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EXHIBIT 99.2
STOCK OPTION AGREEMENT
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated July 9, 2000, between Premier National
Bancorp Inc., a New York corporation ("Issuer"), and M&T Bank Corporation, a
New York corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee, Issuer and Olympia Financial Corp., a Delaware
corporation and a wholly owned subsidiary of Grantee ("Merger Sub") have
entered into an Agreement and Plan of Reorganization of even date herewith (the
"Reorganization Agreement"), which agreement has been executed by the parties
hereto immediately prior to this Stock Option Agreement (the "Agreement"), and
will enter into an Agreement and Plan of Merger to be dated as of the date of
this Agreement (the "Plan of Merger," and, together with the Reorganization
Agreement, the "Merger Agreements"); and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreements and in consideration therefor, Issuer has agreed to grant Grantee
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 Agreements, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to 3,144,107 fully paid and nonassessable shares of Issuer's
Common Stock, par value $0.80 per share ("Common Stock"), at a price of $13.375
per share (the "Option Price"); provided, however, that in no event shall the
number of shares of Common Stock for which this Option is exercisable exceed
19.9% of the Issuer's issued and outstanding shares of Common Stock without
giving effect to any shares subject to 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.
Notwithstanding anything else in this Agreement to the contrary, the number of
shares of Common Stock subject to the Option shall be reduced to such lesser
number, if any, as may from time to time be necessary, but only for so long as
may be necessary, to cause Grantee not to become an "interested shareholder"
for purposes of Section 912 of the New York Business Corporation Law.
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(b) In the event that any additional shares of
Common Stock are either (i) issued or otherwise become outstanding after the
date of this Agreement (other than pursuant to this Agreement or as permitted
under the terms of the Merger Agreements) or (ii) redeemed, repurchased,
retired or otherwise cease to be outstanding after the date of the Agreement,
the number of shares of Common Stock subject to the Option shall be increased
or decreased, as appropriate, so that, after such issuance, such number equals
19.9% of the number of shares of Common Stock then issued and outstanding
without giving effect to any shares subject or issued pursuant to the Option.
Nothing contained in this Section 1(b) or elsewhere in this Agreement shall be
deemed to authorize Issuer or Grantee to breach any provision of the Merger
Agreements.
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, however, that
the Holder shall have sent the written notice of such exercise (as provided in
subsection (e) of this Section 2) within six months following such Subsequent
Triggering Event; provided, further, however, that if the Option cannot be
exercised on any day because of any injunction, order or similar restraint
issued by a court of competent jurisdiction, the period during which the Option
may be exercised shall be extended so that the Option shall expire no earlier
than on the 10th business day after such injunction, order or restraint shall
have been dissolved or when such injunction, order or restraint shall have
become permanent and no longer subject to appeal, as the case may be, but in
any event within one year following the Subsequent Triggering Event. Each of
the following shall be an "Exercise Termination Event": (i) the Effective Date
(as defined in the Plan of Merger) of the Merger; (ii) termination of the
Merger Agreements in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event; or (iii) the
passage of twelve months after termination of the Merger Agreements if such
termination follows the occurrence of an Initial Triggering Event. The term
"Holder" shall mean the holder or holders of the Option. Notwithstanding
anything to the contrary contained herein, the Option may not be exercised (nor
may Grantee's rights under Section 10 hereof be exercised) at any time when
Grantee shall be in breach of any of its covenants or agreements contained in
the Merger Agreements under circumstances that would entitle Issuer to
terminate the Merger Agreements (without regard to any grace period provided
for in Section 6.1(b)(x) of the Reorganization Agreement). In the event that
Issuer terminates the Merger Agreement pursuant to Section 6.1(f) of the
Reorganization Agreement, then immediately upon Grantee's receipt of the wire
transfer contemplated by such Section 6.1(f), this Agreement shall terminate
and shall become void and have no further force or effect and Grantee shall
surrender this Agreement to Issuer.
