STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered
into as of August 12, 1997, by and between Capital Bancorp, a Florida
corporation ("Issuer"), and Union Planters Corporation, a Tennessee
corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into that certain Agreement
and Plan of Merger, dated as of August 12, 1997 (the "Merger Agreement"),
providing for, among other things, the merger of a wholly owned
Subsidiary of Grantee with and into Issuer, with Issuer as the surviving
entity; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement, Grantee has required that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, Issuer and Grantee
agree as follows:
1. DEFINED TERMS. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Merger
Agreement.
2. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase up to 1,510,500 shares (as adjusted as set forth
herein, the "Option Shares," which shall include the Option Shares before
and after any transfer of such Option Shares) of common stock, $1.00 par
value per share ("Issuer Common Stock"), of Issuer at a purchase price
per Option Share (subject to adjustment as set forth herein, the
"Purchase Price") equal to $40.50; provided, however, that in no event
shall the number of shares of Issuer Common Stock for which this Option
is exercisable exceed 19.9% of the Issuer's issued and outstanding shares
of Issuer Common Stock without giving effect to any shares subject to or
issued pursuant to the Option.
3. EXERCISE OF OPTION.
(a) Provided that (i) Grantee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of its
agreements or covenants contained in this Agreement or the Merger
Agreement, and (ii) no preliminary or permanent injunction or other order
against the delivery of shares covered by the Option issued by any court
of competent jurisdiction in the United States shall be in effect, Holder
may exercise the Option, in whole or in part, at any time and from time
to time following the occurrence of a Purchase Event and prior to the
termination of the Option. Notwithstanding anything to the contrary
contained herein, this Option shall be of no force and effect until the
earlier to occur of (i) expiration of the termination right set forth in
Section 10.1(f) of the Merger Agreement without prior exercise of such
right by Grantee and (ii) delivery by Grantee of written notice to Issuer
to the effect that Grantee has waived its right to terminate the Merger
Agreement pursuant to Section 10.1(f). The Option shall terminate and be
of no further force and effect upon the earliest to occur of (A) the
Effective Time, (B) termination of the Merger Agreement in accordance
with the terms thereof prior to the occurrence of a Purchase Event or a
Preliminary Purchase Event (other than a termination of the Merger
Agreement by Grantee pursuant to (i) Section 10.1(b) thereof (but only if
such termination was a result of a willful breach by Issuer) or (ii)
Section 10.1(c) thereof (each a "Default Termination")), (C) 12 months
after a Default Termination, and (D) 12 months after any termination of
the Merger Agreement following the occurrence of a Purchase Event or a
Preliminary Purchase Event. Any purchase of shares upon exercise of the
Option shall be subject to compliance with applicable law, including,
without limitation, the Bank Holding Company Act of 1956, as amended (the
"BHC Act"). The term "Holder" shall mean the holder or holders of the
Option from time to time, and which initially is the Grantee. The rights
set forth in Section 8 shall terminate when the right to exercise the
Option terminates (other than as a result of a complete exercise of the
Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of the
following events subsequent to the date of this Agreement:
(i) without Grantee's prior written consent, Issuer shall
have authorized, recommended, publicly proposed or publicly
announced an intention to authorize, recommend or propose, or
entered into an agreement with any person (other than Grantee or any
Subsidiary of Grantee) to effect an Acquisition Transaction (as
defined below). As used herein, the term Acquisition Transaction
shall mean (A) a merger, consolidation or similar transaction
involving Issuer or any of its Subsidiaries (other than transactions
solely between Issuer's Subsidiaries and transactions involving
Issuer or any Subsidiary in which the voting securities of Issuer
outstanding immediately prior thereto continue to represent (by
either remaining outstanding or being converted into securities of
the surviving entity or the parent thereof) at least 60% of the
combined voting power of the voting securities of the Issuer or the
surviving entity or the parent thereof outstanding immediately after
the consummation of the transaction), (B) except as permitted
pursuant to Section 7.1 of the Merger Agreement, the disposition, by
sale, lease, exchange or otherwise, of Assets of Issuer or any of
its Subsidiaries representing in either case 25% or more of the
consolidated assets of Issuer and its Subsidiaries, or (C) the
issuance, sale or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction) securities
representing 25% or more of the voting power of Issuer or any of its
Subsidiaries (any of the foregoing, an "Acquisition Transaction");
or
(ii) any person (other than Grantee, any Subsidiary of
Grantee or the group consisting of Xxxx Xxxxx, Xxxx Xxxxx, Xxxxxx X.
