EXHIBIT 10
STOCK OPTION AGREEMENT
DATED AS OF THE 9th DAY OF April, 2001
BY AND BETWEEN
MID-STATE BANCSHARES
AND
AMERICORP
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of the 9th day of April, 2001, (this
"Agreement"), between Mid-State Bancshares, a California corporation
("Grantee"), and Americorp, a California corporation ("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer are entering into an Agreement to Merge and
Plan of Reorganization dated as of the date hereof (the "Plan"), which is being
executed by the parties hereto simultaneously with the execution of this
Agreement;
WHEREAS, as a condition and inducement to Grantee's entering into the
Plan and in consideration therefore, Issuer has agreed to grant Grantee the
Option (as defined below); and
WHEREAS, the Board of Directors of Issuer has approved the grant of the
Option and the Plan prior to the date hereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Plan, the parties hereto
agree as follows:
SECTION 1. GRANT OF OPTION.
(a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to 417,688
shares of fully paid and nonassessable shares of Common Stock, $0.50 par value
per share ("Common Stock"), of Issuer at a fixed price per share of $17.00 (the
"Initial Price"); PROVIDED, HOWEVER, that in the event Issuer issues or agrees
to issue any shares of Common Stock at a price less than the Initial Price (as
adjusted pursuant to Section 5(b)), such price shall be equal to such lesser
price (such price, as adjusted as hereinafter provided, the "Option Price");
and, PROVIDED FURTHER, HOWEVER, that in no event shall the number of shares of
Common Stock for which the Option is exercisable exceed 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. 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 and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Common Stock subject to the Option
shall be increased so that after such issuance such number together with any
shares of Common Stock previously issued pursuant hereto, 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 to issue shares in breach of any provision of the Plan.
SECTION 2. EXERCISE OF OPTION
TIMING OF EXERCISE, TERMINATION. Provided that (i) Grantee shall not be
in material breach of the
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agreements or covenants contained in this Agreement or the Plan and (ii) no
preliminary or permanent injunction or other order against delivery of shares
covered by the Option issued by any court of competent jurisdiction in the
United States shall be in effect, Grantee may exercise the Option, in whole
or part, at any time and from time to time following the occurrence of a
Purchase Event (as defined below); PROVIDED that the Option shall terminate
and be of no further force and effect upon the earliest to occur of (i) at
the Effective Time, (ii)12 months after the first occurrence of a Purchase
Event, (iii) 18 months after the termination of the Plan following the
occurrence of a Preliminary Purchase Event (as defined below), (iv)
termination of the Plan in accordance with the terms thereof prior to the
occurrence of a Purchase Event or a Preliminary Purchase Event (other than a
termination of the Plan by Grantee pursuant to Section 10.1(c), (d) or (f),
or by Grantee and Issuer pursuant to Section 10.1(a) thereof if Grantee shall
at that time have been entitled to terminate the Plan pursuant to Section
10.1(c), (d) or (f) thereof), or (v) 18 months after the termination of the
Plan by Grantee pursuant to Section 10.1(c), (d) or (f) or by Grantee and
Issuer pursuant to Section 10.1(a) thereof if Grantee shall at that time have
been entitled to terminate the Plan pursuant to Section 10.1(c),(d) or (f)
thereof. The events described in clauses (i) - (v) in the preceding sentence
are hereinafter collectively referred to as an "Exercise Termination Event."
Anything herein to the contrary notwithstanding, any purchase of shares upon
exercise of the Option shall be subject to compliance with applicable law.
The rights set forth in Section 7 hereof shall terminate when the right to
exercise the Option terminates (other than as a result of a complete exercise
of the Option) as set forth herein.