(b) The term "Initial Triggering Event" shall
mean any of the following events or transactions occurring after the date
hereof:
(i) Issuer or any of its Subsidiaries
(each an "Issuer Subsidiary"), without having received Grantee's prior written
consent, shall have entered
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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
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder) other than Grantee or any of its Subsidiaries (each
a "Grantee Subsidiary"). For purposes of this Agreement, "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any similar
transaction, involving Issuer or any Significant Subsidiary (as defined in Rule
1-02 of Regulation S-X promulgated by the Securities and Exchange Commission
(the "SEC")) of Issuer, (x) a purchase, lease or other acquisition or
assumption of all or a substantial portion of the assets or deposits of Issuer
or any Significant Subsidiary of Issuer, (y) 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 Issuer, or (z) any
substantially similar transaction; provided, however, that in no event shall
any merger, consolidation, purchase or similar transaction involving only the
Issuer and one or more of its Subsidiaries or involving only two or more of
such Subsidiaries, be deemed to be an Acquisition Transaction; provided that
any such transaction is not entered into in violation of the terms of the
Merger Agreements;
(ii) Issuer or any Issuer Subsidiaries,
without having received Grantee's prior written consent, shall have authorized,
recommended, proposed, or publicly announced its intention to authorize,
recommend or propose to engage in an Acquisition Transaction with any person
other than Grantee or a Grantee Subsidiary;
(iii) Any person (other than Grantee or any
Subsidiary of Grantee) 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) or any person other than Grantee or any
Subsidiary of Grantee shall have commenced (as such term is defined under the
rules and regulations of the SEC), or shall have filed or publicly disseminated
a registration statement or similar disclosure statement with respect to, a
tender offer or exchange offer to purchase any shares of Issuer Common Stock
such that, upon consummation of such offer, such person would beneficially own,
directly or indirectly, 10% or more of the then outstanding shares of Issuer
Common Stock (such an offer being referred to herein as a "Tender Offer" or an
"Exchange Offer," respectively);
(iv) (A) the holders of Issuer Common
Stock shall not have approved the Merger Agreements and the transactions
contemplated thereby, at the meeting of such stockholders at which such
agreement is voted on, (B) such meeting shall not have been held or shall have
been cancelled prior to termination of the Merger Agreements, or (C) the Board
of Directors of Issuer shall have publicly withdrawn or modified, or publicly
announced its intent to withdraw or modify, in any manner adverse to Grantee,
its recommendation that the stockholders of Issuer approve the transactions
contemplated by the Merger Agreements, in each case after it shall have been
publicly announced that any person other than Grantee or any Subsidiary of
Grantee shall have (x) made, or disclosed an intention to make, a proposal to
engage in an Acquisition
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Transaction, (y) commenced a Tender Offer, or filed or publicly disseminated a
registration statement or similar disclosure statement with respect to an
Exchange Offer, or (z) filed an application (or given a notice), whether in
draft or final form, under any federal or state banking laws seeking regulatory
approval to engage in an Acquisition Transaction; or
(v) After an overture is made by a third
party to Issuer or its stockholders to engage in an Acquisition Transaction,
Issuer shall have breached any covenant or obligation contained in the
Reorganization Agreement and such breach (x) would entitle Grantee to terminate
the Merger Agreements and (y) shall not have been cured prior to the later of
30 days after written notice of breach is delivered or the Notice Date (as
defined below).
(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 25% or more of the then outstanding shares of Common Stock; or
(ii) The occurrence of the Initial Triggering
Event described in paragraph (i) of subsection (b) of this Section 2, except
that the percentage referred to in clause (y) shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of
the occurrence of any Initial Triggering Event or Subsequent Triggering Event
of which it has knowledge (together, a "Triggering Event"), it being understood
that the giving of such notice by Issuer shall not be a condition to the right
of the Holder to exercise the Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the date of
which being herein referred to as the "Notice Date") specifying (i) the total
number of shares it will purchase pursuant to such exercise and (ii) a place
and date not earlier than three business days nor later than 60 business days
from the Notice Date for the closing of such purchase (the "Closing Date");
provided, that if prior 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 Option shall be deemed to occur on the
Notice Date relating thereto, except that the Common Stock issuable pursuant to
the Option shall not be deemed outstanding until they are issued in accordance
with the provisions herein.
