitute Share Repurchase Price")
equal to (x) the Highest Closing Price multiplied by the num-
ber of Substitute Shares so designated plus (y) Grantee's
Out-of-Pocket Expenses (to the extent not previously xxxx-
bursed). 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 re-
purchase of the Substitute Option or the Substitute Share
Owner gives notice of the required repurchase of the Substi-
tute Shares, as applicable.
(b) The Substitute Option Holder and the Substi-
tute Share Owner, as the case may be, may exercise its re-
spective right to require the Substitute Option Issuer to re-
purchase the Substitute Option and the Substitute Shares pur-
suant 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 certificates
for Substitute Shares accompanied by a written notice or no-
tices stating that the Substitute Option Holder or the Sub-
stitute Share Owner, as the case may be, elects to require
the Substitute Option Issuer to repurchase the Substitute Op-
tion and/or the Substitute Shares in accordance with the pro-
visions 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 Sub-
stitute Shares and the receipt of such notice or notices re-
lating 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 Is-
xxxx is prohibited under applicable law or regulation 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 por-
tion of the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five
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
-14-
a notice of repurchase pursuant to subsection (b) of this
Section 9 prohibited under applicable law or regulation from
delivering to the Substitute Option Holder and/or the Sub-
stitute 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 best efforts to receive all required regulatory and
legal approvals as promptly as practicable in order to ac-
complish such repurchase), the Substitute Option Holder 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 the 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 xx-
xxxxxxxx; 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 exer-
cisable at the time of delivery of the notice of repurchase
by a fraction, the numerator of which is the Substitute Op-
tion Repurchase Price less the portion thereof theretofore
delivered to the Substitute Option Holder and the denominator
of which is the Substitute Option Repurchase Price, or (B) to
the Substitute Share Owner, a certificate for the Substitute
Option Shares it is then so prohibited from repurchasing.
10. The 90-day period for exercise of certain
rights under Sections 2, 6, 7 and 13 shall be extended: (i)
to the extent necessary to obtain all regulatory approvals
for the exercise of such rights, and for the expiration of
all statutory waiting periods; and (ii) to the extent neces-
sary to avoid liability under Section 16(b) of the 1934 Act
by reason of such exercise.
11. Issuer hereby represents and warrants to
Grantee as follows:
(a) 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 Board of Directors of Issuer and no other corporate pro-
ceedings on the part of Issuer are necessary to authorize
-15-
this Agreement or to consummate the transactions so contem-
plated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate ac-
tion 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 re-
served for issuance upon the exercise of the Option, that
number of shares of Common Stock equal to the maximum number
of shares of Common Stock at any time and from time to time
issuable hereunder, and all such shares, upon issuance pursu-
ant hereto, will be duly authorized, validly issued, fully
paid, nonassessable, and will be delivered free and clear of
all claims, liens, encumbrance and security interests and not
subject to any preemptive rights.
(c) Issuer has taken all action (including if re-
quired redeeming all of the Rights or amending or terminating
the Rights Agreement) so that the entering into of this Op-
tion Agreement, the acquisition of shares of Common Stock
hereunder and the other transactions contemplated hereby do
not and will not result in the grant of any rights to any
person under the Rights Agreement or enable or require the
Rights to be exercised, distributed or triggered.
12. Grantee hereby represents and warrants to Is-
xxxx that:
(a) Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any
approvals or consents referred to herein, to consummate the
transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all neces-
sary corporate action on the part of Grantee. This Agreement
has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of
Common Stock or other securities acquired by Grantee upon ex-
ercise 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 registration under the Securities Act.
13. Neither of the parties hereto may assign any of
its rights or obligations under this Option Agreement or the
Option created hereunder to any other person, without the ex-
press written consent of the other party, except that in the
event a Subsequent Triggering Event shall have occurred prior
-16-
to an Exercise Termination Event, Grantee, subject to the ex-
press provisions hereof, may assign in whole or in part its
rights and obligations hereunder within 90 days following
such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the
date 15 days following the date on which the Federal Reserve
Board approves an application by Grantee under the BHCA to
acquire the shares of Common Stock subject to the Option,
Grantee may not assign its rights under the Option except in
(i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to pur-
chase in excess of 2% of the voting shares of Issuer, (iii)
an assignment to a single party (e.g., a broker or investment
banker) for the purpose of conducting a widely dispersed pub-
lic distribution on Grantee's behalf, or (iv) any other man-
ner approved by the Federal Reserve Board.
14. Each of Grantee and Issuer will use its best
efforts to make all filings with, and to obtain consents of,
all third parties and governmental authorities necessary to
the consummation of the transactions contemplated by this
Agreement, including without limitation making application to
list the shares of Common Stock issuable hereunder on the New
York Stock Exchange upon official notice of issuance and ap-
plying to the Federal Reserve Board under the BHCA for ap-
proval 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 Common Stock issuable
hereunder until such time, if ever, as it deems appropriate
to do so.
15. 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 par-
ties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
16. If any term, provision, covenant or restric-
tion contained in this Agreement is held by a court or a fed-
eral 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
the Holder is not permitted to acquire, or Issuer is not per-
mitted to repurchase pursuant to Section 7, the full number
of shares of Common Stock provided in Section 1(a) hereof (as
adjusted pursuant to Section 1(b) or 5 hereof), it is the ex-
press intention of Issuer to allow the Holder to acquire or
-17-
to require Issuer to repurchase such lesser number of shares
as may be permissible, without any amendment or modification
hereof.
17. All notices, requests, claims, demands and
other communications hereunder shall be deemed to have been
duly given when delivered in person, by cable, telegram, tel-
ecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective address-
es of the parties set forth in the Merger Agreement.
18. This Agreement shall be governed by and con-
strued in accordance with the laws of the State of New York,
regardless of the laws that might otherwise govern under ap-
plicable principles of conflicts of laws thereof.
19. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an origi-
nal, but all of which shall constitute one and the same
agreement.
20. 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 bank-
ers, accountants and counsel.
21. Except as otherwise expressly provided herein
or in the Merger Agreement, this Agreement contains the en-
tire agreement between the parties with respect to the trans-
actions contemplated hereunder and supersedes all prior ar-
rangements 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 assigns. Nothing
in this Agreement, expressed or implied, is intended to con-
fer upon any party, other than the parties hereto, and their
respective successors except as assigns, any rights, rem-
edies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
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.
THE QUICK & XXXXXX GROUP, INC.
/s/ Xxxxxx X. Quick, Jr.
By:____________________________
Name: Xxxxxx X. Quick, Jr.
Title: Chairman of the Board
and Chief Executive Officer
FLEET FINANCIAL GROUP, INC.
/s/ H. Xxx Xxxxxx
By:____________________________
Name: H. Xxx Xxxxxx
Title: Vice Chairman
-19-
