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| (iii) any person other than Grantee or any Grantee Subsidiary shall have
acquired beneficial ownership or the right to acquire beneficial ownership of 15% or more of
the outstanding shares of Common Stock (for purposes of this Agreement, the term
"beneficial ownership" has the meaning given that term in Section 13(d) of the Exchange Act
and the rules and regulations thereunder) provided, that this Section 2(c)(iii) shall not be
triggered (and it shall not constitute an Initial Triggering Event) by any acquisition of Issuer
Common Stock by any person or entity specifically identified as being excluded (under certain
circumstances) from becoming an "Acquiring Person" in Section 1(b) of the Rights
Agreement dated as of July 8, 1996, between Issuer and Grand Premier Trust and Investment,
Inc., N.A., as successor to Premier Trust Services, Inc., as Rights Agent (the "Rights
Agreement") (before any relettering of the subsections of the Rights Agreement
contemplated by the amendment of the Rights Agreement executed as of the date hereof) if
such acquisition of Issuer Common Stock by such person or entity would not cause such
person or entity to become an "Acquiring Person" under the terms of the Rights Agreement;
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| (iv) the stockholders of Issuer shall have voted and failed to approve the
Plan of Merger and the Merger at a meeting that was held for that purpose or any
adjournment or postponement thereof, or such meeting shall not have been held in violation
of the Plan of Merger or shall have been canceled prior to termination of the Plan of Merger
if, prior to such meeting (or if such meeting shall not have been held or shall have been
canceled, prior to such termination), it shall have been publicly announced or the stockholders
of Issuer shall have been advised that any person (other than Grantee or any Grantee
Subsidiary) shall have made, or shall have an intention to make, a proposal to engage in an
Acquisition Transaction;
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| (v) the board of directors of Issuer shall not have recommended, or shall
have withdrawn or modified (or publicly announced its intention to withdraw or modify) in
any manner adverse in any respect to Grantee its recommendation that the stockholders of
Issuer approve the transactions contemplated by the Plan of Merger at any meeting that was
held for that purpose, in anticipation of engaging in an Acquisition Transaction (other than
with Grantee or any Grantee Subsidiary) or following a proposal to Issuer to engage in an
Acquisition Transaction, or Issuer or any Issuer Subsidiary shall have authorized,
recommended or proposed (or publicly announced or advised its stockholders of its intention
to authorize, recommend or propose) an agreement to engage in an Acquisition Transaction
with any person other than Grantee or any Grantee Subsidiary;
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| (vi) any person other than Grantee or any Grantee Subsidiary shall have
filed with the Securities and Exchange Commission ("SEC") a registration statement or
tender offer materials with respect to a potential exchange or tender offer that would
constitute an Acquisition Transaction (or filed a preliminary proxy statement with the SEC
with respect to a potential vote by its stockholders to approve the issuance of shares to be
offered in such an exchange or tender offer);
-3-
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| (vii) Issuer shall have willfully breached any covenant or obligation
contained in the Plan of Merger in anticipation of engaging in an Acquisition Transaction
(other than with Grantee or any Grantee Subsidiary), and following such breach Grantee
would be entitled to terminate the Plan of Merger;
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| (xiii) any person other than Grantee or any Grantee Subsidiary shall have
filed an application or notice with the applicable Governmental Entity under the Bank Holding
Company Act of 1956, the Federal Deposit Insurance Act, the Illinois Bank Holding
Company Act of 1957, the Illinois Banking Act, or other applicable state or federal banking
laws or regulations, which application or notice has been accepted for processing, for
approval to engage in an Acquisition Transaction; or
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| (xiv) a Fiduciary Event shall have occurred under the Plan of Merger.
For purposes of this Agreement, "Acquisition Transaction" means: (a) a merger or consolidation,
or any similar transaction, involving Issuer or any Issuer Subsidiary (other than mergers,
consolidations or similar transactions (i) involving solely Issuer and/or one or more wholly-owned
(except for directors' qualifying shares) Issuer Subsidiary, provided, any such transaction is not
entered into in violation of the terms of the Plan of Merger or (ii) in which the stockholders of Issuer
immediately prior to the completion of such transaction own at least 50% of the Common Stock of
Issuer (or the resulting or surviving entity in such transaction) immediately after completion of such
transaction, provided, any such transaction is not entered into in violation of the terms of the Plan of
Merger); (b) a purchase, lease or other acquisition of all or a substantial part of the assets or deposits
of Issuer or Issuer Subsidiary; (c) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing 15% or more of the voting
power of Issuer or any Issuer Subsidiary; or (d) any substantially similar transaction. For purposes
of this Agreement, "subsidiary" has the meaning given to the term "significant subsidiary" in Rule
12b-2 under the Exchange Act. In this Agreement, the phrase "in anticipation of engaging in an
Acquisition Transaction" shall include, without limitation, any action taken by Issuer's officers or
board of directors after any written or oral, authorized or unauthorized, proposal or expression of
interest has been communicated to any member of Issuer's management or board of directors
concerning an Acquisition Transaction that in any way would involve Issuer and such proposal or
expression of interest has not been withdrawn at the time of the action.
