EXHIBIT 99.2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated November 11, 1996, between Westamerica
Bancorporation, a California corporation ("Buyer"), and ValliCorp Holdings,
Inc., a Delaware corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Buyer, Seller and ValliWide Bank (Seller's subsidiary) have
entered into an Agreement and Plan of Reorganization 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 Buyer's entering into the Merger Agreement
and in consideration therefor, Seller has agreed to grant Buyer the Option (as
hereinafter defined):
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) Seller hereby grants to Buyer an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 3,474,187 fully paid and nonassessable shares of Seller's Common Stock, par
value $.01 per share ("Common Stock"), at a price of $18.00 per share; provided,
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however, that in the event Seller issues or agrees to issue any shares of
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Common Stock (other than as permitted under the Merger Agreement) at a price
less than $18.00 per share (as adjusted pursuant to subsection (b) of Section
5), such price shall be equal to such lesser price (such price, as adjusted if
applicable, the "Option Price"); provided further that in no event shall the
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number of shares for which this Option is exercisable exceed 19.9% of the
Seller's issued and outstanding common shares. 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 hereof (or any treasury
shares held by Seller have been or are sold after the date hereof) (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 to or issued pursuant to the Option. Nothing
contained in this Section 1(b) or elsewhere in this Agreement shall be deemed
to authorize Seller or Buyer 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 hereinafter defined) and a Subsequent Triggering
Event (as hereinafter defined) shall have occurred prior to the occurrence of
an Exercise Termination Event (as hereinafter defined), provided that the
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Holder shall have sent the written notice of such exercise (as provided in
subsection (e) of this Section 2) within 30 days following such Subsequent
Triggering Event. Each of the following shall be
an Exercise Termination Event: (i) the effective time of the Merger on the
Effective Date; (ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event; or (iii) the passage of 12 months after termination of
the Merger Agreement if such termination follows the occurrence of an Initial
Triggering Event (provided that if an Initial Triggering Event continues or
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occurs beyond such termination, the Exercise Termination Event shall be 12
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 occur. The term "Holder" shall mean the
holder or holders of the Option.
(C) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Seller or any of its Subsidiaries (each a "Seller Subsidiary"), without
having received Buyer's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction (as hereinafter defined) with
any person (the term "person" for purposes of this Agreement having the meaning
assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Exchange Act, and the
rules and regulations thereunder) other than Buyer or any of its Subsidiaries
(each a "Buyer Subsidiary") or the Board of Directors of Seller shall have
recommended that the stockholders of Seller approve or accept any Acquisition
Transaction other than as contemplated by the Merger Agreement. For purposes
of this Agreement, "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Seller or any Significant
Subsidiary (as defined in Rule 1-02 of Regulation S-X promulgated by the SEC)
of Seller, (y) a purchase, lease or other acquisition representing 15% or more
of the consolidated assets of Seller and its Subsidiaries, or (z) a purchase or
other acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting power of Seller
or any Significant Subsidiary of Seller;
(ii) Seller or any Seller Subsidiary, without having received
Buyer's prior written consent, shall have authorized, recommended,
proposed or publicly announced its intention to authorize, recommend or
propose, an agreement to engage in an Acquisition Transaction with any
person other than Buyer or a Buyer Subsidiary, or the Board of Directors
of Seller shall have publicly withdrawn or modified, or publicly
announced its intent to withdraw or modify, in any manner adverse to
Buyer, its recommendation that the stockholders of Seller approve the
transactions contemplated by the Merger Agreement;
(iii) Any person other than Buyer, any Buyer Subsidiary or any
Seller Subsidiary acting in a fiduciary capacity shall have acquired
beneficial ownership or the right to acquire beneficial ownership of
10% or more of the outstanding 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);
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(iv) Any person other than Buyer or any Buyer Subsidiary
shall have made a bona fide proposal to Seller or its stockholders by
public announcement or written communication that is or becomes the
subject of public disclosure to engage in an Acquisition Transaction;
(v) After a proposal is made by a third party to Seller or
its stockholders to engage in an Acquisition Transaction, Seller shall
have breached any covenant or obligation contained in the Merger
Agreement and such breach (x) would entitle Buyer 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 Buyer or any Buyer Subsidiary,
other than in connection with a transaction to which Buyer 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 beneficial ownership
of 15% 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 (z) shall be 15%.
