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EXHIBIT 10
Execution Copy
STOCK OPTION AGREEMENT dated as of November 9, 1995, among
BANK OF THE WEST, a California banking corporation ("Grantee"), NF
ACQUISITION CO., a Delaware corporation and a wholly owned subsidiary
of Grantee ("Sub"), and NORTHBAY FINANCIAL CORPORATION, a Delaware
corporation ("Issuer").
WHEREAS, Issuer is a registered savings and loan holding company under the
Savings and Loan Holding Company Act, as amended (the "SLHC Act");
WHEREAS, Grantee is a commercial bank organized and existing under California
law;
WHEREAS, Grantee, Sub and Issuer propose to enter into an Agreement and Plan
of Merger dated as of the date hereof (the "Merger Agreement");
WHEREAS, as a condition and inducement to Grantee's and Sub's willingness to
enter into the Merger Agreement, Grantee and Sub have required that Issuer
grant to Grantee the Option (as defined in Section 2); and
WHEREAS, the Board of Directors of Issuer, believing it to be in the best
interests of Issuer, has approved this Agreement and the grant by Issuer of the
Option.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, the parties hereto agree as follows:
1. Definitions; Interpretation. Capitalized terms used but not defined
herein shall have the meanings set forth in the Merger Agreement, which also
contains in Section 8.03(b) thereof certain rules of construction and
interpretation that shall be applicable hereto as if set forth herein.
2. Grant of Option. Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 547,354 fully paid and nonassessable shares (such amount, as may be adjusted
from time to time as set forth herein, the "Option Shares") of Common Stock,
par value $0.10 per share ("Issuer Common Stock"), of the Issuer at a purchase
price of U.S. $13.25 per Option Share (such price, as may be adjusted from time
to time as set forth herein, the "Option Price"). The number of Option Shares
that may be received upon the exercise of the Option and the Option Price are
subject to adjustment as set forth in Section 6.
3. Exercise of Option. (a) Grantee may exercise the Option, in whole or
part, at any time and from time to time on or after the date hereof if, but
only if, both an Initial Triggering Event (as defined below) and a Subsequent
Triggering Event (as defined below) shall have occurred prior to the occurrence
of an Exercise Termination Event (as defined below). Each of the following
shall be an Exercise Termination Event: the earliest to occur of (i) the
Effective Time of the Merger, (ii) termination of the Merger Agreement pursuant
to Section 7.01 thereof (other than for any of the reasons described in clause
(iii) of this Section 3(a)), and (iii) the later of (A) 18 months after
termination of the Merger Agreement (x) by either Grantee or Sub under Section
7.01(c)(i) thereof, (y) by Grantee under Section 7.01(b)(ii) thereof as a
result of a willful breach of any covenant or obligation or willful breach of
any of Issuer's representations, or warranties contained in the Merger
Agreement, provided, however, that such breach need not be willful if such
termination occurs after the occurrence of an Initial Triggering Event, or (z)
by Issuer under Section 7.01(b)(iv) under circumstances where Grantee or Sub
could effect termination pursuant to Section 7.01(c)(i), and (B) the passage of
18 months after the occurrence of the first Initial Triggering Event; provided,
however, that, any such exercise and purchase of
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Option Shares shall be subject to compliance with applicable laws, including
the SLHC Act. The rights set forth in Sections 8, 9 and 10 shall not terminate
when the right to exercise the Option terminates as set forth herein, but shall
extend to such time as is provided in such Sections 8, 9 and 10.
Notwithstanding the termination of the Option, Grantee shall be entitled to
purchase those Option Shares with respect to which it has exercised the Option
in accordance with the terms hereof prior to the termination of the Option.