(d) The term "Subsequent Triggering Event" shall mean either of the following
events or transactions occurring after the date of this Agreement:
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| (i) 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,
provided, that this Section 2(d)(i) shall not be triggered (and it shall not constitute a
Subsequent Triggering Event) by any acquisition of Issuer Common Stock by any person or
entity specifically identified as being excluded (under certain circumstances) from becoming
an "Acquiring Person" in Section 1(b) of the Rights Agreement dated as of July 8, 1996,
-4-
|
| between Issuer and Grand Premier Trust and Investment, Inc., N.A., as successor to Premier
Trust Services, Inc., as Rights Agent (the "Rights Agreement") (before any relettering of
the subsections of the Rights Agreement contemplated by the amendment of the Rights
Agreement executed as of the date hereof) if such acquisition of Issuer Common Stock by
such person or entity would not cause such person or entity to become an "Acquiring Person"
under the terms of the Rights Agreement; or
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| (ii) occurrence of the Initial Triggering Event described in clause (i) of
Section 2(c), except that the percentage referred to for purposes of defining "Acquisition
Transaction" in clause (c) of that definition shall be 25%.
(e) Issuer shall notify Grantee promptly in writing of the occurrence of any Initial
Triggering Event or Subsequent Triggering Event (collectively, "Triggering Events"), it being
understood that the giving of such notice by Issuer shall not be a condition to the right of Holder to
exercise the Option.
(f) If Holder is entitled and wishes to exercise the Option (or any portion thereof),
it shall send to Issuer a written notice (the date of such notice is referred to as the "Notice Date")
specifying: (i) the total number of shares it will purchase pursuant to such exercise; and (ii) a place
and date not earlier than three business days nor later than 45 business days from the Notice Date for
the closing of such purchase (the "Closing Date"); provided, that if prior notification to or approval
of any Governmental Entity is required in connection with such purchase, Holder shall promptly file
the required notice or application for approval, shall notify Issuer of such filing, and shall
expeditiously process the same and the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which any required notification periods have expired or
been terminated or such approvals have been obtained and any requisite waiting period or periods
shall have passed. Any exercise of the Option shall be considered to occur on the Notice Date relating
thereto.
(g) At the closing referred to in Section 2(f), Holder shall (i) pay to Issuer the
aggregate purchase price for the shares of Common Stock purchased pursuant to the exercise of the
Option in immediately available funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive offices; provided, that failure
or refusal of Issuer to designate such a bank account or accept surrender of this Agreement shall not
preclude Holder from exercising the Option.
(h) At the closing, simultaneously with the delivery of immediately available funds
as provided in Section 2(g), Issuer shall deliver to Holder a certificate or certificates representing the
number of shares of Common Stock purchased by Holder and, if the Option should be exercised in
part only, a new Option evidencing the rights of Holder to purchase the balance of the shares subject
to this Option.
-5-
(i) Certificates for Common Stock delivered at a closing under this Agreement
may be endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject to certain
provisions of an agreement, dated as of September 9, 1999, between the registered
holder hereof and Issuer and to resale restrictions arising under the Securities Act of
1933, as amended. A copy of such agreement is on file at the principal office of Issuer
and will be provided to the holder hereof without charge upon receipt by Issuer of a
written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions of the Securities Act of
1933, as amended (the "Securities Act"), in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Holder shall have delivered to Issuer a copy of a
letter from the staff of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for purposes of the Securities Act;
(ii) the reference to the provisions of this Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the shares have been sold or transferred in
compliance with the provisions of this Agreement and under circumstances that do not require the
retention of such reference in the opinion of counsel to Holder; 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.
(j) Upon the giving by Holder to Issuer of the written notice of exercise of the
Option provided for under Section 2(f) and the tender of the applicable purchase price in immediately
available funds, Holder shall be considered, subject to the receipt of any necessary regulatory
approvals, to be the holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to Holder. 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, issuance and delivery of stock certificates under this Section 2 in
the name of Holder or its assignee, transferee or designee.