PURCHASE EVENT. The term "Purchase 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") shall have entered into an agreement to engage in an
Acquisition Transaction (as defined below) with any Person (the term
"Person" for purposes of this Agreement having the meaning assigned
thereto in Sections 3(a) (9) and 13(d)(3) of the Securities Exchange
Act of 1934 (the "Exchange Act"), and the rules and regulations
thereunder) other than Grantee or any of its subsidiaries (each a
"Grantee Subsidiary") or the Board of Directors of Issuer shall have
recommended that the shareholders of Issuer approve or accept any
Acquisition Transaction with any Person other than Grantee or any
Grantee Subsidiary. For purposes of this Agreement, "Acquisition
Transaction" shall mean (x) a merger or consolidation, or any similar
transaction, involving Issuer or any Issuer Subsidiary, (y) a purchase,
lease or other acquisition of all or substantially all of the assests
of or assumption of all or substantially all the deposits of Issuer or
any Issuer Subsidiary or (z) a purchase or other acquisition (including
by way of merger, condolidation, share exchange or otherwise) of
securites representing 10% or more of the voting power of Issuer or any
Issuer Subsidiary, provided that the term "Acquisition Transaction"
does not include any internal merger or consolidation involving only
Issuer and/or Issuer Subsidiaries;
(ii) The acquisition by any Person other than Grantee or any
Grantee Subsidiary of Beneficial Ownership of shares of Common Stock,
such that, upon the consummation of such acquisition, such Person would
have Beneficial Ownership, in the aggregate, of 25% or more of the then
outstanding shares of Common Stock; or
(iii) The occurrence of a Preliminary Purchase Event described
in Section 2(c)(i) or (ii) hereof except that the percentage referred
to in either such case shall be 25%.
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(c) PRELIMINARY PURCHASE EVENT. The term "Preliminary Purchase Event"
shall mean any of the following events or transactions occurring after the date
hereof:
(i) Any Person (other than Grantee or any Grantee Subsidiary
or any Issuer Subsidiary acting in a fiduciary capacity in the ordinary
course of business) shall have acquired Beneficial Ownership or the
right to acquire Beneficial Ownership, of shares of Common Stock (the
term "Beneficial Ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the Exchange Act, and the
rules and regulations thereunder) such that, upon the consummation of
such acquisition, such Person would have Beneficial Ownership, in the
aggregate, of 10% or more of the then outstanding shares of Common
Stock;
(ii) Any Person other than Grantee or any Grantee Subsidiary
shall have made a BONA FIDE proposal to Issuer or its shareholders, by
public announcement or written communication that is or becomes the
subject of public disclosure, to engage in an Acquisition Transaction
(including, without limitation, any situation in which any Person other
than Grantee or any Grantee Subsidiary 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 of 1933, as
amended (the "Securities Act"), with respect to, a tender offer or
exchange offer to purchase any shares of Common Stock such that, upon
consummation of such offer, such Person would own or control 10% or
more of the then outstanding shares of Common Stock (such an offer
being referred to herein as a "Tender Offer" or an "Exchange Offer",
respectively);
(iii) After a proposal is made by a third party to Issuer or
its shareholders to engage in an Acquisition Transaction, or such third
party states its intention to make such a proposal if the Plan
terminates and/or the Option expires, Issuer shall have breached any
covenant or obligation contained in the Plan and such breach would
entitle Grantee to terminate the Plan (without regard to the cure
period provided for therein);
(iv) The holders of the Common Stock shall not have approved
the Plan by the requisite vote at the meeting of such shareholders held
for the purpose of voting on the Plan, or such meeting shall not have
been held or shall have been canceled prior to termination of the Plan,
in each case after it shall have been publicly announced that any
Person (other than Grantee or any Grantee Subsidiary) shall have (A)
made, or disclosed any intention to make, a BONA FIDE proposal to
engage in an Acquisition Transaction, (B) commenced a Tender Offer or
filed a registration statement under the Securities Act with respect to
an Exchange Offer or (C) filed an application (or given a notice) with,
whether in draft or final form, the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") or any other governmental
authority or regulatory or administrative agency or commission (each, a
Governmental Authority"), for approval to engage in an Acquisition
Transaction;
(v) 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 Governmental Authority for
approval to engage in an Acquisition Transaction; or
(vi) The Issuer's Board of Directors shall have withdrawn or
modified (or publicly announced its intention to withdraw or modify) in
any manner adverse in any respect to Grantee its
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recommendation that the shareholders of Issuer approve the
transactions contemplated by the Plan in anticipation of engaging
in an Acquisition Proposal, or Issuer or any Issuer Subsidiary
shall have authorized, recommended, proposed (or publicly announced
in its intention to authorize, recommend or propose) an agreement
to engage in an Acquisition Transaction with any person other than
Grantee or a Grantee Subsidiary.