(d) Seller shall notify Buyer promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Seller shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise
the Option, it shall send to Seller 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
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the closing of the purchase and sale pursuant to the Option (the "Closing")
cannot be consummated by reason of any applicable judgment, decree, order, law
or regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated; and provided further, without
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limiting the foregoing, that if prior notification to or approval of the
Federal Reserve Board 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 pursuant to this sentence shall run instead
from the date on which any required notification periods have expired or been
terminated or such approvals have been obtained and any requisite waiting
period or periods shall have passed. Any exercise of the
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Option shall be deemed to occur on the Notice Date relating thereto.
Notwithstanding this subsection (e), in no event shall any Closing Date be more
than 18 months after the related Notice Date, and if the Closing Date shall not
have occurred within 18 months after the related Notice Date due to the failure
to obtain any such r equired approval, the exercise of the Option effected on
the Notice Date shall be deemed to have expired. In the event (i) Buyer receives
official notice that an approval of the Federal Reserve Board or any other
regulatory authority required for the purchase of Option Shares (as hereinafter
defined) would not be issued or granted, (ii) a Closing Date shall not have
occurred within 18 months after the related Notice Date due to the failure to
obtain any such required approval or (iii) Holder (or Substitute Holder) shall
have the right pursuant to the last sentence of Section 7 (or Section 9) to
exercise the Option (or Substitute Option), Buyer shall nevertheless be entitled
to exercise its right as set forth in Section 7 and Buyer or Holder (or
Substitute Holder) shall be entitled to exercise the Option (or Substitute
Option) in connection with the resale of Seller Common Stock or other securities
pursuant to a registration statement as provided in Section 6.
(f) At the Closing referred to in subsection (e) of this Section 2,
the Holder shall pay to Seller the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Seller,
provided that failure or refusal of Seller to designate such a bank account
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shall not preclude the Holder from exercising the Option.
(g) At such Closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Seller shall
deliver to the Holder 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 evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Seller 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. If at the time of
issuance of any Option Shares pursuant to an exercise of all or part of the
Option hereunder, Seller shall not have redeemed the Rights (as defined in the
Stockholders' Rights Plan adopted by Seller on March 25, 1996, as amended (the
"Rights Agreement")), or shall have issued any similar securities, then each
Option Share issued pursuant to such exercise shall also represent rights or
new rights with terms substantially the same as and at least as favorable to
Buyer as are provided under the Rights Agreement or any similar agreement then
in effect.
(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 Seller and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on
file at the principal office of Seller and will be provided to the
holder hereof without charge upon receipt by Seller of a written request
therefore."
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It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the Holder shall have
delivered to Seller a copy of a letter from the staff of the SEC, or an opinion
of counsel, in form and substance reasonably satisfactory to Seller, to the
effect that such legend is not required for purposes of the Securities Act;
(ii) the reference to the provisions of this Agreement in the above legend shall
be removed by delivery of substitute certificate(s) without such reference if
the shares have been sold or transferred in compliance with the provisions of
this Agreement and under circumstances that do not require the retention of
such reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required
by law.
(i) Upon the giving by the Holder to Seller of the written notice
of exercise of the Option provided for under subsection (e) of this Section 2
and the tender of the applicable purchase price in immediately available funds,
the Holder shall be deemed to be the holder of record of the shares of Common
Stock issuable upon such exercise, notwithstanding that the stock transfer
books of Seller shall then be closed or that certificates representing such
shares of Common Stock shall not then be actually delivered to the Holder or
the Seller shall have failed or refused to designate the bank account described
in subsection (f) of this Section 2. Seller 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 preparation, issuance and delivery of
stock certificates under this Section 2 in the name of the Holder or its
assignee, transferee or designee.
3. Seller agrees: (i) that it shall at all times maintain, free
from preemptive rights, sufficient authorized but unissued or treasury shares
of Common Stock (and other securities issuable pursuant to Section 5(a)) so
that the Option may be exercised without additional authorization of Common
Stock (or such other securities) after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock (or
such other securities); (ii) that it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of
any of the covenants, stipulations or conditions to be observed or performed
hereunder by Seller; (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 requirements specified in 15 U.S.C. (S) 18a and regulations
promulgated thereunder and (y) 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 state banking law, prior approval of or notice to the Federal
Reserve Board or to any state regulatory authority is necessary before the
Option may be exercised, to cooperate fully with the Holder in preparing such
applications or notices and to provide 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 the Seller duly and effectively to issue
shares of Common Stock pursuant hereto; and (iv) promptly to take all action
provided herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
of this Agreement at the principal office of Seller, 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
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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 Seller 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, Seller 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 Seller, 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 number of shares of Common Stock purchasable upon the
exercise of the Option shall be subject to adjustment from time to time as
provided in this Section 5.