3. Covenants of Issuer. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of Common Stock so that the
Option may be exercised without additional authorization of Common Stock after giving effect to all
other options, warrants, convertible securities and other rights to purchase Common Stock; (ii) that
it will not, by charter amendment or through reorganization, consolidation, merger, dissolution or sale
of assets, or by any other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed under this Agreement by
Issuer; (iii) promptly to take all action as may from time to time be required (including (x) complying
with all applicable premerger notification, reporting and waiting period requirements and (y) if, under
the applicable federal or state regulatory requirements or any state or federal banking law, prior
approval of or notice to any Governmental Entity is necessary before the Option may be exercised,
-6-
cooperating fully with Holder in preparing such applications or notices and providing such
information to each such Governmental Entity as they may require) to permit Holder to exercise the
Option and Issuer duly and effectively to issue shares of Common Stock pursuant to this Agreement;
and (iv) promptly to take all action provided in this Agreement to protect the rights of Holder against
dilution.
4. Exchange of Option. This Agreement (and the Option granted by this Agreement)
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 Holder to purchase, on the same terms and subject to the same conditions as
are set forth in this Agreement, in the aggregate the same number of shares of Common Stock subject
to this Option. The terms "Agreement" and "Option" as used in this Agreement include any stock
option agreements and related options for which this Agreement (and the Option granted by this
Agreement) may be exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like tenor and date. Any
such new Agreement executed and delivered shall constitute an additional contractual obligation on
the part of Issuer, whether or not the Agreement so lost, stolen, destroyed or mutilated shall at any
time be enforceable by anyone.
5. Adjustments. In addition to the adjustment in the number of shares of Common Stock
that are subject to the Option pursuant to Section 1 of this Agreement, the number of shares of
Common Stock subject to the Option and the Option Price shall be subject to adjustment from time
to time as provided in this Section 5.
(a) In the event of any change in, or distributions in respect of, Common Stock
by reason of stock dividends, stock splits, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares or the like, the type and number of shares of Common Stock subject
to the Option shall be appropriately adjusted and proper provision shall be made so that, if any
additional shares of Common Stock are to be issued or otherwise become outstanding as a result of
any such change (other than pursuant to an exercise of the Option), the number of shares of Common
Stock that remain subject to the Option shall be increased so that, after such issuance and together
with shares of Common Stock previously issued pursuant to the exercise of the Option (as adjusted
on account of any of the foregoing changes in the Common Stock), such number equals 19.99% of
the number of shares of Common Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock subject to the Option is
adjusted as provided in this Section 5, the Option Price shall be adjusted by multiplying the Option
Price by a fraction, the numerator of which shall be equal to the number of shares of Common Stock
subject to the Option prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock subject to the Option after the adjustment.
-7-
6. Registration Rights. Upon the occurrence of a Subsequent Triggering Event that
occurs prior to an Exercise Termination Event, Issuer shall, at the request of Grantee delivered within
12 months (or such later period as provided in Section 10) of such Subsequent Triggering Event
(whether on its own behalf or on behalf of any subsequent holder of this Option (or part thereof) or
owner of any of the shares of Common Stock issued pursuant hereto), promptly prepare, file and
keep current a shelf registration statement under the Securities Act covering any shares issued and/or
issuable pursuant to this Option and shall use its commercially reasonable efforts to cause such
registration statement to become effective and remain current to permit the sale or other disposition
of any shares of Common Stock issued upon total or partial exercise of this Option ("Option
Shares") in accordance with any plan of disposition requested by Grantee. Issuer will use its
commercially reasonable efforts to cause such registration statement promptly to become effective
and then to remain effective for such period not in excess of 180 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably necessary to effect such
sales or other dispositions. Grantee shall have the right to demand two such registrations. Issuer shall
bear the costs of both of such registrations (including, without limitation, Issuer's attorneys' fees,
printing costs and filing fees, except for underwriting discounts or commissions, brokers' fees and
the fees and disbursements of Grantee's counsel related thereto). Notwithstanding the above, if, at
the time of any request by Grantee for registration of Option Shares as provided above, Issuer is in
the process of registration with respect to an underwritten public offering by Issuer of shares of
Common Stock, and if in the good faith judgment of the managing underwriter or managing
underwriters (or, if none, the sole underwriter or underwriters) of such offering the offer and sale of
the Option Shares would interfere with the successful marketing of the shares of Common Stock
offered by Issuer, the number of Option Shares otherwise to be covered in the registration statement
contemplated by this Section 6 may be reduced; provided, that, after any such required reduction, the
number of Option Shares included in such offering for the account of Holder shall constitute at least
25% of the total number of shares to be sold by Holder and Issuer in the aggregate; provided further,
that if such reduction occurs, then Issuer shall file a registration statement (which shall not count as
one of Holder's two demand registrations) for the balance of the Option Shares subject to the
registration demand as promptly as practical as to which no reduction pursuant to this Section 6 shall
be permitted or occur and, if such required reduction occurs in connection with the Holder's first
demand registration, the 12 month period referred to in the first sentence of this Section shall be
increased to 24 months for the Holder's second demand registration. Each such Holder shall provide
all information reasonably requested by Issuer for inclusion in any registration statement to be filed
to register Option Shares. If requested by any such Holder in connection with such registration, Issuer
shall become a party to any underwriting agreement relating to the sale of such shares, but only to
the extent of obligating itself in respect of representations, warranties, indemnities and other
agreements customarily included in such underwriting agreements for Issuer. Upon receiving any
request under this Section 6 from any Holder, Issuer agrees to send a copy thereof to any other
person known to Issuer to be entitled to registration rights under this Section 6, in each case by
promptly mailing the same, postage prepaid, to the address of record of the persons entitled to receive
such copies. Notwithstanding anything to the contrary in this Agreement, in no event shall the
number of registrations that Issuer is obligated to effect be increased by reason of the fact that there
shall be more than one Holder as a result of any assignment or division of this Agreement.