(d) NOTICE BY ISSUER. Issuer shall notify Grantee promptly in writing
of the occurrence of any Preliminary Purchase Event or Purchase Event; PROVIDED,
HOWEVER, that the giving of such notice by Issuer shall not be a condition to
the right of Grantee to exercise the Option.
(e) NOTICE OF EXERCISE. In the event that Grantee is entitled to and
wishes to exercise the Option, it shall send to Issuer a written notice (the
"Option Notice" and the date of which being hereinafter referred to as the
"Notice Date") specifying (i) the total number of shares of Common Stock it will
purchase pursuant to such exercise, (ii) the aggregate purchase price as
provided herein and (iii) a period of time (that shall not be less than three
business days nor more than sixty business days) running from the Notice Date
(the "Closing Date") and a place at which the closing of such purchase shall
take place; PROVIDED, THAT, if prior notification to or approval of the Federal
Reserve Board or any other Governmental Authority is required in connection with
such purchase (each, a "Notification" or an "Approval," as the case may be), (a)
Grantee shall promptly file, or cause to be filed, the required notice or
application for approval ("Notice/Application"), (b) Grantee shall expeditiously
process, or cause to be expeditiously processed, the Notice/Application and (c)
for the purpose of determining the Closing Date pursuant to clause (iii) of this
sentence, the period of time that otherwise would run from the Notice Date shall
instead run from the later of (x) in connection with any Notification, the date
on which any required notification periods have expired or been terminated and
(y) connection with any Approval, the date on which such approval has been
obtained and any requisite waiting period or periods shall have expired. For
purposes of Section 2(a) hereof, any exercise of the Option shall be deemed to
occur on the Notice Date relating thereto. On or prior to the Closing Date,
Grantee shall have the right to revoke its exercise of the Option in the event
that the transaction constituting a Purchase Event that gives rise to such right
to exercise shall not have been consummated.
(f) PAYMENTS. At the closing referred to in Section 2(e) hereof,
Grantee shall present and surrender this Agreement and pay to Issuer the
aggregate Option Price for the shares of Common Stock specified in the Option
Notice in immediately available funds by wire transfer to a bank account
designated by Issuer; PROVIDED, HOWEVER, that failure or refusal of Issuer to
designate such a bank account shall not preclude Grantee from exercising the
Option.
(g) DELIVERY OF COMMON STOCK. At such closing, simultaneously with the
delivery of immediately available funds as provided in Section 2(f) hereof,
Issuer shall deliver to Grantee a certificate or certificates representing the
number of shares of Common Stock specified in the Option Notice and, if the
Option should be exercised in part only, a new Option evidencing the rights of
Grantee thereof to purchase the balance of the shares of Common Stock
purchasable hereunder.
(h) HOLDER OF RECORD. Upon the giving by Grantee to Issuer of an Option
Notice and the tender of the applicable purchase price in immediately available
funds on the Closing Date, Grantee shall be deemed to be the holder of record of
the number of shares of Common Stock specified in the Option Notice,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then
actually be delivered to Grantee. Issuer shall pay all expenses and any and all
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United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of Grantee.
SECTION 3. ISSUER'S COVENANTS.
(a) AVAILABLE SHARES. The Issuer agrees that it shall at all times
until the termination of this Agreement have reserved for issuance upon the
exercise of the Option that number of authorized and reserved shares of Common
Stock equal to the maximum number of shares of Common Stock at any time and from
time to time issuable hereunder, all of which shares will, upon issuance
pursuant hereto, be duly authorized, validly issued, fully paid, nonassessable,
and delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights.
