EXHIBIT 2.1
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into as
of February 17, 1997, by and between American Federal Bank, FSB, a federal stock
savings bank ("Issuer"), and CCB Financial Corporation, a North Carolina
corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into that certain Agreement and
Plan of Reorganization, dated as of February 17, 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 2,188,180 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 $25.00.
3. EXERCISE OF OPTION.
(a) Provided that (i) Grantee shall not be in material breach of its
agreements or covenants contained in the Merger Agreement and the Grantee or
Holder (as hereinafter defined) shall not be in material breach of its
agreements or covenants contained in this 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;
PROVIDED that 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 (other than a Default Termination) following the occurrence of a
Purchase Event or a Preliminary Purchase Event; PROVIDED FURTHER, that 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") and the Home Owners' Loan Act of 1933, as
amended (the "HOLA"); and PROVIDED FURTHER, that any termination of the Merger
Agreement by Grantee prior to 5:00 P.M. Eastern Standard Time on March 19, 1997,
shall be deemed for purposes of this Agreement to be effected pursuant to
Section 10.1(h) of the Merger Agreement irrespective of any other sections of
the Merger Agreement referenced by Grantee in its notice of termination of the
Merger Agreement. 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 expression
of intent or 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), (B) except as permitted by the prior written consent of
Grantee, the disposition, by sale, lease, exchange or otherwise, of Assets
of Issuer or any of its Subsidiaries representing in either case 20% 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 having, or securities convertible
into, or exchangeable for, securities having, 20% 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 or any Subsidiary of Grantee)
shall have acquired beneficial ownership (as such term is defined in Rule
13d-3 promulgated under the 0000 Xxx) of or the right to acquire beneficial
ownership of, or any "group" (as such term is defined under the 1934 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, 20% 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 1934 Act),
or shall have filed a registration statement under the 1933 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 15% 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 not made, or shall have withdrawn or
modified in a manner adverse to Grantee, a favorable recommendation with
respect to shareholder approval of 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, or disclosed an
intention to make, a proposal to engage in an Acquisition Transaction, (B)
commenced a Tender Offer or filed a registration statement under the 1933
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 the
Merger Agreement and shall include such Person's Affiliates (as defined in the
Merger Agreement).
(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
Consent (and expiration of any mandatory waiting periods).
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, THE HOME
OWNERS' LOAN ACT OF 1933, AS AMENDED, AND THE REGULATIONS OF THE OFFICE OF
THRIFT SUPERVISION PROMULGATED THEREUNDER INCLUDED IN 12 C.F.R., PART 563G, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF FEBRUARY 17, 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 the above legend shall be removed by
delivery of substitute certificate(s) without such legend if Holder shall have
delivered to Issuer a copy of a letter from the staff of the OTS, 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 1933
Act or the HOLA.
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 and other 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 WARRANTS 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 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)), 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 into an agreement: (i) to
consolidate with or merge into any Person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger; (ii) to permit any Person, other than Grantee or one of
its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then-outstanding
shares of Issuer Common Stock shall be changed into or exchanged for stock or
other securities of Issuer or any other Person or cash or any other property or
the 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 upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, Holder shall receive for each Option Share with respect to which the
Option has not been exercised an amount of consideration in the form of and
equal to the per share amount of consideration that would be received by the
holder of one share of Issuer Common Stock less the Purchase Price (and, in the
event of an election or similar arrangement with respect to the type of
consideration to be received by the holders of Issuer Common Stock, subject to
the foregoing, proper provision shall be made so that Holder would have the same
election or similar rights as would the holder of the number of shares of Issuer
Common Stock for which the Option is then exercisable).
(c) Issuer shall not enter into any agreement of the type described in
Section 7(b) unless the other party thereto consents to provide the funding
required for Issuer to pay the Section 8 Repurchase Consideration.
8. REPURCHASE AT THE OPTION OF HOLDER.
(a) Subject 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 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 National Association of Securities Dealers Automated Quotations
System National Market System ("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, "Repurchase Event" shall occur if (i) any Person (other
than Grantee or any Subsidiary of Grantee) shall have acquired actual ownership
or control, or any "group" (as such term is defined under the 0000 Xxx) shall
have been formed which shall have acquired actual ownership or control, 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(b) (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 OTS, 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. CERTAIN RESTRICTIONS.
(a) Following the date hereof and prior to the Expiration Date (as defined
in subparagraph (c) below), Holder shall not, directly or indirectly, by
operation of law or otherwise, sell, assign, pledge, or otherwise dispose of or
transfer any Restricted Shares beneficially owned by Holder, other than (i)
pursuant to Section 8, (ii) following termination of the Merger Agreement,
pursuant to a merger, share exchange, tender or exchange offer, or other
business combination that has been approved or recommended, or otherwise
determined to be fair and in the best interests of the shareholders of Issuer,
by a majority of the members of the Board of Directors of Issuer (which majority
shall include a majority of the directors who were directors prior to the
announcement of such business combination), or (iii) in accordance with Section
10.
