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EXHIBIT 10.1
STOCK OPTION AGREEMENT
This Stock Option Agreement is entered into by and among Valley of the
Rogue Bank ("VRB"), an Oregon state bank, and the shareholders of Investors
Banking Corporation ("IBC"), effective as of July 24, 1997. The shareholders of
IBC are referred to herein as the "IBC Shareholders"
R E C I T A L S
WHEREAS, IBC owns 307,203 shares of capital stock of Colonial Banking
Company ("CB").
WHEREAS, VRB and CB are entering into a letter of intent (the "Letter
of Intent") of even date herewith, providing for the merger of VRB and CB (the
"Merger");
WHEREAS, the parties to the Merger intend to enter into a definitive
agreement to consummate the Merger (the "Merger Agreement") within 90 days of
the date hereof, subject to completion of due diligence reviews;
WHEREAS, under the Letter of Intent, a condition to the obligation of
VRB to close the Merger will be the acquisition by VRB of all of the outstanding
capital stock of IBC;
WHEREAS, the IBC Shareholders approve in principle the proposal by VRB
to merge with CB, and desire to support and assist in completion of the
transaction by granting an option to VRB to acquire all shares of IBC capital
stock owned by each of the IBC Shareholders;
AGREEMENT
NOW THEREFORE, in consideration of the execution by VRB of the Letter
of Intent, the IBC Shareholders hereby agree as follows:
1. Grant of Option. Each of the IBC Shareholders hereby irrevocably
grants to VRB the option (the "Option") to acquire the number of shares of IBC
capital stock set forth opposite his or her name below, at a price per share
equal to that amount calculated by multiplying the total number of shares of CB
capital stock held of record by IBC by $41.00, subtracting therefrom liabilities
of IBC, if any, and dividing the resulting figure by the total number of shares
of IBC capital stock outstanding as of the date of the exercise of this Option.
2. Exercise of Option. VRB shall have the right to exercise the Option
at any time until March 31, 1998. Exercise shall be by written notice delivered
to the IBC Shareholders. Payment for the shares of stock subject to the Option
shall be made within 10 business days following exercise of the Option by
delivery of cashier's check or wire transfer, at the election of each IBC
Shareholder.
3. Obligation of VRB to Exercise Option. Unless and until the Merger
Agreement is executed, VRB shall be under no obligation to exercise the Option.
Upon execution of the Merger Agreement, VRB will have the obligation to exercise
the Option and purchase the shares of IBC capital stock, subject to satisfaction
or waiver (except where required by law) of all conditions of closing the Merger
as set forth in the Merger Agreement and immediately before the closing of the
Merger.
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4. Representations, Warranties and Covenants of IBC Shareholders. Each
of the undersigned IBC Shareholders represents, warrants and covenants to VRB as
follows:
a. The number of shares of CB outstanding as of the date hereof is
379,001. There are outstanding options to acquire 47,599 shares of CB
weighted average exercise price of $10.61 per share. There are no other
options, warrants or other rights to acquire shares of CB capital
stock, and CB is not a party to any contract, agreement or other
obligation to issue additional shares of capital stock. Prior to
exercise or termination of this Stock Option Agreement, CB will not
issue any shares of capital stock, nor any options, warrants or other
rights to acquire shares of CB stock, nor declare or pay any dividends
on its capital stock other than dividends as required by the terms of
its preferred stock.
b. The number of shares of IBC outstanding as of the date hereof is
28,266.47. There are no outstanding options, warrants or other rights
to acquire shares of IBC capital stock, other than options (the "IBC
Options") held by Xxxxxx Xxxxxx and Xxxxxxx Xxxxxxx (the "IBC Option
Holders") for each to purchase 500 shares of IBC capital stock at an
exercise price of $100 per share. IBC is not a party to any other
contract, agreement or other obligation to issue additional shares of
capital stock. Prior to exercise or termination of this Stock Option
Agreement, IBC will not issue any shares of capital stock, other than
upon the exercise of the IBC Options held by the IBC Option Holders nor
any options, warrants or other rights to acquire shares of IBC stock.