(b) (i) An "Initial Triggering Event" means the occurrence with respect to
the Issuer of any of the following events or circumstances after the date
hereof:
(A) Issuer or any of its Subsidiaries (each an "Issuer Subsidiary")
without having received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as defined below)
with any person (the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(A)(9) and 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Securities Exchange Act"), and the
rules and regulations thereunder) other than Grantee or any of its
Subsidiaries (each a "Grantee Subsidiary") or the Board of Directors of
Issuer shall have recommended that the stockholders of Issuer approve or
accept any Acquisition Transaction with any person other than Grantee or any
Grantee Subsidiary. For purposes of this Agreement, "Acquisition
Transaction" shall mean (x) a merger or consolidation, or any similar
transaction, involving Issuer or any of Issuer's subsidiaries, (y) a
purchase, lease or other acquisition of all or substantially all of the
assets of Issuer or any subsidiary 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 Issuer or any
subsidiary; provided that the term "Acquisition Transaction" does not include
any internal merger or consolidation involving only Issuer and/or Issuer
Subsidiaries;
(B) Any person (other than Grantee or any Grantee Subsidiary) shall
have acquired beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of Issuer Common Stock
(the term "beneficial ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the Securities Exchange Act, and
the rules and regulations thereunder);
(C) Any person other than Grantee or any Grantee Subsidiary shall
have made a bona fide proposal to Issuer or its stockholders, by public
announcement or written communication that is or becomes the subject of
public disclosure, to engage in an Acquisition Transaction (including,
without limitation, any situation in which any person other than Grantee or
any Grantee Subsidiary shall have commenced (as such term is defined in Rule
14d-2 under the Securities Exchange Act) or shall have filed a registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to, a tender offer or exchange offer to purchase any
shares of Issuer Common Stock such that, upon consummation of such offer,
such person would own or control 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));
(D) After a proposal 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 Merger Agreement and
such breach would entitle Grantee to terminate the Agreement, the holders of
Issuer Common Stock shall not have approved the Merger Agreement at the
meeting of such stockholders held for the purpose of voting thereon, such
meeting shall not have been held or shall have been cancelled prior to
termination of the Merger Agreement or Issuer's Board of Directors shall have
withdrawn or modified in a manner adverse to Grantee the recommendation of
Issuer's Board of Directors with respect to the Merger Agreement;
(E) Any person other than Grantee or any Subsidiary thereof, other
than in connection with a transaction to which Grantee has given its prior
written consent, shall
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have filed an application or notice with the Office of Thrift Supervision
("OTS") or other federal or state bank regulatory authority for approval to
engage in an Acquisition Transaction with respect to Issuer; or
(F) Issuer shall have breached any covenant or obligation contained
in that certain letter agreement dated October 17, 1995 between Grantee and
Issuer.
(ii) The term "Subsequent Triggering Event" shall mean the occurrence with
respect to Issuer of either of the following events or circumstances after the
date hereof:
(A) The acquisition by any person other than Grantee or any Grantee
Subsidiary of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
(B) The occurrence of an Initial Triggering Event described in
Section 3(b)(i)(A) except that the percentage referred to in clause (z) shall
be 25%.
(c) Issuer shall notify Grantee promptly in writing of the occurrence of any
Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"); provided that it is understood that the giving of such
notice by Issuer shall not be a condition to the right of Grantee to exercise
the Option.
(d) In the event Grantee is entitled to and wishes to exercise the Option,
it shall send to Issuer a written notice (the date of which being referred to
herein as the "Notice Date") specifying (i) the total number of Option 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 (a "Closing Date"); provided that
if prior notification to or approval of the OTS or any other Governmental
Entity is required in connection with such purchase, Grantee 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, as the case may be, (A)
any required notification periods have expired or been terminated or (B) such
approvals have been obtained and any requisite waiting period or periods shall
have passed.
(e) Notwithstanding Section 3(d), 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 required approval, the exercise of the Option
effected on the Notice Date shall be deemed to have expired. In the event (i)
Grantee receives official notice that an approval of the OTS or any other
Governmental Entity required for the purchase of the Option Shares would not be
issued or granted or (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, Grantee shall nevertheless be entitled to exercise its right
as set forth in Section 8 or to exercise the Option in connection with the
resale of Issuer Common Stock or other securities pursuant to a registration
statement as provided in Section 10. The provisions of this Section 3 and
Section 4 shall apply with appropriate adjustments to any such exercise.
4. Payment and Delivery of Certificates. (a) On each Closing Date referred
to in Section 3(d), Grantee shall pay to Issuer in immediately available funds
by a wire transfer to a bank account designated by Issuer an amount equal to
the Option Price multiplied by the number of Option Shares to be purchased on
such Closing Date.
(b) On each Closing Date, simultaneously with the delivery of immediately
available funds as provided in Section 4(a), Issuer shall deliver to Grantee a
certificate or certificates representing the Option Shares to be purchased on
such Closing Date. If the Option should be exercised in part only, a new
Option evidencing the rights of Grantee to purchase the balance of the Option
Shares purchasable hereunder shall be issued to Grantee, and Grantee shall
deliver to Issuer a copy of this Agreement and a letter agreeing that Grantee
will not offer to sell or otherwise dispose of such Option Shares in violation
of applicable law or the provisions of this Agreement.