(b) COMPLIANCE. The Issuer agrees that it will not, by amendment of its
articles of incorporation or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or seek to
avoid the observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by Issuer.
(c) CERTAIN ACTIONS, APPLICATIONS AND ARRANGEMENTS. Issuer shall
promptly take all action as may from time to time be required (including (i)
complying with all pre-merger notification, reporting and waiting period
requirements specified in 15 U.S.C. Section 18a and regulations promulgated
thereunder and (ii) in the event, under the Bank Holding Company Act of 1956, as
amended ("BHCA"), or the Change in Bank Control Act of 1978, as amended, or any
California banking law, prior approval of or notice to the Federal Reserve Board
or to any other Governmental Authority is necessary before the Option may be
exercised, cooperating with Grantee in preparing such applications or notices
and providing such information to each such Governmental Authority as it may
require) in order to permit Grantee to exercise the Option and Issuer duty and
effectively to issue shares of Common Stock pursuant hereto, and to protect the
rights of Grantee against dilution.
SECTION 4. EXCHANGE OF OPTION.
This Agreement and the Option granted hereby are exchangeable, without
expense, at the option of Grantee, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other agreements providing for
Options of different denominations entitling 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 in this Section 4 include any
agreements and related options for which this Agreement and the Option granted
hereby may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
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SECTION 5. ADJUSTMENTS.
The number of shares of Common Stock purchasable upon the exercise of
the Option shall be subject to adjustment from time to time as follows:
(a) In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or the like, the type and number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional shares of Common Stock are to be
issued or otherwise to become outstanding as a result of any such change (other
than pursuant to an exercise of the Option), the number of shares of Common
Stock that remain subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously issued pursuant to
the exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it represents the same proportion of the number of
shares of Common Stock then issued and outstanding as such proportion before the
applicable event described in this Section 5(a).
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment.
SECTION 6. REGISTRATION RIGHTS.
(a) Upon the occurrence of a Purchase Event that occurs prior to an
Exercise Termination Event, Issuer shall, at the request of Grantee (whether on
its own behalf or on behalf of any subsequent holder of the Option (or part
thereof) or any of the shares of Common Stock issued pursuant hereto), promptly
take such action as may be required under applicable federal or state laws,
including if applicable registering or qualifying any shares issued and issuable
pursuant to the Option for sale or the sale of any such shares or otherwise
securing any necessary governmental permits or approvals for the sale of such
shares (any and all such actions are hereinafter referred to as a
"Registration"), in order to permit the sale or other disposition of any shares
of Common Stock issued upon total or partial exercise of the Option ("Option
Shares") in accordance with any plan of disposition requested by Grantee. Issuer
will use its best efforts to cause such Registration to remain in effect for
such period not in excess of 180 days from the day such Registration is first
effected. Grantee shall have the right to demand two such Registrations at the
Issuer's expense. The foregoing notwithstanding, if, at the time of any such
request by Grantee as provided above, Issuer is in the process of a Registration
with respect to an underwritten public offering of shares of Common Stock, and
if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering, the offering or inclusion of the Option Shares would interfere
materially with the successful marketing of the shares of Common Stock offered
by Issuer, the number of Option Shares otherwise to be covered in such
Registration contemplated hereby may be reduced; PROVIDED, HOWEVER, that after
any such required reduction, the number of Option Shares to be included in such
Registration for the account of Grantee shall constitute at least 33-1/3% of the
total number of shares of Common Stock held by Grantee and Issuer covered in
such Registration; PROVIDED FURTHER, HOWEVER, that if such reduction occurs,
then Issuer shall effect a Registration for the balance of such shares as
promptly as practicable thereafter as to which no reduction shall thereafter
occur. In addition, if the Issuer proposes to effect a Registration with respect
to its Common Stock or any other
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securities in such a manner that would permit the Registration of the Shares
or a sale of the Shares for public sale (whether proposed to be offered for
sale by the Issuer or any other Person) it will give prompt written notice to
Grantee of its intention to do so, specifying the relevant terms of such
proposal, including the proposed maximum offering price thereof. Upon the
written notice of Grantee (whether on its own behalf or on behalf of any
subsequent holder of the Option [or part thereof] or any of the shares of
Common Stock issued pursuant hereto) delivered to the Issuer within 20
business days after the giving of any such notice, which request shall
specify the number of Shares desired to be disposed by Grantee, the Issuer
will use its best efforts to effect, in connection with such proposed action,
the Registration of the Shares or a sale thereof set forth in such request.