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7. Repurchase of Option.
(a) At any time after the occurrence of a Repurchase Event (defined below): (i)
at the request of Holder, delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor to Issuer) shall repurchase the Option from Holder
at a price (the "Option Repurchase Price") equal to the amount by which (x) the market/offer price
(as defined below) exceeds (y) the Option Price, multiplied by the number of shares for which this
Option may then be exercised; and (ii) at the request of the owner of Option Shares from time to time
(the "Owner"), delivered prior to an Exercise Termination Event (or such later period as provided
in Section 10), Issuer (or any successor to Issuer) shall repurchase such number of the Option Shares
from Owner as Owner shall designate at a price (the "Option Share Repurchase Price") equal to
the market/offer price multiplied by the number of Option Shares so designated. The term
"market/offer price" shall mean the highest of: (i) the price per share of Common Stock at which
a tender or exchange offer therefor has been made; (ii) the price per share of Common Stock to be
paid by any third party pursuant to an agreement with Issuer; (iii) the highest sale price for shares of
Common Stock within the six-month period immediately preceding the date Holder gives notice of
the required repurchase of this Option or Owner gives notice of the required repurchase of Option
Shares, as the case may be; or (iv) in the event of a sale of all or any substantial part of the assets or
deposits of Issuer or any Issuer Subsidiary, the sum of the net price paid in such sale for such assets
or deposits and the current market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by Holder or Owner, as the case may be, and
reasonably acceptable to Issuer, divided by the number of shares of Common Stock of Issuer
outstanding at the time of such sale. In determining the market/offer price, the value of consideration
other than cash shall be determined by a nationally recognized investment banking firm selected by
Holder or Owner, as the case may be, and reasonably acceptable to Issuer.
(b) Holder or Owner, as the case may be, may exercise its right to require Issuer
to repurchase the Option and any Option Shares pursuant to this Section 7 by surrendering for such
purpose to Issuer, at its principal office, a copy of this Agreement or certificates for Option Shares,
as applicable, accompanied by a written notice or notices stating that Holder or Owner, as the case
may be, elects to require Issuer to repurchase this Option and/or the Option Shares in accordance
with the provisions of this Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option Shares and the receipt
of such notice or notices relating thereto, Issuer shall deliver or cause to be delivered in immediately
available funds to Holder the Option Repurchase Price and/or to Owner the Option Share Repurchase
Price therefor or the portion thereof that Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or regulation, or
as a consequence of administrative policy, from repurchasing the Option and/or the Option Shares
in full, Issuer shall immediately so notify Holder and/or Owner and thereafter deliver or cause to be
delivered in immediately available funds, from time to time, to Holder and/or Owner, as appropriate,
the portion of the Option Repurchase Price and the Option Share Repurchase Price, respectively, that
-9-
it is no longer prohibited from delivering, within five business days after the date on which Issuer is
no longer so prohibited; provided, that if Issuer at any time after delivery of a notice of repurchase
pursuant to Section 7(b) is prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to Holder and/or Owner, as appropriate, the Option Repurchase
Price and the Option Share Repurchase Price, respectively, in full (and Issuer hereby undertakes to
use its commercially reasonable efforts to obtain all required regulatory and legal approvals and to
file any required notices as promptly as practicable in order to accomplish such repurchase), Holder
or Owner may revoke its notice of repurchase of the Option or the Option Shares either in whole or
to the extent of the prohibition, whereupon, in the latter case, Issuer shall promptly: (i) deliver to
Holder and/or Owner, as appropriate, that portion of the Option Repurchase Price or the Option
Share Repurchase Price that Issuer is not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to Holder, a new Agreement evidencing the right of Holder to purchase that number of
shares of Common Stock obtained by multiplying the number of shares of Common Stock for which
the surrendered Agreement was exercisable at the time of delivery of the notice of repurchase by a
fraction, the numerator of which is the Option Repurchase Price less the portion of the Option
Repurchase Price previously delivered to Holder and the denominator of which is the Option
Repurchase Price, and/or (B) to Owner, a certificate for the Option Shares it is then so prohibited
from repurchasing. If an Exercise Termination Event shall have occurred prior to the date of the
notice by Issuer described in the first sentence of this Section 7(c), or shall be scheduled to occur at