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(c) Certificates for Issuer Common Stock delivered on a Closing Date
hereunder shall 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 RESALE RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF
NOVEMBER 9, 1995, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICE OF ISSUER. A COPY OF SUCH AGREEMENT WILL BE MAILED 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 Grantee shall have delivered to Issuer a copy of a letter from the
staff of the Securities and Exchange Commission, or an opinion of counsel, in
form and substance satisfactory to Issuer, 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 Option 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.
(d) Upon the giving by Grantee to Issuer of the written notice of exercise
of the Option provided for under Section 3(d), the tender of the applicable
purchase price in immediately available funds and the tender of a copy of this
Agreement to Issuer, Grantee shall be deemed to be the holder of record of the
Option Shares issuable upon such exercise, notwithstanding that the stock
transfer books of Issuer shall then be closed or that certificates representing
such Option Shares shall not then be actually delivered to Grantee. Issuer
shall pay all expenses and any and all 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 4 in the name of Grantee or
its assignee, transferee or designee.
(e) If, at the time of issuance of any Option Shares pursuant to an exercise
of all or a portion of the Option hereunder, Issuer shall have created a
"poison pill" or similar security and issued any "rights" or similar securities
pursuant thereto ("Rights"), then each Option Share issued pursuant to such
exercise shall also represent Rights or new rights with terms substantially
identical to and at least as favorable to Grantee as are provided under the
Rights Agreement or any similar agreement then in effect.
5. Authorizations, etc. Issuer agrees (i) that it shall at all times
maintain, free from preemptive rights or Liens, sufficient authorized but
unissued shares of Issuer Common Stock (and other securities issuable pursuant
to Section 6) so that the Option may be exercised without additional
authorization of Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Issuer Common
Stock, (ii) that it will not, by charter amendment or through reorganization,
recapitalization, reclassification, 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 action as
may from time to time be required (including, in the event, under the SLHC Act,
or a state banking law, prior approval of or notice to the OTS or to any state
regulatory authority is necessary before the Option may be exercised,
cooperating fully with Grantee in preparing such applications or notices and
providing such information to the OTS or such state regulatory authority as
they may require) in order to permit Grantee to exercise the Option and so that
the Option Shares, when issued, shall be duly authorized, validly issued, fully
paid and nonassessable and free and clear of all Liens and not subject to any
preemptive rights; and (iv) promptly to take all action provided herein to
protect the rights of Grantee against dilution.
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6. Adjustments. (a) In the event that any additional shares of Issuer
Common Stock are issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to an exercise of the Option or an event
described in Section 6(b)), including pursuant to stock option plans and in
connection with acquisitions and other transactions permitted by the Merger
Agreement, the number of Option Shares shall be increased so that, after such
issuance, it equals 19.9% of the number of shares of Issuer Common Stock then
issued and outstanding (without giving pro forma effect to the issuance of the
Option Shares). Nothing contained in this Section 6(a) or elsewhere in this
Agreement shall be deemed to authorize Issuer to issue shares of Issuer Common
Stock in breach of, or otherwise breach any of, the provisions of the Merger
Agreement.
(b) In the event of any change in Issuer Common Stock by reason of a stock
dividend, split-up, recapitalization, combination, subdivision, conversion,
exchange of shares or similar transaction, the type and number of Option Shares
shall be appropriately adjusted and proper provision shall be made in the
agreements governing any such transaction, so that Grantee shall receive upon
exercise of the Option the number and class of shares, other securities,
property or cash that Grantee would have received in respect of Issuer Common
Stock if the Option had been exercised in full and the Option Shares had been
issued to Grantee immediately prior to such event or the record date therefor,
as applicable. Whenever the number of Option Shares is adjusted as provided in
this Section 6(b), the Option Price shall be adjusted by multiplying the Option
Price by a fraction, the numerator of which is equal to the number of Option
Shares purchasable prior to the adjustment and the denominator of which is
equal to the number of Option Shares purchasable after the adjustment.