Grantee shall be entitled to two such Registrations at the Issuer's expense.
Grantee shall provide all information reasonably requested by Issuer for
inclusion in connection with any such Registration. In connection with any
such Registration, Issuer and Grantee shall provide each other with
representations, warranties, indemnities and other agreements customarily
given in connection with such Registrations. If requested by Grantee in
connection with such Registration, Issuer and Grantee shall become a party to
any underwriting agreement relating to the sale of such shares, but only to
the extent of obligating themselves in respect of representations,
warranties, indemnities and other agreements customarily included in such
underwriting agreements.
(b) In the event that Grantee requests Issuer to effect a Registration
following the failure to obtain any approval required to exercise the Option as
described in Section 9 hereof, the closing of the sale or other disposition of
the Common Stock or other securities pursuant to such Registration shall occur
substantially simultaneously with the exercise of the Option.
(c) 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 expenses, including the reasonable fees and expenses of one
counsel to the holders of Option Shares which are the subject of a Registration,
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 this Section 6 (including the related
offerings and sales by holders of Option Shares) and all other qualifications,
notification or exemptions pursuant to this Section 6.
(d) In connection with any Registration under this Section 6, Issuer
hereby indemnifies the Grantee, and each officer, director and controlling
person of Grantee and each underwriter thereof, including each person, if any
who controls such holder or underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, losses, claims, damages and liabilities
caused by any untrue, or alleged untrue, statement 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 officer, director and controlling person of Issuer shall be
indemnified by such Grantee, 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 prospectus or notification or offering circular (including any
amendments or
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supplements thereto) in reliance upon, and in conformity with,
information furnished in writing to Issuer by such holder or such underwriter,
as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section 6(d) 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 6(d), 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 6(d). 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 reasonably 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 either agrees to pay the same, (ii) the indemnifying party
fails to assume the defense of such action with counsel reasonably 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 interests of the indemnified party. No
indemnifying party shall be liable for the fees and expenses of more than one
separate counsel for all indemnified parties or for any settlement entered into
without its consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 6(d) 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 fault of Issuer, the
Grantee 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 the Grantee 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 misrepresentation. Any obligation by any Grantee
to indemnify shall be several and not joint with other holders of Option Shares.
SECTION 7. OPTION REPURCHASE.
(a) Upon the occurrence of a Purchase Event that occurs prior to an
Exercise Termination Event, (i) at the request (the date of such request being
the "Request Date") of Grantee, delivered within 30 days of the Purchase Event
(or such later period as may be provided pursuant to Section 9 hereof), Issuer
shall repurchase the Option from Grantee at a price (the "Option Repurchase
Price") equal to (x) the amount by which (A) the market/offer price (as defined
below) exceeds (B) the Option Price, multiplied by (y) the number of shares for
which the Option may then be exercised and (ii) at the request (the date of such
request being the "Request Date") of the owner of Option Shares from time to
time (the "Owner"), delivered within 30) days of a Purchase Event (or such later
period as may be provided pursuant to Section 9 hereof), Issuer shall repurchase
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such number of the Option Shares from the Owner as the Owner shall designate at
a price (the "Option Share Repurchase Price") equal to (x) the market/offer
price multiplied by (y) 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 therefore has been made after
the date hereof and on or prior to the Request Date, (ii) the price per share of
Common Stock paid or to be paid by any third party pursuant to an agreement with
Issuer (whether by way of a merger, consolidation or otherwise) or (iii) in the
event of a sale of all or substantially all of Issuer's assets, 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 independent
investment banking firm mutually selected by Grantee or the Owner, as the case
may be, on the one hand, and Issuer, on the other hand, divided by the number 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 determined by a nationally-recognized independent investment banking
firm mutually selected by Grantee or Owner, as the case may be, on the one hand,
and Issuer, on the other hand, whose determination shall be conclusive and
binding on all parties.