If elected by the IBC Option Holders, the IBC Shareholders will cause
IBC to cancel the IBC Options in consideration of the agreement of IBC
to pay to the IBC Option Holders the difference between the
consideration the IBC Option Holders would receive at the closing of
the exercise of this Option and the exercise price of the IBC Options
(the "Cancellation Consideration"). If the IBC Option Holders elect to
cancel the IBC Options, the Cancellation Consideration shall be a
liability of IBC at the closing of the exercise of this Option and
shall be paid immediately following that closing. If, on the other
hand, the IBC Option Holders elect to exercise their IBC Options prior
to the closing of the exercise of this Option, the amount of
consideration paid to acquire IBC shares in exercise of the this Option
shall be additional consideration to be paid to the IBC shareholders
upon the closing of the exercise of this Option. The terms of the IBC
Options shall not be modified except as expressly permitted hereby
prior to the termination of this Option.
c. IBC's assets consist solely of 307,203 shares of CB capital stock,
and any cash paid by the IBC Option Holders to exercise their options
to purchase IBC shares, and at the closing of the exercise of this
Option, IBC will have no outstanding liabilities or obligations to
which it is subject, other than the obligation to pay the Cancellation
Consideration if the IBC Option Holders so elect, and there is no basis
for any person to assert any liability on the part of IBC for any
reason whatsoever;
d. The IBC Shareholders identified below are the only shareholders of
IBC, and there are no other persons holding or controlling any
securities of IBC which are convertible into equity securities of IBC.
The number of shares set forth opposite each IBC Shareholder's name
below represents all shares of IBC capital stock beneficially owned by
such shareholder, and each such shareholder holds title to such shares
free and clear of any lien or other encumbrance thereon.
e. Each IBC Shareholder has all the necessary legal authority to enter
into this Stock Option Agreement and to sell his or her shares of IBC
capital stock that are subject hereof.
f. Until closing of the merger of CB and VRB as contemplated by the
Letter of Intent, neither IBC nor any of its directors, officers,
employees, shareholders or agents will solicit or entertain an offer by
any other person to enter into any contract or agreement which, if
consummated, would
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result in a majority of the outstanding voting stock of CB being
acquired by, or CB merged or consolidated with, any other entity, or
the sale of substantially all of the assets of CB.
g. The representations and warranties under this section shall survive
the closing of the exercise of this Option and the closing of the
Merger.
5. Termination. This Stock Option Agreement shall terminate on the earlier
of any of the following:
a. Upon exercise by VRB;
b. 90 days following the date of the Letter of Intent, if no Merger
Agreement has been executed, unless at such time, (I) VRB advises IBC
Shareholders of its intent to acquire the IBC shares notwithstanding
the absence of an executed Merger Agreement, (ii) offers to purchase
all of the outstanding CB stock held by CB shareholders other than IBC
for cash consideration of $43.36 per share, and (iii) VRB or VRB
Bancorp shall have filed an application to the Board of Governors of
the Federal Reserve System for prior approval to acquire the
outstanding shares of IBC capital stock as provided in this Option;
c. in the absence of a Merger Agreement, the later of January 1, 1998,
or 10 days following receipt of all necessary and applicable regulatory
approvals for VRB to exercise this Option;
d. March 31, 1998; or
e. Upon written release by VRB of the Option.
6. Voting of Shares. The IBC Shareholders agree to support the Merger
and to cause IBC to vote its shares of CB stock in favor of the Merger at any
meeting of the shareholders of CB or action taken by consent of the shareholders
in lieu of such a meeting.
7. General Provisions.
a. Binding Effect. This Option shall be binding upon and inure to the
benefit of the parties hereto and their heirs, executors,
administrators, successors, and assigns.
b. Notices. All notices to IBC Shareholders relating to this Stock
Option Agreement shall be delivered to each IBC Shareholder at the
respective address on the signature page of this Option or such other
address as shall be specified in writing by the IBC Shareholder. All
notices to the VRB shall be delivered at VRB's principal offices at 000
Xxxx Xx., X.X. Xxx 0000, Xxxxx Xxxxx, Xxxxxx 00000.
c. Governing Law and Interpretation. This Option shall be governed by
the laws of the State of Oregon as to all matters, including but not
limited to matters of validity, construction, effect and performance,
without giving effect to rules of choice of law.
d. Attorneys Fees. If any arbitration, suit or action is instituted in
connection with any controversy arising out of this Option or the
enforcement of any right hereunder, the prevailing party shall be
entitled to recover, in addition to costs, such sums as the arbitrator
or court may adjudge reasonable as attorney's fees, including fees on
any appeal.