Xxxxx and Xxxxxx X. Xxxxx (the "Family"), provided that no member of
the Family increases his or her beneficial ownership of outstanding
Issuer Common Stock (other than as a result of exercise of options
outstanding as of the date hereof) such that the aggregate
beneficial ownership of the Family as of the date hereof increases
by more than 1%) shall have acquired beneficial ownership (as such
term is defined in Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), of or the
right to acquire beneficial ownership of, or any "group" (as such
term is defined under the Exchange Act), other than a group of which
Grantee or any of its Subsidiaries of Grantee is a member, shall
have been formed which beneficially owns or has the right to acquire
beneficial ownership of, 25% or more of the then-outstanding shares
of Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of
the following events:
(i) any person (other than Grantee or any Subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the 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 25% 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); or
(ii) the holders of Issuer Common Stock shall not have
approved the Merger Agreement at the meeting of such shareholders
held for the purpose of voting on the Merger Agreement, such meeting
shall not have been held or shall have been canceled 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, in each case after it shall have been publicly
announced that any person (other than Grantee or any Subsidiary of
Grantee) shall have (A) made a proposal to engage in an Acquisition
Transaction, (B) commenced a Tender Offer or filed a registration
statement under the Securities Act with respect to an Exchange
Offer, or (C) filed an application (or given a notice), whether in
draft or final form, under any federal or state statute or
regulation (including a notice filed under the HSR Act and an
application or notice filed under the BHC Act, the Bank Merger Act,
or the Change in Bank Control Act of 1978) seeking the Consent to an
Acquisition Transaction from any federal or state governmental or
regulatory authority or agency.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) In the event Holder 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 Option Shares
it intends to purchase pursuant to such exercise and (ii) a place and
date not earlier than three business days nor later than 15 business days
from the Notice Date for the closing (the "Closing") of such purchase
(the "Closing Date"). If prior Consent of any governmental or regulatory
agency or authority is required in connection with such purchase, Issuer
shall cooperate with Holder in the filing of the required notice or
application for such Consent and the obtaining of such Consent and the
Closing shall occur immediately following receipt of such Consents (and
expiration of any mandatory waiting periods).
(e) Notwithstanding any other provision of this Agreement to the
contrary, in no event shall:
(i) Holder's (taking into account all other Holders) Total
Profit (as defined below) exceed $18.0 million and, if it otherwise
would exceed such amount, Holder, at its sole election, shall either
(A) reduce the number of shares of Issuer Common Stock subject to
the Option, (B) deliver to Issuer for cancellation without
consideration Option Shares previously purchased by Holder, (C) pay
cash to Issuer, or (D) any combination of the foregoing, so that
Holder's actually realized Total Profit (together with the Total
Profit realized by all other Holders) shall not exceed $18.0 million
after taking into account the foregoing actions; and
(ii) the Option be exercised for a number of shares of
Issuer Common Stock as would, as of the date of exercise, result in
Holder's (taking into account all other Holders) Notional Total
Profit (as defined below) of more than $18.0 million; provided, that
nothing in this clause (ii) shall restrict any exercise of the
Option permitted hereby on any subsequent date.
As used in this Agreement, the term "Total Profit" shall mean the
aggregate sum (prior to the payment of taxes) of the following: (i) the
amount received by Holder pursuant to Issuer's repurchase of the Option
(or any portion thereof) pursuant to Section 8; (ii) (x) the amount
received by Holder pursuant to Issuer's repurchase of Option Shares
pursuant to Section 8, less (y) Holder's purchase price for such Option
Shares; (iii) (x) the net cash amounts received by Holder pursuant to the
sale of Option Shares (or any other securities into which such Option
Shares shall be converted or exchanged) to any unaffiliated person, less
(y) Holder's purchase price of such Option Shares; and (iv) any amounts
received by Grantee on the transfer of the Option (or any portion
thereof) to any unaffiliated person.