any time before the expiration of a period ending on the thirtieth day after such date, Holder shall
nonetheless have the right to exercise the Option until the expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be considered to
have occurred upon the occurrence of any of the following events or transactions after the date of
this Agreement and prior to the occurrence of an Exercise Termination Event (or such later date as
provided in Section 10):
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| (i) the acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 50% or more of the then outstanding Common Stock;
provided, that this Section 7(d)(i) shall not be triggered (and it shall not constitute a
Repurchase Event) by any acquisition of Issuer Common Stock by any person or entity
specifically identified as being excluded (under certain circumstances) from becoming an
"Acquiring Person" in Section 1(b) of the Rights Agreement dated as of July 8, 1996,
between Issuer and Grand Premier Trust and Investment, Inc., N.A., as successor to Premier
Trust Services, Inc., as Rights Agent (the "Rights Agreement") (before any relettering of
the subsections of the Rights Agreement contemplated by the amendment of the Rights
Agreement executed as of the date hereof) if such acquisition of Issuer Common Stock by
such person or entity would not cause such person or entity to become an "Acquiring Person"
under the terms of the Rights Agreement; or
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| (ii) the consummation of any Acquisition Transaction described in clause
(i) of Section 2(c), except that the percentage referred to for purposes of defining
"Acquisition Transaction" in clause (c) of that definition shall be 50%.
-10-
8. Substitute Option.
(a) If, prior to an Exercise Termination Event, Issuer shall enter into an agreement
to (i) consolidate with or merge into any person, other than Grantee or any Grantee Subsidiary, or
engage in a plan of exchange with any person, other than Grantee or any Grantee Subsidiary, and
Issuer shall not be the continuing or surviving corporation of such consolidation or merger or the
acquiror in such plan of exchange, (ii) permit any person, other than Grantee or any Grantee
Subsidiary, to merge into Issuer or be acquired by Issuer in a plan of exchange and Issuer shall be the
continuing or surviving corporation, but, in connection with such merger or plan of exchange, the
then outstanding shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other person or cash or any other property or the then outstanding shares of
Common Stock shall after such merger or plan of exchange represent less than 50% of the
outstanding shares and share equivalents of the merged or acquiring company, or (iii) sell or
otherwise transfer all or a substantial part of its or any Issuer Subsidiary's assets or deposits to any
person, other than Grantee or any Grantee Subsidiary, 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 in this Agreement,
be converted into, or exchanged for, an option (the "Substitute Option"), at the election of Holder,
to acquire capital stock of either (x) the Acquiring Corporation (as defined below) or (y) any person
that controls the Acquiring Corporation.
(b) The following terms have the following meanings:
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| (i) "Acquiring Corporation" means: (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer); (ii) the acquiring person in a plan of exchange in which Issuer is
acquired; (iii) Issuer in a merger or plan of exchange in which Issuer is the
continuing or surviving or acquiring person; and (iv) the transferee of all or
a substantial part of Issuer's or any Issuer Subsidiary's assets or deposits.
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| (ii) "Substitute Common Stock" means the voting common
stock to be issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
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| (iii) "Assigned Value" means the market/offer price, as defined in
Section 7.
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| (iv) "Average Price" means 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 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
-11-
|
| share of common stock issued by the person merging into Issuer or by any
company that controls or is controlled by such person, as Holder may elect.
(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 Holder. The issuer of the
Substitute Option shall also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement (after giving effect for such purpose to the
provisions of Section 9), which agreement shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the number of shares of
Common Stock for which the Option was exercisable immediately prior to the event described in the
first sentence of Section 8(a), divided by the 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, the numerator of which shall be the number of shares of Common Stock for which the
Option was exercisable immediately prior to the event described in the first sentence of Section 8(a)
and the denominator of which shall be the number of shares of Substitute Common Stock for which
the Substitute Option is exercisable.