(b) Grantee or the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and/or any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the Option
and/or the Option Shares in accordance with the provisions of this Section 7. As
immediately as practicable, and in any event within five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to Grantee the Option Repurchase Price or to the Owner the
Option Share Repurchase Price or the portion thereof that Issuer is not then
prohibited from so delivering, under applicable law and regulation or as a
consequence of administrative policy.
(c) Issuer hereby undertakes to use its best efforts to obtain all
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish any repurchase contemplated by
this Section 7. Nonetheless, 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 Grantee and/or the Owner and
thereafter deliver or cause to be delivered, from time to time, to Grantee
and/or the Owner, as appropriate, the portion of the Option Repurchase Price and
the Option Share Repurchase Price, respectively, that it is no longer prohibited
from delivering, within five business days after the date on which Issuer is no
longer so prohibited; provide, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to Section 7(b) is prohibited under
applicable law or regulation from delivering to Grantee and/or the Owner, as
appropriate, the Option Repurchase Price and the Option Share Repurchase Price,
respectively, in full Grantee or Owner may revoke its notice of repurchase of
the Option or the Option Shares either in whole or in part whereupon, in the
case of a revocation in part, Issuer shall promptly (i) deliver to Grantee
and/or the Owner, as appropriate, that portion of the Option Purchase Price or
the Option Share Repurchase Price that Issuer is not prohibited from delivering
after taking into account any such revocation and (ii) deliver, as appropriate,
either (A) to Grantee, a new Agreement evidencing the right of Grantee to
purchase that number of shares of Common Stock equal to the number of shares of
Common Stock purchasable immediately prior to the delivery of the notice of
repurchase less the number of shares of Common Stock covered by the portion of
the Option repurchased or (B) to the Owner, a certificate for the number of
Option Shares covered by the revocation.
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(d) Issuer shall not enter into any agreement with any party (other
than Grantee or a Grantee Subsidiary) for an Acquisition Transaction unless the
other party thereto assumes all the obligations of Issuer pursuant to this
Section 7 in the event that a Grantee or Owner elects, in its sole discretion,
to require such other party to perform such obligations.
SECTION 8. SUBSTITUTE OPTION.
(a) GRANT OF SUBSTITUTE OPTION. In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to consolidate or
merge with any Person, other than Grantee or a Grantee Subsidiary, and shall not
be the continuing or surviving corporation of such consolidation or merger, (ii)
to permit any Person, other than Grantee or a Grantee Subsidiary, 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 securities of any other Person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its or any Issuer Subsidiary's assets to any Person,
other than Grantee or a Grantee Subsidiary, then, and in each such case, the
agreement governing such transaction shall make proper provision so that the
Option shall, upon the consummation of such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of Grantee, of either (x) the Acquiring
Corporation (as defined below) or (y) any Person that controls the Acquiring
Corporation (the Acquiring Corporation and any such controlling Person being
hereinafter referred to as the "Substitute Option Issuer").
(b) EXERCISE OF SUBSTITUTE OPTION. The Substitute Option shall be
exercisable for such number of shares of the Substitute Common Stock (as is
hereinafter defined) as is equal to the market/offer price (as defined in
Section 7 hereof), MULTIPLIED by the number of shares of the Common Stock for
which the Option was theretofore exercisable, divided by the Average Price (as
is hereinafter defined). The exercise price of the Substitute Option per share
of the Substitute Common Stock (the "Substitute Purchase Price") shall then be
equal to the product of the Option Price multiplied by a fraction in which the
numerator is the number of shares of Common Stock for which the Option was
theretofore exercisable and the denominator is the number of shares for which
the Substitute Option is exercisable.