As used in this Agreement, the term "Notional Total Profit" with respect
to any number of shares of Issuer Common Stock as to which Holder may
propose to exercise the Option shall be the Total Profit determined as of
the date of such proposed exercise, assuming that the Option were
exercised on such date for such number of shares and assuming that such
shares, together with all other Option Shares held by Holder and its
affiliates as of such date, were sold for cash at the closing sale price
per share of Issuer Common Stock as quoted on the Nasdaq National Market
(or, if Issuer Common Stock is not then quoted on the Nasdaq National
Market, the highest bid price per share as quoted on the principal
trading market or securities exchange on which such shares are traded as
reported by a recognized source chosen by Holder) as of the close of
business on the preceding trading day (less customary brokerage
commissions).
The provisions of this Section 3(e) shall apply to any
Substitute Option (as defined below).
(f) Grantee agrees, promptly following any exercise of all or
any portion of the Option, and subject to its rights under Section 8, to
use commercially reasonable efforts promptly to maximize the value of
Option Shares purchased, taking into account market conditions, the
number of Option Shares, the potential negative impact of substantial
sales on the market price for Issuer Common Stock, and availability of an
effective registration statement to permit public sale of Option Shares.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated
by Issuer, an amount equal to the Purchase Price multiplied by the number
of Option Shares to be purchased on such Closing Date, and (ii) present
and surrender this Agreement to the Issuer at the address of the Issuer
specified in Section 13(f) hereof.
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided
in Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such
Closing, which Option Shares shall be free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever and subject to no
pre-emptive rights, and (B) if the Option is exercised in part only, an
executed new agreement with the same terms as this Agreement evidencing
the right to purchase the balance of the shares of Issuer Common Stock
purchasable hereunder, and (ii) Holder shall deliver to Issuer a letter
agreeing that Holder shall not offer to sell or otherwise dispose of such
Option Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each
Closing shall be endorsed with a restrictive legend which shall read
substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED
AS OF AUGUST 12, 1997. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A
WRITTEN REQUEST THEREFOR.
It is understood and agreed that: (i) the references in the above legend
to resale restrictions of the Securities Act shall be removed by delivery
of substitute certificate(s) without such reference if 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 and its counsel, to the effect that such legend is not required
for purposes of the Securities Act; (ii) the references in the above
legend to the provisions of this Agreement 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.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals 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 Issuer. This Agreement has
been duly 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 until the obligation to deliver Issuer Common Stock upon
the exercise of the Option terminates, will have reserved for
issuance, upon exercise of the Option, the number of shares of
Issuer Common Stock necessary for Holder to exercise the Option, and
Issuer will take all necessary corporate action to authorize and
reserve for issuance all additional shares of Issuer Common Stock or
other securities which may be issued pursuant to Section 7 upon
exercise of the Option. The shares of Issuer Common Stock to be
issued upon due exercise of the Option, including all additional
shares of Issuer Common Stock or other securities which may be
issuable pursuant to Section 7, upon issuance pursuant hereto, shall
be duly and validly issued, fully paid, and nonassessable, and shall
be delivered free and clear of all liens, claims, charges, and
encumbrances of any kind or nature whatsoever, including any
preemptive rights of any shareholder of Issuer.
6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby
represents and warrants to Issuer that:
(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) This Option is not being, and any Option Shares 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 Laws.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by reason
of a stock dividend, stock split, split-up, recapitalization,
combination, exchange of shares or similar transaction, the type and
number of shares or securities subject to the Option, and the Purchase
Price therefor, shall be adjusted appropriately, and proper provision
shall be made in the agreements governing such transaction, if any, so
that Holder shall receive, upon exercise of the Option, the number and
class of shares or other securities or property that Holder would have
received in respect of Issuer Common Stock if the Option had been
exercised immediately prior to such event, or the record date therefor,
as applicable. If any additional shares of Issuer Common Stock are issued
after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 7(a) or pursuant to this
Option), the number of shares of Issuer Common Stock subject to the
Option shall be adjusted so that, after such issuance, it, together with
any shares of Issuer Common Stock previously issued pursuant hereto,
equals 19.9% of the number of shares of Issuer Common Stock then issued
and outstanding, without giving effect to any shares subject to or issued
pursuant to the Option.
(b) In the event that Issuer shall enter in 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
outstanding shares of Issuer Common Stock immediately prior to such
merger shall after such merger represent less than 50% of the outstanding
shares and share equivalents of the merged company; or (iii) to sell or
otherwise transfer all or substantially all of its Assets to any person,
other than Grantee or one of its Subsidiaries, then, and in each such
case, the agreement governing such transaction shall make proper
provisions 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 (x) the Acquiring Corporation (as
defined below) or (y) any person that controls the Acquiring Corporation
(in each case, such person being referred to as the "Substitute Option
Issuer").