7. Replacement Options. (a) In the event that, prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to consolidate with
or merge into any person, other than Grantee 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 Grantee or one of its
subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or exchanged
for stock or other securities of Issuer or any other person or cash or any
other property or the then outstanding shares of Issuer 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 its assets to any person, other than Grantee 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 Grantee, of either (A) the Acquiring Corporation
(as defined below) or (B) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (A) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other than
Issuer), (B) Issuer in a merger in which Issuer is the continuing or
surviving person or (C) the transferee of all or substantially all of
Issuer's assets.
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute Option.
(iii) "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 the Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided that, if Issuer is the
issuer of the Substitute Option, the Average Price shall be computed with
respect to a share of common stock issued by the person merging into Issuer
or by any company which controls or is controlled by such person, as Grantee
may elect.
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(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, be the
same as the Option, such terms shall be as similar as possible and in no event
less advantageous to Grantee. The issuer of the Substitute Option (the
"Substitute Option Issuer") shall also enter into an agreement with Grantee in
substantially the same form as this Agreement, which shall be applicable to the
Substitute Option. Without limiting the generality of the foregoing, the
provisions of Sections 8, 9, 10, 11 and 12 shall apply with respect to the
Substitute Option and any securities for which the Substitute Option becomes
exercisable with the same effect as if all references to "Issuer" in such
Sections were references to "Substitute Option Issuer", all references to
"Issuer Common Stock" were references to "Substitute Common Stock", all
references to the "Option" were references to the "Substitute Option" and all
references to "Option Shares" were references to "Substitute Option Shares".
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the then-current Applicable Price (as
defined in Section 8(c)) multiplied by the number of shares of Issuer Common
Stock for which the Option is then exercisable, divided by the then-current
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 in which the numerator is the number of shares of Issuer Common Stock
for which the Option is then exercisable and the denominator is the number of
shares of the 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 the 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 such
exercise but for the limitation in this paragraph (e), the Substitute Option
Issuer shall make a cash payment to Grantee equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
paragraph (e) over (ii) the value of the Substitute Option after giving effect
to the limitation in this paragraph (e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by
Grantee.
(f) Issuer shall not enter into any transaction described in Section 7(a)
unless the Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer hereunder.
8. Repurchase at the Option of Grantee. (a) At the request of Grantee at
any time during (i) the period during which the Option is exercisable pursuant
to Section 3 or (ii) the period of 30 business days immediately following the
occurrence of either of the events set forth in clauses (i) and (ii) of the
second sentence of Section 3(e) (but solely as to the shares of Issuer Common
Stock with respect to which the required approval was not received) (either
such period being referred to herein as the "Repurchase Period"), Issuer (or
any successor entity thereof) shall repurchase from Grantee (A) the Option (or,
in the circumstances set forth in clause (ii) above, that portion thereof
relating to shares of Issuer Common Stock with respect to which required
approvals were not received) unless the Option has expired or been terminated
in accordance with the terms hereof and (B) all Option Shares purchased by
Grantee pursuant hereto with respect to which Grantee then has beneficial
ownership. The date on which Grantee exercises its rights under this Section 8
is referred to as the "Request Date". Such repurchase shall be at an aggregate
price (the "Section 8 Repurchase Consideration") equal to the sum of:
(1) the aggregate exercise price paid by Grantee for any Option
Shares acquired with respect to which Grantee then has beneficial ownership;
(2) the excess, if any, of (x) the Applicable Price for shares of
Issuer Common Stock over (y) the Option Price, with such excess multiplied by
the number of Option Shares with respect to which the Option has not been
exercised; and
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(3) the excess, if any, of (x) the Applicable Price over (y) the
Option Price paid (or, in the case of Option Shares with respect to which the
Option has been exercised but the Closing Date has not occurred, payable) by
Grantee for each Option Share with respect to which the Option has been
exercised, with such excess multiplied by the number of such Option Shares.