(a) In the event of any change in 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 so that Buyer shall receive upon
exercise of the Option and payment of the aggregate Option Price
hereunder the number and class of shares or other securities or property
that Buyer would have received in respect of Common Stock if the Option
had been exercised in full immediately prior to such event, or the
record date therefor, as applicable.
(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.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event (or as otherwise provided in the last
sentence of Section 2(e)), Seller shall, at the request of Buyer delivered
within 30 days after such Subsequent Triggering Event (or such trigger date as
is provided in the last sentence of Section 2(e) (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 Securities Act covering
any shares issued and issuable pursuant to this Option and shall use its best
efforts to cause such registration statement to become effective and remain
current in order to permit the sale or other disposition of any shares of Common
Stock issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Buyer. Seller will use
its 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 effective or such shorter time as
may be reasonably necessary to effect such sales or other dispositions. Buyer
for a period of
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18 months following such first request shall have the right to demand a second
such registration if reasonably necessary to effect such sales or dispositions.
The foregoing notwithstanding, if, at the time of any request by Buyer for
registration of Option Shares as provided above, Seller is in 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
inclusion of the Holder's Option or Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by Seller, 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
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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 Seller in the aggregate; and provided
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further, however, that if such reduction occurs, then the Seller shall file a
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registration statement for the balance as promptly as practical and no reduction
shall thereafter occur (and such registration shall not be charged against the
Holder). Each such Holder shall provide all information reasonably requested by
Seller for inclusion in any registration statement to be filed hereunder. If
requested by any such Holder in connection with such registration, Seller shall
become a party to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements for the Seller. Upon receiving any
request under this Section 6 from any Holder, Seller agrees to send a copy
thereof to any other person known to Seller 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 persons entitled to receive such
copies.
7. (a) Upon the occurrence of a Subsequent Triggering Event
that occurs prior to an Exercise Termination Event, (i) at the request of the
Holder, delivered within 30 days after such occurrence (or such later period as
provided in Section 10 or the last sentence of Section 2(e)), Seller (or any
successor thereto) shall repurchase the Option from the Holder 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 the number
of shares for which this Option may then be exercised plus (y) Buyer's
Out-of-Pocket Expenses (as defined below) (to the extent not previously
reimbursed) and (ii) at the request of the owner of Option Shares from time to
time (the "Owner"), delivered within 30 days after such occurrence (or such
later period as provided in Section 10), Seller 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 (x) the market/offer price
multiplied by the number of Option Shares so designated plus (y) Buyer's
Out-of-Pocket Expenses (to the extent not previously reimbursed). The term
"Out-of-Pocket Expenses" shall mean Buyer's reasonable out-of-pocket expenses
incurred in connection with the transactions contemplated by the Merger
Agreement, including, without limitation, legal, accounting and investment
banking fees. The term "market/offer price" shall mean the highest of (i) the
highest 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 Seller, (iii) the highest
closing price for shares of Common Stock quoted in the New York Stock Exchange
(or if Common Stock is not quoted in the New York Stock Exchange, the highest
bid price per share as quoted on the National Association of Securities Dealers
Automated Quotation Systems, or, if the shares of Common Stock are not quoted
thereon, on the principal trading market on which such shares are traded as
reported by
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a recognized source) within the six-month period immediately preceding the date
the Holder gives notice of the required repurchase of Option Shares, as the case
may be, or (iv) in the event of a sale of assets representing 15% or more of the
consolidated assets of Seller and its Subsidiaries, the sum of the price paid in
such sale for such assets and the current market value of the remaining assets
of Seller as determined by a nationally recognized investment banking firm
selected by the Holder or the Owner, as the case may be, divided by the number
of shares of Common Stock of Seller outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking firm selected
by the Holder or Owner, as the case may be.