(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 Substitute
Option Issuer shall also enter into an agreement with the then-holder or
holders of the Substitute Option in substantially the same form as this
Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of the Substitute Common Stock (as hereinafter defined) as is
equal to the Assigned Value (as hereinafter defined) multiplied by the
number of shares of the Issuer Common Stock for which the Option was
theretofore exercisable, divided by the Average Price (as hereinafter
defined). The exercise price of the Substitute Option per share of the
Substitute Common Stock (the "Substitute Purchase Price") shall then be
equal to the Purchase Price multiplied by a fraction in which the
numerator is the number of shares of the Issuer Common Stock for which
the Option was theretofore exercisable and the denominator is the number
of shares for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing
or surviving corporation of a consolidation or merger with Issuer
(if other than Issuer), (y) Issuer in a merger in which Issuer is
the continuing or surviving person, and (z) the transferee of all or
any substantial part of the Issuer's assets (or the assets of its
Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the
Substitute Option.
(iii) "Assigned Value" shall mean the highest of (x) the
price per share of the Issuer Common Stock at which a Tender Offer
or Exchange Offer therefor has been made by any person (other than
Grantee), (y) the price per share of the Issuer Common Stock to be
paid by any person (other than the Grantee) pursuant to an agreement
with Issuer, and (z) the highest closing sales price per share of
Issuer Common Stock quoted on the Nasdaq National Market (or if
Issuer Common Stock is not quoted on the Nasdaq National Market, the
highest bid price per share on any day as quoted on the principal
trading market or securities exchange on which such shares are
traded as reported by a recognized source chosen by Grantee) within
the six-month period immediately preceding the agreement; provided,
that in the event of a sale of less than all of Issuer's assets, the
Assigned Value shall be the sum of the price paid in such sale for
such assets and the current market value of the remaining assets of
Issuer as determined by a nationally recognized investment banking
firm selected by Grantee (or by a majority in interest of the
Grantees if there shall be more than one Grantee (a "Grantee
Majority")) and reasonably acceptable to Issuer, divided by the
number of shares of the Issuer Common Stock outstanding at the time
of such sale. In the event that an exchange offer is made for the
Issuer Common Stock or an agreement is entered into for a merger or
consolidation involving consideration other than cash, the value of
the securities or other property issuable or deliverable in exchange
for the Issuer Common Stock shall be determined by a nationally
recognized investment banking firm selected by Grantee and
reasonably acceptable to Issuer (or if applicable, Acquiring
Corporation). (If there shall be more than one Grantee, any such
selection shall be made by a Grantee Majority.)
(iv) "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 Issuer, the person merging into
Issuer or by any company which controls or is controlled by such
merger person, as Grantee may elect.
(f) In no event pursuant to any of the foregoing paragraphs
shall the Substitute Option be exercisable for more than 19.9% of the
aggregate of the shares of the Substitute Common Stock outstanding prior
to exercise of the Substitute Option. In the event that the Substitute
Option would be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common Stock but for this clause (f), 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 clause (f) over (ii) the value of the Substitute
Option after giving effect to the limitation in this clause (f). This
difference in value shall be determined by a nationally recognized
investment banking firm selected by Grantee (or a Grantee Majority) and
reasonably acceptable to the Acquiring Corporation.
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder and take all other actions that may be
necessary so that the provisions of this Section 7 are given full force
and effect (including, without limitation, any action that may be
necessary so that the shares of Substitute Common Stock are in no way
distinguishable from or have lesser economic value than other shares of
common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9, 10 and 11 shall apply, with
appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in
such sections to "Issuer," "Option," "Purchase Price" and "Issuer Common
Stock" shall be deemed to be references to "Substitute Option Issuer,"
"Substitute Option," "Substitute Purchase Price" and "Substitute Common
Stock," respectively.
8. REPURCHASE AT THE OPTION OF HOLDER.
(a) Subject to Section 3(e) and to the last sentence of Section
3(a), at the request of Holder at any time commencing upon the first
occurrence of a Repurchase Event (as defined in Section 8(d)) and ending
12 months immediately thereafter, Issuer shall repurchase from Holder the
Option and all shares of Issuer Common Stock purchased by Holder pursuant
hereto with respect to which Holder then has beneficial ownership. The
date on which Holder 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:
(i) the aggregate Purchase Price paid by Holder for any
shares of Issuer Common Stock acquired by Holder pursuant to the
Option with respect to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 7),
multiplied by the number of shares of Issuer Common Stock with
respect to which the Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) 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 Holder for each share of Issuer Common Stock with respect to
which the Option has been exercised and with respect to which Holder
then has beneficial ownership, multiplied by the number of such
shares.
