STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") dated May __,
2000 is by and among PSB BANCORP, INC., a Pennsylvania corporation ("PSB") and
Xxxxxxxx X. Xxxxxxx ("Xxxxxxx"), Xxxxxxx and Associates, LLC., Xxxxxxx
Investment Partnership, LP, Xxxxxxx Investment Partnership II, LP, Kerrimatt,
LP, and Federal Holdings LLC (collectively with Xxxxxxx, the "Investor Group").
BACKGROUND
PSB and Investor Group desire to enter into a Stock Option Agreement
(the "Agreement") providing PSB with an option to purchase 103,950 shares of the
common stock, par value $1.00 per share (the "Common Stock") of JADE Financial
Corporation ("JADE") presently owned by Investor Group on the terms and
conditions hereinafter set forth.
In consideration of the foregoing and the mutual covenants and
agreements set forth herein, PSB and Investor Group, intending to be legally
bound hereby, agree:
AGREEMENT
1. Grant of Option. Investor Group hereby grants to PSB, on the terms and
conditions set forth herein, the option to purchase (the "Option") 103,950
shares of Common Stock (the "Option Shares") at a price per share (the "Option
Price") equal to $14.50. The grant of the Option is subject to the following
conditions.
(a) Subject to the rights of PSB under this Agreement, the Investor Group
retains all rights to the Option Shares during the executory period of this
Agreement.
2. Exercise of Option.
(a) Subject to the satisfaction of the conditions specified below, PSB shall
exercise the Option, and the Investor Group shall deliver the Option Shares to
PSB, on or before the fifth (5th) business day (the "Closing") after the signing
of a definitive agreement pursuant to which PSB will acquire all the issued and
outstanding Common Stock of JADE for cash (the "Acquisition Agreement").
(b) If the Acquisition Agreement provides for a price per share in excess of
$14.50, the Option Price shall be reset to equal the price per share set forth
in the Acquisition Agreement.
(c) Neither PSB nor Investor Group will take any action that would have the
effect of preventing or disabling the delivery of the Option Shares to PSB upon
exercise of the Option or otherwise performing their obligations under this
Agreement.
3. PSB Additional Conditions to Closing. In addition to the execution of an
Acquisition Agreement, the obligation of PSB to purchase the Option Shares is
subject to the satisfaction of the following conditions:
(a) No preliminary or permanent injunction or other order against the delivery
of the Option Shares issued by any court of competent jurisdiction in the United
States shall be in effect on the date of exercise.
(b) Receipt by PSB of the required regulatory approval from the Board of
Governors of the Federal Reserve System to hold over 5% of the Common Stock.
Prior to filing, a copy of any application for regulatory approval to be filed
with the Board of Governors of the Federal Reserve System will be furnished to
the Investor Group for their review.
4. Covenant of PSB. PSB covenants that it will file all necessary bank
regulatory applications/notices to acquire Option Shares within 45 days after
the date of this Agreement.
5. Payment and Delivery of Certificates. At any Closing hereunder, (i) PSB will
make payment to Investor Group of the aggregate price for the Option Shares so
purchased by wire transfer of immediately available funds to an account
designated by Investor Group, (ii) Investor Group will deliver to PSB a stock
certificate or certificates representing the number of Option Shares so
purchased, registered in the name of PSB or its designee, and (iii) PSB will pay
any transfer or other taxes required by reason of the issuance of the Option
Shares so purchased.
6. Representations and Warranties of Investor Group
(a) Investor Group has beneficial ownership of the Option Shares, and the same
are free and clear of all liens, claims, charges and encumbrances of any kind
whatsoever.
(b) Investor Group owns no other shares of Common Stock other than the Option
Shares.
(c) Xxxxxxx has all requisite power under the organizational documents of each
member of the Investor Group to execute, deliver and perform this Agreement on
behalf of each member of the Investor Group hereunder. This Agreement
constitutes a legal, valid and binding obligation of each member of the Investor
Group, enforceable against each member of the Investor Group in accordance with
its terms.
7. Representations and Warranties of PSB
(a) PSB has full corporate power and authority to execute, deliver and perform
this Agreement. This Agreement constitutes a legal, valid and binding obligation
of PSB, enforceable against PSB in accordance with its terms.
(b) PSB represents that it is acquiring the Option for PSB's own account and not
with a view to, or for sale in connection with, any distribution of the Option
or the Option Shares.
8. Covenant of Investor Group. Investor Group covenants that it will not (i)
sell the Option Shares during the term of this Agreement (ii) acquire any
additional shares of Common Stock, (iii) take any action to, or solicit or
encourage any other party to, make any offer to acquire all the Common Stock of
JADE or all or substantially all the assets of JADE; (iv) acquire any shares of
common stock of either PSB or any entity resulting from PSB's merger with or
acquisition of JADE for a period of 18 months from the date of execution of an
Acquisition Agreement; or (v) except as may be required by law, make any public
or private statements either written or oral, to any other party, regarding the
management or operations of JADE or PSB prior to the termination of this
Agreement in accordance with its terms. The provisions of Section 8(v) shall not
apply from the date of filing by JADE of a Proxy Statement (the "Proxy"), with
the Securities and Exchange Commission, relating to its annual meeting (the
"Annual Meeting"), if the Proxy relates to an Annual Meeting to be held prior to
October 31, 2000.