(c) TERMS OF SUBSTITUTE OPTION. The Substitute Option shall otherwise
have the same terms as the Option, PROVIDED, HOWEVER, that if the terms of the
Substitute Option cannot, for legal reasons, be the same as the Option, such
terms shall be as similar as possible and in no event less advantageous to
Grantee.
(d) SUBSTITUTE OPTION DEFINITIONS. The following terms have the
meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation 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 any
substantial part of the Issuer's assets (or the assets of any Issuer
Subsidiary);
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the Substitute
Option; and(iii) "Average Price" shall mean the average closing
10
price of a share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in question,
but in no event higher than the closing price of the shares of the
Substitute Common Stock on the day preceding such consolidation,
merger or sale; PROVIDED, HOWEVER, that if such closing price is not
ascertainable due to an absence of a public market for the Substitute
Common Stock, "Average Price" shall mean the higher of (i) the price
per share of Substitute Common Stock paid or to be paid by any third
party pursuant to an agreement with the issuer of the Substitute
Common Stock and (ii) the book value per share, calculated in
accordance with generally accepted accounting principles, of the
Substitute Common Stock immediately prior to exercise of the
Substitute Option; PROVIDED, FURTHER, 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, the Person merging into
Issuer or by any company which controls or is controlled by such
merging Person, as Grantee may elect.
SECTION 9. EXTENSION OF EXERCISE RIGHT.
Notwithstanding Sections 2, 6 and 7 and 11 hereof, if Grantee has given
the notice referred to in one or more of such Sections, the exercise of the
rights specified in any such Section shall be extended (a) if the exercise of
such rights requires obtaining regulatory approvals (including any required
waiting periods) to the extent necessary to obtain all regulatory approvals for
the exercise of such rights, and (b) to the extent necessary to avoid liability
under Section 16(b) of the Exchange Act by reason of such exercise; PROVIDED,
HOWEVER that in no event shall any closing date occur more than 6 months after
the related Notice Date, and, if the closing date shall not have occurred within
such period due to the failure to obtain any required approval by the Federal
Reserve Board or any other Governmental Authority despite the best efforts of
Issuer or the Substitute Option Issuer, as the case may be, to obtain such
approvals, the exercise of the Option shall be deemed to have been rescinded as
of the related Notice Date. In the event (a) Grantee receives official notice
that an approval of the Federal Reserve Board or any other Governmental
Authority required for the purchase and sale of the Option Shares will not be
issued or granted or (b) a closing date has not occurred within six months after
the related Notice Date due to the failure to obtain any such required approval,
Grantee shall be entitled to exercise the Option in connection with the resale
of the Option Shares pursuant to a registration statement as provided in Section
6.
SECTION 10. ISSUER'S REPRESENTATIONS AND WARRANTIES.
Issuer hereby represents and warrants to Grantee as follows:
(a) CORPORATE AUTHORITY. Issuer has full corporate power and authority
to execute and deliver 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 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 authorized, executed and delivered by
the Issuer.
(b) AVAILABILITY OF SHARES. Issuer has taken all necessary corporate
action to authorize and reserve and to permit it to issue, and at all times from
the date hereof through the termination of this Agreement in accordance with its
terms will have reserved for issuance upon the exercise of the Option, that
number of shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time
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issuable hereunder, and all such shares, upon issuance pursuant hereto, will
be duly authorized, validly issued, fully paid, non-assessable, and will be
delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights.
(c) NO VIOLATIONS. The execution, delivery and performance of this
Agreement does not or 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 articles of incorporation or by-laws,
or the comparable governing- instruments of any of the Issuer 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 the Issuer Subsidiaries (with or without the giving of notice, the lapse
of time or both) or under any law, rule, ordinance or regulation or judgment,
decree, order, award or governmental or non-governmental permit or license to
which it or any of the Issuer 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.