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e. Arbitration. Any claim or controversy arising out of this Option or
the breach thereof shall be settled by arbitration pursuant to the
commercial arbitration rules of the American Arbitration Association.
Arbitration shall be in Xxxxxxx County, Oregon. The arbitration award
may be entered as a judgment in any court or courts with proper
jurisdiction.
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This Stock Option Agreement entered into and dated as of July 24, 1997.
IBC SHAREHOLDERS: Number of Shares Owned
----------------------
A Common B Common
-------- --------
/s/X. X. Xxxxxxx 3,840 3,178.112
----- -- -------
Name: X. X. Xxxxxxx
Address: 0000 Xxxxx Xxxxxx Xxxx.
X. Xxxxxxxxx, XX 00000
/s/Xxxxx Xxxxxxx 820.171 388
-------- -------
Name: Xxxxx Xxxxxxx
Address: X.X. Xxx 0000
Xxxxx, XX 00000
/s/ Xxxxxx X. Xxxxxxx 1,281 1,069.299
--- ------ -- -------
Name: Xxx Xxxxxxx
Address: 0000 Xxxxxxxx XX
Xxxxx, XX 00000
/s/Xxxxxx Xxxxxxx 114 240.015
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Name: Xxxxxx Xxxxxxx
Address: 0000 Xxxxxxxx Xx. X.
Xxxxx, XX 00000
Xxxxxx Capital Partners, Ltd. 3,840 3,178.122
By:/s/X. X. Xxxxxx
----- -- ------
Name: X. X. Xxxxxx
Address: 0000 X. Xxxxxxxx Xx., Xxxxx 000
Xxxxxxxxx, XX 00000
/s/X. X. Xxxxxx 1,024 847.503
----- -- ------
Name: Xxxxxxx Xxxxxx
Address: 0000 X. Xxxxxxxx Xx., Xxxxx 000
Xxxxxxxxx, XX 00000
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IBC SHAREHOLDERS: Number of Shares Owned
Common Preferred
------ ---------
/s/Xxxxxxxx Xxxxxx 180 149.067
----------- ------
Name: Xxxxxxxx Xxxxxx
Address: 0000 Xxxxxxxx Xx.
Xxxxxx Xxxx, XX 00000
/s/Xxxxxx Xxxxxx 179 148.171
--------- ------
Name: Xxxxxx Xxxxxx
Address: 0000 Xxxxxxxx Xx.
Xxxxxx Xxxx, XX 00000
Xxxxxxx/Xxxxx, Inc. 779 0
By: /s/Xxxxx Xxxxxxx, Secretary
-------- -------- ---------
Name: Xxxxx Xxxxxxx
Address: X.X. Xxx 0000
Xxxxx, XX 00000
/s/Xxxx X. Xxxxxxx 3,337 2,761.803
------- -- -------
Name: Xxxx X. Xxxxxxx
Address: 000 Xxxxxxxx Xxx
Xxxxxxxxx, XX 00000
/s/Xxxxxx X. Xxxxxxx 504 417.197
--------- -- -------
Name: Xxxxxx X. Xxxxxxx
Address: X.X. Xxx 0000
Xxxxxxxx, XX 00000
AGREEMENT BY IBC OPTIONHOLDERS
Xxxxxxx Xxxxxxx joins in this Stock Option Agreement. The IBC
Optionholders agree that the terms of this Stock Option Agreement are applicable
to their IBC Options and as to any shares acquired upon the exercise of such
options, and further agree to either exercise such IBC Options prior to the
exercise of this
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Option or, if they fail to do so, shall elect or shall be deemed to have elected
to cancel the IBC Options in exchange for the Cancellation Consideration as
provided above.
/s/Xxxxxxx Xxxxxxx
------------------
Xxxxxxx Xxxxxxx
Address: 00000 X. Xxxxx Xxx.
Xxxxxxxx, XX 00000
/s/Xxxxxx Xxxxxx
----------------
Xxxxxx Xxxxxx
Address: 000 XX X. Xx.
Xxxxxx Xxxx, XX 00000
Acknowledged and accepted:
VALLEY OF THE ROGUE BANK
/s/Xxxxxxx X. Xxxxx
-------------------
Xxxxxxx X. Xxxxx
President & CEO