(f) At the closing referred to in subsection (e) of this
Section 2, the Holder shall pay to Issuer the aggregate purchase price for the
shares of Common Stock
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purchased pursuant to the exercise of the Option in immediately available funds
by wire transfer to a bank account designated by Issuer; provided, that failure
or refusal of Issuer to designate such a bank account 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,
Issuer 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 Issuer a copy of this Agreement and a letter
agreeing that the Holder will not offer to sell or otherwise dispose of such
shares in violation of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO CERTAIN PROVISIONS OF AN AGREEMENT BETWEEN THE
REGISTERED HOLDER HEREOF AND ISSUER AND TO RESALE RESTRICTIONS
ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED. A COPY
OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF ISSUER
AND WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
RECEIPT BY ISSUER OF A WRITTEN REQUEST THEREFOR."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "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 Issuer a copy of a letter from
the staff of the SEC, or an opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the Securities Act; (ii) the reference to the
provisions to 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 Issuer 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 and obtaining all regulatory approvals and the expiration of
all statutory waiting periods, 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 Issuer shall then be closed or
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that certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and
all United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
3. Issuer agrees: (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but unissued or
treasury shares of Common Stock so that the Option may be exercised without
additional authorization of Common Stock after giving effect to all other
options, warrants, convertible securities and other rights to purchase Common
Stock; (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all commercially reasonable 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.
Section 18a and regulations promulgated thereunder and (y) in the event, under
federal or state banking law, prior approval of or notice to the Federal
Reserve Board or any other federal or state regulatory authority is necessary
before the Option may be exercised, cooperating fully with the Holder in
preparing such applications or notices and providing such information to the
Federal Reserve Board or such other federal or state regulatory authority as
they may require) in order to permit the Holder to exercise the Option and
Issuer duly and effectively to issue shares of Common Stock pursuant hereto;
and (iv) promptly to take all action provided herein to 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 Issuer, for other
Agreements providing for Options of different denominations entitling the
holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any Stock Option Agreements and related Options for which
this Agreement (and the Option granted hereby) may be exchanged. Upon receipt
by Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will execute and deliver a
new Agreement of like tenor and date. Any such new Agreement executed and
delivered shall 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.
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 and the Option Price shall be subject to
adjustment from time to time as provided
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in this Section 5. In the event of any change in, or distributions in respect
of, the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of
shares, distributions on or in respect of the Common Stock that would be
prohibited under the terms of the Merger Agreement, or the like, the type and
number of shares of Common Stock purchasable upon exercise hereof and the
Option Price shall be appropriately adjusted so that Grantee on exercise will
receive what it would have received had it exercised and held Common Stock
immediately before such event.