(e) In no event, pursuant to any of the subsections above, shall the Substitute
Option be exercisable for a number of shares that, together with the number of shares owned by
Grantee other than Fiduciary Shares, is more than 19.99% of the shares of Substitute Common Stock
outstanding prior to exercise of the Substitute Option. In the event that the Substitute Option would
be exercisable for more than 19.99% of the shares of Substitute Common Stock outstanding prior
to exercise but for this Section 8(e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this Section 8(e) over (ii) the value of the Substitute
Option after giving effect to the limitation in this Section 8(e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by Holder and reasonably
acceptable to the Substitute Option Issuer.
(f) Issuer shall not enter into any transaction described in Section 8(a) unless the
Acquiring Corporation and any person that controls the Acquiring Corporation assume in writing all
the obligations of Issuer under this Agreement.
9. Repurchase of Substitute Option.
(a) At the request of a holder of the Substitute Option (a "Substitute Option
Holder"), the Substitute Option Issuer shall repurchase the Substitute Option from the Substitute
Option Holder at a price (the "Substitute Option Repurchase Price") equal to the amount by which
(i) the Highest Closing Price (as defined below) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which the Substitute
-12-
Option may then be exercised. In addition, at the request of the owner (the "Substitute Share
Owner") of shares of Substitute Common Stock, the Substitute Option Issuer shall repurchase the
Substitute Common Stock at a price (the "Substitute Share Repurchase Price") equal to the
Highest Closing Price multiplied by the number of shares of Substitute Common Stock so designated.
The term "Highest Closing Price" shall mean the highest closing price for shares of Substitute
Common Stock within the six-month period immediately preceding the date the Substitute Option
Holder gives notice of the required repurchase of the Substitute Option or the Substitute Share
Owner gives notice of the required repurchase of the Substitute Common Stock, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the case may
be, may exercise their respective rights to require the Substitute Option Issuer to repurchase the
Substitute Option and the Substitute Common Stock pursuant to this Section 9 by surrendering for
such purpose to the Substitute Option Issuer, at its principal office, the agreement for such Substitute
Option (or, in the absence of such an agreement, a copy of this Agreement) and certificates for
Substitute Common Stock accompanied by a written notice or notices stating that the Substitute
Option Holder or the Substitute Share Owner, as the case may be, elects to require the Substitute
Option Issuer to repurchase the Substitute Option and/or the Substitute Common Stock in
accordance with the provisions of this Section 9. As promptly as practicable, and in any event within
five business days after the surrender of the Substitute Option and/or certificates representing
Substitute Common Stock and the receipt of such notice or notices relating thereto, the Substitute
Option Issuer shall deliver or cause to be delivered in immediately available funds to the Substitute
Option Holder the Substitute Option Repurchase Price and/or to the Substitute Share Owner the
Substitute Share Repurchase Price therefor or the portion thereof that the Substitute Option Issuer
is not then prohibited under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under applicable
law or regulation, or as a consequence of administrative policy, from repurchasing the Substitute
Option and/or the Substitute Common Stock in part or in full, the Substitute Option Issuer shall
immediately so notify the Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Option Repurchase Price and
the Substitute Share Repurchase Price, respectively, which it is no longer prohibited from delivering,
within five business days after the date on which the Substitute Option Issuer is no longer so
prohibited; provided, that if the Substitute Option Issuer is at any time after delivery of a notice of
repurchase pursuant to Section 9(b) prohibited under applicable law or regulation, or as a
consequence of administrative policy, from delivering to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the Substitute Option Repurchase Price and the Substitute
Share Repurchase Price, respectively, in full (and the Substitute Option Issuer shall use its
commercially reasonable efforts to obtain all required regulatory and legal approvals as promptly as
practicable to accomplish such repurchase), the Substitute Option Holder or Substitute Share Owner
may revoke its notice of repurchase of the Substitute Option or the Substitute Common Stock either
in whole or to the extent of the prohibition, whereupon, in the latter case, the Substitute Option Issuer
shall promptly: (i) deliver to the Substitute Option Holder or Substitute Share Owner, as appropriate,
that portion of the Substitute Option Repurchase Price or the Substitute Share Repurchase Price that
the Substitute Option Issuer is not prohibited from delivering; and (ii) deliver, as appropriate, either
(x) to the Substitute Option Holder, a new Substitute Option evidencing the right of the Substitute
Option Holder to purchase that number of shares of Substitute Common Stock obtained by