(b) If Grantee exercises its rights under this Section 8, Issuer shall,
within 10 business days after the Request Date, pay the Section 8 Repurchase
Consideration to Grantee in immediately available funds, and Grantee shall
surrender to Issuer the Option and the certificates evidencing the shares of
Issuer Common Stock purchased thereunder with respect to which Grantee then has
beneficial ownership, and Grantee shall warrant that it has sole record and
beneficial ownership of such shares and that the same are then free and clear
of all Liens. Notwithstanding the foregoing, to the extent that prior
notification to or approval of the OTS or other Governmental Entity is required
in connection with the payment of all or any portion of the Section 8
Repurchase Consideration, Issuer shall deliver from time to time that portion
of the Section 8 Repurchase Consideration that it is not then so prohibited
from paying and 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 the preceding sentence for the payment of the portion of the Section 8
Repurchase Consideration requiring such notification or approval shall run
instead from the date on which, as the case may be, (i) any required
notification period has expired or been terminated or (ii) such approval has
been obtained and, in either event, any requisite waiting period shall have
passed. If the OTS or any other Governmental Entity disapproves of any part of
Issuer's proposed repurchase pursuant to this Section 8, Issuer shall promptly
give notice of such fact to Grantee and redeliver to Grantee the Option Shares
it is then prohibited from repurchasing, and Grantee shall have the right to
exercise the Option as to the number of Option Shares for which the Option was
exercisable at the Request Date less the number of shares as to which payment
has been made pursuant to Section 8(a)(2); provided that if the Option shall
have terminated prior to the date of such notice or shall be scheduled to
terminate prior to the date of such notice or shall be scheduled to terminate
at any time before the expiration of a period ending on the 30th business day
after such date, Grantee shall nonetheless have the right so to exercise the
Option or exercise its rights under Section 10 until the expiration of such
period of 30 business days. Notwithstanding anything herein to the contrary,
Grantee shall be entitled to exercise its right under this Section 8 on only
one occasion.
(c) For purposes of this Agreement, the "Applicable Price" means the highest
of (i) the highest price per share at which a tender offer or exchange offer
has been made for shares of Issuer Common Stock after the date hereof and on or
prior to the Request Date (or any other applicable determination date), (ii)
the price per share to be paid by any third party for shares of Issuer Common
Stock or the consideration per share to be received by holders of Issuer Common
Stock, in each case pursuant to an agreement with Issuer for a merger or other
business combination entered into on or prior to the Request Date (or any other
applicable determination date), (iii) the highest price per share paid by any
third party to acquire from a stockholder of Issuer, in one transaction or in a
series of related transactions, an aggregate amount of Issuer Common Stock of
10% or more of the outstanding Issuer Common Stock or (iv) the highest bid
price per share of Issuer Common Stock as quoted on the American Stock Exchange
or, if not so quoted, on the principal trading market on which such shares are
traded as reported by a recognized source during the 60 business days preceding
the Request Date (or any other applicable determination date). If the
consideration to be offered, paid or received pursuant to a transaction
described in either clause (i) or (ii) above shall be other than cash, the
value of such consideration shall be determined in good faith by an independent
nationally recognized investment banking firm selected by Grantee and
reasonably acceptable to Issuer, which determination shall be conclusive for
all purposes of this Agreement.
9. Repurchase at the Option of Issuer. (a) Except to the extent that
Grantee shall have previously exercised its rights under Section 8, at the
request of Issuer during the six-month period commencing 15 months following
the first occurrence of a Subsequent Triggering Event, Issuer may repurchase
from Grantee, and Grantee shall sell to Issuer, all (but not less than all)
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the shares of Issuer Common Stock acquired by Grantee pursuant hereto and with
respect to which Grantee has beneficial ownership at the time of such
repurchase at a price equal to the greater of (i) 110% of the Current Market
Price (as defined below) or (ii) the sum of (A) the Option Price in respect of
the shares so acquired and (B) Grantee's pre-tax per share carrying cost (as
defined below), multiplied in the case of either clause (i) or (ii) above by
the number of shares so acquired (the "Section 9 Repurchase Consideration");
provided that Grantee, within 30 days following Issuer's notice of its
intention to purchase shares pursuant to this Section 9, may deliver an
Offeror's Notice (as defined in Section 11) pursuant to Section 11, in which
case the provisions of Section 11 and not those of this Section 9 shall
control; and provided further that Issuer's rights under this Section 9 shall
be suspended (with any such rights being extended accordingly) during any
period when the exercise of such rights would subject Grantee to liability
pursuant to Section 16(b) of the Exchange Act by reason of Grantee's purchase
of shares of Issuer Common Stock pursuant to this Agreement.
(b) If Issuer exercises its rights under this Section 9 and Grantee does not
deliver an Offeror's Notice or Grantee does not sell the shares to a third
party pursuant thereto, Issuer shall, within 10 business days after the
expiration of the 30-day period referred to in paragraph (a) above or, if
applicable, upon abandonment of the transaction covered by the Offeror's
Notice, pay the Section 9 Repurchase Consideration in immediately available
funds, and Grantee shall surrender to Issuer the certificates evidencing the
shares of Issuer Common Stock purchased hereunder with respect to which Grantee
then has beneficial ownership, and Grantee shall warrant that it has sole
record and beneficial ownership of such shares and that the same are then free
and clear of all Liens.