(b) The Holder or the Owner, as the case may be, may exercise its
right to require Seller to repurchase the Option and any Option Shares pursuant
to this Section 7 by surrendering for such purpose to Seller, 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 the Holder
or the Owner, as the case may be, elects to require Seller to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Seller shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Seller is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that Seller is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Seller 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 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 Seller is no longer so prohibited; provided, however,
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that if Seller at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to
the Holder and/or the Owner, as appropriate, the Option Repurchase Price and
the Option Share Repurchase Price, respectively, in full (and Seller hereby
undertakes to use its best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to the extent
of the prohibition, whereupon, in the latter case, Seller 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 Seller 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. If an Exercise
Termination Event shall have occurred prior to the date of the notice by Seller
described in the first sentence of this subsection (c), or shall be scheduled
to occur at
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any time before the expiration of a period ending on the thirtieth day after
such date, the Holder shall nonetheless have the right to exercise the Option
until the expiration of such 30-day period.
8. (a) In the event that prior to an Exercise Termination
Event, Seller shall enter into an agreement (i) to consolidate with or merge
into any person, other than Buyer or one of its Subsidiaries, and shall not be
the continuing or surviving corporation of such consolidation or merger, (ii)
to permit any person, other than Buyer or one of its Subsidiaries, to merge
into Seller and Seller 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 assets to any person, other than Buyer
or one of its Subsidiaries, then, and in each such case, the agreement governing
such transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set
forth herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing
or surviving corporation of a consolidation or merger with Seller (if
other than Seller), (ii) Seller in a merger in which Seller is the
continuing or surviving person, and (iii) the transferee of all or
substantially all of Seller's assets.
(2) "Substitute Common Stock" shall mean the common stock
issued by the issuer of the Substitute Option 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 consolidation, merger or sale in question, but in no
event higher than the closing price of the shares of Substitute Common
Stock on the day preceding such consolidation, merger or sale; provided
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that if Seller 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 Seller or by any company which controls 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 Substitute Option cannot, for legal reasons,
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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 substantially the same form as this Agreement (after
giving effect for such
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purpose to the provisions of Section 9), which agreement shall be applicable to
the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock as is equal to the Assigned Value multiplied
by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal to
the Option Price multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock for which the Option is then exercisable and
the denominator of which shall be the number of shares of Substitute Common
Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than
19.9% of the shares of Substitute Common Stock outstanding prior to exercise
but for this clause (e), the issuer of the Substitute Option (the "Substitute
Option Seller") shall make a cash payment to Holder equal to the excess of (i)
the value of the Substitute Option without giving effect to the limitation in
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.
(f) Seller shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations
of Seller hereunder.
9. (a) At the request of the holder of the Substitute Option
(the "Substitute Option Holder"), the Substitute Option Seller 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 exercise price
of the Substitute Option, multiplied by the number of shares of Substitute
Common Stock for which the Substitute Option may then be exercised plus (y)
Buyer'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 Seller
shall repurchase the Substitute Shares at a price (the "Substitute Share
Repurchase Price") equal to (x) the Highest Closing Price multiplied by the
number of Substitute Shares so designated plus (y) Buyer's Out-of-Pocket
Expenses (to the extent not previously reimbursed). The term "Highest Closing
Price" shall mean the highest closing price for shares of Substitute Common
Stock within the six-month period immediately preceding the date the Substitute
Option Holder gives notice of the required repurchase of the Substitute Option
or the Substitute Share Owner gives notice of the required repurchase of the
Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as
the case may be, may exercise its respective right to require the Substitute
Option Seller to repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose to the Substitute
Option Seller, 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 notices
stating that the Substitute Option
10
Holder or the Substitute Share Owner, as the case may be, elects to require the
Substitute Option Seller to repurchase the Substitute Option and/or the
Substitute Shares in accordance with the provision of this Section 9. As
promptly as practicable, and in any event within five business days after the
surrender of the Substitute Option and/or certificates representing Substitute
Shares and the receipt of such notice or notices relating thereto, the
Substitute Option Seller 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 Seller is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Seller is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from repurchasing the Substitute Option and/or the Substitute Shares
in part or in full, the Substitute Option Seller shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion of the
Substitute Option Repurchase Price or 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 Seller is no longer
so prohibited; provided, however, that if the Substitute Option Seller is at
-----------------
any time after delivery of a notice of repurchase pursuant to subsection (b) of
this Section 9 prohibited under applicable law or regulation, or as a
consequence of administrative policy, from delivering to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Seller shall use its best efforts to receive
all required regulatory and legal approvals as promptly as practicable in order
to accomplish 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 Seller 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 Seller is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Option Shares it is then so prohibited
from repurchasing. If an Exercise Termination Event shall have occurred prior
to the date of the notice by the Substitute Option Seller described in the first
sentence of this subsection (c), or shall be scheduled to occur at any time
before the expiration of a period ending on the thirtieth day after such date,
the Substitute Option Holder shall nevertheless have the right to exercise the
Substitute Option until the expiration of such 30 day period.