multiplying the number of shares of Substitute Common Stock for which the surrendered Substitute
Option was exercisable at the time of delivery of the notice of repurchase by a fraction, the numerator
of which is the Substitute Option Repurchase Price less the portion of the Substitute Option
Repurchase Price previously delivered to the Substitute Option Holder and the denominator of which
is the Substitute Option Repurchase Price, and/or (y) to the Substitute Share Owner, a certificate for
the Substitute Common Stock it is then so prohibited from repurchasing. If an Exercise Termination
Event shall have occurred prior to the date of the notice by the Substitute Option Issuer described
in the first sentence of Section 9(c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, the Substitute Option Holder shall nevertheless
have the right to exercise the Substitute Option until the expiration of such 30-day period
10. Extension of Exercise Provisions.The 30-day, six-month, 12-month, 18-month or
24-month time periods for the exercise of certain rights under Sections 2, 6, 7, 9, 12 and 14 shall be
extended: (i) to the extent necessary to obtain all regulatory approvals for the exercise of such rights
(for so long as the Holder, Owner, Substitute Option Holder or Substitute Share Owner, as the case
may be, is using commercially reasonable efforts to obtain such regulatory approvals), and for the
expiration of all statutory waiting periods; (ii) to the extent necessary to avoid liability under Section
16(b) of the Exchange Act by reason of such exercise; and (iii) for a period of time equal to any
notice or cure periods provided to Issuer in connection with any breach that would permit Grantee
to terminate the Plan of Merger pursuant to Section 2(c)(vii) of this Agreement.
11. Representations and Warranties.
(a) Issuer hereby represents and warrants to Grantee as follows:
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| (i) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly and validly authorized by the board of
directors of Issuer prior to the date of this Agreement and no other corporate proceedings on
the part of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed and
delivered by Issuer. This Agreement is the valid and legally binding obligation of Issuer.
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|
| (ii) Issuer has taken all necessary corporate action to authorize, reserve
and permit it to issue, and at all times from the date of this Agreement through the termination
of this Agreement in accordance with its terms will have reserved for issuance upon the
exercise of the Option, that number of shares of Common Stock equal to the maximum
number of shares of Common Stock at any time and from time to time issuable under this
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| Agreement, and all such shares, upon issuance pursuant to this Agreement, will be duly
authorized, validly issued, fully paid, nonassessable and will be delivered free and clear of all
claims, liens, encumbrances and security interests and not subject to any preemptive rights.
(b) Grantee hereby represents and warrants to Issuer as follows:
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| (i) Grantee has full corporate power and authority to execute and deliver
this Agreement and, subject to any approvals or consents referred to herein, to consummate
the transactions contemplated by this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the part of Grantee. This
Agreement has been duly executed and delivered by Grantee.
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|
| (ii) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired with a view
to the public distribution thereof and will not be transferred or otherwise disposed of except
in a transaction registered or exempt from registration under the Securities Act of 1933, as
amended.
12. Assignment. Neither party to this Agreement may assign any of its rights or
obligations under this Agreement or the Option created under this Agreement to any other person
without the express written consent of the other party, except that if a Subsequent Triggering Event
shall have occurred prior to an Exercise Termination Event, Grantee, subject to the express
provisions of this Agreement, may assign in whole or in part its rights and obligations under this
Agreement; provided, that until the date 15 days following the date on which the last of all applicable
Governmental Entities has approved an application by Grantee to acquire the shares of Common
Stock subject to the Option, Grantee may not assign its rights under the Option except in: (i) a widely
dispersed public distribution; (ii) a private placement in which no one party acquires the right to
purchase in excess of 2% of the voting shares of Issuer; (iii) an assignment to a single party (such as
a broker or investment banker) for the purpose of conducting a widely dispersed public distribution
on Grantee's behalf; or (iv) any other manner approved by all applicable Governmental Entities.
13. Cooperation. Grantee and Issuer each will use its commercially reasonable efforts to
make all filings with, and to obtain consents of, all third parties and Governmental Entities necessary
to the consummation of the transactions contemplated by this Agreement, but Grantee shall not be
obligated to apply to state banking authorities for approval to acquire the shares of Common Stock
issuable under this Agreement until such time, if ever, as it considers appropriate to do so.