6. Upon the occurrence of a Subsequent Triggering Event
that occurs prior to an Exercise Termination Event, Issuer shall, at the
request of Grantee delivered within six months of such Subsequent Triggering
Event (whether on its own behalf or on behalf of any subsequent holder of this
Option (or part thereof) or any of the shares of Common Stock issued pursuant
hereto), promptly prepare, file and keep current a registration statement under
the Securities Act covering this Option and any shares issued and issuable
pursuant to this Option and shall use its reasonable best efforts to cause such
registration statement to become effective and remain current in order to
permit the sale or other disposition of this Option and any shares of Common
Stock issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement first to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. The foregoing notwithstanding, Issuer may postpone filing or
updating such registration for a reasonable period of time after receipt of the
original request (not exceeding 180 days) if, in the good faith opinion of
Issuer's board of directors, effecting the registration statement would
adversely affect a material financing, acquisition, disposition of assets or
stock, merger or other comparable transaction or would require Issuer to make
public disclosure of information the public disclosure of which would have a
material adverse effect upon Issuer, provided that the Issuer shall not delay
such action pursuant to this sentence more than once in any twelve-month
period. Grantee shall have the right to demand two such registrations. The
foregoing notwithstanding, if, at the time of any request by Grantee for
registration of the Option or Option Shares as provided above, Issuer is in
registration with respect to an 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 Issuer, the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced; and provided,
however, that after any such required reduction the number of Option Shares to
be included in such offering for the account of the Holder or Holders shall
constitute at least 25% of the total number of shares to be sold by the Holder
or Holders and Issuer in the aggregate; and provided, further, however, that
if such reduction occurs, then the Issuer shall file a registration statement
for the balance as promptly as practicable and no reduction shall thereafter
occur. Each such Holder shall provide all information reasonably requested by
Issuer for inclusion in any registration
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statement to be filed hereunder. If requested by any such Holder in connection
with such registration, Issuer 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 secondary offering underwriting
agreements for the Issuer. Upon receiving any request under this Section 6
from Grantee, Issuer agrees to send a copy thereof to any other person known to
Issuer to be entitled to registration rights under this Section 6, in each case
by promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies. Notwithstanding anything to the
contrary contained herein, in no event shall Issuer be obligated to effect more
than two registrations pursuant to this Section 6 by reason of the fact that
there shall be more than one Holder as a result of any assignment or division
of this Agreement. In addition, Grantee agrees to use all reasonable efforts
to cause, and to cause any underwriters of any safe or other disposition to
cause, any sale or other disposition pursuant to such registration statement to
be effected on a widely distribution basis so that upon consummation thereof no
purchaser or transferee shall own beneficially more than 2% of the then
outstanding voting power of the Issuer.
7. The periods for exercise of certain rights under
Sections 2, 6, 10 and 12 shall be extended: (i) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights, and for the
expiration of all statutory waiting periods; and (ii) to the extent necessary
to avoid liability under Section 16(b) of the Exchange Act by reason of such
exercise.
8. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to authorize this Agreement or
to consummate the transactions so contemplated. This Agreement has been duly
and validly executed and delivered by Issuer.
(b) 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 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.
9. Grantee hereby represents and warrants to Issuer
that:
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(a) Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or
consents referred to herein, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been duly executed
and delivered by Grantee.
(b) The Option is not being, and any shares of Common
Stock or other securities acquired by Grantee upon 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.
10. Neither of the parties hereto may assign any of its
rights or obligations under this 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, Grantee, subject to the express
provisions hereof, may assign in whole or in part its rights and obligations
hereunder within six months following such Subsequent Triggering Event (or such
later period as provided in Section 7); provided, however, that until the date
fifteen days following the date on which the Federal Reserve Board approves an
application by Grantee to acquire the shares of Common Stock subject to the
Option (proof of which approval shall be furnished promptly to Issuer), 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.
11. Each of Grantee and Issuer will use its reasonable
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
Amex upon official notice of issuance and applying to the Federal Reserve
Board, for approval to acquire the shares issuable hereunder, and Grantee's
ability to exercise the Option is conditioned on obtaining all such consents
and approvals, but Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
12. (a) Upon the occurrence of a Subsequent
Triggering Event that occurs prior to an Exercise Termination Event, (i) at the
request of any Holder, delivered within thirty days following such occurrence
(or such later period as provided in Section 7), Issuer shall repurchase the
Option from the Holder at a price (the "Option Repurchase Price") equal to the
amount by which (A) the market/offer price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which this Option may then
be exercised, plus, to the extent not previously reimbursed, Grantee's
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reasonable documented out-of-pocket expenses incurred in connection with the
transactions contemplated by, and the enforcement of Grantee's rights under,
the Merger Agreements, including without limitation reasonable legal,
accounting and investment banking fees (the "Grantee's Out-of-Pocket
Expenses"), and (ii) at the request of any owner of Option Shares from time to
time (the "Owner"), delivered within thirty days following such occurrence (or
such later period as provided in Section 7), Issuer shall repurchase such
number of the Option Shares from such Owner as the Owner shall designate at a
price per share ("Option Share Repurchase Price") equal to the greater of (A)
the market/offer price and (B) the average option price per share paid by the
Owner for the Option Shares so designated, plus, to the extent not previously
reimbursed, Grantee's Out-of-Pocket Expenses. The term "market/offer price"
shall mean the highest of (w) the price per share of the Common Stock at which
a tender offer or exchange offer therefor constituting the Subsequent Trigger
Event has been consummated, (x) the price per share of the Common Stock to be
paid by any Person, other than Grantee or a subsidiary of Grantee, pursuant to
an agreement with Issuer, (y) the highest closing price for shares of Common
Stock within the 60-day period immediately preceding the required repurchase of
Options or Option Shares, as the case may be, or (z) 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 net assets
of Issuer as determined by a nationally recognized investment banking firm
selected by a majority in the interest of the Holders or the Owners, as the
case may be, and reasonably acceptable to Issuer, 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 investment banking firm selected
by a majority in interest of the Holders or the Owners, as the case may be, and
reasonably acceptable to Issuer.