(b) If Holder exercises its rights under this Section 8, Issuer
shall, within ten business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment Holder shall surrender to Issuer the
Option and the certificates evidencing the shares of Issuer Common Stock
purchased thereunder with respect to which Holder then has beneficial
ownership, and Holder 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, claims, charges and encumbrances of any kind
whatsoever. Notwithstanding the foregoing, to the extent that prior
notification to or Consent of any governmental or regulatory agency or
authority is required in connection with the payment of all or any
portion of the Section 8 Repurchase Consideration, Holder shall have the
ongoing option to revoke its request for repurchase pursuant to Section
8, in whole or in part, or to require that Issuer deliver from time to
time that portion of the Section 8 Repurchase Consideration that it is
not then so prohibited from paying and promptly file the required notice
or application for Consent and expeditiously process the same (and each
party shall cooperate with the other in the filing of any such notice or
application and the obtaining of any such Consent). If any governmental
or regulatory agency or authority disapproves of any part of Issuer's
proposed repurchase pursuant to this Section 8, Issuer shall promptly
give notice of such fact to Holder. If any governmental or regulatory
agency or authority prohibits the repurchase in part but not in whole,
then Holder shall have the right (i) to revoke the repurchase request or
(ii) to the extent permitted by such agency or authority, determine
whether the repurchase should apply to the Option and/or Option Shares
and to what extent to each, and Holder shall thereupon 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 sum of the number of
shares covered by the Option in respect of which payment has been made
pursuant to Section 8(a)(ii) and the number of shares covered by the
portion of the Option (if any) that has been repurchased. Holder shall
notify Issuer of its determination under the preceding sentence within
five business days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of Holder's
rights under this Section 8 shall terminate on the date of termination of
this Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price" means
the highest of (i) the highest price per share of Issuer Common Stock
paid for any such share by the person or groups described in Section
8(d)(i), (ii) the price per share of Issuer Common Stock received by
holders of Issuer Common Stock in connection with any merger or other
business combination transaction described in Section 7(b)(i), 7(b)(ii)
or 7(b)(iii), or (iii) the highest closing sales price per share of
Issuer Common Stock quoted on the Nasdaq National Market (or if Issuer
Common Stock is not quoted on the Nasdaq National Market, the highest bid
price per share as quoted on the principal trading market or securities
exchange on which such shares are traded as reported by a recognized
source chosen by Holder) during the 60 business days preceding the
Request Date; provided, however, that in the event of a sale of less than
all of Issuer's Assets, the Applicable Price shall be the sum of the
price paid in such sale for such assets and the current market value of
the remaining assets of Issuer as determined by an independent nationally
recognized investment banking firm selected by Holder and reasonably
acceptable to Issuer (which determination shall be conclusive for all
purposes of this Agreement), divided by the number of shares of the
Issuer Common Stock outstanding at the time of such sale. If the
consideration to be offered, paid or received pursuant to either of the
foregoing clauses (i) or (ii) shall be other than in cash, the value of
such consideration shall be determined in good faith by an independent
nationally recognized investment banking firm selected by Holder and
reasonably acceptable to Issuer, which determination shall be conclusive
for all purposes of this Agreement.
(d) As used herein, a "Repurchase Event" shall occur if (i) any
person (other than Grantee or any subsidiary of Grantee shall have
acquired beneficial ownership (as such term is defined in Rule 13d-3
promulgated under the Exchange Act), or the right to acquire beneficial
ownership, or any "group" (as such term is defined under the Exchange
Act) shall have been formed which beneficially owns or has the right to
acquire beneficial ownership of 50% or more of the then-outstanding
shares of Issuer Common Stock, or (ii) any of the transactions described
in Section 7(b)(i), 7(b)(ii) or 7(iii) shall be consummated.