14. Minimum Repurchase Proceeds.
(a) Grantee may, at any time following a Repurchase Event that occurs prior to
the occurrence of an Exercise Termination Event (or such later period as provided in Section 10),
relinquish the Option (together with any Option Shares issued to and then owned by Grantee) to
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Issuer in exchange for a cash fee equal to the Surrender Price; provided, that Grantee may not
exercise its rights pursuant to this Section 14 if Issuer has repurchased the Option (or any portion
thereof) or any Option Shares pursuant to Section 7. The "Surrender Price" shall be equal to
$15,763,040.00 (i) plus, if applicable, Grantee's purchase price with respect to any Option Shares and
(ii) minus, if applicable, the excess of (A) the net cash amounts, if any, received by Grantee pursuant
to the arms' length sale of Option Shares (or any other securities into which such Option Shares were
converted or exchanged) to any unaffiliated party, over (B) the Option Price.
(b) Grantee may exercise its right to relinquish the Option and any Option Shares
pursuant to this Section 14 by surrendering to Issuer, at its principal office, a copy of this Agreement
together with certificates for Option Shares, if any, accompanied by a written notice stating (i) that
Grantee elects to relinquish the Option and Option Shares, if any, in accordance with the provisions
of this Section 14 and (ii) the Surrender Price. The Surrender Price shall be payable in immediately
available funds on or before the second business day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or regulation, or
as a consequence of administrative policy, from paying the Surrender Price to Grantee in full, Issuer
shall immediately so notify Grantee and thereafter deliver or cause to be delivered, from time to time,
to Grantee, the portion of the Surrender Price that it is no longer prohibited from paying, within five
business days after the date on which Issuer is no longer so prohibited; provided, that if Issuer at any
time after delivery of a notice of surrender pursuant to Section 14(b) is prohibited under applicable
law or regulation, or as a consequence of administrative policy, from paying to Grantee the Surrender
Price in full: (i) Issuer shall (A) use its commercially reasonable efforts to obtain all required
regulatory and legal approvals and to file any required notices as promptly as practicable in order to
make such payments, (B) within five days of the submission or receipt of any documents relating to
any such regulatory and legal approvals, provide Grantee with copies of the same, and (C) keep
Grantee advised of both the status of any such request for regulatory and legal approvals, as well as
any discussions with any relevant regulatory or other third party reasonably related to the same; and
(ii) Grantee may revoke such notice of surrender by delivery of a notice of revocation to Issuer and,
upon delivery of such notice of revocation, the date of any Exercise Termination Event shall be
extended to a date six months from the date on which the Exercise Termination Event would have
occurred if not for the provisions of this Section 14(c) (during which period Grantee may exercise
any of its rights under this Agreement, including any and all rights pursuant to this Section 14).
15. Remedies. The parties acknowledge that damages would be an inadequate remedy
for a breach of this Agreement by either party and that the obligations of the parties shall be
enforceable by either party through injunctive or other equitable relief. In connection therewith, the
parties waive the posting of any bond or similar requirement.
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,
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impaired or invalidated. If for any reason such court or regulatory agency determines that Holder is
not permitted to acquire, or Issuer is not permitted to repurchase pursuant to Section 7, the full
number of shares of Common Stock provided in Section 1(a) (as adjusted pursuant to Sections 1(b)
or 5), 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 of this
Agreement.
17. Notices. All notices, requests, claims, demands and other communications under this
Agreement shall be in writing and shall be considered to have been duly given if delivered or sent and
received by a fax transmission (if receipt by the intended recipient is confirmed by telephone and if
hard copy is delivered by overnight delivery service the next day), by hand delivery, or by a
nationwide overnight delivery service (all fees prepaid) to the respective addresses of the parties set
forth in the Plan of Merger.
18. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Michigan, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws.
19. Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be considered to be an original, but all of which shall constitute one and the same
agreement.
20. Fees and Expenses. Except as otherwise expressly provided in this Agreement, each
party shall bear and pay all costs and expenses incurred by it or on its behalf in connection with the
transactions contemplated under this Agreement, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
21. Entire Agreement. Except as otherwise expressly provided in this Agreement or in
the Plan of Merger, this Agreement contains the entire agreement between the parties with respect
to the transactions contemplated under this Agreement and supersedes all prior arrangements or
understandings with respect thereof, written or oral. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the parties to this Agreement and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to confer
upon any party, other than the parties to this Agreement, and their respective successors and
permitted assignees, any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
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In Witness Whereof, the parties have caused this Stock Option Agreement to be
executed by their officers, thereunto duly authorized, as of the date first written above.
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| OLD KENT FINANCIAL CORPORATION
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|
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| By: /s/ Xxxx X. Xxxxxxx
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| Xxxx X. Xxxxxxx
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| Executive Vice President and Chief Financial
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| Officer
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|
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| GRAND PREMIER FINANCIAL, INC.
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|
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| By: /s/ Xxxxxxx X. Xxxxx
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| Xxxxxxx X. Xxxxx
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| Its: Chairman and Chief Executive Officer
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|
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