SECTION 11. GRANTEE'S REPRESENTATIONS AND WARRANTIES.
Grantee hereby represents and warrants to issuer as follows:
(a) CORPORATE AUTHORITY. 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 deliver 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. This Agreement has been duly authorized, executed and
delivered by Grantee.
(B) INVESTMENT INTENT. The Option is not being, and any shares of
Common Stock or other securities acquired by Grantee upon exercise of the Option
will not be, acquired with a view to the public distribution thereof and will
not be transferred or otherwise disposed of except in a transaction registered
or exempt from registration under the Securities Act.
SECTION 12. ASSIGNMENT.
Neither of the parties hereto may assign any of its rights or delegate
any of its obligations under this Agreement or the Option created hereunder to
any other Person without the express written consent of the other party, except
that Grantee may assign this Agreement to a wholly owned subsidiary of Grantee
and Grantee may assign its rights hereunder in whole or in pall after the
occurrence of a Preliminary Purchase Event; PROVIDED, HOWEVER, that until the
date at which both the Federal Reserve Board has approved an application by
Grantee under the BHCA and the California Commissioner of Financial Institutions
(the "Commissioner") has approved or exempted an application by Grantee under
Section 700 et. seq. of the California Financial Code to acquire the shares of
Common Stock subject to the Option, other than to a wholly owned subsidiary of
Grantee, 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 purchase 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 public distribution on
Grantee's behalf, or (iv) any other manner approved by the Federal Reserve Board
and the Commissioner. The term "Grantee" as used in this Agreement shall also be
deemed to refer to Grantee's permitted assigns. Any attempted assignment
prohibited by this Section 12 is void and without effect.
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SECTION 13. FILINGS AND CONSENTS.
Each of Grantee and Issuer will use its reasonable 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 if necessary,
for listing of the shares of Common Stock issuable hereunder on any exchange or
quotation system and applying to the Federal Reserve Board under the BHCA and to
state banking authorities for approval to acquire the shares issuable hereunder.
SECTION 14. REMEDIES.
The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties shall hereto be enforceable by either party hereto
through injunctive or other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
SECTION 15. SEVERABILITY.
If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the 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 permitted 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
Section 5 hereof), it is the express intention of Issuer to allow Grantee to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible, without any amendment or modification hereof.
SECTION 16. NOTICES.
All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in Person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Plan.
SECTION 17. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original but all of which shall constitute one
and the same agreement and shall be effective at the time of execution.
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SECTION 18. EXPENSES.
Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
SECTION 19. ENTIRE AGREEMENT.
Except as otherwise expressly provided herein or in the Plan, this
Agreement contains the entire agreement between the parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereof, written or oral. The terms and conditions
of this agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors except as assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
SECTION 20. DEFINITIONS.
Capitalized terms used in this Agreement and not defined herein but
defined in the Plan shall have the meanings assigned thereto in the Plan.
SECTION 2 1. EFFECT ON PLAN.
Nothing contained in this Agreement shall be deemed to authorize Issuer
or Grantee to breach any provision of the Plan.
SECTION 22. SELECTIONS.
In the event that any selection or determination is to be made by
Grantee hereunder and at the time of such selection or determination there is
more than one Grantee, such selection shall be made by a majority in interest of
such Grantees.
SECTION 23. FURTHER ASSURANCES.
In the event of any exercise of the option by Grantee, Issuer and such
Grantee 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.
SECTION 24. VOTING.
Except to the extent Grantee exercises the Option, Grantee shall have
no rights to vote or receive dividends or have any other rights as a shareholder
with respect to shares of Common Stock covered hereby.
SECTION 25. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of California.
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IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
MID-STATE BANCSHARES
By: /S/ XXXXXX X. XXXXXX
----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman of the Board
AMERICORP
By: /S/ XXXXXX X. XXXXXXXXX
----------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
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