(b) Each Holder and Owner, as the case may be,
may exercise its right to require Issuer to repurchase the Option and any
Option Shares pursuant to this Section 12 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 such Holder or Owner elects to require Issuer to repurchase this
Option and/or Option Shares in accordance with the provisions of this Section
12 and a representation as to the ownership and freedom from liens. As
promptly as practicable, and in any event within ten 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 each Holder the Option Repurchase Price and/or to each
Owner the Option Share Repurchase Price therefor or the portion thereof that
Issuer is not then prohibited under applicable law and regulation from so
delivering; provided, however, that the Holder may not exercise its right to
require Issuer to repurchase the Option or any Option Shares more than one
time.
(c) To the extent that Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from repurchasing the Option and/or
the Option Shares in full, Issuer shall immediately so notify each Holder
and/or each Owner and thereafter deliver or cause to be delivered,
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from time to time, to such Holder and/or 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 ten
business days after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of a notice of
repurchase pursuant to paragraph (b) of this Section 12 is prohibited under
applicable law or regulation, or as a consequence of administrative policy,
from delivering to any Holder and/or Owner, as appropriate, the Option
Repurchase Price and the Option Share Repurchase Price, respectively, in part
or in full (and Issuer hereby undertakes to use its best efforts to receive any
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish such repurchase), such 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 Issuer shall
promptly (i) deliver to such Holder and/or Owner, as appropriate, that portion
of the Option Purchase Price or the Option Share Repurchase Price that Issuer
is not prohibited from delivering; and (ii) deliver, as appropriate, either (A)
to such Holder, a new Stock Option Agreement evidencing the right of such
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 such Owner, a
certificate for the Option Shares it is then so prohibited from repurchasing.
(d) At any time after the occurrence of a
Subsequent Triggering Event and prior to the later of (a) the expiration of 24
months immediately following the first purchase of shares of Common Stock
pursuant to the Option and (b) the termination of the Option, if Grantee shall
desire to sell, assign, transfer or otherwise dispose of all or any of the
Option or the shares of Common Stock or other securities acquired by it
pursuant to the Option, it shall give Issuer written notice of the proposed
transaction, identifying the proposed transferee, accompanied by a copy of a
binding offer to purchase such shares or other securities signed by such
transferee and setting forth the terms of the proposed transaction. Upon
receipt of such notice, Issuer shall for a period of 10 business days have the
right of first refusal to purchase the Option or the Common Stock then held by
the Grantee that is proposed to be sold at the purchase price set forth in such
notice. The purchase of any such shares or other securities shall be settled
within 10 business days of the date of the acceptance of the offer and the
purchase price shall be paid to Grantee in immediately available funds;
provided that, if prior notification to or approval of any governmental or
regulatory authority is required in connection with such purchase, Issuer shall
promptly file the required notice or application for approval and shall
expeditiously process the same (and Grantee shall cooperate with Issuer in the
filing of any such notice or application and the obtaining of any such
approval) and the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which, as the case may be, (a) any
required notification period has expired or been terminated or (b) such
approval has been obtained and, in either event, any requisite waiting period
shall have passed. In the event of the failure or refusal of Issuer to
purchase all the shares or other securities covered by such notice or if any
such governmental or regulatory authority disapproves Issuer's proposed
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12
purchase of such shares or other securities, Grantee may, within 60 days from
the date of such notice (subject to any necessary extension for regulatory
notification, approval or waiting periods), sell all, but not less than all, of
such shares or other securities to the proposed transferee at no less than the
price specified and on terms no more favorable than those set forth in such
notice. The requirements of this Section 12(d) shall not apply to (w) any
disposition as a result of which the proposed transferee would own beneficially
not more than 2% of the outstanding voting power of Issuer, (x) any disposition
of Common Stock or other securities by a person to whom Grantee has assigned
its rights under the Option with the consent of Issuer, (y) any sale by means
of public offering registered under the Securities Act in which steps are taken
to reasonably assure that no purchaser will acquire securities representing
more than 2% of the outstanding voting power of Issuer or (z) any transfer to a
wholly-owned subsidiary of Grantee which agrees in writing to be bound by the
terms thereof.