10. The 30-day period for exercise of certain rights under Sections
2, 6, 7, 9 and 12 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise
11
of such rights, and for the expiration of all statutory waiting periods; and
(ii) to the extent necessary to avoid liability under Section 16(b) of the
Exchange Act by reason of such exercise.
11. Seller hereby represents and warrants to Buyer as follows:
(a) Seller 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 Seller and no other corporate proceedings on the part of
Seller are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Seller. This Agreement is the valid and legally binding
obligation of Seller, enforceable against Seller in accordance with its terms.
(b) Seller 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 issuable hereunder, and all such shares, upon
issuance pursuant 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) Seller has taken all action (including if required redeeming
all of the Rights or amending or terminating the Rights Agreement) so that the
entering into of this Option 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.
(d) Except as disclosed pursuant to the Merger Agreement, the
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
Violation pursuant to any provisions of the Certificate of Incorporation or
by-laws of Seller or any Subsidiary of Seller or, subject to obtaining any
approvals or consents contemplated hereby, result in any Violation of any loan
or credit agreement, note, mortgage, indenture, lease, Plan or other agreement,
obligation, instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Seller or any
Subsidiary of Seller or their respective properties or assets which Violation
would have a Material Adverse Effect on Seller.
12. 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 express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Buyer, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 30
days following such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the date 30 days
-----------------
following the date on which the Federal Reserve Board approves an application
by Buyer under the BHCA to acquire the shares of Common Stock
12
subject to the Option, Buyer 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 Seller, (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
Buyer's behalf, or (iv) any other manner approved by the Federal Reserve Board.
13. Immediately following an Initial Triggering Event, each of Buyer
and Seller 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 NASDAQ.NMS upon official notice of issuance and
applying to the Federal Reserve Board under the BHCA for approval to acquire the
shares issuable hereunder, but Buyer 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.
14. Notwithstanding anything to the contrary herein, in the event
that the Holder or Owner or any Related Person thereof is a person making
without the prior written consent of Seller an offer or proposal to engage in
an Acquisition Transaction (other than the transaction contemplated by the
Merger Agreement), then (i) in the case of a Holder or any Related Person
thereof, the Option held by it shall immediately terminate and be of no further
force or effect, and (ii) in the case of an Owner or any Related Person thereof,
the Option Shares held by it shall be immediately repurchasable by Seller at the
Option Price. A Related Person of a Holder or Owner means any Affiliate (as
defined in Rule 12b-2 of the rules and regulations under the Exchange Act) of
the Holder or Owner and any person that is the beneficial owner of 20% or more
of the voting power of the Holder or Owner, as the case may be.
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 parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief.
16. 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 or Substitute Option Holder is not permitted
to acquire, or Seller or Substitute Option Seller is not permitted to repurchase
pursuant to Section 7 or Section 9, as the case may be, 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 Seller to
allow the Holder to acquire or to require Seller 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, 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 Merger Agreement.
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18. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, regardless of the laws that might
otherwise govern under applicable 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 original, but all of which shall
constitute one and the same agreement.
20. Except as otherwise expressly provided herein or in the Merger
Agreement, each of the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted 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. Any provision of this
Agreement may be waived at any time by the party that is entitled to the
benefits of such provision. This Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
22. In the event of any exercise of the Option by Buyer, Seller and
Buyer 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.
23. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
VALLICORP HOLDINGS, INC.
By: /s/ J. Xxxx XxXxxxx
--------------------
Name: J. Xxxx XxXxxxx
Attest: /s/ E. L. Xxxxxxx Title: Chairman and Chief
----------------- Executive Officer
Name: E. L. Xxxxxxx
Title: Executive Vice President, General
Counsel and Secretary
WESTAMERICA BANCORPORATION
By: /s/ Xxxxx X. Xxxxx
--------------------
Name: Xxxxx X. Xxxxx
Attest: /s/ Xxxx Xxxx Xxxx Title: Chairman, President and
-------------------- Chief Executive Officer
Name: Xxxx Xxxx Xxxx
Title: Assistant Corporate Secretary
15
WESTAMERICA BANCORPORATION
By /s/ Xxxxx X. Xxxxx
----------------------------------------------------------------------------
Xxxxx X. Xxxxx
Chairman, President and Chief Executive Officer
16