(c) As used herein, (i) "Current Market Price" means the average closing bid
price per share of Issuer Common Stock as quoted on the American Stock Exchange
or, if not so quoted, on the principal trading market on which such shares are
traded as reported by a recognized source for the 10 business days preceding
the date of the Issuer's request for repurchase pursuant to this Section 9 and
(ii) "Grantee's pretax per share carrying cost" shall be the amount equal to
the interest on the aggregate Option Price paid for the shares of Issuer Common
Stock purchased from the date of purchase to the date of repurchase at the rate
of interest announced by Parent as its prime or base lending or reference rate
during such period, less any dividends received on the shares so purchased,
divided by the number of shares so purchased.
10. Registration Rights; Listing. (a) Issuer shall, if requested by
Grantee at any time and from time to time (i) within three years of the first
exercise of the Option or (ii) for 30 business days following the occurrence of
either of the events set forth in clauses (i) and (ii) of the second sentence
of Section 3(e) or receipt by Grantee of official notice that an approval of
the OTS or any other Governmental Entity required for a repurchase as
contemplated by Section 8(b) would not be issued or granted (but solely as to
the shares of Issuer Common Stock or portion of the Option with respect to
which the required approval was not received), as expeditiously as practicable
prepare and file up to two registration statements under the Securities Act if
necessary in order to permit the sale or other disposition of the shares of
Issuer Common Stock or other securities that have been acquired by or are
issuable to Grantee upon exercise of the Option in accordance with the intended
method of sale or other disposition stated by Grantee, including a "shelf"
registration statement under Rule 415 under the Securities Act or any successor
provision. Issuer shall use its best efforts to cause each such registration
statement to become effective and to remain effective for such period not in
excess of 180 days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sale or other
disposition. Issuer shall also use its best efforts to qualify such shares or
other securities under any applicable state securities laws. Grantee agrees to
use all reasonable efforts to cause, and to cause any underwriters or agents of
any sale or other disposition to cause, any sale or other disposition pursuant
to such registration statement to be effected on a widely distributed basis so
that upon consummation thereof no purchaser or transferee shall own
beneficially more than 2% of the then outstanding voting power of Issuer. In
the event that Grantee requests Issuer to file a registration statement
following the failure to obtain a required approval for an exercise of the
Option as described in Section 3(e), the closing of the sale or other
disposition of Issuer Common Stock or other securities pursuant to such
registration statement shall occur substantially simultaneously with the
exercise of the Option,
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and Grantee shall be entitled to cause the Option Shares to be issued directly
to the underwriters or agents named in such registration statement. The
obligations of Issuer hereunder to file a registration statement and to
maintain its effectiveness may be suspended for one or more periods of time
that do not exceed 60 days in the aggregate for all such periods if the Board
of Directors of Issuer shall have determined that the filing of such
registration statement or the maintenance of its effectiveness would require
disclosure of nonpublic information that would materially and adversely affect
Issuer. Any registration effected under this Section 10 shall be at Issuer's
expense, except for underwriting discounts or commissions, brokers' fees and
the fees and disbursements of Grantee's counsel related thereto. Grantee shall
provide all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. If requested by Grantee in
connection with any such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares or other securities,
but only to the extent of obligating itself in respect of representations,
warranties, covenants, indemnities, contribution and other agreements
customarily included in such underwriting agreements for the issuer. If,
during the time periods referred to in the first sentence of this Section 10,
Issuer effects a registration under the Securities Act of Issuer Common Stock
for its own account or for any other stockholders of Issuer (other than on Form
S-4 or S-8, or any successor form), it shall allow Grantee the right to
participate in such registration, and such participation shall not affect the
obligation of Issuer to effect two registration statements for Grantee under
this Section 10; provided that, if the managing underwriters of such offering
advise Issuer in writing that in their opinion the number of shares of Issuer
Common Stock requested to be included in such registration exceeds the number
which can be sold in such offering, Issuer shall include the shares requested
to be included therein by Grantee pro rata with the shares intended to be
included therein by Issuer or other stockholders, taken as a single group.