13. (a) Notwithstanding any other provision of this
Agreement, in no event shall the Grantee's Total Profit (as hereinafter
defined) exceed $24 million and, if it otherwise would exceed such amount, the
Grantee, at its sole election, shall either (i) reduce the number of shares of
Common Stock subject to this Option, (ii) deliver to the Issuer for
cancellation Option Shares previously purchased by Grantee valued at fair
market value at the time of delivery, (iii) pay cash to the Issuer, or (iv)
undertake any combination thereof, so that Grantee's actually realized Total
Profit shall not exceed $24 million after taking into account the foregoing
actions.
(b) Notwithstanding any other provision of this
Agreement, this Option may not be exercised for a number of shares as would, as
of the date of exercise, result in a Notional Total Profit (as defined below)
of more than $24 million; provided, that nothing in this sentence shall
restrict any exercise of the Option permitted hereby on any subsequent date.
(c) As used herein, the term "Total Profit" shall
mean the aggregate amount (before taxes) of (i)(x) the net cash amounts
received by Grantee pursuant to the sale of Option Shares (or any other
securities into which such Option Shares are converted or exchanged) to any
unaffiliated party, including the Issuer, less (y) the Grantee's purchase price
of such Option Shares, plus (ii) any amounts received by Grantee on the
transfer of the Option (or any portion thereof) to any unaffiliated party,
including the Issuer.
(d) As used herein, the term "Notional Total
Profit" with respect to any number of shares as to which Grantee may propose to
exercise this Option shall be the Total Profit determined as of the date of
such proposed exercise assuming that this Option were exercised on such date
for such number of shares and assuming that such shares, together with all
other Option Shares, including Shares underlying the Option itself, held by
Grantee and its affiliates as of such date, were sold for cash at the closing
market price for the Common Stock as of the close of business on the preceding
trading day (less customary brokerage commissions).
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13
14. 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.
15. 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 the full number
of shares of Common Stock provided in Section 1(a) hereof (as adjusted pursuant
to Sections 1(b) or 5 hereof), it is the express intention of Issuer to allow
the Holder to acquire such lesser number of shares as may be permissible,
without any amendment or modification hereof.
16. 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 Reorganization Agreement.
17. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws
thereof.
18. 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.
19. 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.
20. Except as otherwise expressly provided herein or in
the Merger Agreements, 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 thereto, 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 and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
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14
21. Capitalized terms used in this Agreement and not
defined herein shall have the meanings assigned thereto in the Merger
Agreement.
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15
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
PREMIER NATIONAL BANCORP, INC.
By /s/ T. Xxxxxxxxx Xxxxxxxxxx III
------------------------------------------
T. Xxxxxxxxx Xxxxxxxxxx III
Chairman
M&T BANK CORPORATION
By /s/ Xxxxxxx X. Xxxxx
------------------------------------------
Xxxxxxx X. Xxxxx
Executive Vice President and Chief Financial Officer
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