9. Topping Fee. Notwithstanding the provisions of Section 2(a) hereof, PSB and
the Investor Group agree that in the event that an acquisition agreement is
executed by JADE with any party other than PSB pursuant to which all the issued
and outstanding shares of Common Stock will be acquired for cash at a price per
share in excess of $14.50, then, subject to the receipt of any required
regulatory approval, PSB may exercise the Option and the Option Price shall be
equal to $14.50 plus one-half the difference between the acquisition price set
forth in the acquisition agreement with such third party and $14.50.
Notwithstanding the foregoing, the provisions of this Section 9 shall not be
applicable if Investor Group has violated the provisions of Section 8 hereof.
10. Termination. This Agreement and the Option shall terminate on the earlier
of:
(a) October 31, 2000; or
(b) the date of the Closing hereunder; or
(c) the date of the Annual Shareholders Meeting of JADE, if Xxxxxxxx X. Xxxxxxx
is not nominated and recommended for election by the Board of Directors of JADE.
11. Termination Fee. If prior to October 31, 2000, PSB does not make a bona fide
written offer to purchase all of the shares of Common Stock of JADE for a price
equal to or greater than $14.50 per share, PSB will pay to the Investor Group a
termination fee of $100,000. This Section 11 shall survive termination.
12. Specific Performance. The parties hereto acknowledge that damages would be
an inadequate remedy for a breach of this Agreement and that the obligations of
the parties hereto shall be specifically enforceable.
13. Entire Agreement. This Stock Option Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersede all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof.
14. Assignment or Transfer. PSB may not sell, assign or otherwise transfer its
rights and obligations hereunder, in whole or in part, to any person or group of
persons other than to a subsidiary of PSB.
15. Amendment of Agreement. By mutual consent of the parties hereto, this
Agreement may be amended in writing at any time, for the purpose of facilitating
performance hereunder or to comply with any applicable regulation of any
governmental authority or any applicable order of any court or for any other
purpose.
16. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
17. Notices. All notices, requests, consents and other communications required
or permitted hereunder shall be in writing and shall be deemed to have been duly
given when delivered personally, by telegram or telecopy, or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties as follows:
(i) If to PSB, to:
PSB Bancorp, Inc.
0000 Xxxxxx Xxxxxx
Eleven Penn Center - Suite 2601
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx XxXxxxxx, President
and Chief Executive Officer
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxx & Xxx
One Glenhardie Corporate Center
0000 Xxxxxxxx Xxxx
X.X. Xxx 000
Xxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx, Esquire
Telecopy No.: (000) 000-0000
(ii) If to Investor Group, to:
Xxxxxxxx X. Xxxxxxx, Esquire
000 Xxxxx Xxxx, X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
with copies to:
Stroock & Stroock & Xxxxx
First Union Financial Center
000 Xxxxx Xxxxxxxx Xxxx, XX, Xxxxx 0000
Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx, Esquire
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof). 18. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic internal law (but not the law of
conflicts of law) of the Commonwealth of Pennsylvania.
19. Captions. The captions in this Agreement are inserted for convenience
and reference purposes, and shall not limit or otherwise affect any of the terms
or provisions hereof.
20. Waivers and Extensions. The parties hereto may, by mutual consent, extend
the time for performance of any of the obligations or acts of either party
hereto. Each party may waive (i) compliance with any of the covenants of the
other party contained in this Agreement and/or (ii) the other party's
performance of any of its obligations set forth in this Agreement.
21. Parties in Interest. This Agreement shall be binding upon and inure solely
to the benefit of each party hereto, and, nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Stock Option Agreement.
22. 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.
23. Expenses. Except as otherwise provided herein, all costs and expenses
incurred by the parties hereto in connection with the transactions contemplated
by this Agreement or the Option shall be paid by the party incurring such cost
or expense.
PSB BANCORP, INC.
/ss/ Xxxxxxx XxXxxxxx
By:_______________________________
Xxxxxxx XxXxxxxx,
President and Chief
Executive Officer
/ss/ Xxxxxxxx X. Xxxxxxx
By:_______________________________
Xxxxxxxx X. Xxxxxxx (Individually)
XXXXXXX AND ASSOCIATES, L.L.C.
/ss/ Xxxxxxxx X. Xxxxxxx
By:_______________________________
Xxxxxxxx X. Xxxxxxx,
General Partner
XXXXXXX INVESTMENT PARTNERSHIP, LP
/ss/ Xxxxxxxx X. Xxxxxxx
By:________________________________
Xxxxxxxx X. Xxxxxxx,
General Partner
XXXXXXX INVESTMENT PARTNERSHIP II,LP
/ss/ Xxxxxxxx X. Xxxxxxx
By:_________________________________
Xxxxxxxx X. Xxxxxxx.
General Partner
KERRIMATT, LP
/ss/ Xxxxxxxx X. Xxxxxxx
By:_________________________________
Xxxxxxxx X. Xxxxxxx
FEDERAL HOLDINGS, LLC
/ss/ Xxxxxxxx X. Xxxxxxx
By:_________________________________
Xxxxxxxx X. Xxxxxxx, Manager