(b) If Issuer Common Stock or any other securities to be acquired upon
exercise of the Option are then listed on a national or regional securities
exchange or quoted on a national or regional quotation system, Issuer, upon
request of Grantee, shall use its best efforts to make any filings and obtain
any approvals necessary in order to cause the Option Shares or other securities
acquired upon exercise of the Option to be so listed or quoted.
11. First Refusal. At any time after the first occurrence of a Subsequent
Triggering Event and prior to the later of (a) expiration of 24 months
immediately following the first purchase of shares of Issuer Common Stock
pursuant to the Option and (b) the termination of the Option pursuant to
Section 3(a), if Grantee shall desire to sell, assign, transfer or otherwise
dispose of all or any of the shares of Issuer Common Stock or other securities
acquired by it pursuant to the Option, it shall give Issuer written notice of
the proposed transaction (an "Offeror's Notice"), identifying the proposed
transferee, accompanied by a copy of a binding offer to purchase such shares or
other securities from such transferee and setting forth the terms of the
proposed transaction. An Offeror's Notice shall be deemed an offer by Grantee
to Issuer, which may be accepted within 10 business days of the receipt of such
Offeror's Notice, on the same terms and conditions and at the same price at
which Grantee is proposing to transfer such shares or other securities to such
transferee. The purchase of any such shares or other securities by Issuer
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 the OTS or any
other Governmental Entity 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, (i) any
required notification period has expired or been terminated or (ii) 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 an Offeror's Notice or
if the OTS or any other Governmental Entity disapproves Issuer's proposed
purchase of such shares or other securities, Grantee may, within 60 days from
the date of the Offeror's 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
specified, in the Offeror's Notice. The requirements
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of this Section 11 shall not apply to (A) any disposition as a result of which
the proposed transferee would own beneficially not more than 2% of the
outstanding voting power of Issuer, (B) any disposition of Issuer Common Stock
or other securities by a person to whom Grantee has assigned its rights under
the Option with the consent of Issuer, (C) any sale by means of a 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 (D) any transfer to Sub or
to any other wholly owned subsidiary of Parent that agrees in writing to be
bound by the terms hereof.
12. Division of Option. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer, for other
Agreements providing for Options of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Issuer
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.
13. Assignment. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement or the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Grantee may assign in whole
or in part its rights and obligations hereunder to Sub or to any other direct
or indirect wholly owned subsidiary of Grantee without the consent of Issuer.
Subject to the preceding sentence, 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.
14. Further Assurances. Each party hereto will use its best efforts to make
all filings with, and to obtain consent of, all third parties and governmental
authorities necessary or advisable to the consummation of the transactions
contemplated by this Agreement, including applying to the OTS under the SLHC
Act for approval to acquire the shares issuable hereunder. In the event of any
exercise of the Option by Grantee, Issuer, Grantee and Sub shall execute and
deliver all other documents and instruments and take all other action that may
be reasonably necessary or advisable in order to consummate the transactions
provided for by such exercise.
15. Specific Performance. 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 specific performance, injunctive relief or other equitable
relief. This provision is without prejudice to any other rights that the
parties hereto may have for any failure to perform this Agreement.
16. Severability. If any term, provision, covenant or restriction contained
in this Agreement is held by a court or a Federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, 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 Grantee is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 8, the full number of Option Shares provided in
Section 1(a) hereof (as adjusted pursuant to Section 6), it is the express
intention of Issuer to allow Grantee to acquire or to require Issuer to
repurchase such lesser number of Option Shares as may be permissible without
any amendment or modification hereof.
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17. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in the manner and to the addresses specified in accordance with Section 8.02 of
the Merger Agreement.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to any
applicable principles of conflicts of laws.
19. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
20. Expenses. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
21. Waiver and Amendment. 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. Entire Agreement; No Third-Party Beneficiaries. Except as otherwise
expressly provided herein or in the Merger Agreement, this Agreement (and the
Merger Agreement and the other documents and instruments referred to herein and
therein) 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. 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,
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remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided herein.
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
day and year first above written.
BANK OF THE WEST,
by
/s/ Xxx X. XxXxxxx
------------------------------
Name: Xxx X. XxXxxxx
Title: President and Chief
Operating Officer
NF ACQUISITION CO.,
by
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
NORTHBAY FINANCIAL CORPORATION,
by
/s/ Xxxxxx X. Xxxx
-----------------------------
Name: Xxxxxx X. Alys
Title: President and Chief
Executive Officer
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