(b) Other than pursuant to the Merger Agreement, following the date hereof
and prior to the Expiration Date, without the prior written consent of Issuer,
Holder shall not, nor shall Holder permit its Affiliates to, directly or
indirectly, alone or in concert or conjunction with any other Person or group of
Persons, (i) in any manner acquire, agree to acquire or make any proposal to
acquire, any securities of, equity interest in, or any material property of, the
Issuer (other than pursuant to this Agreement or the Merger Agreement), (ii)
except at the specific written request of Issuer, propose to enter into any
merger, share exchange, or other business combination involving Issuer or to
purchase a material portion of the Assets of Issuer, (iii) make or in any way
participate in any "solicitation" of "proxies" (as such terms are used in
Regulation 14A promulgated under the 0000 Xxx) to vote, or seek to advise or
influence any Person with respect to the voting of, any voting securities of
Issuer, (iv) form, join or in any way participate in a group of Persons acting
in concert with respect to any voting securities of Issuer, (v) seek to control
or influence the management, Board of Directors or policies of Issuer, (vi)
disclose any intention, plan or arrangement inconsistent with the foregoing,
(vii) advise, assist or encourage any other Person in connection with the
foregoing, or (viii) request Issuer (or its directors, officers, employees or
agents) to amend or waive any provision of this Section 9(b), or take any action
which may require Issuer to make a public announcement regarding the possibility
of a business combination or merger with such party. Issuer shall not adopt any
"Rights Plan" or similar arrangement in any manner which would cause Holder, if
Holder has complied with its obligations under this Agreement, to become an
"Acquiring Person" under such Rights Agreement solely by reason of the
beneficial ownership of the shares purchasable hereunder.
(c) For purposes of this Agreement, the term "Expiration Date" with respect
to any obligation or restriction imposed on a party hereunder shall mean the
earlier to occur of (A) the third anniversary of the date hereof.
10. REGISTRATION RIGHTS.
(a) Following termination of the Merger Agreement, 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 an offering circular 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,
including, without limitation, a "shelf" registration statement under Rule 415
under the 1933 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.
(b) If Issuer at any time after the exercise 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 cause all such shares, the Holder 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 object for valid business reasons, 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
two times. 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 its 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.
(c) Issuer shall use all reasonable efforts to cause each offering circular
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:
(i) prior to the earliest of (A) termination of the Merger Agreement
pursuant to Section 10.1 thereof, (B) failure to obtain the requisite
shareholder approval pursuant to Section 9.1(a) of the Merger Agreement,
and (C) a Purchase Event or a Preliminary Purchase Event;
(ii) on more than two occasions;
(iii) more than once during any calendar year;
(iv) 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
(v) 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.
In addition to the foregoing, Issuer shall not be required to maintain the
effectiveness of any offering circular after the expiration of 120 days from the
effective date of such offering circular. 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) Issuer will pay all expenses (including without limitation registration
fees, qualification fees, blue sky fees and expenses (including the fees and
expenses of 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 shall be borne by
such Selling Holders.
(e) In connection with any registration under subparagraph (a) or (b) above
Issuer hereby indemnifies 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 1933 Act, against all expenses, losses, claims,
damages and liabilities caused by any untrue statement of a material fact
contained in any prospectus or notification or offering circular (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 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 that was included by
Issuer in any such prospectus or notification or offering circular (including
any amendments or supplements thereto) 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, that was included by Issuer
in any such prospectus or notification or offering circular (including any
amendments or supplements thereto) 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). 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 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 fails 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. 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 0000
Xxx) 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 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 OTS from time to time, including,
without limitation, Rules 144 and 144A. Issuer shall at its expense provide
Holder with any information necessary in connection with the completion and
filing of any reports or forms
required to be filed by them under the Securities Laws, or required pursuant to
any state securities laws or the rules of any stock exchange.
(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.
11. 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.
12. 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.
13. MISCELLANEOUS.
(a) EXPENSES. Except as otherwise provided in Section 10, 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 13(h)) 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 North Carolina.
(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: AMERICAN FEDERAL BANK, FSB
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXXXX X. XXXXXXXXXXX, XX.
Xxxxxxx X. Xxxxx Xxxxxxx X. Xxxxxxxxxxx, Xx.
Secretary Chairman, President, and
Chief Executive Officer
[CORPORATE SEAL]
ATTEST: CCB FINANCIAL CORPORATION
By: /s/ XXX X. XXXXXXX By: /s/ XXXXXX X. XXXXXXXX
Xxx X. Xxxxxxx Xxxxxx X. Xxxxxxxx
Secretary Vice Chairman, President, and
Chief Executive Officer
[CORPORATE SEAL]