(e) In connection with the application of the provisions of this
Section 8, Grantee acknowledges (i) that Issuer's ability to fund the
Section 8 Repurchase Consideration in accordance with the provisions of
this Section 8 may be dependent upon the payment by Issuer's Subsidiaries
of a capital distribution or distributions ("Capital Distribution") to
Issuer and that any such Capital Distribution will be subject to the
prior approval of the Federal Reserve Board and the principal federal and
state regulatory agencies having jurisdiction over Issuer's Subsidiary
banks, and (ii) that, unless there has been an agreement of the type
described in Section 7(b), Issuer's obligations under this Section 8 do
not impose on Issuer an obligation to otherwise finance the payment of
the Section 8 Repurchase Consideration through the incurrence of
indebtedness or the issuance of capital instruments or securities by
Issuer in either case sufficient in amount to satisfy the payment of the
Section 8 Repurchase Consideration. Accordingly, Issuer shall not be
deemed to be in breach of this Section 8 if, after making its best
efforts to obtain regulatory authorization for a Capital Distribution
required to pay the Section 8 Repurchase Consideration, it is unable to
do so.
9. REGISTRATION RIGHTS.
(a) Issuer shall, subject to the conditions of subparagraph (c)
below, if requested by any Holder, including Grantee and any permitted
transferee ("Selling Holder"), as expeditiously as possible prepare and
file a registration statement under the Securities Laws if necessary in
order to permit the sale or other disposition of any or all shares of
Issuer Common Stock or other securities that have been acquired by or are
issuable to Selling Holder upon exercise of the Option in accordance with
the intended method of sale or other disposition stated by Holder in such
request (it being understood and agreed that any such sale or other
disposition shall be effected on a widely distributed basis so that, upon
consummation thereof, no purchaser or transferee shall beneficially own
more than 2% of the shares of Issuer Common Stock then outstanding),
including, without limitation, a "shelf" registration statement under
Rule 415 under the Securities Act or any successor provision, and Issuer
shall use its best efforts to qualify such shares or other securities for
sale under any applicable state securities laws. Each such Holder shall
provide all information reasonably requested by Issuer for inclusion in
any registration statement to be filed hereunder.
(b) If Issuer at any time after the exercise of the Option, but
prior to the termination of the Option, proposes to register any shares
of Issuer Common Stock under the Securities Laws in connection with an
underwritten public offering of such Issuer Common Stock, Issuer will
promptly give written notice to Holder of its intention to do so and,
upon the written request of Holder given within 30 days after receipt of
any such notice (which request shall specify the number of shares of
Issuer Common Stock intended to be included in such underwritten public
offering by Selling Holder), Issuer will use all reasonable efforts to
cause all such shares, the holders of which shall have requested
participation in such registration, to be so registered and included in
such underwritten public offering; provided, that Issuer may elect to not
cause any such shares to be so registered (i) if the underwriters in good
faith determine that the inclusion of such shares would interfere with
the successful marketing of the shares of Issuer Common Stock for the
account of Issuer, or (ii) in the case of a registration solely to
implement a dividend reinvestment or similar plan, an employee benefit
plan or a registration filed on Form S-4 or any successor form, or a
registration filed on a form which does not permit registrations of
resales; provided, further, that such election pursuant to clause (i) may
only be made once. If some but not all the shares of Issuer Common Stock,
with respect to which Issuer shall have received requests for
registration pursuant to this subparagraph (b), shall be excluded from
such registration, Issuer shall make appropriate allocation of shares to
be registered among Selling Holders and any other person (other than
Issuer or any person exercising demand registration rights in connection
with such registration) who or which is permitted to register their
shares of Issuer Common Stock in connection with such registration pro
rata in the proportion that the number of shares requested to be
registered by each Selling Holder bears to the total number of shares
requested to be registered by all persons then desiring to have Issuer
Common Stock registered for sale (other than Issuer or any person
exercising demand registration rights in connection with such
registration).
(c) Issuer shall use all reasonable efforts to cause the
registration statement referred to in subparagraph (a) above to become
effective and to obtain all consents or waivers of other parties which
are required therefor and to keep such registration statement effective,
provided, that Issuer may delay any registration of Option Shares
required pursuant to subparagraph (a) above for a period not exceeding 90
days provided Issuer shall in good faith determine that any such
registration would adversely affect an offering or contemplated offering
of other securities by Issuer. Notwithstanding anything to the contrary
contained herein, Issuer shall not be required to register Option Shares
under the Securities Laws pursuant to subparagraph (a) above:
(i) prior to the occurrence of a Purchase Event and
following the termination of the Option;
(ii) more than once;
(iii) within 90 days after the effective date of a
registration referred to in subparagraph (b) above pursuant to which
the Selling Holders concerned were afforded the opportunity to
register such shares under the Securities Laws and such shares were
registered as requested; and
(iv) unless a request therefor is made to Issuer by Selling
Holders holding at least 25% or more of the aggregate number of
Option Shares then outstanding or the right to acquire at least 25%
of the Option Shares.
In addition to the foregoing, Issuer shall not be required
to maintain the effectiveness of any registration statement after the
expiration of 120 days from the effective date of such registration
statement. Issuer shall use all reasonable efforts to make any filings,
and take all steps, under all applicable state securities laws to the
extent necessary to permit the sale or other disposition of the Option
Shares so registered in accordance with the intended method of
distribution for such shares, provided, that Issuer shall not be required
to consent to general jurisdiction or qualify to do business in any state
where it is not otherwise required to so consent to such jurisdiction or
to so qualify to do business.
(d) Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration
fees, qualification fees, blue sky fees and expenses (including the fees
and expenses of Issuer's counsel), accounting expenses, printing
expenses, expenses of underwriters, excluding discounts and commissions
but including liability insurance if Issuer so desires or the
underwriters so require, and the reasonable fees and expenses of any
necessary special experts) in connection with each registration pursuant
to subparagraph (a) or (b) above (including the related offerings and
sales by Selling Holders) and all other qualifications, notifications or
exemptions pursuant to subparagraph (a) or (b) above. Underwriting
discounts and commissions relating to Option Shares and any other
expenses incurred by such Selling Holders in connection with any such
registration (including expenses of Selling Holders' counsel) shall be
borne by such Selling Holders.
(e) In connection with any registration under subparagraph (a)
or (b) above Issuer hereby agrees to indemnify the Selling Holders, and
each underwriter thereof, including each person, if any, who controls
such holder or underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, losses, claims, damages and
liabilities caused by any untrue statement of a material fact contained
in any registration statement or prospectus (including any amendments or
supplements thereto) or any preliminary prospectus, or caused by any
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar
as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue
statement or any omission or alleged omission made in reliance upon and
in conformity with, information furnished in writing to Issuer by such
indemnified party expressly for use therein, and Issuer and each officer,
director and controlling person of Issuer shall be indemnified by such
Selling Holder, or by such underwriter, as the case may be, for all such
expenses, losses, claims, damages and liabilities caused by any untrue,
or alleged untrue, statement or omission made in reliance upon, and in
conformity with, information furnished in writing to Issuer by such
holder or such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this
subparagraph (e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be
sought against any indemnifying party under this subparagraph (e), such
indemnified party shall notify the indemnifying party in writing of the
commencement of such action, but the failure so to notify the
indemnifying party shall not relieve it of any liability which it may
otherwise have to any indemnified party under this subparagraph (e),
except to the extent such failure to notify materially prejudices the
indemnifying party. In case notice of commencement of any such action
shall be given to the indemnifying party as above provided, the
indemnifying party shall be entitled to participate in and, to the extent
it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense of such action at its own expense, with
counsel chosen by it and reasonably satisfactory to such indemnified
party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless (i) the
indemnifying party either agrees to pay the same, (ii) the indemnifying
party falls to assume the defense of such action with counsel
satisfactory to the indemnified party, or (iii) the indemnified party has
been advised by counsel that one or more legal defenses may be available
to the indemnifying party that may be contrary to the interest of the
indemnified party, in which case the indemnifying party shall be entitled
to assume the defense of such action notwithstanding its obligation to
bear fees and expenses of such counsel; provided, however, that the
indemnifying party shall not be liable for the expenses of more than one
firm of counsel for all indemnified parties in any jurisdiction. No
indemnifying party shall be liable for any settlement entered into
without its consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this subparagraph
(e) is unavailable to a party otherwise entitled to be indemnified in
respect of any expenses, losses, claims, damages or liabilities referred
to herein, then the indemnifying party, in lieu of indemnifying such
party otherwise entitled to be indemnified, shall contribute to the
amount paid or payable by such party to be indemnified as a result of
such expenses, losses, claims, damages or liabilities in such proportion
as is appropriate to reflect the relative benefits received by Issuer,
all Selling Holders and the underwriters from the offering of the
securities and also the relative fault of Issuer, all Selling Holders and
the underwriters in connection with the statements or omissions which
resulted in such expenses, losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The amount paid or
payable by a party as a result of the expenses, losses, claims, damages
and liabilities referred to above shall be deemed to include any legal or
other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim; provided, that in no
case shall any Selling Holder be responsible, in the aggregate, for any
amount in excess of the net offering proceeds attributable to its Option
Shares included in the offering. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. Any obligation by any holder to
indemnify shall be several and not joint with other holders.
In connection with any registration pursuant to
subparagraph (a) or (b) above, Issuer and each Selling Holder (other than
Grantee) shall enter into an agreement containing the indemnification
provisions of this subparagraph (e).
(f) Issuer shall use its best efforts to comply with all
reporting requirements and will do all such other things as may be
necessary to permit the expeditious sale at any time of any Option Shares
by Holder in accordance with and to the extent permitted by any rule or
regulation promulgated by the SEC from time to time, including, without
limitation, Rules 144 and 144A.
(g) Issuer will pay all stamp taxes in connection with the
issuance and the sale of the Option Shares and in connection with the
exercise of the Option, and will save Holder harmless, without limitation
as to time, against any and all liabilities, with respect to all such
taxes.
10. QUOTATION; LISTING. If Issuer Common Stock or any other
securities to be acquired upon exercise of the Option are then authorized
for quotation or trading or listing on the Nasdaq National Market or any
other securities exchange or any automated quotations system maintained
by a self-regulatory organization, Issuer, upon the request of Holder,
will promptly file an application, if required, to authorize for
quotation or trading or listing the shares of Issuer Common Stock or
other securities to be acquired upon exercise of the Option on the Nasdaq
National Market or any other securities exchange or any automated
quotations system maintained by a self-regulatory organization and will
use its best efforts to obtain approval, if required, of such quotation
or listing as soon as practicable.
11. DIVISION OF OPTION. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of 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 in the aggregate
the same number of shares of Issuer Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any other
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.
12. MISCELLANEOUS.
(A) EXPENSES. Except as otherwise provided in Section 9, 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.
(B) 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.
(C) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY; SEVERABILITY.
This Agreement, together with the Merger Agreement and the other
documents and instruments referred to herein and therein, between Grantee
and Issuer (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof and (b) is not intended to
confer upon any person other than the parties hereto (other than any
transferees of the Option Shares or any permitted transferee of this
Agreement pursuant to Section 12(h) and other than as provided in the
Merger Agreement) any rights or remedies hereunder. If any term,
provision, covenant or restriction of this Agreement is held by a court
of competent jurisdiction or a federal or state governmental or
regulatory agency or authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of 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 Option does not permit Holder to
acquire, or does not require Issuer to repurchase, the full number of
shares of Issuer Common Stock as provided in Sections 3 and 8 (as
adjusted pursuant to Section 7), it is the express intention of Issuer to
allow Holder to acquire or to require Issuer to repurchase such lesser
number of shares as may be permissible without any amendment or
modification hereof.
(D) GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Tennessee without
regard to any applicable conflicts of law rules.
(E) DESCRIPTIVE HEADINGS. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
(F) NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail
(return receipt requested) to the parties at the addresses set forth in
the Merger Agreement(or at such other address for a party as shall be
specified by like notice).
(G) COUNTERPARTS. This Agreement and any amendments hereto may
be executed in two counterparts, each of which shall be considered one
and the same agreement and shall become effective when both counterparts
have been signed, it being understood that both parties need not sign the
same counterpart.
(H) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under 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 party, except that Grantee
may assign this Agreement to a wholly owned Subsidiary of Grantee and
Grantee may assign its rights hereunder in whole or in part after the
occurrence of a Purchase Event. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
(I) FURTHER ASSURANCES. In the event of any exercise of the
Option by Holder, Issuer and Holder shall execute and deliver all other
documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided for
by such exercise.
(J) SPECIFIC PERFORMANCE. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree
to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such equitable relief and that this
provision is without prejudice to any other rights that the parties
hereto may have for any failure to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly
authorized, all as of the day and year first written above.
ATTEST: CAPITAL BANCORP
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxx Xxxxxx X. Xxxxx
Secretary Chairman of the Board, President
and Principal Executive Officer
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: /s/ X. Xxxxx House, Jr. By: /s/ Xxxxxxx X. Xxxxx
X. Xxxxx House, Jr. Xxxxxxx X. Xxxxx
Secretary President and Chief Operating
Officer
[CORPORATE SEAL]
